TMENT OF 

Susan Kurland 2]ii :^cP 19 A Q- rp 

Assistant Secretary for Aviation and International Affairs 

U.S. Department of Transportation 

1200 New Jersey Ave, SE 

Washington, DC 20590 

RE: Joint Motion of Air Canada, Austrian, Britisli Midland, Continental, Lufthansa, 

LOT, SAS, Swiss, TAP and United, Docket DOT-OST-2008-0234 - Public 

Comment Submission 

Dear Ms. Kurland, 

I write on behalf of UNITE HERE under Docket DOT-OST-2008-0234 regarding the 

inclusion of Brussels Airlines in the immunized Star Alliance and A++ joint venture. 

A letter to the Department dated August 31, 2011, submitted by Arthur Molins on 

behalf Deutsche Lufthansa AG, stated "no party opposes the motion." In reference to 

UNITE HERE'S position on the issue, the letter from Lufthansa says that our previous 

submission "comments on, but does not request the Department deny, the joint 

motion." 

In suggesting that we do not oppose the motion, Deutsche Lufthansa AG has 

misrepresented our position. UNITE HERE opposes the Joint Motion. To reiterate, 

our position can be summarized as follows: 

• In order to grant antitrust immunity to airlines, the law requires the 

Department of Transportation to determine that the "exemption is required 

by the public interest."^ We believe the Brussels Airlines case falls short. 

• Beyond failing to prove the consumer benefits of A++ immunity and 

therefore an expansion of that immunity, the Joint Movants fail to 

demonstrate that immunity is necessary to provide supposed benefits with 

regards to Brussels Airlines. 

• We believe the inclusion of Brussels Airlines in the immunized A++ joint 

venture would set a problematic precedent for the expansion of antitrust 

immunity grants. One particular concern is that Lufthansa still owns less 

than a majority of Brussels Airlines,^ yet requests the "same treatment" for 

Brussels as given to "majority-owned affiliates" under Order 2009-7-10.3 

1 DOT Order 2009-7-10 at 3, citing 49 U.S.C. § 41308(b). 

2 Lufthansa owns 45% of Brussels Airlines. Joint Movants Response to Request for More Information, 

July 5, 2011, in Docket DOT-OST-2008-0234 at Exhibit B. 

3 DOT Order 2009-7-10 at 2. 
In our public comment submission, we noted conditions that the Department should 

consider imposing if it does decide to grant immunity. These suggestions, which 

should not be misconstrued to represent support for immunity, include: 

• Any grant of imniuhity ^hbulcl! hot take effect until Lufth,ansa offipially 

purchases the rei^i^ning^hares of Brussels Airlines. • 

• Any grant of immunity should include certain carve outs, including routes 

currently undef anti-trust investigation in Europe and hub-io-hub fqutes. 

We believe expanding thp current Star Alliance antitrust immunity is a t:;omplicated 

one that not only impactsthe public interest on its own but also has.the potential to 

set a dangerous precedent for future antitrust immunity grants. 

While we trust that the Department will take our comments into appiropriate 

consideration despite Lufthansa!smischaracterization, we are alsp copying other 

relevant parties on this letter to ensure the record is clear. Our full comments, as 

submitted formally to the Department during the public comment period in August, 

are enclosed again here for ybur convenience. 

Thank you for your attention to this matter. : ,,. • .-: ^ ciit 

Sincerely,-

Kyle Schafer 

UNITE HERE 

55 W. Van Buren 

Chicago, IL 60660 

kschafer@unitehere.org 

CC: See attached list 
Cc: 

Arthur J. Molins 

General Counsel North America 

Deutsch Lufthansa AG ., , 

1640 Hempstead Turnpike ' " 

East Meadow, NY 11554 '>:' ' 

Stephen J. ^orri,ssjsy ,i ) ^-if ,•;; 

Managing Director, Regulatpiy , i ., 

United Airlines and Continental Airlines 

1025 Connecticut Ave. N.W., Ste. 1210 

Washihgton, DC 20036 ''• 

steve.mOTrissey@united.com ' •" . <> c.i' 

