BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

WASHINGTON, D.C. 

Joint Application of 

DELTA AIR LINES, INC.; 

VIRGIN AUSTRALIA AIRLINES PTY LTD d/b/a 

VIRGIN AUSTRALIA; 

VIRGIN AUSTRALIA INTERNATIONAL AIRLINES 

PTY LTD d/b/a V AUSTRALIA; 

PACIFIC BLUE AIRLINES (NZ) LTD; and 

PACIFIC BLUE AIRLINES (AUST) PTY LTD 

Docket DOT-OST-2009-0155 

Under 49 U.S.C. §§ 41308 and 41309 for Approval 

of and Antitrust Immunity for Alliance 

Agreements 

REPLY OF THE JOINT APPLICANTS 

June 3, 2011 
Communications with respect to this document should be sent to: 

Merren McArthur 

 Group Executive, Corporate Advisory 

Dayna Field 

 Senior Counsel 

The Virgin Australia Group 

P.O. Box 1034 

Spring Hill QLD 4004 

Australia 

+617 3333 6801 

merren.mcarthur@virginaustralia.com.au 

dayna.field@virginaustralia.com.au 

Anita Mosner 

Holland & Knight 

2099 Pennsylvania Avenue, N.W., Suite 100 

Washington DC 20006 

(202) 419-2604 

anita.mosner@hklaw.com 

for: VIRGIN AUSTRALIA AIRLINES PTY LTD 

 d/b/a VIRGIN AUSTRALIA, 

VIRGIN AUSTRALIA INTERNATIONAL 

AIRLINES PTY LTD d/b/a V AUSTRALIA, 

PACIFIC BLUE AIRLINES (NZ) LTD, and 

PACIFIC BLUE AIRLINES (AUST) PTY LTD 

Andrea Fischer Newman 

 Senior Vice President, Government 

Affairs 

Alexander Van der Bellen, 

 Managing Director, Government Affairs 

and Associate General Counsel 

Jeff Morgan 

 Regional Director, Government Affairs 

DELTA AIR LINES, INC. 

1212 New York Avenue, N.W. 

Washington, DC 20005 

(202) 842-4184 

sascha.vanderbellen@delta.com 

 

i 
BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

WASHINGTON, D.C. 

Joint Application of 

DELTA AIR LINES, INC.; 

VIRGIN AUSTRALIA AIRLINES PTY LTD d/b/a 

VIRGIN AUSTRALIA; 

VIRGIN AUSTRALIA INTERNATIONAL AIRLINES 

PTY LTD d/b/a V AUSTRALIA; 

PACIFIC BLUE AIRLINES (NZ) LTD; and 

PACIFIC BLUE AIRLINES (AUST) PTY LTD 

Docket DOT-OST-2009-0155 

Under 49 U.S.C. §§ 41308 and 41309 for Approval 

of and Antitrust Immunity for Alliance 

Agreements 

REPLY OF THE JOINT APPLICANTS 

Delta Air Lines, Inc. (“Delta”), Virgin Australia Airlines Pty Ltd (“Virgin Australia”), 

Virgin Australia International Airlines Pty Ltd (“V Australia”), Pacific Blue Airlines (NZ) 

Ltd, and Pacific Blue Airlines (Aust) Pty Ltd1

 (the “Joint Applicants”) hereby respond to 

the Department’s Show Cause Order 2011-5-8 and the Comments submitted on June 1, 

2011 by Hubert Horan. 

The Joint Applicants appreciate the detailed and thorough reexamination of the 

proposed alliance conducted by the Department. The Department’s first show cause 

order identified several concerns which the Joint Applicants extensively addressed in 

 

1

 These carriers are referred to collectively as the “Virgin Australia Carriers.” As the Department 

previously has noted, the Virgin Blue Group has undergone a rebranding. See Order 2011-5-8 at 

n.3. By letter dated May 24, 2011, the Department acknowledged and registered the change in 

names of Virgin Blue Airlines Pty Ltd and Virgin Blue International Airlines Pty Ltd d/b/a V 

Australia to, respectively, Virgin Australia Airlines Pty Ltd d/b/a Virgin Australia, and Virgin 

Australia International Airlines Pty Ltd d/b/a V Australia. The Joint Applicants request that the 

final order reflect the updated and current registered trade names of the Virgin Australia Carriers. 
Joint Reply 

