BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

American Airlines Multiple Price Advertising Violations of 49 U.S.C. § 41712 and 14 CFR 399.84(a) British Airways Multiple Price Advertising Violations of 49 U.S.C. § 41712 and 14 CFR 399.84(a) Docket DOT - OST - 2013 - 0024

Docket DOT - OST - 2013 - 0025

COMMENT S IN SUPPORT OF DOT INVESTIGATION INTO AMERICAN AIRLINES INC AND BRITISH AIRWAYS PLC VIOLATIONS AND REQUEST FOR JOINT INVESTIGATION OF IMMUNIZED INTEGRATED JOINT VENTURE PARTNERS

Communications with respect to this document should be sent to: Mike Borsetti 1 Montgomery St Ste 2500 San Francisco, CA 94104 mike@borsetti.com
21 March 20131 BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. American Airlines Multiple Price Advertising Violations of 49 U.S.C. § 41712 and 14 CFR 399.84(a) British Airways Multiple Price Advertising Violations of 49 U.S.C. § 41712 and 14 CFR 399.84(a) Docket DOT - OST - 2013 - 0024

Docket DOT - OST - 2013 - 0025

COMMENT S IN SUPPORT OF DOT INVESTIGATION INTO AMERICAN AIRLINES

INC AND BRITISH AIRWAYS PLC VIOLATIONS AND REQUEST FOR JOINT INVESTIGATION OF IMMUNIZED INTEGRATED JOINT VENTURE PARTNERS

M ATTER OF P UBLIC D ECEPTION IN D OCKET C OMMENTS In r eading the comments to date in these docket it is difficult not to notice how many people have been deceived by surcharges applied by British Airways or its DOT - immunized integrated joint venture partner American Airlines when re deem ing their award mileage credits for free flights. These comments include , to date, those of Sam Khatib in DO T - OST - 2013 - 0025 - 0003 , Kevin James O'Connor in DOT - OST - 2013 - 0025 - 0005 , Michael Ferris in D OT - OST - 2013 - 0025 -2

0008 , Sean Thornton Seelinger in DOT - OST - 2013 - 0025 - 0022, Anonymous in DOT - OST - 2013 - 0025 - 0023 , Zak Rakrouki in DOT - OST - 2013 - 0025 - 0024, J P in DOT - OST - 2013 - 0025 - 0026 , Margaret Ann Shooshani in DOT - OST - 2013 - 0025 - 0029 , Alex Goldberg DOT - OST - 2013 - 0025 - 0030 , Aaron Reese in DOT - OST - 2013 - 0025 - 0032 , Kevin Morrison in DOT - OST - 2013 - 0025 - 0036 , Anonymous in DOT - OST - 2013 - 0025 - 0038 , John Bishop in DOT - OST - 2013 - 0025 - 0040 , Regan Eliston Wright in DOT - OST - 2013 - 0025 - 0039 , Deirdre Elizabeth Seim in DOT - OST 2013 - 0025 - 0041 , Jack Sh ort in DOT - OST - 2013 - 0025 - 0048 , and Kathleen Voss in DOT - OST 2013 - 0025 - 0056 , as well as Alex Goldberg in DOT - OST - 2013 - 0024 - 0003 , Anonymous in DOT OST - 2013 - 0024 - 0006 and Shawn Cole in DOT - OST - 2013 - 0024 - 0009 . By way of background, prior to the implementation of the integrated joint venture in which American, British Airways, and Iberia would cooperate on all of their transatlantic flights and services , approved by the DOT in 2010 - 7 - 8 Final Order ( DOT - OST - 2008 - 0 252 - 3406 ), the (currently ) approximately 72 million 1 members in the American Airlines AAdvantage program were precluded from redeeming their award mileage credits for transatlantic travel on British Airways. With the implementation of the thusly approved integrated joint venture on 1 October 2010 , American Airlines extended the ability to redeem AAdvantage award mile age credits for

1 American Airlines, Inc, Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2012 . Retrieved 21 March 2013 from http://phx.corporate ir.net/External.File?item=UGFyZW50SUQ9NDk2MDc4fENoaWxkSUQ9NTM0ODgyfFR5cGU9MQ==&t=13

transatlantic travel on British Airways , posting on an online F.A.Q. 2 that British Airways would

“ assess an added surcharge ” 3 , the fuel surcharge. 1) A MERICAN DIRECTLY BEN EFITS FROM THE “B RITISH A IRWAYS ” FUEL SURCHARGE IT CHARGES ON AWARDS I t appears that American Airlines directly benefits from the fuel surcharge revenue assessed on these redemptions since, as it itself states 4 , American Airlines and British Airways

