OST-2000-8448 - Santa Barbara - Exemption - Venezuela-US Scheduled Passenger

Santa Barbara proposes to schedule weekly round trip flights between Caracas and Miami and between Maracaibo and Miami. It anticipates that initially it will use B-737 or comparable aircraft wet leased from a duly authorized and properly qualified U.S. or foreign air carrier. Charter flights would be provided only in response to market demand.

Santa Barbara desires to reach an agreement with a U.S. certificated air carrier to provide the wetlease services for which it has applied in this Docket. However, the U.S. carrier utilizes the Fort Lauderdale gateway as its principal service point in this area and service via the Miami gateway would be costly, inconvenient and not suitable for its operations. Accordingly, Santa Barbara requests the Department of Transportation (the "Department*) to authorize Santa Barbara to engage in scheduled foreign air transportation of passengers, property and mad between including the points Caracas and Maracaibo, Venezuela and Fort Lauderdale, Florida, limited to a long term wet lease arrangement with a U.S. certificated air carrier to be filed and approved by the Department.

To the best of Aeropostal knowledge, the U.S.-Venezuela Air Transportation Agreement does not include Fort Lauderdale, FL, as an authorized U.S. point for the duly licensed and designated carriers of Venezuela. However, to the extent that the Department were to grant Santa Barbara the authority to operate to Fort Lauderdale, FL, on an extra-bilateral or any other basis, Aeropostal would also request that it be granted the same extra-bilateral. authority, since it has been interested in operating scheduled services to Fort Lauderdale for some time now.

Exemption from 49 U.S.C. § 41301 to engage in scheduled foreign air transportation of persons, property and mail between Caracas and Maracaibo, Venezuela, and Fort Lauderdale, Florida; and authority to conduct charters in accordance with Part 212 of the Department's rules. The applicant would conduct these services only by wet leasing aircraft from a duly authorized and properly supervised U.S. or foreign air carrier.

As regards Aeropostal, we note that the carrier has no pending request for Fort Lauderdale authority on file with the Department. Should such a request be filed, we will consider it at that time. In the circumstance presented, however, we see no reason to withhold the requested authority from Santa Barbara.

Based on the record in this case, we found that Santa Barbara Airlines is financially and operationally qualified to perform the services authorized above. In addition, we found that Santa Barbara Airlines is substantially owned and effectively controlled by citizens of Venezuela. Specifically, all of Santa Barbara Airlines' owners and chief management personnel are citizens of Venezuela. The carrier is properly licensed by the Government of Venezuela to perform the proposed services. Santa Barbara Airlines may not conduct U-S. operations with its own aircraft and crews without further order of the Department.

Hereby applies for renewal of the exemption from 49 U.S.C. 41301 granted to it by Notice of Action Taken dated March 5, 2001 to conduct scheduled foreign air transportation of persons, property and mail between Caracas and Maracaibo, Venezuela, and Fort Lauderdale, Florida and authority to conduct charters in accordance with Part 212 of the Department's rules using wet leased aircraft from a duly authorized and properly supervised U.S. or foreign air carrier.

Santa Barbara has recently reached an agreement with a U.S. certificated air carrier to provide certain wet-lease charter services and is implementing the authority granted and pursuant to the Statement of Authorization 2002-008 approved February 22, 2002. The program of charter flights will serve Miami, Florida.

Renew exemption from 49 U.S.C. § 41301 to engage in scheduled foreign air transportation of persons, property and mail between Caracas and Maracaibo, Venezuela, on the one hand, and Miami and Fort Lauderdale, Florida, on the other hand, and authority to conduct charters in accordance with Part 212 of the Department's rules. The applicant would conduct these services only by wet leasing aircraft from a duly authorized and properly supervised U.S. or foreign air carrier.

Santa Barbara Airlines may not conduct U.S. operations with its own aircraft and crews without further order of the Department.

