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EXHIBIT 99.2
COMMERCIAL COOPERATION AGREEMENT
BETWEEN
NORTHWEST AIRLINES, INC.
AND
HAWAIIAN AIRLINES, INC.
MAY 17, 2000
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TABLE OF CONTENTS
(NOT PART OF THIS AGREEMENT)
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SECTION 1. CODESHARE SERVICE 1
(a) CODESHARE SERVICE 1
(b) CATEGORIES OF CODESHARE SERVICE 1
i. NW ON HA'S INTRA-HAWAII FLIGHTS 1
ii. HA ON NW'S HNL-JAPAN FLIGHTS 2
iii. NW ON HA'S HNL-SOUTH PACIFIC FLIGHTS 2
SECTION 2. IMPLEMENTATION OF THIS AGREEMENT 2
(a) IMPLEMENTATION PLANS 2
(b) SCHEDULE COORDINATION 2
(c) INTERNAL RESERVATIONS AND DISTRIBUTION SYSTEMS 2
(d) THROUGH CHECK-IN AND SEAMLESS CONNECTING SERVICE 2
(e) PRORATES 3
(f) FREQUENT FLYER PROGRAMS 3
(g) MARKETING AND SALES 3
(h) PROMOTION AND ADVERTISING 3
(i) TOUR PRODUCTS 3
(j) PRODUCT QUALITY, CONSISTENCY AND COORDINATION 3
(k) COST SHARING 4
(l) CARGO AND MAIL 4
(m) STAFF CONTACTS 4
SECTION 3. EFFECTIVE DATE & TERM, TERMINATION AND SURVIVAL OF
OBLIGATIONS 4
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(a) EFFECTIVE DATE AND TERM 4
(b) TERMINATION WITHOUT DEFAULT 4
(c) TERMINATION FOR DEFAULT 5
(d) SURVIVAL OF OBLIGATIONS 5
SECTION 4. GENERAL TERMS AND CONDITIONS FOR CODESHARE SERVICE 6
(a) AIRCRAFT AND CREWS 6
(b) AVIATION SAFETY AND SECURITY 6
(c) DUAL SERVICE 7
(d) IRREGULAR OPERATIONS 7
(e) FAMILY ASSISTANCE 7
(f) FARES 7
(g) CARRIAGE AND TARIFF RULES 8
(h) CRS CHARGES 8
(i) BAGGAGE AND CARGO SETTLEMENT 8
(j) REVENUE SETTLEMENT 8
(k) SCHEDULE TRANSMISSION AND PUBLICATION 9
(l) TAXES 9
(m) GOVERNMENT APPROVALS 10
(n) USE OF TRADEMARKS AND LOGOS 11
SECTION 5. INSURANCE 12
(a) HAWAIIAN INSURANCE 12
(b) NORTHWEST INSURANCE 12
SECTION 6. RELEASE AND INDEMNIFICATION 13
(a) INDEMNIFICATION BY HAWAIIAN AIRLINES 13
(b) INDEMNIFICATION BY NORTHWEST 14
SECTION 7. ________________________ 14
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SECTION 8. COMPETITIVE MARKETING 14
SECTION 9. REPRESENTATION AND WARRANTY ON REGULATORY COMPLIANCE 15
SECTION 10. ASSIGNMENT 15
SECTION 11. NOTICES 15
SECTION 12. GOVERNING LAW 16
SECTION 13. ARBITRATION 16
SECTION 14. DEFINITION OF TERMS 17
SECTION 15. ENTIRE AGREEMENT; AMENDMENTS; INCONSISTENCY 17
SECTION 16. CONFIDENTIALITY 17
SECTION 17. DIRECTORS, OFFICERS, SHAREHOLDERS, AGENTS, EMPLOYEES 17
SECTION 18. FORCE MAJEURE, ETC. 17
SECTION 19. CONSTRUCTION, SEVERABILITY, NO THIRD PARTY BENEFICIARY 18
SECTION 20. RELATIONSHIP BETWEEN THE PARTIES 18
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EXHIBIT A. CODESHARE MARKETS
EXHIBIT B. MULTI-LATERAL PRORATE AGREEMENT
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HAWAIIAN AIRLINES, INC. & NORTHWEST AIRLINES, INC.
COMMERCIAL COOPERATION AGREEMENT
This Commercial Cooperation Agreement ("Agreement") is made as of May 17, 2000
by NORTHWEST AIRLINES, INC., with a principal place of business at 5101
Northwest Drive, St. Paul, MN 55111-3034, USA (hereinafter "Northwest" or "NW"),
and HAWAIIAN AIRLINES INC., with a principal place of business at Honolulu
International Airport, P.O. Box 30008, Honolulu, Hawaii, 96820-0008, United
States (hereinafter "Hawaiian Airlines" or "HA"). The parties collectively shall
be referred to as "Carriers".
Whereas, the Carriers entered a Cooperative Marketing Agreement, dated May 20,
1996 (the "CMA"), pursuant to which they engage in codesharing and certain other
cooperative marketing programs;
Whereas, the Carriers desire to replace the CMA with this Agreement;
Now, therefore, the Carriers agree as follows:
SECTION 1. CODESHARE SERVICE.
a. CODESHARE SERVICE. For purposes of this Agreement, the term "Codeshare
Service" will mean either HA or NW coded passenger air transportation
on routes where air transportation is provided via flights operated by
HA which display the NW code and vice versa. The Codeshare Services
shall be operated in accordance with all applicable laws, rules and
regulations of governmental authorities having jurisdiction over the
affected Codeshare Service.
Each Carrier shall have the right to publish its designator in
connection with and to sell seats on the Codeshare Service flights
operated by the other Carrier. Such sales shall be made on a "free
sell" basis whereby the operating Carrier's inventory is made available
on real time basis to the codeshare Carrier. In this regard, the
Carriers will consult with each other and develop the specific terms,
conditions and procedures for selling each other's inventory.
b. CATEGORIES OF CODESHARE SERVICE. The Carriers agree that there are
three (3) categories of Codeshare Service, each of which is described
below. Codeshare Service will initially be implemented in the markets
set forth in Exhibit A, paragraph 1. The Carriers further agree to
implement Codeshare Service in the markets set forth in Exhibit A,
paragraphs 2 and 3 on a schedule that shall be mutually agreed:
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i. NW ON HA'S INTRA-HAWAII FLIGHTS. This category of codesharing
is comprised of situations wherein NW places its code in both
directions on HA operated intra-Hawaii flights. The resultant
NW coded, HA operated flights will connect with NW operated
flights at HNL and provide published NW coded connecting
service or local market conditional stopover service between
points served by NW world-wide and points in the Hawaiian
Islands served by HA.
ii. HA ON NW'S HNL-JAPAN FLIGHTS.
This category of codesharing is comprised of situations
wherein HA places its code in both directions on certain NW
operated HNL-Japan flights in accord with the U.S./Japan
Aviation Bilateral. This will allow such NW operated flights
to be published and sold as an HA itinerary. Implementation of
this category of Codeshare Service is subject to mutual
agreement of the Carriers.
iii. NW ON HA'S HNL-SOUTH PACIFIC FLIGHTS.
This category of codesharing is comprised of situations
wherein NW places its code in both directions on certain HA
operated HNL-South Pacific flights in accord with any
applicable aviation bilateral agreements. This will allow such
HA operated flights to be published and sold as an NW
itinerary. Implementation of this category of Codeshare
Service is subject to mutual agreement of the Carriers.
SECTION 2. IMPLEMENTATION OF THIS AGREEMENT.
a. IMPLEMENTATION PLANS.
The Carriers will consult with each other regarding the operational
details for the definition and development of all Codeshare Service and
related cooperative marketing programs. In this regard, the Carriers
will develop internal and mutually agreeable timetables for the
implementation of all individual and cooperative programs.
b. SCHEDULE COORDINATION.
The Carriers have reviewed and will continue to review their schedules
to identify and establish as many connection opportunities as possible
at HNL. The Carriers will adjust as many flight schedules as possible
to maximize connectivity at common connecting points to the extent that
the adjustments are economically feasible in the judgment of the
operating Carrier. The Carriers will establish procedures for
exchanging schedules and schedule changes and implement appropriate,
mutually agreed schedule coordination programs.
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c. INTERNAL RESERVATIONS AND DISTRIBUTION SYSTEMS.
The Carriers agree to link their computer systems used in supporting
Codeshare Service to facilitate sales system-wide. The Carriers will
consult with each other regarding the technical plan and timetable for
establishing such linkage. Computer system linkage will be established
in connection with the implementation of Codeshare Service pursuant to
this Agreement.
d. THROUGH CHECK-IN AND SEAMLESS CONNECTING SERVICE.
The Carriers agree to implement through check-in and "seamless"
connecting service such that their joint passengers will enjoy the
convenience of checking in to any selected NW or selected HA airport
ticket counter and receiving seat assignments, boarding cards, luggage
tags to final destinations, documentation checks and frequent flyer
credits as appropriate for their connecting flights on the Carriers.
The Carriers will consult with each other and develop a mutually agreed
technical plan and timetable for implementing through check-in and
seamless connecting service.
e. PRORATES.
The Carriers have entered into a Multilateral special prorate agreement
("Multilateral Prorate Agreement") that provides for the distribution
of the interline revenues generated as a result of their commercial
cooperation. The Multilateral Prorate Agreement is set forth as Exhibit
B hereto.
f. FREQUENT FLYER PROGRAMS.
The Carriers have separately entered into a reciprocal frequent flyer
agreement ("Frequent Flyer Agreement") that provides for the
development of mutually beneficial programs to enhance passenger
loyalty on both airlines. Such agreement provides for each Carrier to
participate in the other's frequent flyer program with selected earning
and redemption opportunities for at least the duration of this
Agreement.
g. MARKETING AND SALES.
The Carriers will use reasonable best efforts to take advantage of all
available marketing and sales synergies.
h. PROMOTION AND ADVERTISING.
The Carriers will explore opportunities to share trade advertising to
promote joint service offerings to the travel trade as appropriate and
will seek the support of tourism agencies for the promotion of travel
products.
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i. TOUR PRODUCTS.
The Carriers will explore opportunities to collaborate in developing
and promoting tour products through their respective tour agencies,
subsidiaries or other distribution media or channels.
j. PRODUCT QUALITY, CONSISTENCY AND COORDINATION.
The Carriers will study their respective airport and in-flight product
standards and their information systems compatibility levels and will
establish and implement certain minimum criteria in connection with
Codeshare Service.
k. COST SHARING.
The Carriers may implement cost sharing programs, as appropriate, in
connection with the Codeshare Service and any other cooperative
programs.
l. CARGO AND MAIL.
The Carriers will develop and implement mutually beneficial commercial
cooperation programs with respect to the carriage of cargo and mail.
Such programs may include, but are not limited to, a separate prorate
agreement for interline cargo shipments and an agreement implementing
mail codesharing.
m. STAFF CONTACTS.
The Carriers will provide each other with a list of internal staff
contacts whose responsibility it is to develop and implement Codeshare
Service between the Carriers and the other commercial cooperation
programs contemplated in this and other agreements between the
Carriers.
SECTION 3. EFFECTIVE DATE AND TERM, TERMINATION AND SURVIVAL OF OBLIGATIONS.
a. EFFECTIVE DATE AND TERM. This Agreement shall become effective on the
date first appearing above (the "Effective Date") and shall remain in
effect continuously thereafter until terminated.
