**BEFORE THE DEPARTMENT OF TRANSPORTATION**  **WASHINGTON, D. C.**

--------------------------------------------- Application of : : AMERICAN AIRLINES, INC. : DOT-OST-2010- : 0088 under 49 USC 40l09 for allocation of : 11 weekly U.S.-Brazil frequencies :

---------------------------------------------

--------------------------------------------- Application of : : DELTA AIR LINES, INC. : DOT-OST-2010- : 0090 for frequency allocation : (Detroit-Sao Paulo) :

---------------------------------------------

**REPLY OF AMERICAN AIRLINES, INC. AND MOTION FOR LEAVE TO FILE** 

Communications with respect to this document should be sent to: VIRASB VAHIDI WILLIAM K. RIS, JR. Senior Vice President - Senior Vice President - Planning Government Affairs American Airlines, Inc. American Airlines, Inc. P.O. Box 619616, MD 5634 1101 17 th Street, N.W. DFW Airport, Texas 75161 Washington, D.C. 20036 KENJI C. HASHIMOTO CARL B. NELSON, JR. Vice President – Strategic Associate General Counsel Alliances American Airlines, Inc. American Airlines, Inc. 1101 17 th Street, N.W. P.O. Box 619616, MD 5635 Washington, D.C. 20036 DFW Airport, Texas 75261 (202) 496-5647 carl.nelson@aa.com ROBERT A. WIRICK Director, Regulatory American Airlines, Inc. P.O. Box 619616, MD 5635 DFW Airport, Texas 75261 (817) 963-0394 robert.wirick@aa.com

April 23, 2010**BEFORE THE DEPARTMENT OF TRANSPORTATION**  **WASHINGTON, D. C.**

--------------------------------------------- Application of : : AMERICAN AIRLINES, INC. : DOT-OST-2010- : 0088 under 49 USC 40l09 for allocation of : 11 weekly U.S.-Brazil frequencies :

---------------------------------------------

--------------------------------------------- Application of : : DELTA AIR LINES, INC. : DOT-OST-2010- : 0090 for frequency allocation : (Detroit-Sao Paulo) :

--------------------------------------------- **REPLY OF AMERICAN AIRLINES, INC. AND MOTION FOR LEAVE TO FILE** American Airlines, Inc. hereby replies to the consolidated answer submitted by Delta Air Lines, Inc. on April16, 2010 to American’s motions of April 8, 2010 in the captioned dockets. In DOT-OST-2010-0088, American is seeking Brazil frequencies to serve JFK-Rio de Janeiro (daily) and Miami-Brasilia (4 days per week). In DOT-OST-2010-0090, Delta is seeking frequencies to serve Detroit-Sao Paulo (4 days per week). In its motions, American asked for immediate approvalof its application, and dismissal of Delta’s. American requests leave to file this reply in the interest of a complete record for the Department’s consideration.- 2 –

In its answer, Delta persists in its quest for frequencies to operate to Sao Paulo, despite the fact that the U.S.-Brazil Memorandum of Understanding, 1 and the Department’s March 24 notice inviting applications, make absolutely clear that none of the 14 new frequencies effective October 1, 2010 can be used at Sao Paulo. Delta itself, in applying for 7 newfrequencies last year, conceded that Sao Paulo is not available. See Delta application, DOT-OST-2009-0003, January 27, 2009, p. 1 (calling Rio de Janeiro “the largest and most important traffic point eligible for 2009 award service”). Sao Paulo was ineligible for 2009 frequencies, and remains ineligible for 2010 frequencies, as the same MOU proviso applies in both years. See also joint application of Deltaand US Airways, DOT-OST-2009-0197, August 24, 2009, acknowledging the Sao Paulo limitation (p. 2 n. 4), which applies to frequencies that become available in both 2009 and 2010.

1 June 26, 2008, Attachment B, Annex 1, Section II (2), p. 4 n. 5 (“the frequencies provided in (D) [7 available October 1, 2009] and (E) [14 available October 1, 2010] may not be used for services between Guarulhos International Airport and points in the United States until the regulatory constraints in place as of June 26, 2008, related to infrastructure at that airport, are removed.”- 3 -

Rather than accepting the reality that Sao Paulo is not in issue, Delta has devised a tactic to game the system and defeat the Sao Paulo limitation. Specifically, Delta envisions a process whereby it would surrender 4 of its lesservalue regional Brazil frequencies for re-allocation to American to serve Miami-Brasilia. The Department would at the sametime “replace” the surrendered frequencies by awarding highervalue frequencies to Delta from the 2010 allocation. Delta proposes to park the replacement frequencies on regional Brazil routes until the Sao Paulo restriction is lifted, at which point Delta would shift the frequencies to Detroit-Sao

Paulo.The Department should squarely reject Delta’s invocation of alchemy to turn lead into gold. Its proposal is inconsistent with the MOU, the Department’s notice, and applicable precedent, as we explain below. Directly on point is Order 2006-6-17, June 10, 2006,where the Department had invited applications for DCA withinperimeter slots, which under Air-21 could be used only to serve small hub or non-hub destination airports. Despite this clear limitation, AirTran applied for DCA slots to serve two- 4 -

medium hub airports, Chicago (Midway) and Indianapolis, proposing a scheme remarkably similar to the shell game Delta is promoting here: “While AirTran acknowledges that both Indiana- polis and Midway were designated as medium hub airports in 1997 [Air-21’s baseline], the carrier contends that the Department should remove two slots from a legacy carrier, give them to AirTran to serve Indianapolis or Midway, and then replace the two pulled slots with two exemption slots, which the legacy carrier could then use for service to a small or non-hub airport” (p. 2). The Department dismissed AirTran’s DCA-Midway/Indianapolis request as non-responsive to the notice inviting applications, notwithstanding AirTran’s proposal to sidestep the small hub/non-hub restriction: “AirTran’s application [seeks] medium hub slot exemptions when the ones made available in the proceeding are limited to small hubs/non-hubs. We cannot find this application to be responsive to our Notice; simply put, AirTran seeks some- thing that was not advertised as available and is not in fact available . Moreover, AirTran’s attempted cure for its lack of responsiveness would require that the Department, in the name of promoting competition, withdraw slots from one of the other applicants and award them non- competitively to AirTran. Not only does this raise competitive issues well outside the scope of this proceeding, but would . . . be incon- sistent with the precepts of fundamental fairness” (p. 6, emphasis added).- 5 -

