BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, DC

In the Matter of ) ) 2010 U.S.
- Haneda Combination ) Docket DOT

- OST

- 2010

- 0018 Services Allocation Proceeding ) )
APPLICATION OF CONTINENTAL AIRLINES, I NC. AND UNITED AIR LINES, INC. FOR AWARD OF BACK
- UP AUTHORITY Communications with respect to this document should be sent to: Hershel I. Kamen Vice President

– International, Regulatory and Policy UNITED AIR LINES, INC. AND CONTINENTAL AIRLINES, INC. 1350 I Street, NW Washington, DC 20005

- 3389
Steve Morrissey Managing Director, Regulatory & Policy UNITED AIR LINES, INC. AND CONTINENTAL AIRLINES, INC. Jeffrey A. Manley Senior Regulatory Advisor UNITED AIR LINES, INC. 1025 Connecticut Avenue, NW Washin gton, DC 20036 (301) 229

- 8571 jeffrey.manley@united.com
March 29, 2011 Daniel A. Weiss Managing Director, International & Regulatory Affairs UNITED AIR LINES, INC. AND CONTINENTAL AIRLINES, INC. T homa s Newton Bolling Managing Attorney, Regulatory Affairs CONTINENTAL AIRLINES, INC. P.O. Box 4607

– HQSLG Houston, TX 77210

- 4607 (713) 324

- 56 0 6 thomas.bolling@coair.comBEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, DC

In the Matter of ) ) 2010 U.S.
- Haneda Combination ) Docket DOT

- OST

- 2010

- 0018 Services Allocation Proceeding ) )

APPLICATION OF CONTINENTAL AIRL INES, INC. AND UNITED AIR LINES, INC. FOR AWARD OF BACK
- UP AUTHORITY Continental 1 and United request the issuance to them of back

- up authority to Delta and the other carriers awarded slots at Tokyo’s Haneda Airport in the above

referenced proceeding. S uch authority should be awarded for a period of one year and should become effective if a holder of Haneda slots fails to operate its slots for a period of more than 90 days. Continental and United will use the slots to implement one or more of the servic es they proposed in this proceeding, as described below. Continental and United state as follows in support of this application : 2
1. By Order 2010

- 7

- 2, the Department allocated slots allowing limited services at Tokyo’s Haneda Airport, which was schedule d to be reopened in October 2010 for limited international long

- haul services. The awards were made pursuant to the
U.S.

- Japan Memorandum of Understanding of December 11, 2009 (“MOU”), which
limited U.S. carrier services between Haneda and the United Stat es to a total of 28

1 Common names for airlines are used. 2 Effective October 1, 2010, Continental and United became commonly owned by United Continental Holdings, Inc. The two carriers, however, are continuing to opera te separately until the Federal Aviation Administration authorizes combined operations under a single operating certificate.Application of Continental and United

Page 2 weekly slots . In their applications, Continental and United proposed daily services to Guam, New York/ Newark and San Francisco, but were not awarded any of the 28 available slots. 3 All other applicants received slots, half awarded t o Delta and the other half split equally between American and Hawaiian.
2. Delta, which operates a hub at Tokyo Narita Airport, was awarded slots allowing it to operate daily services between Haneda and both Los Angeles and Detroit. It proposed to start s ervices with B747 equipment on October 31, 2010, or within 120 days of the effectiveness of the MOU.
3. The Department did not select a back

- up carrier because it believed at the time that the “record in this proceeding indicates that the selected carrier s are committed to inaugurating their U.S.

- Haneda services in a timely manner.” Order 2010

- 7

- 2 at 8. The awards to Delta, American and Hawaiian were issued on July 6, 2010, and the opportunities were expected to be available at the end of October 2010. In view of the uncertainty inherent in the completion date of runway expansion at Haneda and the date on which the MOU would be signed, the Department did not require service to start within the usual 120 day interval from the date of its final order (abou t November 6, 2010), but gave carriers the option of deferring their start

- up until 90 days following October 31, 2010 ( i.e., late January 2011). Id . at 8, n. 27. 4 Despite the three

- month extension of the start

- up date beyond the usual requirement, Delta did not promptly start

3 The Guam

- Haneda service was proposed by Continental Micronesia in a joint application that also included Continental’s New York / Newark proposal. Continental and Continental Micronesia have already merged into a single carrier (Notice of Action Taken, November 5, 2010, in Docket DOT

