**BEFORE THE**

**DEPARTMENT OF TRANSPORTATION**

**WASHINGTON, D. C.**

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- OST

- 2013

- FREQUENCY PROCEEDING : 0072

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**ANSWER OF AMERICAN AIRLINES, INC.** 

Communications with respect to this document should be sent to:

VIRASB VAHIDI WILLIAM K. RIS, JR. Senior Vice President

- Senior Vice President

- Marketing and Planning Government & Regulatory and Chief Commercial Officer Affairs American Airlines, Inc. American Airlines, Inc. P.O. Box 619616, MD 5634 1101 17 th Street, N.W. DFW Airport, Texas 75161 Washington, D.C. 20036

ROBERT A. WIRICK FRANCIS C. HEIL Managing Director, Regulatory Senior Attorney and International Affairs American Airlines, Inc. American Airlines, Inc. 1101 17 th Street, N.W. P.O. Box 619616, MD 5635 Washington, D.C. 20036 DFW Airport, Texas 75261 (202) 496

- 5642 (817) 963

- 0394 francis.heil@aa.com robert.wirick@aa.com

May 3, 20131 **BEFORE THE DEPARTMENT OF TRANSPORTATION**  **WASHINGTON, D. C.**

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**ANSWER OF**  **AMERICAN AIRLINES, INC**

SUMMARY

American Airlines, Inc. has applied for 14 weekly Brazil

frequencies to provide daily nonstop service to Sao Paulo from

Los Angeles starting November 20, 2013 and from Chicago

starting November 21, 2014. American's prop osal, which

features opening Los Angeles as a new U.S.

- flag gateway to

Brazil and introducing intra

- gateway competition at Chicago,

should be granted ahead of the request by Delta Air Lines for

21 of the 28 (or 75%) Sao Paulo

- eligible frequencies available

for allocation that Delta would use at its existing gateways.

As part of the consideration in the Delta/US Airways

LGA/DCA slot swap, Delta agreed to sell to US Airways seven

Brazil frequencies that Delta is currently using to operate

daily service betw een Detroit and Sao Paulo. In what we

believe is a first in the annals of CAB or DOT route

proceedings, Delta is now asking the Government to replace the

authority it has sold because otherwise Detroit's nonstop2 flights to Sao Paulo will have to be suspen ded. As a matter of

sound polic y , the Department should not reward Delta's

improvident behavio r

. If Delta's tactic succeeds, American or

US Airways would in e f fect be paying Delta's debt since seven of

the 28 opportunities would be given to Delta to recov er what it

sold and would no longer be available for allocation to either

of the other two applicants.

Delta presently holds 23 frequencies that can be used to

serve Sao Paulo, but only operates 21. Delta could be using

its two Sao Paulo dormant frequen cies by scheduling peak day

of

- week service on its existing Sao Paulo routes, and should

not be considered for an award of additional Brazil authority

while existing Sao Paulo rights are dormant.

Delta's first choice for 2013 is Atlanta

- Sao Paulo, a

rout e Delta already serves. If Atlanta need s additional

service, Delta would be providing it with its two Sao Paulo

dormant frequencies or by taking advantage of extra sections

allowed by Brazil.

Delta’s second choice for 2013 is New York

- Sao Paulo. At

Ne w York, as at Atlanta, Delta already operates daily nonstop

service to Sao Paulo. And at New York, as at Atlanta, Delta

does not operate its two dormant Sao Paulo frequencies or use

the opportunit y provided by Brazil to operate extra sections

.3 Moreove r , the New Y ork

- Sao Paulo route currently enjoys

nonstop service by four carriers (United, American, and T AM in

addition to Delta) operating a total of 35 daily nonstops.

American's 2013 proposal to open Los Angeles as a new

U.S.

- flag nonstop gateway t o Sao Paulo should clearly have

priority over Delta's proposal for cumulative flights at either

Atlanta or well

- served New Y ork. Los Angeles is the largest

U.S.

- Brazil O&D market without daily nonstop service, and that

gap should be filled with an award h ere to American.

American's 2014 proposal to bring intra

- gateway

competition to the Chicago

- Sao Paulo route, presently a United

Air Lines monopol y , should also have priority for one of the

available awards. Chicago is the six th largest O&D market to

Bra zil, and American will o f fer roundtrip on

- line connections

to 77 U.S. behind cities compared to just 1 1 by Delta at New

Y

ork.

American will operate 247

- seat B777 aircraft to Sao Paulo

from both Los Angeles and Chicago, compared to 21 0

- seat B767

equipment proposed by Delta on each of the three routes it is

seeking. That represents a 17.6 percent capacity advantage for

American or 27,010 annual roundtrip seats. In selection cases,

the Department has found larger capacity equipment to be a

significant deci sional factor.4 Delta presses for its selection by arguing that American

is "dominant" in the U.S.

