1 UNITED STATES OF AMERICA BEFORE THE DEPARTMENT OF TRANSPORTATION

 Agreement Adopted by the Passenger ) Services Conference of the Inte rnational ) Docket OST-2013-0048 Air Transport Association )

 MOTION FOR EXTENSION OF TIME, MOTION FOR LEAVE TO FILE AN

OTHERWISE UNAUTHORIZED DOCUM ENT, AND RESPONSE OF THE AMERICAN ANTITRUST INSTITUTE

Motion for Extension of Time under 14 C.F.R. 302.9(a)(2) The American Antitrust (AAI) 1 respectfully moves for an extension of time under 14 C.F.R. § 302.9(a)(2) to file an otherwise unauthorized document pur suant to 14 C.F.R. § 302.6(c)(1) to respond to the Reply of the In ternational Air Trans port Association, U.S. Department of Transportation Docket OS T-2013-0048, June 21, 2013 (hereinafter “IATA Reply”). Under § 302.6(d), a motion for leave to file a further responsive document must be filed within seven days of the document to which the proposed filing is responsive, unless, among other things, an extension is allowed under § 302.9 (a)(2). Under § 302.9(a)(2), a Department of Transportation (DOT) decision maker, as appropriate, may permit the filing of a further responsive docum ent after the expirati on of a specified time period where good cause for the failure to act on time is clearly shown.

1 The AAI is an independent and nonprof it education, research, and advocacy organization whose mission is to advance the role of competition in the economy, protect consumers, and sustain the vitality of the an titrust laws. The AAI is managed by its Board of Directors, with the guidance of an A dvisory Board consistin g of approximately 130 prominent antitrust lawyers, law professors, economists, and business experts. The AAI’s Board of Directors alone has approved this filing for AAI. The individual views of members of the Advisory Boar d may differ from AAI positions.2 Here, the DOT should find good cause to a llow an extension of time. Although the AAI was timely served with the IATA Reply by U.S. mail, it did not receive and discover the IATA Reply, which was an opti onal filing not required under 14 C.F.R. § 302.6(a), until after the expirati on of the seven-day statutory period. The AAI prepared the above-referenced motions and responsiv e comments promptly upon learning of the existence of the IATA Reply. The IATA Reply also is deficient in several respects that bear critically upon a proper evaluation of IA TA’s application for approval of Resolution 787 (“Application”). Because allowing the AAI to respond to the IATA Reply would aid the DOT in its evaluation by elucidating these deficiencies, the AAI submits that an extension of time is in the public interest . For all of these reasons, the DOT should exercise its discretion to gran t the AAI’s motion for an extension of time to file an

otherwise unauthorized document.

Motion for Leave to File an Otherwise Unauthorized Document

The AAI also moves for leave to f ile an otherwise unauthorized document pursuant to14 C.F.R. § 302.6(c)(1) to res pond to the IATA Reply. Under § 302.6(c)(1), the DOT will accept otherwise unauthorized documents if leave has been obtained on written motion for good cause shown. Here, the DOT should find good cause to allow the AAI to file a response to the IATA Reply, for several reas ons. First, the IATA Reply suggests ordering language, admonitions, or rest rictions that the DOT could incorporate in its approval that tacitly or explicitly w ould purport to alter the scope of such approval in ways the Application would not. 2 Because this language was not included in the

2 See IATA Reply at 9, 12, 14, 15.3 Application itself, the AAI has never had th e opportunity to comment on IATA’s full proposal. Allowing the AAI to file a respons e to the IATA Reply would afford the AAI an opportunity to address IATA’s now “complete ” proposal for the first time. Second, as discussed in AAI’s responsive comments incor porated into this motion below, the IATA Reply sidesteps important concerns about the potential competitive effects of Resolution

787. The AAI submits that full consideratio n of the potential co mpetitive effects of Resolution 787 is in the public interest. Fo r all of these reasons, the DOT should grant

the AAI’s motion for leave to file an otherwise unauthorized document.

