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OST-2004-17363 - Atlas and Polar - Transfer of Brazil Exemption, Designation, Frequencies
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Atlas Air, Inc. and Polar Air Cargo, Inc. OST-2004-17363 - Transfer of Brazil Exemption, Designation, Frequencies, and Frequency Dormancy Waiver March 18, 2004 Joint Application for Transfer of Brazil Exemption, Designation, Frequencies, and Frequency Dormancy Waiver | Word Atlas Air, Inc. and Polar Air Cargo, Inc. request that the Department approve pursuant to 49 U.S.C. §41105, or in the alternative disclaim jurisdiction over, the transfer of Atlas’ U.S.-Brazil all-cargo designation, ten all-cargo frequencies, related dormancy waiver and U.S.-Curitaba/ Fortaleza exemption authority to Polar. The Joint Applicants also request that the Department, at an appropriate time following receipt of notification from the Joint Applicants, (1) effectuate the transfer that has been approved and (2) obtain from the U.S. Department of State a U.S. diplomatic note to Brazil revalidating Polar’s designation as one of the four U.S. carriers permanently authorized to conduct U.S.-Brazil scheduled all-cargo services (in lieu of Atlas) and designating Atlas to provide code-share-only service between the United States and Brazil in accordance with Annex I, Section II of the U.S.-Brazil air transport agreement. The basis for these requests is set forth below. The transfer of Brazil operating rights from one airline to another airline within the same corporate family will preserve the situation in which the four U.S-Brazil all-cargo designations are held by four unrelated airlines, see Order 2002-5-24 at 4, thus having no adverse impact on competition in the U.S-Brazil market (or any other market). Indeed, the Atlas-to-Polar Brazil route transfer will, if anything, intensify Brazil competition by enhancing Polar's ability to compete against other U.S. and foreign airlines in the market. Atlas and Polar are requesting the transfer of Atlas' exemption authority to serve Curitiba and Fortaleza, Brazil. However, because Polar will retain bilaterally authorized Brazil rights under its Certificate for Route 636 and the exemption granted by Order 2001-7-13, the transfer of Atlas' certificate authority to/from Brazil is neither needed nor sought. Counsel: Polar, Kevin Montgomery, 202-828-1002, kevin.montgomery@polaraircargo.com / Atlas, Russell Pommer, 202-822-9121, rpommer@atlasair.com OST-04-17363 - Transfer of US-Brazil All-Cargo Exemption, Designation, Frequencies and Dormancy Waiver April 8, 2004 Answer of Amerijet International Assuming the Joint Applicants do not intend, through their application, to try to recapture the four frequencies now under consideration in the 2003 Proceeding, Amerijet supports approval of the Joint Application and urges the Department to approve it expeditiously. Moreover, so that the Department remains faithful to its oft-repeated and consistently applied policy of awarding available new authority in limited entry markets at the earliest possible time, Amerijet encourages the Department to take this opportunity to finalize its decision in the 2003 Proceeding and award the available certificate, designation and four frequencies to Amerijet, the only applicant qualified to receive them. Counsel: John Richardson, 202-371-2258, jrichardson@johnlrichardson.com
OST-04-17363 - Transfer of US-Brazil All-Cargo Exemption, Designation, Frequencies and Dormancy Waiver
April 8, 2004 Arrow Air does not oppose the application of Atlas and Polar so long as approval or in the alternative disclaimer of jurisdiction over the relief requested does not raise issues or otherwise impact consideration by the Department of Transportation of the applications, including the application of Arrow Air, pending in the U.S.-Brazil All-Cargo Proceeding. So that there is no confusion as to the availability of a fourth designation under the bilateral to award to a new entrant authority at issue in the Brazil All-Cargo Proceeding, Arrow respectfully requests that if the Department acts favorably on the Joint Application, the designation presently held by Atlas be cancelled. A further designation "to provide code-share only service" should be issued to Atlas by the Department only if it is required under the bilateral agreement to allow such service to be conducted. Counsel: Lawrence Wasko and Jacquelyn Gluck, 202-862-4370, ldwasko@erols.com and jngluck@erols.com
