Delta American Answer Revsd

BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

Joint Application of ) ) AMERICAN AIRLINES, INC. ) Docket OST-2001-10387 And ) BRITISH AIRWAYS PLC ) ) under 49 USC 41308 and 41309 for approval ) of and antitrust immunity for agreement ) )

Joint Application of ) ) AMERICAN AIRLINES, INC. ) Docket OST-2001-10388 And ) BRITISH AIRWAYS PLC ) ) under CFR Part 212 for statements of ) authorization (blanket codesharing) and ) under 49 USC 40109 for related exemption ) authority ) )

JOINT MOTION FOR AN ORAL EVIDENTIARY HEARING BEFORE AN ADMINISTRATIVE LAW JUDGE

November 19, 2001 Communications with respect to this document should be addressed to:

Andrea Fischer Newman D. Scott Yohe Senior Vice President, Government Senior Vice President - Affairs Government Affairs David Mishkin John J. Varley Vice President, International & Assistant General Counsel Regulatory Affairs DELTA AIR LINES, INC Megan Rae Rosia Managing Director, Government Affairs Robert E. Cohn & Associate General Counsel Alexander Van der Bellen NORTHWEST AIRLINES, INC. SHAW PITTMAN LLP 901 Fifteenth Street, N.W., Suite 310 2300 N Street, N.W. Washington, D.C. 20005 Washington, D.C. 20037 (202) 842-3193 (202) 663-8060

Counsel for DELTA AIR LINES, INC. Rebecca G. Cox Vice President, Government Affairs Hershel I. Kamen Staff Vice President, International & Regulatory Affairs CONTINENTAL AIRLINES, INC.

R. Bruce Keiner, Jr. Lorraine B. Halloway Thomas Newton Bolling CROWELL & MORING LLP 1001 Pennsylvania Avenue, N.W. Washington, D.C. 20004-2595 (202) 624-2500

Counsel for CONTINENTAL AIRLINES, INC. BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. November 19, 2001

Joint Application of ) ) AMERICAN AIRLINES, INC. ) Docket OST-2001-10387 And ) BRITISH AIRWAYS PLC ) ) under 49 USC 41308 and 41309 for approval ) of and antitrust immunity for agreement ) )

JOINT MOTION FOR AN ORAL EVIDENTIARY HEARING BEFORE AN ADMINISTRATIVE LAW JUDGE

Delta Air Lines, Inc., Northwest Airlines, Inc., and Continental Airlines, Inc.

(collectively, the “Petitioners”) hereby move the Department to establish an oral evidentiary hearing before an Administrative Law Judge (“ALJ”) in accordance with section 303.45 of the Department’s Rules. This case is extraordinary in terms of the scope, complexity and controversy of the factual issues presented. Moreover, the Joint Motion for Oral Evidentiary Hearing Page 2 international aviation policy implications and public interest consequences of the

American/British Airways alliance are profound.

The additional facts, arguments and evidence put forward by the Joint Applicants and interested parties in their answers and replies now make it abundantly clear that an oral evidentiary hearing before an Administrative Law Judge is essential to develop, evaluate and resolve the substantial issues of disputed material facts raised in this proceeding. The Department has received thousands of pages of conflicting documentary evidence and statements. Without the opportunity for an oral hearing and cross examination, the Department has no reliable means to assess the credibility of the witnesses, documents, factual assertions, evidence and arguments put forward by the

Joint Applicants, their supporters and opponents.

The stakes are too high for the Department to proceed further in the decision- making process without the benefit of a full oral evidentiary hearing. The critical facts surrounding this alliance need to be tested in the crucible of cross examination. As discussed below, there are a host of critical factual, policy and evidentiary matters in dispute, and cross examination has long been regarded to have “unique potential as an engine of truth.”1 The evidence developed through oral testimony must then be weighed by an objective and independent ALJ. There is no other way to ensure that the important competition and public interest concerns implicated by this alliance are fully ventilated.

