June 24, 2021 Via Email Arthur J. Molins General Counsel, The

1200 New Jersey Avenue, S.E. U.S. Department Washington, DC 20590 of Transportation

Office of the Secretary of Transportation

June 24, 2021

Via Email Arthur J. Molins General Counsel, The Americas Deutsche Lufthansa AG 1400 RXR Plaza 13th Floor Uniondale, New York 11556

Dear Mr. Molins,

This letter is in response to your correspondence of April 9, 2021, requesting that the subsidiary of Deutsche Lufthansa (Lufthansa), EW Discover GmbH (Discover), be covered by the grant of immunity under Department of Transportation (DOT) Order 2009-7-10, issued in July 2009 and subsequently amended. In your letter, you establish that Discover is a new and wholly-owned subsidiary controlled by Lufthansa, is not an acquisition of another carrier, and intends to operate on a metal-neutral basis within the transatlantic joint venture between Air Canada, Lufthansa Group, and United Airlines (A++). You also state that Discover will be fully integrated into all elements of A++ including, among others: revenue sharing, network planning, governance, pricing, codesharing, and frequent flyer reciprocity, with “no geographical or other restrictions on where and how Discover can operate within the scope of A++ and the A++ Agreement.”

The Office of Aviation Analysis has reviewed your request and corresponding plans for integration of Discover into A++ to determine whether they raise competition concerns, and whether Discover’s participation in A++ is on terms that would allow it to produce public benefits only obtained by participation in the joint venture with a grant of antitrust immunity. Following this review, I can confirm that the Department will consider EW Discover GmbH, as the entity exists today, to be an immunized affiliate of Lufthansa under A++, subject to the same conditions and obligations as Lufthansa and its affiliates. DOT considers Discover within the coverage of the existing immunity based upon the representations provided in your letter, specifically that Discover will participate in the joint venture in a metal-neutral fashion similar to other Lufthansa affiliates with no specific provisions limiting Discover’s transatlantic services, and that the carrier will operate with all the rights and obligations as other Lufthansa affiliates under the governing joint venture agreement previously approved by the Department and currently in effect.

Discover is a startup carrier that is wholly-owned by an existing antitrust immunity holder, and intends to take over services operated by Eurowings, an immunized affiliate of Lufthansa, largely using existing assets of the Lufthansa Group. Under the circumstances, extending immunity to the carrier does not represent a significant competitive change from the arrangements DOT has previously approved under Order 2009-7-10, and subsequent orders. As Discover intends to be fully incorporated within A++ by operating on similar footing to that of other immunized partners, including joint pricing, codesharing, frequent flyer reciprocity, connecting traffic, and linking networks, the Department has not identified any significant issues with respect to the immunized alliance’s ability to continue passing along public benefits from the joint venture to consumers. Unlike the acquisition of existing competitors, or a partnership with a minority-owned affiliate, including Discover within A++ should not require a new application or motion, particularly as the carrier intends to be fully integrated into the broader immunized alliance.

Through this letter, the Department considers Discover to be a covered affiliate under Order 2009-7-10, and subsequent orders, so long as it operates in a manner consistent with the representations made in your April 9th letter. The Department expects that Discover will adhere to existing requirements in the ordering paragraphs of Order 2009-7-10, and subsequent orders, including submission of origin and destination data. I am placing a copy of your April 9, 2021 letter, and this response, in Docket DOT-OST-2008-0234 so that interested parties and the traveling public are apprised of Discover’s status.

Sincerely,

Todd M. Homan Director Office of Aviation Analysis

Cc: Steve Morrissey, United Airlines Daniel Magny, Air Canada

- 2 -

April 9, 2021

VIA EMAIL

Mr. Todd Homan Director Office of Aviation Analysis U.S. Department of Transportation 1200 New Jersey Avenue, SE Washington, DC 20590

Re: EW Discover GmbH

Dear Mr. Homan:

Deutsche Lufthansa AG ("Lufthansa"), on behalf of the antitrust-immunized Star Alliance carriers (the "Star Carriers" 1), requests the Department's confirmation that Lufthansa's wholly owned subsidiary, EW Discover GmbH ("Discover"), will be considered by the Department to be covered by the grant of antitrust immunity under Order 2009-7-10. 2 The Star Carriers would appreciate the Department's confirmation of this letter and acknowledgment that such grant of immunity covers Discover.

