BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

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

Application of AMERICAN AIRLINES, INC. for an allocation of 11 U.S.-Brazil frequencies ) ) ) ) ) ) ) Docket DOT-OST-2010-0088

CONSOLIDATED RESPONSE OF DELTA AIR LINES, INC. TO APPLICATION OF AMERICAN AIRLINES, INC. AND ANSWER OF US AIRWAYS, INC. Communications with respect to this document should be addressed to:

Glen Hauenstein Executive Vice President – Network Planning and Revenue Management Robert J. Cortelyou Senior Vice President – Network Planning Andreas Renner Director – International Network Planning Chris Kennedy General Manager – International Network Analysis DELTA AIR LINES, INC. 1030 Delta Boulevard Atlanta, Georgia 30320 Andrea Fischer Newman Senior Vice President – Government Affairs DELTA AIR LINES, INC. 1212 New York Avenue, N.W. Washington, D.C. 20005

Alexander Van der Bellen Managing Director – Government Affairs & Associate General Counsel Jeff Morgan Regional Director – Government Affairs DELTA AIR LINES, INC. 1212 New York Avenue, N.W. Washington, D.C. 20005 (202) 842-4184 sascha.vanderbellen@delta.com

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

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

Application of AMERICAN AIRLINES, INC. for an allocation of 11 U.S.-Brazil frequencies ) ) ) ) ) ) ) Docket DOT-OST-2010-0088

CONSOLIDATED RESPONSE OF DELTA AIR LINES, INC. TO APPLICATION OF AMERICAN AIRLINES, INC. AND ANSWER OF US AIRWAYS, INC.

Delta Air Lines, Inc. (“Delta”) hereby files this consolidated response to the Application of American Airlines, and the April 19, 2010 Answer of US Airways. The circumstances of this case provide the Department with a valuable public interest opportunity to fund all current requests for Brazil frequencies -- while simultaneously laying the foundation for the future expansion of Delta’s nonstop Detroit-Sao Paulo service, which is set to begin on October 21, 2010. Delta plans to begin the service at a level of two weekly flights – but substantial additional benefits can and will be realized through the future expansion of Detroit-Sao Paulo to a full daily service pattern. Detroit and Sao Paulo are each major industrial manufacturing centers and Detroit-Sao Paulo is one of the largest U.S.-Sao Paulo O&D markets without nonstop service. Delta’s Detroit hub provides ex tensive coverage of the underserved MidwestResponse of Delta Page 2 region and northern tier of the United States, and will provide effective intergateway competition to United’s Chicago-Sao Paulo service. As proposed in Delta’s April 16, 2010 Answer, the Department can achieve a public interest maximizing result that will promote the full implementation of American’s current services and Delta’s future expansion through the prudent allocation and redistribution of existing frequencies. American has requested a total of 11 frequencies

– 7 for New York-Rio de Janeiro service and 4 for Miami-Brasilia. The Miami-Brasilia flights are eligible for service using the lower category of northern/regional Brazil frequencies – and do not require high value Rio/Sao Paulo rights. There is a strong expectation that the U.S. Government will be able to negotiate substantial further liberalization of northern/regional frequencies – but that securing future Sao Paulo frequencies from the Government of Brazil will be more difficult. Accordingly, Delta proposed that 4 of Delta’s 10 northern/regional frequencies be

reallocated to American for Miami-Bras ilia service – and that Delta receive 4 replacement frequencies eligible for future Sao Paulo service from the currently available pool of 14 frequencies. Delta will immediately use these replacement frequencies to fund its existing northern/regional services. This provides American with all the authority necessary to implement its current service pl ans, provides Delta with the ability to fund 4 daily Detroit-Sao Paulo flights, leaving 3 Sao Paulo-eligible frequencies available to any carrier in the unallocated pool. 1 Delta’s proposal and American’s proposal are thus not mutually exclusive, and no further carrier selection procedures are required. On April 19, 2010, US Airways filed a misguided and internally inconsistent answer -- opposing only Delta’s request -- but with no objection to American’s application for 11 of the 14 Sao Paulo-eligible frequencies. Either US Airways does not

1 Delta plans to seek the 5 th Sao Paulo-eligible frequency required for daily Detroit-Sao Paulo service from the unallocated pool in the future. Such a request would, of course, be subject to any additional carrier selection procedures that might be necessary at the time.Response of Delta Page 3 understand the nature of Delta’s proposal, or it is asking the Department to intentionally award the available frequencies in a sub-optimal manner so as to limit future U.S. carrier services, unnecessarily enrich the portfolio of the largest and most dominant U.S. carrier to Brazil, and create artificial scarcity of Sao Paulo frequencies. It is not in the public

