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# I I Motion of BEFORETHE DEPARTMENT OFTRANSPORTATION OFFICE OFTHE SECRETARY WASHINGTON, D.C.

UNITED AIRLINES, INC. For Confidential Treatment Under Section 302.39 Docket OST-95-675

MOTION OFUNITED AIRLINES, INC. TOWITHHOLD INFORMATION

FROM PUBLIC DISCLOSURE

Communications withrespect to this document should be sent to: DAVID B. OLAUSSEN ManagingCounsel UNITED AIRLINES, INC. 233 South Wacker Drive Chicago, IL 60601 872-825-8069

DATED: May 20, 2013 •: ,:

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-- ---**,·-~~ ~;-**  ·---·**~**Motion of BEFORETHE DEPARTMENT OFTRANSPORTATION OFFICE OFTHE SECRETARY WASHINGTON, D.C.

UNITED AIRLINES, INC. ForConfidential Treatment Under Section 302.39 Docket OST-95-675

MOTION OFUNITED AIRLINES, INC. TO WITHHOLD INFORMATION

FROM PUBLIC DISCLOSURE

Pursuant to Rule 39(e) ofthe Department ofTransportation, Office ofthe Secretary Procedural Rules, United Airlines, Inc. ("United") hereby files this Motion to Withhold From Public Disclosure the information contained in a sealed envelope and captioned Schedule B-7 Airframe and Aircraft Engine Acquisitions and Retirements and delivered to the Office ofAviation Transportation Management. This information is provided pursuant to Part 241 ofthe Department's EconomicRegulations, 14 CFR 241, and is part ofForm 41 Schedule B-7. The information soughtto be withheld from public disclosure details United's acquisition cost and sales realization amounts with respect to new and used aircraft and aircraft engines, each broken down by model, individual serial number, and individual purchase orsale prices. The information for which United seeks confidential treatment under this instant Motion is similar to and consistent with that for which the Department granted, in 1993 and 1994 orders, confidential treatment to similar Schedule B-7 data filed separately by United, American Airlines, Inc. ("American") and DeltaAirlines, Inc. ("Delta"). Theinformation sought to be witfiheld falls within Exemption 3 ofthe Freedom ofInformation Act (5 U.S.C. 552(b)(3)), which exempts from disclosure information required by statute to be withheld. Exemption 3 provides that:provides that: "(b) This section does not apply to matters that are... 

### * * * * * (3) specifically exempted from disclosure by statute (other than section 552(b) ofthis title), provided that such statute (A) requires that the matters be withheld from the public in such amanner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types ofmatters to be withheld; 11 Section 1104 ofthe Federal Aviation Act of 1958, as amended (the Act),
"Any person may make written objection to the public disclosure ofinformation contained in any application, report, ordocument filed pursuant to the provisions ofthis Act

...statingthe grounds for such objection. Any information contained in such application, report, ordocument

...shall be withheld from public disclosure by the

...Secretary ofTransportation

... 1f disclosure ofsuch information would

...adversely affect the competitive position ofany air carrier in foreign air transportation. 11 United considers the requested information deleted from Schedule B-7 to be highly sensitive and confidential. The air transportation industry, both domestically and internationally, has become highly competitive. Aircraft ownership costs are amajorcost of doing business for all certificated carriers. A carrier's ability to reduce its aircraft ownership costs relative to its competitors can, therefore, provide a carrier a significant competitive advantage. In an effort to secure such an advantage, United applies considerable management resources to trying to reduce its aircraft ownership costs. Thisincludes devoting substantial resources to trying to obtain airframes and engines at the lowest possible acquisition cost and disposing ofthese assets at the highest possible salesprice. Moreover, the negotiations for new equipment are made more difficult by the fact that there are only three manufacturers oflarge jetairframes and only three oflargejetengines. However, as long as the Department makes available to the publicUnited's acquisition cost for each airframe and engine it acquires and the salesproceeds realized on each sale ofsuch equipment, United is denied the benefit ofthese efforts, harmingUnited commercially. Once UniTed's costs are divulged,United's competitors can use these costdatato negotiate contract price adjustments from the same suppliers United is using orfrom competing suppliers. Since many ofthese competingcarriers are foreign flag carriers, their equipment prices will never bereported tothe Department, let alone be made public. 