1 International Harvester Co. v. Ruckelshaus, 478 F.2d 615, 631 (D.C. Cir. 1973). Joint Motion for Oral Evidentiary Hearing Page 3

The hearing should be open to participation by all interested parties, including airlines, consumers and civic parties. The hearing should be assigned to an ALJ directed to receive evidence on these issues, submitted under oath and subject to cross- examination. The ALJ should then issue a Recommended Decision to the Assistant

Secretary based on the findings of fact from the hearing record, as provided by section

303.45(d). An oral evidentiary hearing is necessary to test the veracity of the conflicting factual assertions made by the participating parties in this proceeding, and to ensure fair, objective and impartial consideration of the important public interest issues raised by the

Joint Application.

A. Background

The Joint Applicants have re-submitted the same alliance they proposed in 1997.

That alliance proposal was dismissed by the Department because the “fundamental predicate” for consideration, competitive access to London Heathrow, was missing. The

Joint Applicants now premise approval of the alliance on allegedly changed circumstances relating to London Heathrow access and competition. Virtually all of the material factual issues raised by the Joint Application are in dispute, just as they were at the time the American/British Airways alliance was last considered.

Then, the Department correctly concluded that “this is an exceptional case posing a unique set of issues” and determined that an “oral hearing is warranted in this case. The proposed American Airlines/British Airways alliance entails an enormous degree of regulatory complexity. In weighing the distinct competitive and policy issues involved, Joint Motion for Oral Evidentiary Hearing Page 4 we must also take into account the fundamental and unprecedented issue of U.S. carriers’ expanded access into London’s Heathrow Airport.” Order 97-9-4 (emphasis added).

The factual and regulatory issues raised by the present application are even more complex and controverted than when the alliance was last considered. Just as the

Department previously found that a hearing would provide “valuable benefits” by having the evidence “thoroughly examined in a hearing context,” an oral evidentiary hearing is essential to develop a full and complete record for the Department’s decision. To do otherwise would shortcut the Department’s statutory public interest responsibilities, and would be inconsistent, arbitrary and capricious with respect to the Department’s prior determination that a hearing is necessary to examine the unique and unprecedented competition and London Heathrow access problems raised by the alliance.2

B. Critical Factual Issues Are Disputed and the Existing Documentary Evidence is Highly Controverted

The Answers and Replies to the Joint Application establish the compelling need for a full oral evidentiary hearing. There are a host of important factual issues on which the Joint Applicants, interested parties, and the relevant competition authorities have reached markedly different conclusions. Some of the critical and disputed factual issues

2 While the Department was correct in its prior decision to require a hearing, the legislative-type hearing process proposed by the Department in the last case is inadequate. For the reasons explained herein, the opportunity for cross-examination is essential to the hearing process; furthermore, in rendering its decision, the Department should have the benefit of the neutral and objective finding of fact made by an ALJ as provided in section 303.45 of the Department’s rules. Joint Motion for Oral Evidentiary Hearing Page 5 that can only be fully developed through an oral hearing and cross examination include, inter alia:

 Whether U.S.-London Heathrow is a relevant market.  The significance and degree of increased concentration that the alliance would create on U.S.-London Heathrow routes.  The extent to which the combination will allow American and British Airways to eliminate competition, rationalize services, and raise prices on U.S.-London Heathrow routes.  Whether non-incumbent U.S. airlines can gain access to commercially viable London Heathrow slots, from what sources, and in what timeframes.  Whether non-incumbent U.S. airlines can gain access to commercially viable London Heathrow gate, aircraft parking, and terminal facilities, from what sources and in what timeframes.  The significance of the acknowledged fare premium that British Airways enjoys at Heathrow over Gatwick  Whether the claimed network expansion benefits of the alliance are consistent with British Airways’ announced plans to concentrate on point-to-point premium traffic and reduce connecting flows over Heathrow.  Whether the impact on competition of the alliance is measured by the number of viable competitive U.S.-London Heathrow frequencies operated, overall London Heathrow activity, U.S.-London passengers carried, or a combination thereof.  The markets in which competition would be lost.  The number of consumers at risk due to the loss of competition.  Whether connecting services over continental Europe hubs to provide effective U.S.-London competition against the proposed American-British Airways alliance.  Whether any remedies can be fashioned to counteract or deter the anticompetitive effects of the alliance.  How many new U.S. carrier flights between the United States and London Heathrow, and on what routes, would be necessary to begin to offset the anticompetitive efforts of the American/British Airways alliance. Joint Motion for Oral Evidentiary Hearing Page 6

 The availability of less anticompetitive alternatives to the proposed alliance.

