We tentatively believe that the selection of American would provide greater public benefits than would the selection of Delta, taking into consideration all of the factors that Delta maintains warrant its selection for authority to serve China in 2006, including Delta’s position that it would provide superior service benefits in both the gateway and beyond-gateway markets.

Delta would offer Atlanta its first nonstop service to China, a factor we have considered noteworthy in other selection cases and one that certainly weighs in Delta’s favor here. The record also shows, however, that the Atlanta-China O&D market is very small, having generated only nine passengers per day in each direction for the year ended March 2004.95 By contrast, Chicago is a major source of local traffic to China; the Chicago-Shanghai market alone was four times the size of the entire Atlanta-China market during that period. The fact that Chicago-Shanghai is substantially larger than Atlanta-Beijing is a relevant public interest consideration in this proceeding because it indicates that American could provide more passengers with nonstop service than Delta in the forecast year.

In these circumstances, we tentatively believe that Delta’s case for U.S.-China authority rests on its argument that it has a decisive advantage in the area of behind-gateway service.96 The record shows that Delta has offered to provide the most on-line connecting service in this proceeding.97 Compared to American, Delta would serve more cities, provide more communities with first nonstop-to nonstop connections to China, and
provide more flights to the Southeast region of the United States, which Delta believes is underserved.98 We recognize that Delta has proposed to make maximum use of its hub in Atlanta to serve the U.S.-China market and that Delta’s proposal would improve service to China, as would the proposal of American and other applicants in this case. However, we tentatively find that the record raises serious questions about Delta’s claim that it would provide significantly more on-line service benefits than American, particularly in light of the fact that, in analyzing the 2006 service proposals, we must take into account the implications of Continental’s potential entry, if made final, into the market one year earlier.

Furthermore, most of Delta’s on-line service points generate very little China traffic. In fact, 72 of the 89 communities that Delta, but not Continental, would serve generated less than one passenger per day in each direction in the year ended in March 2004.102 While Delta would provide more cities with first one-stop service to China than American, the record shows that these cities generated a total of 2020 passengers during that period – fewer than four passengers per day in each direction.103

Finally, we note that Delta’s on-line service points include four cities on the west coast, plus Denver and Las Vegas. We tentatively believe that Delta would not offer these cities a credible service option because travel between the cities and China via Delta’s Atlanta hub would involve a 2000-3000 mile backhaul and because there are now far more convenient U.S-China service options available to those cities via Los Angeles and San Francisco.