 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, DC

Issued by the Department of Transportation on March 19, 2004

                     NOTICE OF ACTION TAKEN -- DOCKETS OST-2003-15021 &
2002-12550

_____________________________________________________________

This serves as notice to the public of the action described below, taken
by the Department official indicated (no additional confirming order
will be issued in this matter).

Application of   American Airlines, Inc.     filed    2/17/04  for:

				 

XX  Contingent waiver from the 90-day dormancy condition:

BACKGROUND

By Notice of Action Taken dated July 30, 2002 (Docket OST-2002-12550)
the Department authorized American Airlines to provide third-country
code-share service to Ukraine with Swiss International Air Lines, Ltd.
d/b/a Swiss, via Zurich and awarded it 2.5 weekly frequencies to operate
in the U.S.-Ukraine market.  American and Swiss implemented the service;
however, on August 1, 2003, Swiss filed a notice in Docket
OST-2002-12001 that it would cease serving Ukraine effective October 26,
2003.  

On October 30, 2003, United filed an application for the available
U.S.-Ukraine third-country code-share opportunity and requested 3.5
frequencies (Docket OST-2003-16445).  

On October 31, 2003, American filed to transfer its U.S.-Ukraine
third-country designation and 2.5 weekly frequencies from Swiss to
British Airways.  Even though it had not been using these frequencies,
American is proceeding on the basis that it still holds them through
March 31 by virtue of a blanket dormancy waiver granted to U.S. carriers
in Order 2003-4-18.  On the contingency that American’s request to
transfer these frequencies to British Airways is not granted in time for
service to begin by April 1, American requests a waiver of the 90-day
dormancy condition until such time as the Department grants American’s
transfer application and American has implemented U.S.-Ukraine service
with British Airways.

United filed an answer urging the Department to dismiss American’s
application and approve United’s application stating that the
frequency allocation to which American refers was limited to code-share
services in conjunction with Swiss, and those services ceased on October
26, 2003.  In this regard, United states that American is no longer in a
position to restart those services.

Applicant rep.:    Carl B. Nelson, Jr., 202-496-5647    DOT analyst: 
Sylvia Moore, 202-366-6519   

DISPOSITION

XX  Dismissed (see Remarks)

The above action was effective when taken:    March 19, 2004

XX  Action taken by:	Paul L. Gretch, Director		

			Office of International Aviation

2

Remarks:  When American applied for the code-share frequencies before us
here, it expressly agreed that it “will immediately return any unused
frequencies for reallocation upon application by another U.S. carrier
requiring such frequencies to operate additional Ukraine service.”  We
have now received such an application from United, in Docket
OST-2003-16445.  Even had American not committed to returning these
frequencies in the circumstances presented, we would still reach the
same result under established policies that when we award authority to a
specific U.S. carrier-foreign carrier code-share partnership to serve a
designation-restricted or frequency-restricted market, the U.S. carrier
cannot freely change code-share partners without first seeking
Department approval and, in the event of competing U.S. carrier
interest, recompeting for the authority in a new selection proceeding. 
On this basis, and notwithstanding the dormancy waiver cited by American
in Order 2003-4-18, we conclude that American has now lost its claim to
the 2.5 Ukraine frequencies, and those frequencies have reverted to the
Department for reallocation.  Since a dormancy waiver can only operate
to maintain frequencies that a carrier in fact still holds, and since we
have determined that those frequencies have reverted to the Department
for reallocation based on American’s prior statements, and its
partner’s notification of cessation of service, and the effect of our
established policies, American’s reliance on Order 2003-4-18 is
misplaced.  Consequently, American’s contingency dormancy motion is
moot and we are dismissing it.  By separate concurrent action, we are
issuing a Notice in connection with the launching of a competitive
selection proceeding for the available Ukraine service.

________________________________________________________________________
______________

Under authority assigned by the Department in its regulations, 14 CFR
Part 385, we found that our action was consistent with Department policy
and with the public interest.  We may amend, modify, or revoke the
authority granted in this Notice at any time without hearing at our
discretion.

Persons entitled to petition the Department for review of the action set
forth in this Notice under the Department’s regulations, 14 CFR
§385.30, may file their petitions within seven (7) days after the date
of issuance of this Notice.  This action was effective when taken, and
the filing of a petition for review will not alter such effectiveness.

An electronic version of this document is available on the World Wide
Web at:

http://dms.dot.gov//reports/reports_aviation.asp

 Reply of American of July 9, 2002, in Docket OST-2002-12550, at 2. 
(Footnote omitted).

 See Order 2000-10-14.  Cf. Order 2002-3-24.

 We have consolidated American’s application in Docket OST-2002-12550
for transfer of its U.S.-Ukraine third-country code-share designation
and frequencies and United’s application in Docket OST-2003-16445 in
this new proceeding, Docket OST-2004-17373.