Hershel L Kamen 

Vice President-International, Regulatory and 

Policy ' ' i 

United Airlines and Cohtin6htal Airline's 

1350.1 St>NW, Ste. 1250 

Washington, DC 20005 . ,.,•' : 

hershel.kamen(5)united.com 

Daniel A. Weiss 

Managing Director, International 

United Airlines and Continental Airlines 

1350 I St., NW, Ste. 1250 

Washington, DC 20005 

Dan.weiss(5)united.com 

Thomas Newton Boiling 

Associate General Counsel, Regulatory, 

Alliances and International 

United Airlines and Continental Airlines 

1350 I St., NW, Ste. 1250 

Washington, DC 20005 

Thomas.bollingtScoair.com 

Michael Goldman 

Silverberg, Goldman and Bikoff LLP 

Counsel for Scandinavian Airlines System 

1101 30th Street NW, 

Washington, DC 20007 

mgoldman(5)sgbdc.com 

Max Sandlin 

Lobbyist - Air Canada 

Mercury LLC 

601 Pennsylvania Avenue NW 

North Building, Suite 1000 

Washington DC 20004 

agusttSmercurvllc.com 

?^lj'..;: iO 

•:'! ; 

Rui Pinto 

Lpbbyist - TAP Air Portugal , .., • 

Bristol Group - vr. ' 

^•gii^S^^eriilh^iv^^ • '•' -'•" ' •'•' 

Alexandria, VA 22310 

, CUri^tipeX yarney • -,, . i. • < 

Assistant Attorney General 

Department of Justice Antitrust Division 

950 Petmsylvahia'Avenue, I^W' ' ' 

' Washihgton, DC 20530! (i . 

Ray LaHood 

Department of Jransporfciition 

U.S. Department of Tfahspprtafipn 

1200 New Jersey Ave, SE •; 

Washington, DC 20590" '" " '^ '• • • 

•'!i-,,T.-;! ' • • ' J ' • ••;'•; . 1 •'• : ' .!.••.'. ' 

Elj^n^^ Wright , . •, : - : ., 

Program Manager, Docket Operations 

U.S. Department of Transportation 

120b New Jersey AVenue, SE ' • 

West Building, Ground Floor, Room W12-140 

Washington, DC 20590 

Sen. Patrick Leahy 

Chair, U.S. Senate Committee on the Judiciary 

437 Russell Senate Bldg 

United States Senate 

Washington, DC 20510 

Sen. Herb Kohl 

U.S. Senate Committee on the Judiciary 

Chair, Subcommittee on Antitrust, 

Competition Policy and Consumer Rights 

224 Dirksen Senate Office Building 

Washington, DC 20510 

Sen. Maria Cantwell 

U.S. Senate Commerce, Science & 

Transportation Committee 

Chair, Subcommittee on Aviation Operations, 

Safety, and Security 

311 Hart Senate Office Building 

Washington, DC 20510 

Other studies have echoed questions on the necessity of antitrust immunity to 

realize consumer benefits. Volodyrhjn" Bilotkach and Kai Huscherlrath concluded, 

"The frequently postulated lower prices due to the removal of double . 

marginalization following antitrust immunity are not obvious from the theoretical 

point of view, and can be realized in a partnership without such immunity."^ 

Similarly) economists at the Department 'of Justice Economic Analysis Group noted 

in 2011, "data also show that antitrust inlmunity is not reasonably necessary for 

alliance participants to deliver pricing efficiencies to connecting passengers. This 

evidence does not support broad regulatory exemptions from the U.S. antitrust laws 

for international airline alliances."^ 

Current Consumer Environment 

Meanwhile, in 2011, travelers have already seen repeated airfare increases. The Los 

Angeles Times reported in April that international travelers are likely to see the 

biggest hikes partly due to less competition on international routes.^ 

Of particular concern, in May 2011, the New York Times ran a story about the clout 

of the airhne alliances that are receiving antitrust immunity, noting:: 

But for all the talk of the benefits that alliances offer travelers, there is a 

continuing debate about the downside of this trend: too much market 

concentration, leading to higher fares. That is particularly a concern across the 

Atlantic, wherefores have risen disproportionately as competition has shrunk. 

