BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

2013/2014 U.S. - Brazil Combination Frequency Allocation Proceeding ) ) ) ) ) ) ) Docket DOT - OST - 2013 - 0072

CONSOLIDATED ANSWER OF DELTA AIR LINES, INC. Communications with respect to this document should be addressed to: Glen Hauenstein Executive Vice President, Network Planning & Revenue Management Robert J. Cortelyou Senior Vice President

– Network Planning DELTA AIR LINES, INC. 1030 Delta Boulevard Atlanta, Georgia 30320 Andrea Fischer Newman Senior Vice President

– Government Affairs DELTA AIR LINES, INC. 1212 New York Avenue, N.W. Washington, D.C. 20005 Alexander Van der Bellen Managing Director

– Governmen t Affairs

& Associate General Counsel Chris Walker Regional Director

– Government Affairs DELTA AIR LINES, INC. 1212 New York Avenue, N.W. Washington, D.C. 20005 (202) 842 - 4184 sascha.vanderbellen@delta.com

May 3 , 201 3BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

2013/2014 U.S. - Brazil Combination Frequency Allocation Proceeding ) ) ) ) ) ) ) Docket DOT - OST - 2013 - 0072

CONSOLIDATED ANSWER OF DELTA AIR LINES, INC. I. Introduction As a result of the successful negotiation with Brazil, the Department has the opportunity in this proceeding to improve the U.S. - Brazil market structure and install meaningful competition against American, which dominates the restricted U.S. - Sao Paulo market with nearly half the entire U.S. flag frequency allocation. US Airways and American are in the process of completing their merger, which they expect to conclude by the third quarter of this year. Given the Depar t ment’s stated public interest o bjectives in this case, and the fact of the pending American/US Airways merger, service and competitive benefits for t he traveling public would be maximized by awarding Delta the 21 frequencies requested to increase service from Atlanta and New York, and to maintain service at Detroit. II. Executive Summary Delta respectfully submits that the most important public interest consideration in this case is to provide for an equitable and competitive distribution of U.S. - Sao Paulo frequencies. U.S. - Sao Paulo service is dominated by American which holds 47 of theAnswer of Delta Page 2 total 105 U.S. flag unrestricted frequencies. DL - A - 101. American and US Airways are merging, and TAM’s decision to join the oneworld alliance will lead to even greater concentration of the U.S. - Brazil service in the hands of a single carrier/alliance group. DL - A - 109

. By authorizing Delta’s proposals to increase and maintain service at At l anta, New York and Detroit, the Depar t ment will create important service benefits for the traveling public, and substantially improve the U.S. - Brazil competitive market structure. US Airways contends that because its merger with American cannot be closed without certain regulatory approvals , “US Airways and American today remain separate competitors.” (US Supp at 4). This claim is, at best, a fleeting and transient fact that no party reasonably expects to be true when frequencies at issue become effective in October . Actions speak louder than words . W hile US Airways and American claim to “remain separate competitors, ” in the 84 pages of briefs and exhibits filed to date in this proceeding, not one word of criticism was leveled by either US Airways or American against the other. Instead, the American/US Airways merger parties direct all of their attack s and criticism s against Delta. See, e.g. US Airways Supp at 10 - 12, 16 - 18; American Supp. at 5 - 6. Delta has requested 21 frequencies and American/US Airway s have together requested 28. Delta’s request for 21 frequencies is more modest than appears, because Delta is required to transfer 7 frequencies to US Airways pursuant to the terms of the DCA/LGA slot swap transaction. Delta’s net request is for 14 incremental frequencies. US Airways will receive 7 unrestricted frequencies from Delta, and either American or US Airways are assured of receiving the 7 remaining surplus frequencies after grant of Delta’s request

– thus providing the combined AA/US entity with 14 incremental frequencies. DL - A - 102, 103

. The 14 incremental frequencies AA/US are assured to receive are sufficient to fund both of the US Airways’ Charlotte and PhiladelphiaAnswer of Delta Page 3 proposals; and, American can fund nonstop service at Los Angeles or Chicago by moving just one of its four daily Miami f lights

