02-21555. Review Under 49 U.S.C. 41720 of United/US Airways Agreements

AGENCY:

Office of the Secretary, Department of Transportation.

ACTION:

Extension of waiting period.

SUMMARY:

United Air Lines and US Airways have submitted code-sharing and frequent flyer program reciprocity agreements to the Department for review under 49 U.S.C. 41720. That statute requires such agreements between major U.S. passenger airlines to be submitted to the Department at least thirty days before the agreements' proposed effective date and authorizes the Department to extend the waiting period for any such agreement. The Department has determined to extend the waiting period for the United/US Airways agreements for an additional thirty days.

FOR FURTHER INFORMATION CONTACT:

Thomas Ray, Office of the General Counsel, 400 Seventh St. SW., Washington, DC 20590, [phone].

SUPPLEMENTARY INFORMATION:

As provided by 49 U.S.C. 41720, on July 25 United and US Airways submitted code-sharing and frequent flyer program reciprocity agreements to the Department more than thirty days before the airlines planned to implement them. The statute authorizes us to extend the waiting period by 150 days with respect to a code-sharing agreement and by 60 days for the other types of agreements covered by the advance-filing requirement.

We have been reviewing the agreements, the comments submitted by outside parties, and other information in our possession, and we have been consulting with the Justice Department. We have also given interested parties an opportunity to submit comments on the agreements. 67 FR 50745 (August 5, 2002). As has been the case with respect to all agreements submitted under 49 U.S.C. 41720 since its enactment, our review of the United/US Airways agreements has been informal. See 67 FR 50745.

The purpose of our review is to see whether we should begin a formal investigation under section 41712 of the arrangements between United and US Airways, or take other action as a result of the agreements. United and US Airways will not need to obtain our approval before implementing their agreements after the end of the statutory waiting period (either the original waiting period or any extended period established by us). To block two airlines from implementing an agreement, we would normally need to issue an order under 49 U.S.C. 41712 (formerly section 411 of the Federal Aviation Act) in a formal enforcement proceeding that determines that the agreement's implementation would be an unfair or deceptive practice or unfair method of competition that would violate that section. Our informal review of the agreements accordingly focuses on whether they would significantly reduce competition.

We have concluded that we need additional time to determine whether the agreements or specific provisions in the agreements raise questions under 49 U.S.C. 41712 that may require us to request modifications of the agreements or to institute an enforcement proceeding. The agreements present important issues that require additional investigation by us. We have therefore determined to extend the waiting period by another thirty days, from August 24 to September 23. We understand that the two airlines wish to be able to implement the agreements promptly, and we therefore intend to conclude our review as soon as reasonably possible.

We recognize that the Air Carrier Association of America (“ACAA”) filed a motion to suspend proceedings and open a docket. ACAA argues that all information relating to the application should be made public, including all discussions between US Airways and the Air Transportation Stabilization Board (“ATSB”), the board that is considering a loan guarantee application filed by United and that has conditionally approved a loan guarantee application filed by US Airways. Docket OST-2002-12986. We have given ACAA and all other interested persons the ability to comment on the United/US Airways agreements. If ACAA has evidence and analysis indicating that the United/US Airways agreements in whole or in part may involve unfair methods of competition, it has had the opportunity to submit that material for our consideration.

In addition, the ACAA motion incorrectly assumes that the ATSB based its conditional approval of the US Airways application on the airline's ability to implement its agreements with United. The letter released by the ATSB did not make the implementation of those agreements a necessary condition to approval of the loan guarantee application. The ATSB has been expressly informed and is fully aware that this Department and the Justice Department have independent responsibilities for preventing unlawful anti-competitive conduct in the airline industry and that this Department has other independent regulatory responsibilities over the airline industry and the airports used by commercial airlines. This Department intends to carry out all of its regulatory responsibilities regarding the agreements before it completely independent of any matters that may or may not be pending before the ATSB.

Issued in Washington, DC, on August 19, 2002.

Read C. Van de Water,

Assistant Secretary for Aviation and International Affairs.