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International Air Transport Association

Part 1 of 2 CTC COMP 0396 dated 21 June 2002 Composite Cargo Resolution 502 CTC COMP 0404 dated 9 July 2002 - technical correction CTC COMP 0400 dated 25 June 2002 - Minutes Intended effective date: 1 October 2002

Counsel:  IATA, David O'Connor, 202-293-9292

International Air Transport Assosciation

IATA's proposal would directly affect the pricing of airfreight by establishing a new methodology by which low-density freight is assigned an imputed weight. The proposal would impose a serious economic burden on high tech and many other sectors of the US economy that are dependent on airfreight services. Recognizing this burden, and the overall impact this proposal will have on a struggling US economy, we believe it is important that DOT’s consideration of this matter be deliberate and comprehensive.

By: Stephen Harper

International Air Transport Assosciation

The Health & Personal Care Logistics Conference, Inc. and the National Small Ship­ments Traffic Conference, Inc., are associations of shippers of freight, including manufacturers of pharmaceuticals and personal care products and manufacturers of other commodities, many of whose members rely on international air transportation for package and parcel shipments. IATA's Application seeks antitrust immunity for a dimensional rule change that will effectively raise rates on such shipments.

The additional time is needed to inform shippers about IATA's Application and to ana­lyze the lengthy Application along with four air carriers' accompanying economic statements (to­taling more than 200 single-spaced pages). Shippers must assess the economic impacts they face, including not just 20% rate increases, but also other costs that may be incurred. Shippers must consider modifications to shipping and packaging practices that they developed in reliance on the current dimensional rule, in effect since 1991, which IATA's Application seeks to change. In addition, applicable legal, economic and public interest considerations must be analyzed. Conducting the necessary research and preparing the reply comments needed to provide DOT with a full record will require more than 21 days.

By: NSSTC, John Cutler

On February 13, 2003, the High Tech Airfreight Shippers Coalition submitted a letter seeking extension for a minimum of 90 days beyond the normal 21-day comment period. Answers to the Coalition's request would be due on February 26, 2003. In order to have the benefit of comments on the Coalition's request prior to the 21-day comment date on IATA's application, we are shortening the answer date on the Coalition's request to 3 p.m. February 24, 2003. Therefore, acting under authority assigned to the Director, Office of International Aviation, 14 CFR 385, we require that answers to the request by the Coalition be filed by 3 p.m. February 24, 2003

By: Paul Gretch

International Air Transport Association

In response to the petitions by the High Tech Airfreight Shippers Coalition, the Health & Personal Care Logistics Conference, Inc. and the National Small Shipments Traffic Conference, Inc., this is to advise that the International Air Transport Association does not object to a 60-day extension of the comment period, which would give all interested parties 81 days to submit comments. However, IATA believes the Coalition’s and the Conferences' request for a 90-day extension beyond the current 21-day period is excessive and unnecessary. It is reasonable to expect the Coalition and other parties would be able to evaluate and comment on Resolution 502 and supporting documentation within 81 days.

By: David O'Conner, 202-293-9292

Pursuant to your notice posted February 21, 2003, please find attached a request supporting a 90-day extension of the deadline for comments on the Application for Approval of Agreements filed January 7, 2003 in the above referenced docket by the International Air Transport Association. We submit this request on behalf of the High-Tech Air Freight Shippers' Coalition, whose membership list is also attached.

IATA's proposal would directly affect the pricing of airfreight by establishing a new methodology by which low-density freight is assigned an imputed weight. The proposal would impose a serious economic burden on high-tech and many other sectors of the U.S. economy that are dependent on airfreight services. Recognizing this burden, and the overall impact this proposal will have on a struggling U.S. economy, we believe it is important, in keeping with DOT's responsibility to deny antitrust immunity for anti-competitive agreements that do not satisfy the public interest requirement, that DOT consider this matter with the benefit of broad public participation.

Counsel: Dewey Ballentine, W. Clark McFadden

The Health & Personal Care Logistics Conference, Inc. and the National Small Shipments Traffic Conference, Inc., which recently filed their own request for a 90-day extension of the answer deadline in the above-referenced docket, hereby state that they support the extension request filed February 13, 2003 by the High Tech Airfreight Shippers Coalition. The public interest will be served by the requested extension, which should apply to all interested parties, and IATA will not be prejudiced.

Counsel: McCarthy Sweeney, John Cutler

International Air Transport Association

The National Industrial Transportation League hereby files this letter in support of the requests for a 90-day extension of the date for submitting comments in response to the Application for Approval of Agreements filed by the International Air Transport Association on February 7, 2003.  In its lengthy proposal, IATA seeks to modify Resolution 502 by imposing a new density standard to be applied to air cargo considered to have a low density. The proposal is not without controversy as it could impose significant change and costs on air freight shippers. Accordingly, the League submits that the normal 21-day comment period is inadequate and will not provide the transportation community with sufficient time to analyze IATA's extensive application, determine its impact, and prepare appropriate comments.

Counsel: Karyn Booth

International Air Transport Association

On February 7, 2003, the International Air Transport Association filed an agreement in the above-captioned docket for approval. Comments would normally be due 21 days from filing, i.e., on February 28, 2003. On February 13, 2003, the High Tech Airfreight Shippers Coalition (the Coalition) submitted a letter seeking extension for a minimum of 90 days beyond the normal 21-day comment period.  Answers to the Coalition’s request would have been due on February 26, 2003. We shortened the answer date on the Coalition’s request to 3 p.m. February 24, 2003.

