### "^'^RTMEN TO F NS-ORWIO M "'": • OPERATION -

l i O 

## 2-

- 0 3 BEFOR ETH E DEPARTMEN T O FTRANSPORTATIO N OFFIC EO FTH ESECRETAR Y WASHINGTON , D.C .

Motio n o f UNITE D AI RLINES , INC . Fo r Confidentia l Treatmen t Unde r Sectio n 302.3 9 Docke t OST-95-67 5

MOTIO N O FUNITE D AI RLINES , INC . T O WITHHOL D INFORMATIO N FRO M PUBLI C DISCLOSUR E

Communication s withrespec t t o thi s documen t

shoul db e sen t

to : DAVI D B . OLAUSSE N Senio r Counse l UNITE D AI RLINES , INC . 7 7 W . Wacke r Chicago , IL6060 1 312-997-806 9 DATED : Novembe r

2 , 201 0BEFOR ETH E DEPARTMEN T O FTRANSPORTATIO N OFFIC EO FTH ESECRETAR Y WASHINGTON , D.C . Motio n o f UNITE D AI RLINES , INC . Fo r Confidentia l Treatmen t Unde r Sectio n 302.3 9 Docke t OST-95-67 5

MOTIO N O FUNITE D AI RLINES , INC . T O WITHHOL D INFORMATIO N FRO M PUBLI C DISCLOSUR E Pursuan t t o Rul e 39(e ) o f

th e Departmen t

o f Transportation , Offic e o f th e Secretar y Procedura l Rules , Unite dAi r Lines , Inc . ("United" ) hereb y tile s thi s Motio n t o Withhol dFro mPubli c Disclosur e th e infomiatio n containe di n aseale denvelop e an dcaptione d Schedul e B- 7 Airframe an dAircraf t Engin e Acquisition s an dRetirement s an ddelivere dt o th e Offic e o f Aviatio n Transportatio n Management . Thi s informatio n i s provide dpursuan t t o Par t 24 1 o f th e Department' s Economi c Regulations , 1 4 CF R241 , an di s part o f For m4 1 Schedul e B-7 . Th e informatio n sough t t o b e withhel dfrompubli c disclosur e detail s United' s acquisitio n cos t

an dsale s realizatio n amount s withrespec t t o ne w an duse daircraf

t an daircraf

t engines , eac hbroke n dow n b y model , individua l seria l number , an dindividua l purchas e o r sal e prices . Th e informatio n fo r whic hUnite dseek s confidentia l treatmen t unde r thi s instan t

Motio n i s simila r t o an dconsisten t

withthat for whic hth e Departmen t

granted , i n 199 3 an d199 4 orders , confidentia l treatmen t

t o simila r

Schedul e B- 7 dat afiledseparatel y b y United , America n Airlines , Inc . ("American" ) an dDelt aAi r Lines , Inc . ("Delta") . Th e informatio n sough t

t o b e withhel dfall s withi n Exemptio n 3 o f th e Freedo m o f hiformatio n Ac t

( 5 U.S.C . 552(b)(3)) , whic hexempt s fromdisclosur e informatio n require db y statut e t o b e withheld . Exemptio n 3 provide s that :

KAAircraf

t - DOT>20tO\B7DO T 20i O 3QTR.do c"(b ) Thi s sectio n doe s no t appl y t o matter s tha t are . . .

**** * (3 ) specificall y exempte dfromdisclosur e b y statut e (othe r tha n sectio n 552(b ) o f thi s title) , provide dthat suc hstatut e (A ) require s tha t th e matter s b e withhel dfromth e publi c i n suc hamanne r a s t o leav e n o discretio n o n th e issue , o r

(B ) establishe s particula r criteri afor

witlilioldin g o r

refer s t o particula r type s o f matter s t o b e withheld; " Sectio n 110 4 o f

th e Federa l Aviatio n Ac t o f 1958 , a s amende d(th e Act) , provide s that : "An y perso n ma y mak e writte n objectio n t o th e publi c disclosur e o f informatio n containe di n an y application , report , o r documen t

filedpursuan t

t o th e provision s o f thi s Act . . . statin g th e ground s fo r suc hobjection . An y informatio n containe d i n suc happlication , report , o r document . . . shal l b e withhel dfrompubli c disclosur e b y th e .. . Secretar y o f Transportatio n . . . i f

disclosur e o f

suc h informatio n woul d.. . adversel y affec t th e competitiv e positio n o f an y ai r carrie r i n foreig n ai r