After an initial term that shall run for at least four (4) years from
the Effective Date, either HA or NW may deliver to the other party
advance written notice of termination which notice provides for a
termination date for this Agreement at least one (1) year subsequent to
the delivery of the notice of termination. ___________________________
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c. TERMINATION WITHOUT DEFAULT. Notwithstanding Section 3.a. above, a
Carrier shall have the option of earlier termination of this Agreement:
(i) if the other Carrier ceases airline operations; (ii) on sixty (60)
days prior written notice if the other Carrier enters bankruptcy; (iii)
on six (6) months prior written notice if the other Carrier merges with
another airline and that other party to this Agreement is not the
surviving entity in the merger; (iv) if the US government, or any other
government whose approval is necessary to maintain Codeshare Service,
were to withdraw its approval of the codesharing arrangement or impose
a material condition or limitation on codesharing operations pursuant
to this Agreement which renders implementation or performance of this
Agreement impossible or economically infeasible; or (v) if that
Carrier's performance is interrupted for an extended period of time (at
least three (3) months or more) because the other Carrier's operations
are seriously affected by a Force Majeure as defined in Section 18
below.
c. TERMINATION FOR DEFAULT. Notwithstanding Section 3.a. above, if either
party shall materially default in the performance of any of the terms,
covenants or conditions of this Agreement, the other party may give
written notice of such default to the party in default. Except as
otherwise provided in Section 4.b.i below, in the event such default is
not cured within thirty (30) days after the giving of such notice, the
party giving notice may terminate the Agreement effective upon such
date that party specifies by further notice to the party in default,
without prejudice to any other rights which the party giving notice may
have. As long as one of the Carriers has commenced dispute resolution
proceedings pursuant to Section 13, herein, the Carriers agree to allow
the arbitral tribunal to determine whether any termination pursuant to
this subsection 3.c. was appropriate. The waiver by either party of
performance of any term, covenant or condition of this Agreement in a
particular instance shall not constitute a waiver of any subsequent
breach or preclude such party from thereafter demanding performance
thereof according to the terms hereof.
In the event of a material default, the Carrier found to be in default
shall be liable to the other Carrier for such damages for breach of
contract as are available under the laws of New York as determined
pursuant to the procedures set forth in Section 13 of this Agreement.
Provided, however, that neither Carrier will be liable for any
consequential, punitive or exemplary damages arising from any
performance or failure to perform under this Agreement, even if such
Carrier knew or should have known of the existence of such damages, and
each Carrier hereby releases and waives any claims against the other
Carrier regarding such damages.
d. SURVIVAL OF OBLIGATIONS. The Carriers agree that their covenants and
obligations contained herein with respect to payments to the other
Carrier, confidentiality and non-disclosure and each Carrier's rights
and remedies under this Agreement in relation thereto and rights of
indemnity shall survive notwithstanding termination of this Agreement.
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SECTION 4. GENERAL TERMS AND CONDITIONS FOR CODESHARE SERVICE.
a. AIRCRAFT AND CREWS.
The Carriers will provide the scheduled air service that is part of the
Codeshare Service in full compliance with FAA regulations applicable to
scheduled passenger air service. Flights operated by HA shall be
operated with its aircraft and crews, and flights operated by NW shall
be operated with its aircraft and crews. Each Carrier's flights will be
operated at its own expense and under its normal operating
arrangements.
b. AVIATION SAFETY AND SECURITY.
i. Each Carrier shall ensure the safety of its own flights in
accordance with all applicable laws and regulations. The
Carriers shall exchange information on aviation safety and
security, and the Carriers agree to provide each other with
technical and material support with respect to aviation safety
and security.
The Carriers are vitally interested in the safety of their
respective passengers and crew and this is reflected in the
application of stringent safety standards to their respective
flight operations, maintenance, and ground operation areas,
consistent with or in excess of what is required by the FAA.
Each party acknowledges the value to the other Carrier of the
safety associated with each Carrier's brand name and agrees
that its code share flights will meet all applicable safety
standards. Provided, however, that any safety requirement of
the other Carrier that is in addition to what a Carrier
applies to its own services will be discussed and agreed upon
prior to implementation The Carriers agree that all such
safety standards will be those that they deem necessary to
both operate safely and separately to provide assurances to
their respective passengers that flights operated with their
respective air carrier codes will be safe operations. Either
Carrier may terminate the use of its code on the other
Carrier's flights upon one (1) day advance written notice to
the other Carrier if it determines, in its sole and absolute
discretion, that the other Carrier has failed to comply with
the terminating Carrier's safety requirements. If such failure
to comply continues for fourteen (14) days following such code
use termination, the Carrier giving notice may immediately
terminate this Agreement for such material breach by the other
Carrier.
ii. Each Carrier agrees that prior to the commencement of
Codeshare Service, and during the term of this Agreement, it
will allow the other Carrier to perform safety due diligence
audits. The Carrier that is the subject of an audit (i) shall
fully cooperate with the other Carrier in its conduct of the
audit and (ii) shall promptly take any necessary corrective
actions, based upon the results of the audit, as mutually
agreed between the Carriers. Neither Carrier shall have any
duty, responsibility or liability whatsoever by virtue of
having received any information
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relating to the other Carrier's operations or having conducted
any audits of the other Carrier pursuant to this Agreement.
c. DUAL SERVICE.
Notwithstanding anything to the contrary set forth herein, or any
implication to the contrary, NW and HA each reserves and retains the
right to enter any market with its own equipment and crews.
d. IRREGULAR OPERATIONS.
In the event of schedule delay, schedule irregularity, or cancellation
on any Codeshare Service flight, the operating Carrier shall provide,
at its expense, all ticketed passengers with the same interrupted trip
amenities, compensation, or any other service that the operating
Carrier provides to its passengers. The operating Carrier shall also
provide, at its expense, all ticketed passengers with transportation to
the final destination on the next available flight on the operating
carrier or with transportation on another carrier. Such service by the
operating carrier shall be substantially similar to that described in
IATA Resolution 735d.
e. FAMILY ASSISTANCE.
The Carriers agree that with respect to the Codeshare Service they will
coordinate regarding emergency response and family assistance matters
including joint activation procedures, and in the event of an aircraft
accident each Carrier will use its reasonable best efforts to cooperate
with the other Carrier in promptly responding to such accident and
providing necessary assistance and services to the family members of
passengers.
f. FARES.
Except as set forth in the last sentence of the second paragraph of
this Section 4.f., NW shall establish on its own and publish all local
and through fares applicable to its flights that are operated as part
of the Codeshare Service. NW shall also establish on its own and
publish tariffs and fares for flight itineraries using its designator
code (NW*) which include transportation via flights operated by HA as
part of the Codeshare Service.
Except as set forth in the last sentence of the first paragraph of this
Section 4.f., HA shall establish on its own and publish all local and
through fares applicable to its flights that are operated as part of
the Codeshare Service. HA also shall establish on its own and publish
tariffs and fares for flight itineraries using its designator code
(HA*) which include transportation via flights operated by NW as part
of the Codeshare Service.
If required, each Carrier will independently submit its fares for
governmental approval.
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g. CARRIAGE AND TARIFF RULES.
NW and HA shall jointly develop those conditions of carriage and tariff
rules for the Codeshare Service that need to be as similar as possible
in order for the Codeshare Services to be provided in a seamless
manner. Such rules governing the air transportation provided as part of
the Codeshare Service shall be available for public inspection at NW's
and HA's corporate offices, at each Carrier's airport ticket offices,
and at each Carrier's city ticket office in the manner required by the
DOT.
h. _________.
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i. BAGGAGE AND CARGO SETTLEMENT.
Baggage and cargo handling, and settlement of baggage and cargo
handling claims between the Carriers, shall be in accordance with this
Agreement, existing tariffs and the Trade Practices Manual of the Air
Transport Association or the IATA Resolutions and Recommended Practices
Manual, whichever applies.
j. REVENUE SETTLEMENT.
i. The operating Carrier will retain all flight coupons and bill
the codeshare Carrier for actual coupons uplifted through
normal passenger billing at rates defined in the Multilateral
Prorate Agreement.
ii. Revenue derived from charges collected for excess baggage
and other related services (pets, stretchers, infants, etc.)
shall belong to operating Carrier.
iii. The Carriers agree to accept each other's tickets without
endorsement for transportation covered under this Agreement.
iv. Settlement under this Agreement shall be through the ACH.
Should one or both Carriers cease to be a member of ACH,
settlement shall be determined by the accountants of the
Carriers concerned in accordance with an Interline Settlement
Agreement to be concluded between the Carriers.
v. Any disputes that may arise with respect to revenue
settlement will be mutually agreed and settled within six
months from notice of objection. However, if agreement is not
reached within such six month period, the Commercial Managers
of both Carriers will be notified immediately and will finally
resolve the dispute through good faith negotiations, if
possible.
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k. SCHEDULE TRANSMISSION AND PUBLICATION.
HA and NW shall provide to each other schedule file information so that
each may effectively publish in all distribution media the Codeshare
Services contemplated in this Agreement.
l. TAXES.
i. For transportation utilizing NW travel documents or NW air
waybills, NW shall be responsible for collecting and paying
any taxes, duties, assessments, imposts, tariffs, fees, and
any other charges (and any interest and penalties thereon) for
which applicable law requires a ticketing carrier to be
responsible ("Ticketing Carrier Taxes"). Ticketing Carrier
Taxes include, but are not limited to, passenger facility
charges, sales and use taxes, stamp taxes, excise taxes, APHIS
user fees, value added taxes (in the nature of a sales or use
tax), gross receipts taxes (in the nature of a sales or use
tax), and U.S. Customs and Immigration user fees. For
transportation utilizing NW aircraft, NW shall be responsible
for collecting and paying all taxes, fees, and any other
charges (and any interest and penalties thereon) imposed as a
result of its activities at a particular location, including,
but not limited to, landing fees, security charges, and APHIS
aircraft fees ("Operating Carrier Taxes"). NW is solely
responsible for any taxes on, based upon, or measured by its
gross income, net income, or gross or net receipts (other than
such taxes in the nature of a sales or use tax), and any
interest and penalties thereon.
ii. For transportation utilizing HA travel documents or HA
airwaybills, HA shall be responsible for collecting and paying
Ticketing Carrier Taxes. For transportation utilizing HA
aircraft, HA shall be responsible for collecting and paying
all Operating Carrier Taxes. HA is solely responsible for any
taxes on, based upon, or measured by its gross income, net
income, or gross or net receipts (other than such taxes in the
nature of a sales or use tax), and any interest and penalties
thereon.
iii. Each carrier further agrees to indemnify, defend and hold the
other carrier harmless from and against taxes, duties,
assessments, imposts, tariffs, fees, and any other charges (as
set forth in Sections 4.l.i and 4.l.ii, above.) ("Charges")
levied upon or advanced by the indemnified Carrier that
ultimately the indemnifying Carrier would be responsible for
paying. If either Carrier receives notice from any taxing
authority with respect to any assessment, potential assessment
or imposition of any Charges that the other Carrier would be
responsible for paying, directly or through an indemnified
claim pursuant to this Section 4.l.iii, the Carrier so
notified shall inform the other Carrier in writing within (10)
business days of receipt of such notice. If, under the
applicable law of
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the taxing jurisdiction, the indemnifying Carrier is
allowed directly to contest such tax in its own name, then
the indemnifying Carrier shall be entitled, at its own
expense and in its own name, to contest the assessment,
imposition, validity, application, or amount of such tax,
and to the extent permitted by law, withhold payment during
pendency of such contest. If the indemnifying Carrier is
not permitted by law to contest such tax in its own name,
upon indemnifying Carrier's request, the other Carrier
shall in good faith and at the indemnifying Carrier's
expense, contest the assessment, imposition, validity,
applicability, or amount of such tax. The other Carrier
shall (i) supply the indemnifying Carrier with such
information and documents requested by the indemnifying
Carrier in a timely manner as is necessary or advisable for
the indemnifying Carrier to control or participate in any
preceding to the extent permitted herein, and (ii) make all
reasonable efforts to assist the indemnifying Carrier with
evidentiary and procedural development of such contest or
protest. The foregoing indemnity shall survive termination
of this Agreement.