IATA answered the Coalition's request and stated that while IATA did not object to an extension of 60 days beyond the normal period for comments, the requested 90-day extension was excessive and unnecessary.

We received answers supporting the full 90-day extension from the Coalition from the Health & Personal Care Logistics Conference, Inc., the National Small Shipments Traffic Conference, Inc, and from the National Industrial Transportation League.

In light of the potentially complex analytical issues raised by the IATA application we view it as particularly important to develop an adequate record for decision. In this regard we find it consistent with the public interest to ensure that all interested parties have sufficient time to submit comments. We therefore have decided to extend the comment period on IATA's application for 90 days beyond the date on which comments otherwise would have been due.

Therefore, acting under authority assigned to the Director, Office of International Aviation, 14 CFR 385, we are extending the period for comment on the agreement in the above-captioned docket to May 29, 2003.

By:  Paul Gretch

International Air Transport Association

Correspondence from Tokyo Electron Texas LLC, concerning IATA's Resolution 502. My comment is against IATA's Resolution 502 to change the volumetric rate. As far as I know, nothing has changed in the world of air freight that would be a driver for changing the relationship between volume versus actual weight charges. If this presumption is correct, then IATA's proposed change looks like little more than a somewhat surreptitious way to increase revenues for airlines and freight forwarders.

By: David Kirby

April 30, 2003

OST-03-14480 - Pricing Agreement

Comments of Dennis Shea

By: Dennis Shea

April 22, 2003

OST-03-14480

Comments of Menlo Worldwide Forwarding

We understand that you are considering approval of IATA Air Cargo Resolution 502, which has recently been approved at the IATA Tariff Coordinating Conference at The Hague. This resolution is designed to reduce the general density calculation for air cargo which currently is classified as light or low-density cargo. Menlo Worldwide Forwarding believes that this resolution will have a significant negative effect on global air freight shippers, especially those in the high technology, electronics, telecommunications, and automotive industry sectors. In essence, this reduction in the general density calculation for air cargo amounts to an approximately 20% increase in a shipper's airfreight cost for companies who ship light density items by air, with no corresponding or offsetting benefit. We do not feel such an increase is warranted, especially given the current global economic climate. Further, we believe that other approaches, such as better packaging design, should be fully explored prior to any such unilateral action being taken.

By: Peter Quantrill

April 22, 2003

OST-03-14480

Comments of Abercrombie & Fitch

The purpose of Resolution 502 is to change the volume to weight relationship from the present 6,000 cubic centimeters (366 cubic inches) per paid kilogram to 5,000 cubic centimeters (305 cubic inches) per paid kilogram for air cargo. This proposed change will result in an approximately 18 percent rate increase and unfairly targets "captive shippers" that depend on air cargo to meet competitive market demands.

By: Richard Cosky

May 14, 2003

OST-03-14480 - IATA 502 Resolution

Comments of Exel

Thousands of companies here in the USA and their Suppliers and Customers abroad are today using airfreight as an integral part of managing their supply chains across geographies while attempting to increase consumer and customer satisfaction through just in time delivery principles.

The proposed resolution is in effect a hidden cost increase adding an average of 10-20% to the final transportation costs. To the best of our knowledge we have not either seen IATA, or the airline community, provide a sufficient case justifying this change in accounting methodology. While understanding the competitive nature of the overall aviation industry and cargo transported by Air, we would rather recommend that the Airlines compete on quality and regularity, with the better operators being able to justify what may well be an official rate and cost increase being accepted by the market place.

Hundreds of our Customers, both small and medium size, as well as large multi-national companies, have raised their concerns to us as one of their preferred suppliers and partners in the area of supply chain management, and as a member of IATA in good standing, we are compelled to share their concerns through this letter.

By: Mike Fountain

May 23, 2003

OST-03-14480

Comments of Adobeair

As a shipper of low density products, I am totally opposed to this change. It is a 16.6% price increase on top of fuel and security surcharges. Almost everything I ship already is impacted by the current domestic and international dimensional weight formula. This change in the dimensional weight formula is unacceptable.

By: Doug A. Bechtel

May 27, 2003

OST-03-14480

Comments of FreightForward Europe

FF E clearly takes the position that a dramatic change in the tariff system cannot be implemented unilaterally by the carriers. FFE considers that any change needs to be discussed with the stakeholders from the forwarding community representing the interests of the manufacturing, trading industry.

If the change should be adopted, then this needs to be applicable for all cargo i.e. loose and unitised cargo and the special tariff system for ULDs (Unit Load Devices) with pivot and excess weight must also be dropped while the general weight / volume ratio has to adopted for all freight shipped by air.

While it is presented as a technical issue, in fact the change in volume ratio is a straight forward freight rate increase of 20 % for volumetric cargo. It will also increase freight rates for cargo that is currently weight cargo but will become volumetric under the new ratio. FFE believes it is against the spirit of normal competition for IATA to implement a rate increase across all carriers. To change ratio should be left to the commercial decision of individual carriers competing in the airfreight market, and it should not be the decision of the airlines in unison.

Carriers still refuse direct discussions with the forwarders on the basis of non ratification of the Resolution by some major trade nations such as the U.S.A. and many countries in Europe, Asia and Latin America - therefore FF E is approaching these ratification bodies with an urgent request not to ratify the resolution as it is the only way to get the parties at the negotiating table.

