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OST-2004-18468 - New US-China Route Opportunities - Cargo
US-China Air Services
US-China Air Services 2001
OST-2004-18468 - New US-China Route Opportunities - Cargo
OST-2004-18469 - New US-China Route Opportunities - Combination
OST-2004-19077 - 2005/2006 US-China Air Services Case and Designations
OST-2005-20889 - Continental Airlines - New York/Newark-Shanghai
OST-2008-0127 - 2009 US-China All-Cargo Proceeding
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New Route Opportunities (U.S.-China) OST-04-18468 - 2004 Cargo Designation and 2004/2005 All-Cargo Frequencies
Served June 21, 2004 Notice of New Route Opportunities | Word The United States and the People's Republic of China initialed, on June 18, 2004, a protocol amending the U.S.-PRC aviation agreement. The amended agreement will greatly expand the opportunities for the air carriers of both countries. These opportunities are increased progressively through 2010. Some of the new U.S. carrier rights can be implemented as early as August 1, 2004. To permit us to begin processing requests to take advantage of these new opportunities as soon as possible, we are by this Notice calling for applications for certain of the newly available rights, as set forth below. We intend to address other rights available under the new agreement by subsequent separate action. By: Paul Gretch
Served June 21, 2004 Notice of New Route Opportunities - Corrected Copy | Word *To reflect that applications are due 7 calendar days from the service date of this notice rather than 7 days as reflected in the original served notice. By: Paul Gretch OST-04-18468 - 2004 Cargo Designation and 2004/2005 All-Cargo Frequencies June 25, 2004 In its June 21 Notice, the Department invited carriers interested in service by email to so state and to provide email addresses. Federal Express Corporation hereby states that, for the purposes of this proceeding, it prefers service by email upon the following individuals:
Counsel: FedEx, G. Bailey Leopard, Jr., 901-434-8600 OST-04-18468 - 2004 Cargo Designation and 2004/2005 All-Cargo Frequencies June 28, 2004 Arrow Air, Inc. hereby responds to the Notice of New Route Opportunities and 2004 Cargo Designation and 2004/2005 All-Cargo Frequencies, Docket OST-2004-18468, issued by the Department of Transportation and served June 21, 2004 in Docket OST-2004-18468, and submits this application for a Certificate of Public Convenience and Necessity to engage in scheduled foreign air transportation of property and mail between any point or points in the United States via intermediate points to a point or points in the People’s Republic of China and to points beyond with full traffic rights. Arrow requests designation as the third US.-China scheduled all-cargo airline and allocation of seven (7) weekly frequencies commencing August 1, 2004 and an additional six (6) weekly frequencies commencing March 25, 2005. Counsel: Lawrence Wasko and Jacquelyn Gluck, 202-862-4370, ldwasko@erols.com and jngluck@erols.com
June 28, 2004 By this application, Evergreen herein applies for the following rights: (a) Designation A certificate of public convenience and necessity to engage in scheduled foreign air transportation of property and mail between a point or points in the United States, via intermediate points, and the co‑terminal points Beijing and Shanghai, China. (b) Integration Authorization to integrate the U.S.-China certificate authority with Evergreen's other all-cargo certificate and exemption authority and to commingle traffic consistent with applicable aviation agreements between the U.S. and foreign countries. (c) Frequencies Allocation of seven weekly U.S.‑China round trip all‑cargo frequencies commencing on or about the earlier of September 1, 2004 or 60 days after the award of the authority. To the extent the Department allocates fewer than seven frequencies to Evergreen as of earlier of September 1, 2004 or 60 days after the award of the authority, Evergreen hereby requests such additional U.S.‑China round trip all‑cargo frequencies commencing on March 25, 2005 to bring its weekly round trip frequencies to a total of seven. Counsel: Evergreen and The Wicks Group, Glenn Wicks, 202-457-7790