transportation. " Unite dconsider s th e requeste dinformatio n delete dfromSchedul e B- 7 t o b e highl y sensitiv e an dconfidential . Th e ai r transportatio n industry , bot hdomesticall y an d internationally , ha s becom e highl y competitive . Aircraf t ownershi p cost s ar e amajo r cos t o f doin g busines s for

al l certificate dcarriers . A carrier' s abilit y t o reduc e it s aircraf t ownershi p cost s relativ e t o it s competitor s can , therefore , provid e acarrie r asignifican t

competitiv e advantage . I

n a n effor t t o secur e suc han advantage . Unite dapplie s considerabl e managemen t resource s t o tryin g t o reduc e it s aircraf t ownershi p costs . Thi s include s devotin g substantia l resource s t o tryin g t o obtai n airframe s an dengine s a t th e lowes t

possibl e acquisitio n cos t an d disposin g o f

thes e asset s at

th e highes t

possibl e sale s price . Moreover , th e negotiadon s for ne w equipmen t

ar e mad e mor e difficul t

b y th e fac t

tha t ther e ar e onl y thre e manufacturer s o f larg e je t airframe s an donl y thre e o f larg e je t engines . However , a s lon g a s th e Departmen t make s availabl e t o th e publi c United' s acquisitio n cos t fo r eac hairfram e an dengin e i t acquire s an dth e sale s proceed s realize do n eac hsal e o f suc hequipment . Unite di s denie dth e benefi t o f thes e efforts , harmin g Unite dcommercially .

Onc e United' s cost s ar e divulged , United' s competitor s ca n us e thes e cos t dat ato negotiat e contrac t

pric e adjustment s fromth e sam e supplier s Unite di s usin g o r fromcompetin g suppliers . Sinc e man y o f thes e competin g carrier s ar e foreig n flag carriers , thei r equipmen t price s wil l neve r

b e reporte dt o th e Department , le t alon e b e mad e public . I t i s no t onl y commerciall y damagin g bu t basicall y unfai r

t o Unite dan dal ] othe r

U.S . carrier s t o requir e the m

lC;\Aircraf t - DOTC2010\B7IX)T 201 0 3QTR.do cthe mt o divulg e t o thei r non-reportin g foreig n flag competitor s th e truit s o f thei r competitiv e effort s withmanufacturer s t o secur e th e bes t possibl e purchas e price . See , e.g. . Orde r 81-12-9 . Th e disclosur e o f

United' s purchase s an ddisposition s o f individua l aircraf

t an d aircraf t engine s woul dallo w competin g foreig n an ddomesti c airlines , manufacturer s o f aircraf t an dengines , an dne w an duse daircraf t owner/lessor s t o calculat e an dclosel y trac k United' s cost s t o inquire , modify , transfe r o r dispos e o f

it s variou s fleets o f

use dmodel s aircraf

t (an drelate d use daircraf

t engines) . I t

woul dadversel y affec t

United' s competitiv e positio n b y strengthenin g th e bargainin g positio n o f othe r airlines , includin g foreig n airlines , an daircraf t owner/lessor s seekin g t o purchas e aircraf t equipmen t

frommanufacturer s an dothers . The y woul db e abl e t o us e thei r knowledg e o f

United' s confidentia l purchas e an dsal e arrangement s a s startin g point s i n thei r ow n negotiations , an dthu s improv e thei r abilit y t o obtai n equa l o r mor e favorabl e prices . Thi s woul dlea dt o United' s competitors , includin g foreig n competitors , bein g abl e t o enjo y lowe r capita l cost s tha n otherwis e th e case , an dt o thei r bein g abl e t o operat e an dcompet e mor e efficientl y wit hUnite dtha n otherwise .

Unite dsubmit s tha t

FOI A Exempfio n 3 i s applicable , a s aresul t o f th e provisio n i n Sectio n 110 4 o f

th e Ac t requirin g th e witlilioldin g frompubli c disclosur e o f an y informatio n containe di n arepor t

filedpursuan t

t o th e Act , i f

suc hdisclosur e woul d"adversel y affec t th e competitiv e positio n o f

an y ai r carrie r i n foreig n ai r

transportation " (4 9 U.S.C . App . 1504) . Th e informatio n for

whic hUnite dseek s confidentia l treatmen t unde r thi s instan t

Motio n i s simila r

t o an dconsisten t

withthat for whic hth e Departmen t

grante dconfidentia l treatment , i n (i ) aMarc h 29 , 199 3 orde r

concernin g simila r

Schedul e B- 7 dat afiledb y Delta , (ii ) aNovembe r 1 , 199 3 orde r concernin g simila r

Schedul e B- 7 dat afiledb y American , (iii ) aDecembe r 29 , 199 3 orde r concernin g simila r

