BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

WASHINGTON, D.C. 

 

 ) 

In the matter of ) 

 ) Docket DOT-OST-2013-0072 

2013/2014 U.S.-Brazil Combination ) 

Frequency Allocation Proceeding ) 

 ) 

ANSWER OF US AIRWAYS, INC. 

Communications with respect to this document should be addressed to: 

Howard Kass 

Vice President, Legal and Government Affairs 

Benjamin T. Slocum 

Director, Legal and Government Affairs 

US Airways, Inc. 

1401 H Street, NW, Suite 1075 

Washington, DC 20005 

(202) 326-5153 

howard.kass@usairways.com 

benjamin.slocum@usairways.com

DATED: May 3, 2013 
- i - 

TABLE OF CONTENTS 

Overview ............................................................................................................ 1

I. Introduction ............................................................................................. 2

II. This Proceeding IS About Market Structure, and the Analysis 

is the Same Whether US Airways and American Are 

Considered Separately or Together ...................................................... 3

A. Department Precedent Requires US Airways and 

American to be Treated as Separate Carriers............................ 3

B. Even Treating US Airways and American as a Single 

Carrier Does Not Change the Correct Outcome of this 

Proceeding ................................................................................... 4

C. Under Delta’s Concept of Market Structure, Which the 

Department Previously Rejected, Competition is 

Reduced, Not Enhanced .............................................................. 6

III. Whether US Airways and American are Treated Separately or 

Not, Delta’s Service Proposal Would Serve to Eliminate 

Competition, Not Enhance It .................................................................. 8

A. Charlotte is a Connecting Hub that Competes With 

Atlanta, Whether as Part of US Airways, or Part of New 

American ....................................................................................... 8

B. JFK Serves Primarily Local Traffic, While Philadelphia is 

a Connecting Hub that Provides an Alternative Gateway 

to Newark and Washington-Dulles for Connecting 

Passengers ................................................................................. 12

C. The Gateway Analysis Remains Identical, even if US 

Airways and American are Treated as a Single Company ..... 15

IV. Beyond Delta’s Flawed View of Market Structure, Delta’s 

Application Contains Numerous Infirmities ....................................... 15

A. Delta Negotiated Away its Detroit-Sao Paulo 

Frequencies to Obtain New York-LaGuardia Slots which 

It Considered More Valuable ..................................................... 16

B. Delta Warehouses Unrestricted Brazil Frequencies and 

has Advantages in Sao Paulo Other Carriers Do Not ............. 17
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

C. Delta Proposes Service Using its Smallest Widebody 

Aircraft of Any Carrier in this Proceeding, and Indeed, in 

its Own Fleet ............................................................................... 18

D. Among Gateway Cities with a Single Daily Flight to/from 

Sao Paulo, Atlanta and Detroit Have Relatively Low 

Local Demand............................................................................. 21

E. US Airways Will Offer Abundant Intra-Brazil Codeshare 

Service ........................................................................................ 22

V. Conclusion................................................................................................... 24 
BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

WASHINGTON, D.C. 

 

 ) 

In the matter of ) 

 ) Docket DOT-OST-2013-0072 

2013/2014 U.S.-Brazil Combination ) 

Frequency Allocation Proceeding ) 

 ) 

ANSWER OF US AIRWAYS, INC. 

Pursuant to Subpart C of the Department of Transportation’s (“Department”) 

Rules of Practice and the Department’s April 12, 2013, Order Instituting Proceeding

(“Instituting Order”), US Airways, Inc. submits this Answer to the competing 

applications of Delta Air Lines, Inc. and American Airlines, Inc. for unrestricted 

frequencies authorizing service to Sao Paulo, Brazil.1

Overview 

 This pleading responds to the applications and supplements submitted in this 

proceeding by the other applicants, in further support of US Airways’ request for 14 

unrestricted Brazil frequencies available for use beginning October 1, 2014. US 

Airways will use seven of these frequencies to continue to benefit consumers flying 

on its new Charlotte-Sao Paulo service, which will commence June 8, 2013, using 

frequencies leased temporarily from United. The other seven frequencies will be 

used to institute Sao Paulo service from US Airways’ Philadelphia hub, a new 

gateway to Brazil in the Northeastern United States. 

 

1

 Common names of carriers are used. 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

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 This pleading is organized into five sections that, taken as a whole, 

demonstrate why the Department should allocate 14 frequencies to US Airways 

before awarding frequencies to others. Following an Introduction in Section I, 

Section II shows that “market structure”2, properly applied, supports the grant of the 

14 frequencies requested by US Airways. Section III demonstrates that Delta’s 

proposal would reduce, not enhance, competition. Section IV explains the myriad 

additional reasons why US Airways should be granted frequencies before others. 

Finally, Section V summarizes the public interest benefits that will result from an 

award of fourteen frequencies to US Airways. 