. DL - A - 401. The full grant of Delta’s proposal will promote the most competitive market structure possible in the existing circumstances. If American’s and US Airway’s proposals were granted here, and Delta’s was not, post merger American would have 82 unrestricted Brazil frequencies, Delta 16, and United 35. DL - A - 103 . On the other hand, if Delta’s proposal is granted in full, American would still be the dominant carrier, but with a much more competitive distribution of unrestricted frequencies: 61 for American, 37 for Delta, and 35 for United. DL - A - 105. In the Instituting Order, the Department stated that in the applicants’ submissions, “we fully expect [the American/US Airways merger] issue to be developed further on the record as the carrie rs advance the merits of their proposals.” Order 2013 - 4 - 9 at 6. However, US Airways and American have failed to volunteer the relevant facts of their merger that bear on this case. In order to develop this issue for the record, Delta calls upon US Airway s and American to address the following interrogatories: 1. Are American and US Airways merging? 1 2. Do American and US Airways expect their merger to be completed in the third quarter of 2013? 2 3. Have American and US Airways filed a route transfer application seeking to consolidate all of US Airways’ international route authorities with American’s ? 3 4. Will the combined entity have at least 61 unrestricted Brazil frequencies including the 47 currently held by American, the 7 to be transferred from

1 http://www.usairways.com/en - US/aboutus/pressroom/newamerican.html?cint=update_21132 2 http://newamericanarriving.com/investors/whats - happening - next/ 3 Docket DOT - OST - 2013 - 0082Answer of Delta Page 4 Delta to US Airways, and 7 surplus frequencies remaining after satisfaction of Delta’s full request in this case? Given that US Airways/ American are assured of receiving 14 incremental frequencies over the next two years ( even after full satisfaction of Delta’s request) there is no credible threat to US Airways ability to continue Charlotte service. US Airways has already extended its lease with U nited though Octo ber 2014 (but does not indicate if it sought to extend the lease until the summer 2015 season when it will receive seven unrestricted frequencies from Delta). Indeed, US Airways conveniently ignores the seven frequencies it will receive from Delta

– which could also be used to fund its Philadelphia proposal. DL - A - 102, 103. At most US Airways requires an award of seven frequencies, which will enable it to continue service at Charlotte and launch new service at Philadelphia following the transfer of the Delta frequencies. With an astounding 47 unrestricted Brazil frequencies at its disposal, the legacy American entity should be ruled out for an award. The public interest requires that American receive more competition, not more frequencies. American operates qu adruple daily Sao Paulo flights at Miami, double daily service at New York , and can readily fund either of its Los Angeles or Chicago service while maintaining service at all existing gateways. Interestingly, US Airways is highly critical of Delta and urges that : the Department should only consider a frequency allocation for purely duplicative services that would be operated by a single carrier (such as Delta’s proposal to add same carrier second daily flights at Atlanta and New York) after accommodating needs for frequencies to preserve existing services and proposals to serve new gateways; and after U.S. cities that already have Sao Paulo nons top service operated by another U.S. or foreign carrier receive an alter native service option

. US Supp at 19 (emphasis original)

. Yet, US Airways has no issue with American’s highly duplicative current service pattern , and US Airway awkwardly construes its pleading to endorse American over Delta.Answer of Delta Page 5 It should not be forgotten that less than a year ago the Department granted a huge frequency request by American for 17 Brazil frequencies, which allowed American to “backfill” frequenc ies on the Miami - Rio de Janeiro route and move those seven unrestricted frequencies to establish a second daily Sao Paulo flight at JFK. 4 DL - A - 107, 108. Thus, even without an award in this case, the Department has been very generous to American with regard to Brazil authority. Given the pending American/US Airways merger and the huge frequency cache that will be held by the combined entity, it is not surprising that US Airways would stress individual gateway attributes over market structure and competition. (US Supp. at 4) Howe ver this belies the reality of the U.S. - Brazil market. Under well settled DOT precedent, all allocated U.S. - Brazil frequencies can be used in any eligible U.S. - Brazil city - pair. 5 Given the large number of frequencies outstanding

– and the flexibility the Department has granted carriers to freely move them among gateways, market structure considerations should be given greater decis ional significance than individual gateway attributes in this case. In terms of individual gateway attributes, however, Delta’s p roposals excel on the merits. The following bullets summarize the service and competitive benefits that would result from Delta’s Atlanta, New York and Detroit proposals:

• Atlanta is Delta’s largest hub with 1,000 daily flights serving 150 U.S. p oints. With just a single daily Atlanta - Sao Paulo flight, Delta’s network is handicapped against the four daily Miami flights operated by American, which will soon be consolidate d with a fifth eastern network service operated by US Airways at Charlotte. A second Atlanta flight is needed to open a new time channel a t this important hub and improve competition in the scores of one stop connecting markets served by American/US Airway s from Miami and Charlotte.