The facts surrounding all of these issues are vigorously disputed, and can only be adequately developed and resolved through the probative process that a full oral hearing would provide. It is not the intent of this motion to catalogue the full extent of disagreement on each and every one of the factual issues in controversy. However, some of the most critical examples include the following:

1. Whether U.S.-London Heathrow is a relevant market. The Joint Applicants claim that Heathrow and Gatwick are merely two airports serving the same city and that

“it is without merit to suggest . . . that Gatwick is not an effective competitive substitute for Heathrow.” Joint Reply at 44. This is squarely at odds with the conclusions reached by each of the Petitioners and every competition authority that has reviewed the alliance, including the DOJ, the UK Office of Fair Trading, and the EU Commission.

As stated by Northwest: “Heathrow is particularly preferred by business passengers and others that place a premium on travel time and convenience.” NW

Answer at 8. Indeed, British Airways’ own public statements confirm that it regards

London Heathrow as a separate market, where it enjoys a 15 percent higher unit revenue per passenger than at Gatwick. Exhibit NW-9. The Joint Applicants, however, claim in their reply that the fact that “average fares between the U.S. and London are almost one- third higher at London Heathrow than London Gatwick” (CO Answer at 24), is

“meaningless.” Joint Reply at 44. Joint Motion for Oral Evidentiary Hearing Page 7

The DOJ said: “Service to Heathrow is a relevant market.” The UK Office of Fair

Trading said: “Heathrow is much more important [than Gatwick] both in terms of frequencies and passengers. The two airports produce markedly different yields, with

Heathrow leading.” OFT Competition Analysis, December 6, 1996, § 107. The EC determined: “London’s special geographic situation is reinforced by the strong attachment shown by passengers living in the United Kingdom, particularly business people, for a single airport, namely London Heathrow.” EC Draft Proposal, July 8, 1998,

§ 272.

In order to resolve the disputed issue of whether or not Heathrow and Gatwick are competitive substitutes, it is critical for the Department to receive in-person testimony from the marketing executives of the proponent and opposing carriers with expert knowledge on this topic, and to weigh the credibility and veracity of that testimony with the benefit of rigorous cross examination.

2. Whether U.S. non-incumbents can obtain sufficient commercially viable

London Heathrow slots and facilities. Lack of access to London Heathrow by U.S. non- incumbents remains a serious threshold issue that must be addressed as a prerequisite to further consideration of the alliance. An open skies/closed airports deal with the U.K. does not provide an adequate basis to proceed with consideration of the alliance – a conclusion the Department had already reached. See, Order 99-7-22 (dismissing prior

AA/BA application). London Heathrow access guarantees for U.S. carrier non- incumbents are an essential prerequisite. Joint Motion for Oral Evidentiary Hearing Page 8

Every competition authority reviewing the alliance has recognized London

Heathrow entry barriers to be a major competition problem, requiring strong remedial measures. The Joint Applicants assert that Heathrow access is available, despite their own internal documents showing the contrary to be true. The only way for the

Department to resolve this critical issue adequately is to hear oral testimony subject to cross examination from the Joint Applicants, interested carriers and the London

Heathrow airport authorities on the likely prospects for new entry.

A full oral evidentiary hearing is essential to test the Joint Applicants’ claims that there are ample London Heathrow service opportunities for non-incumbents. A hearing will also assist the Department in determining the number of commercially viable

London Heathrow slots and facilities that would need to be divested from the Joint

Applicants to provide competitive discipline on key O&D routes and from major new entrant hubs sufficient to protect the public interest.