I. Introduction 

 Approval of US Airways’ application for 14 Sao Paulo frequencies available in 

2014 will unquestionably best achieve the goals established in the Department’s 

Instituting Order. US Airways’ application provides for new service to Sao Paulo that 

gives travelers and shippers the maximum competitive benefits of any carrier in this 

proceeding. Specifically, US Airways is the only applicant in this proceeding 

proposing service to Sao Paulo with this unique combination of benefits: 

 From two new U.S. gateways—Charlotte and Philadelphia; 

 As a new entrant applicant;

 With the largest aircraft in this Proceeding; and 

 

2

 The term “market structure” is used by the Department in the Instituting Order, at p.3. US Airways 

uses the term “market structure” herein out of convenience, only for the purposes of this proceeding. 

US Airways is not taking a position in this proceeding regarding the definition of any potentially 

relevant antitrust market. 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

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 With a demonstrated and unequaled commitment to commencing Sao Paulo 

service through efforts made over a period of years, including unprecedented 

commercial agreements.3 

Each of these considerations is individually important enough to justify 

selection of US Airways for a full award of 14 frequencies. However, the 

Department can achieve all of these important and valuable benefits by granting US 

Airways’ full request, truly maximizing the public benefits generated by those 

frequencies. 

II. This Proceeding IS About Market Structure, and the Analysis is the 

Same Whether US Airways and American Are Considered Separately or 

Together 

 Delta is correct—this is a unique proceeding that revolves around market 

structure. However, while Delta correctly identifies the essence of the proceeding, 

its application of this concept to this case is deeply flawed. 

A. Department Precedent Requires US Airways and American to be Treated 

as Separate Carriers 

US Airways is applying for 14 frequencies as a carrier that is also pursuing a 

merger with another applicant. However, Delta’s view that this somehow disqualifies 

US Airways from an award, or should limit any award made to it, is fundamentally 

wrong. Department precedent requires US Airways be treated as a standalone 

carrier regardless of its merger intentions. For example, the Department treated 

United and Continental as separate entities when deciding grants of antitrust 

immunity and when allocating Haneda slots, even after their merger had closed. 

 

3 Indeed, the tribulations of US Airways in starting Charlotte-Sao Paulo service are well-known at the 

Department and well-covered in US Airways’ Supplement (p.5). 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

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In tentatively approving antitrust immunity for ANA, United and Continental, 

the Department stated that for “the purpose of our analysis, we have considered 

United and Continental to be separate entities.” 4 This was despite the 

Department’s finding that the carriers had completed substantially all of the steps 

necessary to merge—far more than have been completed by US Airways and 

American. 5 The Department’s Final Order affirmed that United and Continental 

must be treated separately.6 

The Department’s Show Cause and Final Orders in the 2010 U.S.-Haneda 

Combination Services Allocation Proceeding, similarly analyzed the applications of 

United and Continental independently.7

 The same treatment must be accorded US 

Airways and American, and the two carriers’ service proposals evaluated individually 

when allocating the available unrestricted Brazil frequencies. 

B. Even Treating US Airways and American as a Single Carrier Does Not 

Change the Correct Outcome of this Proceeding 

Even if the Department accepted Delta’s theory to treat US Airways and 

American as a single-entity, the correct outcome of the Proceeding remains 

unchanged. In its Supplement, US Airways set forth a hierarchy focused on 

 

4 U.S.-Japan Alliance Case, Order 2010-10-4, October 6, 2010, fn.3 (emphasis added) 

5 Id. (“This exemption is contingent upon Continental and United remaining separate and 

independently operated corporations pending the Department’s action on the air carriers’ de facto

route transfer application. The shareholders approved the merger on September 17, 2010, and it 

closed on October 1, 2010.”) (emphasis added) Thus, even though United and Continental had 

closed their merger, the Department nevertheless evaluated them as separate entities. 

6 U.S.-Japan Alliance Case, Order 2010-11-10, November 10, 2010, fn3 (“In conducting our 

analysis, we considered United and Continental to be separate entities...the Department’s 

pendent lite exemption...is contingent upon Continental and United remaining separate and 

independently operated corporations pending the Department’s action on the air carriers’ de facto 

route transfer application.”)(emphasis added). 

7

 Order 2010-5-7, May 7, 2010; Order 2010-7-2, July 6, 2010. 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

- 5 - 

maximizing consumer benefits based on the gateway being proposed.8 As shown in 

Figure 1, the highest priority is preserving current service that is in danger of being 

lost and which the carrier has not abandoned.9

Figure 1: Preserving Existing Gateways and Adding New Gateways Provides 

the Most Consumer Benefits While Purely Duplicative Service Yields the 

Fewest Benefits

** Does not include instances where the carrier knowingly bargained away operating frequencies 

 US Airways and American have each proposed new gateways that would 

introduce new Brazil service options to more consumers and communities than 

Delta’s same-carrier-at-the-same-gateway service. Simply put, each and every 

gateway proposed by US Airways and American would generate more public 

benefits than any proposed Delta service. Accordingly, under the market structure 

 

8 See Supplement of US Airways, Inc. to Application for an Exemption and Frequency Allocation, 

Docket DOT-OST-2013-0072, April 24, 2013, pp.16-20. 

