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2002 US-Mexico All-Cargo Exemption Service Case

By this order we: (1) institute the 2002 U.S.-Mexico All-Cargo Exemption Service Case to select one primary and one backup carrier to provide scheduled all-cargo services in the U.S.-Mexico market; (2) invite interested carriers to file exemption applications, or supplement existing exemption applications, for authority to serve the U.S.-Mexico all-cargo market as set forth below; and (3) consolidate the two already-filed captioned applications into this new proceeding.  

Petitions for Reconsideration:    September 10, 2002

Answers to Petition:                  September 13, 2002

Applications, Amendments to Applications, and Supplements to Applications:    September 19, 2002

Direct Exhibits:                          October 3, 2002

Rebuttal Exhibits:                       October 17, 2002

By:  Read C. Van de Water

2002 U.S.-Mexico All-Cargo Exemption Service Case

Supplementing the above­ captioned application, through which Atlas is seeking an exemption to provide foreign scheduled air transportation of property and mail between Miami, Florida, Huntsville, Alabama and Los Angeles, California, on the one hand, and Mexico City and Guadajara, Mexico, on the other, plus the right to integrate that authority with its other certificate and exemption authorities, and a U.S. designation to provide U.S.-Mexico all-cargo services under the U.S.-Mexico air transport agreement.

As indicated in its August 19 application, Atlas expects to propose five weekly roundtrip flights with B747-200F aircraft between Miami and Huntsville, on the one hand, and Mexico City and Guadalajara, on the other. Each roundtrip rotation will serve all four points. Atlas also expects to propose two - four weekly roundtrip flights with B747-200F aircraft between Los Angeles, on the one hand, and South America, on the other, via Mexico City and Guadalajara, and/or between Los Angeles and Mexico City/Guadalajara on a turnaround basis. In accordance with the practice of applicants in recent proceedings, Atlas will provide precise schedules and related service details in its direct exhibits.

Counsel:  Atlas, Russell Pommer, 202-354-3843, rpommer@atlasair.com

If designated, Capital Cargo will operate scheduled Toledo-Mexico services pursuant to an ACMI contract with BAX Global Inc. BAX Global is one of the largest U.S.-based international transportation and logistics companies, with offices in the U.S., Mexico, Canada and 80 countries throughout the world. From its hub in Toledo, Ohio, it provides worldwide express and cargo air transportation throughout the U.S. and to 123 countries. BAX Global provides domestic feed into its Toledo, Ohio, hub with 18 dedicated all-cargo aircraft. Among other products, BAX Global ships computer chips, automobile parts, jet engines, fashion apparel, medicine and seasonal fresh fruit to and from all areas of the world.

BAX Global will initially utilize one of Capital Cargo's B-727-200 freighter aircraft for its five-day-per-week Toledo-Mexico scheduled service (i.e., Toledo-Saltillo-Guadalajara-Monterrey-Toledo). Connecting at Toledo - BAX Global's U.S. air cargo distribution hub - this five-day-per-week service will provide a domestic feed to BAX Global's extensive network in the U.S. Upon further development of the U.S.-Mexico route, BAX Global intends to add additional scheduled flights between Mexico City and Chihuahua, Mexico, and its Toledo hub.

Capital Cargo's request herein for exemption authority is limited to operating scheduled all-cargo service between Saltillo, Guadalajara and Monterrey, Mexico, on the one hand, and Toledo, Ohio, on the other. However, as noted above, FedEx, DHL and Amerijet each have applications pending before the Department for general route rights between the U.S. and Mexico - as opposed to specific city-pair segments - subject to the prohibition on double designations. Capital Cargo respectfully requests that it be granted the same comprehensive route authority in lieu of the more limited authority for city-pair segments sought herein.

Counsel:  Preston Gates, Jonathan Blank, 202-661-3864, jblank@prestongates.com 

Express.Net will use leased A300B-4 203F aircraft which comply with FAR Part 36 for its U.S.-Mexico scheduled service. The aircraft which will be used for roundtrip Dayton-Monterrey-Guadalajara-Mexico City service are currently being used to provide ad hoc charters, and the aircraft which will be used for Dayton-El Paso-Chihuahua scheduled service are currently being used to provide charter service between these points.  Although Express.Net currently has no stations of its own in Mexico, Express.Net will establish stations at Mexico City and other Mexican points if it is awarded U.S.-Mexico scheduled authority in this proceeding.

Counsel: Crowell & Morning, Lorraine Halloway,  202-624-2500

Gemini will operate its new U.S.-Mexico traffic using the DC-10-30F and the MD­11F aircraft in its fleet. This service will be convenient, efficient, and economical for shippers on both sides of the border. Since it initiated air cargo operations in 1996, Gemini has provided air transportation services to shippers and other airlines around the world. Gemini has a competent and experienced management team that is confident of the market success of Gemini’s service to Mexico.  Gemini will accept an exemption limited to the U.S.-Mexico city-pair routes that Gemini specifies in its Direct Exhibits.

Gemini has operated all-cargo charter service to Mexico, but operational restrictions (restrictive airport curfews, for example) that Mexican authorities impose on charter cargo operations have hampered Gemini’s ability to serve the U.S.-Mexico market in an effective manner. The ability to operate scheduled all-cargo service to Mexico would allow Gemini to avoid many of the impediments experienced by cargo service operated on a charter basis.

