BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. ________________________________________________ ) Joint Application of ) ) DELTA AIR LINES, INC. and ) AEROVIAS DE MEXICO, S.A. DE C.V. ) DOT-OST-2015-0070 ) Under 49 U.S.C. §§ 41308 and 41309 ) for Approval of and Antitrust Immunity ) for Alliance Agreements ) ________________________________________________) MOTION FOR LEAVE TO FILE AND REPLY OF JETBLUE AIRWAYS CORPORATION Communications with respect to this document should be addressed to: James G. Hnat Evelyn D. Sahr Executive Vice President Jonathan T. Linde General Counsel & Government Affairs Drew M. Derco Eckert Seamans Cherin & Mellott, LLC Robert C. Land 1717 Pennsylvania Ave., N.W. Senior Vice President Government Twelfth Floor Affairs & Associate General Counsel Washington, D.C. 20006 Tel: (202) 659-6600 Adam L. Schless Fax: (202) 659-6699 Director, Aircraft Transactions & International Counsel Counsel for JetBlue Airways Corporation JetBlue Airways Corporation 1212 New York Avenue, N.W. Suite 1212 July 21, 2015 Washington, D.C. 20005 Tel: (202) 715-2557
Transcript
BEFORE THE
DEPARTMENT OF TRANSPORTATION
WASHINGTON, D.C.
________________________________________________
)
Joint Application of )
)
DELTA AIR LINES, INC. and )
AEROVIAS DE MEXICO, S.A. DE C.V. ) DOT-OST-2015-0070
)
Under 49 U.S.C. §§ 41308 and 41309 )
for Approval of and Antitrust Immunity )
for Alliance Agreements )
________________________________________________)
MOTION FOR LEAVE TO FILE AND
REPLY OF JETBLUE AIRWAYS CORPORATION
Communications with respect to this document should be addressed to:
James G. Hnat Evelyn D. Sahr
Executive Vice President Jonathan T. Linde
General Counsel & Government Affairs Drew M. Derco
Eckert Seamans Cherin & Mellott, LLC
Robert C. Land 1717 Pennsylvania Ave., N.W.
Senior Vice President Government Twelfth Floor
Affairs & Associate General Counsel Washington, D.C. 20006
Tel: (202) 659-6600
Adam L. Schless Fax: (202) 659-6699
Director, Aircraft Transactions &
International Counsel Counsel for JetBlue Airways Corporation
JetBlue Airways Corporation
1212 New York Avenue, N.W.
Suite 1212 July 21, 2015
Washington, D.C. 20005
Tel: (202) 715-2557
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BEFORE THE
DEPARTMENT OF TRANSPORTATION
WASHINGTON, D.C.
________________________________________________
)
Joint Application of )
)
DELTA AIR LINES, INC. and )
AEROVIAS DE MEXICO, S.A. DE C.V. ) DOT-OST-2015-0070
)
Under 49 U.S.C. §§ 41308 and 41309 )
for Approval of and Antitrust Immunity )
for Alliance Agreements )
________________________________________________)
MOTION FOR LEAVE TO FILE AND
REPLY OF JETBLUE AIRWAYS CORPORATION
JetBlue Airways Corporation (JetBlue) hereby moves for leave to file a reply to the joint
answer of Delta Air Lines, Inc. (Delta) and Aerovias de Mexico, S.A. de C.V. (Aeromexico)
(together, the Joint Applicants) in the captioned docket. The Joint Applicants’ arguments
regarding the sufficiency of the information provided to the Department is not only misleading,
but factually incorrect and potentially harmful to consumers and the travelling public. Because
immunity from the antitrust laws (ATI) is an extraordinary act of administrative relief and should
be considered only with a complete factual record regarding the competitive implications of such
a grant, good cause exists for the Department to accept JetBlue’s reply in the interest of ensuring
that a full record is established that will allow the Department to properly review this application
(Joint Application). JetBlue strongly urges the Department to follow its long-standing precedent
of establishing a complete factual record before advancing this proceeding.
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I. THE PROCESS FOR OBTAINING SLOTS AT MEXICO CITY
INTERNATIONAL AIRPORT IS DIFFERENT THAN AT OTHER
SLOT-CONTROLLED AIRPORTS
Despite the Joint Applicants’ assertions, the process for obtaining slots at Mexico City
International Airport (MEX) is not “similar to other major slot-controlled airports around the
world.” (Answer at 1). JetBlue is the largest domestic airline at John F. Kennedy International
Airport (JFK), one of the world’s most slot-restricted airports, and is quite familiar with slot-
controlled airports and the procedures for obtaining slots.1 Unlike JFK,2 where a transparent and
open process exists for airlines to obtain slots (even peak-time slots), the process for obtaining
slots at MEX is opaque, confusing, politicized and extremely difficult for new entrants. Among
other intricacies, it appears that certain airlines have slots that are not utilized, others operate
flights without assigned slots and several now-defunct airlines retain access to or control over
their former slots. In fact, the slot allocation procedures at MEX have become so complicated
that the Mexican government itself is conducting an internal competition review in order to
evaluate and improve the process to ensure it does not provide an unfair advantage to
Aeromexico. This investigation is taking place at the same time as the Mexican government
1 JetBlue also operates at LaGuardia Airport (LGA), Newark Liberty International Airport (EWR) and Ronald Reagan
Washington National Airport (DCA), the three other federally slot-restricted airports in the United States. 2 The Department recently observed that “[s]ince 2008, numerous carriers have obtained slots at EWR, JFK, and LGA
through either FAA allocations or slot transactions with incumbent airlines….At JFK, new carriers include: Arik Air,
Brussels Airlines, Fly Jamaica Airways, Hawaiian Airlines, Hellenic Imperial Airways, Interjet, LAN Peru, Nippon
Cargo Airlines, Nordic Global Airlines, Norwegian Air Shuttle, Qatar Airways, Transaero Airlines, Virgin America,
WestJet, and XL Airways France.” Slot Management and Transparency for LaGuardia Airport, John F.