By: Maria Scardigli

May 27, 2003

OST-03-14480

Comments of Nike

Resolution 502 is an arbitrary, organized effort by all airfreight carriers to by-pass the competitive market process that governs how airfreight rates are established today. It should not be seen as a savior to the U.S. airlines. The reality is that 57% of the airfreight shipped to/from the U.S. is carried on non-America flagged carriers. Of the 43% carried by U.S. flag carriers, over one-half of that amount is carried by UPS and FedEx, and these carriers are not covered by this agreement. In the final analysis, the additional revenue to America flag carriers will be insignificant compared to the revenue received by foreign flag carriers.

IATA's argument is also flawed when it implies all shippers will find a means to improve packaging to reach the 5,000 cubic centimeter per paid kilogram rate, or presumably use alternative modes of transportation. For inflated Nike airbags shipped from Portland, Oregon to Asia destinations, airfreight is the only option, due to the air bag's short shelf life prior to being molded into polyurethane midsoles. (Note: the only air freighter service in/out of Portland, Oregon is foreign-flag carriers.) While Nike predominately uses ocean freight for its finished products (89%), airfreight is utilized when expedited delivery is driven by consumer market conditions. Opportunities to increase the package density of shipments of our finished products would compromise the commitments to our retailers to provide floor-ready merchandise.

We strongly urge the Department of Transportation to oppose IATA's Resolution 502 and recommend its withdrawal, especially in this difficult economic climate.

By: John Isbell

May 29, 2003

OST-03-14880

Comments of Consumer Electronics Association

Resolution 502 harms the public interest because it would impose a significant increase in freight costs with little or no warning to the affected industries and general public. Prior to being asked in the November survey, only 23 percent of CEA member companies were aware of IATA's attempt to reduce the standard for computing rates for low-volume, high density shipments. While veiled under the guise of a technical change to an existing standard, most affected parties, especially consumer electronics companies and consumers, would not be aware of the change until paying more for products and components shipped by international air freight.

By: John E. Hartgen

May 28, 2003

Comments of Gap

While every industry is feeling the pain of the current economic slowdown, it is tough to justify an increase in airfreight costs that is plainly not market driven. Given the devastating impact this could have on our company, the American retail industry, and many other sectors important to the strength of our national economy, I urge you deny IATA's application for antitrust immunity.

By: Joe O'Leary

May 29, 2003

Comments of Gateway

IATA Resolution 502 would revise the conversion standard used to determine air shipping rates for low density" packaging, the type of protective packaging that is used for many consumer electronics arid high tech components. The current proposal would add 15-20% annually to the shipping of such packages, which amounts to an annual increase of $1.842.4 million for the average consumer-based technology company. Adding such burdensome costs to the high tech sector at this time is completely counter-productive to the intended economic stimulus found in the tax bill recently passed by Congress. Specifically, adding such costs would stunt any potential growth in the entire sector by forcing increased consumer prices and deeper job cuts at a time when recovery has just begun.

By: Donald McClellan, 202-737-2000

May 29, 2003

Comments of Kintetsu World Express (USA) | Word

In essence, IATA seeks authority from the Department of Transportation to reduce weight relationship from the present 6,000 cubic centimeters (366 cubic inches) per paid kilogram to 5,000 cubic centimeters (305 cubic inches) per paid kilogram of air cargo. This proposed change would result in a rate increase of approximately 18 percent for the shipment by air of low density cargo. If approved, Resolution 502 could have significant negative effects on the United States economy and could result in adverse consequences on relations with certain foreign countries. Because Resolution 502 is anticompetitive and is not in the public interest, KWE respectfully requests that the Department decline to approve IATA's request.

Counsel: Dow Lohnes, Jonathan Hill, 202-776-2725, jhill@dhlaw.com

May 29, 2003

Comments of The Metropolitan Nashville Airport Authority

Our community is speaking out on this issue because we are very concerned that implementation of Resolution 502 will have a very severe negative impact on the economic well-being of the Nashville area. Nashville is home to major pharmaceutical production facilities and a very large and rapidly growing medical technology industry. The region has been named the "Silicon Valley of Healthcare" because of the convergence in the area of significant elements of this industry. Nashville is also a major center for the production and assembly of telecommunications and computer equipment and is a leader in the finance, insurance, music and entertainment industries. As a consequence, Nashville's economy is heavily dependent on industries that ship and receive large quantities of relatively light weight, high value goods - the very shipments that IATA has singled out in Resolution 502 for a twenty percent rate increase.

Counsel: Stephen Gelband, 202-337-8970

May 29, 2003

Comments of Pioneer Electronics (USA), Inc. | Word

For thousands of companies that use airfreight services, IATA Resolution 502 will significantly increase shipping costs for lower density cargo. These higher costs in turn will affect economic growth, consumer prices, and jobs in high technology and other sectors currently facing challenging economic conditions. Foreign flag carriers - not US airlines -would receive more than half of this revenue as they derive more of their revenue from cargo shipment than do their US counterparts.

By: Henio R. Arcangeli, 310-952-2277, henio.arcangeli@pioneer-usa.com

May 28, 2003

Comments of Radio Shack | Word

For thousands of companies that use airfreight services, IATA Resolution 502 will significantly increase shipping costs for lower density cargo. These higher costs in turn will affect economic growth, consumer prices, and jobs in high technology and other sectors currently facing challenging economic conditions. Any benefit to U.S. airlines must be discounted for that portion of the benefit that will flow to foreign-flag carriers, and is far outweighed by the other considerations stated above.

By: Arnold Grothues

May 29, 2003

Comments of Society of American Florists and the Wholesale Florist and Florist Suppliers Association | Word

It appears that the Resolution 502 amendment is aimed at increasing airfreight revenues for the world’s airlines. This is not, in our opinion, in the public’s interest nor is it a compelling reason to allow an antitrust exemption.