June 28, 2004 Application of Federal Express FedEx Express has eleven flights per week through three major Chinese gateways: Beijing, Shanghai, and Shenzhen. Now, thanks to the Department's persistent liberalization efforts, FedEx Express has an opportunity to expand its service in China for the benefit of U.S. shippers not to mention the opportunity to locate a worldclass hub facility in China. As is described in more detail below, FedEx Express is seeking a total of eighteen frequencies in this proceeding. If awarded these frequencies, FedEx Express will use twelve for new round-the-world flights connecting the Chinese market to shippers throughout the world. FedEx Express will use the other six frequencies to inaugurate service to an emerging Chinese market - Qingdao. Additionally, such an award will enable FedEx Express to introduce its eighth transpacific daily service. FedEx Express seeks twelve frequencies from the twenty‑one that are available on August 1, 2004. FedEx Express would use six of these frequencies to institute a new westbound round‑the‑world service that would connect the United States with Shanghai, other points in Asia, and Europe with wide‑bodied MD‑ 11 aircraft. The other six frequencies from the 2004 tranche would be used to inaugurate service between the U. S. and Qingdao with A‑310 aircraft. In addition, FedEx Express requests six frequencies from the eighteen that become available on March 25, 2005. It would use these six frequencies for an eastbound round‑the‑world service, connecting the United States, Europe, India, Shanghai, Shenzhen, Beijing and other points in Asia with wide‑bodied MD‑ Il aircraft. Counsel: Federal Express, Thomas Donaldson, 901-434-6664
June 28, 2004 Application of Gemini Air Cargo Gemini seeks designation as the third U.S. scheduled all-cargo carrier to China and asks the Department to allocate to Gemini six (6) of the all-cargo frequencies that will be available in 2004 and six (6) additional all-cargo frequencies that will be available in March 2005 (a total of 12 frequencies for 2005 operations). Gemini will serve Chicago, Los Angeles, New York, and San Francisco in the United States, and Shanghai in China. The proposed routes are: New York (JFK)-Anchorage' (ANC)-Shanghai (PVG)- Anchorage-Chicago (ORD)-NewYork; and Los Angeles (LAX)-San Francisco (SF0)- Anchorage-Shanghai-Anchorage-Los Angeles. Gemini proposes to operate three (3) weekly frequencies on each of the above routes beginning in the fourth quarter of 2004. After March 2005, Gemini will operate six (6) weekly frequencies on each route. Counsel: Roller & Bauer, Lee Bauer, 202-331-3300
June 28, 2004 Application of Northwest Airlines Submits this application for (1) an allocation of five of the 21 U.S.-China all-cargo frequencies available to U.S. carriers August 1, 2004 and (2) five of the 18 all-cargo frequencies available March 25, 2005, pursuant to the U.S.-China Memorandum of Consultations of June 18, 2004. As is explained below, Northwest intends to use the five frequencies available August 1 2004 for additional U.S.-Shanghai all-cargo service, and the five frequencies available March 25. 2005 for new U.S.-Guangzhou all-cargo service. Northwest now requests five frequencies available August 1, 2004 for additional U.S.-Shanghai all-cargo service and five frequencies available March 25, 2005 for new U.S.- Guangzhou all-cargo service. These frequencies will allow Northwest to respond to the unmet and growing demand for air cargo transportation in the U.S.-China market and will enable Northwest to establish a more complete pattern of all-cargo service between China and U.S points that will provide new benefits and transportation options to shippers and freight forwarders. Northwest requests a total of ten frequencies: five available August 1, 2004, and five available March 25, 2005, as follows: U.S.‑Shanghai All‑Cargo Service Northwest requests five frequencies available August 1, 2004 in order to operate additional al‑cargo service between the United States and Shanghai on a Chicago‑Anchorage‑Shanghai (PVG)‑Tokyo and return routing, beginning August 1, 2004. Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com
June 28, 2004 Application of Polar Air Cargo Polar welcomes this opportunity to apply for China route authority, the newly available all‑cargo designation and the frequencies necessary to launch and sustain new service in this market. With the Department's approval of its application, and the Chinese government's grant of all necessary licenses, Polar intends this peak season to inaugurate six weekly B747 freighter flights between New York/Chicago, on the one hand, and Shanghai, on the other, via Incheon.3 Flights will arrive in and depart Shanghai on Wednesdays, Thursdays, Fridays, Saturdays and Sundays, with two flights operated each Sunday to accommodate higher end‑of‑week traffic levels. With an award of three (3) of the 18 additional all-cargo frequencies that will become available on March 25, 2005, Polar proposes to operate an expanded pattern of service. An additional flight would operate each Tuesday, Thursday and Saturday between Los Angeles and Shanghai via Incheon. Matched with the first six frequencies, these flights will allow Polar to offer six-day per week service between China and the principal U.S. gateway cities of Chicago, New York and Los Angeles. These schedules will also give shippers the added capacity required on key days of cargo consolidation. All of these flights, too, will operate over Polar's Incheon hub to connect to additional points in Polar's network. Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com