Response of the American Antitrust Institute

I. Introduction The AAI incorporates these responsive comments to the IATA Reply (“AAI Response”) into its motion for leave to file a further responsive document in the abovecaptioned proceeding pursuant to 14 C.F.R. § 306(c)(2). As a general matter, the IATA Reply raises more questions regarding Re solution 787 than it purports to answer. For example, the document contains additi onal ordering language, admonitions, and

restrictions that wi ll undoubtedly have a material imp act on the interpretation of the original Resolution 787 language. The Reply also carves out and largely eliminates

discussion of the New Distribu tion Capability (NDC) from the XML technical standard proposal. Yet XML and NDC are closely in tertwined in Resolution 787. Finally, fundamental questions remain as to the s ubstantive implications of IATA’s filing approach in purportedly seeking approva l only of an XML me ssaging standard.4 The foregoing problems collectively se rve to make Resolution 787 a “moving target” for which IATA asks for DOT appr oval. This disadvantages not only the DOT, but also industry stakeholde rs and public interest proponent s in their quest to provide useful input as part of the DOT’s open a dvocacy process. Moreover, Resolution 787 is perhaps one of the most important instances in which the DOT will be asked to opine on an issue where consumer protection and competition issues intersect so closely. As many commenters have aptly pointed out, the auth entication provisions of Resolution 787 raise

fundamental issues associated with consum er privacy and choice. The NDC standard –

which Resolution 787 intertwines with the XML standard – generates significant concerns regarding the competitive process and outcomes surrounding the distribution of airline products and services. The IATA Reply does nothing to address commenters’ concerns regarding the vast im plications of the “nexus” of these two major public policy issues. Those issues are arguably at the heart of the DOT’s statutory mission in overseeing the domestic aviation industry. IATA’s Reply is deficient or non-responsiv e to the issues rais ed by the AAI in its

comments filed in this docket on May 1, 2013 (“AAI Comments”), 3 in at least two respects: (1) IATA sidesteps the competitive issues surrounding the NDC model raised in AAI’s Comments; and (2) IATA does not addr ess the substantive risks inherent in transitioning to the XML standard through a Tier 3 approval of Resolution 787, as compared to Tier 1 adoption of an XML stan dard by itself. For the reasons described below, the cumulatively assembled language of Resolution 787, IATA’s Application, and

3 American Antitrust Institute, Comments of the American Antitrust Institute, U.S. Department of Transportation Docket OST-2013-0048, May 1, 2013 (h ereinafter “AAI Comments”)5 IATA’s Reply should lead the DOT to reject IATA’s request for approval in its current

form. II. IATA’s Reply Sidesteps the Competit ive Issues Raised by the NDC Model by Redefining Resolution 787 Sole ly Around the XML Standard Numerous commenters in this proceedi ng articulated concerns regarding the competitive effects of Resolution 787, partic ularly the process through which the NDC proposal was crafted within IATA and th e potential effect of the agreement on competition. AAI, for example, noted that Re solution 787 raised important policy issues relating to potential antic ompetitive coordination among rivals. AAI’s Comments explained that the NDC proposal may potentia lly constitute an anticompetitive agreement among competitors on the “rules” of competition. Integral to this concern was that the stakeholder process for developing Resolutio n 787 did not appear op en, transparent, and inclusive, but rather was confined only to a small group of member airlines charged with promulgating the NDC proposal. 4 In its Reply, IATA almost entirely si desteps the competitive concerns centered on anticompetitive coordination raised in AAI’s Comments. Instead, the Reply attempts to refocus the debate solely on the technica l XML standard and to introduce qualifying language that takes the NDC proposal out of the unwanted spotlight. Indeed, unlike the Resolution 787 proposal, in which NDC shared the stage with XML, there is scarce reference at all to NDC in the body of IATA ’s Reply. What attention is paid to NDC resides primarily in Appendix A, which a ddresses comments regarding the adoption of NDC by IATA’s membership at their A nnual General Meeting on June 3, 2013 – well after the passage of Resolution 787 as it was filed in this proceeding.

