BEFORETHEDEPARTMENTOFTRANSPORTATIONOFFICEOFTHESECRETARYWASHINGTON,DCJointApplicationofALASKAAIRLINES,INC.andAMERICANAIRLINES,INC.fortransferofinternationalrouteauthoritypursuantto49U.S.C.§§40109,41105)))))))))_________________________________)ApplicationofALASKAAIRLINES,INC.foramendmentofexemption))))))_________________________________)ApplicationofAMERICANAIRLINES,INC.foramendmentofexemption))))))_______________________________)DocketDOT-OST-2015-0025DocketDOT-OST-2005-20406DocketDOT-OST-2010-0222JOINTANSWEROFALASKAAIRLINES,INC.ANDAMERICANAIRLINES,INC.TOOBJECTIONSOFDELTAAIRLINES,INC.Conununicationswithrespecttothisdocumentshouldbeaddressedto:JeremyRossSeniorAttorney,LitigationandRegulatoryandDirector,LegalAlaskaAirlines,Inc.19300InternationalBoulevardSeattle,Washington98188jeremy.ross@alaskaair.comDavidHeffernanCozen0'ConnorThe Army&NavyClubBuilding1627IStreet,N.W.Suite1100Washington,D.C.20006(202)463-2537dheffernan@cozen.comCounselforAlaskaAirlines,Inc.DATED:May4,2015HowardKassVicePresident-RegulatoryAffairsRobertA.WirickManagingDirector,RegulatoryandInternationalAffairsAbigailDonovanDirector,CongressionalandFederalAffairsAmericanAirlines,Inc.11011i11Street,N.W.Washington,D.C.20036(202)326-5153howard.kass@aa.comrobert.wirickrW,aa.comabigail.donovan@aa.comBEFORE THE DEPARTMENT

OF TRANSPORTATION OFFICE

OF THE SECRETARY WASHINGTON,

DC Joint Application

of ALASKA AIRLINES,

INC. and AMERICAN AIRLINES,

INC. for transfer

of international

route authority pursuant

to 49 U.S.C.

§§ 40109,41105

) ) ) ) ) ) ) ) ) ______________________________) Application

of ALASKA AIRLINES,

INC

. for amendment

of exemption

) ) ) ) ) ) _________________________________) Application

of AMERICAN AIRLINES,

INC. for amendment

of exemption

) ) ) ) ) ) __________________________________) DATED:
May

4, 2015

Docket DOT-OST-2015-0025 Docket DOT-OST-2005-20406 Docket DOT-OST-2010-0222 JOINT ANSWER

OF ALASKA AIRLINES,

INC. AND AMERICAN AIRLINES,

INC. TO OBJECTIONS

OF DELTA AIR LINES, INC. American Airlines,

Inc. ("American")

and Alaska Airlines,

Inc. ("Alaska") (collectively, the "Joint Applicants") submit this joint answer

to the objections

of Delta Air Lines, Inc.JointAnswerofAlaskaAirlines,Inc.andAmericanAirlines,Inc.("Delta")1totheDepartmentofTransportation'sApril17,2015OrdertoShowCause.Inthatorder,theDepartmenttentativelyapprovedtheJointApplicants'requesttotransferAlaska'sLosAngeles-MexicoCityrouteauthoritytoAmericanandmakeassociatedchangestotheJointApplicants'underlyingoperatingauthority,includingpermittingAlaskatodisplayitsdesignatorcodeonAmerican'snewLosAngeles-MexicoCitytlights.2NopartyotherthanDeltahasobjectedtotheJointApplicationortheshowcauseorder.DeltaoffersnobasisfortheDepartmenttoalteritstentativefindingsandconclusions.Rather,DeltamerelyrestatesargumentsthattheDepartment,withsoundreasoning,rejectedintheshowcauseorder.ThecoreofDelta'slegalargumentisthattheDepartmentshoulddisregardtheprecedentreflectedintheHorizon-SanJuanCanadianTransferCasethat"theproperregulatoryframeworkforexemptionroutetransfers[i]sthesameasforcertificatetransfers."3Deltacontinuestoinsistthatthe1997US-ArgentinaAll-CargoFrequencyProceedingsupportsthepropositionthatcarrierselectionisrequiredinthiscase.TheDepartment,however,sensiblyrejectedthatargumentintheshowcauseorder,noting"[t]hat1997casedidnotinvolvethetraditionaltypeofroutetransferthatwasbeforetheDepartmentin1989[intheHorizoncase],andthatisbeforetheDepartmenthere."4Next,Deltaarguesthat,"evenifthe...Horizoncaseiscontrolling,"comparativeconsiderationoftheDeltaandAmericanapplicationsis"stillrequired."5Deltathencontradictsthisassertionbyimplicitlyconcedingwhatisindisputablytrue:thatthedecisionwhethertoinitiateacarrierselectionproceedinginthesecircumstancesisamatterofdiscretionforthe1ObjectionsofDeltaAirLines,Inc.,Apr.27,2015(DocketDOT-OST-2015-0025).2Order2015-4-10(DocketDOT-OST-2015-0025).3!d.at4,citingHorizon-SanJuanCanadianTransferCase,Orders89-3-22and89-5-14.4Order2015-4-10at4.5ObjectionsofDeltaat2.2Joint Answer

of Alaska Airlines,

Inc. and American Airlines,

Inc. Department.

As the Department explained,

its longstanding
policy

is to presumptively

allow route transfers
(and not grant comparative consideration

of competing applications except

in rare and exceptional circumstances)

as long

as the Joint Applicants satisfy
the statutory public interest
test.