By: Drew Gruenberg for American Florists / Jim Wanko for Wholesale Florists

OST-03-14480

May 29, 2003

Comments of American Apparel & Footwear Association | Word

Resolution 502 is effectively a substantial rate increase, being adopted by IATA on just four months' notice to the shipping public, and coming at a time when shippers in the United States and around the world are suffering from continued economic weakness in the world economy. The current 6,000 cc per paid kilogram conversion ratio has been in effect since 1981, and shippers have designed and constructed their production and packaging in reliance upon the current standard. The proposed IATA increase is unjustified, contrary to the public interest, and inconsistent with fair notice to the shipping public.

By: Kevin Burke, 703-524-1864

May 29, 2003

Comments of Bax Global

The proposal amounts to a thinly veiled cost increase that will impact many of our customers by as much as 20-percent. IATA's rationale, that newer aircraft and engines can uplift increased payloads but fail to deliver the anticipated benefit because air cargo density has decreased, is alleged but to our knowledge has not be proven.

By: Joseph Carnes

May 29, 2003

Comments of Cobra Electronics Corp | Word

By: Daniel S. Schiff

May 29, 2003

Comments of Department of Justice

DOJ urges DOT to re-activate its now dormant Docket 46928, in order to reexamine whether approval and antitrust immunity should be withdrawn for all IATA agreements on fares or rates charged by United States airlines for passenger tickets or air freight carriage sold in this country to consumers for travel or shipments to and from the United States, as well as with respect to IATA agreements on airline fares, rates and charges in other contexts in which United States national interests are strong. Such agreements are contrary to fundamental United States competition policy as set forth in the antitrust laws, and any foreign policy or international comity justifications for immunizing such agreements have further eroded as foreign countries increasingly adopt policies more reliant on market competition.

By: Michele Cano

May 29, 2003

Comments of Expeditors

Despite our repeated requests to IATAto provide a logical, detailed justification forthe adoption of the resolution, supported by actual industry data of global air freight densities, we have not, to date received a sufficient response to our questions. The clarifications we did receive were based rather on subjective reasoning related to aircraft weight/space limitations, aviation technology improvements, and methods used by other transport modes with regard to charging on volumetric cargo. Hence, we remain unconvinced. Until such time as IATA can provide objective and substantiated justification, we do not believe there is sufficient cause for the adoption of this resolution. As such Expeditors respectfully submits that we cannot support the implementation of the resolution as it currently stands.

By: Corey Mahjoubian

May 29, 2003

Comments of Footwear Distributors and Retailers of America | Word

Attachment 1 - Members of FRDA | Word
Attachment 2 - FDRA Programs | Word

More than 97%, by volume, of footwear sold in America comes from overseas sources, accounting for more than 1.7 billion pair with an ex-factory value in excessive of $15.0 billion in 2002. While the bulk of footwear is transported by ocean, a significant portion, perhaps as much as 15% and an even higher percentage from fashion intensive sources such as Europe, moves by international airfreight. All of this airfreight is subject to the low density IATA rules. The proposed IATA density factor would lead, inevitably, to higher prices consumer in a sector already facing stiff price resistance.

By: Peter T. Mangione, 202-737-5660, ptmangione@fdra.org

May 29, 2003

Comments of Health & Personal Care Logistics Conference and National Small Shipments Traffic Conference | Word

The Shipper Conferences are aware of, and are not indifferent to the financial straits of the airline industry. This factor may be subject to consideration as part of the statute's public interest test. However, it is not a dispositive consideration when compared with other important considerations, including the availability of less anticompetitive alternatives.

Counsel: McCarthy Sweeney, John Cutler, 202-775-5560

May 29, 2003

Comments of International Mass Retail Association | Word

While Resolution 502 will significantly raise air cargo rates, it will not serve the public interest. In fact, only 43% of the airfreight shipped to and from the U.S. is actually carried by U.S-flagged airlines. UPS and Fed Ex, who are not covered by the agreement, carry more than half of that 43%. As a result, any benefit from Resolution 502 would primarily go to the non-U.S. flagged airlines.

By: Sandra Kennedy, 703-841-2300

May 29, 2003

Comments of Limited Logistics Services, Inc. | Word

Limited Brands strongly opposes IATA Resolution 502 and its application for an antitrust exemption, which will has been filed with the Department of Transportation pursuant to the docket captioned above. The company's extensive supply chain brings product to US consumers from sources around the globe. International air cargo comprises a critical element of that supply chain due to the great distances from manufacturing to market and the short life cycle of its fashion products.

By: Nicholas J. LaHowchic

May 28, 2003

Comments of Mitsubishi Digital Electronics America | Word

Resolution 502 proposes to lower the density standard from 6000 cubic centimeters per kilogram to 5000 cubic centimeters per kilogram. This proposal, while masked as an update to an existing standard, could have the effect of increasing air freight shipping costs at an estimated 15 percent to 20 percent which will, in turn, affect customer pricing. In short, the customers will bear the brunt of this increase. Furthermore, this proposal will be disproportionately borne by the consumer electronics community since the industry ships many products and components by international air freight.