April 8, 2004 At the behest of the Committee, Atlas has decided not to seek authority to transfer the Brazil Route Rights to Polar from the Bankruptcy Court at this time. As such, on April 6, 2004, Atlas withdrew the Motion without prejudice. Notwithstanding the withdrawal of the Motion, however, Atlas and Polar have refused to withdraw the Joint Application filed with the Department. Because Atlas does not have approval from the Bankruptcy Court to transfer the Brazil Route Rights to Polar, the Committee respectfully requests that the Department defer processing the Joint Application in accordance with 14 C.F.R. § 302.209 and/or otherwise postpone any action on the Joint Application to accommodate Bankruptcy Court proceedings on this matter. In addition, because the Committee has a fiduciary duty to review and evaluate any transfer of assets of Atlas, the Committee respectfully requests that the Department postpone any action on the Joint Application until such time as both Atlas and the Committee consent. In the event Atlas again files a motion seeking approval from the Bankruptcy Court to transfer the Brazil Route Rights to Polar and/or requests that the Department approve the Joint Application, the Committee respectfully requests that the Committee be given the opportunity to make substantive comments to the Department with respect to the Joint Application at such time. Depending on how events unfold with respect to this matter, however, the Committee may have no comments at such later time. Counsel: Kelley Drye, David Vaughan, 202-955-9600, dvaughan@kelleydrye.com OST-04-17363 - Atlas and Polar - Transfer of Brazil Exemption, Designation, Frequencies, and Frequency Dormancy Waiver April 19, 2004 Arrow Air, Inc. respectfully urges the Department of Transportation, in consideration of all of the foregoing, to take no action on the Joint Application in Docket OST-2004-17363 which would delay immediate determination of the carrier selection issues in the matter of U.S.-Brazil All-Cargo Services OST Docket-2003-16690, and on the basis of the evidence of record and which may be officially noticed, grant the application of Arrow Air pending in Docket OST 2003-16690 and deny the application of Amerijet in its entirety, and that the Department take such other and further relief consistent with the premises herein as may be in the public interest. Counsel: Lawrence Wasko and Jacquelyn Gluck, 202-862-4370, ldwasko@erols.com and jngluck@erols.com OST-04-17363 - Transfer of Brazil Exemption, Designation, Frequencies, and Frequency Dormancy Waiver Consolidated Reply of Atlas Air and Polar Air Cargo | Word Amerijet supports the application so long as the contemplated transaction does not enable Polar to reclaim the designation and four frequencies that are now subject to reallocation in Docket OST-2003-16690. There is no cause for concern in that regard. As Atlas and Polar explained in the application, Polar’s permanent designation and four frequencies have reverted to the Department for reallocation pursuant to Order 2002-5-24. To provide for a smooth transition, the Department granted Polar the right to continue to operate to Brazil – but only until the permanent successor is able to start service, at which time Polar’s right will expire by its own terms. It is precisely because Polar lost its permanent designation and frequencies and will lose its temporary rights that it and Atlas are seeking DOT permission to transfer the Atlas designation and frequencies to Polar. Like Amerijet, Arrow expresses no objection to the relief requested in the application so long as there is no impact on the outcome of the ongoing reallocation proceeding. Additionally, Arrow asks the Department to clarify through diplomatic correspondence that Atlas’ designation will be limited to code-share-only services. Because that is all the U.S.