Kennedy International Airport, and Newark Liberty International Airport; Proposed Rule, 80 Fed. Reg. 1284 (January
8, 2015 ).
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investigates potentially collusive alliance activities between Aeromexico and other airlines
including, possibly, Delta.3
Although the Joint Applicants claim “Mexico is in the process of transitioning to the
IATA World Slot Guidelines,” (Answer at 2) attempts by Mexico to implement the IATA
Worldwide Slot Guidelines (WSG) have been stalled for years. This past March, IATA itself
explained that “[t]he timeframe in which the WSG process will be adopted for future seasons [at
MEX] is wholly uncertain at this point,”4 amplifying the patent absurdity of the Joint Applicants’
statement that MEX is like all other major slot-controlled airports. It is not. Moreover, even if
Mexico were to implement the WSG immediately, comparative parity will be achieved only if
new entrants like JetBlue are provided with commercially-viable slots currently held by MEX
incumbents.5 Finally, JetBlue notes that one of the likely reasons implementation of the WSG
has been so delayed is precisely because of the complex and politicized slot situation at MEX.
The fact that the WSG have not been adopted already, as they have at the vast majority of the
world’s slot-restricted airports, is strong evidence of the inequities that currently exist at MEX.
Furthermore, although the Joint Applicants claim Aeromexico’s slot holdings at MEX are
“far less than the share of primary ATI hub carriers at other international airports,” (Answer at 2)
3 See <http://www.reuters.com/article/2015/07/09/us-aeromexico-investigation-idUSKCN0PJ23520150709>:
“Mexico's largest airline, Grupo Aeromexico, is at the center of a price and market-fixing investigation being led by
the country's competition authority, which conducted a dawn raid on the airline's head office earlier this year, two
people with knowledge of the matter told Reuters. Competition regulator Cofece has asked Aeromexico for
information about its alliance agreements with other airlines, the sources said…The collusion probe is separate to an
investigation into the often opaque process of assigning slots at Mexico City airport and the regular approval process
for antitrust immunity with Delta.” 4 Mexico City Airport Slot Coordination, IATA Americas Focus, Q1, 2015. 5 Delta itself has acknowledged that slot-constrained airports can limit the potential for new entry. See Star ATI
Proceeding, Motion of Delta Air Lines, Inc. for Additional Documents and Evidence at 2, Docket DOT-OST-2008-
0234, October 30, 2008.
4
it is common knowledge that the extensive MEX slot holdings of several defunct Mexican
airlines are in legal limbo, and could conceivably be awarded to Aeromexico permanently, which
would vastly increase its share of slots.
II. JETBLUE’S REQUEST FOR ADDITIONAL INFORMATION IS
JUSTIFIED AND SUPPORTED BY DEPARTMENT PRECEDENT
JetBlue’s July 2,, 2015 motion simply requested that the Department establish a factual
record regarding the slot situation at MEX before declaring the record substantially complete and
setting a procedural schedule. JetBlue’s request is justified in this case and consistent with
Department precedent in ATI proceedings.
For nearly two decades the Department, in the course of establishing a record for
evaluating ATI applications where slot-restricted airports are involved, has made inquiries to
foreign governments and/or airport authorities requesting substantial and detailed information
regarding slot allocation procedures. Foreign governments routinely make similar requests to the
Department. These inquiries are essential because a grant of ATI can have serious and powerful
competitive implications when airport access is limited. JetBlue has attached as Appendix 1 a
sample of routine information exchanges that the Department has used in prior ATI proceedings,
including in the recent Delta-Virgin Atlantic case, and urges the Department, in the interests of
due process and equitable consideration, to take a similar approach here so as to ensure a
complete factual record exists prior to setting a procedural schedule.