Comes now Santa Barbara, C.A. pursuant to 49 U.S.C. section 40109, and 14 CFR Part 302, Subpart D, of the Rules of Practice of the Department of Transportation, and hereby applies for renewal of the exemption from the provisions of 49 U.S.C. section 41301, granted to it by Notice of Action Taken dated April 7, 2003, for authority to engage in scheduled foreign air transportation of passengers, property and mail between a point or points in Venezuela and a point or points in the United States and in on-route charters and off-route charters and charter flights between points in the United States and points outside Venezuela subject to the Department's regulations, pending action on its application for a foreign air carrier permit filed in Docket OST-2000-8447, and including authority limited to wet-lease operations with a duly authorized and properly qualified U.S. or foreign air carrier, pending grant of the full relief requested in this Docket. Santa Barbara invokes and relies upon the provisions of 5 U.S.C. section 558(c) in accordance with the provisions of Part 377 of the Department's Special Regulations, as applicable.

Hereby supplements its application for renewal of exemption filed with the Department on April 2, 2004. In paragraph 4 of its application, Santa Barbara advised the Department that it would provide a summary income statement and balance sheet for the most recent available fiscal year, pending its being translated into English. A certified translation is being hereby supplied to the Department.

Santa Barbara also wishes to clarify that although the renewal application filed on April 2, 2004 sought exemption authority to engage in scheduled foreign air transportation of passengers, property and mail between a point or points in Venezuela and a point or points in the United States, Santa Barbara seeks a renewal only of authority granted by the Department, namely for authority to engage in scheduled foreign air transportation of passengers, property and mail between Caracas and Maracaibo, Venezuela on the one hand, and Miami and Fort Lauderdale, Florida on the other hand, as well as authority to conduct charters in accordance with Part 212 of the Department's rules.

Hereby applies for renewal of the exemption from the provisions of 49 U.S.C. section 41301, granted to it by Notice of Action Taken dated April 30, 2004, for authority to engage in scheduled foreign air transportation of passengers, property and mail between Caracas and Maracaibo, Venezuela, on the one hand, and Miami and Fort Lauderdale, Florida, on the other hand; and authority to conduct on-route charters and off-route charters and charter flights between points in the United States and points outside Venezuela subject to the Department's regulations; and including authority limited to wet-lease operations with a duly authorized and properly qualified U.S. or foreign air carrier, pending grant of the full relief requested in this Docket.

On July 8, 2004 Santa Barbara Airlines began two daily scheduled flights between Caracas & Miami by wet leasing B757‑200 aircraft from TransMeridian Airlines. At the end of 2004 Santa Barbara Airlines had a total of six (6) international regular destinations, including Guayaquil & Quito in Ecuador, Madrid, & Tenerife in Spain, Miami, USA and Aruba. SBA is currently in process of obtaining government designation to operate from Caracas into Lisbon, Portugal and Milano, Italy. Our domestic routing system include flights within Caracas, Valencia, Maracaibo, Cumana, Merida, San Antonio, Santa Barbara del Zulia, Las Piedras and Barquisimeto.

In its previously filed application for a foreign air carrier permit, Docket OST-2000-8447, and in other applications for exemption pending action on its request for a permit, Santa Barbara submitted extensive information consistent with part 211 of the Department's regulations.

Renew exemption from 49 U.S.C. 41301 to engage in scheduled foreign air transportation of persons, property and mail between Caracas and Maracaibo, Venezuela, on the one hand, and Miami and Fort Lauderdale, Florida, on the other hand; and authority to conduct charters in accordance with Part 212 of the Department’s rules. The applicant would conduct these services only by wet leasing aircraft from a duly authorized and properly supervised U.S. or foreign air carrier.

Santa Barbara requests that the Department renew authority to provide scheduled foreign air transportation of persons, property and mail at Miami in addition to Fort Lauderdale. The authority to serve Miami and Fort Lauderdale was originally granted by Notice of Action Taken dated March 21, 2002 and most recently renewed June 3, 2005.

Santa Barbara operates scheduled combination services to the U.S. under a wet-lease agreement with a U.S. certificated air carrier as approved by the Department and the Venezuelan Government. With the determination by the FAA, announced April 21, 2006, that the civil aviation authority of Venezuela complies with ICAO standards, and upon approval by the FAA and the Department, Santa Barbara proposes to operate a schedule of B757-200 flights, using its own aircraft.