'"Something changed in the North Atlantic that allowed prices to rise three 

times faster than they did in any other market," said Hubert Horan, an aviation 

consultant who has opposed alliance antitrust immunity. 'That was due to the 

extreme consolidation of the industry. There is no other factor that could 

explain it'^ 

In January 2011, USA Today wrote a forecast for business travelers that also 

suggested a troubling trend: 

While airline mergers are often limited by foreign ownership laws, airline 

alliances continue to grow. The alliances now control over 60% of world airline 

5 Bilokatch, Volodymjo- and Kai Huschelrath. "Antitrust Immunity for Airline Alliances." Centfe for 

European Economic Research, Discussion Paper No. 10-080, at 33. Article also published in Journal 

of Economics, Law and Organization. 

* Gillepsie, William and Oliver Richard, "Antitrust Immunity and International Airline Alliances." 

Economic Analysis Group, Antitrust Division, U.S. Department of Justice, at 20. 

^ Martin, Hugo. "Summer airfares may climb 15% from a year earlier." Los Angeles Times: April 17 

2011. 

8 Stellin, Susan. "The Clout ofAir Alliances." New York Times. May 2 2011. ' 
August 18, 2011 

Susan Kurland 

Assistant Secretary for Aviation and International Affairs 

U.S. Department of Transportation 

1200 New Jersey Ave, SE 

Washington, DC 20590 

RE: Joint Motion of Air Canada, Austrian, British Midland, Continental, Lufthansa, 

LOT, SAS, Swiss, TAP and United, Docket DOT-OST-2008-0234 - Public 

Comment Submission 

Dear Ms. Kurland, 

I write on behalf of UNITE HERE to submit a public comment in the scheduled 

proceeding under Docket DOT-OST-2008-0234 regarding the inclusion of Brussels 

Airlines in the immunized Star Alliance and A++ joint venture. 

We are concerned about the Joint Motion and will detail our issues below in the 

following areas: 

• Demonstration of public benefit 

• Precedent for expansion of immunized group 

• Existing regulatory concerns 

• Lack of information in the public domain 

Demonstration of Public Benefit 

In order to grant antitrust immunity to airlines, the law requires the Department of 

Transportation to determine that the "exemption is required by the public interest."^ 

We believe the Brussels Airlines case falls short. 

Regulatory Background 

The Department of Justice has voiced concern over the level of proof airlines have 

provided that the benefits they claim require immunity. In the DOJ's public 

comment on the 2009 Star Alliance immunity case, included in this Docket, the DOJ 

wrote "a grant of antitrust immunity does not turn on 'the subjective desire of the 

parties to avoid antitrust litigation.'"^ The DOJ noted that airline alliances had 

realized consumer benefits without immunity,3 and concluded that the applicants in 

that case had "not justified their extraordinary immunity request."'^ 

1 DOT Order 2009-7-10 at 3, citing 49 U.S.C. § 41308(b}. 

2 DOJ Comments on Show Cause Order in Docket DOT-OST-2008-0234 at 33. 

3 DOJ Comments on Show Cause Order in Docket DOT-OST-2008-0234 at 33-36. 

* DOJ Comments on Show Cause Order in Docket DOT-OST-2008-0234 at 43. 
capacity with more than 60 current and pending members including 25 of the 

world's 30 largest airlines, Few places remairijwhere alliances don't reach and 

now they are even recruiting LCCs, While alMdnces help travelers maximize 

their miles with a single carrier and simplify airfare discount negotiations for 

corporate travel managers, thealliance oligopoly wiUMkely lead to fewer flight 

options and higher airfares on many global routes.^ : - . ; . •' 

In November2010, the New York.Times had ijpukmimbe^t&to the trend in relation to 

U.S. to Europe travel, a central segment of the airline immunization: 

Fares between the United States and Europe also rose sharply, especially for 

economy-class seats. The average one-way fare in August was $455, a rise of 20 

percent from a year earlier, while the average premium-class fare was $2,087, 

an increase of 11 percent.^'^ :. ::: 

