**BEFORE THE**

**DEPARTMENT OF TRANSPORTATION**

**WASHINGTON, D. C.**

----------------------------------------: 2010 U.S. – HANEDA COMBINATION SERVICES : DOT-OST-2010- ALLOCATION PROCEEDING : 0018 ----------------------------------------:

**REPLY OF AMERICAN AIRLINES, INC.** Communications with respect to this document should be sent to: VIRASB VAHIDI WILLIAM K. RIS, JR.Senior Vice President - Senior Vice PresidentMarketing and Planning Government Affairs and Chief Commercial Officer American Airlines,Inc. American Airlines, Inc. 1101 17 th Street, N.W. P.O. Box 619616, MD 5634 Washington, D.C. 20036 DFW Airport, Texas 75261 FRANCIS C. HEIL ROBERT A. WIRICK Senior Attorney Managing Director, Regulatory American Airlines,Inc. and International Affairs 1101 17 th Street, N.W. American Airlines, Inc. Washington, D.C. 20036 P.O. Box 619616, MD 5635 (202) 496-5642 DFW Airport, Texas 75261 francis.heil@aa.com (817) 963-0394 robert.wirick@aa.com

September 13, 2012**BEFORE THE**

**DEPARTMENT OF TRANSPORTATION**

**WASHINGTON, D. C.**

----------------------------------------: 2010 U.S. – HANEDA COMBINATION SERVICES : DOT-OST-2010- ALLOCATION PROCEEDING : 0018 ----------------------------------------:

**REPLY OF AMERICAN AIRLINES, INC.**

American Airlines, Inc., under the Department’s Order 2012-8-20 of August 17, 2012, hereby replies to the answers submitted on September 6, 2012 by Delta Air Lines, Inc., United Air Lines, Inc., and Hawaiian Airlines, Inc., concerning U.S.-Haneda service authority. American seeks one daily U.S.-Haneda slot pair to operate year-round scheduled foreign air transportation of persons, property, and mail between Los Angeles, California and Tokyo (Haneda), Japan. In doing so, American proposes to operate 247-seat B777 aircraft to Haneda. Los Angeles is the number one U.S. Mainland O&D market to Tokyo, with two times more local passengers thanSan Francisco and six times more than Seattle (Exhibit AA111). Global alliance competition between Los Angeles and Haneda is limited to Star (with service operated by ANA andmarketed by United and US Airways) and SkyTeam (with service operated by Delta). Among the aligned U.S. carriers, American has the least number of total frequencies between the United States and Japan (Exhibit AA-RA-101). To maximize alliance competition in the largest Mainland-Tokyo market that would result in the greatest benefit to the traveling public, American and Los Angeles should be selected in this proceeding. American has a strong identity and presence in theU.S.-Japan market, and is well positioned to serve the LAXHND route. American has served Japan since 1988, and has extensive sales and marketing relationships in both

countries.Selection of American will provide convenient online roundtrip connections from its hub at Los Angeles to its other hubs at Chicago, DFW, and Miami, and 22 other U.S. cities including San Francisco, San Jose, Seattle, Portland, Anchorage, Las Vegas, San Diego, Santa Barbara, Fresno, Denver, Houston, Boston, New York (JFK), and Washington (IAD). In addition, American’s immunized cooperative relationship with Japan Airlines will provide connecting opportunities beyond Haneda to more than two dozen cities in Japan as well as to Shanghai, Beijing, Bangkok, Hong Kong, Seoul, Singapore and Taiwan.**1. DELTA**  Delta’s failure in succeeding with service from its large hub at Detroit should not be rewarded with a second chance opportunity. Doing so is not in the public interest especially where, as here, Delta pins its second chance hope on service to and from a non-hub airport, Seattle, where it operates to only six Mainland cities and must rely heavily on codeshare connecting service from its partners Alaska and Horizon to achieve its roundtrip connections as shown in Exhibit DL-A-406. Furthermore, Delta proposes use of the smallest aircraft from the smallest Mainland-Tokyo market of all the applicants 1 . Contrary to Delta’s assertion that Seattle is the largest U.S.-Tokyo O&D gateway that does not have service to Haneda, it ranks tenth in the U.S.-Haneda market without nonstop service (Exhibit AA-RA-102). In addition, Seattle-Haneda bookings were a mere .25% of all U.S.-Haneda O&D bookings. American plans to reduce its Los Angeles–Narita operation to five weekly flights in January 2013 for one month only. Daily service in the market resumes on February 14. To that end,

1 Delta has proposed the smallest aircraft (225

- seat B767) among the applicants ( see Exhibit AA -R- 105). The Department used aircraft size as a carrier selection factor in the initial decision in this docket. See Order 2010 -5- 7, p.10 (citing Delta’s significant capacity advantage). Delta, as the applicant proposing the least amount of capacity, sho uld not be favored.American is committed to operating daily Los Angeles-Haneda nonstop service as stated in our service proposal.

Delta also states that American ignores its ATI Partnership with JAL and the metal-neutral benefits claimed to justify immunity (See Delta’s Exhibit DL-A-402). To the contrary, in implementing immunity with JAL, American’s goal is to position itself for long-term success in the U.S.-Japan and U.S.-Asia markets against Delta and United. For the benefit of its customers, shareholders, pilots, flight attendants, mechanics, and all other employees, American will continue to seek route opportunities to Japan and to operate transpacific flights in the context of the metal-neutral joint venture. American’s application for Los Angeles-Haneda is consistent with that approach. Finally, Delta’s suggestion that any of JAL’s, and indeed, ANA’s current Haneda frequencies can be reallocated should be rejected. JAL and ANA also had to undergo an extensive selection process in Japan and have made commitments to serve the current market city pairs.