June 28, 2004 Application of United Parcel Service for an Allocation of Frequencies Hereby applies for an award of six (6) of the twenty one (21) round-trip weekly frequencies available in 2004 and six (6) of the eighteen (18) round-trip weekly frequencies available in 2005, enabling UPS to provide additional scheduled all-cargo (property and mail) air transportation services between the U.S. and China, and China and the world. For the six requested frequencies available in 2004, UPS proposes to serve the Shanghai market. UPS will serve the US and Shanghai via Osaka, Japan five (5) times per week using B-767 aircraft, and one time per week non-stop from Anchorage using MD-II aircraft. In addition, UPS will maximize the existing change of gauge provisions by connecting this frequency to other flights. As UPS requires 60 days in order to comply with the U.S.-Japan bilateral provision requiring advance notice given to the Japanese Government for changes in a carriers beyond points, UPS will utilize these frequencies on October 31, 2004, or upon sixty days of receipt of the authority. Prior to October 31, 2004, while it is obtaining requisite authorities and positioning aircraft and crews as necessary to operate in the winter wind season, UPS will initially operate the double daily service to Shanghai non‑stop from the US with B‑747 or MD‑II aircraft three times per week. For the six requested frequencies available in 2005, UPS proposes to serve the Guangzhou market six days per week with MD‑11 aircraft. UPS will also enhance the benefits of this award by co‑terminalizing this flight and using intermediate or beyond points with the frequency. UPS will commence this service on March 25, 2005. Counsel: Kelley Drye, David Vaughan, 202-955-9864, dvaughan@kelleydrye.com July 6, 2004 Answer of Arrow Air to Applications for Certificates of Public Convenience and Necessity, Designation and All-Cargo Frequency Allocation | Word Arrow Air, Inc. has the best service proposal of all of the air carriers, incumbent or proposed new entrants, which have applied for authority in this proceeding. Arrow has proposed to offer direct service to more U.S. business centers and to more cities in the Republic of China than any other applicant. Arrow would make available reliable, competitively priced freighter service in the burgeoning U.S.-China markets, meeting the demand where it is needed, in the manufacturing and merchandise distribution centers both in China and in the U.S. Arrow will make the most effective use of the frequencies allocated by the Department of any applicant if it is selected to operate as it has proposed. An award to Arrow will be fully consistent with the provisions of the U.S.-China bilateral Air Transport Agreement and in the public interest. Counsel: Lawrence Wasko and Jacquelyn Gluck, 202-862-4370, ldwasko@erols.com and jngluck@erols.com
July 6, 2004 Evergreen moves that the Department immediately institute a proceeding by which interested parties can make full evidentiary submissions supporting their applications in the above-captioned proceeding. As Evergreen indicated in the application it filed in the abovecaptioned case, since more than one carrier applied for the authority in question, the Department is obligated to institute such a proceeding in order to satisfy its responsibilities under Ashbacker Radio Corp. v FCC 326 U.s. 327 (1945). Pursuant to the Ashbacker doctrine, when two applications for a license are mutually exclusive, each application must be accorded comparative consideration. In the present case, meaningful comparative consideration of the four applications for the new U.S.-China all-cargo designation can only take place in the context of a full evidentiary proceeding whereby the Department indicates its decisional criteria and gives each applicant the opportunity to present its proposal for service accordingly. Of the four applicants for the new all‑cargo designation (Arrow, Evergreen, Gemini and Polar), Evergreen offers the best proposal for viable, competitive service in the U.S.