Counsel:  Roller Bauer, Moffett Roller, 202-331-3300, mroller@rollerbauer.com

2002 U.S.-Mexico All-Cargo Exemption Service Case

Even though Express.Net chose to include schedules and its traffic forecast in its application supplement, it seeks to have them withheld from the public and the parties "until the Atlas application is dismissed for failure to comply with the Department's order or the procedural requirements in the Department's order are amended for all parties." Express.Net Motion at 2. For the reasons stated above, there is absolutely no basis upon which to dismiss the Atlas application. Nor is there any need for the Department to amend Order 2002-9-5's procedural requirements. If the Department decides that it needs to restore Express.Net to the same procedural posture as the other parties, it can accord confidential treatment to Express.Net's materials until October 3, the due date for direct exhibits, and instruct Express.Net either to serve the materials on the parties on that date or to include the materials in its direct exhibits. Atlas would have no objection to such an approach.

Atlas is disappointed that Express.Net has demonstrated a desire to engage in "stick-a-finger-in-your-eye" tactics in this important proceeding. Express.Net's response is not only unwarranted but seeks to take the selection process to a very low level. Atlas would prefer to let the Department make the selection that best serves the public interest through a full vetting and comprehensive comparison of the relative merits of the carrier submittals.

By: Atlas Air, Russell Pommer

2002 U.S.-Mexico All-Cargo Exemption Service Case

In reviewing the Application of Capital Cargo International Airlines, Inc. For an Exemption From 49 U.S.C. § 41101 and Designation (U.S.-Mexico All-Cargo Service) filed September 19, 2002, we discovered that we filed the incorrect document as Capital Cargo's certification statement. Please find enclosed the correct certification statement document. We apologize for any inconvenience this might have caused.

Counsel: Preston Gates, Edward Kracmer,  202 628-1700

Despite the Department's explicit mandate to provide complete schedule information and traffic forecasts in this highly-expedited proceeding on September 19, 2002, two would-be applicants have failed entirely to do so. Since neither Atlas Air Cargo, Inc. nor Gemini Air Cargo, Inc. provided the information specifically required by the Department to qualify as applicants in this proceeding, their applications should be dismissed forthwith.

Counsel:  Crowell Moring, Lorraine Halloway, 202-624-2500

2002 U.S.-Mexico All-Cargo Exemption Service Case

By this notice we shorten the period for filing responses to (1) the September 19, 2002, Motion for Confidential Treatment filed by Express.Net Airlines, LLC (Express.Net) in the captioned case; and (2) the September 24, 2002, Motion of Express.Net to dismiss the applications of Atlas Air, Inc. (Atlas), and Gemini Air Cargo, Inc. (Gemini) in the captioned case. Under the Department's regulations, answers to the September 19 Motion would normally be due no later than September 30, 2002; and answers to the September 24 Motion would normally be due no later than October 3, 2002.

By Order 2002-9-5, the Department instituted the U.S.-Mexico All-Cargo Exemption Service Case, and established a procedural schedule providing for, among other things, the filing of direct exhibits on October 3, 2002. As the date for filing direct exhibits in the captioned case is imminent, and in the interest of resolving the issues raised in the September 19 and 24 motions without unnecessarily delaying the conduct of the proceeding, we believe that it is in the public interest to shorten the response period for both motions.

By: Paul Gretch

2002 U.S.-Mexico All-Cargo Exemption Service Case

In a motion containing unsupported claims, factual misstatements and timeworn arguments, Express.Net' is urging dismissal of the Atlas and Gemini applications for Mexico route authority. The motion constitutes yet another Express.Net attempt to avoid a full and fair comparison of competing proposals. It should be denied.

In an effort to attack the credibility of our statements of readiness to commence Mexico scheduled service, Express.Net distorts the facts by stating that Atlas "does not even know what schedules it would operate or what traffic it would carry." The statement is irrelevant to the issue raised in the motion to dismiss - whether Atlas is entitled to seek Mexico authority along with other applicants in this proceeding - and, in any event, is factually incorrect. Next Thursday, less than one week from today, Atlas will submit its proposed schedules, which will be based on the Miami/ Huntsville-Mexico charter service already in operation and the Los Angeles-Mexico charter service being planned for Fall 2002. As part of its "get Atlas" approach, Express.Net also resurrects its old argument that Atlas somehow was "tardy" in applying for U.S.-Mexico authority. Motion to Dismiss at 1, 4. The argument is both irrelevant and ridiculous; Atlas made its interest in Mexico known months ago and applied for authority even before the Department invited applications in its instituting order.

Counsel:  Atlas, Russell Pommer, 202-354-3843, rpommer@atlasair.com

Notwithstanding Express.Net's assertion to the contrary, the Department's information request in Order 2002-9-5 is very similar to the information requested in DOT Order 2002-6-20, which instituted the 2002 Brazil All-Cargo Service Proceeding. In that proceeding Gemini included its route proposal in its Application but responded to the balance of the information requests in its Direct Exhibits. Another applicant in the Brazil proceeding, Evergreen International Airways, did not provide its route proposal until its Direct Exhibits. No party filed a motion to dismiss the Evergreen application because it did not include its route proposal in its Application rather than its Direct Exhibits. Each of the three applicants in the Brazil proceeding promoted the merits of its own proposal in its Direct Exhibits and used the Rebuttal Exhibits to highlight alleged deficiencies in its opponents' proposals.