- Brazil market and should not receive

additional frequencies. Delta is in no position to make such a

claim inasmuch as it sold seven of its Sao Paulo eligib le

frequencies to US Airways, is holding dormant Sao Paulo rights,

does not operat e extra sections, and in recent years has

canceled Los Angeles

- Sao Paulo nonstop service and withdrawn

from Recife, Fortaleza, and Manaus. In any event, the

Department often select s carriers with a strong market presence

over applicants with fewer existing routes by focusing on the

merits of the propos als rather than merely adding up existing

frequencies.

Finall y , Delta contends that American and US Airways

should be consid ered a single applicant in view of their

proposed merge r

. In the U.S.

- Japan Alliance Case , the

Department treated United and Continental as separate entities

even after their merger had received shareholder approval and

the transaction had closed because to do otherwise would have

prejudged the outcome of th eir still pending de facto route

transfe r

. The Department should follow the same policy here

where the merger process is at a far earlier stage.

These and other matters are discussed in further detai l

below.5 **I. DE**  **LT A**  **CHOSE T**  **O SELL**  **SEVEN OF ITS**  **SAO P**  **AULO ELIGIBLE**  **FREQUENCIES T**  **O US**  **AI R**  **W**

**A**

**YS, AND CAN ON**  **L Y**  **BLAME ITSELF**  **IF DETROI**  **T 'S SAO**  **P AULO SE**  **R VICE**  **HAS T**  **O BE**  **SUSPENDED AS**  **A RESU**  **L T** 

Delta has come before the Department with an extraordinary

and unpreceden ted request. In the Delta/US Airways LGA/DCA slot

swap ( 76 Federal Register 63702, October 13, 2011 )
, Delta agreed

to sell seven of its weekly Sao Paulo eligible frequencies to US

Airways as part of the package of consideration for the trans

action. Delt a did so voluntarily and with full knowledge that

by contractually committing to sell this authority to US Airways

it would be required to suspend Sao Paulo service on March 1,

2015, the agreed effective date of the transfer.

Thus, Delta is asking that e ither American or US A irways

fund a portion of the cost of its LGA/DCA swap by having the

Department take one of the four opportunities off the table and

hand it to Delta because otherwise Detroit would lose service

for six months in 2015. This is brazen bootstrapping that

clearly should not be countenanced by the Department, as to d o

so would set a terrible precedent. Knowing that a route case is

on the horizon, a carrier could simply sell the relevant limited

entry authority, pocket the proceeds, and en treat the Department

to replace the authority with a new award to avoid interruption

of service.6 I n its April 24, 2013 supplement, Delta attempts to justify

selling Sao Paulo frequencies by contending that otherwise the

LGA/DCA slot swap would not have gone forward: "While Delta

would obviously have preferred not to transfer any of its

unrestricted Brazil frequencies to US Airways, this was a

necessary part of the consideration needed to close the LGA/DCA

transaction" (p. 8). Such a statement lacks cr edibility. Out

of all of Delta's assets (including cash), surely other

consideration was available to close the LGA/DCA deal if Delta

"preferred" to keep its Sao Paulo rights.

Delta announced the US Airways transaction (and revealed

the sale of its Sao Paulo authority) on August 1 2, 2009. Less

than a week later, Del t a announced suspension of several Brazil

routes "for the fall season," including Los Angeles

- Sao Paulo

(effective August 18), Atlanta

- Recife (effective August 19), and

Atlanta

- Fortaleza (eff ective August 31). 1 Suspension of the

first two routes turned out to be permanent, and while Delta did

resume Atlanta

- Fortaleza service, it permanently canceled those

flights as well in September 2010 (Exhibit AA

- R

- 1 ).

1 http://www.ajc.com/news/business/deltas

- flights

- to

- brazil

- will

change/nQLmd/7 Delta calls its application "mo dest" by arguing that its

"net" request is for 14 frequencies, not 21, because it will be

transferring seven Sao Paulo frequencies to US Airways ( Delta

Supplement, p. 3 ). Despite Delta's clever twist, the fact

remains that 28 frequencies are at issue for allocation and

Delta is asking for 21 of them. It is also a fact that Delta

expects either American or US Airways to pick up Delta's tab.

The Department should not step in to bail Delta out at the

expense of the other applicants.