(a) Number of London Heathrow Slots

The Petitioners have shown that, at minimum, 420 to 504 commercially viable

London Heathrow slots and related airport facilities would need to be divested in order for London Heathrow non-incumbents to be in a position to compete with the alliance.

NW Answer at 34, Delta Answer at 24. This is consistent with the DOJ’s prior antitrust analysis and recommendation that a substantial number of commercially viable London

Heathrow slots would need to be divested as a precondition to approval. The Joint

Applicants claim exactly the opposite: “even under the most aggressive antitrust Joint Motion for Oral Evidentiary Hearing Page 9 approach that the Department could plausibly adopt, very few slots would be required to remedy any competitive concerns.” Joint Reply at 75.

This fundamental issue must be probed on the basis of an oral hearing where witness credibility is fully tested by sworn testimony under oath subject to cross examination.

(b) London Heathrow Slot Pool Availability.

There is serious dispute on the factual issue of slot availability through the London

Heathrow growth pool. The Joint Applicants claim that “moderate numbers of London

Heathrow slots will become available without any regulatory intervention” and dispute

Petitioners’ claims that no slots will be available. Id. at 75.

The Department needs to explore the full context of the issue through an oral hearing. The Joint Applicants’ attempt to explain away their own internal documents raises credibility issues. The Petitioners’ factual assertions are supported by the documentary evidence and statements from neutral parties: “American and British

Airways contend that sufficient ‘new’ slots at Heathrow will be created to enable new entrant U.S. carriers to commence service. All evidence is to the contrary. ACL made clear in its submission to the Department that ‘the opportunities to accommodate new entrant U.S. carriers from the additional pool of slots in the next two seasons will be extremely limited.’” NW Answer at 25 (Citing ACL).

The Joint Applicants rely heavily on the fallacy that non-incumbent carriers can access substantial numbers of London Heathrow slots through the holding of their alliance partners or through other slot trades. The Petitioners have submitted solid evidence in their answers explaining why this is not the case, given their alliance partners’ own critical network needs, and the specific need to compete with BA at

Heathrow on their London-homeland routes.3 These statements are fully consistent with the DOJ’s and European competition authorities’ analysis. However, the Joint

Applicants dismiss this evidence as “self-serving statements of their alliance partners.”

Id. at 83; c.f., Answer of Delta at 27, Answer of Northwest at 25, 29. The Joint

Applicants urge that “[a]mong other evidence balanced against such declarations are multiple AA/BA internal planning documents that [consider] the economic impact of

[new] entry.” Id. at 83.

Petitioners submit that these conflicts of material fact are precisely the kinds of disputes that can only be resolved in an oral evidentiary hearing. The “balancing” of conflicting internal documents and written statements is a poor way to assess the critical issue of the likelihood of new competitive entry at London Heathrow. Indeed, in the absence of a hearing the Department has no way to know if any AA/BA planning documents – which are themselves internally inconsistent – are nothing more than “self serving” and created for the sole purpose of facilitating favorable regulatory review.

3 Furthermore, ACL has told the Department that “there is a general unwillingness of the incumbent London Heathrow carriers to divest slots and the market is illiquid.” ACL Submission at 5. Joint Motion for Oral Evidentiary Hearing Page 11

(d) Whether there are sufficient Heathrow facilities to accommodate new entry.

The other side of the Heathrow access coin is lack of essential facilities to sustain additional transatlantic operations. As explained by BAA in its Issues and Principles submission:

It is important to understand, however, that a slot is not just about an allocation of a time on a runway. In order to operate that runway slot (either arrivals or departures) an airline must also be allocated capacity within a given terminal building (Heathrow has four terminals and Gatwick has two terminals). Furthermore, at Heathrow, the coordinator must ensure that the combination of airline schedules does not exceed the declared aircraft parking capacity. An airline will not be granted a slot unless it can operate within the terminal and aircraft parking capacity constraints.

BAA states that immediate large-scale entry by U.S. carriers “would probably prove to be unachievable in any event.”(BAA Issues and Principles at paragraph 17).

American and British Airways have failed to explain how Heathrow non-incumbents will be able to secure the necessary facilities resources during the peak transatlantic window necessary to operate viable new competitive services.

