ost972711

OST-97-2711

U.S.-Ecuador All-Cargo Frequencies / American International Airways, Inc. / Arrow Air, Inc. / Challenge Air Cargo, Inc. / Fine Airlines, Inc. / Florida West International Airways, Inc. / Polar Air Cargo, Inc. / Millon Air, Inc.

Order 97-7-14 | OST-97-2711 | OST-97-2342, 97-2492, 97-2443, 97-2423, 97-2325, 97-2444 | OST-96-1913 | Issued and Served July 14, 1997

Order Rescinding Frequency Allocation and to Show Cause

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By this order, we rescind the allocation of frequencies to Millon Air for US-Ecuador services and we tentatively (1) grant American International Airways an exemption to perform scheduled foreign air transportation of property and mail between Miami and Quito and Guayaquil, and to integrate this authority with the carrier’s certificate authority to serve points in Colombia and (2) allocate AIA three US-Ecuador all-cargo frequencies for these services for a one-year period. In addition, we propose to condition the frequencies tentatively allocated here, as well as frequencies allocated to incumbent carriers, with our standard 90-day dormancy rule. We dismiss the request of Millon Air for renewal of its frequency.

Appendix A – Ecuador Applications | Appendix B – Summary of Responsive Pleadings

By: Patrick Murphy

U.S.-Ecuador All-Cargo Frequencies / American International Airways, Inc. / Arrow Air, Inc. / Challenge Air Cargo, Inc. / Fine Airlines, Inc. / Florida West International Airlines, Inc. / Polar Air Cargo, Inc. / Millon Air, Inc.

OST-97-2711 | OST-97-2342, 97-2492, 97-2443, 97-2423, 97-2325, 97-2444 | 96-1913 | July 24, 1997

Objection Fine Airlines

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With the Department's decision to reallocate Millon's three frequencies, Fine Air had expected at last to overcome that disadvantage by being placed on an equal footing, at a minimum, with its incumbent competitor, Arrow. Although Fine Air understands the constraints that necessarily govern operations in a frequency-controlled market, it had expected that proven performance over a sustained period would qualify it for at least a modest expansion when the opportunity to allocate additional frequencies arose. The Department had the wherewithal in this proceeding to make that modest expansion possible while still adding a new entrant carrier to the market with the same number of frequencies that have enabled Fine Air to sustain a competitive presence from the time it too was a new entrant.

Counsel: Wilmer Cutler, Jeffrey Shane, 202-663-6000

Petition for Reconsideration and Objections of Millon Air

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Withdrawing Millon Air's allocation when the airline is poised to recommence U.S.-Ecuador service is simply unnecessary. U.S.-Ecuador shippers are being adequately served. Records of the Department of Civil Aviation of Ecuador indicate that during the six months period January 1-June 30, 1997, incumbent scheduled all-cargo operators Arrow, Challenge Air Cargo and Fine Airlines together operated a total of 351 charter or special flights approved by the Government of Ecuador in addition to regular scheduled flights performed pursuant to DOT allocations (approximately two per day). This additional lift is more than double the amount Millon Air was providing and more than compensates for the loss of service resulting from Millon Air's temporary stand down. The applications of all three incumbents for additional scheduled frequencies clearly indicate that they are willing and able to devote additional resources to serving the U.S.-Ecuador market. The disruption associated with insertion of a new entrant at this point simply is not warranted.

Attachment

Counsel: Suzette Matthews, 540-364-3470

U.S.-Ecuador All-Cargo Frequencies

OST-97-2711 | July 31, 1997

Consolidated Answer of American International Airways to Objections of Millon Air and Fine Airlines for Reconsideration of Millon Air

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It is incorrect, as Millon contends, that "U.S.-Ecuador shippers are being adequately served." AIA officials travelled to Ecuador last week to begin preparations for obtaining scheduled authority, and met with shippers and forwarders. The strong sentiment among these people is that service in the market is quite inadequate, both in quality as well as quantity. The number of charters and extra sections which Millon reports being operated simply underscores the inadequacy of the 15-frequency regime. One of the complaints among shippers is the irregular nature of much of the service being offered. Charters and extra sections do not fill the need of exporters of highly perishable commodities for dependable, regular, scheduled service, such as that which AIA plans to provide.