-Brazil aviation agreement contemplates and the Joint Applicants seek, we have no objection to such clarification at the appropriate time. We caution, however, that we are now seeking only the Department’s anticipatory approval of a transaction expected to occur at some undetermined point in the future. The U.S. government needs to be careful not to disturb Polar’s existing designation until the Joint Applicants are ready to effectuate the route transfer. Counsel: Polar, Kevin Montgomery, 202-828-1002, kevin.montgomery@polaraircargo.com / Atlas, Russell Pommer, 202-822-9121, rpommer@atlasair.com OST-2004-17363 - Transfer of Brazil Exemption, Designation, Frequencies, and Frequency Dormancy Waiver August 20, 2004 Motion of the Unsecured Creditors Committee of Alas to Withdraw During the course of the concurrent Bankruptcy Court proceeding involving Atlas, Polar and related entities, Bankruptcy Court Case No. 04-10792-BKC-RAM, the concerns of the Official Committee regarding the Brazil Route Rights were addressed by the plan of reorganization of Atlas and Polar, to the satisfaction of the Official Committee. Under the terms of that plan of reorganization, on July 27, 2004, the Official Committee was dissolved. As the Official Committee no longer exists, and because the concerns of the Atlas creditors are addressed by the reorganization plan, it is no longer necessary for the Department to consider the Official Committee’s earlier request to defer processing or otherwise postpone action upon the Joint Application of Atlas and Polar for transfer of Brazil Route Rights. Accordingly, counsel to the Official Committee respectfully moves that its April 8, 2004 Answer, and the comments and objections therein, be withdrawn from this proceeding. Counsel: Kelley Drye, David Vaughan and Michael Francesconi, 202-955-9600, dvaughan@kelleydrye.com US-Brazil All-Cargo Services Order 04-11-03 Issued and Served November 9, 2004 By this order, we tentatively select Arrow Air and allocate five weekly round-trip frequencies to Arrow to provide scheduled all-cargo service between the United States and Brazil. We have also tentatively decided to award backup authority to Amerijet International. In addition, by this order, we have tentatively decided to authorize Polar Air Cargo to operate U.S.-Brazil all-cargo services in place of Atlas Air. We will afford interested parties 10 calendar days from the service date to file objections and 5 calendar days to file any answers to such objections. By: Karan Bhatia OST-03-16690 - US-Brazil All-Cargo Services November 19, 204 Objections of Amerijet International Amerijet contends that the tentative decision announced in the Order to Show Cause should be reversed and Amerijet, rather than Arrow, should be selected. At the very least, it is essential that, if the carrier selection is not reveresed, the Departmentt should make clear that there shall be no flexibility if, as Amerijet suspects, Arrow fails to institute and maintain the full level of freighter service it has promised. Counsel: John Richardson, 202-371-2258, jrichardson@johnlrichardson.com
November 19, 2004 Polar take no position on the Department's tentative selection of Arrow but wish to comment briefly on procedural matters relating to the transfer of Brazil rights. In addition, Atlas and Polar herein request apendente lite extension of the frequency dormancy waiver that is being transferred until 90 days after issuance of the final order. Counsel: Atlas Air, Russell Pommer, 202-822-9121, rpommer@atlasair.com OST-03-16690 - US-Brazil All-Cargo Services November 24, 2004 The Department of Transportation carefully considered the proposals of each of the applicants as reflected in the Order to Show Cause. It tentatively selected Arrow because it would maximize the use of frequencies available under the bilateral and Amerijet would not. The Department found that it is in the public interest to make full use of limited-entry route rights at issue in this proceeding. Clearly, it is the shipping public that will benefit from the competitive wide-body freighter service that Arrow can provide and will provide with the approval of the Department and that Amerijet does not have the capability to provide. Counsel: Lawrence Wasko and Jacquelyn Gluck, 202-862-4370, ldwasko@erols.com and jngluck@erols.com OST-03-16690 - US-Brazil All-Cargo Services November 29, 2004 Answer of Atlas Air and Polar Air Cargo | Word Arrow's single purpose seems to be to ensure that the grant of the frequency dormancy waiver extension beyond December 31, 2004 does not prejudice its own ability to serve Brazil should its tentative award of authority be finalized. There is no reasonable chance of prejudice occurring. At such time that a final order is issued, Arrow will have 90 days to commence Brazil service with its five new frequencies the very same 90 days for which Atlas and Polar seek to extend the current waiver covering their