**II. DE**  **LT A**  **HAS TWO**  **FREQUEN CIES**  **TH A**  **T IT**  **COULD BE**  **USING T**  **O SE R**  **VE SAO**  **P AULO**  **AND HAS THE**  **OPPO R**  **TUNITY T**  **O F**  **L Y**  **EXTRA SECTIONS**  **T O**  **SAO P**  **AULO BUT**  **IS NOT**  **DOING SO** 

Delta holds 23 weekly Sao Paulo eligible frequencies but

operates only 21. See Delta Application
, D OT

- OST

- 2013

- 0045
,

March 4, 2 013 p. 2; Exhibit DL

- 101; and Exhibit AA

- R

- 2

. A

carrier holding authority it could be using to serve a

restricted route should not be granted additional rights in the

same market
, as that would be inconsistent with "the

Department's oft

- stated and longsta nding policy not to permit

valuable rights to remain unused for an extended period" ( Order

2005

- 2

- 10, February 16, 2005, p. 3 )

.8 I n contrast to American, Delta is not taking advantage of

the extra sections that Brazil permits U.S. carriers to

operate. Delta's month

- by

- month published schedules from

January 20 09 to date show only two month s (January and February

2009) when Delta operated more than daily service to Sao Paulo

from any of its three gateways, Atlanta, Detroit, and New York

(Exhibit AA

- R

- 2 ). That Delta has passed up the opportunity to

operate extra sections speaks volumes about the absence of need

for an award of additional frequencies for Delta’s existing

gateways.

By failing to make full use of authority it already holds,

Delta cannot pl ausibly claim priority over other applications,

including American's proposals to open a new gateway at Los

Angeles and to bring intra

- gateway competition to the Chicago

Sao Paulo market and challenge United's monopoly on nonstop

service.

**III. DE**  **LT A'S**  **FIRST 2**  **013 CHOICE, A**  **TLAN T**  **A**
**- SAO**  **P AULO,**  **IS A**  **ROUTE IT**  **ALREADY SE R**  **VES AND SHOULD**  **NOT H**  **A VE**  **PRIORITY OVER**  **AMERICAN'S PROPOSAL**  **T O**  **OPEN LOS**  **ANGELES AS**  **A NEW**  **G A**  **TE W**  **A**

**Y**

Delta's first choice for an award is Atlanta, where Delta

already operates daily nonstop service to Sa o Paulo (Exhibit

DL

- 101 ). Delta is the only applicant not proposing new gateway

daily nonstop service to Brazil. American will provide new

gateway service from Los Angeles, and US Airways w ill open

Philadelphia as a new Brazil gateway

.9 Service from a n ew gateway has long been a key carrier

selection factor. In the 2007 U.S.

- China Combination and All

Cargo Frequency Allocation Proceeding
, Order 2007

- 1

- 4, January

6, 2007, the Department selected United (proposing W ashington

as a new gateway to China) ove r Continental (proposing

cumulative service to China from New Y ork) :

" W e recognize that adding U.S. carrier nonstop New Y ork/Newark

Shanghai service to the New Y ork/Newark

- Beijing services already in place would provide significant service benefits. Howeve r , we have tentatively determined that, given the New Y ork/Newark

China services that already exist, the need for first

- ever nonstop service to China from the W ashington, D.C. metro area is a more urgent need and will result in greater overall public bene fits than Continental's additional Newark

- Shanghai service" (p. 19).

See also 2005 U.S. Argentina Combination Frequency

Proceeding , Order 2005

- 10

- 18, October 5, 2005 (selecting

Continental because it would open Houston as a new gateway to

Buenos Aires); 1999 U.S.

- Italy Combination Service Case , Order

1999

- 2

- 27 (show

- cause), February 23, 1999, p. 4 ( “ the record

supports a tentative finding that we can derive major public

benefits from an award in this case by providing for new gateway

services to Ital y

. This consideration strongly supports Delta's

Atlanta

- Rome application because only Delta would open a new

gateway to Italy ” ).10 Before the Department considers awarding rights to Delta

in this proceeding for a second daily flight from Atlanta to

Sao Paul o, American should receive frequencies to open Los

Angeles as a nonstop gateway to Brazil with daily service.

Indeed, Delta itself recognized the importance of Los Angeles

Sao Paulo nonstop service when it applied for frequencies to

serve the route in 200 8. Here are some of the things Delta

said in the 2008 U.S. Brazil Combination Frequency Allocation

Proceeding
, DO T

- OS T

- 2008

- 0307 :

o "Delta will .

. . open a brand new U.S. carrier gateway

connecting the second largest metropolitan area in the United

Stat es to the largest in Brazil. Delta will bring Los Angeles

its only U.S. carrier nonstop service to Brazil. In fact, Delta

will provide the only such service from anywhere on the W est

Coast to any point in South America" (Delta Supplement, DO T

OS T

- 2008

- 0307
, October 31, 2008, p. 1)

.

o "The only competing proposal is American's.

. . .
American would open no new U.S. Brazil gateway and leave the

W est Coast without U.S. carrier scheduled service to Brazil"

(id., p. 2).

o "Los Angeles is the largest metropolit an area in the

United States without U.S.

- flag service to Brazil" (id.,

Exhibit DL

- 209).11 Delta started Los Angeles

- Sao Paulo nonstop flights on May

21, 2009 but cancelled service on February 26, 2010

. W e are

confident that American's Los Angeles

- Sao Pa ulo operations will

succeed where Delta failed in light of American's stronger

identity and presence both at Los Angeles and in Brazil.

Los Angeles

- Sao Paulo is the largest U.S.