**2. UNITED**  United and its Star Alliance partners (ANA and Singapore Airlines) command the largest presence in the U.S.-Japan nonstop market. United alone operates 9 dailyfrequencies to Tokyo from 8 gateways (Newark, Honolulu, Washington (Dulles), Houston, Los Angeles, Seattle and San Francisco) compared to American’s 5 daily operations from only 4 gateways (Chicago, Dallas/Fort Worth, Los Angeles and New York). Star operates 210 weekly nonstop frequencies between the U.S. and Japan, while oneworld operates 118 (Exhibit AA-R-108). Los Angeles is the largest U.S. Mainland gateway to Tokyo, and twice the size of San Francisco (Exhibit AA-111). In the interest of competitive balance among the three global alliances, and to best serve the public interest in the largest U.S. Mainland O&D market to Tokyo, American’s application for Los Angeles-Haneda authority should be favored over United’s application for a San Francisco-Haneda award.

**3. Hawaiian Airlines**  Hawaiian’s application is the weakest among the contenders and clearly should be disfavored as contrary to the public interest. Only eight U.S.-Haneda opportunities are available under the U.S.-Japan air transport agreement and three of the eight are already being used to serve Hawaii (HA, JAL, and ANA each operates to Haneda from Honolulu)(Exhibit AA-R-111). If Hawaiian were to prevail here, 50 percent of all Haneda opportunities (four of eight) and 50 percent of U.S. carrier Haneda opportunities(two of four) would be used at a Hawaii gateway (Exhibit AA-R-112). Destinations in Hawaii account for 36 percentof passenger bookings in the U.S.-Tokyo market (Exhibit AAR-113), which is less than the 37.5% Haneda slot share now enjoyed by Hawaii. Awarding half of these valuable U.S.- Haneda opportunities for service to Hawaii would clearly be contrary to the public interest.

**4. CONCLUSION**  For the foregoing reasons, the Department should promptly conclude this proceeding by selecting American to operate nonstop service between Los Angeles and Haneda. Los Angeles is the largest Mainland gateway to Tokyo and is without nonstop service to Haneda by oneworld. Selection of American will benefit U.S. Japan passengers, allows American to achieve a stronger competitive position for itself in the U.S.-Japan market and remedy the competitive imbalance among global alliances. Respectfully submitted,

______________________ Francis C. Heil Senior Attorney American Airlines, Inc. September 13, 2012

## AMONG THE ALLIGNED U.S. CARRIERS, AMERICAN HAS THE LEAST NUMBER OF FREQUENCIES BETWEEN U.S. - JAPAN

Source: OAG August 2012 DOT

- OST

- 2010

- 0018 Exhibit AA

- RA

- 101 Page 1 of 1

U.S. CARRIER JAPAN TOKYO AA 35 35 DL 172 124 HA 21 21 UA 139 84 WEEKLY FREQUENCIES

## SEATTLE RANKS TENTH IN THE U.S. – HANEDA MARKET WITHOUT NONSTOP SERVICE DOT

- OST

- 2010

- 0018 Exhibit AA

- RA

- 102 Page 1 of 1

Source: YE July 2012MIDT Unadjusted Bookings * Have nonstop service 

### CITY TOTAL SHARE (%) Honolulu (HNL)* 344,916 50.8 Los Angeles (LAX)* 115,687 17.0 San Francisco (SFO)* 73,824 10.9 New York (NYC)* 38,131 5.6 Las Vegas (LAS) 20,690 3.0 Kona (KOA) 18,832 2.8 Orlando (MCO) 7,023 1.0 Maui (OGG) 5,413 0.8 San Diego (SAN) 4,624 0.7 Detroit (DTW) * 4,465 0.7 Boston (BOS) 3,294 0.5 Phoenix (PHX) 2,735 0.4 Miami (MIA) 2,070 0.3 Atlanta (ATL) 2,030 0.3 Seattle (SEA) 1,680 0.25 Chicago (ORD) 1,649 0.2 OTHERS 31,690 4.7 TOTAL 678,753 100.0 

### BOOKINGS**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 steve.morrissey@united.com sametta.c.barnett@delta.com mgoldman@sgbdc.com dan.weiss@united.com rsilverberg@sgbdc.com r bkeiner@crowell.com dhainbach@ggh

- airlaw.com esahr@eckertseamons.com rpommer@atlasair.com russell.bailey@alpa.org dmrosenthal@jamhoff.com jonathan.linde@united.co m dpdean@jamhoff.com bob.kneisley@wnco.com dkirstein@yklaw.com robert.land@jetblue.com jyoung@yklaw.com msinick@ssd.com willi a m.stallings@usdoj.gov cdonley@ssd.com dwight.moore@ustranscom.mil gbleopard@fedex.com john.allen@faa.gov cefelts@fedex.com urskr@state.gov kevin.montgomery@polaraircargo.com gmurphy@crowell.com nssparks@fedex.com cjsimpson@zsrlaw.com lhalloway@crowell.com benjamin.slocum@usairways.com efaberman@wileyrein.com howard.kass@usairways.com mroller@rollerbauer.com anita.mosner@hklaw.com jennifer.nowak@hklaw.com

________________________________ Francis C. Heil

September 13 , 2012