Renew and amend exemption from 49 U.S.C. § 41301 to engage in scheduled foreign air transportation of persons, property and mail between Caracas and Maracaibo, Venezuela, on the one hand, and Miami and Fort Lauderdale, Florida, on the other hand; and authority to conduct charters in accordance with Part 212 of the Department's rules, and amend the exemption so as to permit the carrier to conduct the authorized operations using its own aircraft and crews.

Santa Barbara's current authority limits the carrier to conducting service only on a wet-leased basis. See Notice of Action Taken issued June 3, 2005, in the present docket. At the time of our granting that authority, Venezuela was a Category 2 country under the FAA's International Aviation Safety Assessment Program. Santa Barbara states in its present application that on April 21, 2006, the FAA announced that the civil aviation authority of Venezuela complies with ICAO standards.

Since the removal of the limitation on Santa Barbara's authority to conduct service on a wet‑lease basis, the company has successfully implemented combination service between Caracas and Miami using its own aircraft. The company now wants to begin freighter service between Venezuela and the U.S. Santa Barbara notes that Venezuela and the U.S. historically have been strong strong economic partners. About 78% of Venezuelan imports by air come from or via the United States. At the present time Venezuelan exports to the United States by air are limited and are not of sufficient volume to support a third/fourth freedom all‑cargo operation. Santa Barbara believes that air freighter services between the U.S. and Venezuela can be successfully developed but that it will be necessary to operate via intermediate points to make the Venezuela‑U.S. all‑cargo operation economically viable.

The cargo commodities to be transported between the U.S. and Venezuela are extensive. The most significant are related to oil production, automotive and telecommunications manufacturing along with general cargo movements. The addition of Colombia makes available the transport of commodities such as textiles and perishables such as flowers. The combination of the markets would provide stronger support and economic success for the proposed service.

Santa Barbara proposes to operate daily freighter service betweenVenezuela and the United States so as to accommodate market demand at the following points:

Santa Barbara would utilize DC1O‑30F aircraft having a payload capacity of 65,000 kgs, or such other aircraft suitable to the proposed operation as determined by the company. It is proposed that the service begin by April 15, 2007

Upon learning of the submission of the Santa Barbara application two weeks ago, with its surprising albeit incorrect assertion that FedEx Express had been authorized by INAC to exercise fifth freedom rights between Venezuela and Colombia, FedEx Express approached the Venezuelan authorities to discuss the matter. We were advised informally that INAC would be amenable to considering such an application from us requesting such extra-bilateral authority, and we have submitted a formal application for these rights which is now pending before INAC. In the event the FedEx Express application is granted by INAC, which we have every hope will prove to be the case, we would propose to advise the Department of Transportation, and expect that we would then be prepared to support the Santa Barbara request. Until such time, however, we would ask the Department to defer a decision on the Santa Barbara application pending in this docket, in light of the circumstances described hereinabove.

Atlas Air, Inc. does not object to the request per se, but urges the Department, at a minimum before granting the application, to require Venezuela to provide written assurances to the United States that (1) it will expeditiously grant all comparable U.S. air carrier requests and (2) not condition approval of any U.S. carrier services on the existence of cooperation agreements between those carriers and Venezuelan airlines.

Atlas would welcome an expansion of rights for carriers of the United States and Venezuela through intergovernmental negotiations and amendment of the existing air transport agreement, which was last modified 17 years ago. One positive element could be an open-skies regime for all-cargo services. Short of that, before granting Santa Barbara's application, the Department should ensure that comparable extra-bilateral rights are available to all U.S. carriers wishing to serve Venezuela' and that unfair restrictions will not be imposed on either bilaterally authorized or extra-bilateral services. Specifically, it ought to require a written commitment from Venezuela to freely grant .S. carrier applications for authority to operate beyond Venezuela on a 5th freedom basis on triangulated routings (such as U.S.-Caracas-Bogota-U.S,). The Department also should require written assurances that Venezuela has permanently abandoned its policy of requiring U.S. carriers to enter into commercial agreements with Venezuelan carriers in order to exercise their rights.