four additional dormant frequencies. It is wholly unrealistic to expect Arrow, during those 90 days, to require more than five frequencies in order to begin Brazil operations at a level greater than that set forth in its service proposal. In any event, as noted in Order 2004- 11-13, one Brazil all-cargo frequency currently is unallocated. It could be assigned to Arrow should that carrier find five frequencies inadequate to meet shipper demand. Arrow's comments additionally fail to undercut the sound basis articulated by Atlas and Polar for a pendente lite dormancy waiver extension. In particular, Polar needs an adequate period following finalization of the route transfer to determine the appropriate level of service in the Brazil market. There is no guarantee that the Department will even have issued its final order by December 31, 2004, the date on which the current dormancy waiver expires. An extension beyond December 31 thus is essential. Counsel: Polar, Kevin Montgomery, 202-828-1002, kevin.montgomery@polaraircargo.com / Atlas, Russell Pommer, 202-822-9121, rpommer@atlasair.com OST-03-16690 - US-Brazil All-Cargo Services Filed November 19, 2004 | Issued December 27, 2004 We have granted the Joint Applicants’ request for a dormancy waiver extension for an additional 90 days to preserve the status quo while the Department considers the pleadings filed in response to Order 2004-11-3 and continues to process a final order in the above-captioned dockets. We have deferred on the Joint Applicants’ request to the extent that they seek a Pendente Lite extension of the dormancy waiver until 90 days after issuance of a final order. We will address the issues raised by the Pendente Lite extension request, including those raised by Arrow, within the context of the proceeding in the above-captioned dockets. We note that our action here extending Atlas’ dormancy waiver will not affect the Department’s consideration of Arrow’s application for new authority to serve Brazil. We find that grant of the waiver request, in the particular circumstances presented, is in the public interest. However, we are putting Atlas and Polar on notice that there should be no expectation that an additional request will similarly be granted. As is our policy in considering dormancy waiver requests, we reserve the right to reexamine whether grant of this waiver continues to be in the public interest. Any future request to extend the dormancy waiver for the frequencies at issue here will have to be considered in light of the specific arguments offered and responses thereto, and in the context of the circumstances present at that time, including whether another carrier seeks to use the frequencies at issue. By: Paul Gretch OST-03-16690 - US-Brazil All-Cargo Services March 16, 2005 Joint Application of Atlas Air and Polar Air Cargo for Frequency Dormancy Waiver Extension | Word Last November, the Department tentatively approved, inter alia, the transfer to Polar of Atlas' U.S-Brazil all-cargo designation, ten all-cargo frequencies and related dormancy waiver applicable to four of those frequencies. Order 2004-11-3. Shortly thereafter, citing the need (1) to preserve authority subject to the route transfer and (2) to allow Polar sufficient time to gear up its permanent Brazil services following issuance of the final order, the Joint Applicants sought to extend the dormancy waiver from its then-current expiration date to 90 days after issuance of the final order. Rather than granting the request in full, the Department extended the dormancy waiver for three additional months, to March 31, 2005, and deferred action on the remaining portion of the request, explaining that it would address the outstanding matter in the final order. Notice of Action Taken, December 27, 2004. The final order has not yet been issued and the March 31 expiration date is fast approaching. Moreover, the factors justifying the grant of the previous dormancy waiver extension are equally applicable now. With the final route transfer approval order anticipated in the near future, Atlas is not now in a position to begin to utilize the dormant frequencies. Following issuance of the final order, Polar will require an additional period of time running beyond even the transition of existing Brazil services to complete the necessary regulatory process in Brazil and increase capacity in a measured fashion with the now‑dormant frequencies. Counsel: Polar, Kevin Montgomery, 202-828-1002, kevin.montgomery@polaraircargo.com / Atlas, Russell Pommer, 202-822-9121, rpommer@atlasair.com OST-03-16690 - US-Brazil All-Cargo Services Macrh 17, 2005 Re: Polling Letter - Atlas Air | Word Counsel: Atlas, Russell Pommer, 202-822-9121, rpommer@atlasair.com US-Brazil All-Cargo Services Order 2005-03-31 Issued March 8, 2005 | Served March 25, 2005 By this order, we make final our tentative findings and conclusions set forth in Order 2004-11-3 award Arrow Air certificate authority for scheduled all-cargo service between Miami and Brazil and allocate it 5 weekly frequencies for its services; and make final our tentative selection of Amerijet International for backup authority in this case. In addition, by this order, we make final our tentative decision to authorize Polar Air Cargo to operate U.S.-Brazil all-cargo services in place of Atlas Air. By: Karan Bhatia OST-2004-17363 - Exemption - US-Curitaba and Fortaleza, Brazil All-Cargo January 22, 2007 Application for Renewal of an Exemption By Order 2005-3-31, approving the transfer of the limited-entry Brazil rights of Atlas Air, Inc. to Polar, the Department granted Polar an exemption to serve Curitaba and Fortaleza, Brazil. That authority had previously been held by Atlas. Polar wishes to retain the ability to use such authority when market conditions warrant. Although Order 2005-3-31 places no expiration date on the authority, Polar is aware of the Department's normal practice of limiting the terms of U.S. air carrier exemptions to periods of two years. If that rule were followed in this case, the authority would expire March 25, 2007. Therefore, in an abundance of caution, Polar is filing a renewal application. Counsel: Polar, Kevin Montgomery, 202-828-1002 OST-2004-17363 - Exemption - US-Curitiba and Fortaleza, Brazil February 2, 2007 FedEx Express does not oppose renewal of the authority at issue in this docket. FedEx Express does, however, wish to point out an apparent inconsistency in that the renewal application states, in paragraph 3, that this authority "is consistent with the air transport agreement between the United States and Brazil" although the original application seeking this authority, filed by Atlas Air in Docket OST-01-10400 on August 14, 2001, conceded, in paragraph 3, that "U.S. carrier authority to serve Curatiba [sic] and Fortaleza will be extrabilateral," FedEx Express is not aware of any amendment of the route description to the U.S. - Brazil Air Transport Services Agreement between 2001 and the present which would have added these points to the route description authorized for U.S. carrier service. Consequently, it is the understanding of FedEx Express that the authority for which renewal is sought in this docket is not in fact provided for in the U.S. - Brazil bilateral agreement but is, instead, extra-bilateral. Furthermore, FedEx Express takes this opportunity to encourage the Department to continue to pursue every opportunity to put in place a liberalized and expanded regime for U.S. - Brazil all-cargo air service. Brazil is the largest air cargo market in South America, yet it remains encumbered by an antiquated bilateral agreement which limits the points that may be served, the number of carriers that may be designated, and the weekly frequencies that may be operated. As this application of Polar demonstrates, economically viable opportunities to institute all-cargo service may arise in response to economic growth in cities which may not have been mentioned when the bilateral route description was last revised. No one has a crystal ball that can foretell where and to what extent the next opportunities for all-cargo service will arise. Accordingly, instead of prolonging the current regime which saddles both carriers and shippers with uncertainty and inefficiency, and adds to the workload of the regulatory agencies charged with administering the aviation relationship, FedEx Express urges the Department to take all possible steps to achieve a liberalized regime for all-cargo services between the U.S. and Brazil, which will rely on competitive market forces to the maximum possible extent and will enable the carriers of both countries to institute services between whatever points and at whatever frequency may be justified by free market conditions. Counsel: Federal Express, David Short, 901-434-8584 |
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