Joint Application of 

ALASKA AIRLINES, INC. 

and 

AMERICAN AIRLINES, INC. 

for transfer of international route authority 

pursuant to 49 U.S.C. §§ 40109,41105 

) ) ) ) 

) 

) 

) 

) _________________________________) 

Application of ALASKA AIRLINES, INC. 

for amendment of exemption 

) ) ) ) 

) 

) 

_________________________________ ) 

Application of AMERICAN AIRLINES, INC. 

for amendment of exemption 

) 

) ) ) ) 

) 

_________________________________ ) 

JOINT REPLY OF 

Docket DOT-OST-2015-0025 

Docket DOT-OST-2005-20406 Docket DOT -OST -2010-0222 

ALASKA AIRLINES, INC. AND AMERICAN AIRLINES, INC. 

TO ANSWER OF DELTA AIR LINES, INC. 
Alaska Airlines, Inc. 

I9300 International Boulevard 

Seattle, Washington 98I88 

jeremy.ross@alaskaair.com 

David Heffernan 

Cozen O'Connor 

The Army & Navy Club Building 

1627 I Street, N.W. 

Suite 1I 00 

Washington, D.C. 20006 

(202) 463 -2537 

dheffernan@cozen.com 

Counsel for Alaska Airlines, Inc. 

DATED: March 6, 20 I5 

Robert A. Wirick 

Managing Director, Regulatory and 

International Affairs 

Abigail Donovan 

Director, Congressional and Federal Affairs 

American Airlines, Inc. 

II OI 17th Street, N.W. 

Washington, D.C. 20036 

(202) 326-5153 

howard.kass@aa.com 

robert. wirick@aa.com 

abigail.donovan@aa.com 
Joint Application of 

ALASKA AIRLINES, INC. 

and 

AMERICAN AIRLINES, INC. 

for transfer of international route authority 

pursuant to 49 U.S.C. §§ 40109,41105 

) 

) ) 

) 

) ) ) ) 

_______________________________ ) 

Application of 

ALASKA AIRLINES, INC. 

for amendment of exemption 

) ) 

) ) 

) 

) 

______________________________ ) 

Application of AMERICAN AIRLINES, INC. 

for amendment of exemption 

) 

) 

) ) ) ) 

_______________________________ ) 

DATED: March 6, 2015 

JOINT REPLY OF 

Docket DOT-OST-2015-0025 Docket DOT-OST-2005-20406 Docket DOT-OST-2010-0222 

ALASKA AIRLINES, INC. AND AMERICAN AIRLINES, INC. 

TO ANSWER OF DELTA AIR LINES, INC. 

Alaska Airlines, Inc. ("Alaska") and American Airlines, Inc. ("American") (collectively, the 

"Joint Applicants") hereby jointly reply to the answer of Delta Air Lines, Inc. ("Delta") filed in 

response to the Joint Applicants' request that the Department approve the transfer to American of 
No party other than Delta filed an answer to the joint application.2 

Delta's answer is nothing more than a spurious effort to obstruct and delay implementation 

of American's new nonstop service on the Los Angeles-Mexico City route.3 The Joint Applicants' 

agreement to transfer the route authority is the type of market-based transaction that the Department 

has routinely approved without consolidating applications from other carriers. There is no legal or 

practical scenario whatsoever in which the authority at issue will be transferred, or awarded, to 

Delta. If the Department fails to promptly approve the route transfer application, Alaska (which has 

consistently operated the route either on a once- or twice-daily basis in full compliance with the 

The Joint Applicants also requested that the Department amend their current exemption authorities in the 

captioned dockets to (i) allow American to serve the Los Angeles-Mexico City route with its own aircraft, and (ii) 

permit Alaska to display its two-letter designator code on American's flights between Los Angeles and Mexico City. 

Alaska holds an exemption authorizing it to engage in scheduled foreign air transportation of persons, property and 

mail between Los Angeles and Mexico City. Notice of Action Taken dated Aug. 25, 2014 (Docket DOT-OST2005-20406). American holds an exemption authorizing it to hold out codeshare service only between Los Angeles 

and Mexico City. Notice of Action Taken dated July 19, 2012 (Docket DOT-OST-2010-0222); renewal currently 

pending. The Joint Applicants requested that both exemptions be reissued for a two-year period. 