- Brazil market

without daily nonstop service (Exhibit AA

- 3). Even in the

abs ence of nonstop service by a U.S. carrier, Los Angeles

- Sao

Paulo
, w ith 88,428 annual booki n gs, is four times bigger than

Atlanta

- Sao Paulo (22,614) , and five times the size of Detroit

Sao Paulo (19,409)

. American is well positioned to introduce

nonstop fl ights between Los Angeles and Sao Paulo using seven of

the 14 frequencies available on October 1, 2013 based on its

identity at Los Angeles and the strength of its operations at

that gateway and in the overall U.S.

- Brazil market

.

American and American E agle operate 143 daily departures

at LAX to a total of 43 cities, including points in China,

Japan, Europe, Mexico, and Canada (Exhibit AA

- 4). American's

proposed Los Angeles

- Sao Paulo nonstop service will offer

substantial public benefits in the large lo cal market along with

convenient on

- line connections to numerous behind cities in the

U.S. and in other countries.12 American's proposed roundtrip elapsed time for Los

Angeles

- Sao Paulo nonstop service is 24:10 (Exhibit AA

- R

- 3 ).

The fastest Los Angele s

- Sao Paulo roundtrip connecting service

Delta shows is 35:08 via Atlanta, 41:15 via New Y ork, and 39:06

via Detroit (Exhibit AA

- R

- 3 ). In the 2005 U.S. Argentina

Combination Frequency Proceeding, Order 20 0 5

- 10

- 2, the

Department selected Continental for nons top service from the

Houston gateway because, among other reasons, "the best service

in the Houston

- Buenos Aires market requires time consuming one

stop on

- line connections via existing gateways" (p. 5). Los

Angeles, the largest U.S.

- Brazil market lacking daily nonstop

service, clearly merits the dramatic improvement in travel time

that American will provide.

In awarding 2013 frequencies, the Department should

clearly favor American over Delta. American will provide new

gateway service from Los Angeles to Sao Paulo
, a far more

beneficial use of limited rights than Delta's proposal to

merely add another flight at Atlanta.13 **IV. DE**  **LT A'S**  **SECOND 2013 CHOICE**  , **NEW YORK** 

**- SAO**  **P AULO,**  **IS A**  **NOTHER ROUTE IT**  **ALREADY SE**  **R VES**  **AND SHOULD NOT**  **H A**  **VE PRIORITY**  **OVER AMERICAN'S**  **CHICAGO**

**- SAO**  **P AULO**  **PROPOSAL**

The New Y ork

- Sao Paulo market currently enjoys nonstop

service not only from Delta but from United, American, and

T

AM (Exhibit AA

- R

- 4 ). The combined weekly frequencies total

35, and would rise to 42 if Delta adds a second tr ip
, or six

times the daily Sao Paulo service at Chicago that is operated

by United Air Lines. American will introduce intra

- gateway

competition to the Chicago

- Sao Paulo market, with substan

tially greater public benefits than Delta's plan to

duplicate the service it already provides to Sao Paulo from

New Y ork.

Chicago is a major hub for American, which together with

American Eagle operates 394 daily departures at ORD to a total

of 121 cities, including points in China, Japan, Europe, Mexico,

Canada
, and the Caribbean (Exhibit AA

- 6). American's proposed

Chicago

- Sao Paulo nonstop service using seven of the 14

frequencies available on October 1, 2014 will benefit the public

with head

- to

- head intra

- gateway competition against United in

both the local and con necting markets.

While Delta claims 48 on

- line connecting points via New

Y

ork (D elta Supplement
, p. 4 ), its detailed schedules reveal

actual roundtrip on

- line connections to Sao Paulo for just 1 1

U.S. behind cities, less than 15 % of the 77 U.S. cities A merican14 will connect with roundtrip service via its Chicago hub

(Exhibit s AA

- R

- 5, AA

- R

- 6 ). See Order 2005 U.S. Argentina

Combination Frequency Proceeding, Order 20 0 5

- 10

- 2, where the

Department, in selecting Continental's proposal to serve Buenos

Aires fro m Houston over Delta's proposal from New Y ork, pointed

out that "Delta would provide on

- line connecting service via New

Y

ork to only 23 cities that Delta already serves through Atlanta"

(p. 5).

Finally, American's proposed roundtrip elapsed time for

Chic ago

- Sao Paulo nonstop service is 21:15 (Exhibit AA

- R

- 7 ).

The fastest Chicago

- Sao Paulo roundtrip connecting service Delta

shows is 31:10 via Atlanta and 32:10 via Detroit ; Delta does not

propose roundtrip connections for Chicago via New York (Exhibit

AA

- R

- 7 ). See Order 2010

- 10

- 2, p. 5.

For all of these reasons, American's Chicago

- Sao Paulo

proposal should be favored over Delta's plan to add a sixth

daily frequency to Sao Paulo from New York.

