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Hong Kong Fifth Freedom All- Cargo Proceeding

We have decided to institute the 2001 Hong Kong Fifth-Freedom All-Cargo Frequencies case to select a carrier or carriers to operate the three weekly Hong Kong fifth-freedom frequencies that are currently available. The subject fifth-freedom all-cargo traffic rights constitute valuable service opportunities in conjunction with service in the U.S.-Hong Kong market. Six U.S. carriers have applied to use these limited opportunities, seeking a greater number of frequencies than are available. In these circumstances, we believe that the public interest is best served by instituting a comparative proceeding to determine how these frequencies should be allocated.

As we have already solicited applications from U.S. carriers interested in allocation of these frequencies, we will not solicit further applications to use the available frequencies. In allocating the available frequencies, our principal objective will be to maximize the public benefits that will result from award of the authority in this case. In this regard, we will consider which applicants will be most likely to offer and maintain the best service for the shipping public. We will also consider the effects of the applicants' service proposals on the overall competitive environment, including the market structure and the level of competition in the U.S.-Asia market, and on any other market shown to be relevant, and also including, where relevant, the positive effect on each applicant's operations in Asia. In addition, we will consider other factors historically used for carrier selection where they are relevant.

We will not place at issue the selection of backup carriers for these frequencies. We caution carriers, however, that frequencies may not be held indefinitely if not used. Consistent with our current practice, the frequencies allocated in this proceeding will be for an indefinite term, provided that the carrier continues to hold the underlying economic authority for the specific markets authorized. The frequencies to be awarded will also be subject to our standard 90-day dormancy condition, whereby the frequencies will be deemed dormant if they are not operated for 90 days in the market authorized, except where service in the market is seasonal. In all such instances of seasonal service, however, a carrier must notify the Department that its operations are of a seasonal nature; otherwise, the dormancy condition will apply. Under the dormancy condition if flights allocated are not used for 90 days, the frequencies expire automatically, and the frequencies revert to the Department for reallocation so that they can be available for other carriers immediately.

• Petitions for Reconsideration: March 19, 2001
• Direct Exhibits: April 2, 2001
• Rebuttal Exhibits: April 16,2001
• Briefs: April 30, 2001

By:  Susan McDermott

Hong Kong Fifth Freedom All-Cargo Frequencies

Order 2001-3-10 set the procedural schedule for U.S. air carriers interested in using fifth-freedom traffic rights for all-cargo services to and from Hong Kong. On March 21, 2001, Federal Express filed a motion requesting that the Department extend the dates for filing Direct Exhibits, Rebuttal Exhibits, and Briefs. The new procedural schedule is as follows: Direct Exhibits due April 12, 2001 Rebuttal Exhibits due April 26, 2001 Briefs due May 10, 2001.

On March 21, 200 1, Federal Express filed a motion requesting that the Department extend for ten calendar days the dates for filing Direct Exhibits, Rebuttal Exhibits, and Briefs. Federal Express stated that its counsel would be attending U.S.-Hong Kong bilateral air service negotiations until March 30, 2001, in Hong Kong and that the travel time and date differences between the U.S. and Hong Kong would make it impossible to meet the current schedule. Counsel for Federal Express stated that all of the other parties to this case had no objection to this extension.

The new procedural schedule requested by Federal Express would be as follows:

• Direct Exhibits: April 12, 2001
• Rebuttal Exhibits: April 26, 2001
• Briefs: May 10, 2001

After the filing of Federal Express' motion, bilateral negotiations between the United States and Hong Kong were postponed. We have decided, nonetheless, to extend the procedural schedule as described above. No party had opposed Federal Express' revised schedule and the requested extension is for only a short period of time that would not prejudice any party's interests in this case. Moreover, we note that many parties may have already adjusted their exhibit preparations based on Federal Express' initial uncontested request. In these circumstances, we find that it is in the public interest to extend the procedural dates in this proceeding.

By:  Paul Gretch

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