4 AAI Comments at 8-10, 11-12.6 In refocusing the debate exclusively on XML, the IATA Reply essentially asks the DOT to “pay no attention to the man behi nd the curtain.” That “man,” of course, is the NDC standard that is intimately intert wined with the XML standard according to the plain language of the Resolution 787 proposal . Moreover, what meager response the IATA Reply offers to the competition issues raised in the AAI Comments falls short

because it mischaracterizes the relevant issu es. The Reply summarily states, for example, that opponents (citing AAI, among others) co ntend that Resolution 787 is not in the public interest because “it would di splace today’s fare filing system.” 5 The Reply also interprets concerns over the la ck of transparency and inclus iveness in IATA’s process for producing the NDC as “excluding other distribution system part icipants from assisting in

the XML data transmission standard.” 6 These characterizations are a misreading of the AAI’s concerns. For example, the

AAI Comments state: Imposition of a uniform distribution mode l (NDC) that is the product of an agreement among the largest airlines could soften existing competition between airlines and between the airlines’ dire ct-connect distribution channel and other channels of distribution, such as onlin e and offline retail and corporate travel agencies. 7

AAI’s focus is on how a mandated NDC st andard developed through a potentially anticompetitive agreement among major airlin es on “rules” could soften intra-channel and inter-channel competition. Indeed, the con cern is not the preservation of the existing airline fare filing system, but promoti on of a competitive process that produces robust

5 IATA Reply at 7. 6 Id. at 21. 7 AAI Comments at 11.7 rivalry between market particip ants and distribution channels and models, thus delivering

benefits to consumers. The IATA Reply offers a similarly errant characterization of AAI’s concerns over IATA’s internal process for reaching ag reement on the NDC model. AAI’s Comments

note: [Absent an open and inclusive industry stakeholder process] , the Application raises fundamental concerns about the intent of the XML-NDC proposal as a competition-neutral or competition-enhancing process. The record evidence indicates that IATA’s a doption of Resolution 787 may not reflect an open and inclusive stakeholder process. . . . Deviat ion from an inclusive process would cast a shadow on the intent of Resolution 787, potentially raisi ng pressing policy questions or even – if the outcome is anticompetitive – antitrust liability. 8

AAI’s concern is not that some distribution system participants were simply excluded from “assisting in the XML data transmission st andard.” Rather, the sa lient issue is that

such exclusion could reveal a Resolution 787 development process that potentially involved anticompetitive collaboration among majo r airlines, the outcome of which could be harmful to competition and consumers. No t only does the Reply miss this fundamental point, it fails to address the logistical que stion of why the IATA membership voted out

the NDC standard before two critical mee tings of stakeholder groups were scheduled. In addition to sidestepping the diffi cult competitive concerns raised by the development process and substance of th e XML-NDC proposal, IATA takes a “BandAid” approach to solving the circumscribed set of competitive concerns the Reply does choose to address. This solution is to sugge st a variety of caveat s and qualifiers to a proposed DOT approval order. As described in more detail below, the AAI notes that the first ordering language proposed in the IA TA Reply poses more questions than it

8 AAI Comments at 8, 9-10.8 answers: “Approval of Resolution 787 does not constitute approval of any agreement among airlines regarding any method of distributing ai r transportation.” 9 At a minimum, the proposed language highlight s the incongruity in IATA’s Reply, namely that the proposed language is one of the few instances where the document even refers to NDC. If the proposed language rises to the level of a proposed amendment to Resolution 787 or the Application, then surely the issues raised by comm enters regarding the NDC

distribution standard deserve mo re discussion in the IATA Repl y. Second, if in fact the Resolution 787 proposal does not constitute approval of any agreement among airlines regarding any method of distribution, then it does not belong in IATA’s DOT filing.