Discover is a recently established private company, organized and operating under the laws of the Federal Republic of Germany, with its principal office in Frankfurt, Germany. It is wholly owned and controlled by Lufthansa and is a member of the Lufthansa Group. Discover has applied for, and expects to shortly obtain, all necessary licenses from the German civil aviation authority to operate as a German-certificated international air carrier. Discover recently submitted an application to the Department for an exemption and a foreign air carrier permit to operate scheduled (and charter) air service between the EU and the United States. 3 Discover plans to commence scheduled service to the United States in June 2021.

By way of background, the Lufthansa Group recently restructured its Eurowings operations to enhance operational efficiency and customer service. Because of this restructuring, U.S. and other operations formerly conducted by Eurowings GmbH (in some

1 The Star Carriers consist of Air Canada, The Austrian Group, Brussels Airlines NV/SA ("Brussels Airlines"), Polskie Linie Lotnicze LOT S.A., Lufthansa, Scandinavian Airlines System, Swiss International Air Lines Ltd., TAP Air Portugal and United Airlines, Inc., and their majority-owned affiliates.

2 "Order 2009-7-10" refers to Order 2009-7-10, as amended by Orders 2011-11-16 (extending antitrust immunity to Brussels Airlines) and 2012-6-21 (terminating antitrust immunity with British Midland Airways Limited).

3 Application of EW Discover GmbH for a Foreign Air Carrier Permit and Exemption, Mar. 22, 2021 (Docket DOT- OST-2021-035). cases via wet lease arrangements with other Lufthansa Group and Lufthansa-affiliated carriers) will be operated by Discover. This restructuring and introduction of Discover will not result in any change to the competitive landscape because flights that were controlled by Lufthansa will continue to be controlled by Lufthansa. Discover will operate flights in its own name and on behalf of Lufthansa within Europe, between Europe and third countries, and between Europe and the United States. 4 These services will include routes within the geographic scope of the Air Canada-Lufthansa Group-United Airlines Transatlantic Joint Venture ("A++"), so these operations will be integrated within A++. Because these in-geographic scope operations have been within A++ as they were previously operated by Eurowings, Discover’s inclusion in A++ is necessary to maintain the status quo of A++'s consumer benefits.

There are direct parallels to prior instances where the Department has confirmed that subsidiary carriers are included in the A++ carriers' grant of ATI without de novo review in a docketed proceeding when there is no change of geographic scope or addition of a new entity. Lufthansa has antitrust immunity with the other Star Carriers pursuant to Order 2009-7-10; the same immunity is required for affiliates whose business plans, decisions, and activities are governed and controlled by Lufthansa.5 In 2013, the Department issued a letter confirming that Air Canada rouge, a carrier wholly owned and controlled by Air Canada that was established after the issuance of Order 2009-7-10, is covered by the immunity granted by that Order. In doing so, the Department recognized that the inclusion of Air Canada rouge within the scope of the immunity granted by Order 2009-7-10 "does not represent a significant competitive change from the arrangements approved by Order 2009-7-10 in July 2009." 6 In 2015, the Department subsequently issued a similar letter confirming that "Lufthansa’s antitrust immunity covers Eurowings [GmbH]" an entity Lufthansa controlled since 2005 when it ceased competing with Lufthansa group. Such “inclusion of Eurowings in the joint venture does not represent a significant competitive change from the arrangements approved by Order 2009-7-10.”.7

The same rationale applies to Discover. Lufthansa has exclusive authority to control the business plans, decisions, and activities of Discover. Indeed, because Lufthansa controls Discover, Discover’s inclusion within A++ will not alter the competitive landscape in any way. Since Discover is a majority (in fact, wholly) owned affiliate of Lufthansa, extension of the antitrust immunity granted by Order 2009-7-10 to Discover is appropriate. This will assure the Star Carriers that the business plans, decisions, and activities of Discover – all of which Lufthansa governs and controls – will be covered by

4 Pursuant to the current plans, Discover will begin operating transatlantic service on or about June 5, 2021, between Frankfurt, Germany, and Las Vegas.

5 See Order 2011-11-16 (Docket DOT-OST-2008-0234).

6 See Letter to Daniel Magny, Senior Counsel, Air Canada, from Todd Homan. Director. Office of Aviation Analysis, U.S. Dep't of Transp. , dated Nov. 12, 2013 (Docket DOT-OST-2008-0234).