Schedul e B- 7 dat afiledb y United , (iv ) an Augus t 23 , 199 4 orde r

concernin g simila r Schedul e B- 7 dat afiledb y Delta , an d(v ) aNovembe r 18 , 199 4 orde r

concernin g simila r Schedul e B- 7 dat afiledb y United . Th e Department' s grant s o f confidentialit y wer e specificall y mad e unde r

Exemptio n 3 (an dit s 199 3 grant s wer e mad e exclusivel y unde r Exemptio n 3 ) sinc e Delt aan dAmerican , lik e United , compet e wit hforeig n ai r carrier s wh o d o no t

file suc h informatio n ye t

ar e free t o obtai n U.S . carrie r informatio n fromth e Department . Th e Departmen t

ther e stated : "thi s lac k o f reciproca l access , th e Departmen t believes , coul dsubstantiall y har mth e competitiv e posifio n o f

American , resultin g i n th e erosio n o f th e U.S . intemafiona l airlin e industry. " Unite dals o submit s tha t th e infonnatio n sougli t

t o b e withhel dfall s withi n exemptio n 4 fromth e Freedo mo f Informatio n Act , 5 U.S.C . 552(b)(4) , whic hprovide s protectio n fromdisclosur e for "trad e secret s an dcommercia l o r financial infonnatio n obtaine d fromaperso n an dprivilege do r confidential;... " Unite dbelieve s th e requeste dinformatio n delete dfro mSchedul e B- 7 clearl y satisf y al l thre e element s require dfor protectio n unde r Exemptio n 4 . First , th e acquisitio n cos t an dsale s realizatio n amount s reporte dar e substantiall y th e sam e a s negotiate dbetwee n th e parties , whic hpurchas e an dsal e price s ar e clearl y financial

- 3 Ki^Aircraf t - DOn2010\B7DO T 201 0 3QTR.do co r

commercia l i n nature . Second , Unite destablishe dthes e price s throug hit s negotiation s with privat e thir dparties ; th e informatio n wa s no t obtaine dfroman y governmenta l entities . Tliird , th e disclosur e o f

suc hinformatio n woul dhar mUnited' s competitiv e position . Se e Gul f & Wester n Indus. . Inc . v . Unite dStates . 61 5 F.2 d52 7 (D.C . Cir . 1979) , Nationa l Park s & Conservatio n Ass' n v . Morton . 49 8 F.2 d76 5 (D.C . Cir . 1974) , Sterlin g Drug . Inc . v . Federa l Trad e Coimn'n . 45 0 F.2 d69 8 (D.C.Cir . 1971) , Th e Tinke n Co . v . U.S . Custom s Service . 49 1 F.Supp . 55 7 (D.C . Cir . 1980) , Braintre e v . Dent , o f Energy . 49 4 F.Supp . 287 , an dBurke.Energ y Corp . V . Departmen t

o f Energv . 58 3 F.Supp . 50 7 (D . Kan . 1984) . Finally , th e Department' s 199 4 grant s o f confidentialit y (i.e. , it s Augus t 23 , 199 4 orde r

concernin g simila r

Schedul e B-7/B-4 3 dat afiledb y Delta , an dit s Novembe r 18 , 199 4 orde r

concernin g simila r

Schedul e B- 7 dat afiled b y United ) wer e specificall y mad e unde r bot hExemption s 3 an d4 . Th e Department , whe n decidin g United' s (an dAmerican' s an dDelta' s respective ) prio r B- 7 confidentialit y motions , grante daten-yea r confidentia l perio dbeginnin g o n th e dat e th e informatio n wa s require dt o b e filedpursuan t t o 1 4 CF R241.22(a) . Unite ddeser\'e s t o b e treate dn o les s favorabl y wit hrespec t t o th e seale dSchedul e B- 7 attache dhereto . WHEREFORE , Unite drequest s tha t th e Department , pursuan t t o Rul e 3 9 o f

it s Rule s o f Pracfic e an dExemption s 3 an d4 o f th e Freedo mo f

Infonnatio n Act , withhol dfrom publi c disclosure , th e pric e informatio n containe di n th e Airfram e an dAircraf t Engin e Acquisitio n an dRetirement s item s whic hhav e bee n delete dfromcolumn s 9 , 1 0 an d1 1 o f th e publi c filing o f

United' s quaiterl y Fon n 4 1 Schedul e B- 7 repor t fo r aperio do f

no t les s tha n te n years . Respectfull y submitted .

Davi dB . Olausse n Senio r Counse l UNITE D AI RLINES , INC . DATE D Novembe r

2 , 201 0

- 4 - lC:\Aircraf t - DO"n20IO\B7DOT 201 0 3QTR.do c