**V. AMERICAN'S**  **247**

**- SE**  **A T**  **B777 AIRCRAFT**  **REPRESENTS A**  **17.6 PERCE**  **NT CA P**  **ACITY AD**  **V AN**  **T AGE**  **OVER DE**  **LT A'S**  **210**

**- SE**  **A T**  **B767 AIRCRAFT** 

American will use 247

- seat B777 aircraft on each of its

proposed routes to Sao Paulo
, a 17.6 percent capacity advantage

over Delta's 210

- seat B767s (Exhibit AA

- R

- 8 ). Indeed, all of

Delta's propo sed service would be provided with 210

- seat B767

equipment
, the smallest capacity in this case (Exhibit AA

- R

- 8 ).15 The Department has recognized the benefits of larger

capacity in making limited entry awards. For example, in Order

2007

- 1

- 4 selecting United 's W ashington

- Beijing proposal over

Continental's for New Y ork/Newark

- Beijing, the Department stated

that "United's B

- 747 service would provide 253,310 seats between

the U.S. and China on an annual basis, 22% more capacity than

C ontinental" (p. 17). See a lso 2010 U.S.

- T okyo Haneda

Combination Services Allocation Proceeding
, Order 2010

- 5

- 7, May

7, 2010 (show

- cause), granting Los Angeles

- Haneda slots to Delta

where "through utilization of B747 aircraft, Delta would inject

more capacity into the U.S.

- T okyo ma rket

. . . . Thus, Delta's

proposed Los Angeles

- Haneda service would provide passengers the

largest capacity in this large market to o f fer a practical

alternative service option to the existing Narita services

available from Los Angeles" (p. 10).

Delta h as a number of aircraft types in its fleet offering

more seats than the B767

- 300ER. Delta operates 246

- seat B767

-

400ERs, 269

- seat B767

- 200ERs, as well as larger aircraft. See

http://www.delta.com/content/www/en_US/traveling

- with

us/airports

- and

- aircraft/

. Delta should upg rade its existing

Sao Paulo service before asking for additional frequencies

.16 **VI. IN**  **SELECTION CASES,**  **THE DE**  **P A**  **R TMENT**  **OFTEN CHOOSES**  **APPLICANTS WITH**  **A STRONG**  **MARKET PRESENCE**  **BY FOCUSING**  **ON**
**THE REL**  **A TIVE**  **MERITS OF THE**  **G A**  **TE W**  **A**

**Y PROPOSALS**  **R A**  **THER THAN**  **MERE L**  **Y ADDING**  **UP EXISTING FREQUENCIES** 

Delta attempts to bolster its case by arguing that American

is "dominant" in the U.S.

- Brazil market and should n ot receive

additional frequencies. Delta is in no position to make such a

claim inasmuch as it sold seven of its Sao Paulo eligible

frequencies to US Airways, holds dormant Sao Paulo rights, does

not operat e extra sections, and proposes the smallest capac ity

equipment among the applicants. Moreover, Delta’s only U.S.

- Rio

de Jan e ir o service is a daily flight from Atlanta (Delta Exhibit

101) even though ample Rio de Jan e iro frequencies are available

for allocation.

But putting those matters aside, the De partment has often

selected incumbents with a strong market presence over

applicants with fewer existing routes by focusing on the

relative merits of each proposed gateway rather than simply

adding up and comparing existing routes and frequencies.

For ex ample, in the 2007 U.S.

- China Combination and All

Cargo Frequency Allocation Proceeding
, United (a strong

incumbent with numerous U.S.

- China routes) was selected over

Continental and American (recent entrants in the China market

with a single route each) b ased on the merits of United's

W ashington

- Beijing proposal and despite claims that such a17 "dominant" carrier should not receive additional authorit y

. As

the Department concluded in Order 2007

- 1

- 4, January 9, 2007

(show

- cause),

"While we have of course tak en note of the competition arguments asserted against United, the circumstances of this particular case lead us to tentatively conclude that the benefits of gaining the first

- ever nonstop service to China from a new gateway representing the largest unserve d O&D market in this proceeding, coupled with the capacity to maximize the benefits of that new service, outweigh the arguments that for competitive reasons the frequencies should have instead been awarded to a di f ferent carrier" (p. 19).

In final Order 2007

- 2

- 10, the Department was more specific

on this point:

" W e are not persuaded by Continental's argument that because of United's position as the carrier having the largest number of frequencies in the market, United's selection is counter to the Depart ment's pro

- competition polic y

. W e disagree.

. . . While considering the number of frequencies and the current service of each applicant.

. . .we weighed the various carrier selection factors in light of the particular circumstances presented in this specif ic case. W e tentatively concluded that the public interest benefits of United's service proposal

- gaining the first

- ever nonstop service to China from a new gateway representing the largest O&D market in this proceeding, coupled with the largest capacity to maximize the benefits of that new service

- were compelling. Nothing asserted by Continental in its objections would now persuade us to change that analysis and conclusion" (pp. 6

- 7).