4 See Notice of Action Taken, Docket OST - 2012 - 0079 (May 24, 2012)

. 5 “We . . . grant the . . . U.S. carriers designated for combination services in the U.S. - Braz il markets flexibility to use their allocated frequencies in markets where the carriers hold requisite underlying authority.” (Order 2004 - 6 - 25).Answer of Delta Page 6

• New York - Sao Paulo is the largest U.S. - Brazil market with nearly 340,000 annual O&D passengers

– far larger than any competing gateway at issue in this proceeding. American operates 2 daily flights, and an additional flight b y its partner, TAM, gives oneworld a 3:1 schedule advantage over Delta. An award of one additional flight to Delta will open a new time channel and help close the competitive gap with American and the oneworld alliance at JFK. In addition, JFK is an imp ortant connecting hub with online service to 48 U.S. points.

• Detroit - Sao Paulo is a successful, established service linking Detroit and the Midwest industrial base to the business and manufacturing center of Brazil. Delta’s flight benefits U.S. companies doing business abroad and extends the global reach of the U.S. auto industry. Detroit provides the only intergateway competition to Chicago in the Midwest region, and offers nonstop service to 114 U.S. points. Continuation of Detroit - Sao Paulo service i s very important to Delta, Detroit, the State of Michigan and U.S. industrial interests.

I I I. Rebuttal of Other Carrier/Gateway Proposals A. US Airways – Charlotte Between them, US Airways and American are assured of receiving 14 incremental frequencies over the next two years even after full satisfaction of Delta’s request. DL - A - 102, 103. In these circumstances, there does not appear to be a material threat to US Airways ability to continue Charlotte service. As noted, US Airways has already extended its lease with United though Octo ber 2014 (but does not indicate if it sought to extend the lease until the summer 2015 season when it will receive seven unrestricted frequencies from Delta). The combined American/US Airways entity will have a minimum of 61 unrestricted Brazil frequencies and it would seem likely that the new American would use at least 7 of those frequencies to maintain service at Charlotte. A second daily Atlanta - Sao Paulo flight will compete with Charlotte and help to offset the loss of eastern U.S. network competition as the result of the consolidation of US Airways and American. DL - A - 202. With just a single daily Sao Paulo flight, the potential of the Atlanta hub is underutilized. The Department can create substantialAnswer of Delta Page 7 service and co mpetitive benefits for the traveling public by authorizing an additional Atlanta - Sao Paulo frequency. Delta’s U.S. - Sao Paulo network is at a disadvantage to the four daily Miami - Sao Paulo flights operated by American, which will soon be combined with a fi fth daily Charlotte - Sao Paulo flight operated by US Airways. DL - A - 201

. New service at Atlanta will help close this competitive gap. Importantly, additional frequencies at Atlanta will help to improve competition in the 48 one - stop overlap markets serve d by both American and US Airways that will lose a competitor as a result of the merger. DL - A - 202

. In terms of comparative metrics, Atlanta is superior to Charlotte both in terms of local market size, and as a connecting hub. Delta provides nonstop service from Atlanta to 150 U.S. cities

– nearly 50 percent more cities than served by US Airways from Charlotte. DL - A - 203 . And, the Atlanta flight serves a metropolitan area with a population mor e than double Charlottes. DL - A - 20 4

. Atlanta’s location in the Southeastern United States provides convenient, competitive, and non - circuitous Sao Paulo connections. Delta and its regional affiliates provide nonstop service from Atlanta to more than 150 U.S. points, and operate more tha n 1,000 peak day departures at the hub. DL - A - 206 . The availability of new time of day coverage and increased capacity on this route will allow more passengers to take advantage of the Atlanta hub gateway. DL - A - 208

. Atlanta offers unsurpassed facili ties and convenience for U.S. - Brazil passengers. In May, 2012, Delta and Atlanta celebrated the opening of Atlanta's new, state - of - the - art $1.4 billion international terminal. DL - A - 209 The new Maynard H. Jackson Terminal interfaces with Atlanta’s multi - c oncourse terminal layout that is designed to facilitate seamless connections to onward flights. DL - A - 210. Detroit is also superior to Charlotte because it provides the only competitive nonstop flight to Sao Paulo for t he entire Midwest region. DL - A - 211. Detroit - Sao PauloAnswer of Delta Page 8 is a successful established service linking Detroit and the Midwest industrial base to the business and manufacturing center of Brazil. Delta’s flight benefits U.S. companies doing business abroad and extends the global reach o f the U.S. auto industry. From Detroit, Delta and the Delta Connection carriers offer nonstop service to 114 U.S. points. DL - A - 214