(iv) The Carriers will consult with each other and develop a
mutually agreeable plan for implementing this Section 4.l.,
taking into consideration applicable tax laws and regulations
and IATA interline revenue accounting procedures.
m. GOVERNMENT APPROVALS.
The Carriers shall each use their reasonable best efforts, in
cooperation with the other, to obtain all necessary codesharing
approvals from government authorities. In the event that any
governmental agency or regulatory body having jurisdiction over the
subject matter hereof shall require any material condition or
limitation to this Agreement, the Carriers shall negotiate in good
faith to make such amendments to this Agreement as shall be necessary
to achieve the purposes and objectives of this Agreement.
n. USE OF TRADEMARKS AND LOGOS.
(i.) The Carriers hereby acknowledge and agree that the logos,
trademarks, service marks and trade names of NW shall be and
remain at all times the exclusive property of NW, and that the
logos, trademarks, service marks and trade names of HA shall
be and remain at all times the exclusive property of HA.
Neither Carrier shall use the logos, trademarks, service marks
and trade names of the other Carrier without the other
Carrier's written consent.
(ii.) Each Carrier may provide to the other certain art work,
drawings, or technical information and advice for the purpose
of assisting such other Carrier in the advertising and
promotion of the codeshare flights. All such drawings,
technical information and advice will be treated by the
receiving Carrier as confidential and proprietary information
of the providing Carrier and the receiving Carrier will use
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it only for those purposes specifically authorized by the
providing Carrier in advance and in writing.
(iii.) HA hereby assumes liability for, and shall indemnify, defend,
protect, save and hold harmless NW, its officers, agents and
employees from and against any and all liabilities, claims,
judgments, damages, and losses, including all costs, fees, and
expenses incidental thereto, of every type and nature
whatsoever, arising from or involving copyright, trademark,
service mark or trade name infringement, provided that such
liabilities, claims, judgments, damages or losses are caused
by or arise out of (or are alleged to be caused by or arise
out of) any alleged acts of HA or its officers, employees, or
agents which are in any way related to the services
contemplated by this Agreement. NW shall give HA prompt notice
of any claim made or suit instituted against NW which, if
successful, would result in indemnification of NW hereunder,
and NW shall have the right to compromise or participate in
the defense of same to the extent of its own interest.
(iv.) NW hereby assumes liability for, and shall indemnify, defend,
protect, save and hold harmless HA, its officers, agents and
employees from and against any and all liabilities, claims,
judgments, damages, and losses, including all costs, fees, and
expenses incidental thereto, of every type and nature
whatsoever, arising from or involving copyright, trademark,
service mark or trade name infringement, provided that such
liabilities, claims, judgments, damages or losses are caused
by or arise out of (or are alleged to be caused by or arise
out of) any alleged acts of NW or its officers, employees, or
agents which are in any way related to the services
contemplated by this Agreement. HA shall give NW prompt notice
of any claim made or suit instituted against HA which, if
successful, would result in indemnification of HA hereunder,
and HA shall have the right to compromise or participate in
the defense of same to the extent of its own interest.
SECTION 5. INSURANCE.
a. Hawaiian Insurance. To the extent of the liability assumed by HA
pursuant to this Agreement, HA agrees to maintain in full force and
effect the following insurance coverages (on an occurrence basis and
not a claims made basis) during the term of this Agreement:
1. All Risk Aircraft Hull insurance including war and allied
perils covering HA's aircraft. Hull insurance shall include
endorsements that:
(a) Provide that the insurer shall waive its subrogation
rights against NW.
(b) Provide that, as respects the interest of NW, this
insurance shall not be invalidated by any breach of
warranty.
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2. Comprehensive Airline Liability insurance with limits no less
than ____________ per seat for the largest aircraft operated
by HA combined single limit per occurrence, including but not
limited to aircraft liability, passenger legal liability, and
premises liability. Such insurance shall include personal
injury and contractual liability.
3. The Comprehensive Airline Liability insurance shall provide
that:
(a) Underwriters agree to accept and insure HA's hold
harmless and indemnity undertaking in this Agreement
in accordance with the policy terms and conditions.
(b) NW is named as an additional insured on such
insurance.
(c) Said insurance is primary with respect to the matters
within such coverage, irrespective of any insurance
carried by NW.
(d) Provide that, as respects the interests of NW, this
insurance shall not be invalidated by any breach of
warranty by HA.
(e) Provide a severability of interest/cross liability
endorsement.
b. Northwest Insurance. To the extent of the liability assumed by NW
pursuant to this Agreement, NW agrees to maintain in full force and
effect the following insurance coverages (on an occurrence basis and
not a claims made basis) during the term of this Agreement:
1. All Risk Aircraft Hull insurance including war and allied
perils covering NW's aircraft. Hull insurance shall include
endorsements that:
(a) Provide that the insurer shall waive its subrogation
rights against HA.
(b) Provide that, as respects the interest of HA, this
insurance shall not be invalidated by any breach of
warranty.
2. Comprehensive Airline Liability insurance with limits no less
than ________ per seat for the largest aircraft operated by NW
combined single limit per occurrence, including but not
limited to aircraft liability, passenger legal liability, and
premises liability. Such insurance shall include personal
injury and contractual liability.
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<PAGE>
3. The Comprehensive Airline Liability insurance shall provide
that:
(a) Underwriters agree to accept and insure NW's hold
harmless and indemnity undertaking in this Agreement
in accordance with the policy terms and conditions.
(b) HA is named as an additional insured on such
insurance.
(c) Said insurance is primary with respect to the matters
within such coverage, irrespective of any insurance
carried by HA.
(d) Provide that, as respects the interest of HA, this
insurance shall not be invalidated by any breach of
warranty by NW.
(e) Provide a severability of interest/cross liability
endorsement.
c. Prior to the commencement of this Agreement, each carrier shall deliver
to the other carrier Certificates of Insurance evidencing compliance
with the insurance terms of this Agreement. These Certificates of
Insurance shall unconditionally obligate the insurer to notify the
other carrier in writing at least thirty (30) days in advance of the
effective date in the event of any material change in, or cancellation
of such insurance.
SECTION 6. RELEASE AND INDEMNIFICATION.
a. Indemnification by Hawaiian. HA agrees to release, indemnify, hold
harmless and defend Northwest, its officers, directors, employees,
agents, successors and assigns, from and against any and all claims,
losses, damages, liabilities, causes of action, suits, judgments and
expenses, whether groundless or not, including, but not limited to,
reasonable attorneys fees, costs and related expenses, for bodily or
personal injury, including death, to any persons, including, but not
limited to, employees of HA, and for any loss of, damage to, or
destruction of any property, including loss of use and consequential
damage thereof arising out of or in any manner connected with the
carriage of passengers or cargo by HA , whether or not occurring or
arising out of the negligence whether active, passive, sole, joint,
comparative, concurrent or any other type, of NW, its officers,
directors, employees or agents; provided, however, that the foregoing
indemnification shall not apply to any such claims or liability (i) for
injury or death of NW's employees incurred in the performance of their
duty and for which workers' compensation normally is recoverable, or
(ii) resulting from the willful misconduct or gross negligence of NW,
its officers, directors, employees or agents.
b. Indemnification by Northwest. NW agrees to release, indemnify, hold
harmless and defend HA, its officers, directors, employees, agents,
successors and assigns, from and against any and all claims, losses,
damages, liabilities, causes of action, suits, judgments
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<PAGE>
and expenses, whether groundless or not, including, but not limited
to, reasonable attorneys' fees, costs and related expenses, for
bodily or personal injury, including death, to any persons,
including, but not limited to, employees of NW, and for any loss of,
damage to, or destruction of any property, including loss of use and
consequential damage thereof, arising out of or in any manner
connected with the carriage of passengers or cargo by NW, whether or
not occurring or arising out of the negligence whether active,
passive, sole, joint, comparative, concurrent or any other type, of
HA, its officers, directors, employees or agents; provided, however,
that the foregoing indemnification shall not apply to any such
claims or liability (i) for injury or death of HA's employees
incurred in the performance of their duty and for which workers'
compensation normally is recoverable, or (ii) resulting from the
willful misconduct or gross negligence of HA, its officers,
directors, employees or agents.
SECTION 7. ____________________.
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SECTION 8. COMPETITIVE MARKETING.
Nothing in this Agreement confers any rights on either party to restrict the
other party's ability:
i. to maintain or change rates, fares, tariffs, markets,
schedules, equipment, services, distribution and marketing
methods, competitive strategies or similar matters; or
ii. to engage in vigorous and full competition with each other and
other entities.
SECTION 9. REPRESENTATION AND WARRANTY ON REGULATORY COMPLIANCE.
a. By Hawaiian: HA hereby represents and warrants to NW that this
Agreement and the operation of the Codeshare Service will not
violate or infringe any laws and regulations currently in
force and will advise NW of any change of regulatory
requirements that may have to be met by HA and NW in operating
the Codeshare Service.
b. By Northwest: NW hereby represents and warrants to HA that
this Agreement and the operation of the Codeshare Service will
not violate or infringe any laws and regulations currently in
force and will advise HA of any change of regulatory
requirements that may have to be met by HA and NW in operating
the Codeshare Service.
SECTION 10. ASSIGNMENT.
This Agreement shall not be assigned by either party without the prior written
consent of the other party.
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<PAGE>
SECTION 11. NOTICES.
All notices, requests, demands and other communications hereunder shall be in
writing, transmitted by facsimile or mail, and shall be deemed to have been duly
given when the party receiving the notice acknowledges it by facsimile or mail.
Each party shall acknowledge receipt as soon as practicable but in any event
within 2 business days of receiving any notice or demand. In the event receipt
is not duly acknowledged, a notice sent by mail shall be deemed to have been
served within seven (7) business days and notice given by fax shall be deemed to
have been served upon receipt by the sender of the fax transmission report
confirming that the fax has been successfully transmitted, provided the
addressee does not within the following two (2) business days notify the sender
that the fax was transmitted illegibly or incorrectly. Notices shall be
transmitted:
(1) if to HA to the attention of:
Hawaiian Airlines Inc.
Honolulu International Airport
P.O. Box 30008
Honolulu, HI 96820-0008
Attn: Senior Vice President Marketing & Sales
Fax: 808-838-6746
(2) if to Northwest to the attention of:
Northwest Airlines, Inc.
5101 Northwest Drive
Department A6390
St. Paul, MN 55111-3034
Attn: Senior Vice President - Alliances
Fax: 612-727-6759
with a copy to:
Executive Vice President and General Counsel
Fax No.: 612-726-0921
If there is any change to or modification of any address of facsimile number set
forth above, the party changing such address or number shall use all reasonable
efforts to promptly notify the other party of such change.
SECTION 12. GOVERNING LAW.
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<PAGE>
This Agreement shall be interpreted in accordance with, and performance shall be
governed by, the laws of New York, regardless of the laws that might be
applicable under principles of conflict of law.
SECTION 13. ARBITRATION.
All disputes, controversies, or differences between the parties which may arise
out of or in relation to or in connection with this Agreement, or the breach
thereof, shall be resolved through good faith negotiation, if possible. If
prompt and reasonable resolution through such negotiation is not possible, in
the sole judgment of either party, the dispute(s) shall be finally settled by
arbitration which shall be conducted in the English language. Such arbitration
shall be conducted in New York City in accordance with the UNCITRAL Arbitration
Rules as at present in force. The appointing authority shall be the President of
the International Court of Arbitration of the International Chamber of Commerce.
The award rendered by the arbitrator(s) shall be final and binding upon the
parties hereto.
SECTION 14. DEFINITION OF TERMS.
Except as may be defined herein, the definition of airline industry terms shall
be those generally used in the international airline industry and where
available should use IATA and/or ICAO definitions.