For example, the Joint Applicants claim that:

Long-haul services to the United States, using wide-body aircraft, tend to generate more revenues and profits than shorter-haul services to the interior U.S. and to Continental Europe. Accordingly, there is a strong economic incentive for carriers to obtain slots for, or reallocate existing slots to new transatlantic services. Joint Reply at 73.

The Joint Applicants go on to say that the Petitioners' concern that “terminal and other Heathrow facilities constitute distinct and additional entry barriers overstate the point.” Id. at 87. However, the notion that intra-European slots could readily be Joint Motion for Oral Evidentiary Hearing Page 12 converted from short-haul to long-haul services is squarely contradicted by BAA. BAA states that these slots are not viable for transatlantic service due to the substantially greater parking and other facility demands created by large long-haul aircraft:

Increasingly, in addition to the ongoing impact of the runway constraint, the aircraft parking stand constraint is affecting airlines’ ability to add new services. The effect of liberalization at London Heathrow will be an increase in the proportion of long-haul services and therefore an increase in the proportion of services with larger aircraft. Unless there are enough large stands available in the peak periods to cope with this change in aircraft size, new services will either not be able to operate or will have to operate with smaller, less appropriate, aircraft. (BAA Issues and Principles at paragraph 15).

An evidentiary hearing will enable the Department to fully develop the evidence on this key issue and make a more accurate assessment of the actual near-term prospects for London Heathrow to absorb additional long-haul U.S.-London flights, given the critical constraints on that airport’s facilities resources.

3. Whether the Joint Applicants will operate London Heathrow as a network connecting hub. The Joint Applicants claim that “consumers will greatly benefit from new online connections beyond Heathrow.” Joint Reply at 55. However, as detailed in

Northwest’s answer:

“British Airways has announced a business strategy, which it has actively pursued over recent years, to limit the extent to which London Heathrow serves as a transfer hub, preferring instead to use its Heathrow slot assets for local point-to-point traffic. This means that the ability of American to use Heathrow as a connecting complex to flow traffic to Europe and other UK points will be limited and is likely to decrease over time as British Airways pursues its de-hubbing strategy.” NW Answer at 39. The Joint Applicants’ assertion that “British Airways has no intention of ‘de- hubbing Heathrow’” (Joint Reply at 60), conflict with both the strategic planning Joint Motion for Oral Evidentiary Hearing Page 13 documents submitted as evidence in this case, as well as BA’s public pronouncements that it is seeking to cut back on “transfer traffic that has been clogging up Heathrow.”

NW Answer at 42 quoting BA’s Christopher Sims.

4. Whether frequency of service is important. The Joint Applicants assert that the number of frequencies operated in any given market has no significant competitive impact once a carrier reaches 2-3 daily flights. Many opponents of the alliance challenge this contention. For example, the alliance would be able to operate a virtual shuttle service on the critical New York-London Heathrow route, where comparable high- frequency service by competitors is effectively blocked by access constraints. As stated by Continental, “the primary advantage held by the proposed American/British Airways alliance would be the schedule frequency it would be able to offer in major markets . . .”

CO Answer at 49. The Joint Applicants maintain that more frequent flights on the New

York-London Heathrow route would not give them an unfair advantage. Joint Reply at

37. The Department needs to resolve the critical factual question of whether frequency is important – as maintained by most commenting carriers (and DOJ) – or irrelevant – as asserted by the Joint Applicants.

5. Impact of the alliance on competition for corporate business. As

Continental has stated:

“Since corporate accounts require significant access to London Heathrow and global networks, the combination of American and British Airways, which are two of the world’s largest airlines and dominate London Heathrow, would give those airlines the ability to leverage their dominance of London Heathrow to decrease the corporate business of other airlines, Joint Motion for Oral Evidentiary Hearing Page 14

which can neither match their scope nor offer significant access to London Heathrow.” CO answer at 19-20.

