Order 2010-3-10 Served: March 11, 2010



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 11 th Day of March, 2010

U.S.-Japan Alliance Case Docket DOT-OST-2010-0059

Joint Application of:

ALL NIPPON AIRWAYS CO., LTD., CONTINENTAL AIRLINES, INC.

and UNITED AIR LINES, INC.

under 49 U.S.C. §§ 41308-41309 for approval of and antitrust immunity for alliance agreements Docket DOT-OST-2009-0350

Joint Application of:

AMERICAN AIRLINES, INC.

and JAPAN AIRLINES INTERNATIONAL CO., LTD.

under 49 U.S.C. §§ 41308-41309 for approval of and antitrust immunity for alliance agreements Docket DOT-OST-2010-0034

ORDER CONSOLIDATING PROCEEDINGS

S UMMARY

By this order, we grant a motion to consol idate two pending applications for antitrust immunity. From this date forward, we will consider the applications of Star Alliance members All Nippon Airways, Continental Airlines, and United Air Lines (“NH/CO/UA”) and oneworld alliance members American Airlines and Japan Ai rlines (“AA/JL”) in a single new proceeding, to be called the U.S.-Japan Alliance Case, in Docket DOT-OST-2010-0059.2 B ACKGROUND

On December 23, 2009, the Star carriers filed the NH/CO/UA application, which included a written application, copies of allian ce agreements, and supporting documents. 1 Seven weeks later, on February 12, 2010, the oneworld carriers filed the AA/JL application, which included a written application and copies of alliance agreements; 2 supporting documents were submitted separately

on March 8 and March 9. 3 Both applications describe plan s by the alliance partners to launch joint ventures for the conveyance of transpacific traffic, focused on the U.S.-Japan market.

On February 12, in connection with the filing of their application, the oneworld carriers moved to consolidate the two proceedings. 4 American and JAL assert that the applications present common issues, since both will require the Department to examine the state of competition on routes between and beyond the United States and Japan. Consolidation is appropriate, they maintain, because it would enable the Department and the parties to address the issues more efficiently, and it would not dela y a decision on either application. 5 Quoting extensively from our

consolidation order in the U.S.-U.K. Alliance Case of 2001, American and JAL argue that all of the Department’s reasons for consolidating matters in the U.S.-U.K. cases apply with equal force in the pending U.S.-Japan cases.

The Star carriers do not oppose consolidation. 6 They do, however, express the concern that

consolidation could result in de layed approval of their applicat ion because the AA/JL filing was submitted after the NH/CO/UA filing, and because th e AA/JL filing is not as complete. Noting that consolidation is not required under the circum stances, the Star carriers emphasize that their consent is based on the premise that “the Depart ment determines that such action will expedite, not delay, a final decision on th e NH/CO/UA application, thereby enabling implementation of the U.S.-Japan Open Skies Agreement at the earliest possible date.” 7

D ECISION

We will grant oneworld’s motion and consolidate the existing dockets into a single new proceeding, to be called the U.S.-Japan Alliance Case . Our decision is consistent with Rule 13 of the Department’s Rules of Practice, which states in relevant part that

1 Joint Application of NH/CO/UA (Dec. 23, 2009).

2 Joint Application of AA/JL (Feb. 12, 2010).

3 Letter from Carol Gosain, Attorney for Japan Airlines (Mar. 8, 2010) (noting the filing of confidential documents); Letter from Carl Nelson, Jr., Attorney for American Airlines (Mar. 5, 2010) (noting the filing of confidential documents).