Atlas states it would welcome U.S. and Venezuela intergovernmental negotiations for the purpose of amending the current bilateral agreement with an expansion or rights for both U.S. and Venezuela air carriers. Santa Barbara concurs with the concept that new bilateral talks could be useful. But Santa Barbara does not believe that it would be in the public interest to deny or delay action on Santa Barbara's application pending such talks and it strongly opposes Atlas' gratuitous suggestion that the Department should take such a position. Santa Barbara urges the Department to evaluate the very significant benefits being enjoyed by the U.S. carriers under the present arrangements between the two countries and in recognition thereof, grant the relief requested by Santa Barbara including services via Colombia.

Upon review of Santa Barbara's application, FedEx Express did the right thing. It investigated whether INAC would be amenable to considering extra-bilateral authority for its Venezuela service and received an informal positive response. An application for fifth freedom rights has been filed by FedEx Express with INAC and is now pending. (FedEx Express Answer at p. 3). Santa Barbara has not responded as of this date regarding the FedEx Express proposal or otherwise stated any position on the application other than as herein reflected. Specifically it is Santa Barbara's position that the Department should not delay action or disapprove the Santa Barbara request pending INAC's action on FedEx Express' application. This reflects the fact that there already exists clear evidence of reciprocity and comity supporting an award to Santa Barbara and the fact of the significant dominance enjoyed by the U.S. carriers currently serving the Venezuela markets in terms of numbers of carriers, numbers of flight operated, fifth, sixth and seventh freedom rights exercised, and the total volume of traffic carried. The shipping public and fair competition deserves the encouragement of Venezuela all-cargo operations including fifth freedom operation in the conduct of U.S.-Venezuela all-cargo services as proposed by Santa Barbara.

In consideration of all of the foregoing and such other matters as the Department can take official notice, Santa Barbara Airlines, C.A. respectfully requests that the Department of Transportation, acting pursuant to 49 U.S.C. section 40109, will grant an exemption from the provisions of 49 U.S.C. section 41301 authorizing Applicant to engage in the scheduled all-cargo foreign air transportation as described, by amendment to its current authority or such other authority as the Department determines to be appropriate, and take such other or further action, consistent with the premises herein, as may be in the public interest.

Amerijet does have issues with the Government of Venezuela which may be relevant to one of the principal issues raised by the Santa Barbara application, whether there is sufficient reciprocity and comity in the bilateral aviation relationship to permit the Department to act favorably on the Santa Barbara application even though it requests authority not contemplated by the terms of the bilateral agreement entered into be the two countries. Amerijet is not prepared to express a position on that question today, and in fairness, it requires additional time within which to determine what course of action it should take with respect to the application.

Santa Barbara filed its application on March 1, 2007. It served the parties shown on the service list attached to the application which included Amerijet at its correct email address for service pursuant to Section 302.7 of the Department's Rules of Practice. Amerijet's copy was transmitted and the electronic record provided no indication that the transmission had failed. The Santa Barbara application was posted by the Department on its DMS web site that day. On March 15, 2007 Federal Express Corporation filed its answer to Santa Barbara's application and that answer was served on all parties including Amerijet. The answer was posted on the DMS web site that date. On March 16, 2007 Atlas Air, Inc. filed its answer to the application and served all parties including Amerijet. The Atlas answer was timely posted on the DMS web site. Amerijet does not claim that it did not receive the answer of FedEx Express on March 15 or the answer of Atlas on March 16, 2007. Accordingly, Amerijet should have been aware of Santa Barbara's application no later than March 16, 2007 and could have acted at that time. It also had the option to file a timely reply on March 27, 2007 to the FedEx Express and Atlas answers but it did not.

Given the procedural sequence and full notice to Amerijet, there is no justification to allow Amerijet an additional fifteen days from March 27, 2007 to file a further answer. As a matter of fairness and equity Amerijet should not be permitted to submit further pleadings and delay the processing of Santa Barbara's application. In this connection Santa Barbara has requested that the Department act promptly and stated in its application that it would like to begin service as early as April 15, 2007 subject to the receipt of all governmental approvals and other necessary steps. The Department should not allow further pleading to delay its decision.