IATA should therefore withdraw its Application, untangle the NDC standard from the XML standard, and resubmit an appropriate application. III. IATA’s Reply does not Explain Wh y the DOT Should Assume the Risk of Approving Resolution 787 When a Tran sition to the XML Standard Could Have Been Filed under the Expedited Tier 1 Procedure IATA’s Reply does not address the seri ous risks it asks the DOT to voluntarily assume by granting unneeded approval of th e XML standard. In its Application and Reply, IATA has always maintained that it believes “Resolution 787 could have been filed for information only under DOT Orde r 2012-4-18 (Tier 1),” because IATA is seeking approval of Resolution 787 “only insofa r as it describes a means to modernize

distribution communications tec hnology with a new XML standard.” 10 Taking it at its word, IATA has never offered a reasonable ex planation for why its implementation of a

9 IATA Reply at 9. 10 Application at 2, 17.9 non-exclusive, non-mandatory XML messaging st andard is before the DOT in a Tier 3 application for approval. 11 IATA’s Application should be rejected in its current form because IATA

continues to believe it does not need the only approval it purports to seek. 12 This fact might be insignificant if Reso lution 787 described only the XML messaging standard that could have been filed under Tier 1, because the DOT could then approve the resolution without any risk that approval would be c onstrued as something over and above that which already qualifies for expedited appr oval. The plain language of Resolution 787, however, describes and intimately intertwine s the NDC distribution standard with the XML messaging standard. The Application in its current form, which seeks approval of Resolution 787 in its current form, therefor e invites obvious confusion about whether DOT approval can be construed as approval of the NDC standard, or any aspects of the NDC standard. Among other things, this co nfusion would be highly susceptible to dangerous interpretations in other admini strative or judicial proceedings, because

11 See Dep’t of Trans., Order 2012-4-18, Action on IATA Agreement, Application for Further Exemption From Condition #2 , at 1-2 (Apr. 13, 2012) (h ereinafter Order 2012-4- 18) (granting broad exemption to Condition #2 “designed to facilitate prompt implementation of routine but essential standard setting . . . agreements without antitrust immunity”); Dep’t of Trans., Order 2002-1-15, Action on IATA Agreement, Order Granting Exemption , at 1, A3 (hereinafter Order 2002- 1-15) (granting exemption from advance approval for 37 specified resolutions or best practices, in cluding Resolution 783, described as “Passenger and Airport Data Interchange Standards [(PADIS)] Board”); Resolution 783, IATA Passenger Services Conference Manual I & II at 725-26 (hereinafter Resolution 783) (“A [P ADIS] Board . . . is established to develop and maintain . . . eXtensible Markup Language (XML) specifications and also future specifications for electroni c interchange of data for airline passenger travel . . . .”) (emphasis added); Resolution 787 at 1.2.2 (“PADI S message standards shall be used for the transmission of data. Development of messaging standar ds shall be in accordance with the provisions of Resolution 783 .”) (emphasis added). 12 In both its Application and Reply, IATA has never retreated from its statement that “Resolution 787 could have been filed for information only under DOT Order 2012-4-18 (Tier 1).” Application at 17 (emphasis added).10 decisionmakers would be forced to form their own conclusions about why otherwise unnecessary approval was sought and awarded. One such conclusion is that more must have been intended by both IATA and the DOT, respectively. 13 In its Reply, IATA tacitly acknowledges the risk of unintentional full or partial NDC approval by asking the DOT to implement ordering language, admonitions, or restrictions that would pur portedly limit the scope of approval. The DOT, however, should decline this invitation to negotiate with itself. IATA’s new language would only invite more interpretive confusion because it does nothing to alter the language of Resolution 787, which intimately intertwines th e NDC standard with the XML standard. Moreover, IATA’s proposed language does not specify to which sections of Resolution 787 it would apply. As such, it would only add to the morass of existing litigation questions created by the diss onance between the language of IATA’s Application for approval and the language of Resolution 787. The proposed orderi ng language would simply interject new litigation questions a bout how the new language applies to each. Instead of asking future decisionmakers to make a jigsaw-puzzle determination as to the scope of approval actually conferred, IA TA should withdraw its Application, issue the XML standard under Tier 1, and submit a separate applicatio n for approval of the NDC standard at another time, subject to separate notice requirements, with full opportunity for public comment. Otherwise, the DOT should reject IATA’s Application. Anything less than a separation of dockets serves to muddy th e waters around the Resolution 787 proposal, risks confusing the public on the scope and breadth of the