In other cases, the Department has likewise chosen

strong incumben t s over applicants having fewer routes or

frequencies in the country market at issue

. See, for

example, Order 2010

- 7

- 2, July 6, 2010, awarding two of the

four available U.S.

- Haneda slot pairs (or 50 percent) to18 Delta, which was already operating to Japan from more U.S.

gateways, and beyond Japan to more Asian destinations
,

than any other U.S. carrier; Order 2004

- 7

- 23, July 23,

2004, awarding seven U.S.

- China frequencies to each of

United and Northwest, at the time the only U.S,

combination carriers servin g China, and denying American

(a prospective new entrant) the opportunity even to apply;

the 1990 U.S.

- Japan Gateways Case , Order 1990

- 10

- 15,

October 16, 1990 (selecting United, a "dominant" U.S.

-

Japan incumbent, over American, a limited MOU carrier, for

t he highly prized Chicago

- Tokyo route).

**VII. AMERICAN**  **AND US AI**  **R W** 

**A**

**YS SHOULD**  **BE CONSIDERED SE**  **P AR**  **A TE**  **APPLICANTS**

Delta argues that in light of the proposed merger of

American and US Airways, the two carriers should be treated

as a single applicant in this proc eeding. Department

precedent does not support Delta's contention.1 9 In the U.S.

- Japan Alliance Case
, Order 2010

- 11

- 10, November

10, 2010, the Department stated:

"In conducting our analysis, we considered United and Continental to be separate entitie s. While the shareholders approved a merger on September 17, 2010 and the merger closed on October 1, 2010, the Department's pendente lite exemption (Order 2010

- 8

- 5), issued on August 30, 2010, is contingent upon Continental and United remaining separate a nd independently operated corporations pending the Department's action on the air carriers' de facto route transfer application" (p. 1 n. 3).

See also the 2010 U.S

. - Haneda C ase, Order 2010

- 5

- 7 (show

cause), May 7, 2010, p. 8 n. 28 ("our tentative findin gs here

are made on each applicant's merits, and have not been

considered in conjunction with, nor have we pre

- judged the

outcome of, the **one** world (American/JAL) and Star (Continental/

United/A NA ) applications for antitrust immunity pending before

the Depa rtment").

Here, the American

- US Airways merger process is at an early

stage. Just as the Department considered United and

Continental to be separate entities prior to issuance of the

final de facto route transfer orde r , so should American and US

Airways be treated separately here in the Department's

analysis.20 CONCLUSION

American's application to open Los Angeles as a new

nonstop gateway to Brazil in 2013, and to introduce intra

gateway competition between Chicago and Sao Paulo in 2014,

should b e the Department's priority in deciding this case.

Delta should not be rewarded for selling Sao Paulo authority to

US Airways and the other applicants should not be placed in the

position of paying Delta's bills.

Nor should Delta's proposal to add Sao Paulo flights at

Atlanta and New York, gateways it already serves, be favored

over the far stronger application submitted by American. While

American has a greater presence in the Brazil market than Delta,

the Department should, as it always does, compare the merits of

the applications. Based on such a comparison, the Department

should promptly conclude this proceeding by granting American's

application in full.

Respectfully submitted,

__________________________ Francis C. Heil Senior Atto rney American Airlines, Inc.

May 3 , 2013OST 2013-0072 Exhibit AA-R-1 Page 1 of 2

OAG for 2009 - 2013 as of April 2013 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ATL GRU 10 9 7 7 7 7 7 7 7 7 7 7 DTW GRU JFK GRU 7 5 5 5 4 5 6 5 5 5 5 5 LAX GRU 1 0 3 2 0 0 1 2 ATL GIG 7 7 7 7 6 7 7 7 7 7 7 7 ATL BSB 2 ATL FOR 3 3 0 0 0 1 ATL MAO 6 5 4 4 4 4 4 3 2 3 2 2 ATL REC 4 4 3 3 3 4 3 2 0 0 0 0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ATL GRU 7 7 7 7 7 7 7 7 7 7 7 7 DTW GRU 1 2 4 JFK GRU 6 5 7 7 5 7 7 7 7 7 7 7 LAX GRU 3 3 0 0 0 0 0 0 0 0 0 0 ATL GIG 7 7 7 7 7 7 7 7 7 7 7 7 ATL BSB 3 3 3 3 3 4 4 4 3 4 4 5 ATL FOR 2 2 2 2 0 2 2 2 0 0 0 0 ATL MAO 3 3 2 2 2 3 4 3 3 3 3 2 ATL REC 0 0 0 0 0 0 0 0 0 0 0 0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ATL GRU 7 7 7 7 7 7 7 7 7 7 7 7 DTW GRU 5 5 5 5 5 5 5 5 5 5 5 6 JFK GRU 7 7 7 7 7 7 7 7 7 7 7 7 LAX GRU 0 0 0 0 0 0 0 0 0 0 0 0 ATL GIG 7 7 7 7 7 7 7 7 7 7 7 7 ATL BSB 5 5 5 5 5 6 6 6 6 6 6 7 ATL FOR 0 0 0 0 0 0 0 0 0 0 0 0 ATL MAO 3 0 0 0 0 0 0 0 0 0 0 0 ATL REC 0 0 0 0 0 0 0 0 0 0 0 0 Weekly Operations 2010