Express.Net has not been prejudiced. To the extent it believes it would be prejudiced by the dissemination of its schedule and traffic exhibits prior to the date of the Direct Exhibits when other applicants provide similar information, it has been protected by the confidential treatment accorded its submissions pending DOT action on its Motion for Confidential Treatment. Express.Net will have ample opportunity to address the schedule information and traffic forecasts of other applicants in its Rebuttal Exhibits and in its Brief.

Counsel:  Roller Bauer, Moffett Roller, 202-331-3300, mroller@rollerbauer.com 

2002 U.S.-Mexico All-Cargo Exemption Service Case

Although Atlas claims it wants a "full and fair" comparison of all the applications, failure to comply with the Department's requirements precludes a fair comparison. Both Atlas and Gemini attempt to explain their failure to comply with the instituting order by referring to the 2002 Brazil case, where the Department's order was in fact ambiguous. In that case, the Department specified what information "applicants" were to provide without specifying precisely when they were to provide it. (Order 2002-6-20 at 3) In this Mexico case, however, the Department specified that "applications. .. should include at a minimum," the information submitted only by Express.Net in its supplement. (See Order 2002-9-5 at 5, emphasis added) Express.Net was not a participant in the Brazil case and the lack of objections to submission of comparable information in that proceeding at the direct exhibit date because of ambiguities in the Brazil order in no way legitimizes the Atlas and Gemini failure to provide timely information in this proceeding. Atlas and Gemini's attempt to secure 14 days additional time to prepare their traffic forecasts and schedules is in itself unfair and should not be condoned by the Department.

Although Capital Air Cargo International Airlines, Inc. also failed to comply fully with the Department's order, it at least provided a complete schedule and a forecast of its total projected traffic, so Express.Net did not ask the Department to dismiss the Capital Air Cargo application. Express.Net would not, of course, object to dismissal of the Capital Air Cargo application as well.

Counsel:  Crowell Moring, Bruce Keiner, 202-624-2500

Gemini Air Cargo. Inc. moves to withdraw its Application in the 2002 U.S.­Mexico All-Cargo Exemption Service Case. Notwithstanding this withdrawal. Gemini is very interested in providing scheduled all-cargo service between the United States and Mexico. As a result of the cargo charter operations that Gemini has operated to Mexico over the past several years, Gemini has developed a solid foundation for the introduction of scheduled service.

Gemini also urges the Department to continue its efforts to liberalize the bilateral aviation relationship between the United States and Mexico so that qualified air carriers such as Gemini can introduce service subject only to the limitations of the marketplace, not artificial limitations imposed by government.

Counsel: Roller Bauer, Moffett Roller,  202 331-3300

2002 US-Mexico All-Cargo Exemption Service Case

We have decided to deny the motion ofExpress.Net to dismiss the applications of Atlas and Gemini in this proceeding.

By: Read Van de Water

2002 U.S.-Mexico All-Cargo Exemption Service Case

Counsel:  Atlas Air, Russell Pommer, 202-354-3843, rpommer@atlasair.com 

Counsel: Preston Gates, Jonathan Blank,  202 661-3864

Counsel:  Crowell Moring, Lorraine Halloway, 202-624-2500

We will dismiss as moot the motion of Express.Net since Direct Exhibits are to be filed today, October 3, 2002. We shall place Express.Net's exhibits in the public portion of Docket OST-2002­13299.

By:  Read C. Van de Water

Counsel:  Crowell Moring, Lorraine Halloway, 202-624-2500

2002 US-Mexico All-Cargo Exemption Service Case

Enclosed, please find an original and five copies of the corrected versions of two exhibits from the above-referenced filing - CC-T-2 and CC-3. The text on the bottom of page eight has been revised to reference the correct exhibit number. For your reading convenience, we have also repaginated page seven. More importantly, we are submitting a corrected version of Exhibit CC-3. While the underlying data on the upper portion of the page remains correct, we noticed that the graph of Northern Industrial Zone Market Air Traffic Growth was an inadvertent duplication of the graph to its left.

Counsel: Preston Gates, Edward Krachmer,  202 661-3886

2002 U.S-Mexico All-Cargo Exemption Service Case

Counsel:  Atlas, Russell Pommer

Counsel:  Crowell Moring

Counsel: Preston Gates, Johnathan Blank,  202 661-3864

2002 U.S.-Mexico All-Cargo Exemption Service Case

October 17, 2002 rebuttal exhibits correcting Exhibit EXN-R-124 and revising references to it in the table of contents and rebuttal testimony:

• 1.         Revised Exhibit EXN-R-124;

• 2.         Revised page 2 of the Table of Contents;

• 3.         Revised pages 1 and 5 of Exhibit EXN-R-T-1;

• 4.         Revised pages 5 and 6 of Exhibit EXN-R-T-3.

