BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

WASHINGTON, D.C. 

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

Joint Application of : 

 : 

 AMERICAN AIRLINES, INC. : 

 and : DOT-OST-2010- 

 JAPAN AIRLINES INTERNATIONAL CO., LTD. : 0034 

 : 

under 49 U.S.C. §§ 41308 and 41309 for : 

approval of and antitrust immunity for : 

alliance agreements : 

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

[PUBLIC] RESPONSES OF AMERICAN AIRLINES, INC., AND 

JAPAN AIRLINES INTERNATIONAL CO., LTD. TO INTERROGATORIES 

Communications with respect to this document should be sent to: 

For Japan Airlines: 

TSUTOMU ANDO 

Executive Officer – 

 International Affairs 

Japan Airlines 

 International Co., Ltd. 

4-11, Higashi-shinagawa 

2-chome, Shinagawa-ku 

Tokyo 140-8637, Japan 

TORU MIZUNO 

Vice President – 

 International Affairs 

Japan Airlines 

 International Co., Ltd. 

4-11, Higashi-shinagawa 

2-chome, Shinagawa-ku 

Tokyo 140-8637, Japan 

YUKI SAITO 

Director, Government Affairs 

Japan Airlines 

 International Co., Ltd. 

1330 Connecticut Ave., N.W. 

Washington, D.C. 20036 

For American Airlines:

VIRASB VAHIDI 

Senior Vice President – 

 Planning 

American Airlines, Inc. 

P.O. Box 619616, MD 5634 

DFW Airport, Texas 75161 

KENJI C. HASHIMOTO 

Vice President – 

 Strategic Alliances 

American Airlines, Inc. 

P.O. Box 619616, MD 5635 

DFW Airport, Texas 75261 

WILLIAM K. RIS, JR. 

Senior Vice President – 

 Government Affairs 

American Airlines, Inc. 

1101 17th Street, N.W. 

Washington, D.C. 20036 
WILLIAM KARAS 

CAROL GOSAIN 

Steptoe & Johnson LLP 

1330 Connecticut Ave., N.W. 

Washington, D.C. 20036 

(202) 429-6223 

wkaras@steptoe.com 

cgosain@steptoe.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 

 

W. BRUCE WARK 

Associate General Counsel 

JEFFREY A. OGAR 

Senior Attorney 

American Airlines, Inc. 

P.O. Box 619616, MD 5675 

DFW Airport, Texas 75261 

(817) 967-3458 

jeff.ogar@aa.com 

CARL B. NELSON, JR. 

Associate General Counsel 

American Airlines, Inc. 

1101 17th Street, N.W. 

Washington, D.C. 20036 

(202) 496-5647 

carl.nelson@aa.com 

February 16, 2010 
BEFORE THE 


DEPARTMENT OF TRANSPORTATION 


WASHINGTON, D.C. 


Joint Application of 

AMERICAN AIRLINES, INC. 

and 00T-OST-2010­

JAPAN AIRLINES INTERNATIONAL CO., LTD. 0034 

under 49 U.S.C. §§ 41308 and 41309 for 

approval of and antitrust immunity for 

alliance agreements 

[PUBLIC] RESPONSES OF AMERICAN AIRLINES, INC., AND 

JAPAN AIRLINES INTERNATIONAL CO., LTD. TO INTERROGATORIES 

In prior antitrust immunity proceedings, the Department has requested 

responses to interrogatories. American Airlines, Inc. and Japan Airlines 

International Co., Ltd. have reviewed the dockets in the U.S.-U.K. Alliance 

Case (00T-OST-2001-11029), SkyTeam (00T-OST-2004-19214), Star (00T-OST-2005­

22922), SkyTeam II (00T-OST-2007-28644), Star II (00T-OST-2008-0234), and 

oneworld (00T-OST-2008-0252) in an effort to provide the Department with 

relevant information at the outset of this proceeding. We believe that our 

responses will facilitate swift approval of the Joint Application so that 

American and JAL may move expeditiously to implement their alliance 

agreements, including a Joint Business Agreement (JBA) , giving consumers 

significant new competitive service options and strengthening oneworld's 

ability to compete with the Star and SkyTeam global alliances. 
- 2 –

1. Describe the Joint Applicants’ strategic objectives in forming the 

Alliance Agreements, particularly addressing why immunity is sought 

and is necessary to achieve those objectives. Provide complete 

details of cooperative activities that would require antitrust 

immunity and the alliance’s plans for each (including, but not limited 

to, sales and marketing strategies, scheduling, capacity allocation 

and management, pricing and revenue management). 

American and JAL have entered into the proposed alliance in order to 

enhance their ability to compete in the global marketplace. International 

alliances are necessary to provide customers with improved products and 

services, as well as access to global markets. American and JAL are network 

carriers, and each believes its future depends on expanding and developing 

this role. To compete effectively in the transpacific market, the Joint 

Applicants must be positioned to challenge the proposed United/Continental/ 

ANA immunized alliance (pending in DOT-OST-2009-0350) and the immunized 

United/Asiana partnership (DOT-OST-2003-14202) within Star, as well as the 

strength of Delta in Japan and throughout the Pacific region which is 

bolstered by immunity between Delta and Korean Air (DOT-OST-2002-11842) 

within SkyTeam. 

Network competition is extremely important to American, which operates 

across the Pacific to Tokyo from four U.S. gateways (New York, Chicago, 

Dallas/Ft. Worth, and Los Angeles), but to just one other Asian destination 

(Shanghai, with Beijing slated for later this year). In order to maximize 

its ability to connect traffic to the rest of Asia seamlessly over Tokyo, 

and compete effectively against other alliances, American requires immunity 

with JAL. 
- 3 –

For its part, JAL needs a U.S. partner with an extensive domestic 

network to remain competitive for traffic between the U.S. and Japan. Only 

a handful of U.S. domestic points can support direct service to Japan, and 

due to statutory restrictions on cabotage, JAL cannot operate between U.S. 

gateways and interior U.S. points. JAL needs antitrust immunity with 

American as its U.S. partner so it can compete effectively for transpacific 

traffic. 