SECTION 15. ENTIRE AGREEMENT; AMENDMENTS; INCONSISTENCY.
This Agreement sets forth the entire agreement and understanding between the
parties as to the subject matter hereof, and merges and supersedes all prior
discussions, agreements and understandings concerning the subjects covered by
this Agreement including, without limitation the CMA. Unless expressly provided
herein, this Agreement may not be changed or modified, except by agreement in
writing signed by the party to be bound thereby. In the event of any
inconsistency between this Agreement and any related implementation agreement
between the Carriers, the terms, conditions and provisions of this Agreement
shall prevail.
SECTION 16. CONFIDENTIALITY.
The parties agree to make public announcements regarding this Commercial
Cooperation Agreement, and to state the benefits of it to the public, trade and
others who need to know to carry out the Agreement and for the parties to avail
themselves of its benefits. Other than the foregoing, the detailed terms of this
Agreement and all other confidential and proprietary information and data
supplied by one Carrier to the other hereunder ("Information") shall be kept
strictly confidential by each of NW and HA. Without the express written consent
of the other party, neither NW nor HA may disclose to any other person any of
the Information in whole or in part, provided, however, that (i) subject to
their agreement to be bound by this confidentiality provision, the attorneys,
accountants, consultants and financial advisors of NW and HA may be
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<PAGE>
informed of the contents of this Agreement (ii) this Agreement may be
disclosed as required in connection with a proceeding to enforce the rights
or remedies under this Agreement of a party hereto, and (iii) NW or HA may
disclose this Agreement to the extent required by applicable law and/or its
relevant regulations and governmental instructions.
SECTION 17. DIRECTORS, OFFICERS, SHAREHOLDERS, AGENTS, EMPLOYEES.
No director, officer, shareholder, agent or employee of either party shall be
charged personally or held contractually liable by or to the other party under
any term or provision of this Agreement or any supplement, modification or
amendment to this Agreement or because of any breach hereof.
SECTION 18. FORCE MAJEURE, ETC.
Except as provided in Section 4.e. and Section 6 of this Agreement, neither
party shall be liable to the other for any loss, injury, damage or delay
whatsoever resulting, directly or indirectly, from one or more of the following:
Act of God; seizure under legal process, governmental sanctions, quarantine
restrictions; fire, fog, flood, or other weather-related reason; failure or
refusal on the part of any government or governmental agency to grant or issue
approvals, clearances, exemptions, permits or operating authority, or recession
or revocation thereof by any government or governmental agency; damage to or
destruction of aircraft or other flight equipment; mechanical difficulties or
breakdowns; unavailability of fuel; riots or civil commotion; strikes, lockouts
or labor disputes (whether resulting from disputes between either party and its
employees or between other parties); U.S military or airlift emergency or
substantially expanded U.S. military airlift requirements as determined by the
U.S. government; activation of the U.S. Civil Reserve Air Fleet; war or hazards
or dangers incident to a state of war; or any other acts, matters or things,
whether or not of a similar nature, which are beyond the control of either party
and which shall directly or indirectly, prevent, delay, interrupt, or otherwise
adversely affect the furnishing, operation or performance of such
transportation. In the event of a strike by NW employees, NW will use its
reasonable best efforts to provide the services specified in this Agreement to
HA. In the event of a strike by HA employees, HA will use its reasonable best
efforts to provide the services specified in this Agreement to NW.
Each Carrier shall have the right to suspend performance of the terms of this
Agreement forthwith in the event of and for the duration of an airlift emergency
as determined by the United States Secretary of Defense or his designee or by
the Commander of the United States Air Mobility Command, or if the United States
Civil Reserve Air Fleet is activated by order of the Secretary of Defense.
SECTION 19. CONSTRUCTION, SEVERABILITY, NO THIRD PARTY BENEFICIARY.
This Agreement shall not be construed against the party preparing it, but shall
be construed as if both parties jointly prepared it and any uncertainty or
ambiguity shall not be interpreted against either party. In the event that any
one or more of the provisions of this Agreement shall be
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<PAGE>
determined to be invalid, unenforceable, or illegal, such invalidity,
unenforceability or illegality shall not affect any other provision of this
Agreement and the Agreement shall be construed as if such invalid,
unenforceable or illegal provision had never been contained herein. NO PERSON
OR ENTITY, OTHER THAN NORTHWEST OR HAWAIIAN AIRLINES, SHALL HAVE ANY RIGHTS,
CLAIMS, BENEFITS OR POWERS UNDER THIS AGREEMENT AND THIS AGREEMENT SHALL NOT
BE CONSTRUED OR INTERPRETED TO CONFER ANY RIGHTS, CLAIMS, BENEFITS OR POWERS
UPON ANY THIRD PARTY. THERE ARE NO THIRD-PARTY BENEFICIARIES OF THIS
AGREEMENT.
SECTION 20. RELATIONSHIP BETWEEN THE PARTIES.
Each Carrier, in its performance under this Agreement, is and shall be engaged
and acting as an independent contractor in its own separate business. Each
Carrier shall retain complete and exclusive control over its personnel and
operations and the conduct of its business. Neither Carrier nor its officers,
employees or agents shall in any manner make any representation or take any
actions which may give rise to the existence of any employment, agency,
partnership or other like relationship between the Carriers hereunder. The
employees, agents and independent contractors of each Carrier shall be and
remain employees, agents and independent contractors of such Carrier for all
purposes, and under no circumstances shall be deemed to be employees, agents or
independent contractors of the other Carrier. Neither Carrier shall have
supervisory power or control over any employees, agents or independent
contractors employed or engaged by the other Carrier (except that the operating
carrier shall have supervisory control over all passengers during any codeshare
flight, including any employees, agents or contractors of the other Carrier who
are on board any such flight).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first appearing above.
NORTHWEST AIRLINES, INC. HAWAIIAN AIRLINES, INC.
By: /s/ By: /s/
------------------------- ----------------------------
Douglas C. Birdsall John B. Happ
Its: Senior Vice President - Alliances Its: Senior Vice President -
Marketing & Sales
By: /s/
----------------------------
Clarence K. Lyman
Its: Vice President - Finance
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<PAGE>
Exhibit A
CODESHARE MARKETS
1. NW CODE ON HA INTRA-HAWAII FLIGHTS.
Between: And:
HNL OGG And any other
ITO Hawaii Island
KOA locations
MKK operated by HA
LIH
LNY
2. HA CODE ON NW HNL-JAPAN FLIGHTS.
As may be mutually agreed
3. NW CODE ON HA HNL-SOUTH PACIFIC FLIGHTS.
As may be mutually agreed
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<PAGE>
[LOGO]
NORTHWEST AIRLINES
WORLDPERKS PROGRAM
PARTNER AGREEMENT
CONFIDENTIAL
5/17/2000
NORTHWEST AIRLINES, INC.
&
HAWAIIAN AIRLINES, INC.
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<PAGE>
NORTHWEST AIRLINES / HAWAIIAN AIRLINES
FREQUENT FLYER AGREEMENT
This Frequent Flyer Agreement ("Agreement") is made and entered into as of May
17, 2000, by and between NORTHWEST AIRLINES, INC., with a principal place of
business at 5101 Northwest Drive, St. Paul MN, 55111-3034, USA (hereinafter
referred to as "NW" or "Northwest") and HAWAIIAN AIRLINES, INC., with a
principal place of business at 3375 Koapaka Street, Ste G350, Honolulu HI,
96819 (hereinafter referred to as "Hawaiian" or "HA"). The parties collectively
shall be referred to as the "Carriers".
WITNESSETH
WHEREAS, this Agreement replaces Exhibit C of the Cooperative Marketing
Agreement between Northwest Airlines/Hawaiian Airlines dated May 20, 1996, as
amended (the "CMA").
WHEREAS, Northwest and Hawaiian desire to cooperate with respect to
participation in each airline's frequent flyer program;
NOW, THEREFORE, in consideration of the premises, mutual covenants and
conditions hereinafter contained, the parties hereto agree as follows:
SECTION 1. PARTIES' INTENT
A. Northwest and Hawaiian intend to cooperate with respect to each airline's
frequent flyer program for the mutual benefit of both airlines and the
members of each airline's frequent flyer program. Operating the
respective programs in a cooperative manner will permit each airline to
better offer seamless service between Northwest and Hawaiian and to
better enable both airlines to effectively compete with larger air
carriers.
B. In the event that either Northwest or Hawaiian makes a payment to the
other airline pursuant to this Agreement, the parties intend that such a
payment will represent a balancing of the parties' respective costs and
benefits associated with their programs.
SECTION 2. WORLDPERKS PROGRAM - ACCRUAL OF BENEFITS
Effective May 17, 2000 (the "Effective Date"), NW shall, subject to the
terms and conditions of this Agreement and subject to the rules and
conditions applicable to the WorldPerks Program, grant miles to any
revenue passenger who is a member of the WorldPerks Program (hereinafter
referred to as "WorldPerks member") and who flies on any Hawaiian
Airlines scheduled flight referred to in Attachment A, based on the
segments flown on Hawaiian in accordance with the rules of the WorldPerks
Program. The mileage accrual structure is subject to changes in the
overall mileage accrual structure of the WorldPerks Program. NW is at
liberty to make these changes and will inform Hawaiian thereof when
Hawaiian routes are involved. All mileage accumulated on Hawaiian flights
will count toward elite level status in the WorldPerks Program.
New city pairs operated by Hawaiian (scheduled service), will be included
in the WorldPerks Program only by mutual consent.
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2
<PAGE>
SECTION 3. WORLDPERKS DATA PROCEDURES
A. Beginning May 17, 2000, Hawaiian Airlines will register the WorldPerks
number of the WorldPerks members at the time of reservation or check in
for all applicable Hawaiian flights. Hawaiian shall be responsible for
the validity, accuracy and completeness of the flight and membership
information of WorldPerks members who have flown on Hawaiian flights.
Consequently, Hawaiian Airlines will be responsible for the training of
check in staff who handle the Hawaiian flights regarding how to correctly
register WorldPerks member information.
B. Hawaiian will provide NW with records of WorldPerks members who have
flown on Hawaiian flights on a weekly basis. These records will be
provided in a format specified by NW. NW will load the records in the
WorldPerks-database and will post accrued benefits to the WorldPerks
member's account. Hawaiian Airlines will forward information to NW's
data processing department at the following address:
WorldPerks Program
Northwest Airlines, Inc.
Computer Support-J3670
1500 Tower View Road
Eagan, MN 55121
(612) 726-7989
C. In the event a WorldPerks member makes a retroactive credit claim or a
request with respect to the member's accrued benefits related to
Hawaiian flights after the date of travel, the WorldPerks member shall
be instructed to contact NW in writing and attach the applicable
ticket and original boarding card.
SECTION 4. WORLDPERKS AWARD USE ON HAWAIIAN AIRLINES
A. When a WorldPerks member has accumulated sufficient mileage under the
WorldPerks Program, the Member is entitled to an award published in
the most recent WorldPerks member guide or any other program
publication (hereinafter referred to as an "Award"). If a WorldPerks
member requests the issuance of an Award which includes one or more
HA-operated segments as listed in Attachment A, NW shall verify in
accordance with the rules and conditions of the WorldPerks Program
that the Member is indeed entitled to the requested Award and, if so,
NW will issue the Award. Hawaiian Airlines shall honor Award tickets
on Hawaiian flights, subject to the terms and conditions of Hawaiian's
participation in the WorldPerks Program as specified in this
Agreement, and the rules and conditions of the WorldPerks Program to
the extent that these are not in conflict with this Agreement and its
Exhibits. Award travel on Hawaiian will be subject to Hawaiian
Airlines General Conditions of Carriage.