‑China market. Evergreen's proposal for seven weekly frequencies to Beijing and Shanghai includes round‑the‑globe flights via Tashkent on Mondays and Tuesdays that takes maximum advantage of the limited traffic early in the week while providing daily point‑topoint traditional cargo service in the U.S.‑China market. Evergreen further offers the substantial access to additional markets by tapping into the Europe‑to‑Asia market as a part of its overall service pattern. In so doing, Evergreen will take advantage of strategic relationships that it has developed to provide improved service to the China market. These substantial advantages will be enumerated in greater detail in the formal proceeding when instituted by the Department in the nearest future. Counsel: The Wicks Group, Glenn Wicks and Lisa Harig, 202-457-7790, gpwicks@wicks-group.com and lharig@wicks-group.com
July 6, 2004 Consolidated Answer of Federal Express FedEx Express suggests that the new entrant be limited to a single allocation in the first tranche, leaving the second tranche to those companies that have already invested in this market, have established successful operations, and can be counted upon to provide continuous service. While we accept the importance of introducing additional participants in this market, this should not mean that the Department should potentially waste valuable assets (the frequencies as well as its procedural time if reallocation becomes necessary) without a proven record of accomplishment. There are plenty of frequencies available later for successful operators. Further, the four applicants for the new designation are asking for frequencies well in excess of the number needed to establish a new service. As the Department has seen in other cases, general freight operators often operate scheduled services using a pattern of four or five weekly round trips. FedEx Express (which had to buy its initial rights from Evergreen) started its operations with four frequencies, building to its present eleven over a period of four years. UPS started with only six. Counsel: Federal Express, Thomas Donaldson, 901-434-6664
July 6, 2004 Consolidated Answer of Gemini Air Cargo The proposals of Arrow, Evergreen, and Polar provide far fewer public benefits to the shipping public, either in the United States or in China, as does Gemini’s proposal. Arrow’s proposal is inferior to that of Gemini’s in several respects. First, Arrow does not have equipment to serve the market. It states that it will obtain two 747 freighter aircraft, which it does not currently operate. Obtaining these aircraft and becoming capable of operating them to China, will obviously cause a significant time delay in implementing Arrow’s proposed service, even if Arrow has the financial resources to undertake such service. In contrast, Gemini’s fleet of MD-11F aircraft are already positioned to undertake the service. Furthermore, the seven round trip intineraries that Arrow proposes are complex and would require a widespread marketing presence. Gemini has operated in Asia for many years and has the marketing ability to operate service it proposes between the U.S. East and West Coasts and Shanghai. Evergreen's service proposal is also defective in comparison to Gemini's in that it does not focus on the China market to the same extent as Gemini's. Two of the seven frequencies sought by Evergreen will be operated as round‑the‑world flights, with all of the attendant commercial risk associated with such service. Polar's application only proposes China service that originates in New York and operates via Chicago. Although Polar's Application states that it will provide connecting service for Los Angeles, it does not provide include the frequent service to and from the Los Angeles and San Francisco markets as does the Gemini proposal. Counsel: Roller & Bauer, Moffett Roller, 202-331-3300, mroller@rollerbauer.com
July 6, 2004 Answer of The City of Houston and The Grater Houston Partnership Arrow's application for the all‑cargo designation that becomes available in 2004, as well as for a portion of the all‑cargo frequencies that become available in 2004 and 2005, proposes to operate services between Houston, on the one hand, and Xiamen and Guangzhou, on the other hand. Arrow's services would significantly benefit the Greater Houston area, which has long sought direct services to China. In addition, Houston notes that Arrow is the only carrier that has proposed to serve Xiamen, and the only carrier that has proposed to serve the important gateway of Guangzhou in 2004. Counsel: Leftwich & Ludaway, Nicole Mason, 202-434-9100, ncmason@leftwichlaw.com