The participation of American and JAL in the initial JBA (which may 

later be expanded to include other oneworld members) is an especially good 

fit, involving largely complementary end-to-end services, with only three 

nonstop overlap routes to Tokyo (New York-JFK, Chicago, and Los Angeles). 

Without antitrust immunity, effective integration between American and JAL 

is impossible for legal and commercial reasons. American and JAL anticipate 

engaging in all of the cooperative activities set forth in the Joint 

Application. 

2. Provide a detailed description of plans to optimize services, traffic 

flows and revenues at all key alliance network hubs, particularly 

focusing on existing overlaps on transpacific routes. Include a 

discussion of the criteria by which services, traffic and revenues 

will be evaluated and optimized. 

American and JAL will coordinate planning efforts in order to offer 

customers a wider choice of travel options at competitive prices, to 

optimize aircraft capacity and ground facilities, and to enhance connecting 

opportunities between their respective networks. This process will require 

that American and JAL jointly assess their U.S.-Japan schedules and 

connecting opportunities in order to build a core network alliance for their 

customers traveling between, and beyond and behind, their respective transpacific gateways in the U.S. and Japan. 
- 4 –

The main elements of planned schedule coordination are as follows: 

 Co-location of flights to the same destinations in the same airport 

terminals where possible (and where possible, increasing the number 

of opportunities to make connections to other services offered by 

the Joint Applicants without changing terminals); 

 Retiming of flights to ensure that the Joint Applicants provide a 

complementary choice of schedules and reduced connection times; and 

 Optimization of aircraft capacity, configurations, and schedules to 

better meet customer preferences and achieve efficiencies. 

 American and JAL anticipate the consumer benefits from these changes 

to include improved choice of flights, increased seat availability on 

flights during peak hours, increased ability for the Joint Applicants to 

reduce prices and add services as a result of efficiencies, increased 

connecting traffic flows, and more connecting opportunities and convenient 

transfers. 

American and JAL will jointly develop revenue plans and forecasts for 

services on their networks. Coordination will enable the parties to better 

predict demand and reduce the need to hold seats back for sale in higher 

value inventories. This will permit more accurate booking practices and the 

possibility of offering more seats at lower fares. Additional information 

on the criteria for optimizing services, traffic flows, and revenues is set 

forth in documents to be submitted separately by the Joint Applicants 

(subject to confidential treatment under 14 CFR 302.12). 

3. Specifically address plans for other oneworld partners and affiliates, 

as well as the proposed transatlantic immunized alliance pending in 

 DOT-OST-2008-0252. 

The proposed American/JAL alliance includes two of oneworld’s transpacific members and will primarily affect transpacific markets. Although 

the American/JAL alliance will be an integral part of oneworld, it will not 

significantly influence operations of other oneworld members that do not 
- 5 –

operate competing transpacific service. Unlike Star, which excludes US 

Airways from its immunized alliances, oneworld will not be faced with the 

problem of reconciling U.S.-Japan service by immunized and non-immunized 

member carriers. oneworld will therefore be better positioned to coordinate 

and rationalize U.S.-Japan service to the benefit of its member carriers and 

their passengers. 

oneworld’s membership currently includes American, British Airways, 

Cathay Pacific, Finnair, Iberia, Japan Airlines, LAN, Malev, Mexicana, 

Qantas, and Royal Jordanian. 

American has separate antitrust immunity with Finnair (DOT-OST-2002-

12063) and with Lan/Lan Peru (DOT-OST-2004-19964), and on February 13, 2010, 

the Department tentatively approved joint antitrust immunity among American, 

British Airways, Iberia, Finnair, and Royal Jordanian by show-cause Order 

2010-2-8 (DOT-OST-2008-0252). It is possible that as the AA/JAL JBA expands 

in geographic scope, other oneworld carriers could be included in a future 

application. 

 In the case of the LAN carriers, this would become more feasible if the 

United States were able to reach open skies agreements with Argentina and 

Ecuador, allowing American to seek antitrust immunity with all four LAN 

affiliates. It is also possible that American and JAL could seek to include 

Qantas in a future application, as the U.S. and Australia now have an open 

skies agreement. Inclusion of Cathay Pacific will not be possible until the 

U.S.-Hong Kong market is fully liberalized. Likewise, inclusion of Mexicana 

is not presently possible. The U.S.-Mexico air transport agreement, 

although not highly restrictive, is not open skies, and thus prevents 

Mexicana from joining the immunized alliance at this time. 
- 6 –

4. Identify and describe all current codeshare and/or marketing alliance 

 arrangements between American and JAL and non-oneworld carriers, and 

 all such arrangements that American and JAL are considering in the next 

 12 months that would impact transpacific traffic flows. 

CODESHARE ARRANGEMENTS 

Parties Description

AA/AS Domestic codeshare 

AA/BR Behind/beyond, gateway-to-gateway 

AA/CI Cargo/mail only 

AA/EI Cargo/mail only 

AA/EK Cargo/mail only 

AA/EY Behind/beyond, gateway-to-gateway 

AA/FJ Gateway-to-gateway 

AA/GF Behind/beyond, gateway-to-gateway 

AA/HA Inter-island codeshare 

AA/KU Cargo/mail only 

AA/LY Behind/beyond, gateway-to-gateway 

AA/MU Behind/beyond, gateway-to-gateway 

AA/SN Behind/beyond, gateway-to-gateway (ends 3/27/10) 

AA/SQ Cargo/mail only 

AA/VN Beyond gateway 

AA/2A Points beyond Frankfurt (train) 

AA/2C Points beyond Paris (train) 

AA/4M Points beyond Buenos Aires 

AA/9W Behind/beyond, gateway-to-gateway 

JL/AF Behind/beyond, gateway-to-gateway, domestic codeshare 

JL/AZ Gateway-to-gateway 

JL/CZ Gateway-to-gateway 

JL/EK Gateway-to-gateway, Japan domestic codeshare 
- 7 –

JL/JQ Gateway-to-gateway 

JL/KE Gateway-to-gateway 

JL/KZ Cargo/mail only 

JL/LH Cargo/mail only 

JL/MU Gateway-to-gateway, China domestic codeshare 

JL/NZ Gateway-to-gateway 

JL/SQ Cargo/mail only 

JL/TG Gateway-to-gateway, domestic codeshare 

JL/TN Gateway-to-gateway 

JL/VN Gateway-to-gateway, Japan domestic codeshare

FREQUENT FLYER ALLIANCES 

Alliance Description

oneworld Agreement to provide accrual/redemption on each others 

network (except AA/BA on transatlantic flights) 