By: Angela Lee

May 29, 2003

Comments of National Association of Manufacturers | Word

By: Lawrence A. Fineran, 202-637-3174, lfineran@nam.org

May 29, 2003

Comments of National Industrial Transportation League (With Attachments)

Resolution 502 is effectively a substantial rate increase, being adopted by IATA on just four months' notice to the shipping public, and coming at a time when shippers in the United States and around the world are suffering from continued economic weakness in the world economy. The current 6,000 cc per paid kilogram conversion ratio has been in effect since 1981, and shippers have designed and constructed their production and packaging in reliance upon the current standard. The proposed IATA increase is unjustified, contrary to the public interest, and inconsistent with fair notice to the shipping public.

Counsel: Thompson Hine, Karyn Booth, 202-331-8800

May 29, 2003

Comments of National Retail Federation

NRF writes to you to express our strong opposition to Resolution 502, advanced by the International Air Transport Association. NRF is a member of the High-Tech Air Freight Shippers Coalition, and has joined in the signing of their comments. However, as this change would dictate a drastic cost increase for many sectors of this industry, we reiterate that opposition and urge you to deny IATA's request for an antitrust exemption for Resolution 502.

By: Erik O. Autor

May 29, 2003

Comments of Semiconductor Industry Association

By: Amy S. Burke

May 29, 2003

Comments of The High Tech Air Freight Shippers' Coalition - Part 1

Comments - Part 2
Appendix B

The High-Tech Coalition's comments demonstrate that the antitrust exemption is not necessary in order to "meet a serious transportation need to achieve important public benefits," as called for in the Federal Aviation Act of 1958. To the extent that there may be a need for changing the Resolution 502 formula for particular carriers or routes, there is no convincing reason why the carriers involved cannot do so through free-market pricing.

Counsel: Dewey Ballentine, James M. Wickett, 202-862-1000, jwickett@deweyballentine.com

May 29, 2003

Comments of Zenith | Word

The rate increase proposed by IATA would be significant, and dramatically affect the consumer electronics and high-tech industries. Along with other participants in these industries, Zenith ships a very large number of "low density" packages, which take up cargo space but do not contain much weight. IATA's proposal would revise the conversion standard used to determine air shipping rates for these packages, and would add 10 to 20 percent annually to the cost of shipping these products by air. The Consumer Electronics Association has estimated that this revision would increase rates by at least $1.2 million for the average consumer technology company that ships packages by means of international air freight. Obviously, this would be a substantial burden for Zenith and other companies.

By: John Taylor, 847-941-8181

May 30, 2003

OST-03-14480

Correspondence of IATA

I received your message below, and as this is a public proceeding pending before the Department, it would be inappropriate under the Department's rules for me to comment on this case before a final decision has been reached. I am placing a copy of your letter and my response in Docket OST-2003-14480.

By: Frank Socha

May 29, 2003

OST-03-14480

Correspondence of National Electrical Manufacturers Association

On behalf of the National Electrical Manufacturers Association, I am writing to urge you to deny approval to the application submitted February 7, 2003 to your agency by the International Air Transport Association. This application by IATA requests antitrust immunity for an agreement to raise airfreight shipping rates on international shipments of lower-density cargo.

I am also writing in support of the brief filed with the Department of Transportation by the High Tech Air Freight Shippers' Coalition regarding this matter. NEMA is a member of the aforementioned twenty-one member Coalition of associations and companies.

NEMA believes that there is no compelling reason as to why antitrust immunity should be granted for this agreement. In addition, we see no reason why the objectives of the airlines -- to raise prices for international shipments of lower-density cargo -- cannot be achieved in the free market. Thus, the member companies of NEMA urge you not to approve this application.

By: Timothy Feldman, 703-841-3200

June 6, 2003

OST-03-14480

Request for 30 Days to Respond to Comments | Word

I am writing on behalf of the International Air Transport Association to request approximately 30 days in which to respond to the comments submitted by opponents of the application that IATA submitted in the above-referenced docket. The application was filed on February 7, 2003. Several opponents of one of the resolutions submitted with the application, an amendment of IATA's Cargo Tariff Conference Resolution 502, requested, and received, a 90 day extension of the normal 21 day answer period.

IATA wishes to review many of the legal and factual points that have been included in the comments. Because of the large number of comments in opposition that have been filed, including one more than 400 pages in length, IATA asks for permission to file responsive comments not later than July 9, 2003.

Since none of the Resolutions in the Application may become effective until the Department has completed its review and approved the application, no opposing party will be disadvantaged by a further delay in the review procedure. Although Part 303 does not specifically provide for a response to comments, this request is consistent with the Part 303 procedures, which are normally set by order of the Assistant Secretary and are unique to each application for approval of inter-airline agreements. I believe that a comprehensive response will also assist the Department in its review of these issues.

We will serve this request on each of the parties who filed Comments and encourage them to contact your office by Monday or Tuesday if they wish to respond to this procedural request.

Counsel: IATA, David O'Connor, 202-293-9292

May 28, 2003

OST-03-14480

Comments of Sanmina - SCI Corporation

Sanmina-SCI, along with a number of other companies in the industry, currently represented by the EMS Coalition, believes the antitrust exemption is anticompetitive and has a larger negative effect on the US economy than the benefit the airlines will receive. We further believe that this price increase could be achieved in the market place, not by means of anti trust exemption. his exemption directly affects the competitiveness of our industry and specifically that of our corporation. The proposed changes to the rules on cargo density in IATA's Resolution 502, has a profound effect on Sanmina-SCI's financial situation. SanminaSC! estimates that an additional 22% (2.5 Million Kgs) of its International Cargo will be affected. The effect of this change increases the cost of transportation on these shipments by 27%, which represents an annual cost increase to Sanmina-SCI of $2.5 Million.