Amerijet's "preliminary answer" highlights, just as did the answers of FedEx Express and Atlas, that the U.S. flag carriers in the Venezuela all-cargo markets are able to operate with a wide range of flexibility. Amerijet acknowledges that it has conducted scheduled all-cargo service in the Venezuela market for "many years." On information and belief Santa Barbara submits that its primary all-cargo service to and from Venezuela has been non-regular charter flights to points other that Caracas or Valencia which are conduct pursuant to extra‑bilateral authorizations and depend upon reciprocity and comity that exists between Venezuela and the United States.

In contrast to Amerijet, Santa Barbara has been restricted in its service to and from the U.S. It has been limited to wet-lease services because of FAA Category II limitations. These limitations have now been lifted and Santa Barbara has recently commenced combination passenger service using its own aircraft to operate between Venezuela and Miami. It now wants to begin all-cargo service but requires certain extra-bilateral rights to operate via Colombia because of market conditions and traffic flow imbalances as described in its application. Santa Barbara's request is very limited and reflects market realities and the need to allow Venezuela air carriers the opportunity to participate in all-cargo services between the U.S. and Venezuela after being prevented from doing so for many years.

It is obvious that Santa Barbara's application may not be favorably considered by the Department at the present time. The limitations on the operating authority the Government of Venezuela has issued to Amerijet clearly preclude approval of the Santa Barbara application on the basis of comity and reciprocity. More importantly, the Department should not even consider the issue of comity and reciprocity as long as the GOV continues to impose restrictions on Amerijet that violate the "fair and equal opportunity to compete" provisions of the currently effective bilateral.

Amerijet respectfully opposes the Santa Barbara application and asks the Department to defer any action on it until the GOV eliminates practices which unfairly injure Amerijet and violate the terms of the currently effective bilateral. In addition, Amerijet supports the request of other US carriers which urge the Department to redouble its efforts to conclude a new and more effective bilateral agreement with the GOV.

Answers to Santa Barbara's application were due on March 16, 2007. American did not file an answer at that time because we believed that approval by the Government of Venezuela of American's proposed service between Miami and Valencia, Venezuela was imminent. Because Venezuela has not yet approved American's application, the public interest would be best served by allowing American to file a late answer in this docket.

American does not object to Santa Barbara's request, provided that the Government of Venezuela first permits American to engage in bilaterally-authorized combination service between Miami and Valencia. The Department granted an exemption to American to serve the Miami-Valencia route by Notice of Action Taken in OST-2006-26387 on December 8, 2006. American duly sought authorization from the Government of Venezuela, but our application remains pending.

In these circumstances, the Department should await Venezuelan approval of American's Miami-Valencia service - which is authorized by the U.S.-Venezuela Air Transport Agreement, as amended - before acting on Santa Barbara's extra-bilateral request in this docket.

Amerijet argues it "is not even permitted to serve Valencia" and that the Government of Venezuela has "effectively barred" Amerijet "from the U.S.-Valencia market." These are serious representations but they are not true. The facts include the following: The Valencia Airport Authority, for cause not known to Santa Barbara, revoked the concession held by the Venezuelan company "ISCAR" to provide ground handling services at Valencia; ISCAR has also been the Venezuela representative of Amerijet; and, importantly, the action by the Airport Authority did not affect Amerijet's licensed authority
issued by INAC to fly between the U.S. and Valencia. U.S. flag all-cargo carriers, Centurion Air Cargo and others, continue to operate to Valencia and so can Amerijet. It is a further fact that Amerijet has not been operating on a regular basis into Valencia for many years. The erroneous claim that the Government of Venezuela is intentionally preventing Amerijet from serving Valencia is not accurate, does not demonstrate lack of reciprocity and comity, and must be rejected.