AA/AS/QX Agreement to provide accrual/redemption on each others 

 network 

AA/EI Agreement to provide accrual/redemption on each others 

 network 

AA/FJ Agreement to provide accrual/redemption on each others 

 network 

AA/GF Agreement to provide accrual/redemption on each others network 

AA/HA Agreement to provide accrual/redemption on each others network 

AA/LY Agreement to provide accrual/redemption on each others network 

AA/SN Agreement to provide accrual/redemption on each others network 

AA/VN Agreement to provide accrual/redemption on each others network 

AA/4M Agreement to provide accrual/redemption on each others network 

AA/9W Agreement to provide accrual/redemption on each others network 

JL/AF Agreement to provide accrual/redemption on each others network 

JL/EK Agreement to provide accrual/redemption on each others network 
- 8 –

JL/MU Agreement to provide accrual/redemption on each others network 

(except accrual on gateway-to-gateway) 

AIRLINE CODES 

AA American Airlines 

AF Air France 

AS Alaska Airlines 

AZ Alitalia 

BR EVA Air 

CI China Airlines 

CZ China Southern 

EI Aer Lingus 

EK Emirates 

EY Etihad 

FJ Air Pacific 

GF Gulf Air 

HA Hawaiian Airlines 

JL Japan Airlines 

JQ Jetstar Airways 

KE Korean Air 

KU Kuwait Airlines 

KZ Nippon Cargo Airlines 

LH Lufthansa 

LY El Al 

MU China Eastern 

NZ Air New Zealand 

QX Horizon Air 

SN Brussels Airlines 

SQ Singapore Airlines 
- 9 –

TG Thai Airways International 

TN Air Tahiti Nui 

VN Vietnam Airlines 

2A Deutsche Bahn 

2C SNCF 

4M Lan Argentina 

9W Jet Airways (India) 

oneworld 

American and JAL, together with nine other airlines, belong to a 

global marketing alliance under the brand “oneworld.” The original members 

of the oneworld alliance, formed in February 1999, were American, British 

Airways, Canadian Airlines International (which withdrew after merging with 

Air Canada), Cathay Pacific, and Qantas. Finnair and Iberia joined soon 

thereafter, followed by Aer Lingus and Lan Chile in 2000. In April 2007, 

oneworld underwent significant change, with JAL, Malev, and Royal Jordanian 

joining at the same time Aer Lingus voluntarily withdrew. Mexicana joined 

oneworld in November 2009. Further detail on the development of oneworld 

may be found at www.oneworld.com. 

 oneworld’s objectives are to provide customers with a high standard of 

interline and codeshare service on all flights operated by the member 

carriers, and to compete with other branded alliances such as Star and 

SkyTeam. To secure these objectives, the members have agreed to implement 

frequent flyer reciprocity and recognition, reciprocal lounge access, and 

other measures to make the international travel experience more convenient 

and seamless for customers. 
- 10 –

In addition to adopting a global brand for use in tandem with their 

individual brands and promotional activities, the oneworld carriers also 

agreed to implement check-in systems to permit boarding passes to be issued 

on flights operated by other members, install signage at airports to direct 

passengers to their connecting flights, support ticket interchangeability, 

and improve system automation. The parties further agreed to enter into or 

continue codeshare, frequent flyer, and airport lounge access agreements on 

a bilateral basis, and to recognize common standards for determining and 

rewarding top tier frequent flyer customers. 

On the cost side, oneworld members have agreed to identify savings 

opportunities where legally allowed through measures such as common ground 

handling and joint purchasing, and to enhance efficiency by, for example, 

sharing office or ticket counter space where appropriate. oneworld has also 

jointly developed new products such as the oneworld Explorer ticket, which 

allows passengers to fly around the world using any oneworld carrier for a 

single fare. A description of other oneworld products and services, and 

other general information, can be found on its website at www.oneworld.com. 

6. Provide a list of all transpacific routes that American and JAL are 

currently serving and the international routes that each would serve 

if the proposed alliance were approved and immunized. To the extent 

it impacts international operations, fully identify all of the 

parties’ current codeshare and/or alliance arrangements, their route 

systems and any plans to alter such arrangements or alliances if the 

proposed alliance were approved. 

Lists of the transpacific routes operated by American and JAL are 

provided in Exhibit JA-11. The parties’ current codeshare and alliance 

arrangements with non-oneworld members are described in response to 

Interrogatory 5; copies of the underlying agreements will be included in our 

confidential submission under 14 CFR 302.12. Neither American nor JAL 
- 11 –

currently has any definitive plans to alter such arrangements or alliances 

if the immunity application is granted, as finalizing the analysis required 

for such agreements will require antitrust immunity. 

7. List all of the new city-pairs that would receive new online service 

as a result of the proposed alliance and provide estimates of the 

number of passengers that would benefit from this new online service 

and how many of these passengers would originate in the U.S. Exclude 

any city-pairs in which no new code is introduced as a result of the 

alliance due to an existing relationship with a non-oneworld carrier. 

See Exhibits JA-3, JA-4, and JA-5. 

8. Provide a comparison of the Joint Applicants’ schedules before 

implementation of the proposed alliance with the planned schedules to 

be implemented after approval of the proposed alliance (defined as the 

earliest date at which current alliance service plans are expected to 

be fully realized). These schedules should include frequency, 

aircraft type and the number of seats per operation. In addition, 

provide a summary of schedule, frequency and equipment changes that 

the Joint Applicants would expect to make within the first two years 

of approval. 

Absent antitrust immunity, American and JAL have not been able to 

coordinate schedule changes to be made after the proposed alliance is 

implemented. American and JAL may adjust their schedules in the future 

depending on market conditions and opportunities presented by the 

competitive environment. 