Fine would have AIA receive, at best, two frequencies. AIA will, of course, operate as many frequencies the Department chooses to give it. Fewer than three frequencies, however, would be inadequate to operate what now appears to be its likely service pattern. As AIA pointed out in its pleading of May 19, 1997,2'the L-1011 is by far the preferred aircraft to use in the Ecuador market, and the one which its customers have requested. After the recent trip to Ecuador by AIA officials, it appears probable that AlA's service will be operated primarily with the L-1011. This, however, would be impossible without three frequencies. Indeed, given the response of the market, AIA could easily use far more than three frequencies. Fine again attempts to make this proceeding a competitive contest between itself and Challenge Air Cargo. It restates its arguments that the higher costs that are experienced in the Ecuador market are attributable to Challenge's control of seven out of the fifteen frequencies .

Counsel: Sher Blackwell, Mark Atwood, 202-463-2500

U.S.-Ecuador All-Cargo Services / Millon Air, Inc.

Order 97-8-20 | OST-97-2711 | OST-96-1913 | Issued and Served August 21, 1997

Order on Reconsideration and Final Order

By this order, we grant Millon Air's petition of reconsideration of Order 97-7-14, and upon reconsideration, affirm our decisions in Order 97-7-14 to rescind the allocation of frequencies to Millon Air for U.S.-Ecuador services and to dismiss Millon's request for renewal of its frequency allocation. We also make final our decisions to ( 1 ) authorize American International Airways, Inc. (AIA), to perform scheduled foreign air transportation of property and mail between Miami, Florida, and Quito and Guayaquil, Ecuador, and to integrate this authority with the carrier's certificate authority to serve points in Colombia, (2) allocate AIA three U.S.-Ecuador all-cargo frequencies for these services for a one-year period, and (3) subject the frequencies allocated here, as well as frequencies allocated to incumbent carriers, to our standard 90-day dormancy condition.

By: Patrick Murphy

U.S.-Ecuador All-Cargo Frequencies / American International Airways, Inc. (Start-Up Delay)

OST-97-2711 | OST-97-3126 | November 13, 1997

Application for an Exmeption

Immediately upon receiving this authority, AIA began the process of applying to the Ecuadorian civil aviation authorities ("DGAC") for an operating permit. This matter is being handled by the company's counsel in Quito. Counsel has confirmed, however, that the DGAC has not yet rendered a decision on the application. While the company had anticipated receiving its authority by this time, it does not appear that it will be in a position to inaugurate service by November 20. Thus, to avoid loss of its route authority, AIA requests an extension of the 90-day dormancy period by an additional 60 days, or until January 19, 1997. AIA intends to begin its scheduled service as soon as possible after receipt of its Ecuadorian authority.

Service List

Counsel: Sher Blackwell, Mark Atwood, 202-463-2500

US-Ecuador All-Cargo Frequencies / American International Airways - (Delay Start-Up)

OST-97-2711 | OST-97-3126 | August 14, 1998

Application for Renewal of Exemption Authority, Frequency Allocation, and Relief from Start-Up Requirement

AIA hereby requests renewal of its exemption authority to provide scheduled foreign cargo air transportation between Miami and Quito and Guayaquil, Ecuador, renewal of allocation of its three all-cargo frequencies, and further limited relief from the 90-day start-up requirement. AIA still expects to operate the scheduled service to Ecuador for which it has been authorized and designated. In order to do so, however, it will be necessary for the Department to renew the one-year exemption and the allocation of three all-cargo frequencies awarded in Order 97-8-20. This authority is now set to expire on August 21, 1998. In addition, relief from the 90-day start-up requirement expires on August 19, 1998. It would be in the best interest of the public to renew the authority in issue (and grant the requested start-up waiver) to permit AIA to complete its Ecuadorian regulatory processes and begin its planned service.

Answers are due by August 31, 1998.

Service List

Counsel: Bagileo Silverberg, Robert Silverberg, 202.944.3300

American International Airways, Inc. (US-Ecuador All-Cargo Frequencies)

OST-97-2711 | OST-97-3126 | August 17, 1998

Re: Letter from American International

Counsel: Bagileo Silverberg, Robert Silverberg

American International Airways, Inc. - (Notice of Action Taken)

OST-97-2711 | Filed August 14, 1998 | Action Taken August 21, 1998

Notice of Action

Scheduled foreign air transportation of property and mail between Miami, Florida, and Quito and Guayaquil, Ecuador, and to integrate this authority with its existing certificate authority to serve Colombia.

Applicant Rep.: Robert Silverberg, 202.944.3300