B. NW and HA will work together to create reservation procedures for the
booking of WorldPerks award tickets on HA flights. All WorldPerks
awards on HA flights will be booked into HA's D-class for award
tickets in first class and in T-class for award tickets in coach
class. Hawaiian may place reasonable restrictions on the number of
seats on any flight(s) on which Awards are honored on a non-
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3
<PAGE>
discriminatory basis. WorldPerks members may book unrestricted capacity
free awards on HA operated flights according to the rules of the
WorldPerks program. Such awards will be booked in P-class for awards in
first class and Y-class for awards in coach class.
C. WorldPerks members holding an award ticket will be treated by Hawaiian
as if they were revenue passengers. In case of Hawaiian flight
irregularities or cancellations, Hawaiian will do all possible to
rebook the passenger holding an Award ticket on a Hawaiian flight or
another carrier's flight. If such passenger must be rebooked on
another carrier, Hawaiian will absorb all costs involved.
SECTION 5. HAWAIIANMILES PROGRAM - ACCRUAL OF BENEFITS
Effective May 17, 2000, HA shall, subject to the terms and conditions of
this Agreement and subject to the rules and conditions applicable to the
HawaiianMiles Program, grant miles to any revenue passenger who is a
member of the HawaiianMiles Program (hereinafter referred to as
"HawaiianMiles member") and who flies on any Northwest scheduled flight
referred to in Attachment A, including NW-coded flights operated by
Express Airlines I and Mesaba Aviation, based on the segments flown on
Northwest in accordance with the rules of the HawaiianMiles Program. The
mileage accrual structure is subject to changes in the overall mileage
accrual structure of the HawaiianMiles Program. Hawaiian is at liberty to
make these changes and will inform NW thereof when NW routes are
involved. All mileage accumulated on NW flights will count toward elite
level status in the HawaiianMiles Program.
New city pairs operated by Northwest (scheduled service), will be
included in the HawaiianMiles Program only by mutual consent.
SECTION 6. HAWAIIAN MILES DATA PROCEDURES
A. Beginning May 17, 2000, Northwest will register the HawaiianMiles
number of the HawaiianMiles members at the time of reservation or
check in for all applicable Northwest flights. Northwest shall be
responsible for the validity, accuracy and completeness of the flight
and membership information of HawaiianMiles members who have flown on
Northwest flights. Consequently, Northwest will be responsible for the
training of check in staff who handle the Northwest flights regarding
how to correctly register HawaiianMiles member information.
B. Northwest will provide Hawaiian with records of HawaiianMiles members
who have flown on Northwest flights on a weekly basis. These records
will be provided in a format specified by HA. Hawaiian will load the
records in the HawaiianMiles-database and will post accrued benefits
to the HawaiianMiles member's account. Northwest will forward
information to HA's data processing department at the following
address:
Computer Operations
HawaiianMiles
Hawaiian Airlines
3375 Koapaka St. Suite G 350
Honolulu, HI 96819
C. In the event a HawaiianMiles member makes a retroactive credit claim
or a request with respect to the member's accrued benefits related to
Northwest flights after the date of travel, the HawaiianMiles member
shall be instructed to
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4
<PAGE>
contact HA in writing and attach the applicable ticket and original
boarding card.
SECTION 7. HAWAIIANMILES AWARD USE ON NORTHWEST
A. When a HawaiianMiles member has accumulated sufficient mileage under
the HawaiianMiles Program, the Member is entitled to an award
published in the most recent HawaiianMiles member guide or any other
program publication (hereinafter referred to as an "Award"). If a
HawaiianMiles member requests the issuance of an Award which includes
one or more Northwest flight segments as referred to in Attachment A,
HA shall verify in accordance with the rules and conditions of the
HawaiianMiles Program that the Member is indeed entitled to the
requested Award and, if so, HA will issue the Award. Northwest
Airlines shall honor Award tickets on Northwest flights, subject to
the terms and conditions of Northwest's participation in the
HawaiianMiles Program as specified in this Agreement, and the rules
and conditions of the HawaiianMiles Program to the extent that these
are not in conflict with this Agreement and its Exhibits. Award travel
on Northwest will be subject to Northwest's General Conditions of
Carriage.
B. HA and NW will work together to create reservation procedures for the
booking of HawaiianMiles award tickets on NW flights. All
HawaiianMiles awards on NW flights will be booked into NW's A-class
for award tickets in First class, D-class for award tickets in
Business class and W-class for award tickets in Coach class. Northwest
may place reasonable restrictions on the number of seats on any
flight(s) on which Awards are honored on a non-discriminatory basis.
HawaiianMiles members may book unrestricted capacity free awards on NW
operated flights according to the rules of the HawaiianMiles program.
Such awards will be booked in P-class for awards in first class, C
class for business class and Y class for awards in coach class.
C. HawaiianMiles members holding an award ticket will be treated by
Northwest as if they were revenue passengers. In case of Northwest
flight irregularities or cancellations, Northwest will do all possible
to rebook the passenger holding an Award ticket on a Northwest flight
or another carrier's flight. If such passenger must be rebooked on
another carrier, Northwest will absorb all costs involved.
SECTION 8. PUBLICITY, ADVERTISING, AND PROMOTION AND INTELLECTUAL PROPERTY
A. All activities by Hawaiian targeted at WorldPerks members by making
use of the WorldPerks Program database are subject to NW's prior
written approval.
B. NW and Hawaiian may publicize in various media information relating to
HA's participation in the WorldPerks Program.
C. NW shall have the right to review and approve any Hawaiian promotional
materials which mention the WorldPerks Program or NW. Hawaiian will
provide NW with such promotional material within a reasonable period
of time before dissemination. The approval by NW shall not
unreasonably be withheld or delayed; such approval must be received
prior to dissemination.
D. NW will include Hawaiian in any general advertisements or promotions in
which all WorldPerks Program partners are mentioned.
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5
<PAGE>
E. As part of the ongoing promotion of Hawaiian as a partner within the
WorldPerks Program, NW will include Hawaiian's participation in
WorldPerks collateral material.
F. Hawaiian may submit to NW at least 1 insert/separate mailing per year,
specifications to be determined by NW, promoting its participation in
NW's Program. Such an insert/mailing may not include information
relating to other airlines which are generally considered as NW's
competitors and may not contain promotional offers or information
which is in conflict with NW's interests.
G. Hawaiian will be responsible for 1) all costs associated with creating
and producing the special inserts or separate mailing 2) all
associated handling and mailing costs, and 3) all costs associated
with providing fulfillment services for Hawaiian promotions and/or
targeted mailings. The cost of such mailing will be mutually agreed
upon.
H. Hawaiian may offer extra mileage (bonus miles) to WorldPerks members
in addition to the normal mileage accumulated in accordance with the
WorldPerks Program. The exact amount of miles, cost of the miles
accumulated to Hawaiian, validity dates and promotional efforts, and
other conditions in connection therewith will be mutually agreed upon
in writing by both parties hereto prior to the start of any such
promotion. The request for a bonus action should be communicated to NW
at least 6 weeks prior to the start of such promotion.
I. NW may offer special award promotions to WorldPerks members. NW may
solicit Hawaiian for participation in these promotions at NW's
discretion. In the event any such promotion includes HA flights, the
exact mileage amounts, validity dates and promotional efforts in
connection therewith will be mutually agreed upon by both parties
hereto prior to the start of any such promotion.
J. All activities by Northwest targeted at HawaiianMiles members by
making use of the HawaiianMiles Program database are subject to
Hawaiian's prior written approval.
K. NW and Hawaiian may publicize in various media information relating to
Northwest's participation in the HawaiianMiles Program.
L. HA shall have the right to review and approve any Northwest
promotional materials which mention the HawaiianMiles Program or HA.
Northwest will provide HA with such promotional material within a
reasonable period of time before dissemination. The approval by HA
shall not unreasonably be withheld or delayed; such approval must be
received prior to dissemination.
M. HA will include Northwest in any general advertisements or promotions
in which all HawaiianMiles Program partners are mentioned.
O. As part of the ongoing promotion of Northwest as a partner within the
HawaiianMiles Program, HA will include Northwest's participation in
HawaiianMiles collateral material.
P. Northwest may submit to HA at least 1 insert/separate mailing per
year, specifications to be determined by HA, promoting its
participation in HA's Program. Such an insert/mailing may not include
information relating to other airlines which are generally considered
as HA's competitors and may not contain promotional offers or
information which is in conflict with HA's interests.
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6
<PAGE>
Q. Northwest will be responsible for 1) all costs associated with
creating and producing the special inserts or separate mailing 2) all
associated handling and mailing costs, and 3) all costs associated
with providing fulfillment services for Northwest promotions and/or
targeted mailings. The cost of such mailing will be mutually agreed
upon
R. Northwest may offer extra mileage (bonus miles) to HawaiianMiles
members in addition to the normal mileage accumulated in accordance
with the HawaiianMiles Program. The exact amount of miles, cost of the
miles accumulated to Northwest, validity dates and promotional
efforts, and other conditions in connection therewith will be mutually
agreed upon in writing by both parties hereto prior to the start of
any such promotion. The request for a bonus action should be
communicated to HA at least 6 weeks prior to the start of such
promotion.
S. HA may offer special award promotions to HawaiianMiles members. HA may
solicit Northwest for participation in these promotions at HA's
discretion. In the event any such promotion includes NW flights, the
exact mileage amounts, validity dates and promotional efforts in
connection therewith will be mutually agreed upon by both parties
hereto prior to the start of any such promotion.
SECTION 9. TERM, TERMINATION AND SURVIVING OBLIGATIONS
A. This Agreement shall become effective as of May 17, 2000 and shall
continue in effect so long as the Commercial Cooperation Agreement
between the parties dated May 17, 2000 remains in effect. In the event
the Commercial Cooperation Agreement is terminated, this Agreement may
be terminated on the same date as the Commercial Cooperation Agreement
or any time thereafter by either party giving at least one-hundred
twenty (120) days prior written notice of termination to the other
party.
B. In the event notice of termination is delivered in accordance with
paragraph A of this Section, 1) WorldPerks members cannot earn miles
on HA flights and HawaiianMiles members cannot earn miles on NW
flights on/after the effective date of termination; and 2) award
tickets can not be issued for travel on the other party's flights
on/after the effective date of termination. All Award travel on
Northwest or Hawaiian flights must be completed within the validity
period of the Award tickets (maximum 1 year). Northwest and Hawaiian
will honor all Award travel on their respective flights during this
period.
SECTION 10. MANAGEMENT REPORTS
A. On a quarterly basis and at no additional cost to Hawaiian, NW shall
provide Hawaiian with a report, summarizing:
(i) the number of segments flown by WorldPerks members on Hawaiian
flights and the number of actual miles per segment city pair.
(ii) the number of award tickets used for travel by HawaiianMiles members
per coupon segment city pair on Northwest flights and the number of
actual miles involved. Ticket numbers will also be provided.
-------------------------------------------------------------------------------
7
<PAGE>
B. On a quarterly basis and at no additional cost to Northwest, Hawaiian
shall provide Northwest with a report, summarizing:
(i) the number of segments flown by HawaiianMiles members on Northwest
flights and the number of actual miles per segment city pair.
(ii) the number of award tickets used for travel by WorldPerks members
per coupon segment city pair on Hawaiian flights and the number of actual
miles involved. Ticket numbers will also be provided.
C. Northwest and Hawaiian may each request other reports from the other
party on an ad hoc basis regarding flight activity of their respective
members on Northwest or Hawaiian flights. The contents and costs of any
such reports will be mutually agreed upon between Hawaiian and Northwest.
SECTION 11. COSTS AND BENEFITS
Northwest and Hawaiian agree that the rights and obligations of the
parties set forth in this Agreement ("Rights and Obligations") will
benefit Northwest and Hawaiian by increasing the number and yield of
paying passengers and making each parties frequent flyer program more
competitive with frequent flyer programs offered by other carriers.