. C o ntinuation of Detroit - Sao Paulo service is very important to Delta, Detroit, and the State of Michigan. Unlike American/US Airways which are assured of receiving 14 frequencies, Delta would be forced to suspend Detroit service if the Department does not grant priority to its request over the competing applications of American and US Airways, which collective ly seek all 28 frequencies in this case. As previously discussed, Delta is contractually obligated to transfer seven weekly unrestricted frequencies to US Airways as part of the DOT - approved DCA/LaGuardia slot swap transaction , which would leave Delta wit h insufficient frequencies to mai ntain service at Detroit. DL - A - 103. It is very important that Delta receive an allocation of frequencies to offset the required transfer to US Airways, which is now American’s merger partner, not a stand - alone new entran t to Brazil as it was at the time of the slot swap. 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 transacti on and to achieve the enormous benefits of establishing a new Delta hub at LaGuardia. American’s attack on the slot swap transaction is specious. AA Supp at 5. The Department recognized the enormous consumer benefits that would be created by the establishment of a new Delta hub at LaGuardia, and the benefit of granting US Airways access to an important international market. Delta has delivered on the public benefits of its ne w hub, increasing DL/US LGA capacity 8 percent , and driving 13 percent more traffic on these flights . DL - A - 215 . The fact is thatAnswer of Delta Page 9 circumstance s have now change d dramatically by virtue of the American/US Airways merger. Favorable action by the Departmen t on Delta’s application is necessary to prevent the new American from attaining unacceptable market power on U.S. - Sao Paulo routes. B. US Airways – Philadelphia US Airways requests 14 frequencies from the Department : 7 to fund Charlotte Sao Paulo and 7 to fund Philadelphia - Sao Paulo. Yet, US Airways inexplicably ignores the seven frequencies it will receive from Delta

– which can be used to fund its Philadelphia proposal. DL - A - 102, 103

. US Airways should not receive two sets of frequencies in this case, and be allowed to warehouse the 7 frequencies it will receive from Delta for some unspecified future use. At most US Airways requires an award of seven frequencies, which will enable it to continue service at Charlotte and launch new service at Philadelphia following the transfer of the Delta frequencies. US Airways’ Philadelphia gateway is immediately adjacent to Delta’s proposed New York gateway. But, New York - Sao Paulo is the largest U.S. - Brazil market wit h nearly 340,000 annual O&D passengers

– far larger than any competing gateway at issue in this proceeding. DL - A - 301 . New York is nearly 50 times larger than Philadelphia or Charlotte, 3.5 times larger than Los Angeles, and 6.5 times larger than Chicago

. Id. Given the importance of the New York market, a second daily flight at Delta’s large and well established New York hub is likely to produce greater benefits than speculative proposals for smaller O&D gateways than have never been able to sustain U.S. flag scheduled service to Sao Paulo. Delta’s second daily New York (JFK) - Sao Paulo flight will compete with the merged US Airways/American entity, and the fact that US Airways will likely have the resources to fund Philad elphia service in the region makes an additional Delta flight allAnswer of Delta Page 10 the more important. American already operates two daily New York - Sao Paulo flights, and an additional flight is offered by its partner, TAM, giving oneworld a 3:1 schedule advantage over D elta. DL - A - 302 . An award of seven additional frequenc ies to Delta will open a new time channel and help close the competitive gap with American and the oneworld alliance at JFK. DL - A - 303

. In addition to serving the largest local market in this case, D elta’s JFK hub will provide significant connecting benefits with online service to 48 U.S. points. DL - A - 304. Whether passengers are originating in New York or connecting from other cities, their experience will be enhanced by Delta’s new Terminal 4 facilit y opening in May 2013. DL - A - 306, 307 . This $1.4 billion investment features the largest SkyClub in Delta’s system, and will allow international arrivals to be concentrated in the new facility. C. American – Los Angeles With 47 unrestricted Brazil frequenci es at its disposal , American should not receive any additional frequencies in this proceeding and the expense of new competitive service by Delta. L ess than a year ago the Department granted a large frequency request by American for 17 Brazil frequencies, which allowed American to “backfill” frequencies on the Miami - Rio de Janeiro route and move those seven unrestricted frequencies to establish a second daily Sao Paulo flight at JFK. 6 DL - A - 107, 108. E ven without an award in this case, the Department has been very generous to American with regard to Brazil authority. The Department has provided American with unlimited “ flexibility to use [its] allocated frequencies in markets where [American] hold[ s] requisite underlying authority.” (Order 2004 - 6 - 25). Thus, while American has the flexibility to serve the Los Angeles - Sao Paulo market today, it prefers to operate

6 See Notice of Action Taken, Docket OST - 2012 - 0079 (May 24, 2012).Answer of Delta Page 11 quadruple daily Sao Paulo flights at Miami, and double daily service at New York