In addition to answering the joint application, Delta filed an Application for Exemption (in Docket DOT-OST2015-0042). The Joint Applicants hereby reserve the right to file a separate answer to Delta's application. The Joint 

Applicants will not address here that contingent application's lack of comparative merit because the Department's 

rejection of Delta's answer and prompt approval of the joint application would render moot Delta's application. In fact, 

Delta's application is not only contingent but wholly theoretical because, as discussed above in text, either the 

Department will promptly approve the Joint Applicants' route transfer application or the Joint Applicants will withdraw 

the application and Alaska will continue to operate the Los Angeles-Mexico City route. Of course, if the Department 

approves the joint application before the 15 calendar day period for filing answers to the Delta application expires, the 

Joint Applicants will have no need to submit an answer to the Delta application. 

It should be noted that Delta once held the authority to serve Los Angeles-Mexico City but returned it to 

the Department, which ultimately led to Alaska securing the route. See Order 2005-2-8, Feb. I 4, 2005, at 2. In the 

Los Angeles-Mexico City market, two U.S. carriers, Delta and United Air Lines, Inc. ("United"), held underlying 

authority and designation under the U.S.-Mexico bilateral agreement to provide direct carrier (own aircraft) services. 

However, by letter submitted January 21, 2005, Delta notified the Department that it would terminate service in this 

market on January 31, 2005. 

2 
1. The Department generally defers to and approves market-based transactions such as 

this one without opening a carrier selection proceeding under the statutory standard for approving 

certificate transfers.5 Despite the Department's longstanding practice, Delta argues that the Joint 

Applicants' route transfer application should not be reviewed under this standard and the 

Department must initiate a proceeding whereby Delta and other carriers would receive comparative 

consideration of alternative proposals to use the route authority, for the sole reason that Alaska 

holds exemption (not certificate) authority to serve the Los Angeles-Mexico City route. In fact, the 

Department has both the statutory authority and discretion to approve the route transfer application, 

which meets both the route transfer and public interest tests for approval.6 

2. Delta's argument is predicated on nothing more than inapplicable language 

excerpted from a single DOT Order from 1997. That case-1997 US-Argentina All-Cargo 

Frequency Proceeding- involved the transfer of under-utilized, if not dormant, cargo frequencies, 

and not the transfer of fully utilized exemption authority involving passenger service, as is the case 

Delta's efforts should be seen for what they are: anti-consumer. If Delta were to receive the Alaska 

designation, both Alaska and American would be forced to exit the route and the number of competitors would be 

reduced by two. 

Answer of Delta Air Lines, Feb. 26,2015 (Docket DOT-OST-2015-0025), at 1-2. 

See Joint Application of Alaska Airlines, Inc. and American Airlines, Inc. for Transfer of International 

Route Authority, Feb. I I, 20 I 5 (Docket DOT -OST-20 I 5-0025), at 3-8. 

3 
Department stated that due to Delta's "extensive winter-season cutbacks," the public interest 

required that the Department make a "fresh examination" of Delta's use of its Seattle-Haneda 

slot pair to determine if the public interest would be better served by reallocating the underutilized slot pair to another carrier. 8 

Those utilization concerns do not apply in this case because Alaska has fully and 

consistently used its Los Angeles-Mexico City authority to operate single-daily or twice-daily 

service for many years. Significantly, Delta never alleges any deficiency in Alaska's utilization of 

the Los Angeles-Mexico City route authority, because Delta knows that no such deficiency exists.9 

See Order 97-11-35, Nov. 20, 1997, at 6 ("(t]he various submissions we have received on the issue of 

Argentina service indicate a substantial evolution in the position and operations of a number of U.S. carriers with 

frequency allocations for Argentina from the time that we issued their respective authorizations"). One of the 

incumbent carriers, Challenge Air Cargo, objected that DOT should include the frequency allocations of all of the 

U.S. carrier incumbents within the scope of the carrier selection proceeding. Significantly, however, DOT refused 

to do so; rather, DOT only included in the proceeding unused or underutilized frequency allocations. See Order 97-

12-19, Dec. 12, 1997, at 3 ("[n]or are we persuaded that the public interest warrants expanding the scope of this 

proceeding to include the frequency allocations of other incumbent carriers. [They] are using their frequencies fully, 

and no party has presented any evidence that would question the use by these carriers of their frequency allocations 

or otherwise warrant our placing those allocations in issue."). Similarly, in this case, Alaska has been fully using its 

Los Angeles-Mexico City route authority and Delta has not presented any evidence that would warrant subjecting 

the authority to a carrier selection proceeding. 

