UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, DC
Issued by the Department of Transportation on June 16 , 20 10

NOTICE OF ACTION TAKEN

-- DOCKET S DOT

- OST

- 20 10

- 00 88 and DOT

- OST

- 2010

- 0090

__________________________________ _______________ _______________________________________________________________________ This serves as notice to the public of the action described below, taken by the Department official indicated (no add itional confirming order will be issued in this matter).

Application of A MERICAN AIRLINES , INC. ( American ) filed 4/8/10 for:

XX Allocation of 11 U.S.

- Brazil weekly combination frequencies in order to institute daily nonstop service between New York (JFK) and Rio de Janeiro and four

- days

- a

- week nonstop service between Miami and Brasilia effective October 1, 2010

. Application of DELTA AIR LINES, INC. (Delta) filed 4/8/10 , as modified 4/16/ 10 for:

XX Allocation of four U.S.

- Brazil frequencies to institute four

- days

- a

- week service between Detroit and Sao Paulo

, when the restriction from use at Sao Paulo is lifted. 1

Applicant rep s : Carl B. Nelson ( 202 ) 496

- 5647 (American) and Alexander Van der Bellen (202) 842

- 4184 (Delta)

DOT Analyst: Brett D. Kruger (202) 366

- 8025

DISPOSITION

XX Granted with respect to allocation of 11 frequencies to American (subject to conditions, see below) XX Dismissed with respect to allocation of frequencies to Delta (see discussion, below)

The above action allocating frequencies was effective when taken: June 16 , 20 10

, and will remain in effect indefinitely, subject to the conditions below.

Action taken by: Susan L. Kurland Assistant Secretary for Aviation and International Affairs

XX The authority granted is consistent with the aviation agreement between the United States and Brazil, as amended

. Except to the extent exempted or waived, this authority is subject to the terms, conditions, and limitations indicated: XX American ’s certificates of public convenience and necessity

1 We note that in its original application, Delta requested an allocation of five frequencies to support daily nonstop Detroit

- Sao Paulo service when the restriction at Sao Paulo is lifted.DISCUSSION

Background: American and Delta filed applications on Apri l 8, 2010 , in response to the Department’s March 24, 2010 Notice Inviting Applications from U.S. air carriers for the 14 combination frequencies that become available October 1, 2010

, for scheduled U.S.

- Brazil services (the October 2010 frequencies). In that n otice, we stated that the frequencies at issue here may be used at any points that U.S. carriers may serve, subject to the restriction that these frequencies may not be used at S ao Paulo’s Guarulhos International Airport until infrastructure

- related constraints at the airport are removed.

In its application, American requested an allocation of 11 frequencies to institute daily nonstop service between New York (JFK) and Rio de Janeiro and four

- days

- a

- week nonstop service between Miami and Brasilia. Delta requested an allocation of five frequencies to support daily nonstop service between Detroit and Sao Paulo when the restriction at Sao Paulo is removed.

Responsive Pleadings: On April 12, 2010, American filed a motion for immediate approval of its application for 11 frequencies

, and filed an additional motion to dismiss the application of Delta for five frequencies . American argues that Delta’s request for frequencies to ser ve the Detroit

- Sao Paulo market is outside the scope of the Department’s March 24 Notice Inviting Applications for the frequencies that become available in October 2010. American asserts that its application is within the scope of t he March 24 Notice and should be immediately approved as uncontested.

On April 16, 2010, Delta filed a consolidated answer to the motions of American. In its answer, Delta modified its request , reducing the number of frequencies sought from 5 to 4, and propose d that the Depa rtment could achieve full implementation of both carriers’ requests through a redistribution of Delta’s currently held frequencies. Delta states that American does not require an award of the October 2010 frequencies in order to ins titute its Miami

- Brasilia service. Rather

, Delta states that the D epartment should consider the long

- term public benefits of the October 2010 frequencies by reallocat ing to American 4 of Delta’s 10 currently

- held more

- restrictive frequencies which can be used to provide Miami

- Brasilia service

, and then allocate to Delta four of the October 2010 frequencies for use by Delta for its existing northern services until the removal of the Sao Paulo re striction. 2

US Airways, Inc. (US Airways) , though not an applicant, filed an answer in opposition to Delta’s application. US Airways asserts that Delta’s request, as modified , is outside the scope of the Department’s March 24 Notice, is inconsistent with the restriction in the U.S.

- Brazil bilateral agreement, a nd is contrary to Department precedent. US Airways further argues that if the Department were to consider Delta’s request, it should also give other interested U.S. carriers an opportunity to apply for frequencies to support future Sao Paulo service

.

On April 23, 2010, Delta filed a consolidated response to the application of American and the answer of US Airways. Delta claims that its proposal is fully consistent with the Department’s March 24 Notice and the U.S.

