**BEFORE THE DEPARTMENT OF TRANSPORTATION**  **WASHINGTON, D. C.**

--------------------------------------------- Application of : : AMERICAN AIRLINES, INC. : DOT-OST-2011- : Under 49 USC 40109 for an exemption : (New York-Mexico City) :

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**APPLICATION OF AMERICAN AIRLINES, INC. FOR AN EXEMPTION (NEW YORK-MEXICO CITY)** 

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 Affairs and Chief Commercial Officer American Airlines, Inc. American Airlines, Inc. 1101 17 th Street, N.W. P.O. Box 619616, MD 5634 Washington, D.C. 20036 DFW Airport, Texas 75161 CARL B. NELSON KENJI C. HASHIMOTO Associate General Counsel Vice President – Strategic American Airlines, Inc. Alliances 1101 17 th Street, N.W. American Airlines, Inc. Washington, D.C. 20036 P.O. Box 619616, MD 5635 (202) 496-5647 DFW Airport, Texas 75261 carl.nelson@aa.com

ROBERT A. WIRICK Director, Regulatory Affairs American Airlines, Inc. P.O. Box 619616, MD 5635 DFW Airport, Texas 75261 (817) 963-0394 robert.wirick@aa.com

July 5, 2011**BEFORE THE DEPARTMENT OF TRANSPORTATION**  **WASHINGTON, D. C.**

--------------------------------------------- Application of : : AMERICAN AIRLINES, INC. : DOT-OST-2011- : Under 49 USC 40109 for an exemption : (New York-Mexico City) :

---------------------------------------------

**APPLICATION OF AMERICAN AIRLINES, INC. FOR AN EXEMPTION (NEW YORK-MEXICO CITY)** 

American Airlines, Inc., under 49 USC 40l09, hereby applies for an exemption authorizing scheduled foreign air transportation of persons, property, and mail between New York (JFK) and Mexico City. American proposes to inaugurate twice-daily nonstop service on the JFK-Mexico City route within 120 days of receiving all governmental authorities, using 164-seat B737 aircraft (16C/148Y). Illustrative schedules and other data are

attached. Under the U.S.-Mexico Air Transport Agreement, as amended, New York-Mexico City service may be operated by up to two carriers of the United States and up to two carriers of Mexico. The two U.S. designations are currently held by Delta (serving from JFK) and Continental (serving from Newark). Accordingly, American would be the third U.S. carrier in the market, and would require extra-bilateral authority to operate on the New York-Mexico City.- 2 -

On June 20, 2011, Volaris, a carrier of Mexico, applied in DOT-OST-2011-0117 for exemption authority in three U.S.- Mexico city-pairs that are also limited by the Air Transport Agreement, as amended, to two designations by each Party: Monterrey-Chicago Mexico City-Las Vegas Mexico City-Los AngelesMexicana and Aeromexico currently hold the two designations available in each of these markets. Although Mexicana suspended operations and entered bankruptcy in August 2010, theVolaris application states that under Mexican law the Government of Mexico cannot re-assign any of Mexicana’s designations while the carrier remains under bankruptcy protection. Thus, Volaris is seeking to be the third Mexican carrier designated on each of the three routes named above, and would require extra-bilateral authority to implement service. American does not object to the Volaris application, provided that our New York-Mexico City application in this docket is also granted. As Volaris recites in its pleading,

Mexicana’s absence has left “a number of U.S.-Mexico routes with substantially decreased competition, fewer service options and higher fares” (p. 4). Those same considerations apply to the New York-Mexico City route.- 3 -

Indeed, the New York-Mexico City market is larger than each of the Monterrey-Chicago, Mexico City-Las Vegas, and Mexico City-Los Angeles markets, and has a greater need for additional service. Based on passenger bookings between the U.S. and Mexico for the year ended May 31, 2011 (MIDT), New York-Mexico City ranks second, Mexico City-Los Angeles ranks third, Mexico City-Las Vegas ranks 15 th , and Monterrey-Chicago

ranks 85 th

. Rank City-Pair Bookings 1 Los Angeles-Guadalajara 340,217

**2 New York-Mexico City 336,744**  3 Mexico City-Los Angeles 326,054 15 Mexico City-Las Vegas 118,176 85 Monterrey-Chicago 22,618 If the Department decides to grant the extra-bilateral Volaris application, the Department should also grant our NewYork-Mexico City request as consistent with the public interest. See Lan Airlines/Lan Cargo , DOT-OST-2005-23236, Notice ofAction Taken, April 13, 2006 (granting extra-bilateral exemption authority in the public interest); Continental/Alitalia , Order 94-9-4, September 6, 1994 (granting extra-bilateral exemption authority in the public interest); Delta/Varig , Order 94-3-33, March 18, 1994 (granting extra-bilateral exemption authority in the public interest).- 4 -

For the foregoing reasons, the Department should grant exemption authority to American to serve the New York-Mexico City route. American proposes to enter the market on within 120 days of receiving all governmental approvals, providing important competitive benefits in the second-largest U.S.- Mexico city-pair. Respectfully submitted,

____________________________ CARL B. NELSON Associate General Counsel American Airlines, Inc. July 5, 2011**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 jhill@dlalaw.com scott.mcclain@delta.com bill@mietuslaw.com sametta.c.barnett@delta.com mgoldman@sgbdc.com kquinn@pillsburywinthrop.com rsilverberg@sgbdc.com bkeiner@crowell.com dhainbach@ggh-airlaw.com esahr@eckertseamons.com mcmillin@woa.com bruce.rabinovitz@wilmerhale.com eskraft@jamhoff.com thomas.bolling@coair.com dpdean@jamhoff.com bob.kneisley@wnco.com dkirstein@yklaw.com robert.land@jetblue.com jyoung@yklaw.com msinick@ssd.com willim.stallings@usdoj.gov cdonley@ssd.com dwight.moore@ustranscom.mil gbleopard@fedex.com john.allen@faa.gov david.heffernan@wilmerhale.com urskr@state.gov kevin.montgomery@polaraircargo.com recohn@hoganlovells.com jrichardson@johnlrichardson.com cjsimpson@zsrlaw.com lhalloway@crowell.com pmurphy@lopmurphy.com efaberman@wileyrein.com lachter@starpower.net mroller@rollerbauer.com anita.mosner@hklaw.com howard.kass@usairways.com jennifer.nowak@hklaw.com benjamin.slocum@usairways.com gmurphy@crowell.com dan.weiss@coair.com russell.bailey@alpa.org rpommer@atlasair.com alfonso.ascencio@volaris.com.mx

________________________________ CARL B. NELSON

July 5, 2011