Weekly Operations 2011 DELTA HAS QUIT SERVICE IN PRIMARY AND SECONDARY MARKETS TO BRAZIL

Weekly Operations 2009OST 2013-0072 Exhibit AA-R-1 Page 2 of 2

OAG for 2009 - 2013 as of April 2013 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ATL GRU 7 7 7 7 7 7 7 7 7 7 7 7 DTW GRU 7 7 7 7 7 7 7 7 7 7 7 7 JFK GRU 7 7 7 7 7 7 7 7 7 7 7 7 LAX GRU 0 0 0 0 0 0 0 0 0 0 0 0 ATL GIG 7 7 7 7 7 7 7 7 7 7 7 7 ATL BSB 7 7 7 7 7 7 7 7 7 7 7 7 ATL FOR 0 0 0 0 0 0 0 0 0 0 0 0 ATL MAO 0 0 0 0 0 0 0 0 0 0 0 0 ATL REC 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 35 35 35 35 35 35 35 35 35 35 35 35

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ATL GRU 7 7 7 7 7 7 7 7 7 7 7 7 DTW GRU 7 7 7 7 7 7 7 7 7 7 7 7 JFK GRU 7 7 7 7 7 7 7 7 7 7 7 7 LAX GRU 0 0 0 0 0 0 0 0 0 0 0 0 ATL GIG 7 7 7 7 7 7 7 7 7 7 7 7 ATL BSB 7 7 7 7 7 7 7 7 7 7 7 7 ATL FOR 0 0 0 0 0 0 0 0 0 0 0 0 ATL MAO 0 0 0 0 0 0 0 0 0 0 0 0 ATL REC 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 35 35 35 35 35 35 35 35 35 35 35 35 Weekly Operations 2012

Weekly Operations 2013 DELTA HAS QUIT SERVICE FROM PRIMARYOST 2013-0072 Exhibit AA-R-2 Page 1 of 2

Source: OAG for 2009 - 2013 as of April 2013 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ATL GRU 10 9 7 7 7 7 7 7 7 7 7 7 DTW GRU JFK GRU 7 5 5 5 4 5 6 5 5 5 5 5 LAX GRU 1 0 3 2 0 0 1 2

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ATL GRU 7 7 7 7 7 7 7 7 7 7 7 7 DTW GRU 1 2 4 JFK GRU 6 5 7 7 5 7 7 7 7 7 7 7 LAX GRU 3 3 0 0 0 0 0 0 0 0 0 0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ATL GRU 7 7 7 7 7 7 7 7 7 7 7 7 DTW GRU 5 5 5 5 5 5 5 5 5 5 5 6 JFK GRU 7 7 7 7 7 7 7 7 7 7 7 7 LAX GRU 0 0 0 0 0 0 0 0 0 0 0 0 2010 (Weekly Operations)

2011 (Weekly Operations) 

### DELTA IS NOT USING 2 OF ITS 23 SAO PAULO ELIGIBLE FREQUENCIES AND IS NOT OPERTING SAO PAULO EXTRA SECTIONS

2009 (Weekly Operations)OST 2013-0072 Exhibit AA-R-2 Page 2 of 2

Source: OAG for 2009 - 2013 as of April 2013 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ATL GRU 7 7 7 7 7 7 7 7 7 7 7 7 DTW GRU 7 7 7 7 7 7 7 7 7 7 7 7 JFK GRU 7 7 7 7 7 7 7 7 7 7 7 7 LAX GRU 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 21 21 21 21 21 21 21 21 21 21 21 21

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ATL GRU 7 7 7 7 7 7 7 7 7 7 7 7 DTW GRU 7 7 7 7 7 7 7 7 7 7 7 7 JFK GRU 7 7 7 7 7 7 7 7 7 7 7 7 LAX GRU 0 0 0 0 0 0 0 0 0 0 0 0 TOTAL 21 21 21 21 21 21 21 21 21 21 21 21 2012 (Weekly Operations)

2013 (Weekly Operations) 

### DELTA IS NOT USING 2 OF ITS 23 SAO PAULO ELIGIBLE FREQUENCIESOST 2013-0072 Exhibit AA-R-3 Page 1 of 1

Source: Exhibit AA-7 and Exhibit AA-8; DL -506 - 516, DL-528-529, and DL-533-538 Airline Roundtrip Route Elapsed time
American LAX GRU LAX 24:10
Delta LAX ATL GRU ATL LAX 35:08
Delta LAX JFK GRU JFK LAX 41:15
Delta LAX DTW GRU DTW LAX 39:06 AMERICAN'S NONSTOP LOS ANGELES - SAO PAULO SERVICE WILL PROVIDE A DRAMATIC IMPROVEMENT IN ELAPSED TIME COMPARED TO DELTA'S CONNECTING SERVICEOST 2013-0072 Exhibit AA-R-4 Page 1 of 1

