Consolidated Answer of Delta Air Lines

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Delta Air Lines Consolidated Answer Page 3 in the public interest because they have no market or consumer service based rationale and would only create confusion and complexity for consumers. 2 JAT and Etihad are proposing codeshare services on routings from Belgrade (BEL) to New York (JFK), Washington (IAD), and Chicago (ORD) via Abu Dhabi (AUH). These routes are so extraordinarily circuitous (nearly 5,000 miles of additional circuity in each direction) that one must question why any consumer would regard their addition to the marketplace to constitute a rational service option or to offer any consumer benefit. Currently, there is robust competition for travel between Belgrade and destinations in the United States via European hubs, where convenient, non-circuitous codeshare and interline connections are available. JAT already codeshares with six European airlines that connect on to the U.S., and has interline agreements with dozens of other airlines with transatlantic service. At least eight different transatlantic carriers serve Belgrade. For example, connecting services between Belgrade and Chicago via Amsterdam, Munich, Vienna, or Frankfurt, involve journeys of approximately 5,000 miles. By contrast, a routing from Belgrade to Chicago via Abu Dhabi is nearly twice as long: approximately 9,640 miles. Such an extremely circuitous itinerary would add nearly 5,000 miles to a consumer’s journey from Belgrade to the United States. 2 In order for the Department to approve the JAT and Etihad applications, it must find that the services proposed are in the public interest See 49 U.S.C. § 40109(c); 14 C.F.R. § 212.11. Moreover, as JAT concedes in its application, the Department is not subject to any obligation imposed by a bilateral air service agreement to approve the JAT application. JAT Application at 2.
Delta Air Lines Consolidated Answer Page 4 Accordingly, it is highly unlikely that a rational consumer would seek out itineraries via Abu Dhabi unless fares were artificially low, i.e., unless JAT and Etihad plan to engage in capacity dumping at below-market fares. We note that the JAT/Etihad proposal does not comply with IATA fare rules on maximum permitted miles (MPM). MPM on the JFK-Belgrade route is 5,404 miles, which the JAT/Etihad routing via Abu Dhabi exceeds by a whopping 2,469 miles. Thus, not only would the proposed codeshare routes not satisfy any new or currently unmet consumer demand; they would cause confusion and complexity in the marketplace (e.g., by cluttering schedule and fare displays and obscuring the consumer-facing availability of superior itineraries and service options). Accordingly, the Department should reject JAT’s and Etihad’s applications because their proposed codeshare arrangements are not in the public interest. II. The proposed codeshare arrangements are ripe for market abuse in light of Etihad’s and JAT’s receipt of state subsidies The proposed codeshare involves two state-owned airlines and one, Etihad, that is heavily state-subsidized. The Department has, previously, expressed concern about state subsidies in its consideration of the “public interest.” 3 Moreover, the Department has specifically stated that among its core policy objectives is to “[e]nsure that 3 See, e.g., Applications of Iberia, Lineas Aereas de Espana, S.A. and Carnival Air Lines, Order 94-9-23 at 4 (“we share American’s concerns on the issue of subsidies. Indeed, Secretary Pena has already written to Marcelino Aquirre, EU Commissioner for Transport and Energy, specifically to express his serious concern regarding the European Commission’s policy on state aid.”).
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Consolidated Answer of Delta Air Lines

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