Counsel:  Crowell Moring, Jonathan Linde, 202-624-2500

2002 U.S.-Mexico All-Cargo Exemption Service Case

The purpose of this proceeding is to award the U.S.-Mexico all-cargo designation and attendant route rights that have been dormant since Emery Worldwide Airlines shut down over a year ago. Three applicants with very different commercial objectives and views of the market are seeking the rights. Atlas should be selected because it will: build on its experience in Latin America, generally, and Mexico, particularly, to provide the best service to the shipping public; have the greatest competitive impact in U.S.-Mexico/Latin America markets; and maximize utilization of the valuable bilateral rights "obtained in exchange for granting Mexico route opportunities for its airlines to serve the United States."

Counsel:  Atlas, Russell Pommer, 202-354-3843, rpommer@atlasair.com

Capital Cargo will be a new entrant to international scheduled service, while teamed with an established, high-quality logistics provider. This combination of Capital Cargo as a new scheduled operator, BAX's power to gather and distribute cargo, and Capital Cargo's highly efficient and reliable and flexible air carrier service, would provide shippers with benefits in markets not proposed by Atlas, and not as well-served by Express.Net.  Capital Cargo submits that its application will most maximize the public benefits that will result from award of the authority in this case through providing efficient and sustainable critical shipping service and respectfully requests that the Department grant its application.

Counsel:  Preston Gates, Edward Krachmer, 202-661-3886, edwardk@prestongates.com 

Express.Net will "maximize the public benefits that will result from an award of authority in this case" (Order 2002-9-5 at 3) by providing the most U.S.-Mexico frequencies, reaching the most U.S. consumers and serving the most Mexican points. Express.Net, with its partner Emery Forwarding, is the applicant with the best service proposal, most extensive U.S. and Mexico coverage, most longstanding presence in both markets, strongest customer base, and the most need for the one available all-cargo designation. Since the only real restriction on operations by U.S. all-cargo charter carriers is timely access at Mexico City, there is no reason to award the scheduled all-cargo designation to either Capital Cargo, which proposes no Mexico City service, or Atlas, which can operate virtually all of its proposed flights without a U.S. designation.

Counsel:  Crowell Moring, Lorraine Halloway, 202-624-2500

2002 US-Mexico All-Cargo Exemption Service Case

Counsel: Russell Pommer,  202 354-3843

2002 U.S.-Mexico All-Cargo Exemption Service Case

Letter of Dayton Area Chamber of Commerce in support for Express.Net Airlines' proposal in the U.S.-Mexico All-Cargo Exemption Service Case.

Counsel: Crowell Moring, Jonathan Linde

2002 U.S.-Mexico All-Cargo Exemption Service Case

Counsel: Preston Gates, Edward Krachmer, 202 661-3886

2002 U.S.-Mexico All-Cargo Exemption Service Case

Letter of Express.Net submitting the attached letters of support from Members of Congress Reyes and Bonilla in the 2002 U.S.-Mexico All-Cargo Exemption Case.

Counsel: Crowell Moring, Jonathan Linde, 202 624-2557

2002 US-Mexico All-Cargo Exemption Service Case

Counsel:  Crowell Moring, Jonathan Linde, 202-624-2500

2002 U.S.-Mexico All-Cargo Exemption Service Case

Correspondence of Capital Cargo International Airlines, Inc. submitting letter of the Honorable Ric Keller of Florida to the application.

Counsel: Preston Gates, David Thomas, 202 661-3864

2002 U.S.-Mexico All-Cargo Exemption Service Case

Letter of Capital Cargo International Airlines, Inc. submitting a letter relating to its application from the Honorable Corrine Brown.

Counsel: Preston Gates, David Thomas, 202 661-3864

2002 U.S.-Mexico All-Cargo Exemption Service Case

Letter of Atlas Air, Inc. submitting a correspondence from Los Angeles World Airports to Norman Y. Mineta, Secretary, dated December 30, 2002, in strong support of the application of Atlas Air, Inc. for the scheduled all-cargo route authority that it seeks in the 2002 U.S.-Mexico All-Cargo Exemption Service Case.

Counsel: Atlas, Russell Pommer, 202 354-3843

2002 US-Mexico All-Cargo Exemption Service Case

Atlas Air's proposed service will produce significant economic benefits for the Los Angeles region and greatly enhance the availability f services between LAX and Latin America. We strongly urge the Department to select Atlas Air for the available designation in the U.S.-Mexico market.

By:  Lydia Kennard

2002 U.S. - Mexico All-Cargo Exemption Service Case

We have tentatively decided to select Express.Net to provide scheduled all-cargo air transportation services in the U.S.-Mexico market. In addition, we have tentatively decided to award backup authority to Atlas.

Both Express.Net and Atlas propose to provide a significant number of weekly flights, each doing so over two different U.S.-Mexico routings, using large A-300 and B-747 aircraft, respectively. In contrast, Capital Cargo proposes to provide half the number of weekly U.S.-Mexico flights over a single U.S.­Mexico routing, using narrow-body B-727 aircraft. Although Capital Cargo argues that it is the only applicant that has presented a well-measured proposal that is sustainable given the current market circumstances, we tentatively find that this argument is outweighed by the benefits of the Express.Net and Atlas proposals, which we tentatively believe should also be sustainable in the market. The available U.S.-Mexico all-cargo designation opportunity is a valuable operating right obtained. through negotiations in exchange for operating rights for Mexican carriers, and the public interest favors maximum use of this limited-entry route right. Given the importance of this authority, we tentatively believe that Capital Cargo's more limited proposal would offer fewer benefits than the proposals of Express.Net and Atlas, as explained below, and, thus, we tentatively conclude that Capital Cargo should not be selected in this proceeding.