. DL - A 401. The fact that American does not chose to operate nonstop service at Sao Paulo is not surprising given that Los Ang e les has not been able to sustain U.S. flag scheduled service to Sao Paulo. Two prior attempts to serve the market failed afte r les s than eight months. DL - A - 402. While Los Angeles does have nonstop service by Korean Air, this is due in large part to the fact that Seoul - Sao Paolo is too far to fly nonstop, and Korean’s load factors on the LAX - GRU segment average less than 70 percent . Id. It is unlikely that American’s flight would be viable, and that American would seek to pocket the frequencies and move them to new gateway using the unrestricted flexibility that is standard for Brazil awards. American has excellent schedule cove rage in the LAX - GRU market with at least six different service options via its D FW and Miami gateways. DL - A - 403 . Because of its west coast location, Los Angeles provides little in the way of connecting benefits because all points east of Phoenix require unacceptable backhaul. DL - A - 404. In addition, American provides nonstop - to - nonstop connections via DFW to 37 of 43 western U.S. cities it serves from Los Angeles. DL - A - 405

. American’s dominance in the U.S. - Brazil marketplace is formidable in its own right, and is even more concerning when the effect s of the US Airways merger and oneworld alliance are considered. Together, these carriers will control 64 percent of U.S. - Sao Paulo capacity. DL - A - 109. American holds antitrust immunity with LAN, 7 and LAN has now completed its take - over of TAM, the largest airline in Brazil. 8 TAM has announced that it will be part of oneworld, and given American’s immunized relationship

7 Order 2005 - 10 - 8. 8 http://www.economist.com/blogs/gulliver/2012/06/south - american - airlinesAnswer of Delta Page 12 with LAN, those ties are likely to be especially close. The award of 21 freque ncies to Delta in this case will help to offset the growing dominance of oneworld in Brazil and Latin America. D. American – Chicago As with Los Angeles, American has sufficient frequencies and the flexibility to serve Chicago - Sao Paulo today if it was in American’s commercial interest to do so. DL A - 401. American should not receive a further award for Chicago service at Delta’s expense. American proposes to add a second nonstop Sao Paul o flight at Chicago (a route already served by United) whereas Delta seeks frequencies to maintain Detroit’s only nonstop flight

– which is also the only competing gateway in t he entire Midwest region. DL - A - 501

. As noted above, Delta’s Detroit - Sao Paulo flight is an important service linking Detroit and the Midwest industrial base to the business and manufacturing center of Brazil. Detroit is a superior connecting hub. From Detroit, Delta and the Delta Connection carriers offer nonstop service to 114 U.S. points. DL - A - 502 . By contrast, American serves 101 points from Chicago. DL - A - 504. And, Delta’s state - of - the - art McNamara terminal was designed with simplicity and ease of passenger transfers in mind, featuring an elevated monorail, moving sidewalk s and integrated customs facility

– a welcome relief to American’s dated facilities at Chicago. DL - A - 505, 506.Answer of Delta Page 13 V . Conclusion Delta’s request for frequencies to increase and maintain Sao Paulo service at Atlanta, New York, and Detroit will create important benefits for the traveling public and enhance competition on U.S. - Brazil routes. Delta respectfully submits that the Department’s objective to m aximize public benefits would be best served by the grant of 21 frequencies to Delta necessary to implement its full service proposal. Respectfully submitted,

_________________________________ Alexander Van der Bellen Managing Director, Government Affairs

& Associate General Counsel DELTA AIR LINES, INC.CERTIFICATE OF SERVICE A copy of the foregoing Appli cation has been served this 3rd day of May , 201 3 , upon the following persons via email: Francis.Heil@aa.com Robert.Wirick@aa.com howard.kass@usairways.com benjamin.slocum@usairways.com dan.weiss@united.com thomas.bolling@united.com paul.gretch@dot.gov esta.rosenberg@dot.gov brian.hedberg@dot.gov brett.kruger@dot.gov urskr@state.gov joe.cambron@wcaa.us brubinst@panynj.gov louis.miller@atlanta - airport.com info@airlineinfo.com

# Delta Answer Exhibits

Section I: Competitive Overview the of U.S. - Brazil Marketplace Section II: US Airways – Charlotte Section III: US Airways – Philadelphia Section IV: American – Los Angeles Section V: American – Chicago

# Section I: Competitive Overview the of U.S. - Brazil Marketplace

# An Award of 21 Frequencies to Delta is Required to Improve the Competitive Market Structure

• American currently dominates Brazil, with nearly half of the U.S. total of unrestricted Sao Paulo frequencies.