Northwest and Hawaiian also agree that the Rights and Obligations will
subject Northwest and Hawaiian to additional costs in terms of
additional administration and management, displacement, dilution, and
passenger-related costs for additional passengers from Program Awards.
Any payment between the parties with respect to this Agreement is
intended to balance the costs and benefits as between the parties.
A. The balancing payment shall be based on costs and benefits associated
with (1) actual miles flown by WorldPerks members on Hawaiian flights,
(2) actual miles flown by HawaiianMiles members on Northwest flights,
(3) any per segment charges and (4) any additional agreed to program
benefits related to such miles.
B. For WorldPerks members flying (revenue travel) on Hawaiian operated
interisland flights, NW will charge Hawaiian a cost recovery fee of
USD _____ per segment flown in coach class and USD _____ per segment
flown in first class and on all HA operated HNL-South Pacific flights,
NW will charge HA a cost recovery fee of USD _____ per actual mile
flown in coach class and USD _____ per actual mile flown in first
class.
C. For WorldPerks members redeeming WorldPerks program awards on Hawaiian
interisland operated flights, Hawaiian will charge Northwest a cost
recovery fee on a segment basis according to the following:
<TABLE>
<CAPTION>
SEGMENTS CLASS SEGMENT CHARGE
------------------------------------------------------
<S> <C> <C>
Interisland Coach _____
Interisland First _____
US-HNL Coach _____
US-HNL First _____
HNL-South Pacific Coach _____
HNL-South Pacific First _____
</TABLE>
------------------------------------
-------------------------------------------------------------------------------
8
<PAGE>
D. For HawaiianMiles members flying (revenue travel) on Northwest
operated flights, HA will charge Northwest a cost recovery fee of USD
_____ per actual mile flown in coach class and USD _____ per actual
mile flown in First/Business class.
E. For HawaiianMiles members redeeming Hawaiian Miles program awards on
Northwest operated flights, Northwest will charge Hawaiian a cost
recovery fee on a segment basis according to the following:
<TABLE>
<CAPTION>
SEGMENTS CLASS SEGMENT CHARGE
--------------------------------------------------------
<S> <C> <C>
US-HNL (nonstop) Coach _____
US-HNL (nonstop) First _____
HNL-Asia (nonstop) Coach _____
HNL-Asia (nonstop) First _____
US-Europe Coach _____
US-Europe First _____
</TABLE>
For all local and beyond connecting flights within the US and Asia,
Northwest will charge HA a cost recovery fee on segment basis according to
the following discrete RPM ranges:
<TABLE>
<CAPTION>
Segment Class of Service Cost Per RPM
RPM Range ---------------- ------------
---------
<S> <C> <C>
0-1,250 Coach _____
1,251-1,750 Coach _____
>1,750 Coach _____
0-1,250 First/Business _____
1,251-1,750 First/Business _____
>1,750 First/Business _____
</TABLE>
Capacity free awards will be charged at ___________________________.
F. The settlement of costs between the parties shall be based on the net
balance of the charges set forth in Sections 11.B, 11.C, 11.D and
11.E. Such net balance shall be invoiced on a quarterly basis within
60 days following the end of the quarter and will be paid within 45
days of receipt of such invoice.
G. Hawaiian Airlines agrees that the redemption charges under Section
11.C shall not be greater than the rates charged to any other Hawaiian
Airlines frequent flyer partner.
SECTION 12. TAX INDEMNIFICATION
A. Hawaiian shall pay and be responsible for all excise taxes, penalties,
and interest relating to the amounts paid by, or benefits transferred
by, Hawaiian to Northwest Airlines or its related entities pursuant to
this Agreement. Hawaiian shall indemnify and hold harmless Northwest
Airlines and its directors, officers, employees, agents and related
entities from and against any and all assessments or payments of
excise tax, penalties, and interest relating to the amounts paid by,
or benefits transferred by, Hawaiian Airlines to Northwest Airlines or
its related entities pursuant to this Agreement. This indemnification
specifically includes, but is not limited to, any assessments or
payments under
-------------------------------------------------------------------------------
9
<PAGE>
Internal Revenue Code sections 4263 or 6672, as amended or succeeded,
and related interest. Any payment which Hawaiian shall be required to
make to, or with respect to Northwest Airlines; its directors,
officers, employees, agents or any of its related entities pursuant to
this Section, with respect to any tax, penalty, or interest which is
subject to indemnification hereunder, shall be in an amount which,
after reduction by the amount of all taxes required to be paid in
respect of the receipt, accrual, or payment of such amount, is equal
to the payment otherwise required hereunder. The rights and
obligations arising under this paragraph shall survive the termination
of this Agreement.
B. Northwest shall pay and be responsible for all excise taxes, penaltie
and interest relating to the amounts paid by, or benefits transferred
by, Northwest to Hawaiian or its related entities pursuant to this
Agreement. Northwest shall indemnify and hold harmless Hawaiian
Airlines and its directors, officers, employees, agents and related
entities from and against any and all assessments or payments of
excise tax, penalties, and interest relating to the amounts paid by,
or benefits transferred by, Northwest Airlines to Hawaiian Airlines or
its related entities pursuant to this Agreement. This indemnification
specifically includes, but is not limited to, any assessments or
payments under Internal Revenue Code sections 4263 or 6672, as amended
or succeeded, and related interest. Any payment which Northwest shall
be required to make to, or with respect to Hawaiian Airlines; its
directors, officers, employees, agents or any of its related entities
pursuant to this Section, with respect to any tax, penalty, or
interest which is subject to indemnification hereunder, shall be in an
amount which, after reduction by the amount of all taxes required to
be paid in respect of the receipt, accrual, or payment of such amount,
is equal to the payment otherwise required hereunder. The rights and
obligations arising under this paragraph shall survive the termination
of this Agreement.
SECTION 13. CONFIDENTIALITY AND DATA OWNERSHIP
Each party agrees to protect as confidential, and not to use except for
the purpose of performing the terms of this Agreement, the contents of
this Agreement, all information exchanged hereunder and the data
furnished or obtained concerning the WorldPerks Program or HawaiianMiles
Program including, without limitation, the reports described in Section
10 hereof, as well as data concerning members of each party's program,
their travel transactions and selections of Awards under the Programs
except for (a) information already in that party's possession at the time
of disclosure; (b) information in the public domain; (c) information
developed or obtained by a party from a third-party source and not in
breach of this agreement; or (d) information a party is required to
disclose by applicable law or court or administrative order or in a
proceeding to enforce this Agreement.
NW retains full ownership of the WorldPerks database and HA retains full
ownership of the HawaiianMiles database.
SECTION 14. NOTICES
Notices to be provided under this Agreement shall be either personally
delivered or sent by prepaid registered mail or fax to the parties at
their respective addresses set forth below:
<TABLE>
<S> <C>
If to NW: If to Hawaiian Airlines:
Northwest Airlines, Inc. Hawaiian Airlines
-------------------------------------------------------------------------------
10
<PAGE>
Director WorldPerks Marketing Sr. Director Reservations and Distribution
5101 Northwest Drive 3375 Koapaka Street, Ste G350
St. Paul, MN 55125-111 Honolulu, HI 96819
Fax: 612-726-7049 Fax: 808-838-6748
Copy to Vice President and General Counsel
Fax: 808-838-6790
</TABLE>
A notice sent by mail shall be deemed to have been served within seven
(7) business days and notice given by fax shall be deemed to have been
served upon receipt by the sender of the fax transmission report
confirming that the fax has been successfully transmitted, provided that
the addressee does not within the following two (2) business days notify
the sender that the fax was transmitted illegibly or incorrectly.
If there is any change to or modification of any address or facsimile
number set forth above, the party changing such address or number shall
use reasonable efforts to promptly notify the other party of such change.
SECTION 15. ENTIRE AGREEMENT
This Agreement expresses the entire understanding of the parties with
respect to the subject matter hereof and may not be changed or modified
except in writing duly signed by each party. As of the Effective Date,
this Agreement supersedes and replaces the prior frequent flyer agreement
between the parties which was set forth as Exhibit C to the CMA.
SECTION 16. APPLICABLE LAWS AND COMPETENT COURT
A. NW and Hawaiian agree that they will comply with all mandatory laws
and regulations applicable to their obligations under this Agreement
as well to their respective frequent flyer programs.
B. With the exception of Section 12 which shall be interpreted in
accordance with U.S. federal law, this Agreement shall be interpreted
in accordance with the laws of Minnesota, regardless of the laws that
might be applicable under principles of conflict of law. Any dispute
that may arise out of or in connection with this Agreement that cannot
be settled amicably shall be resolved in accordance with Section 13 of
the Commercial Cooperation Agreement between the parties dated May 17,
2000.
SECTION 17. SURVIVAL OF OBLIGATIONS
Sections 12 and 13 and any payment obligations under Section 11 shall
survive the termination of this Agreement .
SECTION 18. ASSIGNMENT
Neither party will assign or otherwise transfer any of its rights or
obligations under this Agreement to any third party without the prior
written consent of the other party. Any assignment or transfer of this
Agreement without the required consent shall be void.
-------------------------------------------------------------------------------
11
<PAGE>
SECTION 19. NON-WAIVER
No failure or delay of any party (including their employees and agents)
to exercise any power under the Agreement or at law shall operate as a
waiver thereof, nor shall any single or partial exercise of any such
right or power preclude any other or further exercise thereof or the
exercise of any other right or power under this Agreement, and no waiver
by any party of any provision or part hereof shall be binding unless
expressly made in writing.
SECTION 20. TRADE MARKS
Each of Northwest and Hawaiian hereby grants to the other a limited,
nontransferable, non-exclusive, free license to reproduce and use,
subject to the owning party's reasonable approval, its names, tradenames,
service names, trademarks and service marks (the "Marks") for the limited
purpose of performing this Agreement and promoting the services to be
provided hereunder.
Any and all Marks of either party shall remain the property of the
original owner and may only be used by the other party for the term of
this Agreement and as provided herein. Nothing contained in this
Agreement shall be construed as conferring any right to otherwise use, in
advertising, publicity, promotion, marketing or other activities, the
Marks or other designations of the other party hereto.
SECTION 21. FORCE MAJEURE
No failure or omission of either party to carry out or observe any of the
provisions of the Agreement (except any accrued obligation to make
payments) shall give rise to any claim against that party, or be deemed
to be a breach of this Agreement by that party, if the same shall rise
out of Force Majeure, which is defined herein as any cause not reasonably
within the control of that party, whether or not foreseen, including
(without limitation) such causes as labor disputes, strikes, governmental
intervention, or the party's response to any insistence of any
governmental or supranational authority, wars, civil commotion,
hijacking, fire, flood, accident, storm or any Act of God.
The party delayed or prevented by Force Majeure shall use all reasonable
endeavors to remove such reasons or mitigate the effects thereof, and
upon removal and remedying of such reasons said party shall promptly
resume the performance of its obligations.
If the Force Majeure continues for over 3 months, either party may by
written notice terminate this Agreement immediately.
SECTION 22. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the benefit of
the permitted successors and assignees of each party.
SECTION 23. CAPTIONS
-------------------------------------------------------------------------------
12
<PAGE>
The captions included in this Agreement have been inserted as matter of
convenience only and are not in any way intended to define, limit or be
used in connection with the interpretation of this Agreement.
SECTION 24. INDEPENDENT CONTRACTORS
Nothing contained in this Agreement is intended or shall be construed to
create or establish any partnership or joint venture relationship between
the parties hereto.