Santa Barbara asks that the Department take into consideration the real differences between the Santa Barbara application to operate new all-cargo service between the U.S. and Venezuela now pending before it and the application of American to operate additional passenger, property and mail services between the U.S. and Venezuela now pending before INAC. As previously noted Santa Barbara has been restricted in its service to and from the U.S. because of FAA Category II limitations. These service restrictions lasted for eleven years. With the lifting of these limitations Santa Barbara is now trying to enter Venezula-U.S. markets for the first time. American, in comparison, is well established in U.S.-Venezuela markets and the markets beyond Venezuela that its serves in South America. Santa Barbara does not take any position adverse to the grant of additional authority to American but given the circumstances and the clear inequities between the U.S. carriers and the Venezuelan carriers serving these markets, delaying action on Santa Barbara's request to leverage earlier action by INAC on American's request is not justified.

In consideration of all of the foregoing and such other matters as the Department can take official notice, Santa Barbara Airlines, C.A. respectfully requests that the Department of Transportation without further delay grant Santa Barbara Airlines, C.A. application to engage in the scheduled all-cargo foreign air transportation via Colombia, as described, by amendment to its current authority or such other authorization as the Department determines to be appropriate, and take such other or further action, consistent with the premises herein, as may be in the public interest.

As its Rejoinder, Amerijet contends that it is necessary to restate clearly what Santa Barbara has placed at issue. While there is a bilateral agreement between the two countries, Santa Barbara is seeking authority not contemplated by that agreement. Thus, in order to be successful, Santa Barbara's burden is to show, first, that the bilateral relationship is sound, that carriers designated by the United States under the agreement are enjoying all the rights and benefits arising under the agreement, and secondly, that the extra-bilateral authority it seeks should be sanctioned by the US Government because carriers designated by the US Government are authorized by the Government of Venezuela to enjoy reciprocal benefits or otherwise under the broad principles of comity and reciprocity. Contrary to the ambiguous and conclusionary assertions contained in Santa Barbara's reply, the facts show that Santa Barbara has failed to carry its burden in both respects.

It is clear that both Venezuelan and U.S. carriers are keenly interested in introducing additional and innovative fifth freedom services. As both Santa Barbara and FedEx Express have noted in previous filings, these fifth freedom rights are particularly important to sustaining economically viable services between the two countries given the directional imbalances in traffic demand. FedEx Express is therefore hopeful that if bilateral aviation negotiations between the two governments could be convened, there might be a prospect of amending the bilateral air transport agreement to reflect the aspirations of all concerned parties, such that the carriers of both countries could more effectively serve the needs of shippers in the market. FedEx Express therefore urges the U.S. Government to pursue such negotiations at the earliest opportunity. Until such negotiations are successfully concluded, however, FedEx Express can conceive of no basis for affording extra‑bilateral rights to the carriers of Venezuela.

Santa Barbara Airlines, C.A. pursuant to 302.6 of the Rules of Practice of the Department of Transportation respectfully moves for leave to file and hereby withdraws its application for authority to engage in all-cargo foreign air transportation between Venezuela and the United States via Colombia filed March 1, 2007 for amendment of the exemption issued by Notice of Action Taken issued January 24, 2007. Santa Barbara has determined that the proposed all-cargo service via Colombia is not a commercial priority for the company at this time. This withdrawal of the application for amendment has no effect on the authority Santa Barbara currently holds from the Department.

Santa Barbara hereby applies for renewal of the exemption from the provisions of 49 U.S.C. section 41301, granted to it by Notice of Action Taken issued January 24, 2007, for authority to engage in scheduled foreign air transportation of passengers, property and mail between Caracas and Maracaibo, Venezuela, on the one hand, and Miami and Fort Lauderdale, Florida, on the other hand; and authority to conduct on-route charters and off-route charters and charter flights between points in the United States and points outside Venezuela subject to the Department's regulations; using its own aircraft as authorized by INAC the Venezuelan Civil Aviation Authority or wet-leased aircraft subject to the Department's regulations.

Santa Barbara currently operates daily round trip scheduled combination services between Venezuela and the U.S. using two B757-200 aircraft, serial numbers 24118 and 24119 and with the respective Venezuela Registration Numbers YV 2243 and YV2242. These operations are conducted consistent with the requirements of INAC and compliant with ICAO standards. Santa Barbara also has six ATR-42 aircraft in its fleet and wet leases a Boeing 767 aircraft available for service between Venezuela and the U.S.