## 47

7 23 35



# AA US DL UA US - Brazil Unrestricted Weekly Frequencies by Airline

*

MIA 26x JFK 14x DFW 7x EWR 7x IAD 7x IAH 7x ORD 7x *7x leased to US ATL 7x JFK 7x DTW 7x Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 101



## CLT 7x* leased from UA

Note: 2 DL Unrestricted Frequencies Support Atlanta - Rio de Janeiro

# Delta’s Proposal Improves the Competitive Market Structure Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 102



### 23 7 47

DL US AA

16 7 47

DL US AA

37 14 47

DL US AA 37 7 54

DL US AA 

## DL frequencies to US to backfill leased UA

DL awarded 21 frequencies, US or AA receive 7

37 61

DL AA/US 

## AA/US merge, increase frequency advantage 37 61

DL AA/US 

## Current allocation of unrestricted frequencies

DOT DOT

# American and US Airways Proposals Exacerbate Competitive Imbalance Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 103



### 23 7 47

DL US AA

16 7 47

DL US AA

16 21 61

DL US AA 

## DL frequencies to US to backfill leased UA

DL awarded no frequencies, US and AA receive 14 each AA/US merge, increase frequency advantage 16 82

DL AA/US 

## Current allocation of unrestricted frequencies

DOT

# An Award of 21 Frequencies to Delta Will Create the Optimal Competitive Distribution of Frequencies

• AA will remain the largest U.S. carrier to Brazil, but with two credible challengers of equal strength



## 61 37 35



# AA/US DL UA U.S. - Brazil Unrestricted Frequency Distribution if Delta’s Proposal is Granted

MIA 26x JFK 14x CLT 7x DFW 7x LAX/ORD/PHL7x EWR 7x IAD 7x IAH 7x ORD 7x ??? 7x ATL 14x JFK 14x DTW 7x Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 104

Note: 2 DL Unrestricted Frequencies Support Atlanta - Rio de Janeiro

# American Airlines and US Airways are Merging Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 105



# “The combination is expected to be completed in the third quarter of 2013”

- newamericanarriving.com/ faq



# American and US Airways expect to merge before any of the U.S. - Brazil frequencies at issue become effective.

# American Airlines and US Airways are Merging

• American and US Airways tout the strength of their combined Latin American network Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 106

Source: American/US Airways Route Transfer Application at 17.

# American was Awarded 17 Brazil Frequencies Just Last Year

– 7 of Which It Used to Fund New Service on the Restricted JFK - Sao Paulo Route Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 107

# American was Able to Increase New York - Sao Paulo Service by Using DOT’s Award of New Frequencies to “Backfill” Miami - Rio de Janeiro Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 108



### 26

7 7 7

MIA - GRU MIA - GIG JFK - GRU DFW - GRU 

## AA Unrestricted Frequencies May 2012

DOT 26 14 14 7

MIA - GRU MIA - GIG JFK - GRU DFW - GRU 

## Select AA Frequencies Following “Backfill” • American was allowed to move frequencies that became eligible for Sao Paulo flying from their Miami - Rio de Janeiro flight to New York (JFK) - Sao Paulo

– DOT then immediately granted American new Rio de Janeiro frequencies to backfill those transferred to JFK - GRU, and additional MIA - Brazil frequencies as well

New Restricted Frequencies



## Note: 11 Frequencies currently used for non - Sao Paulo service are eligible for future use at Sao Paulo once infrastructure constraints are addressed.

# An Award of 21 Frequencies to Delta is Required to Improve Competitive Balance

American 34%

US Airways 4% Tam, future

oneworld 26% Delta 14% United

19% Other 3% U.S. - Sao Paulo Capacity Share by Airline Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 109

Source : August 2013 OAG 

### oneworld 64% Star 19% Skyteam 17% U.S. - Sao Paulo Capacity Share by Alliance 

## American and US Airways offer 277%

more Sao Paulo capacity than Delta oneworld will control 64% of U.S. - Sao Paulo capacity

# Gol Enhances Delta’s Brazil Network

• Delta codeshares on Gol to 19 Points beyond Sao Paulo Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 110

Source : August 2013 OAG

# Section II: US Airways – Charlotte

# Delta Needs Additional Frequencies at Atlanta to Better Compete with the 5 Daily Flights of AA/US from Their Eastern Network Hubs

• A single daily Atlanta flight puts Delta’s network at a competitive disadvantage to the five daily flights offered by AA/US from Miami and Charlotte.