In all of these accounts, competitive issues are raised as a possible cause of . 

increasing fares. t - ' 

Brussels Airlines Joint Motion 

The Joint Movants claim that inclusion of Brussels Airlines in the immunized A++ 

joint venture would benefit consumers in a variety of ways, including "efficiencyenhancing integration," "reduction of double marginalization," "economies of 

density ... permitting a ticket price reduction," improved "capacity allocation 

(availability) at a wider ranger of fares," "reduced waiting time for preferred flights" 

andmore.ii 

The Joint Movants base these conclusions on stated benefits of the initial A++ 

immunization in 2009. Yet, despite growing scholarly and popular skepticism about 

the benefit or necessity of antitrust exemptions, the Joint Movants do not provide 

any proof that consumers have actually realized these claimed benefits under A++ 

since the initial grant of immunity two years ago. 

If the stated benefits were a true result of the immunity grant, the Joint Movants 

ought to be able to demonstrate them and predict concretely their expansion to 

Brussels Airlines. 

Beyond failing to prove the consumer benefits of A++ immunity and therefore an 

expansion of that immunity, the Joint Movants fail to demonstrate that immunity is 

necessary to provide supposed benefits with regards to Brussels Airlines. 

^ Grossman, Ben. "2011 business travel forecastrHigher prices and more hassles." USA Today. 

January 4, 2011. •.•..• • 

1" Clark, Nicola. "Sticker Shock for Travelers as Airfares Climb." New York Times. November 8 2008. 

11 Docket DOT-OST-2008-0234-0313 at 7-8. 
The Joint Movants note, "if immunity were not granted, it would be highly inefficient 

for Lufthansa" and claim that withoiit immunity they would face "intolerably high 

risk of antitrust litigation'' arid ''legal compliance complexities/'^^ We do not believe 

that these are vaHd reasons to claim an entitlement to exemption from our antitriist 

laws. In fact, the reasoning is entirely circular: that antitrust immunity is necessary 

because protection from antitrust compliance is necessary. 

• • ' " • • _ \' . ;>'••.:-.. , r : -.i U ,:.••'. ' • •• ; ; - •. " - ;;- : .. ; - • 

Furthermore, though'Brussels Airlines would offer only connecting service for U.S. 

passengers, the Joint Movants to doinothing to dismiss the previously noted finding 

by the economists at the Department of Justice Economic Analysis Group that "data 

also show that antitrust immunity is not reasonably necessary for alliance 

participants to deliver pricing efficiencies to connecting passengers."!^ 

Precedent for Expansion of Immunized Group 

We believe the inclusion of Brussels Airlines in the immunized A++ joint venture 

sets problematic precedents for the expansion of antitrust immunity grants. 

Expansion ofHub^to^Hub Service 

Since Order-2009-7-10 was issued granting immunity to the A++ joint venture, the 

European scope of the venture has significantly expanded. Initially, Frankfurt was 

the only European hub with service dominated by one of the A++ partners. With the 

additions of SWISS and Austrian Airlines, Zurich (ZRH) and Vienna [VIE) 

respectively join that immunized hub list. Brussels Airlines would make Brussels 

(BRU) the fourth addition in just two years. 

Volodymyr Bilotkach and Kai Huscherlrath's recent studies for the Centre for 

European Economic Research show that immunization has notable effects on air 

travel networks. For example, they find that antitrust immunity leads to decreases 

in the passenger volumes and frequency of service for non-alliance carriers to newly 

immunized hubs.i'* 

In its 2009 comments, the Department of Justice also i-aised concern the possible 

anti-competitive effects of immunizirig airline partners with hubs at both ends of 

certain city-pairs. ^^ 

!2 Joint Movants Response to Request for More Information, July 5, 2011, in in Docket DOT-OST2008-0234 at 7. 

13 Gillepsie, William and Oliver Richard, "Antitrust Immunity and International Airline Alliances." 

Economic Analysis Group, Antitrust Division, U.S. Department of Justice, at 20. 

