OST-98-3754 / US-France, UPS / Allocation / April 17, 1998

NOTICE: Any person who wishes to support or oppose this Application must file an answer by April 22, 1998, as provided in the Notice issued by the Department of Transportation served April 13, 1998 and must serve that answer on all persons served with this Application.

Application of

UNITED PARCEL SERVICE CO. / DOCKET OST 98-3754

For allocation of available service opportunities

(U.S.-France)

Pursuant to the Notice issued by the Department of Transportation ( the "DOT" or the "Department") served April 13, 1998 announcing new route opportunities between the United States and France, United Parcel Service Co. ("UPS") hereby files this Application for Allocation of Available Service Opportunities. Specifically, UPS requests the allocation of authority to engage in all-cargo foreign air transportation between any point in the United States via intermediate points to any point in France and beyond.

1. On April 8, 1998, the United States and France signed a Memorandum of Consultations providing for a new air transportation agreement (the "Agreement") which will result in a substantial increase in both passenger and all-cargo services. For all-cargo services, the United States may immediately designate a U.S. all-cargo carrier to operate "from points behind the United States via the United States and intermediate points to France and beyond...." (Annex 1, Section I to the Agreement). Annex 2, Article I of the Agreement further states that "[I]n addition: in April 1998 each party can designate two (2) additional airlines for all-cargo services. One of these two additional airlines may not operate to Paris until April 2003...."

2. UPS hereby applies for these service opportunities and also requests that it be named as the U.S. all-cargo air carrier authorized to serve Paris immediately. UPS's service proposal is attached hereto as Exhibit 1. At page one is a diagram of UPS's initial service pattern. Essentially UPS will be adding a B-727 flight between its European hub in Cologne and the Charles DeGaulle Airport in Paris. Page two of Exhibit I shows a non-stop U.S.-Paris B-767 operation with a continuation from Paris to the UPS Cologne hub. UPS will implement this service pattern as soon as the traffic can support a B-767 operation. Page five of Exhibit I shows the extensive service pattern operated by (or for) UPS through its hub in Cologne, Germany. The grant of the requested authority would enable UPS to connect France directly into this extensive hub operation to the benefit of shippers and consignees in the U.S. and elsewhere.

3. UPS already holds the underlying certificate authority to provide the proposed service under its Certificate For Route 557. A copy of this certificate is attached hereto as Exhibit 2. UPS will commence service within 90 days of being awarded the authority.

4. UPS is already well-established in France, having operated there (utilizing other air carriers) for many years. UPS's existing infrastructure in France is substantial. Pages six and seven of Exhibit I provide some details of the present UPS operation in France. They show for example that UPS has a total of 838 surface vehicles and 38 operating centers in France. They also show that UPS carried in excess of 5 million shipments to, from and within France in 1997. This existing presence in France, coupled with the long recognized benefits of being able to operate one's own aircraft in a market /1, will enable UPS to offer immediate and widespread service improvements to both shippers and consignees.

5. UPS has a wide variety of freighter aircraft and can tailor the size of the aircraft to fit the market. UPS's current freighter fleet comprises 51 B-727-100 aircraft, 8 B-727-200 aircraft, 49 DC-8-70 series aircraft, 70 B-757 aircraft, 22 B-767 aircraft and 14 B-747 aircraft.

6. UPS currently plans to initiate service with a B-727 aircraft and projects that, possibly by as early as this year, the traffic will warrant a size increase to a B-767 aircraft. UPS also has B-747 aircraft currently in its fleet and available should the traffic warrant a further capacity increase.

7. In conformance with the requirements of Subpart D of the Department's Procedural Regulations, (14 C.F.R. 302.400 et ~jM.) UPS submits the following. UPS is a Delaware corporation whose mailing address is 1400 Hurstboume Parkway, Louisville, KY 40223. UPS holds certificates of public convenience and necessity authorizing it to engage in domestic and foreign all cargo transportation, including scheduled all-cargo transportation to and from France. See Orders 86-9-39, September 16, 1986; 87-12-61, December 24, 1987; 881-20, January 7, 1988; 88-9-44, September 22, 1988; and Order 91-1-44, January 15, 1991).

8. UPS is a citizen of the United States as that term is defined in the Federal Aviation Act. All officers, directors, shareholders of UPS, or persons who have the power to influence the management of the applicant or persons holding any voting interest in UPS are U.S. citizens.

1/ See, e.g., DOT Order 92-8-7, p.3 (June 17 1992).

9. If the requested service opportunities are granted to UPS, it will commence using them within 90 days. The service proposed here is comparable to that which UPS currently operates and, thus, would not constitute a substantial change in operations requiring review under Part 204 of the Department's regulations. Also, an award of these frequencies to UPS would not be a "major regulatory action" requiring review under the Energy and Conservation Act of 1975, as defined in Part 313.4 of the Department's regulations. UPS has determined that there is adequate fuel available for the proposed service. For UPS's start-up proposal, UPS's fuel consumption would be less than 10 million gallons annually. Fuel consumption statistics are provided at Exhibit 1, p. 3.

10. Attached hereto as Exhibit 3 is the Affidavit of Robert H. Frenzel, Vice President of UPS, attesting to the truth of the matters set forth herein.

WHEREFORE, UPS respectfully requests that the DOT authorize it to engage in all-cargo foreign air transportation between any point in the United States via intermediate points to any point in France and beyond and such other and further relief as may be deemed just necessary.

Respectfully Submitted,

David L. Vaughan

Kelley Drye & Warren LLP

1200 19th Street, N.W.

Suite 500

Washington, D.C. 20036

Attorney for Applicant

United Parcel Service Co.