See also 2004 Combination Frequencies (U.S.-China) , where American applied for China frequencies that would become effective on August 1, 2004, whereas the Department’s notice inviting applications limited the pool of applicants to carriers already designated to serve China (at that time Northwest and United). By Order 2004-7-23, July 12, 2004, the Department denied American’s application, finding that the U.S.-China Air Transport Agreement, “with its carefully phasedstructure for the introduction of new frequencies and designnations,” precluded non-designated carriers such as American from applying for 2004 frequencies. The Department should reach a similar conclusion here, and disqualify Delta (or any other applicant) from an award of 2010 Brazil frequencies to

serve Sao Paulo. See also Order 2000-7-2, July 5, 2000, p. 15 n. 12 (denying AirTran’s application for DCA slots to serve Atlanta (a large hub) as being inconsistent with the instituting order, which called for applications to serve DCA from mediumhubs or smaller). And see Order 98-5-8, May 8, 1998, concerning allocation of U.S.-France frequencies. There, the Department’s notice inviting applications, “by its terms, called specifically for [proposals] for 1998 services” (p. 4).- 6 -

United and Tower Air proposed to start U.S.-France service in 1998, but American and US Airways proposed service in 1999. The Department granted the United and Tower Air applicationsas responsive, but declined to award any U.S.-France frequencies to American or US Airways, as they had submitted proposals outside the scope of the Department’s invitation. What Delta is seeking is also contrary to “precepts of fundamental fairness” (Order 2006-6-17, p. 6). Delta would gain higher value frequencies and warehouse them on regional

Brazil routes until removal of Sao Paulo’s infrastructure constraints, at that point switching the authority to Sao Paulo. In contrast, American would have 7 new frequencies to serve Rio de Janeiro, 4 cast-off frequencies from Delta restricted to regional service, and zero frequencies useable at Sao Paulo. Delta alone would achieve the ability to use

its award to serve Sao Paulo.Delta’s ploy to turn these proceedings into something they are not should be rejected. Sao Paulo frequencies are not in issue. Delta cannot place them in issue with its “surrender” and “replacement” idea, just as AirTran could not place medium hub destinations in issue under a similar ruse- 7 -

involving DCA within-perimeter slots in 2006. See also Order 2009-11-3, November 3, 2009, prohibiting Delta from selecting “at its discretion a different U.S. gateway for service to Bogota from that awarded in the . . . 2007/2008 proceeding” (p. 3). Similarly, Delta should not be allowed “at its discretion” to apply for service to a Brazil point that is ineligible for an award. Finally, there is no public interest justification for favoring Delta with higher-value frequencies. If Delta is allowed to park such frequencies on its regional Brazil routesand shift them in the future to Sao Paulo, why shouldn’t American have the equivalent privilege of serving Miami-Brasilia now and moving the frequencies to Sao Paulo later? The reason is very simple – Sao Paulo frequencies are not in issue

.Accordingly, Delta’s request for 2010 Brazil frequencies for Detroit-Sao Paulo service should be dismissed. American has submitted the only legitimate application for 2010 frequencies, and our request should be granted in full

as uncontested.- 8 -

Respectfully submitted,

___________________________ CARL B. NELSON, JR. Associate General Counsel American Airlines, Inc. April 23, 2010**CERTIFICATE OF SERVICE**

I hereby certify that I have this day served the foregoing document by email on the following persons: sascha.vanderbellen@delta.com jhill@dlalaw.com scott.mcclain@delta.com bill@mietuslaw.com sametta.c.barnett@delta.com mgoldman@sgbdc.com kquinn@pillsburywinthrop.com rsilverberg@sgbdc.com bkeiner@crowell.com dhainbach@ggh-airlaw.com mrosia@crowell.com mcmillin@woa.com bruce.rabinovitz@wilmerhale.com eskraft@jamhoff.com jeffrey.manley@united.com dpdean@jamhoff.com bob.kneisley@wnco.com dkirstein@yklaw.com robert.land@jetblue.com jyoung@yklaw.com msinick@ssd.com donna.kooperstein@usdoj.gov cdonley@ssd.com dwight.moore@ustranscom.mil gbleopard@fedex.com jim.ballough@faa.gov dvaughan@kelleydrye.com byerlyjr@state.gov kevin.montgomery@polaraircargo.com recohn@hhlaw.com jrichardson@johnlrichardson.com cjsimpson@zsrlaw.com lhalloway@crowell.com pmurphy@lopmurphy.com efaberman@wileyrein.com lachter@starpower.net mroller@rollerbauer.com anita.mosner@hklaw.com howard.kass@usairways.com rpommer@atlasair.com benjamin.slocum@usairways.com gmurphy@crowell.com sophy.chen@hklaw.com russell.bailey@alpa.org david.heffernan@wilmerhale.com

_______________________________ CARL B. NELSON, JR. April 23, 2010