Page 2 

subsequent filings, including amending the scope of the Joint Venture agreement, 

offering assurances on capacity levels following ATI approval, providing a more detailed 

explanation and quantification of public benefits, and providing further evidence on the 

improved stability of the U.S.-Australia market in the post open skies environment. After 

careful consideration of this additional evidence, the Department was able to “find that 

the applicants meet the high standard necessary to obtain antitrust immunity.” Order 

2011-5-8 at 15. Mr. Horan’s criticisms of the Department’s Order and proposed 

conditions are without merit. While the Joint Applicants do not intend to respond in detail 

to every erroneous claim, we reply generally as follows: 

In his October 12, 2010 filing, Mr. Horan argued that the Joint Applicants should 

have been granted ATI on the basis of their original filing: “DOT must accept the 

Delta/Virgin application on the grounds that it produces sufficient public benefits under 

section 41308(b) to justify a grant of antitrust immunity, as it clearly meets all of the 

standards used in the public benefits analysis used in SkyTeam, Star, oneworld and 

Japan cases.” (page 17). Mr. Horan now claims, with respect to the enhanced 

application and more substantial record, that public benefits have not been 

demonstrated and “thus immunity cannot be granted.” (June 1 comments at 6). There 

is no merit to Mr. Horan’s new and contradictory claims. The substantial evidence 

submitted in this case strongly supports the Department’s conclusion that the Joint 

Applicants met the standard to obtain antitrust immunity. 

Competition in the U.S.-Australia and U.S.-South Pacific market is now more 

robust than ever. Just last month, Qantas began Sydney-DFW service, creating new 

network service via the largest hub of its oneworld partner, American. Continental 

announced its intention to begin nonstop Houston-Auckland service, as B787 aircraft are 

delivered to its fleet. And, United, already the largest hub carrier at Los Angeles, has 

been further strengthened by its recent merger with Continental. Mr. Horan’s hypothesis 
Joint Reply 

Page 3 

that approval of the alliance could jeopardize U.S.-Australia competition, or that United 

might withdraw from the Los Angeles-Sydney route as a result of additional competition 

by the Delta/Virgin Australia joint venture is unsubstantiated speculation. 

Mr. Horan fundamentally misreads the Joint Applicant’s capacity commitment 

agreement. The Joint Applicants have no intention of withdrawing capacity. In fact, V 

Australia committed to maintaining a higher level of service on U.S.-Australia routes than 

existed at the time of the first show cause order. The Joint Applicants were willing to 

offer the capacity commitments to put to rest any concern that they might withdraw 

service as a result of the grant of antitrust immunity. Contrary to Mr. Horan’s 

contentions, the Joint Applicants have no unilateral right to invoke force majeure to avoid 

the capacity commitments. If the Joint Applicants expect their service to drop below the 

specified levels as the result of a force majeure event such as a terrorist attack, global 

pandemic, stock market crash, or exceedingly high fuel prices “the Parties will seek prior 

approval from DOT to continue the effectiveness of antitrust immunity absent the 

capacity commitment.” See, Capacity Commitment Agreement. Mr. Horan’s remaining 

criticisms are equally without merit. 
Joint Reply 

Page 4 

The Joint Applicants agree with the Department’s analysis, tentative findings, and 

proposed conditions of Show Cause Order 2011-5-8. We request that a Final Order be 

issued as soon as possible, so that the Joint Applicants can begin delivering the benefits 

of their alliance to the traveling public. 

 Respectfully submitted, 

Merren McArthur 

for Virgin Australia Airlines Pty Ltd, 

Virgin Australia International Airlines 

Pty Ltd d/b/a V Australia, 

Pacific Blue Airlines (NZ) Ltd, and 

Pacific Blue Airlines (Aust) Pty Ltd 

Alexander Van der Bellen 

for Delta Air Lines, Inc. 
CERTIFICATE OF SERVICE

A copy of the foregoing has been served this 3rd day of June, 2011, upon the following 

persons via email: 

carl.nelson@aa.com 

howard_kass@usairways.com 

benjamin.slocum@usairways.com 

thomas.bolling@coair.com 

dan.weiss@coair.com 

steve.morrissey@united.com 

jhill@dlalaw.com 

urskr@state.gov 

horanaviation@gmail.com 

info@airlineinfo.com 

todd.homan@dot.gov 

peter.irvine@dot.gov 

christopher.mandel@dot.gov