See Petition of Delta Air Lines, Inc. in the Matter of U.S.-Haneda Combination Services Allocation 

Proceeding, Order 2015-1-14, Jan. 15,2015, at 4. 

Delta also cited an unrelated statutory provision explicitly prohibiting the transfer of slot exemptions at 

Ronald Reagan Washington National Airport ("DCA") where the transaction is not part of an airline merger or 

acquisition. That statutory provision, however, applies exclusively to DCA exemption slots: it does not, and was 

never intended to, limit the Department's authority and discretion to approve the transfer of other forms of 

exemptions and other operating authorities, such as Alaska's Los Angeles-Mexico City authority and even other 

slots at DCA. Had Congress intended to create an explicit prohibition on non-certificate route transfers occurring 

outside of mergers or acquisitions, it would have done so. 

4 
Delta's arguments for a carrier selection proceeding in that case, the Department stated that it "was 

under no obligation to consider competing applications . .. " and that it had a "longstanding policy 

not to convert a route transfer proposal into a section 401 (d) proceeding unless there are strong 

public policy reasons for reviewing the service needs and status of a market." 10 No such policy 

reasons are present here. 

Similarly, in the Horizon Air ("Horizon")-San Juan Airlines ("San Juan") route transfer 

case, United Express, like Delta here, opposed the transfer by San Juan of its U.S.-Canada transborder commuter authority and related designation to Horizon and called on the Department to hold 

a carrier selection proceeding. Notably, this case did not involve the transfer of certificate authority 

(and was not related to an airline merger or acquisition), yet the Department denied United 

Express's request, and instead approved the route transfer application pursuant to the predecessor 

statutory provision to 49 U.S.C. § 41105. In denying United Express's request for a carrier 

selection proceeding under the Ashbacker doctrine, 11 the Department concluded that it was "not 

otherwise required by law to consolidate route transfer applications with competing applications for 

10 Joint Application of Northwest Airlines, Inc. and Hawaiian Airlines, Inc. for Certificate Transfer, Order 91-

3-20, Mar. 11, 1991, at 7-8. 

11 Ashbacker Radio Corp. v. FCC, 326 U.S. 327 (1945). DOT has recognized that, in order for the Ashbacker 

doctrine to apply, applications must be mutually exclusive, so that the grant of one would preclude "realistic 

consideration" and grant of the other. Order 95-2-28, Feb. I 0, 1995, at 5. Ashbacker, however, does not apply to 

applications seeking different relief under different statutory provisions. For example, applications for route 

transfers and applications for new operating authority are "not sufficiently parallel to trigger Ashbacker constraints." 

Order 92-3-49, Mar. 23, I 992, at II. 

5 
result of arm's-length bargaining between Horizon and San Juan; that it [would] not affect the 

number of carriers on the subject trans-border routes or the utilization of available U.S. carrier route 

rights; and that the service proposed by Horizon [was] consistent with the [bilateral agreement]."14 

All of these elements apply to the Joint Applicants' proposed route transfer application and support 

the Department's prompt dismissal of Delta's arguments in favor of a carrier selection proceeding. 15 

Likewise, when Pan American World Airways ("Pan Am") and United applied for approval 

of Pan Am's transfer of its Pacific routes to United- an arrangement that also did not involve a 

merger-the Department dismissed Continental Airlines' assertions that the Ashbacker doctrine 

required the Department to institute a carrier selection proceeding. The Department stated that 

"there [was] no basis for awarding Pan Am's Pacific authority to another carrier," and that the 

application of Ashbacker would "inject issues of public convenience and necessity that are different 

from the standards for approval of a route transfer" thereby "chang[ing] the nature of [the] case." 16 

12 Joint Request of Horizon Air Industries, Inc. d/b/a Horizon Air and San Juan Airlines, Inc. to Transfer 

Trans border Commuter Designations and Related Authority (U .S.-Canada), Order 89-5-14, May 4, 1989, at 4. 