4 Joint Motion of AA/JL (Feb. 12, 2010).

5 Joint Motion of AA/JL at 1-4 (Feb. 12, 2010) (citing Order 2001-11-10 in Docket DOT-OST-2001-11029 (Nov. 20, 2001)).

6 Joint Answer of NH/CO/UA (Feb. 24, 2010).

7 Joint Answer of NH/CO/UA at 1 (Feb. 24, 2010).3 [t]he Department, upon its own initiativ e or upon motion, may consolidate for hearing or for other purposes or may c ontemporaneously consider two or more proceedings that involve substantially the same parties, or issues that are the same or closely related, if it finds that such conso lidation or contemporaneous consideration will be conducive to the prope r dispatch of its business and to the ends of justice and will not unduly delay the proceedings. 8

We have determined that the pe nding applications involve esse ntially the same issues. To resolve both requests for immunity, we will need to consider the current and future state of competition for air services between the United States and Asia, focused on the U.S.-Japan market, as well as the role of th e immunized alliances in promoting or lessening that competition. The overlap in the issues is driven by factual similarities. Both applications involve requests by U.S. and Japanese airlines to form integrated join t ventures with the goal of enhancing transpacific

services.

Moreover, both applications are predicated on the implementation of an open-skies agreement between the United States and Japan. To wit, th e applicants in both cases make the same core argument: the immunized alliances will generate substantial consumer benefits and enhance competition in an “open-skies” environment; however, the implementation of the open-skies agreement between the United States and Japan is contingent upon the Depa rtment’s expeditious review of the antitrust immunity applications. 9 Given the convergence of the core arguments and issues, our analysis and findings concerning one application are lik ely to relate to the other.

We find that our ability to analyze and resolve the issues will be improved by consolidation of the applications. While consolida tion is never required, here it is conducive to the proper dispatch of our business and to the ends of justice. 10 The benefits for admini strative efficiency are compelling in these cases. As in the U.S.-U.K . Alliance Case, consolidation will, under these circumstances, avoid duplication of resources, allow parties to address common issues more efficiently, and allow for cross-referencing of ev idence. It will not unduly delay the proceedings. To the contrary, a more efficient process will aid the consideration and resolution of both applications. Additionally, no party o pposes the motion to consolidate.

We understand the Star carriers’ concern ab out timing and the importance they place on expeditious consideration of their application, which was, in fact, submitted before oneworld’s application. However, with oneworld’s recent filing of supporting documents, we believe that both cases have a similar procedural posture at this point in time and all applicants express the same desire for expeditious consideration. Thus , the applicants share the same incentive to be responsive to evidentiary needs.

Therefore, we hereby consolidate the caption ed pending applications into a single new proceeding in Docket DOT-OST-2010-0059. Applicants and interested parties should direct all

8 14 C.F.R. § 302.13(a).

9 Joint Application of NH/CO/UA at 2-6 (Dec. 23, 2009); Joint Application of AA/JL at 2-6, 13-16, 24 (Feb. 12, 2010).

10 See 14 C.F.R. § 302.13(a); 49 U.S.C. § 46102(a).4 future filings to the new docket. For the purposes of accessing the confidential material in the record, we will deem previous submissions of c onfidentiality affidavits, submitted in either predecessor case in accordance with the Department’s Rule 12 pr ocedures, as satisfactory to permit access to all submissions in the new, consolidated case. 11

A CCORDINGLY :

1. We grant the joint motion of Am erican Airlines, Inc. and Japa n Airlines International Co., Ltd., submitted on February 12, 2010, to consolidate the captioned proceedings;

2. We consolidate the captioned pr oceedings into a new case, to be known as the U.S.-Japan Alliance Case, Docket DOT-OST-2010-0059;

3. We direct applicants and inte rested parties to submit all future filings concerning the pending applications in th e consolidated docket; and

4. We will serve this order upon interested parties.

By:

SUSAN L. KURLAND Assistant Secretary for Aviation

and International Affairs

(SEAL)

An electronic version of this document is available at http://www.regulations.gov

11 Cf . American/ British Airways II Case, Order 2001-11-10 at 13-14 (Nov. 20, 2001) (deeming previous submissions of affidavits in separate dockets as su fficient for accessing confidential information in the consolidated docket).