13 Cf., e.g. , Antonin Scalia & Bryan A. Garner, R eading Law: The Interpretation of Legal Texts 174 (1st ed. 2012) (discussing the “s urplusage canon” and suggesting that no statutory provision “should be given an interpretation that causes it . . . to have no consequence”).11 competitive issues surrounding NDC, and seri ously threatens to short circuit full DOT

review. In its Reply, IATA’s only response to being confronted with this substantively problematic aspect of its filing is to s uggest that its approach was procedurally cognizable. That IATA had a cognizable procedur al path to filing a Ti er 3 application is obvious – nothing in Order 2012-4-18 affirmatively prevents IATA from seeking Tier 3 approval – but it also misses the point. IATA maintains that it was obligated to proceed with a Tier 3 application because it sought approval of the XML standard using a PSC Resolution, and it is require d to file all such conferen ce resolutions for DOT review under Condition #2 to the approval of the Traffic Conference Provisions. 14 This “no choice” argument is specious if IATA trul y seeks approval only to implement the XML standard. Resolution 787 expressly provides that message standards sh all be developed in accordance with the provisions of Resolution 783, and Order 2002-1-15 exempts

Resolution 783 from Condition #2. 15 The argument is also pl ainly irreconcilable with both IATA’s Application, which clearl y states that it could have “ filed” under Tier 1, 16 and other arguments made simultaneously in IATA’s Reply, which clearly states that

IATA “ decided ” to file under Tier 3. 17

14 IATA Reply at 26-27. 15 Resolution 787 at 1.2.2; Order 2002-1-15 at 1, A3. Resolution 783 provides for the creation of a Board to, among other things, “d evelop and maintain . . . eXtensible Markup Language (XML) specifications and also future specifications for electronic interchange of data for airline passe nger travel . . .”. See also id ., Order 2002-1-15, Order 2012-4-18, and Resolution 787, supra note 11.

17 IATA Reply at 27 (“IATA decided to skip the false start th at would result from filing under Tier 1”) (emphasis added).12 More fundamentally, however, the “ no choice” argument conflates IATA’s internal decisionmaking with its obligations under Condition #2 to the approval of the

Traffic Conference Provisions. IATA is master of its internal operations and makes its own decisions as to how to seek approval for a technical standard. If IATA’s decision to present XML for approval to the DOT us ing a PSC Resolution tied to a highly controversial new distribution standard committed IATA to submitting the XML standard to unnecessary scrutiny, with great cost and delay, this ma y be grounds for introspection on IATA’s part. It is not, however, a basis fo r approval of the Application in its current form. The Application is substantively problematic because it cr eates obvious confusion regarding the scope of approva l being sought, and the scope of approval that would be

conferred. IATA also suggests that seeking appr oval for the XML standard under Tier 1

would have been a waste of time because of the likely public outcry, and proceeding under Tier 3 allows it to “skip the false star t,” consistent with unspecified DOT staff guidance. 18 This argument ignores the elephant in the room. Any suggestion that the legions of concerned commenters were m oved by the threat of an XML messaging standard, rather than NDC, should not be ta ken seriously. As IATA itself notes, “XML has become the standard way to describe da ta structures and transmit data over the Internet,” and many of the commenters to this proceeding already use it. 19 The DOT has already exempted from approval a PADIS Boar d established “to deve lop and maintain . .

18 Id . IATA does not specify the nature or timi ng of the “informal” staff guidance, or if DOT staff was fully aware at the time th at IATA planned to submit a resolution describing two standards, one of which qualified for Tier 1 approval and one of which did not, and that it would attempt to seek approva l only for the standard qualifying for Tier 1 approval. 19 Application at 4.13 . eXtensible Markup Language (XML) specifica tions and also future specifications for electronic interchange of data for airline passenger travel.” 20 Of the approximately 400 comments filed, those who oppose Resolution 787 have almost unanimously expressed concerns about NDC, while not a single comm enter argued against approval exclusively on the basis of competition or consumer protection concerns caused by the implementation of an XML standard. 21 The DOT has already confirmed for IATA that