14 Bilokatch, Volodymyr and Kai Huschelrath. "Airline Alliances, Antitrust Immunity and Market 

Foreclosure." Centre for European Economic Research, Discussion Paper No. 10-083, at 23,24. 

15 DOJ Comments on Show Cause Order in Docket DOT-OST-2008-0234 at 17-18, 25-26. 
The Brussels application alone seeks immunization that would add three .such hubto-hub pairs: Washington/Dulles to-Brussels, Chicago to Brussels and Newark to 

Brussels. The immunized partners would face no non-stop competitors on the . 

Dulles - Brussels route, and only one non-stop competitor on the Chicago - Brussels 

route, while holding the dominant hub presence at both ends. 1^ , i 

. ..• ' ' , > ' -' i ";•':: • -X: ' '•:•• . --i. ",': s '• ' ..."• • • •:••'-. . '•: > - ] / • • • 

We believe the Department of Transportation must analyze the collective 

competitive impact of the expansion of hubs witiiin the At<+jnfetwork (Zurich, Vi«nna 

and Brussels) in considering this application and potential carve-outs. 

Ownership .< . v 

Because Lufthansa still owns less than a majority of Brussels Airlines,!^ yet requests 

the "same treatment" for Brussels as giventp"3|?ajdrity-pwned,affiliat^s':, under , 

Order 2009-7-10,1^ a notable precedent would be set in this case for the expansion 

of immunized joint ventures under clauses regarding controlled or jaffiliatie entities. 

If the Department determines that some grant of immunity is necessary, we suggest 

that it not take effect until Lufthansa officially purchases the remaining sl^ares of 

Brussels Airlines. 

Inter-Alliance Qynqmics 

Additionally, part of the justification the Joint Movants give for their immunity 

request suggests another dangerous precedent for antitrust exemptions. In their 

response to the Department of Transportation's Request for More Information, the, 

Joint Movants note that immunity would make them more competitive with other 

alliances, particularly SkyTeam.i^ 

However, they do not suggest that any new service would be launched; they only 

suggest that existing service would become part of the immunized joint venture. It 

should not be the Department of Transportation's prerogative to use antitrust 

immunity to improve the market position of any one alliance in relation to others. 

Indeed, we believe the Department ought to be weary of encouraging a cycle of 

continued consolidation based on repeating this logic. 

16 Source: BRU airport timetables. There are direct flights from BRU to ORD, ATL, IAD, PHL, EWR and 

JFK. United is the only carrier flying nonstop from IAD to Brussels, and the ORD-BRU route has only 

United and American. BRU is a hub for Brussels Airlines, which controls over 30% of the flights there 

(See "Brussels Airlines Puts Star Alliance in the-Driving Seat in Belgium." Airlines and Destinations. 

11 January 2010.). ORD and IAD are hubs for United, EWR is a hub for Continental 

" Lufthansa owns 45% of Brussels Airlines. Joint Movants Response to Request for More 

Information, July 5,2011, in Docket DOT-OST-2OO8'-0234 at Exhibit B. 

18 DOT Order 2009-7-10 at 2, see text and also Footnote 4. . 

19 Joint Movants Response to Request for More Information, July 5,2011, in Docket DOT-OST-2008-

0234 at 3, 6. > 
Existing Regulatory Concerns > 

In June 2011, Bloomberg reported that, "Deutsche Lufthansa AG [LHA)'s 

competitors made no attempt to take over routes the carrier ceded in return for 

European Union antitrust approval to buy part'of Brussels AiHines NV, EU 

regulators said." Whilethe EU is not t&kiftg further action at this time, Bloomberg 

reported the EU Competition CdihiffiissidnerYioted that travel agents or others could 

file a complaint"if there are Seridus contferns about a breach of competition law."2o 

The United States Should withhold inclusion of the four routes ceded by Lufthansa in 

any grant of antitrust immunity fbr Brussels Airlineis. 

Additionally, three of the airlines involved in this request for antitrust immunity 

expansion areeurrently subjects,of antitrttst probes the European Commission 

launched in February 2011 related to specific routesi^i One of the routes under 

scrutiny overseas - Brussels to Lisbon - is included in the Brussels apphcation. 22 

This route should not be included in any U.S.-immunized group until the European 

Commission makes a determination in that case. 