July 6, 2004 A decision on the disposition of the one available designation and the available frequencies is necessary, and, as Polar strongly believes, can be accomplished through the procedural steps that already have been established. Each carrier has been given the opportunity to apply for the rights at issue, and equally, each has been invited to put forward a service proposal to be judged on its merits. The Department may, on the weight of precedent and in the interest of enabling the prompt use of rights of significant national economic value, employ the current proceeding to reach a decision without delay. Polar would urge the Department to use its discretionary authority to do so. The value of the new U.S. all‑cargo rights will be significantly diminished by delay. In order to avoid that result, prompt decisional action is necessary. Polar would ask the Department in its deliberations to focus on the key decisional considerations raised by each application, discount unrealistic route case promises and render a final decision expeditiously so that service commencement becomes possible during the approaching peak season. Counsel: Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com
July 6, 2004 Consolidated Answer of Northwest Airlines The new U.S.-China rights at issue are oversubscribed. Under the U.S.-P.R.C. Memorandum of Consultations of June 18, 2004, the United States may designate one additional carrier for all-cargo services between the United States and China. Four carriers Polar Air Cargo, Evergreen International Airlines, Gemini Air Cargo and Arrow Air have applied for this one additional designation. In addition, under the MOC, there are a total of 39 new U.S.-China all-cargo frequencies available in 2004 and 2005: 21 frequencies are available August 1, 2004, and an additional 18 frequencies are available March 25, 2005. Seven carriers have requested a total of 49 frequencies available August 1, 2004; the same seven carriers have requested at least 321 frequencies available March 25, 2005. Given the fact that the available designations and frequencies for both 2004 and 2005 are oversubscribed, it will be necessary for the Department to institute a comparative selection proceeding. Northwest will submit information in support of its own application and detailed analyses of the competing proposals in accordance with the procedural schedule to be established by the Department. Northwest encourages the Department to conduct an expedited proceeding to enable the selected carriers to take advantage of these new opportunities as soon as possible, and to allow maximum advance time to prepare for the introduction of new service in the market. Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com
July 6, 2004 Consolidated Answer of United Parcel Service UPS is the only applicant proposing to use the available new cargo frequencies to build a "cargo hub" in China and UPS has been explicit in committing to establish its major hub in Shanghai, China's commercial center. First introduced in U.S. international aviation agreements in the recent China Protocol, this innovative "cargo hub" concept allows a U.S. carrier to operate to and from China with previously-unimagined flexibility - with open Seventh Freedom rights, unlimited frequencies to and from the hub, and starburst change of gauge rights. In return, to qualify for such "cargo hub" status, the U.S. carrier must make a major commitment of operations and investment to a major transfer hub at the Chinese point - specifically, the would-be cargo hub carrier must conduct 72 weekly movements at the hub. In light of its review and analysis of the applications of the other all‑cargo carriers in this proceeding, UPS respectfully renews its request that the Department award UPS six round‑trip weekly frequencies in 2004 and six frequencies in 2005 enabling it to provide additional scheduled all‑cargo air transportation services between the United States and China. UPS also requests that the Department grant such other and further relief as maybe deemed just and necessary. Counsel: Kelley Drye, David Vaughan and Michael Francesconi, 202-955-9864, dvaughan@kelleydrye.com and mfrancesconi@kelleydrye.com July 8, 2004 The answers of the other parties critical of Arrow raise two issues that Arrow herein rebuts. The first argument is that Arrow is not currently providing large volumes of service in Asia and therefore not deserving of an award. The second argument is that Arrow does not currently operate B‑747 freighter aircraft which it proposes to use in service to China and therefore should not get an award. Both of these claims by the opposing applicants are wholly without merit and should be rejected by the Department. Counsel: Lawrence Wasko and Jacquelyn Gluck, 202-862-4370, ldwasko@erols.com and jngluck@erols.com