9. Provide complete information describing the extent to which airport 

facilities (including, but not limited to, gates, parking stands, 

counter space and ground-handling) are or will be made available to 

any U.S. airline desiring to begin or increase service at airports in 

Japan. 

To the best of the Joint Applicants’ knowledge, airport facilities 

such as gates, parking stands and counter space are generally available to 

U.S. airlines desiring to begin or increase service at Japanese airports. 

Ground-handling at Japanese airports is not regulated. Therefore, each 

airline makes an independent choice whether to perform its own groundhandling or to contract out that function to another entity. 
- 12 –

10. Provide an assessment of commercially usable slots at Narita and 

Haneda for new transpacific service, particularly by SkyTeam and Star. 

The U.S.-Japan Open Skies Agreement will expand opportunities for U.S. 

carriers to begin or increase service between the United States and Japan. 

The Agreement will not only remove restrictions on U.S. carrier service to 

Japan but will also make additional slots available to U.S. carriers at 

Tokyo’s Narita Airport and re-open Tokyo’s Haneda Airport to scheduled 

international service by U.S. carriers. At the same time, substantial 

capacity increases are planned for the Tokyo metropolitan airports. 

Even under the existing bilateral regime between the U.S. and Japan, 

there are sufficient slots available at Tokyo’s Narita Airport to support 

any services that eligible U.S. carriers wish to operate. Every U.S. 

carrier that has been awarded frequencies to serve Japan has been able to 

obtain slots to serve Narita. Indeed, U.S. carriers are not currently using 

all of their slot holdings at Narita. For example, UPS and Polar Air Cargo 

have reportedly returned slots to the Narita slot coordinator. In addition, 

numerous slots allocated to U.S. carriers are currently being used by their 

Japanese codeshare partners. 

Slots and capacity at both Tokyo Narita and Tokyo Haneda Airports are 

expected to expand in the near future. The capacity at Tokyo Narita Airport 

will increase significantly in summer 2010. The departure and arrival slots 

will be boosted by 10% from 200,000 to 220,000. In addition, the Japanese 

government expects a further expansion of Narita. Narita International 

Airport Corporation has stated its intention eventually to increase slots at 

Narita to 300,000 through more efficient runway and ATC operations. At 

Haneda, which will be re-opened to international scheduled services, a 

fourth runway and a new international passenger terminal building are 

scheduled to open in October 2010. These expansions will significantly 
- 13 ­

increase capacity at Haneda by 155,000 departures and arrivals per year 

eventually, out of which 30,000 slots will be allocated to long-haul 

international services during nighttime hours from the initial stage. 

Further, the U.S. and Japan have affirmed in the recently-signed 

Record of Discussions (ROD) that under the U.S.-Japan Open Skies Agreement 

"the administration of the international airports [such as Narita] will be 

conducted fairly, in accordance with lATA guidelines and existing 

administrative guidelines" and that "any additional slots for international 

services at Narita International Airport will be allocated in accordance 

with this principle." The ROD also provides that for each increase of 

20,000 annual slots in the total number of slots made available at Narita, 

U.S. carriers will be entitled to a number of slots equal to three roundtrip daily flights (2,190 annual slots). Moreover, the ROD provides for 

U.S. carrier access to a proportional allocation of slots and rollover of 

unused slots to ensure their availability when needed. 

In addition, the 2009 Memorandum of Understanding initialed by the 

United States and Japan ensures that U.S. carriers will have access to slots 

at Haneda after the fourth runway becomes operational in October 2010. U.S. 

carriers will have the opportunity to operate four daily scheduled 

combination roundtrip services between Haneda and the United States. The 

ROD notes that the U.S. and Japan may amend and relax these limits "on an 

expedited basis if operational or commercial considerations so justify." 

Specifically with respect to the applications pending before the 

Department for approval of and antitrust immunity for transpacific 

alliances, JAL and American, on the one hand, and All Nippon, United and 

Continental, on the other, will in summer 2010 have 

international slots at Narita Airport . respectively), as shown 

REDACTED 

in the below table. Delta also has substantial slot holdings at Narita 

which are significantly higher when combined 

with its immunized alliance partner, Korean Air 

REDACTED 

11. 	 Pl_s••xpl.in and pzoovide the details o~ any plans ~ozo mu.1til.tezoal 

ooopezo.tion ~ollowift9 • gzoant o~ ATZ. 

The Joint Applicants plan to cooperate in areas such as codesharing, 

frequent flyer programs, global route and schedule planning, sales, 

advertising and marketing, pricing and yield management, inventory and 

procurement, revenue allocation, ground handling, airport facilities and 

support services. The requested antitrust immunity will give American and 

JAL greater economic incentives to codeshare more extensively behind, beyond 

and between their respective gateways. Further, ,the Joint Applicants could 

engage in extensive joint corporate and agency dealingsl allowing the 

on.world immunized alliance to compete with the existing products offered by 

Star and SkyTeam. These benefits are similar to those already enjoyed by 

the existing immunized"alliances within Star and SkyTeam. 

12 . pl.... descz:ib. the speci~ic public ben.~i ts - such •• chanps in 

capac1ty and schedul••, enh.nced. code-.ha.z:ing I coat ••ViDg., and 

.~~ici..DCi.s deZ'iving ~zoOIA .11iance integzo.tioD - that would be 

dizoectly enabled by DO!l' appzoov.l and iJIDani••tion o~ the pzooposed. 

;-mniaed allianCII qz:eement:. (i .•. I tho•• public benefit:. that could 
- 15 –

not be achieved without antitrust immunity). For each public benefit 

described, explain why a grant of ATI is necessary in order for the 

public benefit to be realized, the likelihood of achieving the public 

benefit following a grant of ATI, and the approximate time frame in 

which the public benefit is likely to be realized following a grant of 

ATI.