“the work of the service conf erences [that] involves technica l standards and procedures . . . seldom raises public interest issues.” 22 Public outcry over XML alone is even more implausible if movement to XML would be made expressly and unequivocally non-exclusive and non-mandatory, as IATA

contends. 23 Although a mandatory, exclusive technica l standard (whether express or de facto) can occasionally lead to anticompetitive effects, 24 there is simply no basis to suspect that a truly non-exclusive, optiona l XML “standard” would draw the ire of competition and consumer protection advocates . Indeed, one has to wonder about the purpose, or utility, of seeking to adopt an optional, non-exclusive XML “standard” if it is

20 Order 2002-1-15 at 1, A3. 21 See generally , Dep’t of Trans., Public Comments on Agreement Adopted by the Passenger Services Conference of the Intern ational Air Transport Association, Docket No. OST-2013-0048, available at http://www.regulations.gov (s earch docket number). In its Reply, IATA cites only Open Allies for Ai rfare Transparency as a lone commenter with concerns specifically tied to the XML standard. IATA Reply at 20. However, the vast majority of this comment er’s concerns pertain to NDC. See Comments of Open Allies for Airfare Transparency on Notice of Proposed Rulemaking, Enhancing Airline Passenger Protections, Docket No. DOT-OST-2010-0140. 22 Order 2002-1-15 at 2-3. 23 See Application at 7 (contending that “[n]othing in [Resolution 787] compels conversion to the use of XML.”); IATA Re ply at 13-14 (arguing that the text of Resolution 787 can be read to suggest that movement to the XML standard would be non-exclusive and non-mandatory). 24 See, e.g. , George S. Cary, La rry C. Work-Dembowski & Paul S. Hayes, Antitrust Implications of Abuse of Standard-Setting , 15 G. Mas. L. Rev. 1241 (2008).14 conceptually separate from s eeking approval to implement NDC, 25 particularly given the pace of innovation in electronic messaging stan dards and the possibility that XML will soon undergo fundamental changes or be surpassed by a competing technology. 26 IATA would be wise to “skip the false start” if and when it openly seeks full approval of NDC, but it would be highly disi ngenuous to suggest that implementing an optional XML messaging standard by itself, without any reference to NDC, would generate a comparable public outcry. Such a view is not borne out by the experience of any other standards setting organization that has implemented an XML messaging standard in the 15 years since the WC3 first adopted its XML 1.0 Recommendation. 27 Contrary to IATA’s suggestion, the enormous outpourin g of public atte ntion to this matter favors separating the XML and NDC dockets, not approving the Application and

Resolution 787 in their current form. If IATA insists on pressing this application in its curre nt form, IATA’s request for approval of Resolution 787 should be denied in its entirety. If IATA seeks approval solely and exclusively to implement a non- exclusive, non-mandatory XML technical

standard for electronic data tr ansmission, it should file for separate approval pursuant to the expedited Tier 1 procedure described in Order 2012-4-18.

25 Accord supra note 13 and accompanying text. 26 Five editions of XML 1.0 have been re leased since its inception 15 years ago, s ee Worldwide Web Consortium, Extensible Markup Language (XML) 1.0 (Fifth Edition ), Nov. 26, 2008, available at http://www.w3.org/TR/2008/REC-xml-20081126/, and some experts believe that competi ng standards are superior, s ee, e.g., David Mertz, XML Matters: YAML Improves on XML , IBM developerWorks, Oct. 1, 2002, available at http://www.ibm.com/developerw orks/library/x-matte rs23.html (arguing that “YAML is a great deal simpler to read, edit, modify, and produce than XML”). 27 See Press Release, World Wide Web Cons ortium, The World Wide Web Consortium Issues XML 1.0 as a W3C R ecommendation (Feb. 10, 1998), available at http://www.w3.org/Press/1998/XML10-REC.15 Respectfully submitted, Diana L. Moss, Ph.D.

Vice President American Antitrust Institute 720-233-5971 dmoss@antitrustinstitute.org Randy M. Stutz

Senior Counsel and Director of Special Projects American Antitrust Institute 202-905-9420 rstutz@antitrustinstitute.org July 12, 2013