!d. 

14 ld.at3 . 

15 Just as Delta filed an application for Los Angeles-Mexico City operating authority in the hope of triggering 

a carrier selection proceeding, United Express had also concurrently filed applications for operating authority in the 

markets at issue in the Horizon-San Juan route transfer. The Department should dismiss Delta's intervention in this 

case, just as it did United Express's applications in the Horizon-San Juan route transfer proceeding. 

16 Pacific Division Transfer Case, Order 85-6-44, June 13, 1985, at 10. 

6 
selection proceeding even though Pan Am was failing to operate the route and United held a 

dominant position in the West Coast-Mexico markets. The Department stated that its policy was 

"not to entertain competing applications for route authority that is the subject of a proposed route 

transfer." 17 

The Department's reasons for refusing to initiate a comparative carrier selection proceeding 

in that case are equally valid here: 1) American, the carrier to which the route is being transferred, 

will provide extensive service on the route and "intends to use the route rights to full advantage"; 2) 

American will "provide on-line connecting service at Los Angeles from a number of points" in its 

network; 3) competition will be enhanced and American's "competitive influence should prove 

positive, both between U.S. and foreign carriers and among U.S. carriers in the western U.S.-

Mexico markets"; 4) American will "bring a strong presence to a market now dominated by foreign 

carriers"; and 5) the route transfer will result in a "strong U.S. carrier, with substantial behindgateway feed .. . significantly improv[ing] U.S.-flag presence in this market where more traffic is 

now carried on foreign carriers." 18 If Ashbacker did not apply in the Northwest-Hawaiian and the 

Horizon-San Juan cases, or in the Pan Am-United case (where the facts in support of carrier 

selection were much more compelling), it certainly should not apply here, where Alaska is fully 

operating the route. 

17 Joint Application of United Air Lines, Inc. and Pan American World Airways, Inc. for Certificate Transfer, 

Order 92-3-49, Mar. 23, 1992, at 7. 

18 !d. at 8-9. 

7 
4. Delta's argument that exemptions cannot be transferred is further contradicted by the 

Department's longstanding certificate streamlining policy (DOT-OST-2005-22228), pursuant to 

which the Department has consolidated U.S.-Mexico exemptions into U.S.-Mexico certificates in 

response to carrier requests. For example, by Order 2010-3-12, the Department converted more 

than 40 U.S.-Mexico exemptions held by Delta and Northwest into certificate authority at the 

request of Delta. Thus, today, carriers typically hold various U.S.-Mexico routes in the forms of 

exemptions and certificates. The distinction between certificate and exemption authority for U.S.-

Mexico routes has all but disappeared, thereby invalidating the sole basis for Delta's claim that the 

Department lacks authority and discretion to promptly approve the Joint Applicants' route transfer 

application. 

5. Delta's "form over substance" argument about the transferability of certificates but 

not exemptions is also undercut by the fact that the Department, pursuant to 49 U.S.C. § 41105, has 

repeatedly approved the transfer of exemptions, frequencies, and statements of authorization when 

bundled with certificate authority.20 There is no logical basis for arguing that the statute permits the 

19 See Application ofNorthwest Airlines, Inc. for Exemption (U.S.-Australia), Order 91-8-30, Aug. 16, 1991, 

at 4 (in dismissing Delta's contention that DOT was required to hold a carrier selection proceeding, DOT stated that 

"[i]n any case .. . the designation limitations will no longer apply, and the United States will be entitled to designate 

additional carriers for U.S.-Australia services. Thus, the award of authority to Northwest will not preclude the grant 

of authority to others."). 

20 See, e.g., Joint Application of Continental Airlines, Inc., Continental Micronesia, Inc., Air Micronesia, Inc. 

and United Air Lines, Inc., Order 2011-3-14, Feb. 3, 201 I (Docket DOT-OST-2010-0163); Joint Application of 

Southwest Airlines Co. and AirTran Airways, Inc., Order 2011 -11-1 7, Sept. 15, 2011 (Docket DOT-OST-2011 -

0051); Joint Application of Delta Air Lines, Inc., Northwest Airlines, Inc., Compass Airlines, Inc. and Mesaba 

Aviation, Inc., Order 2009-1-8, Dec. 29,2008 (Docket DOT-OST-2008-0162). 