9

 This is consistent with Department precedent that recognizes the importance of existing services to 

the communities served by them, in awarding limited-entry operating rights. See, e.g, Order 2012-7-

26, July 24, 2012, p.17 (awarding DCA slots to US Airways for the continuation of Jackson, MSWashington, D.C., service, and finding that “Jackson would face significant adverse economic 

consequences if nonstop DCA service were not maintained, with adverse effects felt throughout the 

State of Mississippi.”). The adverse effect on Charlotte of losing Sao Paulo service would be 

significantly greater. 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

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described by US Airways – regardless of whether or not US Airways and American 

are considered a single carrier – both carriers should be fully granted their requests 

for 14 frequencies each before Delta is awarded any additional service. 

C. Under Delta’s Concept of Market Structure, Which the Department 

Previously Rejected, Competition is Reduced, Not Enhanced 

The Department’s Instituting Order states it will consider “the effects on the 

overall competitive environment, including the effects on market structure....” 10 

Delta echoes the Department’s statements: “Delta believes that market structure 

considerations should be given greater decisional significance than individual 

gateway attributes in this case.”11 This is exactly the reason Delta’s application 

should fail in its entirety – because this Proceeding is all about market structure – 

and market structure entirely consists of the individual gateway attributes Delta is so 

quick to discount. 

Delta wrongly ascribes a narrow meaning to market structure. Delta counts 

and recounts frequencies in copious detail, focusing only on absolute frequency 

parity.12 However, Delta’s purely duplicative service proposal offers so few benefits 

that striving for symmetry would negate the Department’s goal of maximizing the 

benefits flowing from these limited entry rights. Under Delta’s model of market 

structure, the seven frequencies needed for Charlotte-Sao Paulo service would 

instead be allocated to Delta at Atlanta for a second daily flight that duplicates 

existing service. 

 

10 Instituting Order, p.3. 

11 Application Supplement of Delta Air Lines, Inc., April 24, 2013. p.4. 

12 See, Exhibits DL-101, DL-104, DL-105, DL-205, and DL-304. 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

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The Department long ago rejected the narrow analysis of market structure 

proposed by Delta, and determined the public interest is best served by creating a 

broadly competitive market structure that takes into account the overall level of 

competition when awarding service on limited-entry routes: 

Market structure encompasses the impact that a route will have 

on the overall level of competition in a particular market. In order 

to evaluate this issue, the Department looks at potential intergateway 

competition—the competitive effect of the proposed service on flights 

offered to the same destination at possible alternative gateways. We 

also examine the degree to which each applicant might increase 

competition with existing services at the same gateway.13

The Department has repeatedly acknowledged the critical importance of 

competing connecting service in limited-entry route cases, such as this one. In the 

1990 U.S.-Japan Gateways Proceeding, the Department rejected Northwest’s 

arguments against Chicago-Tokyo service, which claimed new Chicago-Tokyo 

service was unnecessary, partly because connecting traffic was already well-served 

over existing gateways. In rejecting Northwest’s argument, the Department found 

that the other gateways available to connect passengers were also Northwest 

gateways. Thus, connecting passengers still had no service alternative to 

Northwest.14 The arguments Northwest made against Chicago-Tokyo are the same 

arguments Delta makes against Charlotte-Sao Paulo service in this case. 

 

13 Procedures and Criteria for Selecting Carriers for Limited-Entry Markets, 51 Fed.Reg. 43181, 

December 1, 1986 (emphasis added). 

14 Order 90-10-15, October 12, 1990, p.13 (“We find that several of Northwest’s points confirm rather 

than reduce the need for additional Chicago service. While connecting passengers indeed have a 

number of options available to them, the three most obvious gateways for the region—Chicago itself, 

Detroit, and Minneapolis/St. Paul—are all Northwest gateways. At the latter two, Northwest provides 

the only scheduled nonstop transpacific service; at Chicago it provides the only such U.S.-flag 

service.”) (emphasis in original). 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

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Specifically, Delta seeks to limit connecting Sao Paulo passengers to its Atlanta 

gateway by denying frequencies to Charlotte. 

US Airways agrees fully with the Department’s Instituting Order—market 

structure between the U.S. and Brazil is of paramount importance and should be 

considered carefully by the Department in awarding frequencies. However, as the 

Department has found previously, in the context of this case, market structure must 

mean the broader overall effect of the Department’s frequency allocations on 

communities and consumer welfare, and how best to maximize the benefits flowing 

to consumers, communities and businesses throughout the United States from its 

frequency awards. 

The contrast between US Airways’ and Delta’s views of market structure is 

stark. US Airways’ proposal offers more benefits for consumers and communities 

than Delta’s repetitive service proposal which is nothing more than additional service 

in Atlanta; another frequency at already well-served New York (JFK), in order to 

serve local New York passengers; and a plea to have the Department bail Delta out 

after voluntarily bargaining away its Detroit frequencies. 

III. Whether US Airways and American are Treated Separately or Not, 

Delta’s Service Proposal Would Serve to Eliminate Competition, Not 

Enhance It 

A. Charlotte is a Connecting Hub that Competes With Atlanta, Whether as 

Part of US Airways, or Part of New American 

The frequencies American operates in Miami today are primarily used to 

serve the large amount of South Florida-Sao Paulo local traffic. Delta argues Miami 

is not a major gateway for connecting traffic between Brazil and beyond-gateway 

interior U.S. points, by showing that Miami offers Sao Paulo connecting service to 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

- 9 - 

only 50 communities—less than half the connecting service available over 

Charlotte.15 The small number of connecting points for an airport with so much Latin 

American service proves that Miami serves predominantly local traffic, and would not 

serve as a connecting hub alternative to Atlanta. 