Source: OAG Frequencies Seats American 14 3,899 Delta 7 1,722 TAM 7 2,534 United 7 1,645 TOTAL 35 9,800

Delta Proposal 7 1,470

TOTAL 42 11,270 Weekly 

### NEW YORK ENJOYS 35 WEEKLY NONSTOPS TO SAO PAULO AND WOULD HAVE 42 IF DELTA'S JFK APPLICATION IS GRANTEDOST 2013-0072 Exhibit AA-R-5 Page 1 of 1

Source: Exhibit AA-9 and Exhibit AA-10 Atlanta, GA Little Rock, AR Austin, TX Los Angeles, CA Baltimore, MD Louisville, KY Bloomington/Normal, IL Madison, WI Boston, MA Miami, FL Buffalo, NY Milwaukee, WI Cedar Rapids, IA Minneapolis/St. Paul, MN Champaign, IL Moline, IA Charlotte, NC Nashville, TN Cincinnati, OH New Orleans, LA Cleveland, OH New York (La Guardia), NY Columbus, OH Newark, NJ Dallas/Ft. Worth, TX Oklahoma City, OK Dayton, OH Omaha, NE Denver, CO Orlando, FL Des Moines, IA Palm Springs, CA Detroit, MI Peoria, IL Dubuque, IA Philadelphia, PA El Paso, TX Phoenix, AZ Evansville, IN Pittburgh, PA Fargo, ND Portland, OR Fayetteville, AR Raleigh Durham, NC Flint, MI Reno, NV Fort Myers, FL Richmond, VA Fort Wayne, IN Rochester NY USA Grand Rapids, MI Salt Lake City, UT Green Bay, WI San Diego, CA Harrisburg, PA San Franciso, CA Hartford, CT San Jose, CA Houston (Bush Intl), TX Santa Ana, CA Indianapolis, IN Seattle/Tacoma, WA Jacksonville, FL Sioux Falls, SD Kalamazoo, MI Springfield, MO Kansas City, MO St. Louis, MO Knoxville, TN Tampa, FL La Crosse, WI Toledo, OH Las Vegas, NV Washington (Reagan) Nat'l Lexington, KY West Palm Beach, FL Westchester County, NY 

### AMERICAN WILL OFFER ROUNDTRIP CONNECTING SERVICE TO SAO PAULO VIA CHICAGO TO 77 U.S. CITIESOST 2013-0072 Exhibit AA-R-6 Page 1 of 1

Source: DL-528 and DL-529 Atlanta, GA Boston, MA Baltimore, MD Las Vegas, NV Los Angeles, CA Orlando, FL Philadelphia, PA Rochester, NY San Franciso, CA Salt Lake City, UT St. Thomas, USVI 

### DELTA WOULD OFFER ROUNDTRIP CONNECTING SERVICE TO SAO PAULO VIA NEW YORK TO ONLY 11 U.S. CITIESOST 2013-0072 Exhibit AA-R-7 Page 1 of 1

Source: Exhibit AA-7 and Exhibit AA-8; DL -506 - 516, and DL-533-538 Airline Roundtrip Route Elapsed time

American ORD GRU ORD 21:15
Delta ORD ATL GRU ATL ORD 31:10

Delta ORD DTW GRU DTW ORD 32:10

Note: Delta does not propose roundtrip connections for Chicago via New York AMERICAN'S NONSTOP CHICAGO - SAO PAULO SERVICE WILL PROVIDE A DRAMATIC IMPROVEMENT IN ELAPSED

TIME COMPARED TO DELTA'S CONNECTING SERVICEOST 2013-0072 Exhibit AA-R-8 Page 1 of 1

Source: Exhibits AA-1, AA-2, DL -212, DL-311, DL-412; Supplement of US Airways, Annex A Airline Route Aircraft Seats US Airways PHL - GRU A330 258 CLT - GRU A330 258

American LAX - GRU B777 247 ORD- GRU B777 247

Delta ATL - GRU B767 210 JFK - GRU B767 210 DTW - GRU B767 210 DELTA's PROPOSED B767 HAS THE SMALLEST CAPACITY OF ANY AIRCRAFT PROPOSED IN THIS CASE**CERTIFICATE OF SERVICE**

I hereby certify that I have this day served the foregoing document by email on the following persons:

sascha.vanderbellen@delta.com
t homas.bolling@united.com dan.weiss@united.com karine.faden@united.com benjamin.slocum@usairways.com howard.kass@usairways.com

________________________________ Francis C. Heil

May 3, 2013