DOCKET OST-96-1988 and UNDOCKETED

This serves as interim notice to the public of the action described below, taken orally by the Department official indicated; the confirming order or other decisional document will be issued as soon as possible.

Joint Applicants: COMPANIA MEXICANA de AVIACION, S.A. de C.V. (Mexicana), and UNITED AIR LINES, INC.

Date filed: November 26, 1996

Relief requested: Statement of Authorization under 14 CFR Part 212 to permit Mexicana to carry United’s code in 21 U.S.-Mexico and intra-Mexico city-pair markets (see Attachment 1 of the application), for a period of two years. (The joint application also includes requests by Mexicana and United for underlying operating authority in certain markets and by United for authority to carry Compania Mexicana’s code in certain markets. We have concurrently addressed these requests separately.)

If renewal, date of last action(s): New authority.

Applicant representative(s): Robert D. Papkin (for Compania Mexicana), 202-626-6601

Responsive pleadings: On December 6, 1996, Northwest Airlines filed an answer to the application. Northwest urged the Department not to act on the applicants’ request to code share until Mexican authorities act favorably on its request to code share on certain U.S.-Mexico flights to be operated by Alaska Airlines. On December 11, 1996, American Airlines filed an answer in opposition to the code-share requests of United and Mexicana and a petition for review of the DOT staff action approving code-share arrangements between Delta Air Lines and Aeromexico. American argued that the United-Mexicana and Delta-Aeromexico code shares would substantially reduce U.S.-Mexico competition under the same theories applied by Order 96-6-15 to the American-TACA Group application. American contended that the Department should not approve the subject code-share arrangements in limited-entry U.S.-Mexico markets, while it has imposed burdensome evidentiary requirements (by Order 96-6-15) on it and the TACA Group concerning their request to conduct codeshare operations with American in open-entry Central American markets, and that the Department should impose the same evidentiary requirements in this case as were imposed by the Department in Order 96-6-15. On December 20, 1996, the joint applicants each filed a reply.

DISPOSITION

Action: On June 24, 1997, we granted Mexicana’s request to carry United’s code in the following 18 markets: 1) Chicago-Guadalajara; 2) Chicago-Mexico City; 3) Denver-Mazatlan; 4) Denver-Mexico City; 5) Denver-Puerto Vallarta; 6) Denver-San Jose del Cabo; 7) Los Angeles-Cancun; 8) Los Angeles-Mexico City; 9) Mexico City-Acapulco; 10) Mexico City-Cancun; 11) Mexico City-Guadalajara; 12) Mexico City-Merida; 13) Mexico City-Puerto Vallarta; 14) Mexico City-Zihuatanejo; 15) Miami-Cozumel; 16) San Antonio-Mexico City; 17) San Francisco-Guadalajara; and 18) San Jose-Guadalajara. We dismissed that portion of Mexicana’s request to carry United’s code in these 18 markets beyond December 0, 1997, and deferred action on the carrier’s request to carry United’s code in the remaining three markets (Chicago-Puerto Vallarta; Miami-Cancun; and Newark-Cancun).

Effective dates of authority granted: June 24, 1997, through December 20, 1997 (179 days).

Basis for approval: Reciprocity with Mexico.

Except to the extent exempted/waived, this authority is subject to the terms, conditions, and limitations of Mexicana’s foreign air carrier permit. The codesharing operations must comply with 14 CFR 399.88 of the Department’s regulations, and any amendments to the Department’s regulations concerning codeshare arrangements that may be adopted, and the condition that this foreign air transportation be sold in the name of the carrier holding out the service in computer reservation systems and elsewhere, and that the carrier selling such transportation accept all obligations established in its contract of carriage with the passenger (that is, the ticket). Also, the operator shall not permit the code of its U.S. air carrier codesharing partner to be carried on any flight that enters, departs, or transits the airspace of any area for whose airspace the Federal Aviation Administration has issued a flight prohibition. Moreover, the operator shall not carry the code of its U.S. carrier partner in any market for which the U.S. carrier lacks requisite economic authority to serve. (See Notice of Action Taken, dated June 23, 1997, regarding United’s requests in Docket OST-96-1988.)

Remarks: In reaching our decision to grant Mexicana authority to carry United’s code in the above 18 markets for a period of 179 days (this is not a license with reference to an activity of a continuing nature within the meaning of 5 U.S.C. 558(c)), we found that favorable action for that duration was supported by adequate reciprocity by the Government of Mexico. In that connection, we noted that Mexican authorities have approved the Northwest/Alaska Airlines code-share request (see above) for two consecutive six-month periods. Also, we noted that American Airlines had set forth substantially similar arguments in its petition for review (filed December 11, 1996) of the staff’s action approving the Delta/Aeromexico reciprocal codeshare services in various U.S.-Mexico markets (undocketed), which action has been affirmed by the Department in Order 97-1-15 (issued January 21, 1997). American has not raised any new issues for consideration since that Order was issued that would warrant unfavorable or different action on the instant application. Moreover, we note that general issues relating to limitations on authorization of code-share services in the U.S.-Mexico market have been raised in the context of the American Airlines/Aero California code-share application, Dockets OST-97-2477/2481 and undocketed. We intend to address those issues in the context of our decision in that case. The parties in this case are on notice that the authorities granted by our action here will be subject to any decision made on the general issues raised in the American/Aero California code-share case. Further, while granting the above authority, we also deferred action on Mexicana’s pending request to carry United’s code in the Chicago-Puerto Vallarta, Miami-Cancun, and Newark-Cancun markets and for underlying authority by exemption to conduct scheduled services in various U.S.-Mexico markets (see Attachment 4 of the application). That portion of Mexicana’s request to carry United’s code in the three additional markets was not ripe for consideration, because United, at this point, lacks authority to conduct scheduled services in those markets.

Action taken by: Paul L. Gretch, Director, Office of International Aviation, under assigned authority (14 CFR 385) (Petitions for review may be filed from now until 10 days after the service date of the confirming order/letter. Filing of a petition shall not stay the effectiveness of this action.)