In contrast to Miami, US Airways’ Charlotte operation is designed to maximize 

connecting service with a broad, behind-gateway network that covers much of the 

eastern half of the United States, and will provide 71 cities in the Eastern United 

States16 convenient connecting service to/from Sao Paulo. The Department has 

stressed the importance of this type of behind-gateway competition, stating that “[a] 

carrier’s ability to attract traffic in behind-gateway markets is a crucial consideration 

in deciding the degree to which it will be an effective competitor, either with services 

offered at another gateway or with the other carriers operating at its own gateway.”17

Delta contends that “New American”, assuming it is created, should simply 

move seven frequencies from Miami to Charlotte. However, Delta’s suggestion is 

designed only with Delta’s self-interest in mind. Charlotte provides an attractive 

alternative to Atlanta as a connecting hub, and if it does not receive an award of 

frequencies to continue Sao Paulo service, Atlanta will be left as the only one-stop 

 

15 Application Supplement of Delta Air Lines, Inc., Docket DOT-OST-2013-0072, April 24, 2013, 

Exhibit DL-206. 

16 Includes AL, CT, FL (excluding South Florida), GA, KY, MA, MD, MS, NC, NH, NJ, NY, OH, PA, RI, 

SC, TN, VA, and WV. 

17 U.S.-Australia Service Proceeding, Order 89-10-2, September 25, 1989, p.40. Similarly in the 

United States-United Kingdom Regional Airport Case, Judge Kolko wrote “[b]ehind traffic, by its very 

nature, promotes competition by providing gateway alternatives for interior passengers and shippers” 

and that the “Department recently noted that additional routing options are ‘the material of which a 

more competitive environment is made’.” (R.D. of Administrative Law Judge Burton S. Kolko, Docket 

47090, December 14, 1990, p.54). 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

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alternative to Sao Paulo in the Southeastern U.S. for many consumers from the 14 

cities shown in Figure 2(a).18

Figure 2(a): Without an Award of Frequencies to Charlotte, Atlanta is the Only 

Southeastern Gateway Option for Sao Paulo Travelers Connecting from 14 

Eastern U.S. Cities 

ABE Allentown, PA ILM Wilmington, NC 

AGS Augusta GA MHT Manchester, NH 

AVL Asheville, NC MLB Melbourne, FL 

AVP Scranton, PA MYR Myrtle Beach, SC 

DAB Daytona Beach, FL OAJ Jacksonville, NC 

EWN New Bern, NC PHF Newport News, VA 

HPN White Plains, NY VPS Valparaiso, FL 

Communities shown receive nonstop service to Atlanta and Charlotte; but not to Miami or 

Washington-Dulles. 

Source: August 2013 OAG Schedules for AA: MIA, DL: ATL, US: CLT, UA: IAD, South Florida cities 

excluded 

Similarly, without an award of frequencies for Charlotte-Sao Paulo service, 

connecting passengers from 13 communities in the Eastern United States will be 

deprived of a third one-stop option for Sao Paulo service via an Southeastern U.S. 

gateway, as shown in Figure 2(b). 

 

18 The Department has more than sufficient frequencies available for allocation to ensure that 

Charlotte-Sao Paulo service is not lost. 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

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Figure 2(b): Charlotte-Sao Paulo Service Provides a Third Southeastern 

U.S. Gateway Option for Travelers in 13 Eastern U.S. Cities

ALB Albany, NY PVD Providence, RI

BUF Buffalo, NY PWM Portland, ME

CAE Columbia, SC ROA Roanoke, VA

CHO Charlottesville, VA ROC Rochester, NY 

FAY Fayetteville, NC SAV Savannah, GA

GSP Greenville, SC SYR Syracuse, NY

MDT Harrisburg, PA 

Communities shown receive nonstop service to each of Atlanta, Charlotte, and Washington-Dulles; 

but not to Miami. 

Source: August 2013 OAG Schedules for AA: MIA, DL: ATL, US: CLT, UA: IAD, South Florida cities 

excluded 

Not awarding frequencies to Charlotte so it can compete with Atlanta for Sao Paulo 

travelers would have a damaging effect on market structure that is severe and 

lasting. Awarding Delta a second daily flight to Atlanta would make the harm to 

consumers even worse. 

In total, US Airways’ request for seven frequencies to maintain Charlotte-Sao 

Paulo service will benefit 97 U.S. cities with Northbound connecting service, 87 U.S. 

cities communities with southbound connections, and an estimated 120,000 

connecting passengers annually. US Airways will connect 57 communities in the 

United States to Sao Paulo not served by American through Miami. Ultimately, 

Charlotte could provide oneworld with its first Sao Paulo connecting hub in the same 

region as Atlanta and Washington-Dulles. 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

- 12 - 

B. JFK Serves Primarily Local Traffic, While Philadelphia is a Connecting 

Hub that Provides an Alternative Gateway to Newark and WashingtonDulles for Connecting Passengers 

The selection hierarchy set forth by US Airways suggests that the next 

highest use for the available frequencies would be for new gateways. Indeed, 

Department precedent acknowledges that consumers and competition benefit when 

new gateways are authorized, as discussed in Section II, C, above. 

