BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

Joint Application of

Delta Air Lines and the Virgin Blue Group for antitrust immunity ) ) ) ) ) ) ) Docket DOT-OST-2009-0155

ANSWER OF THE DELTA MAS TER EXECUTIVE COUNCIL OF THE AIR LINE PILOTS AS SOCIATION, INTERNATIONAL Communications with respect to this document should be addressed to:

Donald L. Moak Chairman Delta Master Executive Council Air Line Pilots Association, International 100 Hartsfield Centre Parkway, Suite 800 Atlanta, Georgia 30354 lee.moak@alpa.org

October 22, 2010BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

Joint Application of

Delta Air Lines and the Virgin Blue Group for antitrust immunity ) ) ) ) ) ) ) Docket DOT-OST-2009-0155

ANSWER OF THE DELTA MAS TER EXECUTIVE COUNCIL OF THE AIR LINE PILOTS AS SOCIATION, INTERNATIONAL

The Delta Master Executive Council of the Air Line Pilots Association, International (ALPA), submits this Answer in support of Delta’s proposed alliance with the Virgin Blue Group. On July 1, 2009, Delta became the first U.S. flag carrier to serve all six continents. Delta entered the Los Angeles-Sydney route, which, for nearly two decades before, had been the exclusiv e purview of Qantas and United. Delta has a strong track record of devel oping international ro utes which produce important benefits to U.S. aviation interest s, including labor. However, without an Australian partner, Delta is operating at a serious disadvantage to Qantas/American and United/Air New Zealand, both of which use th eir distribution and network strengths on

both ends of the North America-South Pacific ro ute to capture more tr affic. Approval of the Delta/Virgin Blue joint ve nture will level the playing field and ensure lasting benefits for consumers and U.S. airline employees who fly these important l ong-haul transpacific

routes.The Department has consistently approved ATI alliances as a way to enable U.S. carriers to expand their networks , access additional traffic, and offer new services. This promotes more flying and more jobs for U.S. airline workers. . Here, for the first time, the Department has tentatively denied immunity between a U.S. carrier and an open skies partner. The stated concerns relate primarily to the alliance benefits and the scope of joint venture cooperation. The Appli cants’ October 13, 2010 Response contains new clarifying information, includi ng an extensive economic benefits study, a commitment to include beyond/behind points in the joint venture, and an amendment to the settlement mechanism. With this, the Department’s co ncerns have been fully addressed. The case should be resolved favorably, consistent with other recent grants of antitrust immunity to United/Continental/ANA, American/Japan Air Li nes and American/British Airways. The Delta Pilots are very concerned a bout equality of competitive opportunity. United already has very exte nsive service across the Paci fic, aided by the historic advantage of well-established hubs at Los Angeles and San Francisco. It has the advantage of longstanding incumbency on bot h North- and South-Pacific routes. United’s strength in the Pacific will be even greater now that is has joined forces with Continental to become the world’s largest ai rline --- and is entering into an antitrust immunized relationship with All Nippon Airw ays in addition to the ATI United already

holds with Air New Zealand and Asiana. Fo r its part, American has a close, decadeslong alliance with oneworld partner Qantas -- which alone operates more than 50% of U.S.-Australia capacity. Like United, Amer ican is now being allowed to form an immunized alliance with JAL, which will fu rther strengthen oneworld in the Pacific.



### 2By entering into an alliance with V Au stralia and the Virgin Blue Group, Delta becomes a more credible challenger for Nort h America-South Pacific passengers. It would be unfair to hobble Delta as a competito r and deprive it of the network coverage, frequency, and choice that are necessary to attract corporate accounts and time-sensitive business travelers, which will otherwise continue to favor Qantas/American and

United/Air New Zealand. When DOT approved the large and significantly overlapping AA/BA alliance, it found that “the alliance would enhance comp etition by creating a viable third immunized alliance that is comparable to and competitiv e with the product and service offerings of oneworld’s competitors, Star Alliance and S kyTeam, which have already received grants of antitrust immunity and are proceeding with their own alliance pl ans and integrated joint ventures." AA/BA Final Order 2010-7-8 at 3. Similar be nefits will result here with less potential harmful competitive effects. Delta and V Australia are smaller players in

the U.S.-Australia market than AA/BA ar e to London. Importantly, Sydney is open, while Heathrow is severely slot constrained. Furthermore, in the Japan ATI proceeding, the Department found that no harm would result on six overlapping U.S.-Tokyo routes, even though many of those overlaps were more serious than the 4:3 combination proposed here between the two smallest player s. See, Order 2010-10-4 at 12. In its Final Order, the Department should approve the Delta/Virgin Blue alliance, consistent with its other recent precedents. It would be seriously unfair to streng then oneworld and Star in Tokyo (at Delta’s expense) but deny Delta the ability to form a beneficial and pro-competitive alliance with Virgin Blue in Australia. While the Departme nt may have initially perceived this alliance



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### 4 differently, the new information provided by the Applicants makes clear that it is exactly the same as other end-to-end joint ve ntures which have been approved. As noted above, the Department approves AT I alliances as a way to enable U.S. carriers to expand their networ ks, access additional traffic, and offer new services. Delta’s Los Angeles-Sydney flight directly s upports 200 high quality U.S. aviation jobs including pilots, mechanics, flight attendants, dispatchers and reservationists, and indirectly supports hundreds of additional jobs in the local economy. The grant of antitrust immunity for the proposed alliance between Delta and V Australia will promote and sustain U.S. flag presence in the Au stralia and South Pacific markets. For the reasons above, the Delta MEC urges the Department to revise its tentative findings in a Final Order and to grant antitr ust immunity to Delta and the Virgin Blue Group.

Respectfully submitted

Donald L. Moak Chairman Delta Master Executive Council Air Line Pilots Association, InternationalCERTIFICATE OF SERVICE A copy of the foregoing document has been se rved this 22nd day of October, 2010, upon the following persons via email: robert.rivkin@dot.gov susan.kurland@dot.gov susan.mcdermott@dot.gov christa.fornarotto@dot.gov bob.goldner@dot.gov todd.homan@dot.gov peter.irvine@dot.gov christopher.mandel@dot.gov UrsKR@state.gov Jeremy.Parkinson@infrastructure.gov.au sascha.vanderbellen@delta.com anita.mosner@hklaw.com carl.nelson@aa.com howard_kass@usairways.com benjamin.slocum@usairways.com hkamen@coair.com dan.weiss@coair.com jeffrey.manley@united.com steve.morrissey@united.com jhill@dlalaw.com info@airlineinfo.com