By: Susan McDermott

2002 US-Mexico All-Cargo Exemption Service Case

In light of current market conditions, Capital Cargo does not believe that either Express.Net or Atlas will be able to operate their service proposals. Accordingly, Capital Cargo respectfully requests that, in the event that the Department decides to affirm its tentative decisions, the Department make it a condition of its final award to Express.Net that it must operate its proposed schedule in full and, if and when its cease to do so, that its scheduled authority will become dormant. Moreover, given that Atlas' proposal is completely unrealistic and unsustainable and that Capital Cargo is much more likely to actually fly what it has proposed, Capital Cargo further requests that the Department award backup authority to it and not to Atlas.

Capital Cargo objects to tentative selection of Express.Net for primary authority and especially to Atlas for backup authority. Capital Cargo submits that it should have been selected for primary authority but at the least for backup authority. As compared to Express.Net's overly optimistic service proposal and certainly Atlas' totally unrealistic proposal given current market conditions, Capital Cargo is most likely to fly the operations it proposed. However, the combined effect of the Department's tentative decision in this case and a pending challenge by the Mexican Government to Capital Cargo's current charter operations, is that the U.S. shipping public might not be able to enjoy the significant benefits offered by Capital Cargo's proposed operations in this case and potentially even its current, more modest operations. In light of this, Capital Cargo respectfully submits that it should at the least be selected for backup authority, if not primary authority, in this case, for the reasons discussed below.

Counsel:  Preston Gates, Jonathan Blank, 202-661-3864, jblank@prestongates.com

2002 U.S.-Mexico All-Cargo Exemption Service Case

The factual predicate for the Capital Cargo objection is that the worldwide airline economic situation has deteriorated significantly since the carriers submitted their service proposals over six months ago. While undeniably true, that does not support the position that the carrier with the most modest and least beneficial service proposal should receive the award. If anything, the changed economic climate is reason for the Department to reopen the record for the purpose of soliciting up-to-date service proposals from all carriers. Atlas urges the Department, rather than finalizing the tentative decision, to consider such an approach.

Counsel: Atlas, John Dietrich, 914-701-8327, jdietrich@atlasair.com 

The Department correctly found that Express.Net's proposal was superior to Capital Cargo's proposal because Express.Net will "provide a significant number of weekly flights" and operate "over two different U.S.-Mexico routings, using large A-300" aircraft, while Capital Cargo proposed to operate only "half the number of weekly U.S. Mexico flights over a single U.S. Mexico routing, using narrow-body 727 aircraft.  Express.Net also showed that it will serve more points in Mexico than either Capital Cargo or Atlas, reach the most U.S. shippers and consumers, have the best access to an existing network in Mexico, and serve the most new U.S. gateways.

Counsel:  Crowell & Moring, Lorraine Halloway, 202-624-2500

2002 U.S.-Mexico All-Cargo Exemption Service Case

Hereby respectfully requests leave to file an otherwise unauthorized document; namely, this Reply to the Answer of Express.Net Airlines, LLC to Capital Cargo's Objections to the Department's Show Cause Order in this proceeding.  Capital Cargo believes there is good cause for accepting this filing. While Department practice usually does not permit further responsive pleadings of this nature, Capital Cargo believes the new information contained in the Reply will aid the decision­maker in rendering a final determination in the matter now before the Department and thus will be conducive to the ends of justice.

Counsel:  Preston Gates, Jonathan Blank, 202-661-3864, jblank@prestongates.com

2002 U.S.-Mexico All-Cargo Exemption Service Case

April 22, 2003

OST-02-13299

Joint Surreply of Emery Forwarding and Express.Net Airlines and Motion for Leave to File an Unauthorized Document

Contrary to the claims of Capital Cargo, Emery Forwarding needs wide-body A-300 capacity on the Dayton-El Paso-Chihuahua route, as well as on the Dayton-Monterrey-Guadalajara-Mexico City route, and Express.Net plans to provide that capacity on a scheduled service basis when the Department finalizes its tentative award in this case. The Department should reject Capital Cargo's ploy to delay Express.Net's entry into the U.S.-Mexico scheduled service market and issue a final order selecting Express.Net as soon as possible.

Counsel:  Crowell & Moring, Lorraine Halloway, 202-624-2500

Issued and Served May 22, 2003

Order 03-5-23
OST-02-13299

Final Order | Word

Capital Cargo has essentially reiterated arguments already presented and examined in this proceeding, stating that it is the only applicant likely to operate the service it has proposed because the proposals of Express.Net and Atlas are overly optimistic or unrealistic. It presented no new arguments that persuade us to reconsider these matters. Capital Cargo does newly assert that Express.Net's recent substitution of B-727 aircraft for its A300 aircraft on the Dayton/El Paso-Chihuahua route supports Capital Cargo's contention that only Capital Cargo is most likely to fly the operations that it has proposed. In the joint surreply filed by Emery Forwarding and Express.Net, the parties explain that Express.Net substituted the aircraft for a one-month period during April, the weakest month for U.S.-Mexico all-cargo traffic. The parties go on to say that Express.Net operated A-300 charters over the same routing for nearly 18 months and that it plans to restore service with the A-300 aircraft as soon as traffic increases, which is expected in May or June. Against this background, we have no reason to believe that Express.Net will not institute regularly scheduled service in the subject markets with A-300 aircraft.