US Airways has previously described how JFK is designed to serve local New 

York traffic, but infrastructure constraints at JFK make it ill-suited to serve as a largescale connecting hub for any carrier.19 Delta has admitted this – the slot transaction 

Delta completed with US Airways at LaGuardia enabled Delta to achieve at two New 

York City airports the connecting services it could not achieve at JFK alone. 20 

Delta’s Exhibits DL-306 and DL-307 in this proceeding also demonstrate this fact, 

showing that Delta offers more international routes at JFK than domestic routes in 

the eastern half of the United States.21

Philadelphia, on the other hand, is a superb connecting hub that is designed 

and scheduled to support international services (it is US Airways’ primary Trans- 

 

19 See, e.g., Joint Application of American, US Airways, American Eagle, PSA, and Piedmont for 

Approval of the Transfer of International Route Authorities, April 17, 2013, Docket DOT-OST-2013-

0082, p.29. See also, Supplement of US Airways, Inc. to Application for an Exemption and 

Frequency Allocation, Docket DOT-OST-2013-0072, April 24, 2013, pp.18, fn 21. 

20 See also New York/Newark-Cancun Combination Service Proceeding, Order 2006-6-25, June 21, 

2006, p.8 (“Delta states...the New York-Cancun market is largely a local market.”). 

21 As a practical matter, the realistic number of Delta’s JFK-Sao Paulo connections is significantly less 

than Delta represents. Many of the connections Delta claims in Exhibit DL-307 require travelers to 

overfly existing gateways at Atlanta, Chicago, Detroit, and Washington-Dulles, among others; and 

many others involve significant backhaul to JFK from points south of New York that could be better 

served by Charlotte and Philadelphia. 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

- 13 - 

Atlantic hub) by maximizing connections with a broad, behind-gateway network 

throughout the eastern half of the United States. With over 450 daily flights and 

service to 117 communities, it is the largest hub in the United States without service 

to Brazil. 

Just as Charlotte benefits consumers vis-a-vis Atlanta, an award of 

frequencies for Philadelphia-Sao Paulo service will generate similar benefits for 

consumers, communities and competition. Philadelphia’s location in the Northeast 

United States makes it an attractive option for connecting travelers throughout the 

Eastern United States whose only choice for Brazil service from the Northeast might 

be on United via either Newark or Washington-Dulles. An award to Philadelphia 

provides important market structure benefits by offering connecting consumers an 

alternative gateway to those used by United. Indeed, without an award of 

frequencies for Philadelphia-Sao Paulo service, connecting passengers from the 12 

Mid-Atlantic and Northeastern cities shown in Figure 3 would have United service via 

Newark or Washington-Dulles hubs as their only Northeastern U.S. option for onestop air travel to Sao Paulo. 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

- 14 - 

Figure 3: Without an Award of Frequencies to Philadelphia, United’s Newark 

and Washington-Dulles Hubs are the Only Northeast U.S. Gateways for Sao 

Paulo Travelers Connecting from 12 Eastern U.S. Cities

ALB Albany, NY MDT Harrisburg, PA 

AVP Scranton, PA MHT Manchester, NH 

BDL Hartford, CT PVD Providence, RI

BGM Binghamton, NY PWM Portland, ME

CHO Charlottesville, VA ROA Roanoke, VA

ITH Ithaca, NY SCE State College, PA 

Communities shown receive service to Newark and/or Washington-Dulles, as well as Philadelphia; 

but not to New York-JFK. 

Source: August 2013 OAG Schedules for AA: JFK, DL: JFK, US: PHL, UA: EWR, UA: IAD 

US Airways’ Philadelphia hub will be an attractive alternative because it offers 

service to more destinations in the United States than either Newark or WashingtonDulles.22 Furthermore, as shown in Figure 4, Philadelphia connects more cities with 

Sao Paulo than either Newark or Washington-Dulles. 

Figure 4: More Communities Would Receive One-Stop Service to Sao Paulo 

via Philadelphia than via Either Newark or Washington-Dulles 

 Number of Connecting Cities 

 Philadelphia Washington-Dulles Newark 

Southbound 65 59 49 

Northbound 61 54 46 

Source: Innovata Friday June 14, 2013 Innovata Schedule as of March 4, 2013 

This includes 36 Mid-Atlantic and Northeastern U.S. communities 23 US Airways’ 

Philadelphia-Sao Paulo service will connect to Brazil, as well as communities served 

 

22 Philadelphia offers service to 83 U.S. destinations, while Newark offers service to 77 and 

Washington-Dulles offers service to 78. Source: OAG schedules for August 2013. 

23 Includes: CT, KY, MA, MD, ME, NH, NY (excluding EWR, JFK, LGA), OH, PA, RI, VA, and VT. 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

- 15 - 

by US Airways from Philadelphia that would not receive Sao Paulo connecting 

service from any carrier. 