- OST

- 2010

- 0266), and Continental has continued Continental Micronesia’s operations at Guam and elsew here. 4 In the event of a delay beyond the October target date for both of these events, the Department remained open to a further extension. As it turned out, the runway and new international terminal were completed and the MOU was signed before the en d of October.Application of Continental and United

Page 3 service to Haneda as it had proposed in its application, but requested a deferral to start Haneda services in February, and American followed suit with a request to start its Haneda services in March. See Motion of Delta dated Sept ember 7, 2010 and Motion of American dated Dece mber 20, 2010, in this docket. American ultimately started Haneda service on February 18, 2011, and Delta one day later.
4. On or about March 17, 2011, Delta announced that it was suspending all service at H aneda effective March 24, 2011. Delta’s suspension of Haneda service will reportedly end as late as early June , which is a few days short of the 90 days that would constitute an abandonment of the service. 5
5

. To avoid any risk to Haneda the Department should act immediately to name Continental and United as back

- up carrier in the event that Delta (or any other Haneda

- authorized U.S. carrier) decides to abandon service at Haneda. The back

- up authority should be awarded to “Continental Airlines, Inc. an d/or United Air Lines, Inc. ” consistent with all other authority issued and reissued to the carriers for the transitional period until their operations and service are combined as a single carrier. Depending on what Haneda services are abandoned and how m any slots are available, Continental and United are prepared to start daily services using equipment consistent with the Guam, New York/ Newark or San Francisco services they proposed in this proceeding. Such slots as become available should be authorized subject to the start

- up and dormancy conditions normally applicable to back

- up authority in limited

- entry markets. As the

5 Reports are conflicting on the end of Delta’s service suspension, with dates falling between May 31 and June 4 depending on the source. In view of t he actions of Delta as described above, the public interest would be best served by the D epartment's consider ation of the instant application. This is especially the case since Delta’s Haneda service is uncertain so soon after it inaugurated that service.Application of Continental and United

Page 4 events since the Department’s awards have demonstrated, t he lack of a back

- up carrier for Haneda services creates the risk of a subst antial loss of the value to the public of these hard won economic assets if any of the carriers awarded slots in this proceeding ceases its service or services. It took over a year from the start of this proceeding to the start of service between the main land U.S. and Haneda under the awards made by the Department. Without a back

- up carrier in place, if any of the incumbents abandons its Haneda service, there will inevitably be a significant delay in selecting a replacement

. This will lead directly to a loss of much needed Haneda service and the economic value of these scarce assets to the U.S. economy, a loss that will be particularly harmful to the competitive position of the U.S. carrier industry if reciprocal services by Japanese carriers continue. I t would be contrary to sound foreign economic policy to allow such a situation to occur

. 49 U.S.C. § 40101 ( a ) and ( e ).
6

. Continental and United are ready and willing to operate any of their previously proposed Guam, New York/ Newark or San Francisco

– Ha neda services using equipment consistent with their proposals in this proceeding. I f Haneda service is abandoned and to prevent any waste of valuable Haneda slots, the Department should rely on the carriers’ previous submissions in this proceeding to supp ort its award of back

up authority. Under the circumstances of this case, the record in this proceeding remains current and complete and allows the Department’s issuance of an appropriate order to issue the requested back

- up authority without delay. For these reasons, Continental and United respectfully ask the Department to issue to them a back

- u p allocation of slots for U.S.

- Tokyo Haneda services as proposed in this proceeding to become effective if and when any of the carriers already allocated s lotsCERTIFICATE OF SERVICE I hereby certify that I have this date served a copy of the foreg oing document on all persons named below by causing a copy to be sent via email: benjamin.slocum@usairways.com carl.nelson@aa.com howard_kass@usairways.com jhill@dowlohnes.com (Hawaiian) jeff.morgan@delta.com sascha.vanderbellen@delta.com donna.kooperstein@usdoj.gov dw ight.moore@ustranscom.mil john.allen@faa.gov urskr@state.gov sbaer@panynj.gov challock@newark/newyorkrbp.org carloss@guamairport.net john.martin@flysfo.com kandace.bender@flysfo.com

Annalei Avanceña International Regulatory Advisor

March 29, 2011