8 
6. If the Department were to grant Delta's request for a carrier selection proceeding, it 

would set a dangerous precedent for allowing carriers to challenge the right of incumbents to 

continue to operate their services in limited-entry markets where they are fully utilizing the 

operating rights but a challenger claims its service somehow would generate a public benefit. It is 

undisputed that Alaska has consistently utilized its Los Angeles-Mexico City route authority for at 

least once-daily service. Alaska's agreement to transfer the route to American, and the related 

application the Joint Applicants have submitted to the Department, provide no basis for Delta to 

claim a right to a carrier selection proceeding. In addition, grant of Delta's request would place at 

risk competition in the Los Angeles-Mexico City market: rather than adding American as a potent 

competitor and allowing Alaska to continue in the market, those two options for consumers would 

be totally excluded from the market in place of Delta. Fortunately, both existing law and common 

sense support the swift rejection of Delta's objection and the confirmation of existing policy by 

means ofthe Department's prompt approval of the joint application. 

In conclusion, Delta has not raised any valid basis for the Department to initiate a carrier 

selection proceeding in this case. The Joint Applicants have demonstrated that the proposed transfer 

to American of Alaska's authority to serve the Los Angeles-Mexico City market meets the 

21 The Department also has broad authority to approve the Joint Applicants' application as being in the public 

interest under 49 U.S.C. § 40109. See Joint Application of Alaska Airlines, Inc. and American Airlines, Inc. for 

Transfer of International Route Authority, Feb. II, 2015 (Docket DOT-OST-2015-0025), at 4-5. The Department 

has approved transfers of non-certificate authority without invoking 49 U .S.C. § 41105 or initiating a carrier selection 

proceeding. See, e.g., Notice of Action Taken dated Aug. 2, 20 I 0 (approving temporary transfer of Brazil frequencies 

from United to US Airways and amending US Airways' exemption authority under 49 U.S.C. § 40109) (Docket DOTOST -20 I 0-0183 ). 

9 
Respectfully submitted, 

Jeremy Ross Howard Kass 

Senior Attorney, Litigation and Regulatory Vice President - Regulatory Affairs 

and Director, Legal 

Alaska Airlines, Inc. 

19300 International Boulevard 

Seattle, Washington 98188 

jeremy.ross@alaskaair.com 

David Heffernan 

Cozen 0' Connor 

The Army & Navy Club Building 

1627 I Street, N.W. 

Suite 1100 

Washington, D.C. 20006 

(202) 463-2537 

dheffernan(@,cozen.com 

Counsel for Alaska Airlines, Inc. 

DATED: March 6, 2015 

10 

Robert A. Wirick 

Managing Director, Regulatory and 

International Affairs 

Abigail Donovan 

Director, Congressional and Federal Affairs 

American Airlines, Inc. 

1101 1 ih Street, N.W. 

Washington, D.C. 20036 

(202) 326-5153 

howard.kass@,aa.com 

robert. wi1ick@aa.com 

abigail.donovan(W,aa.com 
cristinasa@state.gov (Department of State) 

brian.hedberg@dot.gov (Department of Transportation) 

todd.homan@dot.gov (Department of Transportation) 

peter.irvine@dot.gov (Department ofTransportation) 

laura.remo@dot.gov (Department ofTransportation) 

brett.kruger@dot.gov (Department ofTransportation) 

john.s.duncan@faa.gov (Federal Aviation Administration) 

dan. weiss@uni ted.com (United) 

steve.morrissey@united.com (United) 

gmurphy@crowell.com (Counsel for United) 

sascha. vanderbellen@delta.com (Delta) 

chris. walker@delta (Delta) 

patrick.rizzi@hoganlovells.com (Republic) 

bob.kneisley@wnco.com (Southwest) 

jhill@cooley.com (JetBlue) 

dkirstein@yklaw.com (Spirit) 

barbara.russell@virginamerica.com (Virgin) 

matwood@cozen.com (Frontier) 

Thomas.ting@suncountry.com (Sun Country) 

Kenneth C. Hines