C. The Gateway Analysis Remains Identical, even if US Airways and 

American are Treated as a Single Company 

That Charlotte and Philadelphia are strong connecting gateways that will 

provide alternatives to the hubs of Delta and United is true regardless of whether 

they are hubs for US Airways or for New American. In light of this, and the 

Department’s previous decisions to consider market structure broadly, the best way 

to achieve maximum public benefits from the 28 frequencies available in this 

proceeding is to favor the proposal that generates benefits by enhancing—not 

eliminating—competition. US Airways’ proposal to serve Charlotte-Sao Paulo and 

Philadelphia-Sao Paulo with seven frequencies each achieves this crucial goal of 

enhancing competition, with new entry24 and new gateways. 

IV. Beyond Delta’s Flawed View of Market Structure, Delta’s Application 

Contains Numerous Infirmities. 

Delta requested 21 frequencies – three-quarters of the available unrestricted 

frequencies – in order to duplicate its existing services at Atlanta and New York, and 

replenish Detroit frequencies it freely bargained away less than two years ago. 

 

24 The Department has long recognized the value of new entry and new gateways for service to 

Brazil. Only four years ago, the Department emphasized the importance of new entry and new 

gateways for U.S.-Brazil service, finding that US Airways’ proposal would best achieve the goal of 

increasing service options for travelers though the establishment of a new gateway operated by a 

new entrant. See, e.g., 2009 U.S.-Brazil Combination Frequency Proceeding, Docket DOT-OST2009-0003, March 20, 2009, pp.7-8 (“[W]hen rights for U.S. air carriers become available in restrictive 

markets, one of our primary goals has been to enhance competition by creating opportunities for new 

entrant carriers to gain market access...selection of US Airways allows us to take advantage of the 

newly available rights in the U.S.-Brazil market by introducing a new entrant carrier that would 

establish important new competition in the U.S.-Brazil market....”). 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

- 16 - 

Despite Delta’s self-serving assertion that its request “is more modest than it 

appears”, 25 its request for nearly all the available frequencies is consistent with 

Delta’s practice in other limited-entry selection cases where it has sought all of the 

available operating rights.26

A. Delta Negotiated Away its Detroit-Sao Paulo Frequencies to Obtain New 

York-LaGuardia Slots which It Considered More Valuable 

Delta’s request for seven frequencies for its Detroit-Sao Paulo service 

constitutes nothing less than a demand that the Department, US Airways and 

American fund Delta’s 2011 acquisition of LaGuardia slots by replenishing the Sao 

Paulo frequencies it used to purchase those slots from US Airways. Delta knew 

when it negotiated the transaction that it would no longer have sufficient frequencies 

to operate Detroit-Sao Paulo service beyond March 2015. It proceeded anyway. 

Delta’s commitment to Detroit-Sao Paulo service, and to its Detroit hub in 

general, is doubtful and the Department should be wary of contrary statements.27 If 

Delta were as concerned about maintaining its Detroit service and intergateway 

competition with Chicago as it now claims, it would not have freely exchanged its 

seven Detroit-Sao Paulo frequencies for LaGuardia slots and knowingly placed that 

service at risk. Furthermore, Delta’s abandonment of the Detroit-Sao Paulo route is 

 

25 Application Supplement of Delta Air Lines, Inc., April 24, 2013. p.3 

26 See, e.g., the 2010 U.S-Haneda Combination Services Allocation Proceeding, where Delta sought 

all four of the available slot pairs for its proposed Seattle, Detroit, Los Angeles and Honolulu service. 

Order 2010-7-2, July 6, 2010. 

27 Although Delta argues Michigan companies rely on Detroit service, the fact is that Pennsylvania is 

home to more Fortune 500 companies (23) than Michigan (20), as shown in Annex A. North Carolina 

also boasts a substantial number of Fortune 500 companies, including the headquarters of Bank of 

America, one of the world’s largest banks, as shown in Annex B. 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

- 17 - 

consistent with Delta’s general lack of commitment to international flights at its 

Detroit hub. To assess Detroit’s importance to Delta and its value as a gateway and 

connecting point, the Department need only look back to July 2012, when Delta 

sought to move its Detroit-Haneda slots to Seattle after warehousing them unused 

for 11 of the preceding 20 months.28 

B. Delta Warehouses Unrestricted Brazil Frequencies and has Advantages 

in Sao Paulo Other Carriers Do Not 

Detroit-Haneda is not the only limited-entry marketplace in which Delta 

warehouses operating rights. Despite its request for three-quarters of the 

unrestricted frequencies available in this case, Delta has failed to fully utilize the Sao 

Paulo frequencies it already holds. Delta holds 23 Sao Paulo frequencies, yet 

operates only 21 of them to Sao Paulo. Exhibits DL-104 and DL-105 state that Delta 

is using these valuable frequencies for its Atlanta-Rio de Janeiro service which it 

could easily operate with other restricted frequencies.29 

Nor does it appear that Delta has operated any extra-section Brazil flights 

during peak seasons as it is permitted to do. In short, Delta has shown no interest in 

using rights it currently holds to expand its Sao Paulo service. Delta already has 

available to it frequencies and extra-sections it could use to add capacity in the 

Atlanta-Sao Paulo and New York-Sao Paulo routes, but it prefers to use its Sao 

Paulo frequencies for other services that only require restricted frequencies. 