By: Phil Alarid

May 27, 2003

OST-03-14480

Comments of Audiovox Electronics

The electronics industry would be severely damaged by a change in the conversion standard, not only from freight cost point of view, but from a packaging standpoint as well. If the resolution were to pass, our industry would have to undergo a metamorphosis in package design in order to lessen the impact of the conversion, which will be costly to say the least.

By: Patrick Moffett

July 9, 2003

OST-03-14480

Reply Comments of IATA

Counsel: IATA, David O'Connor, 202-293-9292

July 14, 2003

OST-03-14480

Motion of High-Tech Shippers Coalition for 30-Day Period to Respond to Comments | Word

Counsel: Dewey Ballantine, Clark McFadden, 202-862-1000

July 21, 2003

OST-03-14480

Answer of IATA to Request for Additional 30-Day Comment Period | Word

IATA will not object to the Coalition's request for an additional 30 days in which to respond to IATA's filing. However, we wish to make clear that our airline members support the application filed in February and want the Department to act favorably on the application as soon as possible after the ad hoc procedures that apply to this matter are concluded.

Counsel: IATA, David O'Connor, 202-293-9292

June 27, 2003

Correspondence of Avnet Electronics Marketing

It is our opinion that IATA has no economic justification supporting the proposed increase. Furthermore, the increased costs will be revenue generators for foreign carriers, not US airlines, as the foreign market derives more of their revenue from cargo shipments than US based airlines.

By: Jim Smith

Issued July 30, 2003 | Served August 4, 2003

OST-03-14480

Notice

On February 7, 2003, the International Air Transport Association (IATA) filed an agreement in the above-captioned docket for approval. On February 26, 2003, in response to a request from the High-Tech Air Freight Shippers Coalition (the Coalition) for a 90-day extension of the normal 21day comment period, we extended the comment period to May 29, 2003. Numerous comments were received on the record by May 29.

On June 9, 2003, IATA submitted a request for approximately 30 days in which to respond to the comments. I/ On June 24, we granted IATA's request, and it filed responsive comments on July 9.

On July 15, the Coalition filed a request for a 30-day period to reply to IATA's responsive comments. In support of its request, the Coalition states that IATA presented new information and a variety of additional argumentation in its July 9 filing, and that parties should have an opportunity to respond.

On July 21, IATA stated that it will not object to the Coalition's request. However, IATA also wished to make it clear that IATA's member carriers support the application filed in February and want the Department to act favorably on the application as soon as possible after the ad hoc procedures that apply to this matter are completed.

We believe thatthe same reasons that warranted a 90-day extension of the initial comment period, and a 30-day period for IATA to file responsive comments, apply equally to the Coalition's request. Permitting the Coalition and other parties to file replies to IATA's responsive comments by August 15 will assist in developing an adequate record for decision, and will not appreciably delay our review process.

Therefore, acting under authority assigned to the Director, Office of International Aviation, 14 CFR 385, we establish a date of August 15, 2003, for the filing of replies to IATA's response to comments previously received on the agreement in the above-captioned docket.

By: Paul Gretch

August 12, 2003

OST-03-14480

Rebuttal Comments of The Health & Personal Care Logistics Conference and the National Small Shipments Traffic Conference in Opposition to IATA Application | Word

IATA devotes the bulk of its Reply to attempting, unsuccessfully, to rebut the Comments of the High Tech Air Freight Shippers Coalition, with a few dismissive pages for the Department of Justice at the end. The Shipper Conferences would remind the Secretary that opposition to IATA Resolution 502 was expressed by a broad spectrum of air cargo shippers and intermediaries. In addition to the members of the Shipper Conferences, most of which are not electronics manufacturers, opponents included the National Industrial Transportation League on behalf of its hundreds of shipper members, individual shippers such as Nike, the Limited and the Gap, forwarders such as Bax Global, Expeditors International, and Exel, florists, mass retailers, the National Association of Manufacturers and others. No shippers or forwarders have expressed support for Resolution 502.

Counsel: McCarthy Sweeney, John Cutler, 202-775-5560

August 13, 2003

OST-03-14480

Comments of Gateway

IATA has offered no economic justification for this rate hike. By getting the government to approve a rate increase within their shipping standards Proposal, 1ATA is attempting to side-step the traditional marketplace where airlines and corporations arrive at reasonable rates through transparent competition and negotiation. At a time of a still-flagging economy, such an increase without clear justification is not in the public interest, and we urge you to deny its passage.

By: Don McClellan

OST-03-14480

August 14, 2003

Comments of Pioneer Electronics (USA)

Resolution 502 harms the public interest by imposing significant new costs on American manufacturers and consumers in the midst of a poor economy. A Consumer Electronic Association survey found that IATA's proposed rate increase of 15% to 20% would cost the average consumer electronic company an estimated at $1.8-$2.4 million. The above-mentioned figure does not take into account costs associated with packaging changes that would take place in order to keep shipment costs at an affordable level, to achieve the proposal's goal of increased "efficiency." Consumer electronics products are packaged so that devices or components are protected, but not so much that the packaging would incur extra shipping costs. Even less protective packaging could result in defective consumer electronics products or components resulting in even more costs to manufacturers, retailers and consumers.

By: Henio Arcangeli, 310-952-2277, henio.arcangeli@pioneer-usa.com

August 14, 2003

Comments of Limited Brands | Word

IATA's reply comments depict pricing scenarios under which a shipper's costs would not rise under the new rule. Those depictions do not represent our international shipment and cost profiles, nor the profiles of many of the importers who help to drive our national economy.