Source : August 2013 OAG Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 201

5

1

AA/US DL 

## Daily Flights to GRU from Southeastern U.S. Gateways

US Hub DL Hub AA Hub



### 500%

# Additional Atlanta Frequencies Will Help to Alleviate the Loss of One - Stop Connecting Competition from AA/US Merger 48 Cities Will Lose A Competitive Alternative

Source : August 2013 schedules, Diio Mi Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 202

Note: Cities served from ATL by DL, and US/AA from MIA and CLT

# Delta’s Proposed Atlanta Gateway Offers Broadest Access for U.S. Cities Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 203



## 150 108 85

ATL CLT PHL 

## Non - stop Destinations from Proposed Hubs

Source : August 2013 OAG US Proposal DL Proposal

# Delta’s Proposed Sao Paulo Gateways Offer Greater Access for More U.S. Customers Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 204



## 5,457

2,296



# 0 2,000 4,000 6,000

ATL CLT 

## Population from Proposed Hub’s Metropolitan Areas (Thousands)

Source : 2012 Census Estimate 

## 18,897

5,965 

# 0 5,000 10,000 15,000 20,000

JFK PHL 

## Population from Proposed Hub’s Metropolitan Areas (Thousands)

US Proposal DL Proposal

# Atlanta Offers More Potential U.S. City Connections Than Charlotte and Miami Combined

• Atlanta offers 38 more unique U.S. destinations than Charlotte and Miami Combined

150 112 108

50

ATL Combined CLT & MIA CLT MIA 

## U.S. City Connections from Southeastern Hubs

AA/US Hub DL Hub

Source : August 2013 OAG Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 205

# Atlanta is an Ideal East Coast Gateway to Sao Paulo Delta Provides Nonstop Service to 150 U.S. Points

Source : August 2013 schedules, Diio Mi 

# To GRU To HNL Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 206

To ANC

# Atlanta is Delta’s Largest Hub and a Major Long - Haul International Gateway

• Atlanta is a major South American gateway

• Delta has a leading international presence in Atlanta and currently serves nine non - stop destinations in South America, two in Africa, one in Asia, and sixteen in Europe Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 207

# Atlanta Needs a Second Frequency to Offer Competitive Time Channel Coverage to Miami

Source : August 2013 OAG Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 208

# Atlanta Offers Unsurpassed Convenience for U.S. - Brazil Connection Passengers Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 209



## • In May 2012, Delta and Atlanta opened the state - of - the - art Maynard H. Jackson Jr. International Terminal, a new $1.4 billion terminal project.

# Atlanta Offers Unsurpassed Convenience for U.S. - Brazil Connection Passengers Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 210



## • DL offers exceptional convenience for connecting passengers at Hartsfield Jackson Atlanta International Airport. International arrivals and departures are gated in Concourses E and F and are easily accessed via airport tram.

### EWR EWR

LAX LAX ORD ORD

MIA MIA MCO MCO ATL ATL CLT CLT

IAH IAH DFW JFK JFK IAD IAD 

# Delta’s Detroit - Sao Paulo Service Gives the Underserved Midwest Region A Second U.S. Gateway to Brazil

DTW

Existing Brazil Gateway Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 211Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 212 Page 25



### 20,347

6,271



# DTW CLT Local GRU Bookings

DL Proposal 

# Detroit is a Important Gateway At Risk of Losing Service

Source : MIDT YE Mar 2013 US Proposal 

## • Detroit is more than three times larger than Charlotte, which US Airways claims is at risk of loss of service as a result of the merger.Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 213 

# Michigan Industry Relies on DTW International Service Major Michigan Companies: General Motors Stryker Ford Motor Autoliv Chrysler Group Visteon Dow Chemical Masco Whirlpool Borg Warner TRW Automotive Holdings CMS Energy Lear Auto - Owners Insurance Ally Financial Kelly Services Kellogg Con - way Penske Automotive Group Meritor DTE Energy

# DTW is Delta’s Primary Midwestern Hub Delta Provides Nonstop Service to 114 U.S. Points

Source : August 2013 schedules, Diio Mi Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 214 Page 27



# To GRU

# The DOT - Approved DCA/LGA Slot Swap Produced Enormous Consumer Benefits Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 215

8% 13%

Seat Chg Pax Chg 

## LGA Capacity vs. Demand Slot transaction created immediate value to traveling public

• DL/US seats in LGA increased 8% and passenger demand increased almost twice that amount at 13%

• LGA industry traffic increased by more than 2,000 daily passengers YoY which is over 750,000 annually

Source: Seat Change

– OAG guide for peak week August 2012 v August 2011 to USA DOT 3Q 2012 v. 3Q 2011 for passenger change (U.S. only)

# Section III: US Airways – Philadelphia

# New York is the Largest and Most Important U.S. Market to Sao Paulo Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 301



### 338,196

97,309 51,281 7,288 6,271 

# NYC LAX ORD PHL CLT 0 100000 200000 300000 400000 U.S. - GRU Local Bookings

DL Proposal

Source : MIDT YE Mar 2013 

## • New York dwarfs the competing gateway proposals in terms of local market size

AA Proposal US Proposal

# American and Its oneworld Partner, TAM, Out - schedule Delta 3 Flight to 1 in the Critical New York - Sao Paulo Market

• An additional JFK frequency will help to achieve parity with American, but Delta will still trail the combined American/TAM (JJ) oneworld offering.