 

28 See Motion of Delta Air Lines, Inc., Docket DOT-OST-2010-0018, July 30, 2012. 

29 While Delta is quick to complain about the seven unrestricted frequencies it will lose, Delta omits 

the fact that it will receive back from US Airways seven frequencies that can be used to serve any 

point in Brazil except Sao Paulo. Thus, Delta could use these frequencies to fund Atlanta-Rio de 

Janeiro, and put its additional unrestricted frequencies to their highest and best use in Sao Paulo. 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

- 18 - 

Finally, in addition to its own frequency holdings, Delta benefits from the Sao 

Paulo frequency and slot holdings of its Brazilian partner, VRG Linhas Aereas S.A. 

d/b/a GOL. Delta recently invested US$100 million in GOL, and now owns and 

controls a portion of that carrier. This provides Delta with wide access to airport 

facilities and slots not available to other airlines. Delta’s ownership interest in GOL 

also permits Delta to benefit economically from the frequencies available to Brazilian 

carriers under the U.S.-Brazil Air Services Agreement. US Airways receives no such 

benefits, as it has nothing more than an arm’s length codeshare relationship with 

TAM for intra-Brazil service. 

C. Delta Proposes Service Using its Smallest Widebody Aircraft of Any 

Carrier in this Proceeding, and Indeed, in its Own Fleet 

Delta will use the smallest aircraft of any applicant in this case for each of its 

three proposed services. Delta’s B767-300ER seats only 210 passengers,30 while 

US Airways’ A330-200, the largest aircraft proposed in this proceeding, seats 253 

passengers31—20% more than Delta’s aircraft. As a result, US Airways’ service 

proposal offers more annual seats than any carrier in this proceeding, as shown in 

Figure 5. 

 

30 This is Delta’s smallest B767 variant. According to www.delta.com, Delta’s B767-300 seats 261 

passengers, and its B767-400ER seats 246. It states also that Delta’s B767-300ER seats only 208 

passengers, not 210. 

31 Does not include five crew rest seats. 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

- 19 - 

Figure 5: US Airways Proposes Service with the Largest Aircraft 

Not only is Delta’s B767-300ER the smallest aircraft proposed by any 

applicant, it is also the smallest widebody aircraft in Delta’s entire fleet, as shown in 

Figure 6. 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

- 20 - 

Figure 6: Delta Proposes Service with the Smallest Widebody Aircraft It 

Operates 

Only aircraft used for international service shown. 

Source: B767-300ER gauge per Delta Application Supplement, all other seating capacities from 

Delta.com. Delta A330 aircraft were not included in Exhibit DL-505. 

If Delta believes it lacks capacity, as suggested in Exhibit DL-106, Delta could 

also up-gauge its existing Sao Paulo service. Delta presently operates B767 aircraft 

between Atlanta, Detroit, and New York-JFK, and Sao Paolo.32 Figure 6 shows 

there are at least four aircraft types in Delta’s fleet it could use to increase the 

capacity it presently offers. Yet Delta does not intend to use any of these aircraft for 

its Brazil service, either existing or proposed. 

 

32 Source: Exhibit DL-204 (Atlanta), Exhibit DL-305 (JFK), and delta.com (Detroit). 

B747‐400

A330‐300

B777‐200LR

B777‐200ER

B767‐400

A330‐200
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

- 21 - 

D. Among Gateway Cities with a Single Daily Flight to/from Sao Paulo, 

Atlanta and Detroit Have the Relatively Low Local Demand 

Despite Delta’s claim that Atlanta requires additional Sao Paulo service, the 

number of local Atlanta and Detroit passengers traveling to Sao Paulo is lower than 

almost all other U.S. gateways with no more than once-daily service to Sao Paulo. 

Atlanta is Delta’s largest hub, and Detroit has already experienced several years of 

stimulation, yet both cities have failed to achieve impressive results. As Figure 7(a) 

shows, there are four other gateways with once-daily service or less, which are 

better candidates for additional Sao Paulo service. 

Figure 7(a): Among Cities with Once-Daily Service or Less, Atlanta and Detroit 

Show Some of the Least Local Demand for Additional Service 

 

Dallas/Ft. Worth, Miami, and New York (JFK) have more than once-daily Sao Paulo service. Miami 

and New York (JFK) have several daily nonstop flights daily to/from Sao Paulo that primarily support 

their strong local market passenger base. 

Source: YEMar13 CRS Booking Data, YEMar2013 OAG Schedules 

Furthermore, while Charlotte currently has less local traffic than Atlanta, this 

will grow substantially once US Airways’ Charlotte-Sao Paulo service begins. When 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

- 22 - 

US Airways commenced Charlotte-Rio de Janeiro service in December 2009, there 

was also a small amount of local market traffic. However, US Airways successfully 

stimulated the marketplace, and the amount of local Charlotte-Rio de Janeiro 

passenger traffic now exceeds the amount of local Atlanta-Rio de Janeiro passenger 

traffic, as shown in Figure 7(b). 