5
III. AS AN ADDITIONAL THRESHOLD MATTER, THE JOINT
APPLICANTS DO NOT APPEAR TO HAVE SUBMITTED A JOINT
VENTURE AGREEMENT FOR THE DEPARTMENT’S REVIEW
The Joint Applicants accuse JetBlue of “delay tactics” and urge the Department to
“promptly issue a Scheduling Order,” (Answer at 1) yet four months after the Joint Applicants
filed their application, ambiguity exists on the record as to whether the Joint Applicants have
even concluded or submitted a joint venture agreement. While the Joint Applicants claim to
have “entered into a comprehensive JCA Agreement,” (Joint Application at 1) without defining
what a JCA agreement is, and later state that the “JCA Parties are presenting the confidential,
detailed JCA for the Department’s consideration,” (Id. at 8 ) there is no evidence on the record
that an executed JCA Agreement exists, as the Joint Applicants also state that they “only recently
agreed to form their JCA.” (Id. at 8, FN 7) Furthermore, the Joint Applicants do not reference a
JCA Agreement in their index of confidential documents and there is no indication that the
Department has received the JCA Agreement via other channels.6
Since 2005, when the Department articulated a heightened public benefits standard in the
SkyTeam I case that had the practical effect of requiring applicants to form metal neutral joint
ventures in order to possibly receive a grant of ATI, every new and successful ATI applicant has
submitted a joint venture agreement concurrently with their application.7 The Joint Applicants
appear to be the single exception to this rule in a decade. Because a grant of ATI would allow
6 Although the Joint Applicants describe in detail what the JCA will ultimately aim to include, they specifically applied
“for antitrust immunity for the Alliance Agreements (described below) so that Delta and Aeromexico can implement
their metal neutral JCA.” Joint Application at 3. The Joint Applicants also note that “Appendix A contains an abstract
of the JCA” (Id. at 3, FN 5) but the Joint Application does not appear to include a corresponding Appendix A, further
adding to the uncertainty and confusion surrounding this application. 7 See Order 2005-12-12, Docket DOT-OST-2004-19214. See also Orders 2008-4-17 and 2008-5-32, Docket DOT-
OST-2007-28644.
6
the parties to implement the JCA Agreement, it would follow that the Department could not
grant ATI in this case unless and until it has reviewed the contents of the agreement for which
immunity is sought.8
The Joint Applicants’ statements on the status of the JCA Agreement are ambiguous and
unclear. JetBlue presumes and seeks that the Department will delay any substantive action on
the Joint Applicants’ request for immunity until, at a minimum, the Joint Applicants provide the
government and interested parties with the agreement they seek to have shielded from the
antitrust laws. If the Department has not even received a copy of the JCA Agreement, then
establishing a factual record regarding slots, as JetBlue requested the Department to do in its
motion, can in no way be construed as causing a delay for the Joint Applicants.9
IV. CONCLUSION
JetBlue respectfully requests that the Department, consistent with well-established
precedent, establish a complete factual record regarding the slot allocation procedures at MEX.
The Joint Applicants should be treated no differently than similarly-situated applicants in past
ATI proceedings. A grant of ATI is extraordinarily powerful and should not be approved lightly,
especially in this era of fewer and fewer major airlines.10 Given the factual circumstances of this
8 If, as implied in some of their statements, the Joint Applicants did submit their JCA Agreement to the Department
for review, in either excerpt form or entirety, but did not include it in their index of confidential documents nor share
it with other parties to the proceeding that have filed confidentiality affidavits, it would be a troubling and flagrant
abuse of the Department’s procedural rules in ATI proceedings. 9 JetBlue also reminds the Joint Applicants that they are obliged under the Department’s procedural rules to update
the information included with their application in a timely manner. “The information provided by the applicant shall
be updated in a timely fashion throughout the period of consideration of the application.” 14 CFR Part 303.04(e).
The Joint Applicants cannot accuse JetBlue of “delay tactics” if they have not updated their application in accordance
with the Department’s regulations. 10 JetBlue notes the comments of the Joint Applicants regarding the exchange of future beyond rights and will not
burden the Department at this time with a response outside the scope of JetBlue’s narrow request regarding slot
7
case, including severe slot constraints at MEX and the Mexican Government’s internal
investigations into the competitive dynamics at play there, particularly involving Aeromexico,
the Department, in order to ensure the consumer benefits the Joint Applicants claim are inherent
in this joint venture, should proceed cautiously and only after a thorough review of a complete
record. The Joint Applicants’ cursory statements regarding the slot processes at MEX are not
sufficient and warrant careful scrutiny as the Department considers what evidence is necessary
before setting a procedural schedule for public comment.
Wherefore, JetBlue respectfully requests the Department grant its motion for leave to file
a reply and urges the Department to carefully consider airport access and slot issues and to only
advance this ATI proceeding upon submission by the Joint Applicants of a complete factual
record.
Respectfully submitted,
Evelyn D. Sahr
Jonathan T. Linde
Drew M. Derco
Eckert Seamans Cherin & Mellott, LLC
July 21, 2015 Counsel for JetBlue Airways Corporation
transparency. At an appropriate time during this proceeding, JetBlue will explain its concerns about the legality and
binding nature of such an exchange of letters.
CERTIFICATE OF SERVICE
I hereby certify that a copy of the foregoing Motion for Leave to File and Reply of
JetBlue Airways Corporation was served by electronic mail this 21st day of July, 2015, on the