SECTION 25. EQUAL EMPLOYMENT OPPORTUNITY
NW and HA are government contractors, and the Parties agree, as such
condition of this contract, to comply with the Equal Opportunity and
Affirmative Action clauses as set forth in Executive Order 11246, the
Vietnam-Era Veterans' Readjustment Act of 1974, the Rehabilitation Act of
1973, and implementing regulations at 41 CFR 60-1.4 (a), 41 CFR 6-741.5,
and 41 CFR 60-250.4 and that the provisions of such laws and regulations
are hereby adopted and incorporated into this Agreement by reference.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
<TABLE>
<S> <C>
HAWAIIAN AIRLINES NORTHWEST AIRLINES, INC.
/s/ /s/
--------------------------------- -------------------------------------
John W. Happ Lizabeth Shultis
Its: Senior VP Marketing and Sales Its: VP Marketing Programs & Worldwide
Advertising
Date:....5/26/00................. Date:................................
/s/
---------------------------------
Clancy Lyman
Its: VP Finance
Date:.....5/17/00...................
</TABLE>
-------------------------------------------------------------------------------
13
<PAGE>
ATTACHMENT A
APPLICABLE WORLDPERKS ACCRUAL/REDEMPTION CITY PAIRS:
1. All inter-island Hawaii city pairs
2. HNL-Pago Pago, AM. Samoa
3. HNL-Papeete, Tahiti
4. All transpacific flights (redemption only)
APPLICABLE HAWAIIANMILES ACCRUAL/REDEMPTION CITY PAIRS:
1. All NW operated routes except competitive O&D city pairs served by both
Hawaiian Airlines and Northwest Airlines which are available for
redemption only.
AWARD LEVELS
A. HawaiianMiles mileage requirements for award travel on Northwest flights
must be equal to or greater than the award levels published for WorldPerks
members redeeming miles for award travel on NW.
B. WorldPerks mileage requirements for award travel on Hawaiian flights shall
be based on the following:
1. HA Inter-island HI flights
a) 5000 miles (coach)
b) 10000 miles (first)
c) 10000 miles (rulebuster / coach)
d) 20000 miles (rulebuster / first)
e) WorldPerks members may redeem 15,000 miles for an 8 days
island pass on HA inter-island flights (valid for coach awards
only).
f) Northwest may common rate beyond HNL inter-island awards. No
additional miles are required in addition to US-HNL, Europe-HNL
and Asia-HNL award levels.
g) NW reserves the right to match other airlines competitive
changes to awards on HA or AQ operated inter-island flights.
2. HA South Pacific flights
a) NW awards on HA South Pacific flights will be based on NW
published award levels to Australia (from HNL, Asia, Europe
and the US mainland). NW reserves the right to change
published award levels at any time. HA will be promptly
notified of such changes.
3. HA transpacific flights
a) NW awards on HA transpacific flights will be based on NW
published transpacific pricing for similar O&D's. NW reserves
the right to change published award levels at any time. HA
will be promptly notified of such changes
-------------------------------------------------------------------------------
14
<PAGE>
EXHIBIT B OF HA/NW
Page 1
HAWAIIAN / KLM / NORTHWEST
MULTILATERAL PRORATE AGREEMENT
This Multilateral Prorate Agreement (the "Agreement"), dated May 17, 2000, is
made by and between Hawaiian Airlines, Inc. ("Hawaiian" or "HA"), KLM Royal
Dutch Airlines ("KLM" or "KL"), and Northwest Airlines, Inc. ("Northwest" or
"NW"). Hawaiian, KLM and Northwest are each referred to herein as a "Carrier"
and collectively as the "Carriers".
WHEREAS, KLM and Northwest have created a transatlantic joint venture
airline alliance (the "JV") pursuant to which numerous flights between the
United States and Europe are operated; and
WHEREAS, KLM, Northwest and Hawaiian desire to facilitate interline
travel between Hawaiian's flights and flights operated by the JV and solely by
NW; and
WHEREAS, KLM, Northwest and Hawaiian desire to divide revenues and
otherwise prorate fares for such interline travel;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, KLM, Northwest and Hawaiian agree to
enter into the Agreement under the terms and conditions set forth herein.
SECTION 1. INTERLINE SETTLEMENT
KLM, Northwest and Hawaiian hereby agree to divide revenues and otherwise
prorate fares as set forth in the Appendix and the Attachments.
SECTION 2. TERM
The Carriers agree that this Agreement will apply to ticketing and travel
on/after June 1, 2000, and shall not be terminated sooner than the effective
termination date of the NW/HA Commercial Cooperation Agreement dated May 17,
2000, as it may be hereafter amended, provided that, upon termination of the
HA/NW Cooperative Marketing Agreement, the Agreement shall remain in effect
until: i) it is terminated by written agreement of HA and NW, or (ii) one of the
three Carriers delivers to the others a written notice of termination at least
60 days in advance of the proposed termination date.
This Agreement supersedes all prior prorate agreements between Hawaiian on the
one hand and Northwest/KLM on the other.
SECTION 3. NOTICES
All notices, requests, demands and other communications hereunder shall be in
writing and shall be delivered personally (including by courier) or mailed by
registered mail, return receipt requested, or given by facsimile transmission to
the parties at the following addresses (or to such other address as a party may
specify by notice given to the others pursuant to this provision), or by SITA
message, or by electronic mail (e-mail) and shall be deemed given when so
received. Notices shall be transmitted as follows:
<PAGE>
Page 2
<TABLE>
<CAPTION>
<S> <C>
(a) if to Hawaiian, to: (b) if to Northwest, to:
Hawaiian Airlines, Inc. Northwest Airlines, Inc.
3375 Koapaka Street Department A2096
Suite G-350 5101 Northwest Drive
Honolulu, HI 96819 St. Paul, MN 55111 USA
Attn: John B. Happ, Senior Vice Attn: G. Robert Flory
President Marketing and Sales Manager - Industry Affairs
Copy: Lyn Anzai Telefax No.: 612-727-7110
General Counsel SITA: MSPQTNW
Telefax No.: 808-838-6746 Mr. Happ e-mail: [email protected]
808-838-3690 Ms. Anzai
SITA: HNLSKHA
(c) if to KLM, to:
KLM Royal Dutch Airlines
Department AMS/QT
Amsterdamseweg 55
1182 GP Amstelveen
The Netherlands
Attn.: F.J. van der Hoorn
Senior Manager Network Interlining
Telefax No.: 31-20-6488094
SITA: AMSQTKL
e-mail: [email protected]
</TABLE>
SECTION 4. AMENDMENT
Except as specified in Attachments A (E)2), any amendments to this Agreement
must be concurred to by HA and NW by written, telegraphic or e-mail means at
least fourteen (14) days prior to effective date of such amendment.
The parties hereto have caused this Agreement to be executed in their names and
on their behalf by their respective officers duly authorized, on the day and
year first above written.
<TABLE>
<CAPTION>
<S> <C>
HAWAIIAN AIRLINES, INC. NORTHWEST AIRLINES, INC.
By: /s/ By: /s/
------------------------------------- -----------------------------------------
Name: John B. Happ Name: G. Robert Flory
Its: Senior Vice President, Marketing Its: Manager - Industry Affairs
and Sales
</TABLE>
<PAGE>
Page 3
<TABLE>
<CAPTION>
<S> <C>
Date: 5/26/00 Date:
----------------------------------- --------------------------------------
KLM ROYAL DUTCH AIRLINES
By: /s/ By:
-------------------------------------- -----------------------------------------
Name: Clarence K. Lyman Name: F.J. van der Hoorn
Its: V.P. Treasurer Its: Senior Manager Network Interlining
Date: 5/17/00 Date:
----------------------------------- --------------------------------------
</TABLE>
<PAGE>
Page 4
HAWAIIAN / KLM / NORTHWEST
MULTILATERAL PRORATE AGREEMENT
APPENDIX
INTERLINE SETTLEMENT GENERAL CONDITIONS
1.1 GENERAL: Hawaiian, KLM, and Northwest agree to divide revenues and otherwise
prorate fares as set forth below for tickets issued June 1, 2000 and beyond for
travel occurring on/after June 1, 2000.
(a) PRORATES:
(1) For HA segments within Hawaii used with through published
or NW/KL unpublished fares or with NW/KL separately assessed
unpublished local intra-Hawaii fares used in conjunction with
and appearing on the same ticket as NW/KL unpublished fare
programs, and for fares publsihed by HA for travel within
Hawaii, see Attachment A.
(2) For class mapping, see Attachment B.
(3) For HA segments between Hawaii and Continental U.S. and
between LAS and LAX used with through NW/KL fares between Area
1 and Areas 2 or 3, or between Area 2 and Area 3 via Area 1,
see Attachment C.
(4) For NW published VUSA fares and Senior Coupon Program,
see Attachment D.
(5) For involuntary reroutes, see Attachment E.
(6) For MLT fares, see Attachment F.
(7) For HA international PPT/PPG fares and NW segments
within Area 1, see Attachment G.
(8) For Volume Discounts (applic. only between HA and NW),
see Attachment H.
(b) APPLICABLE FARES AND TICKET STOCK:
(1) Published fares may be issued using NW 012, KL 074, or HA
173 ticket stock, including standard industry ticket stock
validated NW 012, KL 074, or HA 173, unless otherwise
indicated on the Attachment. Except for VUSA fares, for
purpose of verification of published fares, the applicable
published fare is that filed with the U.S. DOT in PIPPS
(Passenger Interline Prorate System) in effect on the date the
passenger's ticket is issued.
(2) Unpublished fares applicable to the prorates specified
herein may only be issued using NW 012 / KL 074 ticket stock,
including standard industry ticket stock validated
NW 012 / KL 074.
Unpublished fares will be indicated as follows:
- A fare basis code followed by a ticket
designator of one or two letters
followed by 3 digits (e.g. BN656, F304,
SD004, etc.).
- A tour code which begins with a "J" in the
Tour Code Box.
- A fare basis code using a 3 letter city
code, e.g. COSL, MAMS, etc.
- Any IT- or GV-type fare basis code.
These tickets may or may not reflect a fare
value. Any zero value tickets in this
grouping do not include frequent flyer
redemption tickets.
(c) CHILDREN'S DISCOUNT: The children's discount from the adult
prorate shall be the same as is applicable to the through
fare, unless otherwise noted on the attachment. However, on HA
segments, no children's discount is applicable to the amount
to be paid to HA when travel on the
<PAGE>
Page 5
fare sector to be prorated is wholly within North America, or
as otherwise noted in the Attachments.
(d) INTERLINE SERVICE CHARGE: All flight coupons billed under this
agreement will be subject to the interline service charge
outlined in the ACH Manual of Procedures between HA and NW and
on IATA Revenue Accounting Manual (RAM) procedures between HA
and KL, unless otherwise noted on any attachment to this
Agreement.
(e) RESERVATIONS FOR TRAVEL:
Reservations booking class requirements are as outlined in the
Attachments.
(f) APPLICABLE FLIGHT NUMBERS: Travel as outlined in Attachments
E and G when ticketed on HA stock is permitted only on flights
operated by NW, by XJ and by 9E.
(g) RULE WAIVERS: HA shall recognize rule waivers granted by NW/KL
and their agents with respect to any provision applicable to
any fare covered under this Agreement when ticketed on NW/KL
stock.
(h) NW VISIT USA, BEREAVEMENT/ILLNESS, AND SENIOR COUPON/SENIOR
DISCOUNT PROGRAMS: HA agrees to allow travel over its route
system within Hawaii as outlined in the provisions specified
herein and filed by NW.
(i) MINIMUM PRORATE RULE: The Minimum Prorate Rule as outlined in
the Prorate Manual Passenger (PMP) Chapter E.1.g) will not
apply to any provisions specifically addressed herein.
(j) SITUATIONS NOT COVERED: The provisions of the ACH Passenger
Proration Rules Manual or of the PMP, as applicable, will
govern those situations not specifically addressed herein.