Figure 7(b): US Airways’ Charlotte-Rio de Janeiro Service Has Grown to Carry 

More Local Passengers than Atlanta-Rio de Janeiro

Source: US DOT Data, Q4 2007 thru Q32012

US Airways anticipates a similar result for Charlotte-Sao Paulo service.33

E. US Airways Will Offer Abundant Intra-Brazil Codeshare Service 

While Delta emphasizes its codeshare with its corporate partner GOL, US 

Airways currently offers 271 weekly codeshare flights on TAM to ten Brazilian points 

 

33 This also means US Airways’ Charlotte-Sao Paulo service will carry more local passengers that 

Delta’s Detroit-Sao Paulo service, which has fewer local passengers than Atlanta, rendering Exhibit 

DL-405 obsolete. 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

- 23 - 

beyond Rio de Janeiro.34 US Airways expects to institute codeshare service with 

TAM to ten Brazilian points beyond Sao Paulo after commencement of US Airways’ 

new Charlotte-Sao Paulo service, as shown in Figure 8.

Figure 8: US Airways’ Will Offer Abundant Intra-Brazil Codeshare Service from 

Sao Paulo

Source: August 2013 OAG. 

US Airways’ codeshare with TAM thus allows it to offer codeshare service beyond 

Rio de Janeiro and Sao Paulo to many major Brazilian points. 

 

34 Source: August 2013 OAG. These points are: Belo Horizonte, Brasilia, Curitiba, Fortaleza, Foz du 

Iguacu, Porto Alegre, Recife, Salvador, Sao Paulo, and Vitoria. 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

- 24 - 

* * * 

Under no circumstance should Delta receive additional Sao Paulo 

frequencies when it does not fully utilize the frequencies available to it today; does 

not operate extra section flights; does not operate peak season flights; and proposes 

service with an aircraft that is the smallest of any applicant and the smallest 

widebody aircraft in its fleet. This is particularly true when any award could be made 

only at the expense of applicants that have consistently demonstrated their strong 

commitment to Brazil, such as US Airways. 

V. Conclusion 

Only US Airways’ application provides for new service to Sao Paulo that 

achieves the Department’s goals of maximizing public benefits and providing optimal 

and sustainable service for travelers and shippers. US Airways’ service proposal 

realizes these goals by providing a unique combination of benefits, including: 

 Service from Charlotte and Philadelphia - two new U.S. gateways; 

 New entrant competition to Sao Paulo; 

 Service with the largest aircraft of all applicants in this proceeding; and 

 Unmatched commitment to U.S.-Brazil service through its persistent efforts 

over several years to commence Sao Paulo service. 

The Department has an opportunity in this proceeding to ensure the U.S.-Sao Paulo 

market structure continues to maximize the benefits coming from Sao Paulo 

frequencies for U.S. travelers and shippers. Regardless of whether US Airways and 

American are treated as one carrier or two, this means preserving existing gateways 

where the carrier has shown dedication to the service; adding new gateways; and 

creating service alternatives within gateways. It also means not awarding purely 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

- 25 - 

duplicative service merely to establish symmetry in the allocation of limited entry 

rights. 

As US Airways has demonstrated, Charlotte is an important competitive 

alternative to Atlanta; and Philadelphia provides an important option versus Newark 

and Washington-Dulles. Without an award of frequencies to US Airways, many 

passengers will be left with only a single carrier option for Sao Paulo service; and 

many more passengers will have less than full choice among carriers for Sao Paulo 

service. Market structure considerations aside, Delta’s application is also infirm in 

other aspects, offering the smallest aircraft, to cities with either small local demand 

(Atlanta); which only serve local demand (JFK); or which Delta has previously 

abandoned (Detroit). 
Answer of US Airways, Inc. 

Docket DOT-OST-2013-0072 

May 3, 2013 

- 26 - 

 For the foregoing reasons, US Airways, Inc. respectfully requests that the 

Department of Transportation grant it an exemption and 14 frequencies for service 

between Charlotte and Sao Paulo, and Philadelphia and Sao Paulo, as more fully 

explained herein, and grant such other or further relief as the Department deems 

necessary and appropriate. 

Respectfully submitted, 

 _______________________________ 

Howard Kass 

Vice President, Legal and Government 

Affairs 

Benjamin T. Slocum 

Director, Legal and Government Affairs 

US Airways, Inc. 

1401 H Street, NW, Suite 1075 

Washington, DC 20005 

(202) 326-5153 

howard.kass@usairways.com 

benjamin.slocum@usairways.com 

DATED: May 3, 2013 
 

CERTIFICATE OF SERVICE 

I hereby certify that on May 3, 2013, a copy of the Answer of US Airways, 

Inc. was served via e-mail on each of the following: 

urskr@state.gov (Department of State) 

paul.gretch@dot.gov (Department of Transportation) 

esta.rosenberg@dot.gov (Department of Transportation) 

brett.kruger@dot.gov (Department of Transportation) 

brian.hedberg@dot.gov (Department of Transportation)

francis.heil@aa.com (American) 

robert.wirick@aa.com (American) 

steve.morrissey@united.com (United) 

dan.weiss@united.com (United) 

richa.himani@united.com (United) 

karine.faden@united.com (United) 

sascha.vanderbellen@delta.com (Delta) 

mark.gale@phl.org (Philadelphia International Airport) 

tjorr@charlotteairport.com (Charlotte Douglas International Airport) 

anita.mosner@hklaw.com (Counsel for Charlotte Douglas International Airport)

 

 __________________________ 

 Benjamin T. Slocum