Order 95-6-13 Served June 8,1995 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Issued by the Department of Transportation on the 8 th day of June, 1995 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Applications of : : BRITISH AIRWAYS PLC : DOCKETS 48640 : 49086 for exemptions under 49 U.S.C. 40109 : 49381 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Applications of : : USAIR, INC. : UNDOCKETED : for Statements of Authorization under Part 207 of the : Department's Regulations to code share with British : Airways PLC : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ORDER Summary By this order we renew the regulatory authorities granted British Airways PLC and USAir, Inc. to engage in code-share operations involving 66 interior U.S. cities served through British Airways' U.S. gateways and the Philadelphia-Mexico City market. We also grant the necessary regulatory authorities for the carriers to expand their code-share operations to 65 additional U.S. cities and 7 international cities. The authorities are effective immediately for a period of two years from the date of service of this order. Background By Orders 93-3-17, 93-11-26, and 93-12-34, the Department granted British Airways and USAir the necessary regulatory authorities to conduct code-sharing services to various points in the United States in conjunction with British Airways' services between the United Kingdom and its authorized U.S. gateways. In addition, on January 7, 1994, we granted USAir a Statement of Authorization to conduct code-sharing service with British Airways in the Philadelphia-Mexico City market. All of these operations were approved through March 17, 1994. By Order 94-3-31, the Department renewed these authorities through March 17, 1995. Applications On January 13, 1995, British Airways and USAir filed for renewal of the necessary regulatory authorities to continue the code-share services previously authorized by the Department. 1 These points are listed in Appendix A. In addition, British Airways and USAir had previously filed applications to expand their code-share operations to include 65 additional U.S. points and 7 foreign points as described in Appendix B. In support of their applications British Airways and USAir state that both the existing and expanded code-share operations are specifically provided for in the 1991 U.S. -U.K. Memorandum of Consultations and provide significant benefits to the public. 2 Responsive Pleadings 3 American Airlines, Inc. filed an objection to the renewal applications. Replies to American's answer were filed by British Airways, USAir, and the City of Philadelphia, Division of Aviation. American filed a reply to the answer of USAir. American and Delta filed answers opposing the expanded code-share services. American and Delta focus their objections on the state of U.S.-U.K. aviation negotiations at the time of their submissions. American also makes arguments concerning proposed service increases by British Airways at Philadelphia and their asserted impact on American's Philadelphia-London services. USAir, British Airways, and Philadelphia respond to these points. Recent Developments In a Memorandum of Consultations dated June 5, 1995, representatives of the United States and the United Kingdom reached understandings involving certain amendments to the Air Services Agreement (Agreement) between the countries providing benefits for both sides. The MOC further provides that the provisions of the amendments can be implemented on the basis of comity and reciprocity pending an Exchange of Notes, upon approval of all outstanding applications to conduct code-sharing services permitted by the Agreement. In this regard, the MOC notes that U.S. delegation assured the U.K. delegation that all pending U.K. code-share applications would be approved within seven days of the effective date of the MOC. Moreover, paragraph 6 of the Draft Exchange of Notes attached to the MOC includes a new provision to the effect that approvals of these applications will be for at least two years. Decision We have decided to renew the code-share authorities last approved by the Department by Order 94-3-31 and to grant the regulatory authorities necessary for the expanded code-share operations proposed by the applicants to serve additional U.S. and international cities. 4 The authorities are effective immediately and will remain in effect for two years from the date of service of this order. The recent MOC contains an explicit assurance that these applications would be approved within seven days. Furthermore, the code-share operations at issue provide significant service benefits to the public by providing numerous communities with additional, and in some markets, more convenient alternatives for service between the United States and the United Kingdom. In these circumstances, we find that approval of the requested authorities by final order is consistent with the public interest. Against this background, none of the arguments offered by the objecting parties persuades us to adopt a contrary result. ACCORDINGLY, 1. We renew the exemption authority of British Airways PLC and the Statements of Authorization granted USAir, Inc. to conduct the code-share services previously authorized by Order 94-4-31; 2. We renew the Statement of Authorization granted USAir, Inc. to code-share with British Airways in the Philadelphia-Mexico City market, previously authorized by Order 94-4-31; 3. We grant British Airways an exemption under 49 U.S.C. section 40109 to the extent necessary to engage in the code-share operations between points in the United Kingdom, on the one hand, and points in the United States and certain foreign points, on the other, served through British Airways' U.S. gateways as set forth in Appendix B; 4. We grant USAir, Inc. a Statement of Authorization under Part 207 of the Department's regulations to engage in the code-share operations with British Airways involving the U.S. and foreign points set forth in Appendix B of this order; 5. The authorities granted in ordering paragraphs 1-4 are effective immediately and will remain in effect for two years from the date of service of this order; 6. In the conduct of these services, we expect British Airways to adhere to the applicable terms, conditions, and limitations of its foreign air carrier permit (Order 93-8-44); 7. We require British Airways and USAir to comply with 14 CFR 399.88 of the Department's regulations and any amendments to the Department's regulations concerning code-sharing arrangements that may be adopted; 8. The Statements of Authorization granted by this order are subject to the further condition that the subject foreign air transportation be sold in the name of the carrier holding out such service in computer reservation systems and elsewhere, and that the carrier selling such transportation accept all obligations established in its contract of carriage with the passenger ( i.e., the ticket); 9. We grant all motions for leave to file otherwise unauthorized documents in the captioned proceedings; and 10. We will serve this order on British Airways PLC; USAir, Inc.; Delta Air Lines, Inc.; American Airlines, Inc.; the City of Philadelphia, Division of Aviation; the Ambassador of the United Kingdom of Great Britain and Northern Ireland in Washington, D.C.; the Department of State (Office of Aviation Negotiations); and the Federal Aviation Administration. By: PATRICK V. MURPHY Acting Assistant Secretary for Aviation and International Affairs (SEAL) 1 British Airways and USAir filed timely applications for renewal of their authorities. These authorities have remained in effect pending action on the renewal applications under the provisions of 5 U.S.C. 558(c). 2 The applicants cite the new Paragraph 11 of Section 5 of Annex 1 for the intra-U.S. code-share services and Paragraph 10 of Section 5 of Annex 1 with respect to the code-share services involving foreign points, which are set out in the 1991 MOC. 3 Various pleadings in the captioned proceedings were accompanied by motions for leave to file. We will grant the motions. 4 We find that British Airways is operationally and financially qualified to provide the services at issue based on the May 25, 1989, Exchange of Notes between the United States and the United Kingdom, T.I.A.S. 11675, under which the aviation authorities of each country will normally accept, on a reciprocal basis, the other's fitness determinations in regard to carriers seeking authority to conduct certain bilateral services, including the requested authority. See Order 93-8-44.