interest to do so. US Airways erroneously claims that Delta is attempting to “warehouse” frequencies that “must lay fallow until an indeterminate future date.” US at 1, 3. This is simply wrong, and ignores the clear substance of Delta’s request. Whatever objections US Airways may have had to Delta’s initial Application do not apply to the modified proposal explained in Delta’s April 16 pleading, since all four frequencies will be immediately used for current services. US Airways notes that “Delta apparently believes that holding Sao Paulo-eligible frequencies for its own ‘lower category’ regional service should be preferred by the Department to American’s use of the same frequencies for its regional Miami-Brasilia service.” US at n.2. This is, in fact, exactly Delta’s point. These frequencies are eligible for future use at Sao Paulo -- and American already holds the vast majority of unrestricted Brazil frequencies with a total of 47 Sao Paulo-eligible frequencies to Delta’s 23. It would be contrary to the public interest to allocate the currently available frequencies to American so as to unnecessari ly foreclose Detroit-Sao Paulo service and further undermine the competitive market structure. Because exactly the same number of Sao Paulo-eligible frequencies will remain in the unallocated pool regardless of whether the current rights are distributed to American or Delta, US Airways should be

indifferent to the allocation. 2 Indeed, US Airways is likely better off under Delta’s

2 Delta’s modified proposal reduced its initial frequency request from five to four – thus ensuring complete neutrality with respect to US Airways or any other carrier that might be interested in applying for these rights in the future.Response of Delta Page 4 proposal since Detroit-Sao Paulo will be nearly fully funded, leaving more future rights available to US Airways. The benefits-maximizing solution proposed by Delta is available to the Department only because Delta has been diligent in pursuing the important northern/regional market-opportunities negotiated in 2008 and available to all U.S. carriers. US Airways has eschewed those rights and failed to apply for a single northern/regional market now or at any time in the past. In these circumstances, US Airways should not be heard to complain about Delta’s requested frequency allocation, nor should the Department entertain US Airways’ attempt to thwart or condition Delta’s future use of frequencies for which US Airways has submitted no proposal. Moreover, US Airways has failed to take advantage of any of the open skies or liberal entry opportunities in any South American country including Chile, Argentina, and Peru, among others. Instead, US Airways seeks to cherry pick only select limited entry opportunities in Brazil. 3 Delta’s proposal is fully consistent with the Department’s March 24, 2010 Notice, as well as the U.S.-Brazil Air Transport Agreement. The Department’s Notice specifically states that “the frequencies at issue here may be used at any points that U.S. carriers may serve , subject to the restriction that these frequencies may not be used at Sao Paulo’s Guarulhos International Airport until infrastructure-related constraints at the airport are removed.” Delta’s proposal recognizes the infrastructure-related constraint, and will utilize the frequencies beginning in October 2010, consistent with the bilateral conditions. In allocating frequencies, the Department routinely takes expected future developments into account, and weighs factors such as the applicants’ proposed start

3 Ironically, Delta is actively working to assist US Airway’s entry into the Sao Paulo market through the mutual exchange of Brazil frequencies as part of a larger transaction. Additional frequencies will continue to be available to US Airways in the unallocated pool, and US Airways has the option of serving both Rio de Janeiro and Sao Paulo on a tag basis, as Delta did for many years as it worked to gain entry to the market.Response of Delta Page 5 date, aircraft availability, and infrastructure constraints in its decision. 4 Delta is confident that Brazil will resolve the airport infrastructure constraints at the Guarulhos International Airport. There is nothing in the Notice nor in any DOT policy or precedent that precludes the Department from taking expected future considerations into account when allocating these rights. The Notice expressed a strong intent to allocate the available frequencies for current services, but this does not prevent the Department from taking into account all factors that have a bearing on the highest and best long term use of the frequencies. Delta’s proposed solution maximizes public benefits by fully funding all current carrier proposals, while laying the foundation for the important expansion of Detroit-Sao Paulo service. Accordingly, Delta respec tfully urges the Department to conclude this proceeding by redistributing four of Delta’s northern/regional frequencies to American, and allocating Delta four of the 14 frequencies which become available for service in October, 2010. Respectfully submitted,

_________________________________ Alexander Van der Bellen Managing Director, Government Affairs & Associate General Counsel DELTA AIR LINES, INC.

4 For example, in 2007 US Airways sought and received China frequencies even though it did not have a transpacific-capable aircraft. The Department is currently allocating rights for future U.S.-Haneda services, although the new international terminal at that airport has not yet opened.CERTIFICATE OF SERVICE A copy of the foregoing Response has been served this 23rd day of April, 2010, upon the following persons via email:

carl.nelson@aa.com howard_kass@usairways.com benjamin.slocum@usairways.com hkamen@coair.com dan.weiss@coair.com rbkeiner@crowell.com (for Continental) mrosia@crowell.com (for Continental) jeffrey.manley@united.com julie.oettinger@united.com robert.land@jetblue.com jhill@dlalaw.com (for JetBlue) dkirstein@yklaw.com (for Spirit) jyoung@yklaw.com (for Spirit) paul.gretch@dot.gov esta.rosenberg@dot.gov brian.hedberg@dot.gov byerlyjr@state.gov john.allen@faa.gov lester.robinson@wcaa.us emily.neuberger@wcaa.us joe.cambron@wcaa.us mike.orr@airlineinfo.com