7 See Letter to Arthur J. Molins, General Counsel the Americas, Lufthansa, from Todd Homan, Director, Office of Aviation Analysis, U.S. Dep’t of Transp. , Oct. 23, 2015 (Docket DOT-OST-2008-0234) ("the inclusion of Eurowings in the joint venture does not represent a significant competitive change from the arrangements approved by Order 2009-7-10, issued in July 2009"). the same antitrust immunity held by Lufthansa, which is necessary to achieve the public benefits referenced in Order 2009-7-10.

Importantly, like Air Canada rouge and Eurowings, Discover will be fully integrated into A++. Permitting Discover to fully integrate into the A++ joint venture will unlock all of the public benefits of the integrated metal-neutral joint venture for passengers traveling to/from the United States on Discover. The public benefits of fully integrated joint ventures – recognized by the Department in past orders, including Order 2009-7-10 granting approval of A++ – include fare combinability, reductions in double marginalization, traffic stimulation leading to economies of density, increased fare and schedule and routing availability, and decreased connection times.8

Discover will be immediately and fully integrated into all aspects of A++ as early as practicable and upon receipt of the Department’s confirmation that the antitrust immunity granted to Lufthansa applies to Discover, including:

• Revenue Sharing : Discover’s flights on routes within the scope of A++ will be included in Lufthansa’s capacity contribution to A++, thereby ensuring that the joint venture’s strong existing metal-neutral policies and overall philosophy will apply fully to Discover.

• Network Planning : Discover’s flights on routes within the scope of A++ will be included in the joint venture’s network planning and decision making processes via Lufthansa.

• Governance : Discover will be integrated into the established A++ governance structure through Lufthansa, which will represent Discover on all A++ boards and committees.

• Pricing : Discover will participate fully in A++’s single-point pricing, including both eastbound and westbound pricing organizations, for all Discover-operated flights within the scope of the joint venture.

• Fare Products and Distribution : Discover’s fare products will be fully aligned with A++ pricing programs, sold via Lufthansa and A++ websites, and included in A++ sales offerings (corporate, travel agency, retail).

• Codesharing : the United and Air Canada designator codes will be displayed on Discover- operated flights on routes within the scope of A++.

• Customer Experience : Discover products will be aligned with A++ customer service policies and procedures in key areas, such as check-in and cross-carrier PNR access to provide customers with a seamless experience via the A++ network.

• Frequent Flyer Program (FFP) and Airport Lounge Benefits : Discover will be fully aligned with Lufthansa and A++ partners to provide customers with the same FFP and lounge benefits as when booking and traveling on Lufthansa and other A++ carriers. United Mileage Plus and Air Canada FFP members will enjoy the same status benefits

8 See, e.g., Order 2009-7-10 at IV.C. and ability to accrue and redeem miles on Discover flights as if they were flying on Lufthansa.

• Technological Integration : Discover will be seamlessly integrated into the Lufthansa Group’s commercial systems and processes, including PSS co-hosted by Amadeus, and the Star Alliance’s technology infrastructure.

Discover shall comply with all protocols required of A++ partner affiliates to participate in A++ including the execution of an affiliate agreement that commits an affiliate to comply with the terms and conditions of A++. Pending receipt of all regulatory approvals, the affiliate agreement is the only agreement necessary to execute to effectuate Discover’s inclusion into A++. In participating in A++, Discover shall have no geographical or other restrictions on where and how Discover can operate within the scope of A++ and the A++ Agreement. Thus, A++ will continue to function efficiently in delivering metal-neutral, seamless service benefits to customers after Discover’s integration into the A++ joint venture. Discover's inclusion in A++ is necessary to ensure that passengers who enjoy these A++ benefits today on routes flown by Eurowings will continue to enjoy these benefits when routes transfer to Discover.

For these reasons, the Star Carriers respectfully request the Department's written confirmation that the antitrust immunity granted to Lufthansa and the Star Carriers by Order 2009-7-10 is extended to Lufthansa's wholly owned subsidiary, Discover. We would appreciate receiving such confirmation as soon as possible because of the short timeframe until Discover's planned commencement of U.S. services in June 2021 and the related need to ensure that Discover is fully integrated into A++ as expediently as possible.

Thank you.

Respectfully submitted,

espectfully submitted,

Arthur J. Molins General Counsel, The Americas Deutsche Lufthansa AG

Cc: United Airlines, Steve Morrissey, Air Canada, Daniel Magny