July 8, 2004 Re: Statement of Position of DHL Express While DHL Express takes no position as to which of the four new entrant applicants should be allocated the 2004 designation, it strongly believes that whichever carrier is selected should be awarded at least six of the 2004 frequencies. In order to maximize the competitive benefits available from increasing the number of designated U.S. all-cargo carriers, it is essential that the new entrant carrier be able to operate at least a six-times-weekly all-cargo service pattern as soon as possible. Anything less would undermine the potential value of that carrier's service for DHL, its customers, and other forwarders and shippers. The Department, as an overarching priority, should allocate the available frequencies so that, effective August 1, 2004, there will be four U.S. carriers that are authorized to operate at least six-times-weekly all-cargo service between the United States and China. That priority can be achieved by: 1) granting Northwest's request for five of the 2004 frequencies to increase its existing thrice-weekly U.S.-Shanghai allcargo service to a daily schedule; and 2) allocating at least six of the 2004 frequencies to the new entrant carrier that is awarded the 2004 designation. By: Daniel McDonald
July 8, 2004 Consolidated Reply of Evergreen International Evergreen urges the Department to ensure that its instituting order reflect its long‑standing policy that enhanced competition through new entrant market participation is in the public interest. Indeed, the position of Federal Express and UPS with respect to new entrant competition is particularly problematic given that the liberalization of the U.S.‑China market is specifically aimed at enhancing competition‑not at reinforcing the duopoly positions of the mega‑carriers. Counsel: The Wicks Group, Glenn Wicks and Lisa Harig, 202-457-7790, gpwicks@wicks-group.com and lharig@wicks-group.com
July 8, 2004 Consolidated Reply of Federal Express | Word As is evidenced by the interest in the new designation and newly available frequencies, the previous U.S.‑China air services regime was a dam that needed to be broken, and the U.S. government is to be commended for the persistent and creative way in which it did so. However, now that the dam is broken, the Department must avoid being swept up by unrealistic, overly optimistic and, in some instances, vague and ambiguous proposals. These new opportunities are simply too valuable to be cast adrift in a fast‑moving river of foreign competition and operational complexity. FedEx Express stands with its head well above water more so than any other applicant as a tried, tested and successful participant in the U.S.‑China and U.S.‑Asia all‑cargo markets. Its proposal is clear and complete and, if granted, will enable FedEx Express to further develop its exceptional, established network of express and cargo services to the benefit of U.S. shippers and U.S. interests. Counsel: FedEx, G. Bailey Leopard, Jr., 901-434-6664, gbleopard@fedex.com
July 8, 2004 Consolidated Reply of Gemini Air Cargo Notwithstanding the blithe and self‑serving assertions of Federal Express and UPS that a frequency allocation of four ‑‑ maybe five ‑‑ flights out of the 39 available in 2004/2005 would be adequate for the success of the new entrant, the concentration of the huge number of remaining frequencies among the incumbent carriers would certainly cripple, if not doom, the ability of the new entrant carrier to compete effectively. Furthermore, a de minimus frequency award would mean that the substantial startup costs incurred by the new entrant would have to be spread over fewer flights, making commercial success even more challenging. Such a restrictive allocation is wholly unnecessary, however, since, as stated above, full award of Gemini's frequency request would still allow a 135% increase in the total number of frequencies available for distribution among the incumbent applicants. Counsel: Roller & Bauer, Moffett Roller, 202-331-3300, mroller@rollerbauer.com