American maintains that “far from harming corporate customers, the AA/BA alliance will benefit them” and that “access to Heathrow is not the key competitive factor” in competing for U.S. corporate accounts. Joint Reply at 26, 27. This issue needs to be developed and tested on an oral evidentiary record where knowledgeable witnesses will testify under oath.

6. Inability of other alliances to discipline AA/BA. The Joint Applicants cite the “growth of international alliances” as the number one new factor in approving their alliance. Joint Application at 5. The Department needs to probe in an oral hearing the

Joint Applicants’ claim that other alliances would provide effective competitive discipline, given that geography and excessive backhaul have, thus far, precluded the existing transatlantic alliances from effectively competing for nonstop U.S.-London passengers via Continental European hubs. See, e.g., Answer of Delta at 29, Answer of

Northwest at 34.

7. Whether open skies without London Heathrow access would produce any consumer benefits. The Department needs to test the disputed claims regarding how, if at all, the proposed alliance would produce benefits comparable to other open skies alliances when the most important U.K. gateway airport remains effectively closed to new entry and competition by access constraints. The Joint Applicants claim that “under open skies, the density of the U.S.-U.K. demand is certain to attract entry by new competitors, and expansion by the large number or existing competitors . . . All of these Joint Motion for Oral Evidentiary Hearing Page 15 carriers will compete with the AA/BA alliance in an open skies environment.” Joint

Reply at 5.

The Petitioners dispute this assertion because open skies without Heathrow access-

“. . . would be a cruel hoax. The skies over the U.K. are already sufficiently open that U.S. airlines are able today to provide service freely between the U.S. and any point in the U.K. except London’s Heathrow and Gatwick airports. The only benefit to U.S.-U.K. passengers from an “open skies” agreement would be opening London Heathrow and Gatwick to extensive competition. Instead of achieving that goal, however, the open skies/closed airports agreement . . .would simply facilitate the American/British Airways plan to eliminate effective U.S.-London competition.” CO answer at 38.

8. AA/BA plans with other carriers. An evidentiary hearing is required to develop the record with respect to how the proposed alliance fits into the Joint

Applicants' future alliance plans for operating in a consolidated European marketplace.

In particular, the hearing needs to explore what additional European partners the Joint

Applicants may have plans to draw into a common immunized alliance.

9. Effect of the United/bmi alliance. The Joint Applicants argue that the proposed United/bmi alliance at London Heathrow would discipline American/British

Airways and is “a procompetitive development.” Joint Reply at 29. The Petitioners have shown that approval of the two proposed alliances would make the competitive situation worse, not better:

One significant problem that U.S. carriers would face in attempting to obtain commercially viable slots for U.S.-Heathrow operations from incumbent carriers is the fact that the majority of commercially viable slots. . . are held by the four current U.S.-Heathrow operators: American, British Joint Motion for Oral Evidentiary Hearing Page 16

Airways, United/bmi and Virgin Atlantic. American and British Airways alone hold 41.5% of the commercially viable slots. Collectively, American, British Airways and United/bmi hold 58.2 % of the commercially viable slots. Virgin’s share brings the total to 60.7% of the slots. Viewed from an alliance perspective, the oneworld and Star alliance together hold 77.9% of the commercially viable slots at Heathrow. NW Answer at 27 (internal citations omitted).

This arrangement would relegate other carriers and their respective alliances to distant third-tier London Heathrow status, which hurts carrier competitiveness across their entire networks in marketing to key business customers and corporate accounts.

This is an important, complex and highly controverted issue that needs to be explored in an oral evidentiary hearing.

C. The Joint Applicants Have Submitted Untested Expert Statements and Studies.

The Joint Applicants have recently introduced no fewer than seven statements and economic studies, purported to be “answers” and “replies.” These documents should have been part of the Joint Applicants’ direct presentation. If the statements are not stricken entirely, as urged by Northwest in its Motions to Strike, interested parties and the

Department need the opportunity to analyze and challenge this new evidence through cross examination and expert testimony of their own.

