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OST-96-1153

Southern Air Transport, Inc. (Notice of Action Taken - Renew)

OST-96-1153 | Posted May 23, 1997

Notice of Action

Scheduled foreign air transportation of property and mail between a point or points in the US, on the one hand, and the coterminal points Barranquilla, Bogota, Cali, and Cartagena, Colombia, on the other, via the intermediate points.

By: Paul Gretch

Order Confirming Notices of Action Taken

Order 97-6-16 | Issued June 12, 1997 | Served June 18, 1997

Order

The captioned U.S. air carriers have applied for various forms of authority or relief from Title 49 of the U.S. Code or regulations or orders of the Department in order to perform the air transportation activities shown in the attached Notices of Action Taken. Except as noted, no answers were filed to these requests. Because of the imminence of these operations, we approved them by telephone, subject to adherence, by each applicant, to the conditions set forth in its certificate(s) of public convenience and necessity, and/or conditions attached.

• American Airlines – OST-97-2302
• American Airlines – OST-97-2527
• Amerijet International – OST-97-2183
• Continental Airlines – OST-97-2489
• Pan American World Airways – OST-97-2467
• Polar Air Cargo – OST-97-2265
• Polar Air Cargo - OST-97-2265
• Polar Air Cargo – OST-97-2352
• Southern Air Transport – OST-96-1153
• United Air Lines – OST-97-2126

By: Paul Gretch

Southern Air Transport (Exemption Renewal, US-Colombia Scheduled All-Cargo)

OST-96-1153 | February 23, 1998

Application for Renewal of Scheduled Exemption Authority

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By an application which is currently pending in Docket 48658, Southern Air is seeking amendment of its §401 Certificate of Public Convenience and Necessity authorizing scheduled all-cargo service on this route. Since the Department has not yet acted upon Southern Air's §401 Certificate Amendment application seeking to conduct scheduled all-cargo service on this route, the scheduled exemption authority granted to Southern Air by the May 21, 1997 Notice of Action Taken will expire by its own terms on May 21, 1998.

Southern Air therefore requests that its authority to conduct scheduled all-cargo service between a point or points in the United States, on the one hand, and the coterminal points Barranquilla, Bogota, Call, and Cartagena, Colombia, on the other hand, via intermediate points be extended by a further year.

Answers are due by March 10, 1998

Service List

Counsel:  Pierre Murphy, Elizabeth Collins, 202-872-1679

Southern Air Transport, Inc. (Notice of Action Taken)

OST-96-1153 | Filed February 23, 1998 | Action Taken May 15, 1998

Notice of Action

Scheduled foreign air transportation of property and mail between a point or points in the United States, on the one hand, and the coterminal points Barranquilla, Bogota, Call, and Cartagena, Colombia, on the other, via intermediate points.

Applicant Rep:  Pierre Murphy, 202-872-1679

Southern Air Transport, Inc.

Southern Air operated on its U.S.-Colombia route through September 1998. In October 1998, Southern Air filed a petition under Chapter 11 of the Bankruptcy Code in the United States District Court for the Southern District of Ohio. On February 26, 1999, the Bankruptcy Court approved the purchase of Southern Air's route authority and other assets by Devon Partners LLC. Devon has formed "Southern Air Inc." and transferred the acquired route authority find other assets to Southern, which plans to continue Southern Air's strong record of all-cargo operations with many of the same employees as soon as possible. To that end, former Southern Air employees are now employed by Southern and are helping Southern secure FAA and DOT route transfer authority. Pursuant to 49 U.S.C. § 40109 and Rule 402 of the Department's Rules of Practice, Southern Air Transport, Inc. and Southern Air Inc.  apply to renew for a one-year period Southern Air's exemption from 49 U.S.C. § 41101 l to provide scheduled air transportation of property and mail between points in the United States, on the one hand, and the coterminal points Barranquilla, Bogota, Call and Cartagena, Colombia, on the other hand, via intermediate points.

Counsel:  Crowell Moring, Bruce Keiner, 202-624-2500 and Pierre Murphy, 202-872-1679

Southern Air Transport, Inc.

Polar takes no position on whether the Department should renew the exemption authority of an airline that has ceased all operations. Even if Southern Air's exemption were renewed, however, the dormant authority would provide the holder no more right to commence service to Colombia than any other carrier. It is long-standing Department policy that dormant route authority does not provide the holder a preference in starting new operations in a limited entry market. . In addition to Southern Air's dormant designation, there is a second designation for all-cargo service that has been available under the U.S.-Colombia Air Transport Agreement since September 1, 1998. That designation is the subject of the pending U.S.-Colombia All-Cargo Services proceeding, where Polar is one of only two remaining applicants.' The importance that Polar attaches to this route is the basis for Polar's persistence in pressing for an expeditious resolution of the case and grant of the authority in question.

Counsel:  Kirkland & Ellis, Cathleen Peterson for Polar, 202.879.5161

Southern Air Transport, Inc.

Polar is attempting to use the lack of sufficient frequencies to meet all requests in the U.S.-Colombia All-Cargo Services Proceeding, Docket OST-98-3939, to undermine a potential worldwide competitor and interfere with the transaction transferring Southern Air's route authority and other assets to Southern. By depriving Southern of a valuable limited-entry route, Polar hopes to block the progress of Southern in providing vigorous new competition on international routes. Southern would not object to Polar receiving temporary U.S.-Colombia all-cargo authority from the Department so long as such authority does not preclude Southern from commencing its U.S.-Colombia all-cargo operations under the authority it has acquired from Southern Air or delay the start-up of Southern's operations.

