BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. Joint Application of ALASKA AIRLINES, INC. AND AMERICAN AIRLINES, INC. for transfer of international route authority under 49 U.S.C. 40109, 41105 (Los Angeles-Mexico City Docket OST-2015-0025 OBJECTIONS OF DELTA AIR LINES Communications with respect to this document should be addressed to: Robert J. Cortelyou Senior Vice President Network Planning Joe Esposito, Vice President - Network Planning Americas Amy Martin, Director, Network Planning, Latin Amercia 1030 Delta Boulevard Atlanta, Georgia 30320 Alexander Van der Bellen Managing Director Regulatory and International Affairs & Associate General Counsel Christopher Walker Regional Director Regulatory and International Affairs 1212 New York Avenue, N.W. Washington, D.C. 20005 (202 842-4184 sascha.vanderbellen@delta.com chris.walker@delta.com April 27, 2015
BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. Joint Application of ALASKA AIRLINES, INC. AND AMERICAN AIRLINES, INC. for transfer of international route authority under 49 U.S.C. 40109, 41105 (Los Angeles-Mexico City Docket OST-2015-0025 OBJECTIONS OF DELTA AIR LINES Delta Air Lines, Inc. ( Delta Objects to the findings of Show Cause Order 2015-4-10, which tentatively decided to transfer Los Angeles (LAX - Mexico City (MEX exemption and designation authority from Alaska Airlines, Inc. ( Alaska to American Airlines, Inc. ( American without considering Delta s contemporaneous application for same route. First, Delta s application is clearly superior on the merits. American proposes two daily flights with B-737-800 aircraft, whereas Delta would operate three daily flights with the same aircraft type, both configured with 160 seats. Delta s additional flight represents 117,000 more annual round-trip seats a major public interest benefit on this important limited entry route: 400 350 300 250 200 150 100 50 0 LAX-MEX Capacity Annual Round-Trip Seats (K AA + 33% DL
Delta Objections Page 2 Second, Delta respectfully disagrees that the much older Horizon-San Juan Canadian Transfer Case (Orders 89-3-22 and 89-5-15 is controlling over the Department s more recent pronouncement regarding exemption and frequency transfers in the 1997 U.S.-Argentina All-Cargo Frequency Proceeding. There, the Department clearly and unequivocally stated that frequency awards were akin to exemptions and that a comparative selection case was required for the transfer of such authorities: While some of the parties have invoked route transfer cases as precedential guidance, the transfer language of the act relates to the transfer of certificate authority. Frequency allocations are not certificate awards. We have traditionally deemed them to be in the nature of exemption authority. Order 97-11-35 at 5 (emphasis added. In the Argentina case, the Department found that the transfer of authorities deemed to be in the nature of exemption authority 1 required a route case to determine the best public interest use of the authorities. Delta respectfully submits that a similar inquiry is appropriate here. Third, even if the Department were to decide that the Horizon case is controlling, contemporary consideration of the competing Delta and American applications is still required. In the Horizon case, the Department stated that it would conduct a comparative route case proceeding where there are strong reasons of policy for reviewing the needs and status of the market. 89-3-22 at 3. There are strong policy reasons at play here. In the U.S.-Mexico marketplace, American commands a 25% market share to Delta s 11%. (OAG Seat Shares, March 2015. The competitive benefits of Alaska over American were primary considerations in the selection of Alaska for this award: 1 Id. American brings none of the competitive advantages that come with the selection of Alaska in this case. American currently offers significant foreign scheduled air transportation services in the U.S.-Mexico market, and directcarrier services in the U.S.-Mexico City market. More specifically, American offers direct-carrier service to 11 Mexican cities from nine U.S. cities (four of
Delta Objections Page 3 which are American hubs, and serves Mexico City from three U.S. points. Order 2005-05-01 at 5 (emphasis added. The Show Cause Order at n.10 suggests at that American s and Alaska s proposals share some of the same competitive attributes - such as twice-daily service and facilitating entry by a new U.S.-flag carrier on the LAX-MEX route, but the Show Cause Order does not persuasively distinguish the Department s prior finding that American provides none of the competitive benefits of Alaska. As such, the proposed transfer here would defeat the Department s rationale for selection of [American] over other competing applicants. Order 2009-11-3 at 3. The selection of Delta, as a growing hub carrier at LAX, and as a much smaller player in the overall U.S.-MEX marketplace, would better serve the Department s original competitive objectives. Finally, should the Department nonetheless approve the transfer of LAX-MEX authorities from Alaska to American without conducting a comparative public interest proceeding, logic and precedent will compel the same deference to all future marketbased transfers of designations, frequencies, slots and exemptions. While such a declared policy change works to Delta s detriment in this matter, the Department should straightforwardly acknowledge that it will henceforth permit all carriers to enjoy the same degree of certainty in future market-based transactions for international frequencies, slots and exemptions. Respectfully submitted, Alexander Van der Bellen Managing Director, Regulatory and International Affairs & Associate General Counsel
CERTIFICATE OF SERVICE A copy of the foregoing Objections have been served this 27th day of April, 2015, upon the following persons via email: Air Carrier Name Email Address Alaska Airlines David Heffernan dheffernan@cozen.com Alaska Airlines Jeremy Ross jeremy.ross@alaskaair.com American Howard Kass howard.kass@aa.com American Robert Wirick robert.wirick@aa.com Frontier Mark Atwood matwood@cozen.com Frontier Steve Lachter slachter@cozen.com Hawaiian/JetBlue Jonathan Hill jhill@cooley.com Hawaiian/JetBlue Parker Erkmann perkmann@cooley.com JetBlue Robert Land robert.land@jetblue.com Republic Bob Cohn robert.cohn@hoganlovells.com Republic Pat Rizzi patrick.rizzi@hoganlovells.com Southwest/AirTran Bob Kneisley bob.kneisley@wnco.com Southwest/AirTran Leslie Abbott leslie.abbott@wnco.com Spirit Airlines David Kirstein dkirstein@yklaw.com Spirit Airlines Joanne Young jyoung@yklaw.com Sun Country John Fredericksen john.fredericksen@suncountry.com Sun Country Thomas Ting thomas.ting@suncountry.com United Dan Weiss dan.weiss@united.com United Thomas Bolling thomas.bolling@united.com Virgin America John Varley john.varley@virginamerica.com Brian Hedberg Robert Finamore Brett Kruger Reese Davidson Info brian.hedberg@dot.gov robert.finamore@dot.gov brett.kruger@dot.gov reese.davidson@dot.gov info@airlineinfo.com