 This discussion is provided in the Joint Application at pp. 10-25. In 

addition, in show-cause Order 2010-2-8, February 13, 2010, in the oneworld 

immunity docket, the Department recognized that a third strong global 

alliance is a public benefit. See p. 14 (“the proposed alliance will 

provide a third global network that can better discipline the fares and 

services offered by the Star and SkyTeam alliances. The enhanced interalliance competition is beneficial for consumers across many markets, in 

particular the hundreds of transatlantic markets in which the applicants 

become more competitive as a direct result of the alliance. Travelers in 

those markets instantly gain new competitive options”) and p. 28 (“the 

proposed transaction facilitates a third strategic alliance. This too is a 

public benefit. oneworld will become more competitive in a number of 

markets, exerting increased competitive discipline on fares and services in 

those markets. Consumers getting a third viable option will enjoy more 

destinations, better connections, improved schedules, and better frequent 

flyer benefits. These benefits complement the annual surplus from price 

reductions and increased traffic on current interline routes”). Approval of 

ATI for American and JAL will produce similar public benefits. 

13. Please describe (i) the purpose, scope, terms, and proposed timeline 

 for implementing any planned joint ventures, revenue or benefit sharing 

 agreements, or other integrative arrangements under the proposed 

 immunized alliance agreements, and (ii) the extent to which the 

 realization of any public benefits associated with the proposed 

 agreements is contingent upon the implementation of such ventures, 

 agreements, or arrangements. 
- 16 –

This information is provided in the Joint Application at pp. 7-9, 16-

17, and 30-31, and in the relevant agreements, consisting of an alliance 

agreement and a joint business agreement. Absent the JBA, oneworld would be 

limited in its ability to compete with the far larger transpacific presence 

of (1) United (which operates a hub in Tokyo), United/Continental/ANA 

(antitrust immunity pending), United/Asiana (antitrust immunity in place), 

and Air China, Singapore Airlines, and Thai International (codesharing) 

within Star and (2) Delta (which operates a hub in Tokyo) and Delta/Korean 

(antitrust immunity in place) within SkyTeam. American and JAL will not 

implement the JBA absent antitrust immunity. 

14. Please discuss how the Joint Applicants will manage conflicting 

interests and economic incentives with respect to capacity allocation, 

scheduling pricing, revenue and inventory management (especially for 

connecting traffic), and sales and marketing strategies. Please 

address the extent to which conflicts between these three overlapping 

but separate entities in each of these commercial areas will affect 

the realization of any public benefits that would result from approval 

of the Joint Application. 

While the JBA is currently limited to American and JAL, the existence 

of additional immunized alliances within and outside oneworld will not 

reduce the consumer benefits that the JBA makes possible. American has 

managed separate bilateral immunized transatlantic alliances in the past, 

such as its prior immunized agreements with Swiss and Brussels Airlines 

(which were terminated after each was acquired by Lufthansa and became a 

member of Star), and its existing immunized alliance with Finnair. The 

Joint Applicants do not anticipate any conflicting interests or economic 

incentives between the proposed alliance here and other alliances that 

presently exist. Accordingly, American and JAL contemplate no negative 

impact on the public benefits that will occur as a result of approving the 

proposed alliance. 
- 17 ­

15. 	 Please describe the impact of JAL's bankruptcy on its operations, 

JAL's recent management changes and restructuring, and the likely scope 

of operations by JAL in the near and long term as a result of these 

developments. In your answer, please indicate how these plans are 

likely to affect its alliance activities and commercial relationships 

with oneworld carriers and the proposed timeline for any changes. 

REDACTED 


16. 	 Please describe the sources of and estimate the value of any cost 

savings that the Joint Applicants will be able to achieve only if they 

are granted antitrust immunity. 
- 18 –

This discussion is provided in the Joint Application at pp. 11, 14-18. 

American and JAL anticipate that significant cost savings will be realized 

following grant of antitrust immunity. 

17. How does the JBA reconcile an independent firm’s intrinsic orientation 

to act purely in its own economic interest, and the express goal of 

American and JAL in the JBA of aligning economic interests to achieve 

metal neutrality and deliver significant consumer benefits? 

This question probes whether the JBA’s method of allocating pricing 

and capacity functions will lead to individual decisions that are not in the 

collective best interest of the alliance and consumers. However, any such 

concerns will not be realized; in fact, the method of governance that the 

JBA participants have chosen is designed specifically to ensure that neither 

AA nor JAL has an incentive to focus on its independent self interest. This 

is because the JBA’s revenue sharing mechanism aligns each party’s interests 

toward growing the transpacific business to the greatest extent possible and 

on a metal-neutral basis. 

18. Describe your plans for joint international product development as 

well as expectations for the improvement of each party’s product by 

virtue of the alliance cooperation envisioned by the alliance 

agreement and the JBA. 

Because American and JAL currently lack antitrust immunity, it would 

have been legally imprudent and commercially impractical to discuss or 

develop specific plans for joint international product development. The 

parties generally anticipate that product differences will exist in the 

early days of the JBA. Over time, and as the oneworld brand matures, the 

JBA participants expect to harmonize and enhance their international 

services. What has not been decided at this point is the extent to which 

the parties will continue to offer different products across the different 

brands in the long run. 
- 19 –

19. Describe the steps you plan to take to achieve fare combinability 

under the JBA, and the estimated timeframe to complete the task. 

Explain whether you plan to harmonize or map your CRS fare classes and 

revenue management buckets and provide existing documentation on the 

harmonized fare and revenue management buckets, as well as proposed 

mapping of selling and booking classes based on their dollar value and 

restrictions. 

As members of oneworld, the JBA participants already have full fare 

class mapping. Thus, fare combinability will require only the addition of a 

rule in each carrier’s tariffs providing that all fares within the JBA’s 

scope are fully combinable. With metal neutrality, each carrier will have 

the incentive to make these rule changes. Fare combinability should be 

achievable within the same timeframe anticipated for implementing the JBA as 

a whole.

20. Given the structure of the JBA, which contemplates pooling revenues 

and certain limited costs, please explain: 

(i) whether and to what extent the joint venture participants plan to 

include additional costs, beyond those itemized in Schedule 1 of 

the JBA, in the arrangement in the future, and 

(ii) the benefits and detriments of pooling those other costs for the 

participating airlines and consumers given economic, political, 

and contractual constraints faced by global airline alliances. 