Counsel:  Pierre Murphy, 202-872-1679 for SAT and Crowell Moring, Lorraine Halloway, 202-624-2500 of SA

Southern Air Tranport, Inc.

Southern Air and SAI also contend that the Department does not ordinarily consider competing applications in connection with route transfers. In each of the cases they cite, however, the transferee was an operating carrier that was fully capable of using the transferred authority. That is not the case here. Although SAI, a new company, hopes to obtain Department operating authority and hire some of Southern Air's former employees, in reality, SAI is still in the planning stage. No route transfer application has been filed, and no Department finding has been issued concluding that SAI is fit, willing and able to provide foreign air transportation. The outcome of SAI's aspirations is less than certain. In any case, SAI's hopes to enter the Colombia market at some future date should not prevent Polar, an established and operating air carrier, from beginning Colombia service immediately.

Counsel:  Kirkland & Ellis, Cathleen Peterson for Polar, 202.879.5161

Southern Air Transport, Inc.

Polar claims that Southern merely "hopes to hire some of Southern Air's former employees" and "is still in the planning stage." In fact, former Southern Air employees are already working at Southern, and Southern expects to file a route transfer application by May 7. Southern officials now have decided to concentrate on c barter and wet-lease operations during the first year of Southern's operations. Thus, Southern has now decided that it does not plan to initiate its own U.S.-Colombia scheduled service before September 2000, and the designation held by Southern Air is available for temporary reallocation until that date.

Counsels:  Pierre Murphy, pmurphy@lopmurphy.com and Elizabeth Collins for Southern Air Transport, ecollins@lopmurphy.com, Crowell & Moring LLP, Bruce Keiner, Jr., rbkeiner@cromor.com and  Lorraine Halloway for Southern Air, lhalloway@cromor.com

Southern Air Transport, Inc.

Polar Air Cargo, Inc. adopts the attached Answer, dated May 21, 1999, as its response to the Joint Surreply of Southern Air Transport, Inc., and Southern Air, Inc., dated April 30, 1999, in the above-captioned proceeding.

Counsel:  Polar and Kirkland Ellis, Jeffrey Manley, 202-879-5161, jeffrey_manley@kirkland.com

Southern Air Inc. and Southern Air Transport, Inc.

We have reviewed the instant application, the answers of Kitty Hawk and Polar, and the responses of the applicants, as well as other information available to us. Based on that review, we tentatively conclude that Southern is fit to conduct the limited all-cargo charter operations that it proposes in its application. However, we tentatively conclude that we are not prepared to transfer to Southern the various additional authorities held by SAT, including its passenger authority and its scheduled all-cargo route authority. Southern has not presented any plans to conduct any passenger operations, nor has it hired the necessary personnel for such service. It also does not have firm plans to use the scheduled all-cargo authority at issue. In addition, as more fully discussed in the "FITNESS" section below, it is uncertain as to whether Southern would have the financial resources available to it to conduct passenger service or more extensive scheduled cargo operations and we tentatively find no basis on the record to conclude that Southern is fit to conduct operations under the authority for which it seeks transfer from SAT.

Moreover, we note that the scheduled cargo authorities at issue include authority in certain limited-entry markets. Limited-entry authorities are valuable rights that were obtained by the United States in exchange for foreign carriers' rights to serve the United States. Southern has stated that it has no plans to start any scheduled service until September 2000 at the earliest. It is not our policy to allow such limited-entry routes to be wasted, particularly where another carrier has firm long-term plans to use them. In these circumstances, with respect to the foreign route authority at issue, we have tentatively concluded that we are not persuaded that transfer of the authority would be consistent with our international aviation policy objectives.

We are similarly unpersuaded as to the merits of Southern's proposal for a temporary allocation of certain SAT authority. In these circumstances and given our findings relating to Southern's fitness and plans for operations and the need to provide U.S. flag service with more certainty, we are not persuaded that Southern's proposal best serves the public interest. As discussed below, Southern has proposed a very limited cargo charter operation. Should Southern subsequently decide to expand its operations, it could file for such limited-entry authorizations, if available, and be subject to a Department finding that it is fit to provide such operations.

Counsel:  Bradley Mims

Southern Air Transport, Inc

We find that Southern Air, Inc., is fit, willing, and able to engage in interstate and foreign charter air transportation of property and mail. We issue a certificate of public convenience and necessity to Southern Air, Inc., authorizing it to engage in interstate charter air transportation of property and mail in the form and subject to the Terms, Conditions, and Limitations attached. We deny the joint application filed by Southern Air Transport, Inc., and Southern Air, Inc, for transfer of certificate and exemption authority. We cancel the section 41103 and 41102 certificates issued to Southern Air Transport, Inc., by Orders 78-5-120 (Docket 32342) and 84-1-59 (Docket 41187) and all exemption authority. We direct that, should Southern Air, Inc., propose to operate more than two aircraft, it must notify the Department in writing at least 45 days in advance and demonstrate its fitness for such operations prior to placing additional aircraft into service.

By:  Bradley Mims

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