“ share the revenue and treat customers the same regardless of which airline actually flies the aircraft ” (emphasis added) . Fuel surcharge is a carrier - imposed fee, and indisputably a form of revenue for the carrier. 2) AA DVANTAGE MEMBERS HUR T BY REPLACEMENT OF AA “ METAL NEUTRAL ” AIRCRAFT WITH BA’ S AAdvantage members have been irreparably hurt by the post - integrated joint venture substitution of “metal neutral” American Airlines - operated aircraft with “metal neutral” Bri tish Airways - operated aircraft on routes to London . W hile American Airlin es and British Airways reap the benefits of the integrated joint venture, AAdvantage members are no longer be able to obtain non - stop award travel from Boston from 31 March without paying an additional $458 per 2 There was no mention of any surcharges on the email communications to members sent on 1 October 2010 and signed by Maya Liebman. 3 From http://www.aa.com/i18n/utility/jba - faqs.jsp , Retrieved 21 March 2013: “Q. Will I have to pay an added surcharge when I use my miles for travel on American Airlines? A. No. American Airlines does not assess additional charges beyond required government taxes and fees for passengers traveling on American on AAdvantage award tickets. Q. How much are the added charges assessed by British Airways and Iberia? A. British Airways and Iberia assess an added s urcharge which varies based on the origin, destination, cabin etc. At the time of booking, the reservation agent will be able to provide you with the amount of the surcharge that applies to the itinerary you've chosen.” 4 American Airlines, Inc, Background Information: Antitrust Immunity Application process . Retrieved 21 March 2013 from http://www.aa.com/content/images/aboutUs/newsroom/ATIBackgrounder.pdf4

roundtrip (at current Economy class fuel surcharge levels) 5
. This development is clearly against the public interest.



# Before ( 29 March) 

# After ( 31 March)

3) H ARM TO THE P UBLIC Thirdly , the unreasonabl y high level of fuel surcharges has harmed the 72 million AAdvantage members by devaluing the purchas ing power of their award mileage credits of up to 7 5 % as per the comment by Ms. Voss (DOT DOT - OST - 2013 - 0025 - 0056 ) 6 . This is the equivalent of wiping out the value of up to 4 57 billion outstanding AAdvantage award mileage
5 On that date the flight formerly operated as AA 108 will be replaced by an additional BA - operated flight, maintaining the same total integrated joint venture frequency but completely eliminating AA - operated service. Source: search on http: //aa.com performed on 21 March 2013 6 In my experience on the NYC - LHR route in low season redeeming an Economy class award costs as much as 86% of purchasing the ticket, with the vast majority of this being fuel surcharges. American still wants 100% of the agreed to award mileage credits in addition to this.5

credits , which is clearly against the public interest since most of the public holds award mileage credits. 4) A NECDOTAL D ISTORTION IN A WARD A VAILABILITY B ASED ON “M ETAL N EUTRAL ” C ARRIER T he vast majority of award space on the integrated joint venture is anecdotally available only on those flights where the integrated joint venture partners charge fuel surcharges, i.e. those “metal neutral” ones operated by British Airways. Fewer than 35% of the award seats to London seems to be available on American Airlines, 35% being AA’s approximate market share to London. This anecdotal information can be confirmed by a quick analysis of the traffic as reported to the DOT, and, if true, should be investigated further.

A CTION TO B E T AKEN I encourage the Secretary to listen to the commenters and include these issues in its investigations, which are a deceptive practice of the integrated joint venture airlines involved. Award mileage credit s are an integral part of what th e public purchase s with an airline ticket , and are marketed by the airlines as means to be awarded with aspirational free travel , often to pristine sandy beaches or far - away places i . The name itself, award , is synonym of reward , and in the English language it means something that is given or bestowed 7 , not sold. With the imposition of fees that are as high as 7 5 % ( and higher), it is neither given nor bestowed, and to call it an award is, a prima facie , deceitful . 7 Sources: http://www.merriam - webster.com/dictionary/award and http://dictionary.reference.com/browse/award6

R ESOLUTION In view of the preponderant evide nce and public support, the Secretary should open a joint investigation under 49 U.S.C. § 41712 without further delay into the deceitful practice by the DOT - immunized integrated joint venture partners American Airlines and British Airways as it pertains to fuel surcharges on, at a minimum, transatlantic routes . T he Secretary should also exercise its duty under 49 USC § 41309 (b) (1) and start a periodic review of Final Order 2010 - 7 - 8 ( DOT - OST - 2008 - 0252 - 3406 ) to end its approval on the basi s of the failure of the applicants to implement fully the application approved , specifically the

“ full reciprocity of frequent flyer benefits between American and British Airways ” listed in the section en titled “ The Proposed Alliance Will Create Significant New Consumer Benefits ” 8
. Submitted via regulations.gov on 21 March 2013 /s/ Mike Borsetti

i American Airlines currently markets its program with a video appearing at http://www.aa.com/i18n/AAdvantage/programInformation/main.jsp and available directly at http://link.brightcove.com/services/player/bcpid1335016593001?bckey=AQ~~,AAABDmhAyHE~,UBpv5ReJ C5dAwUeG7ebCLCtymWCHLb - &bctid=1416302117001 As typical with the marketing of these programs, just the first minute of the video contains all of these aspirat ional messages

8 Joint Application of AMERICAN AIRLINES, INC., BRITISH AIRWAYS PLC, FINNAIR OYJ, IBERIA LÍNEAS AÉREAS DE ESPAÑA, S.A, ROYAL JORDANIAN AIRLINES under 49 U.S.C. §§ 41308 and 41309 for approval of and antitrust immunity for alliance agreements (Document DOT - OST - 2008 - 0252 - 0001 ), Page 16. Same statement repeated o n page 23 .78 \9