BEFORE THE
U.S. DEPARTMENT OF TRANSPORTATION
Joint Application of
DELTA AIR LINES, INC. and
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
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
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