American and British Airways’ experts – four of which are not even identified -- need to be confronted under oath and required to explain how their current submissions relate to their own inconsistent prior conclusions. For example, Professor Brueckner’s statement on behalf of the alliance claims it would produce tens of millions of dollars in Joint Motion for Oral Evidentiary Hearing Page 17 consumer benefits to interline passengers. However, only a year ago Professor Brueckner concluded that these benefits were more than outweighed by other considerations and that the Department’s rejection of the AA/BA alliance “was probably a prudent regulatory decision” “[g]iven the large volume of AA/BA gateway to gateway traffic” and the

Department’s inability to reach an agreement that would assure viable competitive access for U.S.-London Heathrow non-incumbents. Brueckner and Whalen, The Price Effects of

International Airline Alliances The Journal of Law and Economics, Volume XLIII (2) P.

541 (October, 2000).

Cross examination has the unique ability to ferret out these sorts of conspicuous omissions and inconsistencies.

The Joint Applicants rely on Professor Kahn’s statement for the proposition that because the combination of American and British Airways would raise their combined overall London Heathrow slot holdings from 37 to 39 percent, the matter is not “worthy of antitrust concern, let alone condemnation.” Joint Reply at 18, citing Kahn at 6.

However, the Joint Applicants go on to say that “the long distance and many time zones separating New York and London limit the time windows during which it is practical to operate flights.” Joint Reply at 38. In light of the fact that the Joint Applicants hold the lion’s share of restricted London Heathrow slots and facilities “during the windows which it is practical to operate flights,” and that they operate almost 90 percent of U.S.-

London Heathrow service by U.S. and U.K. carriers, the credibility of Professor Kahn’s statement that this alliance is not “worthy of antitrust concern” is suspect. Professor Joint Motion for Oral Evidentiary Hearing Page 18

Kahn’s own statement reveals his skepticism toward the alliance, but now has reversed course and that his “own disposition toward this alliance . . . has turned positive . . .”

Professor Kahn’s statement, if it is to be given any weight at all, must be subject to cross- examination in which the inconsistency of his prior and current positions can be fully explored.

D. Conclusion.

This case is a watershed in terms of international aviation policy. There are a host of extraordinary complex, troubling and controverted factual issues that are inadequately addressed on the basis of the existing written record. Given the stakes, the Department has a compelling public interest obligation to conduct a full oral evidentiary hearing prior to rendering a decision in this case. The Department correctly determined that a hearing was warranted the last time it investigated the American/British Airways alliance, and the same considerations apply to the instant application.

Joint Motion for Oral Evidentiary Hearing Page 19

Respectfully submitted,

Andrea Fischer Newman D. Scott Yohe Senior Vice President, Government Senior Vice President - Affairs Government Affairs David Mishkin John J. Varley Vice President, International & Assistant General Counsel Regulatory Affairs DELTA AIR LINES, INC Megan Rae Rosia Managing Director, Government Robert E. Cohn Affairs & Associate General Alexander Van der Bellen Counsel SHAW PITTMAN LLP NORTHWEST AIRLINES, INC. 2300 N Street, N.W. 901 Fifteenth Street, N.W., Suite 310 Washington, D.C. 20037 Washington, D.C. 20005 (202) 663-8060 (202) 842-3193 Counsel for DELTA AIR LINES, INC. ______Rebecca G. Cox Vice President, Government Affairs Hershel I. Kamen Staff Vice President, International & Regulatory Affairs CONTINENTAL AIRLINES, INC.

R. Bruce Keiner, Jr. Lorraine B. Halloway Thomas Newton Bolling CROWELL & MORING LLP 1001 Pennsylvania Avenue, N.W. Washington, D.C. 20004-2595 (202) 624-2500

Counsel for CONTINENTAL AIRLINES, INC. CERTIFICATE OF SERVICE

I certify that a copy of the foregoing Joint Motion has been served this 19th day of November 2001, upon each of the following persons in accordance with the Department's rules.