6 In this case,

t h e Department tentatively determined

that American's proposed service
and Alaska's continued presence

in the Los Angeles-Mexico

City market

via codesharing satisfy that test.

7 The Department
again noted

its longstanding "genera

l policy disfavoring consolidation"

absent "strong
pub

l ic policy reasons

for reviewing

the service needs and status

of the market."

8 The Department

then concluded

that "the current condition

of the U.S.-Mexico market does not warrant deviating
from our normal disinclination

to conso

l idate competing
route applications

with

a transfer request."

9 In short, the Department, applying

the correct statutory standard, tentative

l y found that the Joint Applicants
have satisfied

the prerequisites

for approva

l of their proposed route transfer and that Delta

fai

l ed to persuade

the Department

that

it should deviate from

its general

po

l icy disfavoring comparative consideration

of competing applications. Delta's repetition

of arguments

that the Department soundly rejected

in the show cause order provides

no basis
for the 6 Order 2015-4-10

at 5-6

. Delta does not contest

the Department's finding
that the Joint Applicants

have satisfied that test. 7 ld

. at

6

. Delta argues that

it should

be awarded

the route authority because

it is

" a much smaller player

in the overall U.S.-MEX marketplace." Objections

of Delta

at

3

. Delta's attempt

at modesty

is disingenuous.

Delta neglects

to mention

that

, in addition

to its own substantial services

to Mexico,

it has

a codesha

r e alliance
with Aeromexico,
which

is by far the largest Mexican carrier,
and that those two carriers have applied

for approval

and antitrust immunity

for

a "comprehensive" integrated joint venture agreement

and other commercial agreements

that would afford Delta

a distinct competitive advantage

in "the overall

U

. S.-MEX marketplace."

Joint Application

for Approval

of and Antitrust Immunity

for Alliance Agreements

of Delta Air Lines

, Inc

. and Aerovias

de Mexico,

S.A

. de C. V

. , Mar.

3 I, 2015 (Docket DOT -OST-20 15-0070)

. 8 Order 2015-4-10

at

6

. Delta previously supported

this policy
and invoked

it in support

of Delta's joint request with US Airways

to approve a transfer

of Brazil frequencies.

See Contingent
Joint Application

of US Airways,

Inc. and Delta Air Lines,
Inc. for Transfer

of Frequencies

and Contingent Application

of US Airways,

Inc. for Amendment

of Exemption,

Aug

. 24, 2009 (Dockets DOT-OST-2009-0

197, 2009-0003),

at 5-6. 9 ld

.

3Joint Answer

of Alaska Airlines,

Inc. and American Airlines,

Inc. Department

to question

the merits

of its tentative decision. Therefore,

the Department should finalize

its tentative decision without delay. The Joint Applicants

are committed

to start service

as soon

as they receive

all necessary government approvals.

In order

to facilitate

a smooth transfer from Alaska

to American

and for the Joint Applicants

to begin advertising

and selling tickets

as soon

as possible,

the Joint Applicants respectfully request
that the Department promptly
issue

an order finalizing

the findings

and conclusions

of the show cause order, and affirming

the transfer

of the Los Angeles-Mexico

City route

to American subject

to the conditions

set forth

in the show cause order. Respectfully submitted, Jeremy Ross Senior Attorney, Litigation

and Regulatory and Director, Legal Alaska Airlines,

Inc. 19300 International Boulevard Seattle, Washington
98188 jeremy. ross

@ alaskaair.
com David Heffernan Cozen O'Connor The Army

& Navy Club Building 1627

I Street, N.W. Suite 1100 Washington,

D.C. 20006 (202) 463-2537 dhe ffe rnan
(a> cozen.com Counsel

for Alaska Airlines

, Inc. DATED: May4,2015

4 Howard Kass Vice President

- Regulatory Affairs Robert

A. Wirick Managing Director, Regulatory

and International Affairs Abigail Donovan Director

, Congressional

and Federal Affairs American Airlines,

Inc

. 1101

17 111 Street, N.W. Washington,

D.C. 20036 (202) 326-5153 howard .kass
({U, aa.com robert

.w irick
(a> aa.com abiga il.donovan
Ul1aa .comCERTIFICATEOFSERVICEIcertifythatonMay4,2015,IservedbyelectronicmailacopyoftheforegoingJointAnsweruponthoseaddresseeslistedbelow:englets@state.gov(DepartmentofState)cristinasa@state.gov(DepartmentofState)brian.hedberg@dot.gov(Departmento.fTransportation)todd.homan@dot.gov(Departmento.fTransportation)peter.irvine@dot.gov(DepartmentofTransportation)laura.remo@dot.gov(Departmento.fTransportation)brett.kruger@dot.gov(DepartmentofTransportation)john.s.duncan@faa.gov(FederalAviationAdministration)dan.weiss@united.com(United)steve.morrissey@united.com(United)gmurphy@crowell.com(United)sascha.vanderbellen@delta.com(Delta)chris.walker@delta(Delta)patrick.rizzi@hoganlovells.com(Republic)bob.kneisley@wnco.com(Southwest)robert.land@jetblue.com(JetBlue)esahr@eckertseamans.com(JetBlue)dderco@eckertseamans.com(JetBlue)dkirstein@yklaw.com(Spirit)barbara.russell@virginamerica.com(Virgin)matwood@cozen.com(Frontier)thomas.ting@suncountry.com(SunCountry)LEGAL\2273127011KennethC.Hines