- Brazil Air Transport Agreement , arguing that the October 2010 frequencies may be used at any points that U.S. carriers may serve and are restricted at Sao Paulo only until infrastructure

- related constraints at the airport are removed. Delta’s request is also supported by an answer of the Wayne County Airport Authority which operates the Detroit Metropolitan Wayne County Airport.

2 Delta states that it plans to seek the fifth Sa o Paulo

- eligible frequency required to provide daily Detroit

- Sao Paulo service from the unallocated pool in the future.American filed an answer to Delta’s April 8 application and a reply to Delta’s April 16 consolidated answer. 3 American continues to argue that Sao Paulo frequencies are not at issue and that Delta’s request should be dismissed. In support of its argument, American states that Delta itself recognized Sao Paulo as an ineligible point in its August 24, 2009

, joint application with US Airways for se ven U.S.

- Brazil frequencies that were subject to the same limitations

. American further cites Department precedent in Order 2006

- 6

- 17, where the Department found the application of AirTran Airways, Inc. (AirTran) for a similar reallocation of slots to be unresponsive and inconsistent with the precepts of fundamental fairness.

Delta filed a consolidated reply on May 4, 2010, further arguing that the applications of Delta and American
are not m utually exclusive and that the Department should make the best l ong

- term use of the October 2010 frequencies by awarding four to Delta. Delta further cites Department Order 2008

- 11

- 21, where the Department reallocated one northern frequenc y returned by Delta to American in order for both carrier applicants to prompt ly institute service and maxim ize use of the available limited

- entry bilateral rights.

Decision: We have decided to grant American’s request for 11 weekly U.S.

- Brazil frequencies , from the pool of 14 frequencies that become available on October 1, 2010, for its proposed daily New York (JFK)

- Rio de Janeiro service and four

- days

- a

- week Miami

- Brasilia service. We also dismiss Delta’s request.

It is the Department’s longstanding policy not to a llocate limited

- entry rights to carriers without firm plans t o use them , which we have held to include, among other things, a firm date for instituting service

. In the 2008 U.S.

- Brazil Combination Frequency Allocation Proceeding, which Delta cites in support of its argument, we awarded a more

- restrictive frequency , returned by Delta, to American in order for both carrier applicants to promptly institute service, where both parties had demonstrated firm plans , including start

- up dates, for their service proposals

. In the present instance, Delta has applied for freq uencies on the basis that they will be used in Sao Paulo when the infrastructure

- r elated constraints there are removed. However, there is no date when those constraints would be removed , and thus no firm date by which Delta could begin service

. American’s requested frequencies, on the other hand, would all be available for use, and American has provided firm start

- up dates for using them. In these circumstances, w e are not grant ing Delta’s application

, and we a ccordingly dismiss Delta’s request for freque ncies to serve the Detroit

- Sao Paulo city

- pair market.

Nor do we believe it is in the public interest to swap the frequencies as Delta has proposed. We invited applications for unrestricted frequencies. To then instead award restricted frequencies is not consistent with the use of the more l iberal rights received by the United S tates in the bilateral agreement.

Conditions: Consistent with our standard practice, the frequencies allocated here are subject to our standard 90

- day dormancy condition, wherein any frequency not operated for a period of 90 days (once inaugurated and for any reason other than seasonal use), will be deemed dormant and the allocation as to that frequency will expire automatically and the frequency will revert to the Department for r eallocation.

In addition, consistent with our practice in awarding frequencies, we will require that American inaugurate service with the frequencies allocated here within 10 days of October 1 , 2010 ( i.e. , by October 10 , 2010). Failure to inaugurate serv ice with a newly allocated frequency by October 10 , 2010, will result in the unused frequency reverting to the Department.

Remarks: American states that the introduction of its services will result in a near

- term annual change in fuel consumption exceedi ng 10 million gallons. Under the provisions of the Energy Policy and Conservation Act of 1975 and 14 CFR Part 313 of our rules, we have considered the matter of American’s anticipated fuel consumption along with the other public interest factors we conside r in taking action in a proceeding of this

3 American also requests leave to file the reply. In the interest of obtaining a complete record we will grant American’s motion.kind. We find, in the circumstances presented, that in view of our obligations under 49 U.S.C. 40105 to act consistently with international agreements (in this case, the U.S.

- Brazil Air Transport Agreement), and t he public benefits that will be derived from American’s services, approval of the request notwithstanding the anticipated level of fuel consumption is warranted.

With our action here, there are a total of three U.S.

- Brazil combination frequencies availabl e for allocation to U.S. carriers. 4

An electronic version of this document is available on the World Wide Web at: http://www.regulations.gov

4 These unallocated frequencies remain subject to the restriction that they may not be used at Sao Paulo’s Guarulhos International Airport until infrastructure related constraints at the airport are removed.