FedEx Express suggests that action on this request should be delayed until such time as FedEx Express receives a favorable ruling from Institute Nacional de Avicion Civil in Venezuela on the request filed by FedEx Express for extra-bilateral authority to operate a new flight once a week to cover Viracopas - Valencia - Memphis. FedEx Express's request was filed with INAC on November 13, 2007 and INAC has not yet ruled on the application.

Santa Barbara asserts that its application demonstrates principals of comity and reciprocity and although FedEx Express does not object to Santa Barbara's application for extra-bilateral rights, the principals of comity and reciprocity require that action on Santa Barbara's application be deferred until such time as FedEx Express' request for extrabilateral rights is granted by INAC. Both requests seek minimal expansions beyond the terms of the bilateral, with FedEx Express seeking a Fifth Freedom opportunity at an alternative gateway and Santa Barbara requesting the right to continue to use a nondesignated gateway. Further, Santa Barbara has invoked the automatic continuation provision of the Administrative Procedures Act and will not be harmed by the US. deferring action on its Application until such time as INAC rules on FedEx Express' request.

The position taken by FedEx Express is without merit. FedEx Express in its answer is attempting to intertwine Santa Barabara's existing authority to operate combination carriage over routes which are either in the bilateral air transport agreement between Venezuela and the US or for which clear comity and reciprocity has been found to exist and applicable to carriers from both the US and Venezuela with extra-bilateral all-cargo service and fifth freedom flight for which there has been no showing of reciprocity and comity. It is Santa Barbara's view that given the huge imbalance in favor of US Flag carriers in the Venezuela-US air transportation markets the position expressed by FedEx Express in its answer is not reasonable and should be rejected by the Department.

On November 14, 2007 Santa Barbara filed a timely application for renewal of the exemption issued by the Department to engage in foreign air transportation of persons property and mail between Caracas and Maracaibo, Venezuela, on the one hand, and Miami and Fort Lauderdale, Florida, on the other hand, in addition to other specified authority, invoking the provisions of the 5 U.S.C. § 558 in accordance with the provisions Part 377 of the Department's Special Regulations. That application is pending before the Department. Santa Barbara now asks the Department for a limited further authority to include Valencia as an additional co-terminal point in Venezuela for service to and from Miami carrying persons, property and mail and to engage in charter flights between Valencia and the U.S., such authority to be in addition to that presently held by Santa Barbara as set forth in the referenced exemption. The Applicant is desirous of beginning service between Valencia and Miami as soon as possible after receipt of all necessary permissions.

Santa Barbara initially proposes to operate daily service between Valencia and Miami which it would integrate with service in the Maracaibo-Miami market. Santa Barbara proposes to use a B757-21B aircraft, Serial No. 24714, configured with 192 Economy and 8 First Class seats, or such other aircraft as may be available and appropriate for use in this routing.

In these circumstances, the Department should await Venezuelan approval of Arnerican's Miami-Valencia service - which is authorized by the U.S.-Venezuela Air Transport Agreement, as amended - before acting on Santa Barbara's request in this docket.

With Amerijet barred from the U.S.-Valencia market, it is singularly inappropriate for Santa Barbara to seek DOT authority to serve that market, and it would appear to be equally inappropriate for the Department to consider Santa Barbara's application favorably until Amerijet is permitted to resume operations at Valencia with and through its designated agent.

The Department is well aware of the problem Amerijet has confronted in its effort to serve Valencia. On April 11, 2007, Amerijet filed an answer In opposition to another Santa Barbara application based in part on actions of the Government of Venezuela that effectively terminated Amerijet's ability to continue to serve Valencia. In the face of opposition from Amerijet and other U.S. carriers, Santa Barbara subsequently withdrew that application. Nevertheless, the Valencia restriction which was the subject of Amerijet's opposition to the application continue in effect. Unless and until the Government of Venezuela does whatever is necessary to eliminate and remove those restrictions, the Department should not even consider acting favorably on the pending Santa Barbara application.

