BEFORE THE

U.S. DEPARTMENT OF TRANSPORTATION

Joint Application of

 

DELTA AIR LINES, INC. and
AEROVIAS DE MEXICO, S.A. DE C.V.

 

Under 49 U.S.C. §§ 41308 and 41309 for Approval of and Antitrust Immunity for Alliance Agreements

 

 

   Docket DOT-OST-2015-0070

CONSOLIDATED SURREPLY AND MOTION FOR LEAVE TO FILE
OF THE DELTA MASTER EXECUTIVE COUNCIL
OF THE AIR LINE PILOTS ASSOCIATON, INTERNATIONAL

Communications with respect to this document should be addressed to:

 

 

 

 

 

 

 

 

 

 

August 28, 2019

Ryan S. Schnitzler

Chairman

Delta Master Executive Council

Air Line Pilots Association, International

100 Hartsfield Center Parkway, Suite 800

Atlanta, Georgia 30354

Ryan.Schnitzler@alpa.org

Kathy.Hunt@alpa.org

 

BEFORE THE

U.S. DEPARTMENT OF TRANSPORTATION

Joint Application of

 

DELTA AIR LINES, INC. and
AEROVIAS DE MEXICO, S.A. DE C.V.

 

Under 49 U.S.C. §§ 41308 and 41309 for Approval of and Antitrust Immunity for Alliance Agreements

 

 

   Docket DOT-OST-2015-0070

CONSOLIDATED SURREPLY AND MOTION FOR LEAVE TO FILE

OF THE DELTA MASTER EXECUTIVE COUNCIL

OF THE AIR LINE PILOTS ASSOCIATON, INTERNATIONAL

On behalf of the more than 14,000 pilots who fly for Delta Air Lines, Inc., the Air Line Pilots Association, International’s Delta Master Executive Council (MEC) respectfully moves to file this Consolidated Surreply.[1] Delta and Aeromexico[2] (collectively, the Parties) have asked the Department to eliminate the condition on the Delta-Aeromexico joint venture (the JV) that provides for the current approval and grant of antitrust immunity to expire on December 21, 2020. Although the MEC had previously objected to requiring the JV to submit to de novo review after five years,[3]subsequent revelations about Delta’s use of its joint venture with Virgin Atlantic to effectively outsource flying to a foreign carrier partner—described in detail in the MEC Comment filed in the pending Blue Skies joint venture proceeding,[4] attached hereto and incorporated by reference—give the MEC serious cause for concern about the potential of the JV to be used in a similar manner.

Like the Delta-Virgin Atlantic joint venture, the JV incentivizes Delta and Aeromexico to maximize aggregate rather than individual profits, includes carriers with significantly disparate labor standards, and is thus potentially vulnerable to labor arbitrage. Delta’s substantial equity interest in Aeromexico, like its ownership interest in Virgin Atlantic, only compounds those incentives. Tellingly, Delta already offers London-Mexico City itineraries that connect through the US but are operated entirely by Delta’s partially-owned joint venture partners. See, e.g., LHR-JFK-MEX (UK-US via Virgin Atlantic; US-Mexico via Aeromexico). On such services offerings, Delta is able to share in the economic benefits of all component flight segments without producing any corresponding benefit to US aviation job or career opportunities.

To date, while facing the prospect of de novo review prior to December 21, 2021, the Parties have in fact allocated Delta a significant amount of growth under the JV. The Parties particularly describe using Delta capacity to “continue offering more transborder service than would otherwise be possible in light of current adverse market conditions, including the grounding of a substantial portion of Aeromexico’s narrow-body fleet due to the ongoing Boeing 737 Max issues.” Consolidated Reply at 2. However, in the absence of a meaningful commitment from Delta to equitable growth within the JV, questions remain about whether this trend will continue should the de novo review condition be lifted, particularly once Aeromexico’s 737 Max aircraft are able to resume operations.

The MEC’s concerns in this regard are compounded by Delta’s repeated violation of its own pilot contract requirements related to the Delta-Aeromexico alliance. Specifically, since the Parties initially sought approval for the JV, Delta has committed seven distinct Aeromexico-related violations of the Delta Pilot Working Agreement, accruing respectively in July 2016, December 2017, March 2018, June 2018, December 2018, January 2019, and February 2019. Four of these violations arose due to Delta’s breach of contractual limits placed on the number and/or share of Delta passenger seats that can be sold on Aeromexico flight segments. The other three violations arose due to Delta’s failure to maintain certain minimum required levels of Delta flying between the US and Mexico.