The Joint Applicants have no current plans to include costs beyond 

those itemized in Schedule 1 of the JBA. However, it is possible that the 

JBA’s structure could be changed over time. To the extent those changes are 

significant enough to warrant notification to the Department, the Joint 

Applicants will do so. Full cost-sharing would add unnecessary complexity 

to the JBA, and is not necessary in order to achieve metal neutrality. 

 
- 20 –

 Moreover, by not sharing in the benefits of cost reduction, each 

party has an incentive to operate its flights as efficiently as possible 

(such as by acquiring and deploying more fuel efficient aircraft to the 

JBA). On the other hand, the JBA could eventually evolve from revenue 

sharing to profit sharing, depending on the parties’ experiences and other 

developments. 

21. Describe your plans to cooperate in the transportation of cargo, 

including but not limited to the names of parties who intend to 

cooperate and the scope of their planned cooperation. 

While the JBA participants have no current plans to include cargo 

within the scope of the JBA, antitrust immunity between the Joint Applicants 

would facilitate potential integration of cargo activities. Absent 

antitrust immunity, the possibilities for joint cargo activity are limited. 

With antitrust immunity, potential joint cargo offerings could be further 

pursued. Initially, however, it seems likely that cargo cooperation will be 

less extensive than cooperation involving passenger traffic. 

22. Describe the commercial considerations of including other oneworld 

members, especially Cathay Pacific and Qantas, in future iterations of 

the JBA. 

The JBA is necessary to create metal neutrality between American and 

JAL to counteract their inherent incentives to divert traffic – at the 

expense of overall network efficiency – to their individual transpacific 

services. 

 Cathay Pacific’s inclusion in the proposed immunized alliance and JBA 

is not possible at this time in the absence of an open skies agreement 

between the U.S. and Hong Kong. Qantas’ inclusion in a future application 

for antitrust immunity and membership in the JBA is possible, although no 

agreements have been reached to do so. Across the Pacific, there are no 

overlaps between Qantas and American (nor could there be, as American lacks 
- 21 –

the commercial ability to operate flights to Australia), and thus metal 

neutrality would exist even if Qantas were an immunized member of oneworld 

but not a participant in the JBA. 

23. The Department understands that the Joint Applicants are seeking 

 global antitrust immunity. Given the JBA’s scope, which is limited 

 to transpacific markets, describe: 

(i) the plans for future cooperation between and among all parties on 

non-transpacific routings, and 

(ii) the consumer benefits attributable to antitrust immunity that 

have been or will be created by cooperation on non-transpacific 

routings. 

Global antitrust immunity will enable American and JAL to engage in 

joint global corporate dealing, joint account management, and a more 

integrated approach to schedules and networks even outside the JBA’s scope. 

Unlike SkyTeam (which had more than one U.S. member prior to the Delta/ 

Northwest merger), or Star (which recently added Continental to a 10-way 

antitrust immunity that also includes United, US Airways, and Air Canada), 

there is only one North American carrier in the Joint Application here – 

American. That means that while global immunity for SkyTeam or Star has a 

potential impact on existing competition on U.S.-Asia, U.S.-Europe, and 

U.S.-South America routes, it would have no such effect once granted to 

oneworld. 

While the JBA’s scope currently includes only transpacific flights 

between North America and Japan (plus behind/beyond sectors within North 

America and Asia), those flights are often integrated into more global 

itineraries. American and JAL plan to cooperate on such itineraries 

worldwide, and will have strong incentives to do so as the risk of diversion 
- 22 –

beyond North America-Asia routes is less worrisome to the parties. As 

discussed above, where end-to-end coordination is contemplated, there is 

less risk of diversion and it is far easier for immunized alliances to 

cooperate optimally without the need for a metal neutral joint venture. 

24. Explain what regulatory authority, if any, you believe is necessary to 

obtain from foreign countries to fully implement the alliance 

agreements within the timeframe suggested in your application. In your 

answer, describe the nature of the regulatory process, its estimated 

duration, and the extent to which the proposed alliance will be 

limited absent the foreign regulatory authority, for both broadening 

coverage in the transatlantic markets, and serving markets to/from the 

rest of the world, particularly since global immunity is requested. 

Full implementation of the Alliance Agreements requires approval of 

and a grant of antitrust immunity for the Agreements by the Japanese Civil 

Aviation Bureau (including the consent of the Japanese Federal Trade 

Commission) under Articles 110 and 111 of the Japanese Civil Aviation Law. 

Before implementing the Alliance Agreements in any third country, the 

parties will determine what regulatory action, if any, needs to be taken 

with respect to such country. The Joint Applicants will only implement the 

Alliance Agreements in third countries to the extent that all necessary 

regulatory approvals have been obtained. 

25. Given the tentatively approved immunized alliance of oneworld members 

in transatlantic markets, and the present existence of the American/ 

Lan Airlines/Lan Peru alliance, which would overlap with the proposed 

American/JAL alliance in U.S.-Europe and U.S.-South America markets, 

describe your plans to manage traffic flows and pricing to/from Europe 

and South America. 

The proposed American/JAL alliance will not overlap with the proposed 

immunized alliance of oneworld members in transatlantic markets tentatively 

approved on February 13, 2010 by show-cause Order 2010-2-8, or with the 

American/Lan/Lan Peru alliance in U.S.-South America markets. The JBA 

includes traffic between the U.S. and Japan and beyond, not U.S.-Europe or 

U.S.-South America. Traffic flows to Europe and South America are not 
- 23 –

within the JBA’s current scope. The carriers’ decisions to serve European 

and South American destinations from their hubs will continue to be made 

independently. However, antitrust immunity will allow coordination to 

maximize the efficient utilization of their respective hubs. 

Procedures to protect the unauthorized disclosure of competitively 

sensitive information between the proposed alliance and the AA/LA/LP 

alliance are already in place. The AA/LA/LP alliance compartmentalizes 

information to prevent spillover to competition between American and the two 

non-immunized LAN affiliates – Lan Argentina and Lan Ecuador. These and 

like procedures will prevent unauthorized disclosure of competitively 

sensitive information among American/JAL, the oneworld transatlantic 

immunized alliance, and LAN and its affiliates. 

