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OST-98-4277

Challenge Air Cargo, Inc. (US-Brazil Additional Frequencies)

OST-98-4277 | August 3, 1998

Application for Additional Frequencies

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Challenge hereby respectfully requests that the Department allocate to it 2.0 additional scheduled all-cargo wide-body frequency allocations (ie. 4.0 narrow-body equivalents) in the U.S.-Brazil market.

Answers are due by August 18, 1998 - Intends to Poll

Service List

Counsel:  Zuckert Scoutt, William Callaway, 202-298-8660

Challenge Air Cargo, Inc. (US-Brazil)

OST-98-4277 | August 4, 1998

Answer of American International Airways

As indicated in the Challenge application, the applications of AIA and Challenge, taken together, do not exceed the remaining allocations available to the four U.S. designated all-cargo carriers. As such, AIA does not object to the Challenge application provided the Department does not act on the Challenge request before deciding the AIA application. In this regard, AIA notes that to expedite the DOT's consideration of its request, Challenge has indicated it intends to poll those carriers served with its application. Since AIA seeks to commence its expanded U.S.-Brazil services as early as August 16th (pending receipt of all necessary U.S. and Brazil approvals) AIA urges the Department to act as soon as possible on the applications of AIA and Challenge to permit AIA to maintain its timetable and thereby enhance competitive service levels in the U.S.-Brazil market.

Counsel:  Bagileo Silverberg, Robert Silverberg, 202-944-3300

Challenge Air Cargo, Inc. (Notice of Action Taken)

OST-98-4277 | Filed August 3, 1998 | Issued August 14, 1998

Notice of Action

Challenge states that beginning on or about September 15, 1998, it plans to add four weekly narrow-body flights (2.0 wide-body equivalents) in the Miami-Sao Paulo market over a Miami-Caracas-Sao Paulo-Caracas-Miami routing with B-757 freighter aircraft.

Applicant Rep:  William Callaway, 202-298-8660

United Parcel Service Co. and Challenge Air Cargo, Inc.

We tentatively find that the route transfer meets our standards for approval. Specifically, the introduction of UPS' service will provide new service options to the shipping public, more fully use our bilateral route opportunities and enhance competition in the U.S.-Latin America all-cargo market. In these circumstances, we tentatively conclude that approval of the transfer will benefit the public and will not conflict with our international aviation objectives.

We also tentatively find that both carriers will remain fit to provide their authorized services and that the transfer of Challenge's Latin America route authority to UPS will have a positive impact on the viability-of both carriers- Challenge will benefit from the, infusion of new capital to support its future plans. UPS will benefit from the ability to expand its operations to new markets, improving its competitive posture. The improvement in each carrier's viability will enable each carrier to compete more effectively and thereby enhances competition in the airline industry. 

Furthermore, we tentatively find that there will be a positive impact on the U.S. trade position in the international air transportation market as a result of this transfer. Since UPS has a much more extensive route network and worldwide infrastructure than Challenge, UPS will able to provide more effective competition to both foreign carriers and other U.S. carriers in the U.S.-Latin America market. In these circumstances, air commerce between the United States and Latin America should increase, improving the U.S. trade position.

By:  Bradley Mims

United Parcel Service Co. and Challenge Air Cargo, Inc.

We have decided to make final our tentative decision in Order 2000-3-2 to approve the transfer of Challenge's Latin America authority to UPS and also to grant Challenge an interim exemption to permit it to continue operating its existing services until UPS is prepared to begin its own operations in the transferred markets.  The record in this proceeding shows that UPS is hiring 90% of the Challenge employees. Moreover, as we noted in our show-cause order, the expansion of UPS' services into Latin America will create jobs, having an overall positive impact on airline workers. Furthermore, it is clear from the record of this proceeding that collective bargaining provisions are in Place to address employment issues and, as noted by the IBT, additional supplemental agreements also have been presented to the pilots relevant to these issues. In this regard, the IBT has stated that supplemental agreements provide an additional two million dollars in separation benefits.

By: Bradley Mims

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