Carl B. Nelson, Jr. Daryl A. Libow Associate General Counsel Sullivan & Cromwell American Airlines, Inc. 1701 Pennsylvania Ave., N.W. 1101 17th Street, N.W., Suite 600 Suite 800 Washington, D.C. 20036 Washington, D.C. 20006 [email protected] [email protected]

Don H. Hainbach Jeffrey A. Manley Boros & Garofalo, P.C. Wilmer, Cutler & Pickering 1201 Connecticut Ave., N.W. 2445 M Street, N.W. Washington, D.C. 20036 Washington, D.C. 20037 [email protected] [email protected]

Megan Rae Rosia R. Bruce Keiner, Jr. Managing Director, Government Affairs Thomas Newton Bolling and Associate General Counsel Crowell & Moring LLP Northwest Airlines, Inc. 1001 Pennsylvania Avenue, N.W. 901 15th Street, N.W., Suite 310 Washington, D.C. 20004-2595 Washington, D.C. 20005 [email protected] [email protected] [email protected]

Thomas V. Lydon Donald T. Bliss Director of Government Affairs O’Melveny & Myers LLP Evergreen International Airlines, Inc. 555 13th Street, N.W. 1629 K Street, N.W., Suite 301 Suite 500 West Washington, D.C. 20006-1602 Washington, D.C. 20004-1109 [email protected] [email protected]

Moffett Roller John L. Richardson Roller & Bauer, PLLC Crispin & Brenner, P.L.L.C. 1020 19th Street, N.W., Suite 400 1156 15th Street, N.W., Suite 1105 Washington, D.C. 20036 Washington, D.C. 20005 [email protected] [email protected]

David L. Vaughan Jeffrey N. Shane Kelley Drye & Warren LLP Hogan & Hartson L.L.P. 1200 19th Street, N.W., Suite 500 555 13th Street, N.W. Washington, D.C. 20036 Washington, D.C. 20004 [email protected] [email protected]

Nancy S. Sparks Edgar N. James Managing Director Marie Chopra Federal Express Corporation James & Hoffman, P.C. 3620 Hacks Cross Road 1101 17th Street, N.W., Suite 510 Building B, 3rd Floor Washington, D.C. 20036 Memphis, Tennessee 38125 [email protected] [email protected] [email protected]

Marshall S. Sinick Hugh M. Ford Robert D. Papkin General Manager, Legal Squire, Sanders & Dempsey L.L.P. Virgin Atlantic Airways Limited 1201 Pennsylvania Avenue, N.W. The Office, Manor Royal P.O. Box 407 Crawley RH10 RNU Washington, D.C. 20044-0407 United Kingdom [email protected] [email protected] [email protected]

Stephen H. Lachter James R. Weiss 1150 Connecticut Avenue, N.W. Preston Gates & Ellis LLP Suite 900 1735 New York Ave., NW, Suite 500 Washington, D.C. 20036 Washington, DC 20006 [email protected] [email protected]

Russell E. Pommer Joanne Young Associate General Counsel and Baker & Hostetler, LLP Director of Regulatory Affairs 1050 Connecticut Avenue, N.W. Atlas Air, Inc. Suite 1100 901 15th Street, N.W., Suite 400 Washington, D.C. 20036 Washington, D.C. 20005 [email protected] [email protected]

Michael F. Goldman James W. Tello Silverberg, Goldman & Bikoff, LLP P.O. Box 66824 1101 30th Street, N.W., Suite 120 Washington Square Station Washington, D.C. 20007 Washington, D.C. 20035 [email protected] [email protected]

Director, Flight Standards Service U.S. TRANSCOM/TCJ5-AA Federal Aviation Administration, AFS-1 Attn: Air Mobility Analysis 800 Independence Avenue, S.W., Rm. 821 508 Scott Drive Washington, D.C. 20591 Scott AFB, IL 62225-5357

Office of Aviation Negotiations First Secretary (Transport) U.S. Department of State British Embassy 2201 C Street, N.W., Room 5531 3100 Massachusetts Ave., N.W. Washington, D.C. 20520 Washington, D.C. 20008

Roger Fones Chief, Transportation, Energy & Agricultural Section Antitrust Division U.S. Department of Justice 325 Seventh Street, N.W., Suite 500 Washington, D.C. 20530 [email protected]

______Donna Herrmann