Order 2001-1-2 - Transatlantic, Transpacific and Latin American Service Mail Rates Investigation - Establishing Final International Service Mail Rates Until Further Department Action

Order 2001-1-2 - Transatlantic, Transpacific and Latin American Service Mail Rates Investigation - Establishing Final International Service Mail Rates Until Further Department Action

Transatlantic, Transpacific and Latin American Service Mail Rates Investigation (9A)

Order 2001-1-2
OST-1996-1629

Issue January 2, 2001
Served January 5, 2001

Not Available to Public on Jan 2nd

Order Establishing Final International Service Mail Rates Until Further Department Action

Exhibit A: International Service Mail Rates

Transatlantic, Transpacific and Latin American Service Mail Rates Investigation (9A)

We agree with American that Continental's reported terminal costs in the Atlantic appear suspect, but not for American's stated reason. Examining Appendix D- I -A it is clear that Continental's unit terminal costs of $178.41 are less than half of $457.33, the weighted average of all Atlantic carriers including Continental. Similarly, TWA's reported unit terminal costs of $988.52 appear equally suspect because they are more than double $457.33, the weighted average of all Atlantic carriers including TWA. It would not be fair to excise Continental's while at the same time leave in TWA's costs because each appear equally suspect. Furthermore, the cost disparities of Continental and TWA are not new, because each carrier was, respectively, by far the lowest and highest cost carrier in the preceding rate period. The recent update has only accentuated their respective deviations, with Continental's unit costs decreasing by 22.68% and TWA's increasing by 11.91%, while the average has decreased by 5.50%. Under these circumstances, to disregard only the low cost carrier would be as unfair to the USPS as would be disregarding only the highcost carrier to the other carriers. As a result, we will continue to include both Continental's and TWA's data at this time, but we will adjust the rate prospectively, as discussed below, should the two carriers submit any revised data.

The stated purpose of the Postal Service letter was to open informal discussion among the parties to determine revised rates. We support the goal of working with parties to see if a consensus is possible. In this instance, the resolution of American's objection to Order 2000-11-5 and the Postal Service's desire to resolve nebulous but perhaps larger issues is not immediately possible. In addition, if we take no action, the rates established in Orders 99-10-23 and 99-12-16 remain final until further Department action. The current rates are generally lower than those we tentatively set in Order 2000-11-5. It is our policy, in general, to no longer issue rates subject to retroactive adjustment. In other words, unless we finalize the rates tentatively determined by Order 2000-11-5, the carriers would forego significant mail revenues.

We will therefore grant the Postal Service's request, in so far as making the rate proposed by Order 2000-11-5 final until further Department action. We will work to see if the issues raised by the Postal Service can be resolved on a consensus basis. We will also direct both Continental and TWA to closely re-examine their reported Atlantic terminal costs, and based on their examination, we will amend the rates as appropriate. Regardless of the conclusions of that re-examination, the rates we are finalizing here will not be adjusted retroactively.

By: Francisco J. Sanchez