By: Susan McDermott

August 15, 2003

OST-02-13299

Application of Express.Net for Emergency Waiver of Start-Up Condition

Pending receipt of Express.Net's Mexico scheduled permit, Express.Net is already operating an A-300 aircraft over its proposed Dayton-Guadalajara-Monterrey-Mexico City routing on a charter basis five times per week. Because Express.Net does not have operating authority from Mexico for scheduled services, however, Mexico City International Airport authorities have on several occasions denied Express.Net the airport slot necessary to enable Express.Net to connect with other flights at the Dayton hub operated by Menlo Worldwide Forwarding (formerly Emery Worldwide). Express.Net asks the Department to grant an emergency waiver of the startup condition in its U.S.-Mexico exemption authority for 30 days so Express. Net can continue pursuing Mexico authority and begin offering scheduled services on the routes it was awarded.

Counsel: Crowell Moring, Lorraine Halloway, 202-624-2500

August 18, 2003

OST-02-13299

Re: Express.Net Polling Letter

This is to advise the Department that we have polled all the carriers (Atlas, Capital Cargo, Amerijet, Astar, Northwest, Federal Express and UPS) served with Express.Net's emergency waiver application, and they all have no objection to or no comment on, the application.

Counsel: Crowell Moring, Lorraine Halloway, 202-624-2500

August 19, 2003

OST-02-13299

Approval of Application of Express.Net

By: George Wellington

OST-02-13299

September 19, 2003

Application of Express.Net Airlines for an Emergency Waiver of the Startup Condition (El Paso-Chihuahua)

Although Express.Net originally proposed operating Dayton-El PasoChihuahua flights using the A-300 aircraft it had operated over the same routing as charters, traffic on this route has declined below levels which would support A-300 service. Traffic is sufficient, however, to require use of B-727 aircraft with approximately 10,000 pounds more capacity than Express.Net's own B-727 aircraft. To operate flights tailored to meet the current demand on the Dayton-El PasoChihuahua route, Express.Net will wet-lease B-727 aircraft from Ryan International Airlines which have greater capacity than Express.Net's own B-727s because Ryan's aircraft have more powerful engines. To date, however, Mexican authorities have not committed to permitting such wet-lease operations. Representatives of Express.Net and Ryan have been working with the Mexican authorities and hope to resolve the wet-lease issue satisfactorily in the near future. Pending receipt of the wet-lease authority, Ryan International is operating its B-727 aircraft over the proposed Dayton-El Paso-Chihuahua routing on a charter basis for Menlo Worldwide Forwarding (formerly Emery Worldwide Forwarding) five times per week.

Counsel: Crowell & Moring, Bruce Keiner, 202-624-2500

OST-02-13299

September 19, 2003

Approval of Application of Express.Net Airlines for an Emergency Waiver of the Startup Condition (El Paso-Chihuahua)

Express. Net Airlines, LLC applies for an additional emergency 30-day waiver of the startup condition on Express.Net's El PasoChihuahua exemption authority issued by Order 2003-5-23. Express.Net was granted a waiver of the start-up date for all of its U.S.-Mexico exemption authority on August 19, 2003, but that waiver expires today. Express.Net has instituted the Dayton-Monterrey-Guadalajara-Mexico City A-300 service it proposed. The requested waiver as to Dayton-El Paso-Chihuahua service is necessary because the service currently required cannot be instituted without approval of a wet-lease by Mexican authorities. Express.Net asks the Department to grant its request on an expedited basis no later than close of business September 19, 2003, the date by

By: Linda Lundell

OST-02-13299

October 15, 2003

Application of Express.Net Airlines for an Emergency Waiver of the Startup Condition (El Paso-Chihuahua)

Applies for an additional emergency 60-day waiver of the startup condition on Express.Net's El Paso-Chihuahua exemption authority issued by Order 2003-5-23. Express.Net's current 30-day waiver of the start-up date for its El Paso-Chihuahua exemption authority expires on October 19, 2003. An additional waiver of 60 days for Dayton-El Paso-Chihuahua service is necessary because the service currently required cannot be instituted without approval of a wet-lease by Mexican authorities and, despite the intervention of the U.S. Embassy, Mexico has not yet granted such approval. Express.Net asks the Department to grant its request on an expedited basis no later than close of business October 17, 2003, so Express.Net can continue to pursue foreign approvals from Mexico with the U.S. Embassy's assistance and begin offering scheduled service on the El Paso-Chihuahua route it was awarded. Express.Net will poll the carriers served with this application and advise the Department of their positions as soon as possible.