IATA's reply comments portray this 1:5000 as a maximum, with the competitive marketplace resulting in more favorable terms offered by some airlines. Certainly there is no evidence to be found in the current cargo marketing practices of major international airlines to support this. With high barriers to entry, airlines control supply of capacity and dictate such terms to the shipping public.

By: Nicholas J. LaHowchic, 614-415-7101

OST-03-14480

August 15, 2003

Comments of Association of Floral Importers of Florida | Word

Approximately two-thirds of the flowers consumed in the U.S. are imported through Miami International Airport (MIA) and AFIF Members account for the majority of that volume. Our flowers are only imported by air and flowers represent the number one import through MIA. Anything that affects these air carriers greatly impacts our Members, as would a change to the current rule regarding low-density cargo. Currently flowers are shipped based on weight, not on volume. The proposed change to Resolution 502 would change the current rule from the present 6000 cc to 5000 cc per kg, increasing the number and cost of shipments that are priced on volume rather than actual weight.

By: Lin Watts, 305-593-2383

August 15, 2003

Comments of Colombian Flower Exporters Association | Word

This proposal will significantly, unavoidably and adversely increase our costs. Air transportation represents more than 30% of the cost of exporting flowers, and in some markets up to 50% of the cost. That additional cost, and the resulting loss in competitiveness of this industry, would translate into decreased production, decreased employment, and ultimately increased social and economic disruptions for this industry in Colombia.

By: Augusto Solano

August 15, 2003

Comments of Consumer Electronics Association

IATA's proposal to reduce the international density standard for low-density, high volume packages does not address a serious transportation need, is not in the public interest, and is achievable by other reasonable alternatives, such as marketplace negotiation. CEA again urges the U.S. Department of Transportation to not grant an exemption from U.S. antitrust laws for IATA's proposed change to Resolution 502.

By: Gary Shapiro

August 15, 2003

Reply of the High-Tech Air Freight Shippers Coalition

In seeking Department approval, IATA has misstated the issue: it is not simply whether the proposed change in the density rule is in the public interest. Clear and specific statutory requirements must be met before an anticompetitive agreement may be approved by the Department. These requirements include a documented necessity to meet a serious transportation need or an important public benefit and that no less anticompetitive alternatives are available. The Department cannot approve the proposed agreement on the change in the density rule unless this standard has been met.

By: W. Clark McFadden

August 22, 2003

OST-03-14480

Correspondence of the International Air Transport Association

The International Air Transport Association (IATA) has reviewed the comments submitted in response to IATA's Reply to comments submitted in, opposition to the proposal to change the density standard for international, air freight that was included in the application that IATA submitted in the above-referenced docket.

It is obvious that IATA has not yet been able to persuade the representatives of important customers of its Member airlines that the proposed modification of the traditional density standard will not result in an automatic increase in the price for transporting air freight, but will produce efficiencies that will benefit shippers, intermediaries, airlines, and the environment.

However, rather than extend the debate on this subject by asking for a period to reply to the most recent submissions, IATA requests that the Department close the record and act on its application that was filed on February 7, 2003, in accordance with the Department's procedural requirements.

Counsel: IATA, David O'Connor, 202-293-9292

OST-03-14480

September 10, 2003

Correspondence from High-Tech Air Freight Shippers Coalition

In its submissions to the Department of Transportation, IATA asserts that a change in the density standard "will not result in an automatic increase in the price for transporting air freight." Yet even before the Department closes the record in its consideration of the proposed change in the density standard, air carriers such as DHL are announcing comprehensive and automatic price increases based on the proposed change. There could hardly be more dramatic and compelling evidence to belie the IATA contentions.

The DHL letter is a vivid depiction of several of the points made by the Coalition in its submissions, filed respectively on May 29, 2003 and August 15, 2003. The Coalition believes that the record would benefit from the inclusion of the DHL announcement as a demonstration of the real-world impact that will result if the Department approves IATA's application for antitrust immunity for its Resolution 502.

Counsel: Dewey Ballentine, W. Clark McFadden, 202-862-1000

September 12, 2003

Comments of CSTA

especially in relation to IATA's role in the rules and regulation process. I've attached a link to nmfta, an organization dealing with "National Motor Freight Classification" which is a US trucking rate classification standard. When you review just the linked page you can see that the type of classification
adjustment for trucking is very similar to what IATA is trying to do with CR 502.

http://www.nmfta.org/whatisclass2.htm

And as you read through this rate classification it is not considered an antitrust issue for trucking. It's only fair that the same consideration is given to air carriers. When you combine the US trucking practice, with the way I outline air-cargo rating below, you'll see it's virtually the same thing.

By: CSTA

September 10, 2003

Amended Letter of High Tech Shippers Coalition

Counsel: Dewey Ballantine, Clark McFadden

OST-03-14480

September 29, 2003

Letter of the National Small Shipments Traffic Conference, Inc. and The Health and Personal Care Logistics Conference | Word

This letter is in reply to the unsigned and incomplete letter posted under the title "CSTA" on September 12, 2003, which has recently come to my attention. The author of the CSTA letter is wrong in suggesting that "it is not considered an antitrust issue for trucking" when the National Motor Freight Classification is published or amended by the trucking company members of the NMFTA, acting through the Association's National Classification Committee.

