# Weekly Cabinet Report for 

# Week of November 26, 2001

# Read C. Van de Water

# Assistant Secretary for Aviation

#  And International Affairs

# The Secretary

###### 

###### WEEK OF NOVEMBER 26

**[American Airlines/British Airways (AA/BA) and United/bmi British
Midland Antitrust Immunity Cases]{.underline}:** The Department expects
to act on a motion filed by Northwest Airlines to strike three
statements submitted as answers by American in the American/British
Airways antitrust case. Northwest argues that the statements constitute
evidence by the applicants that should have been filed with the
application, and thus the filing of these statements as Answers to the
application is prejudicial to other parties. Answers to the motion were
filed November 21. The Department has recently consolidated the
American/British Airways and the United/bmi British Midland antitrust
cases, and called for answers to the consolidated applications by
December 10 and replies by December 17. The Department also requested
additional information from both sets of joint applicants.

**[Delta/Air France/Czech Airlines/Alitalia Antitrust
Immunity]{.underline}:** The Department expects to issue a tentative
decision in this alliance/antitrust immunity case in November. Responses
to the application have been filed and the record is ready for a
Department decision.

**[Air Transportation Safety and System Stabilization
Act]{.underline}**: Carrier applications for compensation for losses
attributable to terrorist activity were due November 13 for carriers
other than air taxis, which are due November 26. The Department began
receiving applications on November 1, and 154 applications were filed by
COB on November 15. We are now reviewing the applications and anticipate
making the first payments on November 19.

**OUTLOOK FOR NEXT FOUR WEEKS**

**[Midway Airlines]{.underline}**: Midway Airlines filed for Chapter 11
Bankruptcy on August 14 and suspended operations on September 12. It has
announced its intention to implement a new business plan on December 1.
The company attributes its inability to operate since September 12 to
the terrorist activity and seeks compensation for losses both for its
grounded operations through November and its proposed new service for
the month of December. On November 9, Midway filed information necessary
to begin the process of reestablishing its economic fitness which must
be completed before it can resume service. The Department has not made
any decisions regarding Midway\'s application.

**[GATS 2000 Negotiations]{.underline}**: The next round of World Trade
Organization (WTO) General Agreement on Trade in Services (GATS) 2000
negotiations will take place in Geneva during the first week of December
2001. Of particular interest to the Department, sectoral negotiating
proposals submitted by member countries will be considered during
December 4-7. Proposals on transport will be considered in 3 groups:
maritime, air, and all other transport. Regarding air transport
proposals, the United States continues to maintain that discussion must
be limited to the three air services that are already included in the
GATS: aircraft maintenance and repair, computer reservations system, and
selling and marketing.

**[U.S.-Chile Free Trade Agreement]{.underline}**: The last round of the
U.S.-Chile Free Trade Agreement negotiations is scheduled to take place
in Miami, from November 27 to December 4. The negotiations include
market access, customs/rules of origin, services, financial services,
investment, safeguards, dispute settlement, intellectual property
rights, e-commerce, government procurement, institutional issues, and
labor. DOT/OST staff will participate as part of the market access and
services negotiating teams and have contributed to the development of
U.S. positions in those areas.

**[Western Hemisphere Transportation Initiative]{.underline}**: The
Western Hemisphere Transportation Initiative's (WHTI) Executive
Committee will meet in Washington, D.C., on December 4, to discuss and
act on the agenda resulting from the Ministers' meeting in Punta del
Este last March. Particular emphasis will be placed on the development
of a mechanism for increased aviation safety and security in the Western
Hemisphere. In addition, member states will be informed of an
Inter-American Development Bank effort to make available a line of
credit for airport security projects in the region. Under the lead of
the Office of Aviation and International Affairs, FAA and other modal
representatives will participate in the WHTI Executive Committee
meeting.

####### RESULTS OF RECENT ACTIVITIES

**[S-1 Meeting with Israeli Minister of Transport]{.underline}**:
Secretary Mineta met with Israel Minister of Transport Ephraim Sneh on
November 9 for discussions on aviation issues and DOT assistance to
Israel in establishing a Coast Guard. The Israelis raised concerns on
security requirements at New York for onward services provided by North
American Airlines to El Al passengers, and the possible use of El Al Air
Marshalls on these flights; additional investment in North American
Airlines by El Al; and, the need for the Israelis to obtain an agreement
for Maintenance Implementation Procedures (MIP) to perform maintenance
at foreign repair stations. The FAA is in discussion with the Israeli\'s
on these issues. The U.S. Coast Guard will continue to work with the
Israelis on establishing a Coast Guard.

**[Land Transportation Standards Subcommittee (NAFTA)]{.underline}**:
Staff briefed interested industry representatives regarding outcomes
from the plenary meeting of the Land Transportation Standards
Subcommittee (LTSS) meeting which took place in Ottawa, Ontario, Canada
October 15-17, 2002. Briefings were provided on discussions regarding
commercial vehicle and driver standards, weights and dimensions,
transport of hazardous materials, border facilitation activities and
research and special projects initiatives. Working group meetings of the
LTSS will continue throughout the year. The next plenary meeting will be
in the United States in October 2002.

**[Air Carrier Loan Guarantee Program]{.underline}**: On November 13,
America West became the first airline to apply for a federal loan
guarantee under the Air Transportation Safety and System Stabilization
Act (P.L. 107-42). America West requested air carrier loan guarantees
totaling \$400 million in credit. The carrier asserted that, if the loan
guarantees were approved, they would be a catalyst for America West to
achieve nearly \$1 billion in liquidity from financial support and
concessions \-- from equipment suppliers, state and local authorities,
and others \-- over the next seven years. The carrier further claims
that if the loan guarantees were not approved, it would be forced to
seek bankruptcy protection in the near future and, ultimately, to cease
commercial operations because of the unavailability of
debtor-in-possession financing. America West has made tentative
arrangements for a seven-year loan supported by the issuance of a
Federal Credit Instrument issued or syndicated by Citigroup through its
subsidiaries, Govco Incorporated and Citibank, N.A. The staffs of the
Federal Reserve Board, the Department of the Treasury, and the
Department of Transportation have begun a close review of the
application

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