# Weekly Cabinet Report for 

# Week of November 5, 2001

# Read C. Van de Water

# Assistant Secretary for Aviation

#  And International Affairs

The Secretary

###### 

###### WEEK OF NOVEMBER 5

#  

**[American Airlines/British Airways (AA/BA) Antitrust
Immunity]{.underline}***:* The Senate Commerce Committee has tentatively
scheduled a hearing on November 6 on the "State of the Airline
Industry," which would include a discussion on the pending antitrust
alliances. The Senate Judiciary Committee has tentatively scheduled a
hearing on this case (as well as other pending antitrust alliances) for
November 7. On October 12, the Department issued a notice extending the
date for answers to the AA/BA application to November 2 and the date for
replies to November 9.

**OUTLOOK** **FOR NEXT FOUR WEEKS**

**[Antitrust Immunity Issues]{.underline}**: The Department staff is
drafting a Show-Cause Order that tentatively grants antitrust immunity
to the Delta Air Lines-Air France-Alitalia-Czech Airlines alliance. If
finalized, the action will permit the partners maximum flexibility in
coordinating their operations and enhancing the service options
available to consumers. The tentative decision results from the
open-skies agreements with France, Italy, and the Czech Republic. The
tentative authority would provide the partners with immunity from U.S.
antitrust laws to the extent necessary to enable them to plan and
coordinate pricing and services over their respective route systems.
Each airline will continue to be independent companies and will retain
their separate corporate and national identities.

The tentative grant of immunity is subject to a condition requiring the
partners to withdraw from fare coordination sponsored by the
International Air Transport Association (IATA). The grant is subject to
data reporting requirements, and the partners must resubmit their
agreements for review within five years. The tentative decision does not
allow the partners to adopt a common name or brand.

2

Finally, the tentative grant of immunity does not extend to the
coordination of certain activities by the partners with respect to
unrestricted coach/business/first class fares for U.S.-point-of-sale
passengers flying nonstop in the Atlanta/Cincinnati-Paris markets.

**[Airline Compensation]{.underline}**: Applications for the second
round of payments to compensate air carriers for losses due to the
terrorist attacks are due on November 13. Compensation payments will be
made to air carriers as applications are processed throughout the week
of November 19 - 23

**RESULTS OF RECENT ACTIVITIES**:

###### OECD Cargo Liberalization Group: DOT participated in an experts group meeting October 29-30, in Paris, to continue work drafting a model multilateral air cargo liberalization agreement. 

**[Sri Lanka]{.underline}**: Aviation negotiations between the United
States and Sri Lanka aimed at concluding an open-skies aviation accord
were held October 30-November 1, in Washington. Sri Lanka indicated that
it would like to have transitional provisions in the areas of airline
ground handling, pricing, and passenger charter rights. The negotiations
focused on these issues.

**[United Kingdom]{.underline}**: In government-only talks held in
London on October 22 to discuss negotiation of an open-skies agreement
between the two countries, both countries explained their positions
clearly. In addition, although the U.K. preference is to conclude an
open-skies agreement close in time to the Department's tentative
decision in the AA/BA antitrust immunity case, they are considering a
U..S. proposal to "delink" the issues in timing and conclude an
open-skies agreement earlier. Talks were also held with the UK and EU
competition authorities about the pending alliance application of
American Airlines/British Airways for antitrust immunity.

**[Airline Compensation]{.underline}**: The final rule outlining the
procedures for compensation of air carriers under the Air Transportation
Safety and System Stabilization Act (Public Law 107-42) was published in
the Federal Register on Monday, October 29.

**[Airline Loan Guarantee Program]{.underline}**: During the week of
Oct. 29 -- Nov. 2, the Department of the Treasury was expected to
publish the application form enabling air carriers seeking to file for
approval under the \$10 billion loan guarantee program established by
the Air Transportation Safety and System Stabilization Act.

3

**[Airport Congestion and Delay]{.underline}**: During the week of
October 29^th^, the Department issued a Federal Regulation Notice
indefinitely suspending the closing date for comments requested on
market-based actions to relieve airport congestion and delay.