1.2. SETTLEMENT OF ACCOUNTS: Transportation furnished hereunder shall be
included in the monthly settlement of accounts in the same manner as other
transportation sales between HA and NW, as per the ACH Manual of Procedures, and
between HA and KL per the IATA RAM.
1.3. COLLECTION OF APPLICABLE FARES: Except for the fare reductions specifically
noted herein, all other charges with respect to transportation furnished
hereunder, including charges for excess baggage, shall be governed by applicable
tariffs, rules and regulations.
1.4. RESPONSIBILITY FOR COMPLIANCE WITH CONDITIONS: Each Carrier agrees to see
that its agents comply with the terms and conditions of this Agreement. Should
the terms and conditions of this Agreement be violated by a Carrier or its
agents, the Carrier in violation agrees to reimburse the other Carrier(s) for
any and all losses or damages incurred by the other Carrier(s) due to violation
of the terms and conditions herein by the Carrier in violation or its agents.
1.5. MOST FAVORED CUSTOMER (APPLICABLE ONLY BETWEEN HAWAIIAN AND NORTHWEST):
-------------------------------------------------------------------------------
Hawaiian shall be entitled to a 90 day written notice and an opportunity to cure
any violation of this section. In the event Hawaiian elects to leave such more
favorable charges in effect, this Agreement shall be amended such that the more
favorable prorate amount becomes the applicable prorate on these segments upon
the expiration of the 90 day notice period.
1.6 AGREEMENT ON LIMITED TERM PRORATE AMOUNTS: NW and HA agree that, in the
event the revision or extension of any of the limited term prorate amounts in
the Attachments cannot in good faith be agreed at the manager level, both
carriers will escalate the unresolved issue(s) to the appropriate executive
level for good faith resolution, and in no case at any point may either carrier
<PAGE>
Page 6
invoke termination of the Agreement solely based on failure to revise or extend
these amounts. NW and HA agree that neither carrier shall prolong the time
necessary to reach agreement on revised amounts on the basis of self-interest.
____________________________________.
<PAGE>
Page 7
ATTACHMENT A
HA SEGMENTS WITHIN HAWAII
THROUGH PUBLISHED AND UNPUBLISHED FARES
SEPARATELY ASSESSED LOCAL FARES WITH NW/KL UNPUBLISHED PROGRAMS
(A) FARE TYPES - All through published and through unpublished NW/KL fares
between worldwide points and points in Hawaii, and separately assessed
unpublished local intra-Hawaii fares used in conjunction with and
appearing on the same ticket as NW/KL unpublished fare programs.
(B) APPLICABLE TICKET STOCK - NW / KL / HA (including standard industry
ticket stock validated NW 012 / KL 074 / HA 173) except that NW/KL
unpublished fares may only be issued on NW 012 / KL 074 stock.
(C) PLACE OF ISSUE - Worldwide.
(D) ROUTING - Worldwide via KL/NW to/from HNL, and via HA between HNL and
points in Hawaii. When ticketed on NW/KL stock, additional carriers are
permitted anywhere in the itinerary, however NW/KL must complete
carriage to or from HNL.
(E) PRORATION
1) TRAVEL IN HA'S FIRST CLASS CABIN
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
2) TRAVEL IN HA'S ECONOMY CLASS CABIN
-------------------------------------------------------------
b) ALL HA SEGMENTS, UNPUBLISHED NORMAL FARES, AND
THROUGH PUBLISHED AND UNPUBLISHED SPECIAL FARES
For all through published and unpublished fares, and
for separately assessed unpublished local fares sold in
conjunction with and appearing on the same ticket as
NW/KL unpublished fare programs, HA will accept the
following OW USD amounts per segment for travel on HA
segments connecting to/from NW/KL at HNL, regardless
of stopover at HNL.
<PAGE>
Page 8
The fare basis code for separately assessed amounts
will be xHANW1 where "x" is the booking class sold
using the NW flight number. This grouping also
includes all int'l seamen fares with fare basis code
-SCxx.
----------------------------------------------------
c) HA SEGMENTS NOT TO/FROM HNL, UNPUBLISHED SPECIAL
FARES
----------------------------------------------------
3) INTRA-HAWAII PUBLISHED FARES
Prorates specified herein shall not apply to published fares
sold for travel within Hawaii that does not connect to/from
NW/KL at HNL.
a) HA-DESIGNATED FLIGHTS
----------------------------------------------------
b) NW-DESIGNATED FLIGHTS
----------------------------------------------------
(F) INTERLINE SERVICE CHARGE -
----------------------------------------------------
<PAGE>
Page 9
ATTACHMENT B
CODESHARE CLASS MAPPING AND INTERLINE BOOKING CLASS REQUIREMENTS
Class mapping for NW flight numbers on HA-operated flights is as follows. The
same scheme will be filed in IPGT-1 CAB581 Rule 7 by KL and NW to apply when the
HA flights covered by this Agreement are sold using the HA code on a through NW
or KL int'l fare.
If either NW or HA believes that the mapping as structured is at any point
failing to meet the mutually agreed objective of greater traffic development by
NW on HA's system within Hawaii, a concerted effort will be made by both
carriers to effect changes towards assuring that primary objective of this
important marketing relationship.
NW CLASS HA CLASS
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----- -----
----- -----
----- -----
----- -----
----- -----
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ATTACHMENT C
HA SEGMENTS BETWEEN HAWAII AND CONTINENTAL U.S. AND LAS-LAX
NW/KL INTERNATIONAL FARES (EXCLUDING FARES WHOLLY WITHIN AREA 1)
(A) FARE TYPES - All through published NW/KL fares between Area 1 and Areas
2 or 3, or between Area 2 and Area 3 via Area 1.
(B) APPLICABLE TICKET STOCK - NW / KL (including standard industry ticket
stock validated NW 012 / KL 074).
(C) PLACE OF ISSUE - Worldwide.
(D) ROUTING - Worldwide via KL/NW to/from HNL/LAS/LAX/PDX/SEA/SFO and via
HA between the points outlined below. Additional carriers are permitted
anywhere in the itinerary, however NW/KL must complete carriage to or
from the HA connect point.
(E) PRORATION
----------------------------------------------------------------------
(F) INTERLINE SERVICE CHARGE -
----------------------------------------------------------------------
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ATTACHMENT D
HA SEGMENTS WITHIN HAWAII AND LAS-LAX
NW VUSA FARES AND SENIOR COUPON PROGRAM
(A) FARE TYPES - All published NW VUSA fares between points in Hawaii and
between LAS and LAX, and NW Senior Coupon Program between points in
Hawaii. NW shall provide HA with a copy of all VUSA and Senior Coupon
Fares applicable to travel on HA upon government approval and receipt
of the completed tariff pages from ATPCo. Senior Coupon tickets reflect
fare basis code "KPEAK" with ticket designator "SD004" (both unique to
this program).
(B) APPLICABLE TICKET STOCK
Only NW/KL (including standard industry ticket stock validated NW 012 /
KL 074).
(C) PLACE OF ISSUE - Worldwide.
(D) ROUTING -
1) VUSA FARES
Passengers must travel exclusively via HA or NW-designated
flights operated by HA between points in Hawaii, or via HA
between LAS and LAX.
2) SENIOR COUPON FARES
Passengers must travel exclusively via HA or NW-designated
flights operated by HA between points in Hawaii.
(E) PRORATION -
----------------------------------------------------------------------
(F) INTERLINE SERVICE CHARGE -
----------------------------------------------------------------------
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ATTACHMENT E
INVOLUNTARY REROUTING FOR HA AND NW/KL FARES
(A) FARE TYPES - All HA, NW and KL fares, published and unpublished.
(B) APPLICABLE TICKET STOCK - HA / NW / KL (including standard industry
ticket stock validated HA 173 / NW 012 / KL 074).
(C) PLACE OF ISSUE - Worldwide.
(D) PRORATION -
----------------------------------------------------------------------
(F) INTERLINE SERVICE CHARGE -
----------------------------------------------------------------------
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(E) ATTACHMENT F
NW / MLT VACATIONS TOUR OPERATOR FARES
(A) FARE TYPES - Fares using the xHAMLT fares basis code sold by MLT
Vacations, Inc., as part of a tour package for either round trip,
circle trip or one way travel. Prorates are not applicable to "air
only" travel and shall not be published as addon amounts. Fare basis
code will be xHAMLT where "x" is the booking class sold using the NW
flight number..
(B) APPLICABLE TICKET STOCK - NW (including standard industry ticket stock
validated NW 012). Tickets shall be issued such that the prorate amount
is not separately assessed on the ticket.
(C) DATE AND PLACE OF ISSUE - Applicable to all tickets issued on/after
June 1, 2000, and beyond at any MLT Vacations, Inc., office. Tickets
must show MLT Vacations in the validation box.
(D) ROUTING - Passengers must travel exclusively via HA or NW-designated HA
flights between any two points in Hawaii served by HA.
(E) PRORATION -
----------------------------------------------------------------------
(F) INTERLINE SERVICE CHARGE - ______________.
(G) TRAVEL DATES - June 1, 2000 through May 31, 2003.
(H) DISCOUNTS - No discounts apply.
(I) AMENDMENTS TO RATES - Section 4 applies, with the exception of the
amount payable to HA which may be amended at HA's sole discretion,
provided thirty (30) days advance written notice is given to MLT
Vacations, Inc.
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ATTACHMENT G
NW TC1 SEGMENTS
HA INTERNATIONAL FARES BETWEEN TC1 AND PPG/PPT
(A) FARE TYPES - All HA fares, published and unpublished, between PPG/PPT
and Area 1 via the Pacific.
(B) APPLICABLE TICKET STOCK - HA / NW / KL (including standard industry
ticket stock validated HA 173 / NW 012 / KL 074).
(C) PLACE OF ISSUE - Worldwide.
(D) ROUTING - Via HA between PPG/PPT and HNL/LAS/LAX/PDX/SEA/SFO and via NW
between the points in Area 1 outlined below. Travel is permitted only
via flights operated by NW, by XJ, and by 9E.
(E) PRORATION AND BOOKING CLASSES -
-----------------------------------------------------------------
(F) DISCOUNTS-
-----------------------------------------------------------------
(G) INTERLINE SERVICE CHARGE -
-----------------------------------------------------------------
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ATTACHMENT H
VOLUME DISCOUNTS
APPLICABLE SOLELY BETWEEN NW AND HA
Production will be calculated based on total segments of all revenue tickets
issued on NW 012 stock used on HA for travel within Hawaii as per Attachments A
and F. Separately assessed local HA fares as outlined in Attachment A (E)3) will
not be considered segments for these purposes.
A segment is defined as each one way passenger for which a separate prorate
amount is paid by NW to HA. A segment may consist of more than one coupon in the
case of connections, e.g. ITO-LIH with a connection in HNL. Further, for
example, a passenger completing an itinerary of HNL-KOA, then KOA-OGG, then
OGG-LIH, then LIH-HNL would equal 4 segments.
The discount schedule is as follows:
----------------------
Settlement of these discounts will be made monthly. Calculations shall be based
on seasonal indexing using the results from the previous year.
Seasonal indexing for Mar00 - Feb01:
----------------------
Indices will be revised annually based on NW-HA traffic exchange results.
Further, NW shall not be held to the negative incentive amounts below the
_______ production level in the case of causes or events beyond the reasonable
control of NW, including, without limitation, the following: force majeure, Act
of God, seizure under legal process, fire, flood, or other weather related
reason, or the actions or inactions of any governmental authority, including,
without limitation, the failure or refusal on the party of any government or
governmental agency to grant or issue approvals, clearances, exemptions, permits
or operation authority, or rescission or revocation thereof by any government or
governmental agency; damage to or destruction of aircraft or other flight
equipment, mechanical difficulties or breakdowns; unavailability of fuel; riots
or civil commotion; strikes, lockouts or labor disputes, war or hazards or
dangers incident to a state of war.