Amerijet's claim that it is "barred from the U.S.-Valencia market" is a serious allegation but it is not true. Santa Barbara noted in its filing dated April 11, 2007 in this Docket that the Valencia Airport Authority, for cause not known to Santa Barbara, revoked the concession held by the Venezuelan company "ISCAR" to provide ground handling services at Valencia. ISCAR has been the Venezuela representative of Amerijet. The action by the Airport Authority did not affect Amerijet's licensed authority issued by INAC to fly between the U.S. and Valencia. U.S. flag all-cargo carriers, Centurion Air Cargo and others, continue to operate to Valencia and so can Amerijet. The unrelated third-party problems of ISCAR are no basis to deny Santa Barbara's application to provide combination service to Valencia. Amerijet noted in its Answer that its agent in Venezuela has asked a Venezuela court to review the matter. Clearly a third party law suit in Venezuela is not a basis for delay or denial of Santa Barbara's application. Amerijet's position is without merit and should be rejected.

American would have the Department delay approval of Santa Barbara's application until INAC has acted favorably on American's application to operate between Miami and Valencia. Santa Barbara has not opposed the application of American pending before INAC and has and will support American consistent with Santa Barbara's interests. But it asks that the Department take into consideration what the real public interest issue is - that of the traveling public and the need for direct service in the Valencia-Miami market. It would not be in the public interest to delay approval of Santa Barbara's application pending resolution of the American application. It would be harmful and inconsistent with the provisions of the bilateral agreement itself.

Santa Barbara further asks that the Department look at the real differences between Santa Barbara and American. Santa Barbara is a small but growing Venezuelan flag air carrier. It has a limited route structure and is just now in the process of recovering from the years of being deprived of serving the United States because of limitation imposed by Venezuela's classification as a Category 2 country by the Federal Aviation Administration. American, in contrast, is a long established, very, very large U.S. flag air carrier that has enormous resources and serves markets throughout the world. The impact that the delay or denial of Santa Barbara's request has on it as it tries to emerge from years of operating under the wet-lease restrictions imposed as a result of Venezuela's previous status as a Category 2 country far out weigh the impact on American, which carrier is a dominating presence in international markets including Venezuela markets. Santa Barbara has a lot of catching up to do and delaying its entry into the Valencia market will cause it harm in addition to not being in the public interest for reasons stated.

American Airlines, Inc. hereby withdraws the answers it submitted in this docket on April 25, 2008 and April 13, 2007. To the extent required, American requests leave to withdraw. American states that it has no objection to the pending applications filed by Santa Barbara Airlines on April 11, 2008 and March 1, 2007.

Santa Barbara initially proposes to operate four round trips a week between Barcelona and Miami as follows:

Additional flights will be added as the market requires. Santa Barbara proposes to use a B757-21B aircraft, Serial No. 24714, configured with 192 Economy and 8 First Class seats, or such other aircraft as may be available and appropriate for use in this routing. The addition of this capacity would accommodate market demand as evaluated by Applicant and provide effective competitive air service between Barcelona and Miami.

OST-2000-8447 - Foreign Air Carrier Permit Application	December 1, 2000	Application for a Foreign Air Carrier Permit	Foreign Air Carrier Permit; U.S.- Venezuela Scheduled Passenger
		Index of Exhibits
		Exhibit SAN-1: Required Information
		Exhibit SAN-2: Authority
		Exhibit SAN-3: Insurance Coverage
		Exhibit SAN-4: Financial Statements
		Exhibit SAN-5: Service Proposal
		Exhibit SAN-6: Warsaw Agreements
		Verification
		Service List

OST-00-8448	February 15, 2001	Amendment No.1 to Application for Exemption	Foreign Air Carrier Permit; U.S.- Venezuela Scheduled Passenger
		Service List

OST-00-8448	March 2, 2001	Answer of Aeropostal Alas de Venezulela	U.S.- Venezuela
		Service List

OST-00-8448	March 4, 2002	Application for Renewal of Exemption and for Authority to Serve Miami	U.S.- Venezuela
		Service List

Flight No.	Route	Departure	Arrival	Frequency
S3-1522	MIA-BLA	11:00	13:30	Mon, Tues, Fri, Sun
S3-1523	BLA-MIA	14:30	17:30	Mon, Tues, Fri Sun