Source : August 2013 OAG Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 302



## 3

1



# AA & JJ DL Daily JFK - Sao Paulo Flights

AA JJ 

## 1,838

492



# AA & JJ DL Daily JFK - Sao Paulo Seats

AA JJ

# Delta Needs a Second JFK Frequency to Offer Competitive Time Channel Coverage

Source : August 2013 OAG Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 303

# Delta’s Domestic JFK Routes Provide Key Access to International Destinations Delta Provides Nonstop Service to 48 U.S. Points

Source : August 2013 schedules, Diio Mi Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 304



# To GRU

# JFK is Delta’s Premier International Gateway Delta Provides Nonstop Service to 44 International Points

Source : August 2013 schedules, Diio Mi Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 305

# JFK’s New Terminal 4 Will Offer NYC - Brazil Passengers A Premier Airport Experience Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 306



## • In May 2013, Delta and New York will open the new Terminal 4, a $1.4 billion terminal project that will allow for easier transit with additional baggage claims, as well as customs and border - security facilities.

# JFK’s New Terminal 4 Will Offer NYC - Brazil Passengers A Premier Airport Experience Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 307



## • International arrivals will be concentrated in the new Terminal 4.

# Section IV: American – Los Angeles

# American is Able to Fly LAX - GRU Today Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 401



### 26

14

7

0 

# MIA JFK DFW LAX AA Frequencies by Gateway • Despite holding 47 unrestricted frequencies, with no U.S. gateway limitations, AA spurns LAX - GRU in favor of quadruple daily service at MIA and double daily service at JFK



# ?

# Los Angeles Has Not Sustained Direct Daily Sao Paulo Service

• Only Korean Air Lines operates this route currently

– 3x weekly

– Historical Load Factor < 70% • Delta and United have both operated the route before, each attempt lasted less than 8 months

– DL August 2009 - February 2010

– UA October 1992 - April 1993 Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 402



# 1990 2000 2010 DL UA AA LAX - GRU Scheduled Service History by U.S. Flag Carriers

# American’s Los Angeles Customers Can Conveniently Connect Via DFW & MIA Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 403



## LAX - GRU via DFW via MIA 

# Distance 6,346 6,414

Circuity 3.1% 4.2%

# LAX - GRU Would Only Benefit a few West Coast Connections Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 404



## More convenient via LAX

More convenient via DFW or MIA

# American’s Los Angeles Customers Can Conveniently Connect Via DFW & MIA Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 405



## • Of the 43 cities AA serves from LAX, only 6 are not already connected to DFW

Source : August 2013 OAG

# American’s Los Angeles Customers Can Conveniently Connect Via DFW & MIA Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 406



## • Of the 43 cities AA serves from LAX, only 6 are not already connected to DFW

Source : August 2013 OAG 

### 37

6 

# Already Connected New Conneciton via LAX AA LAX Cities Already Connected to GRU via DFW

# Section V: American – Chicago

### EWR EWR

LAX LAX ORD ORD

MIA MIA MCO MCO ATL ATL CLT CLT

IAH IAH DFW JFK JFK IAD IAD 

# Delta’s Detroit - Sao Paulo Service Gives the Underserved Midwest Region A Second U.S. Gateway to Brazil

DTW

Existing Brazil Gateway Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 501

# DTW is Delta’s Primary Midwestern Hub Delta Provides Nonstop Service to 114 U.S. Points

Source : August 2013 schedules, Diio Mi Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 502 Page 46



# To GRU

# DTW is Delta’s Midwest International Gateway Delta Provides Nonstop Service to 16 International Points

Source : August 2013 schedules, Diio Mi Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 503

# Detroit Offers More Potential U.S. City Connections Than AA at O’Hare

• Detroit offers 13 more unique U.S. destinations than O’Hare

114 101

DTW ORD 

## U.S. City Connections from Midwestern Hubs

AA Hub DL Hub

Source : August 2013 OAG Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 504

# Passengers Throughout the U.S. Can Conveniently Travel via Detroit Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 505



## • The McNamara Terminal was designed with simplicity and ease of passenger transfer in mind.

# Passengers Throughout the U.S. Can Conveniently Travel via Detroit Docket DOT - OST - 2013 - 0072 Exhibit DL - A - 506



## • DL offers exceptional convenience for connecting passengers with the McNamara Terminal at Detroit Metropolitan Wayne County Airport.