26. Provide each applicant’s estimated percentage of total revenue, total 

premium revenue from corporate and travel agency contracts, and total 

premium revenue, in transatlantic markets and, specifically, in 

individual U.S.-UK airport-pairs, as well as an assessment of the 

industry’s overall revenues in each of the aforementioned categories. 

The parties have no accurate mechanism by which to estimate overall 

industry revenues generated by corporate and travel agency contracts. 

However, we are providing certain data for American and JAL below. 

27. Describe the frequency of service needed in U.S.-Tokyo markets to 

obtain corporate and travel agency contracts. To what extent are 

corporate and travel agency customers indifferent to Narita versus 

Haneda service from U.S. points of origin? 

There is no set level of service required in U.S.-Tokyo markets in 

order to compete for corporate and travel agency contracts. Many large 

agencies and corporate customers are focused on global networks – making the 

number of frequencies much less relevant. Even for U.S.-Japan focused 

customers, the number varies by city-pair. Depending on the size of the 

local market and connectivity on both ends of the route, just one frequency 
- 24 –

per day might be supported. Even in the denser local markets where multiple 

frequencies can be operated – like New York, Los Angeles and Chicago – 

competition for corporate and agency business will remain intense even after 

the proposed alliance is approved, as consumers will still have far more 

options to Tokyo from those cities than they do to Star and SkyTeam hubs in 

Europe. 

28. Provide detailed discussion of the following: 

(i) Whether your interline traffic with airlines that are not part of 

the oneworld alliance has declined over the past three years, 

and, if so, the extent to which such declines areattributable to 

less favorable prorate terms for airlines that are not part of 

the oneworld alliance; 

(ii) How the terms of your interline agreements with airlines that are 

not members of the oneworld alliance have changed over the past 

three years when compared with your interline agreements with 

airlines that are members of the oneworld alliance; 

(iii) Whether you plan either to reduce the number of airlines that are 

not part of the oneworld alliance with which you maintain 

interline agreements, or otherwise to reduce (either 

contractually or through inventory availability) the numbers of 

passengers you carry on an interline basis with airlines that are 

not part of the oneworld alliance given the growth and capacity 

agreements presented in the Joint Business Agreement (Section 

3.3, pages 5-6); and 

(iv) Whether any changes to your interline practices and policies visà-vis carriers that are not part of the oneworld alliance are 

contemplated. 

(i) American: In approving the Air France/KLM merger, the European 

Commission relied upon interline traffic to provide a “competitive 

constraint” on the immunized alliance duopoly that currently exists between 

Star and SkyTeam. After that merger was approved – and just days after 

filing for antitrust immunity with Delta, Northwest, KLM, Alitalia and CSA 

in 2004 – Air France began systematically eliminating interline competition 

from non-SkyTeam carriers. Specifically, Air France restricted inventory 

availability to American and other non-SkyTeam carriers while imposing 
- 25 –

discriminatory prorate terms. As a result, American’s interline traffic on 

Air France went down 90% year-over-year. American has not reciprocated in 

kind. 

JAL: JAL has not experienced any significant discriminatory interline 

practices from non-oneworld carriers over the past three years and has 

maintained prorate agreements and interline practices with non-oneworld 

carriers comparable to the agreements in place prior to 2007. There has been 

a natural shift in passenger traffic between JAL and oneworld carriers which 

can be attributed to favorable inventory access, favorable prorate 

agreements and general passenger benefits of the alliance. While JAL 

believes that restricted inventory availability from some carriers may have 

contributed to the decline in non-oneworld traffic, we do not believe that 

JAL was a target of any specific discrimination. Between 2007 and 2008, the 

overall flow between JAL and all interline partners decreased by 4%; during 

the same period, interline flow increased by 4% between JAL and oneworld 

partners and decreased by 7% between JAL and non-oneworld partners. 

The most recent results for 2009 (APR-OCT) must be looked at in 

conjunction with JAL’s overall traffic results. JAL’s premium passenger 

demand, which has a high interline requirement, decreased by approximately 

35% during this period. Indeed the overall interline flow between JAL and 

all carriers reduced by 33%. Significantly, the flow between JAL and 

oneworld carriers decreased by only 5%, while flow between JAL and nononeworld carriers decreased by 45%. JAL does not attribute these 

fluctuations to any changes in the terms or conditions of the interline 

agreements that we have with non-oneworld airlines, but rather to a natural 

polarization towards the favorable conditions within the oneworld alliance. 
- 26 –

(ii) American: American has not signed many new interline agreements 

over the past three years, focusing instead upon improving the quality of 

what is delivered in its existing agreements, including a conversion of such 

agreements from paper to electronic ticketing. American has amended its 

agreements to require affirmation of IATA standards on the involuntary 

rerouting of passengers, and participation in one of the two industry 

clearinghouses. American has also required interline partners to support 

automation features that facilitate improved accuracy and efficiencies in 

the interline accounting process. This includes an option to charge fees 

for inaccurate or incomplete data feeds, or the use of shortcut forms to 

reroute passengers (rather than preparing new automated tickets). These 

changes are all intended to help reduce American’s processing costs. 

American has also begun requiring periodic review of some interline 

agreements to ensure that the parties are using best practices, rather than 

simply having evergreen agreements that tend to become outdated and drive up 

costs. 

JAL: There has been very little change to the terms of the interline 

agreements JAL has with non-oneworld members over the past three years. The 

only significant change has been the adoption of 100% E-Ticketing in BSP 

markets worldwide and a dramatic increase in the number of interline ETicket agreements during this period. 

(iii) American: American is seeking to increase – not reduce – the 

number of interline agreements that it has with non-oneworld carriers. 