Counsel: Crowell & Moring, Bruce Keiner, 202-624-2500

OST-02-13299

October 17, 2003

Answer of Capital Cargo International Airlines to Application of Express.Net Airlines, LLC for an Emergency Waiver of the Startup Condition (El Paso-Chihuahua)

Capital Cargo objects to extending Express.Net's deadline for service on the El Paso-Chihuahua route because Express.Net has failed to timely commence operations on that route using the Airbus A-300 aircraft it said it would operate there. Instead, Express.Net now indicates that market conditions on that route require it to operate that route indefinitely using a wet-leased Boeing 727 aircraft, and it is seeking an extension to allow more time to secure the Mexican government's approval of that wet lease.

Counsel: Preston Gates, Jonathan Blank, 202-628-1700, jblank@prestongates.com

October 17, 2003

Reply of Express.Net

Express.Net is seeking an additional waiver of 60 days to permit U.S. government officials to continue negotiating with the DGAC on Express.Net and Ryan's behalf. Express.Net has received non-objections from all of the carriers served with its October 15, 2003 waiver request except Capital Cargo. Although Capital Cargo now says it objects to an extension for use of the wet-leased B-727 aircraft, Capital Cargo did not oppose Express.Net's previous 30-day request, which was sought by Express.Net and approved by the Department for the same purpose.

Counsel: Crowell Moring, Bruce Keiner, 202-624-2500

OST-02-13299 - Application of Express.Net

Filed October 15, 2003 | Issued October 17, 2003

Notice of Action Taken

We found that grant of the requested waiver from the startup condition imposed on Express.Net's award in Order 2003-5-23 was in the public interest in the circumstances presented. In taking this action, we recognized that Express.Net had not yet received approval for the wetlease arrangement needed to commence service in the Dayton-El Paso-Chihuahua market; Express.Net and Ryan continue to work closely with the Mexican aviation authorities to secure this approval; and, at the request of Express.Net and Ryan, the U.S.

Express.Net's extension of the start-up deadline is effective through December 16, 2003, or until the date on which Express.Net begins service under the exemption authority awarded by Order 2003-5-23, whichever occurs earlier. Service not operated for a period of 90-days (once service under this exemption authority is inaugurated) will become dormant. The 90-day dormancy period with respect to the Dayton-El Paso-Chihuahua route will begin on the date Express.Net inaugurates service under this exemption authority.

Capital would have our decision on ExpressNet's request turn on one thing - the type of aircraft to be used in the Dayton-El Paso-Chihuahua market. However, in awarding the authority in the Cargo Case, we found Express.Net to be the preferred carrier for a number of reasons. We similarly found a number of reasons why Capital was not the preferred choice. Against this background, we find nothing in the arguments of Capital that persuades us to change our result here or to otherwise alter our selection in the Cargo Case.' In the circumstances presented, we believe that the public interest is best served by granting Express.Net's request here for a 60-day waiver of the startup deadline for the subject services.

We note that Express.Net has reassured us that it is committed to restoring A-300 service in the Dayton-El Paso-Chihuahua market as soon as possible.

By: Paul Gretch

OST-02-13299

September 1, 2004

Re: Request of Atlas Air for Activation of Backup Authority and Designation for U.S.-Mexico Scheduled All-Cargo Services | Word

Herein requests activation of its backup exemption authority to provide U.S.-Mexico all-cargo service between: (1) Huntsville, Alabama, on the one hand, and Mexico City and Guadalajara, Mexico, on the other hand, and (2) Los Angeles California, on the one hand, and Mexico City and Guadalajara, Mexico, on the other, plus designation under the U.S.-Mexico Air Transport Agreement, as amended, to provide U.S.-Mexico scheduled all-cargo services, initially in those city pairs.  As explained below, the conditions established by the Department for such actions have recently been satisfied.

Order 2003-5-23 accorded Atlas backup exemption authority between: (1) Huntsville, on the one hand, and Mexico City and Guadalajara, on the other, and (2) Los Angeles, on the one hand, and Mexico City and Guadalajara, Mexico, on the other.  Before the Department will make such authority effective, Express.Net must have informed the Department that its own authority is dormant and Atlas must notify the Department that it is still in a position to implement service and seeks activation of its backup authority.  As indicated above, the Express.Net notification has been given.  Atlas hereby gives notice that it is still in a position to institute service, and it requests activation of its backup authority.

Counsel: Atlas, Russell Pommer, 202-822-9121, rpommer@atlasair.com

OST-02-13299 - 2002 US-Mexico All-Cargo Exemption Service Case

Filed September 1, 2004 | Issued September 10, 2004

Notice of Action Taken | Word

By letter dated September 1, 2004, Atlas requested activation of its backup exemption authority to provide U.S.-Mexico all-cargo service between: (1) Huntsville, Alabama, on the one hand, and Mexico City and Guadalajara, Mexico, on the other hand; and (2) Los Angeles, California, on the one hand, and Mexico City and Guadalajara, Mexico, on the other hand. Atlas also requested designation under the U.S.-Mexico aviation agreement to provide the services proposed. Atlas states, further, that it is still in a position to institute service in the U.S.-Mexico market. In this regard, Atlas maintains that, as soon as its backup authority has been activated and Atlas has obtained the requisite license from the Mexican government, Atlas plans to commence service in the markets with B747 freighter aircraft.