Lack of Information in Public Domain 

DOT Order 2009-7-10, included in this docket, directed the Joint Movants to submit 

annual reports to the Department of Transportation Office of ANriation Analysis.23 

The reports were described in the Order: 

V. ANNUAL REPORTING 

In the tentative decision, we tentatively found that additional reporting is 

necessary to monitor commercial developments and ensure that public benefits 

are being realized. No party has objected to these reporting requirements. 

ITSA/ASTA has suggested that we augment the requirements to address sales 

and distribution issues, as well as compliance with antitrust protocols. We 

agree with this suggestion. The Department intends that additional reporting 

should cover all core airline activities undertaken to achieve the full range of 

public benefits, which includes cooperation in sales and distribution and joint 

negotiations with travel agents, as Well asefforts to preserve competition, 

which include antitrust compliance. All interested parties had the opportunity 

20 White, Aoife. "Lufthansa Competitors Made No Bids for Brussels Slots, EU Says." Bloomberg. 20 

June 2011. 

21 "Antitrust: Commission probes certain co-operation agreements between Lufthansa and Turkish 

Airlines and between Brussels Airlines and TAP Air Portugal." European Commission Press Release 

IP/11/147. 11 February 2011. 

22 DOT-OST-2008-0234-0313 a t 281 . 

23 DOT Order 2009-7-10 at 29, point 10. 
to reply to ITSA/ASTA's suggestions, and thftreyvere ho further comments on 

this issue. 

Therefore, we make final oifr tentative finding that th^ airlines should submit y. 

annual reports. Tlje reports sf}ould-fojcus on the progress made byth^ i 

applicants tqward^^qchieving tkeirstatfiid goals for operating an alliance with . 

antitrust immunity the, specific action^ th^yMvetqken.toimplementeach of •, 

their alliance agreements (including ^specially joint venture agreements), the 

present or future planned ^ooperaticm ,amang the alliance partnersin all.core 

airline functions, and a discussion of the pabli(benejits that are being realized 

by the immunized alliance.^^ 

Related to pur opncern about the demonstf ^tion of public benefit in the Brussels 

Airlines application, we are concerned that informationfromthe;2010 submission 

of this report is not included in the public docket. 

In May 2011, UNITE HERE submitted a request under the Freedom of Information 

Act to the Department of Transportation to release the 2010 report that should have 

been submitted by the immunized group. ?5 The Department denied the request in 

full26 and an appeal is pending.27 

In order for pubjfc entities to make more informed analysis of the inipact of 

antitrust immunity granted to the Joint Movants, including an understanding of any 

public benefits actually realized, we believe these reports must be made pubUcly 

available in the future and that any Final Order in this matter should reflect this 

change. We also ask that the 2010 report be released immediately and that the 

schedule on this Joint Motion be extended accordingly to allow for analysis prior to 

any expansion of antitrust immunity to Brussels Airlines. We believe that the 

present public comment process is fatally flawed because key information about the 

effects of immunity has been withheld from the public. 

Conclusion 

We are concerned that the Joint Movants have not proven the public benefits that 

would come from an expansion of the A++immunization, nor have they justified the 

necessity of an immunity grant. Meanwhile, the proposed growth of the immunized 

joint venture sets a potentially problematic precedent for future requests^ 

24 DOT Order 2009-7-10 at 26. 

25 DOT FOIA File Numbe r FY-2011-13 8 

26 Determination from DOT FOIA Officer Kathy Ray in lette r from th e Office of th e Secretary of 

Transportation dated 31 May 2011. 

27 Appeal submitted by UNITE HERE to Rosalind A. Knapp in a letter dated 27 June 2011. 
If immunity is granted nonetheless, we request the Department of Transportation 

consider certain route carve outs. We also request the release of annual reports 

submitted by the Joint Movants, retroactively and in the future. 

We hope that the Department will address our concerns when making a final order 

on this matter. 

Sincerely, 

Kyle Schafer 

UNITE HERE 

55 W. Van Buren 

Chicago, IL 60660