BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D. C.

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2013/2014 U.S.–BRAZIL COMBINATION : DOT-OST-2013-

FREQUENCY PROCEEDING : 0072 

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REPLY 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 17th 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 17th 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 14, 2013
1

THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D. C.

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2013/2014 U.S.–BRAZIL COMBINATION : DOT-OST-2013-

FREQUENCY PROCEEDING : 0072 

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REPLY OF AMERICAN AIRLINES, INC.

 American Airlines hereby replies to the answer submitted 

in this proceeding by Delta Air Lines on May 3, 2013. Because 

there is almost nothing new in Delta's pleading, our reply will 

be brief. The Department should promptly conclude this case by 

granting American's application in full, with seven frequencies

to open a new gateway to Sao Paulo at Los Angeles, the largest 

U.S. city without nonstop service to Brazil, and with seven to 

bring intra-gateway competition to Chicago.

 • Delta again tries to bootstrap its way into getting

seven of the 28 available frequencies by arguing that in order 

to continue serving Sao Paulo from Detroit, it must have that

allotment to replace what it sold to US Airways. As a matter of 

sound policy, the Department should not reward Delta's 

improvident behavior at the expense of the other applicants, 

which would be placed in the position of paying Delta's debt.
2

 • As it did in its supplement on April 24, 2013, Delta 

counts and recounts American's present holding of Brazil 

frequencies as if this were a disputed Presidential election. 

Indeed, Delta engages in this counting exercise more than 25 

times in its supplement, answer, and accompanying exhibits. But 

that is not how the Department decides selection cases. In the 

2007 U.S.-China case, Final Order 2007-2-10, dated February 6, 

2010, p. 6, the Department stated: "We 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 Department's procompetition policy.... The public interest benefits of United's 

service proposal - gaining the first-ever nonstop service to 

China from a new gateway, coupled with the largest capacity to

maximize the benefits of that new service - [are] compelling".

 • Delta's answer neglects to mention that it holds two

unrestricted frequencies that it is not using to serve Sao 

Paulo, or that since February 2009, a period of more than four

years, it has not taken advantage of the extra section 

opportunities offered by the Brazilian aeronautical authorities. 

From March 2009 to May 2013, when Delta operated zero Sao Paulo 

extra sections, American operated 553 (Exhibit AA-SR-1).
3

Had Delta operated the same number of extra sections and used 

its two weekly dormant Sao Paulo frequencies, Delta would have 

added 4 weekly round trip flights to Sao Paulo during this 

period. Clearly, Delta should not be preferred for an award 

where it has left significant rights unexercised for a prolonged 

period.

 • Delta continues to argue, without case support, that 

the proposed American/US Airways merger compels treating the two 

carriers as a single applicant. The Department's precedents say

just the opposite. See Order 2010-11-10, November 10, 2010, p. 

1 n. 3, treating United and Continental as separate entities 

pending the Department's final action on their de facto route 

transfer application.

 • Delta asserts that the Department has been "very 

generous" to American by granting our application for 17 Brazil 

frequencies in 2012, which included seven Rio de Janeiro 

"backfill" frequencies to replace Sao Paulo eligible rights that 

American had been using at Rio but was transferring to Sao 

Paulo. American was not the beneficiary of any special 

treatment in that proceeding. Ample unallocated frequencies 

were available, neither Delta nor any other carrier objected, 

and the Department took favorable action as it always does in 

such circumstances (DOT-OST-2012-0079). As for seeking 

unallocated Rio frequencies to backfill a transfer of 
4

unrestricted frequencies to a Sao Paulo route, that practice was 

used by Delta in 2010 (DOT-OST-2010-0186). Delta has no basis 

to suggest that there was anything unusual or questionable about 

American's following the same path in 2012.

 • In an effort to mask the fact that it is seeking 21 of 

the 28 frequencies at issue, Delta again tries out the notion 

that on an "incremental" basis it is requesting only 14 because 

it is merely recouping the seven it sold to US Airways. But the 

reality is that Delta wants 21, leaving just seven for the other 

applicants. Under Delta’s scheme, fewer frequencies would be 

available for American and US Airways, which would end up 

footing the bill for Delta’s sale of valuable Sao Paulo rights.

 • Not surprisingly, Delta's answer says nothing about 

capacity. Delta proposes to use 210-seat B767 aircraft, the 

smallest equipment offered by any applicant. American, with

247-seat B777s, has a 17.6 percent capacity advantage over 

Delta, or 27,010 annual roundtrip seats. The Department has 

long recognized the importance of capacity in selecting carriers 

to serve limited entry routes. See 2007 China case, Order 2007-

1-4, p. 17 and 2010 Haneda case, Order 2010-5-7, p. 10. 
5

Indeed, in the Haneda case, Delta said that it "will provide the 

largest capacity aircraft maximizing U.S.-Haneda benefits," and 

that the Department has on numerous occasions stated that the 

size of the aircraft and amount of capacity delivered by the 

applicant is an important selection criteria for maximizing 

public benefits in carrier selection cases" (Delta Answer, DOTOST-2010-0086, March 1, 2010, p. 13).