By: Paul Gretch

OST-02-13299 - 2002 US-Mexico All-Cargo Exemption Service Case

November 12, 2004

Application of Atlas Air for Waiver of Start-Up-Condition | Word

By Notice of Action Taken, dated September 10, 2004, the Department activated the U.S.-Mexico backup all-cargo exemption authority that had been awarded to Atlas in Order 2003-5-23. As is typical with the award of limited-entry rights, service inauguration was required within 90 days – which in this case translates to a start-up deadline of December 9, 2004. Promptly following this award, Atlas commenced the licensing process in Mexico.  Even though it Atlas already holds a license authorizing charter operations pursuant to specific Mexican permits, Mexico is insisting on the submission of certain technical documentation ab initio.

Atlas is preparing the required documentation but does not think the process will have been completed by December 9, 2004, the current start-up deadline.  To secure necessary additional time, Atlas seeks a two-month waiver of the start-up deadline, to February 9, 2005.

Counsel: Atlas, Russell Pommer, 202-822-9121, rpommer@atlasair.com

OST-02-13299 - 2002 US-Mexico All-Cargo Exemption Service Case

November 22, 2004

Re: Polling Letter of Atlas Air | Word

On November 12, 2004, Atlas Air, Inc. filed an application for a waiver of the 90-day start-up condition attached to the Department’s activation of Atlas’ Mexico authority, bringing the new start-up deadline to February 9, 2005. We have polled the carriers served with the application (FedEx, UPS, Amerijet, Astar) and have been advised that none intends to object to or otherwise comment on the Atlas request.

Because the current start-up condition requires service inauguration by December 9, 2004, Atlas requests that the Department grant the waiver extension request as soon as possible.

Counsel: Atlas Air, Russell Pommer, 202-822-9121, rpommer@atlasair.com

OST-02-13299 - 2002 US-Mexico All-Cargo Exemption Service Case

November 29, 2004

Approval of Application for Waiver of Start-Up Condition for Atlas Air

By: George Wellington

OST-02-13299 - 2002 US-Mexico All-Cargo Exemption Service Case

February 1, 2005

Application of Atlas Air for Start-Up Waiver Extension | Word

By Notice of Action Taken, dated September 10, 2004, the Department activated the U.S.-Mexico backup all-cargo exemption authority that had been awarded to Atlas in Order 2003-5-23. Because of the complexity of the licensing process in Mexico, Atlas obtained a waiver of the DOT start-up condition through February 9, 2005.

Atlas has been working diligently to comply with Mexico’s licensing requirements and believes it now has submitted all documentation required by the Dirección General de Aeronáutica Civil. The DGAC is in the process of reviewing that documentation. Atlas is awaiting DGAC notification about the acceptability of the documentation and Mexico’s subsequent issuance of a license authorizing Atlas to provide scheduled cargo service.

Atlas hopes the process will be completed promptly but has no way of predicting when the DGAC may act. It appears highly unlikely, however, that the process will be completed in time to permit a February 9 inauguration of scheduled service. To allow a reasonable period of time, Atlas seeks a further two-month waiver of the start-up deadline, to April 9, 2005.

Counsel: Atlas Air, Russell Pommer, 202-822-9121, rpommer@atlasair.com

OST-02-13299 - 2002 US-Mexico All-Cargo Exemption Service Case

February 3, 2005

Re: Polling Letter of Atlas Air | Word

On February 1, 2005, Atlas Air, Inc. filed an application for an additional two-month waiver of the start-up condition for its U.S.-Mexico scheduled service, until April 9, 2005. We have polled the carriers served with the application (FedEx, UPS, Amerijet, Astar) and have been advised that none objects to the Atlas request.

Because the current start-up condition requires service inauguration by February 9, 2005, Atlas requests that the Department grant the waiver extension request as soon as possible.

Counsel: Atlas Air, Russell Pommer, 202-822-9121, rpommer@atlasair.com

OST-02-13299 - 2002 US-Mexico All-Cargo Exemption Service Case

February 7, 2005

Approval of Application - Atlas Air

By: George Wellington

OST-02-13299 - 2002 US-Mexico All-Cargo Exemption Service Case

March 30, 2005

Application of Atlas Air for Start-Up Waiver | Word

Because the ongoing licensing process in Mexico has not yet been completed, Atlas Air, Inc. requests an additional two-month waiver of the startup condition for its U.S.-Mexico scheduled services, until April 9, 2005.

Counsel: Atlas Air, Russell Pommer, 202-822-9121, rpommer@atlasair.com

OST-2002-13299

April 1, 2005

Re: Polling Results

Counsel: Atlas, Russell Pommer, 202-822-9121

OST-2002-13299

Filed March 30, 2005 | Approved April 4, 2005

Notice of Approval - Atlas Air

By: George Wellington

OST-2002-13299 - US-Mexico All-Cargo Exemption Service Case

June 6, 2005

Re: Atlas' U.S.-Mexico Authority

Even though Atlas has recently been successful in obtaining a scheduled license from Mexico, it no longer believes U.S.-Mexico scheduled service is necessary to meet the needs of its customers. Also, the Mexican DGAC has been far more hospitable in granting charter applications. Given these developments, Atlas believes it can accommodate its commercial requirements for U.S.-Mexico capacity by continuing to operate charters and herein relinquishes its U.S.-Mexico scheduled rights so another U.S. carrier can be given the opportunity to use them.

By: Russell Pommer

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