While American began limiting its participation in these agreements in 2001 

in an effort to reduce costs, improved automation has made it more 

commercially viable to enter into and maintain these agreements. 
- 27 –

JAL: JAL has no plans to reduce the number of active non-oneworld 

agreements, or to change the conditions or inventory accessibility to nononeworld carriers. We would expect that new agreements will be concluded in 

line with changing commercial requirements. It is however necessary to 

mention that JAL has approximately 170 Interline Traffic agreements, of 

which approximately 70 agreements do not have E-Ticket capability. The 

combined interline volume of these 70 carriers is less than 0.3% of JAL’s 

interline traffic. These agreements are currently maintained with paper 

tickets issued at the JAL ticketing offices as a service for the extremely 

small number of passengers that continue to use these carriers’ services. 

JAL anticipates that E-Ticketing solutions will be developed with a small 

number of these carriers in the next 2-3 years; however, as the cost of ETicketing development far exceeds the revenue that can be expected, JAL 

would anticipate that nearly all of these agreements will gradually become 

redundant and will eventually be terminated when paper tickets are no longer 

supported by any airline. 

(iv) The Joint Applicants do not contemplate any commercial changes 

to their interline practices with non-oneworld carriers. Unlike Star and 

SkyTeam, which have policies forbidding or discouraging their members from 

engaging in codesharing or FFP relationships with current and prospective 

members of other alliances without approval of the other carriers, oneworld 

carriers frequently engage in such relationships, which are important to 

interlining. As oneworld improves the integration of its network, an 

increasing number of passengers will be attracted from Star and SkyTeam. 

However, the Joint Applicants anticipate a reduction in interlining with 

Star and SkyTeam carriers as those alliances continue to discourage or 
- 28 –

exclude interlining outside their own networks. oneworld’s goal is not to 

preclude joint marketing relationships outside the alliance to the extent 

that they are consistent with its goals. 

American: American is currently working to improve the accuracy and 

availability of information shown to airline users of the SHARES CRS 

(Continental, US Airways, Virgin Atlantic and others). American is also 

working to streamline the procedures used for involuntary rerouting of 

customers – both within oneworld and with other interline partners. 

American intends to review the policies and procedures used for passengers 

who purchase separate tickets for through carriage, rather than buying and 

presenting a single interline ticket. Further, American is reviewing ways 

to make consistent baggage fee collection possible on interline itineraries. 

Finally, American intends to create a more effective tool to screen bookings 

for the inclusion of a downline carrier with which American has no interline 

relationship. 

JAL: JAL anticipates that there will be an improvement in codeshare 

agreements between JAL and non-oneworld interline partners with a gradual 

migration from the remaining block-space agreements towards free-flow 

agreements, which are considered more efficient and economic. JAL intends to 

increase the number of non-oneworld interline partners participating in 

Direct Access level reservations, which will increase the number of nononeworld carriers available for sale on JAL’s public internet site. 

Furthermore, JAL aims to continue improving the automation of the passenger 

interline experience with developments such as Web-Checkin by PC or cell 

phone, cell phone boarding passes and expanded Web-based functions, all of 

which will include interline sectors of non-oneworld and oneworld carriers. 
- 29 –

Additionally, JAL is working on the development and introduction of 

the Electronic Miscellaneous Document (EMD), which will replace the current 

paper Excess Baggage Tickets as well as handwritten MCO’s. Potentially the 

EMD can also be used for Web-based reissues or Optional Services in the 

future. It is anticipated that the EMD will be available for interline 

transactions with all EMD capable airlines within the next two years. 

29. Discuss any labor effects of the proposed alliance, and whether, 

 how, and to what extent employees of the applicant airlines will 

be integrated. In particular, state whether the transaction or a 

similar type of transaction has been the subject of recent collective 

bargaining discussions between American and its unions. Provide a 

discussion of whether both union and non-union employees adversely 

affected by the alliance would be compensated or otherwise protected. 

 American believes that the transaction raises no significant labor 

issues. American and JAL will remain independent. No significant impact on 

unionized employees is anticipated under the alliance and coordination 

agreements. The applicants believe that the long-term impact of the 

transaction will be positive for all existing employees for new job 

creation. 

30. Describe any effect of granting the Joint Application on 

American’s Civil Reserve Air Fleet (CRAF) commitments. 

The alliance agreements between American and JAL will have no impact 

on American’s CRAF commitments. 
- 30 ­

Respectfully submitted, 

c!:!,!~4 R. BRUCE WARK 

JEFFREY A. aGAR 

American Airlines, Inc. 

'Willi". /(/,40 IA~ WILLIAM KARAS 

CAROL GOSAIN 

Steptoe & Johnson LLP 

Counsel for Japan Airlines 

International Co., Ltd. 

February 16, 2010 

.. _----------- ---- --­
CERTIFICATE OF SERVICE 

I certify that I have this day served the foregoing 

document by on the following persons: 

sascha.vanderbellen@delta.com 

scott.mcclain@delta.com 

sametta.c.barnett@delta.com 

kquinn@pillsburywinthrop.com 

bkeiner@crowell.com 

mrosia@crowell.com 

bruce.rabinovitz@wilrnerhale.com 

jeffrey.manley@united.com 

bob.kneisley@wnco.com 

robert.land@jetblue.com 

msinick@ssd.com 

cdonley@ssd.com 

anbird@fedex.com 

dvaughan@kelleydrye.com 

kevin.rnontgornery@polaraircargo.com 

jrichardson@johnlrichardson.com 

Ihalloway@crowell.com 

efaberrnan@wileyrein.com 

mroller@rollerbauer.com 

howard.kass@usairways.com 

benjarnin.slocurn@usairways.com 

sophy.chen@hklaw.com 

February 16, 2010 

jhill@dlalaw.com 

bill@mietuslaw.com 

rngoldman@sgbdc.com 

rsilverberg@sgbdc.com 

dhainbach@ggh-airlaw.com 

mcmillin@woa.com 

rnchopra@jamhoff.com 

russell.bailey@alpa.org 

dkirstein@yklaw.com 

jyoung@yklaw.com 

donna.kooperstein@usdoj.gov 

dwight.rnoore@ustranscorn.mil 

jirn.ballough@faa.gov 

byerlyjr@state.gov 

recohn@hhlaw.com 

simpson@zsrlaw.com 

pmurphy@loprnurphy.com 

lachter@starpower.net 

anita.mosner@hklaw.com 

rpomrner@atlasair.com 

gmurphy@crowell.com