Counsel: McCarthy Sweeny, John Cutler, 202-775-5574

OST-03-14480

October 3, 2003

Comments of Cargo Shipping Transporation Analysis | Word

The attached document will illustrate the change in packaging techniques by shippers that erode the carrier's ability to charge appropriate volume. Similar issues in the trucking industry also require the occasional adjustment of commodity classification based on density, packaging, and value. See attached link http://www.nmfta.org/whatisclass2.htm Since deregulation airfreight net -rates are lower now than back in 1975. Between the carrier - forwarder there are "Net-Net. Contract", "Density" and "Spot" rating schemes which vary from carrier to carrier. The proposed adjustment to the conversion factor is based on changes in packaging which when looking at the illustrations attached, is clearly taking up more space on the aircraft. The pictures were taken from 4 different carriers and of 5 different shippers and commodities. If the volume calculation is not adjusted how does the carrier re-coop the lost revenue from these shipments? They can¿t. The competitiveness of air-transport rating is not going to change as a result of this rule. Carriers can select to apply volume or not apply it that will not change. I¿ve extracted an excerpt defining the basic premise of antitrust ¿The historic goal of the antitrust laws is to protect economic freedom and opportunity by promoting competition in the marketplace. Free competition benefits consumers through lower prices, better quality, and greater choice. Competition provides businesses the opportunity to compete on price and quality, in an open market and on a level playing field, unhampered by anticompetitive restraints. The key is making the playing field level for all parties concerned and as a result, the integrity of antitrust remains 100% uncompromised with the adjustment to the volume standard.

By: CSTA, Robert Caton, 631-862-1259, RFCaton@csta-intl.com

October 1, 2003

Comments of Cargo Shipping Transporation Analysis | Word

The attached represent comments submitted to the DOJ in relation to the issue related to Antitrust. Although the majority of information has been covered in the previous submittal, I believe it's important to note that the attached went to the DOJ shortly after making their initial statement.

By: CSTA, Robert Caton, 631-862-1259, RFCaton@csta-intl.com

OST-03-14480

October 9, 2003

Supplement of Cargo Shipping Transporation Analysis | Word

In the Boeing link below you can see reference made to airfreight yield steadily declining as far back asl 970 and declining at a rate of 3.4% per year since 1985. As I indicated previously airfreight rates are highly competitive and the Boeing analysis helps illustrate the effects of such a market.

http://www.boeinq.com/commercial/carqo/execsummary.html

However the deterioration of the load factor in relation to volume assessment is the area highlighted by this resolution.

By: Robert Caton, 631-862-1259

OST-03-14480

October 29, 2003

Re: Congressional Correspondence on Resolution 502

This is in response to your letter of September 5 to Senator John McCain, addressing a proposal of the International Air Transport Association to revise the provisions of IATA Resolution 502, which establishes standards governing the pricing of low-density cargo. Senator McCain has asked me to respond to you.

IATA has not yet filed the amendments to Resolution 502 with the Department. Please be assured that when IATA files them for Department review and approval, we will fully consider all comments submitted in the docket of that proceeding.

By: John Kiser, Office of International Aviation

OST-03-14480

October 20, 2003

Correspondence of EGL - Eagle Global Logistics

On behalf of EGL Eagle Global Logistics and the many customers that we service, I urge you to follow the recommendation of the U.S. Department of Justice and reject the International Air Transport Association's proposal which seeks to alter the cargo pricing formula. We are in agreement with the Justice Department in their assessment that the proposed change in calculating freight rates for low‑density shipments "is effectively a price­fixing agreement." Additionally, we are opposed to IATA's request for antitrust immunity pursuant to sections 412 and 414 of the Federal Aviation Act and ask that their appeal be denied.

By: Joseph Bento, 281-618-3100

OST-2003-14480

March 28, 2005

Submission of IATA

On 7 February 2003, IATA filed on behalf of the IATA Cargo Tariff Conference pursuant to Sections 41308 and 41309 of Title 49 of the United States Code and Parts 303.03, 303.05 and 303.30(c) of Title 14 of the Code of Federal Regulations, amendments to Composite Cargo Resolution 502 adopted at The Hague on May 27-31, 2002. These amendments, constituting Agreement CTC COMP 0396 amended paragraph 1 of Resolution 502 and deleted paragraphs 2 and 4.

The amendment to paragraph 1 was a proposal to reduce the density ratio for low density cargo from 6,000 cc of volume as the equivalent of 1 kg of weight to 5,000 cc of volume as the equivalent of 1 kg. This filing was assigned DOT Docket Number 14480. DOT has not yet ruled on this filing.

On reviewing the status of the above-noted filing, the Cargo Tariff Conference decided via means of a mail vote which closed on March 21, 2005 to rescind the above-referenced proposed amendment to paragraph 1 concerning the volumetric calculation for low density cargo adopted at its meeting of May 2002 at The Hague.

Counsel: IATA, David O'Connor, 202-293-9292

International Air Transport Association

Order 2005-4-23
OST-2003-14480

Issued and Served April 27, 2005

Order

The agreement in the above docket adopted an amendment to paragraph 1 of Resolution 502 ("Low Density Cargo"), to amend the cargo density ratio fl'om 6,000 cubic cm. per kg., to 5,000 cubic cm. per kg. The agreement also proposed deletion of paragraphs 2 and 4 of Resolution 502, which have never been implemented and which IATA states are redundant in today's environment.

On March 29, 2005, IATA withdrew the amendment to paragraph 1. Thus its proposal to change the cargo density ratio is no longer before us for action. In this order, we are approving the deletion of paragraphs 2 and 4 from Resolution 502.

Accordingly, we approve and grant antitrust immunity to the agreement deleting paragraphs 2 and 4 of Resolution 502, subject, where applicable, to conditions previously imposed.

By: Paul Gretch

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