### It is not only commercially damagingbut basically unfair to United and all other U.S. carriers to require

.2-them to divulge to their non-reportingforeign flag competitors the fruits oftheir competitive efforts with**manu~acturers** to secure the best possible purchaseprice.**See,~.** Order 81-12-9. The disclosure ofUnited's purchases and dispositions ofindividual aircraft and aircraft engines would allow competingforeign and domestic airlines, manufacturers ofaircraft and engines, and new and used aircraft owner/lessorsto calculate and closely track United's costs to inquire, modify, transfer ordispose ofits various fleets ofused models aircraft (and related used aircraft engines). It would adversely affect United's competitive position by strengtheningthe bargaining position ofother airlines, includingforeign airlines, and aircraft owner/lessors seekingto purchase aircraft equipment from manufacturers and others. They would be able to use their knowledge ofUnited's confidential purchase and sale arrangements as startingpoints in their own negotiations, and thus improve their ability to obtain equal or more favorable prices. This would lead to United's competitors, including foreign competitors, being able to enjoy lower capital costs than otherwise the case, and to their being able to operate and compete more efficiently with United than otherwise. United submits that FOIA Exemption 3 is applicable, as a result ofthe provision in Section 1104ofthe Act requiringthe withholdingfrom public disclosure ofany information contained in a report filed pursuant to the Act, ifsuch disclosure would "adversely affect the competitive position ofany air carrierin foreign air transportation" (49 U.S.C. App. 1504). The information for which United seeks confidential treatment under this instant Motion is similarto and consistent with that for which the Department granted confidential treatment, in (i) a March 29, 1993 order concerning similar Schedule B-7 data filed by Delta, (ii) a November 1, 1993 order concerningsimilar Schedule B-7 data filed by American, (iii) a December 29, 1993 orderconcerning similar Schedule B-7 data filed by United, (iv) an August 23, 1994 orderconcerning similar Schedule B-7 data filed by Delta, and (v) a November 18, 1994 order concerning similar Schedule B-7 data filed by United. The Department's grants of confidentiality were specifically made under Exemption 3 (and its 1993 grants were made exclusively under Exemption 3) since Delta and American, like United, compete with foreign air carriers who do not file such information yet are free to obtain U.S. carrier information from the Department. TheDepartment there stated: "this lack ofreciprocal access, the Department believes, could substantially harm the competitive position ofAmerican, resulting in the erosion ofthe U.S. international airline industry." United also submits that the information sought to be withheld falls within exemption 4 from the Freedom ofInformation Act, 5 U.S.C. 552(b)( 4), which provides -protection from atsclosure

### for"trade secretsancrcommercial or financlarinformaiTon obtained from a person and privileged or confidential;

..." United believes the requested information deleted from Schedule B-7 clearly satisfy all three elements required for protection under Exemption 4. First, the acquisition cost and sales realization amounts reported are substantially the same as negotiated between the parties, which purchase and sale prices are clearly financial or commercial in nature. Second, United established these prices through its negotiations with

.3-private third parties; the information was not obtained from any governmental entities. Third, the disclosure ofsuch information would harm United's competitive position. See Gulf& Western Indus

.. Inc. v. United States, 615 F.2d 527 (D.C. Cir. 1979), National Parks & Conservation Ass'n v. Morton, 498 F.2d 765 (D.C. Cir. 1974), SterlingDrug, Inc. v. Federal Trade Comm'n, 450F.2d 698 (D.C.Cir. 1971),The Tinken Co. v. U.S. Customs Service, 491 F.Supp. 557 (D.C. Cir. 1980), Braintree v. Dept. ofEnergy, 494 F.Supp. 287, and Burke Energy Corp. v. Department ofEnergy, 583 F.Supp. 507 (D. Kan. 1984). Finally, the Department's 1994 grants ofconfidentiality (i.e., its August 23, 1994 order concerningsimilar Schedule B-7/B-43 data filed by Delta, and its November 18, 1994 order concerning similar Schedule B-7 data filed by United) were specifically made under both Exemptions3 and 4. The Department, whendeciding United's (and American's and Delta's respective) prior B-7confidentiality motions, granted aten-year confidential period beginning on the date the information was required to be filed pursuant to 14 CFR 241.22(a). United deserves to be treated no less favorably with respect to the sealed Schedule B-7 attached hereto. WHEREFORE, United requests that the Department, pursuant to Rule 39 ofits Rules ofPractice and Exemptions 3 and 4 ofthe Freedom ofInformation Act, withhold from public disclosure, the price information contained in the Airframe and Aircraft Engine Acquisition and Retirements items which have been deleted from columns 9, 10 and 11 ofthe publicfiling ofUnited's quarterly Form 41 Schedule B-7report for a period ofnot less than ten years.

DATED: May 20, 2013

. 4- Respectfully submitted,

David B. Olaussen Managing Counsel UNITED AIRLINES, INC.