PHOTO: American caught a break by having the DOT accept its request for an extension on starting a new LAX-Beijing route. (photo via Flickr/Oliver Holzbauer)
For the sake of competition, the Department of Transportation has given American Airlines six more months to start a new route between Los Angeles and Beijing, China, it said in a March 10 filing.
At the same time, the DOT rejected Delta Air Lines’ bid for the same route and same reason.
The DOT wants a third airline to give passengers more choice and more competition since Delta already flies to China from Seattle while United has a flight to Beijing out of San Francisco.
In support of its request, American Airlines said that, despite its filing of two applications with the Civil Aviation Administration of China (CAAC) and efforts it has taken with other stakeholders, the airline has been unable to secure commercially viable takeoff and landing slot times at Beijing despite it eagerness to commence service there.
Last December, the DOT allocated to American seven weekly frequencies to provide scheduled combination services in the Los Angeles-Beijing market. The order concluded a proceeding to consider the competing applications of American and Delta since each applied to operate daily round-trip Los Angeles-Beijing flights. The frequencies were awarded to American, subject to the Department’s standard 90-day start-up condition, which would require American begin its proposed service in the Los Angeles-Beijing market on or before March 16, 2017.
On February 23, 2017, Delta filed an objection to American's request. Delta asserts that the circumstances cited by American were foreseeable, that the requested delay is unduly long and that there was a competitive proceeding in which a competing carrier was and remains willing and able to begin service in a timely fashion
Sorry, said the DOT.
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“When we selected American’s Los Angeles-Beijing proposal, we did so because we concluded that American’s proposal would provide greater enhancements to competition and service than selection of Delta and would thereby maximize public benefits,” the DOT said in its decision.
“The Department recognizes that, in granting an extension of the start-up deadline, the benefits of American’s service might be somewhat delayed. On balance, however, we have determined that such a delay, resulting from American’s inability to obtain commercially viable slots from the Chinese authorities, does not warrant the carrier’s loss of authority and the resultant loss of those public benefits that formed the basis of our selection decision.
"At the same time, we note that U.S.-China frequency opportunities remain limited. While the Department finds merit in American’s request for an extension, we do not find that an approval for one year is warranted in the circumstances presented. We regard a six-month period as more appropriate for American either to secure the slots it needs, or if it has not yet been able to do so, report on the status of its efforts in the context of seeking a further start-up extension.
"The Department will therefore grant American relief for six months (i.e., until September 16, 2017) from the 90-day start-up condition applicable to its allocation of seven weekly Los Angeles-Beijing frequencies.”
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According to the Atlanta Journal-Constitution, the existing U.S.-China Air Transport Agreement caps the total number of weekly frequencies that each country’s airlines can operate to primary Chinese cities, including Beijing and Shanghai. Four U.S. airlines—American, Delta, Hawaiian, and United—currently provide passenger services between the United States and China.
These airlines have already been allocated nearly all of the slots that are available to the United States.