 • While Delta calls Detroit-Sao Paulo a "successful" 

service, its load factor does not support such a claim. Based 

on T-100 data for the year ended October 31, 2012, the most 

recent year with publicly available numbers, Delta's load factor 

was just 71 percent, and in three of the months was in the 53 -

59 percent range (See Exhibit AA-SR-2). Furthermore, these load 

factors were on 210-seat aircraft. If Delta had been operating 

larger aircraft, as American has proposed, Delta's Detroit-Sao 

Paulo annual load factor would have been even less.

 • Delta is the only applicant not proposing to serve Sao 

Paulo from a new gateway. Delta would use all 21 of the 28 

frequencies it is seeking at its existing Atlanta, New York, and 

Detroit gateways by adding a second trip at Atlanta, a sixth 

trip at New York, and continuing to serve the Detroit-Sao Paulo 

route with a free refill (at the expense of the other 

applicants) of the frequencies it sold to US Airways. American, 

in contrast, will provide far greater benefits to the public by
6

opening Los Angeles as a new gateway to Brazil, and introducing 

intra-gateway competition against United Air Lines at Chicago. 

The Department's consistent policy in selection cases is to 

favor new gateway proposals. See 2007 China case, Order 2007-1-

4, January 6, 2007, p. 19. The Department should follow that 

well-established policy here as well.

 • American's application to serve the Los Angeles-Sao 

Paulo and Chicago-Sao Paulo routes has received strong public 

support which we are submitting under a separate cover letter. 

Supporters of American’s Los Angeles-Sao Paulo proposal include 

Senators Dianne Feinstein, Barbara Boxer, 21 U.S. 

Representatives from California, the Lt. Governor of California, 

the Mayor of Los Angeles, and Los Angeles World Airports, the 

operator of LAX. Supporters of American’s Chicago-Sao Paulo 

proposal include all 18 U.S. Representatives from Illinois and 

the Mayor of Chicago. American has received substantial 

additional support from business leaders, chambers of commerce, 

and economic development organizations, and more than 2000

American employees at Los Angeles and Chicago.
7

CONCLUSION

The proposals are submitted and the record is clear. To 

secure the greatest public benefits, American should be awarded 

14 frequencies to fund its proposed service to Sao Paulo from 

Los Angeles (2013) and Chicago (2014).

Respectfully submitted,

__________________________

Francis C. Heil

Senior Attorney

American Airlines, Inc.

May 14, 2013
OST 2013-0072

Exhibit AA-SR-1

Page 1 of 1

Source: OAG 

Year Round Trip Flights

2009 (March - December) 75

2010 93

2011 151

2012 172

2013 (January - May) 62

TOTAL 553

Year Round Trip Flights

2009 104

2010 104

2011 104

2012 104

2013 104

TOTAL 520

TOTAL U.S. - SAO PAULO ROUND 

TRIP FLIGHTS DELTA COULD 

HAVE OPERATED 1073

DELTA HAS FAILED TO UTILIZE SIGNIFICANT OPPORTUNITIES 

AVAILABLE TO INCREASE ITS

 U.S. - BRAZIL SERVICES

U.S. - SAO PAULO FREQUENCIES LEFT ON THE TABLE BY DELTA

U.S. - SAO PAULO EXTRA SECTION ROUND TRIP FLIGHTS FLOWN BY 

AMERICAN

HAD DELTA UTILIZED THE OPPORTUNITIES AVAILABLE IT 

COULD HAVE OPERATED AN ADDITIONAL 4 WEEKLY ROUND TRIP 

FLIGHTS IN THE PERIOD 2009 MARCH - 2013 MAY
OST 2013-0072

Exhibit AA-SR-2

Page 1 of 1

Source: T100 YE October 2012

Month / Year Operations Seats Onboard Load Factor

Oct-12 62 13,020 10,727 82.4%

Sep-12 59 12,390 10,417 84.1%

Aug-12 60 12,600 9,915 78.7%

Jul-12 60 12,600 10,410 82.6%

Jun-12 60 12,600 8,968 71.2%

May-12 60 12,600 8,307 65.9%

Apr-12 59 12,390 6,945 56.1%

Mar-12 62 13,020 6,829 52.5%

Feb-12 58 12,180 7,139 58.6%

Jan-12 61 12,810 10,274 80.2%

Dec-11 54 11,340 7,912 69.8%

Nov-11 41 8,610 5,523 64.1%

AVERAGE 70.7%

DELTA'S ANNUAL DETROIT - SAO PAULO LOAD 

FACTOR IS BARELY ABOVE 70% AND IN 3 MONTHS 

WAS IN THE 53% - 59% RANGE
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

thomas.bolling@united.com

dan.weiss@united.com

karine.faden@united.com 

benjamin.slocum@usairways.com

howard.kass@usairways.com

_____________________

Francis C. Heil

May 14, 2013