In light of the above, in the event that the pending Motion is granted, the MEC respectfully urges the Department to impose replacement conditions to ensure that the JV continues to yield expanded US carrier operations and corresponding growth in job and career opportunities for US aviation workers. Moreover, as explained in the Blue Skies MEC Comment, a periodic review mechanism with the narrow focus of that proposed in the Blue Skies proceeding is not sufficient to achieve those ends.  Rather, to adequately protect the Department’s public interest objectives of strengthening the competitive position of US air carriers relative to foreign air carriers, and encouraging fair wages and working conditions, 49 U.S.C. §§ 40101 (a)(5), (a)(15), and (e)(1), its periodic review of the JV should specifically examine (1) the impact of the alliance on the balance of flying and growth between Delta and Aeromexico in joint venture markets, as well as with respect to high-value long haul “beyond” routes to and from Central and South America, and (2) the impact of the alliance on US airline jobs and career opportunities related to transborder flying and flying to Central and South America. Such review should quantitatively document the JV’s impact on Delta’s absolute and relative share of flying and incremental growth in US–Mexico and US/Mexico–Central/South America markets, including through calculation of frequencies, block hours, and ASMs generated by Delta. In addition to scheduled periodic review, at such time as Aeromexico’s Boeing 737 Max fleet is scheduled to resume operations, the Department should impose a supplemental review to ensure that progress will continue to be made on these metrics notwithstanding Aeromexico’s expanded capacity. 

 

[1] Good cause exists for granting the MEC’s motion. On August 15, 2019, Delta and Aeromexico filed a Consolidated Reply that “clarif[ies]” the requests made in their initial Motion to Amend Order 2016-12-13 and raises additional issues—including discussion of the review proposed by the Department in the pending Delta-Air France-KLM-Virgin Atlantic (Blue Skies) joint venture proceeding—that require a response. See Consolidated Reply and Motion for Leave to File, DOT-OST-2015-0070-222 (Aug. 15, 2019) (Consolidated Reply); Motion to Amend Order 2016-12-13, DOT-OST-2015-0070-209 (July 3, 2019) (Motion). Consideration of the MEC’s Consolidated Surreply will assist the Department in making an informed decision on a more complete record and will cause no prejudice to any party in this proceeding.

[2] Common names are used for carriers.

[3] Objections and Comments of the Delta Master Executive Council of the Air Line Pilots Association, International, DOT-OST-2015-0070-79 (Nov. 18, 2016).

[4] Comment of the Delta Master Executive Council of the Air Line Pilots Association, International, DOT 2013-0068-0077 (Aug. 16, 2019) (MEC Comment).

 

 

 

 

 

 

 

 

 

 

August 28, 2019

Respectfully submitted,

 

 

                                                                                  
Ryan Schnitzler,
Chairman
Delta Master Executive Council
AIR LINE PILOTS ASSOCIATION, INTERNATIONAL

CERTIFICATE OF SERVICE

I hereby certify that a copy of the foregoing was served by electronic mail this 28th day of August, 2019, on the following:

Air Carrier                            Name                                      Email Address

Alaska                                     David Heffernan                     dheffernan@cozen.com

Allegiant                                 Aaron Goerlich                       agoerlich@ggh-airlaw.com

American                                Robert Wirick                         robert.wirick@aa.com

Amerijet                                  Joan Canny                             jcanny@amerijet.com

Atlas                                        Russ Pommer                          rpommer@atlasair.com

Federal Express                      Ralph Carter                           rscarter@fedex.com

Federal Express                      Courtney Felts                        cefelts@fedex.com

Frontier                                   Howard Diamond                   howard.diamond@flyfrontier.com

Hawaiian                                 Parker Erkmann                      perkmann@cooley.com

JetBlue                                    Robert Land                            robert.land@jetblue.com

                                                  Reese Davidson                      reese.davidson@jetblue.com

                                                  Evelyn Sahr                            esahr@eckertseamans.com

                                                  Drew Derco                            dderco@eckertseamans.com

Kalitta Air                               Mark Atwood                         matwood@cozen.com

National Airlines                    Malcolm Benge                      mlbenge@zsrlaw.com

                                                  John Richardson                     jrichardson@johnlrichardson.com

Polar Air Cargo                      Kevin Montgomery                kevin.montgomery@polaraircargo.com

Southwest                               Bob Kneisley                          bob.kneisley@wnco.com

                                                  Leslie Abbott                          leslie.abbott@wnco.com

Spirit Airlines                         David Kirstein                        dkirstein@yklaw.com

                                                  Joanne Young                          jyoung@yklaw.com

Sun Country                            Brandon Carmack                  brandon.carmack@suncountry.com

                                                  Victoria Palpant                      victoria.palpant@suncountry.com

United                                     Dan Weiss                               dan.weiss@united.com

                                                  Steve Morrissey                      steve.morrissey@united.com

                                                  Abby Bried                             abried@jenner.com

                                                  Amna Arshad                          aarshad@jenner.com

UPS                                         Dontai Smalls                         dsmalls@ups.com

 

Department of

   Transportation                     Todd Homan                           todd.homan@dot.gov

                                                  Peter Irvine                             peter.irvine@dot.gov

                                                  Brian Hedberg                        brian.hedberg@dot.gov

                                                  Robert Finamore                     robert.finamore@dot.gov

                                                  Brett Kruger                            brett.kruger@dot.gov

Department of

   Justice                                  Kathleen O’Neill                    kathleen.oneill@usdoj.gov

                                                  Caroline Laise                         caroline.laise@usdoj.gov

Federal Aviation

   Administration                     John Duncan                           john.s.duncan@faa.gov

 

AirlineInfo                                                                              info@airlineinfo.com

 

 

                                                                                    /s Ryan Schnitzler                                          

                                                                                    Ryan Schnitzler