July 8, 2004 Consolidated Reply of Northwest Airlines Northwest urges the Department, in its instituting order, to resolve the frequency counting methodology issue which has been raised by UPS. UPS argues that FedEx requires only 12 frequencies, not the 18 it has requested, because the FedEx request for 12 to be used for around‑the‑world service in both directions is collapsible into six. UPS argues that FedEx in its application has not considered that frequencies under the U.S‑China Agreement may be used for round‑trip operations. As the Department has done in past cases in which such issues have been presented, a clear standard must be established so that all carriers have an opportunity to present proposals that are consistent with such definitions and to provide a comparative analysis of the various proposals grounded in what is bilaterally feasible. Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com
July 8, 2004 Consolidated Reply of Polar Air Cargo Because Polar is the only new‑entrant applicant with a scheduled route network, the argument by other new‑entrant applicants about the desirability of point‑to‑point services is hardly unexpected. Yet the applicants that advance it fail to mention that they will have the ability to operate their own point‑to‑point services under the newly expanded charter regime. Evergreen's discussion about the desirability of scheduled, point‑to‑point services is especially curious because the carrier could not sustain service in Hong Kong (with the largest airfreight through‑put of any airport in the world) and Taiwan. Nor, by its own admission, could it rally more than 59 charter flights per year in the combined markets of Hong Kong and mainland China. Counsel: Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com
July 8, 2004 Consolidated Reply of United Parcel Service Wholeheartedly concurs with the majority of the other applicants that the Department of Transportation should allocate the available frequencies in the most expeditious possible manner. The Department negotiated to make the first set of these valuable frequencies available on August 1, 2004 - to ensure that designated carriers could take full advantage of the peak season for U.S.-China traffic. The Department should not allow these rights to lie fallow for any period of time. To this end, UPS urges the Department to adopt the reasonable suggestion of Polar Air Cargo, Inc and to decide this matter based on the docket record as it exists today, dispensing with direct and rebuttal exhibits, testimony, and briefs. This record adequately details the competing proposals, and the capabilities of the applicants to serve the public interest and make full use of these new opportunities. Counsel: Kelley Drye, David Vaughan and Michael Francesconi, 202-955-9864, dvaughan@kelleydrye.com and mfrancesconi@kelleydrye.com June 23, 2004 Re: The Metropolitan Washington Airports Authority Letter in Support of the Agreement The new agreement is of particular interest to the Authority, as we are working hard to bring nonstop and direct air service from our nation's capital to the Chinese capital, as well as to Shanghai, Guangzhou, and other regions within the People's Republic of China. The new aviation agreement should enhance the prospects for such service, opening new opportunities for Washington and other U.S. cities without needed China service. By: James Bennett Order 04-7-13 Issued and Served July 19, 2004 Order Requesting Additional Information and Establishing Further Procedures | Word The newly negotiated agreement affords U.S. cargo carriers valuable new rights effective August 1. We believe that the public interest calls for prompt implementation of those rights and therefore favors the adoption of expedited procedures to facilitate that possibility. With this in mind, we have reviewed carefully all the pleadings so far submitted, along with the various procedural suggestions and motions. We have determined that the record would be meaningfully enhanced with a limited degree of additional input from the parties. We have therefore decided to afford the parties one additional opportunity to augment and/or clarify their proposals along with one further opportunity for responsive comment. In reaching our decision, our principal objective will be to maximize the public benefits that will result in award of the authority in this case. In this regard, we will consider which applicant(s) will be most likely to offer and maintain the best service for the shipping public. We will consider the effects of the applicants’ service proposals on the overall market structure and the level of competition in the U.S.-China market, and any other market shown to be relevant, in order to promote an air transportation environment that will sustain the greatest public benefits. In addition, we will consider other factors historically used for carrier selection where they are relevant. We will consider whether to award backup authority for the certificate award in this case based on the material in the record. Additional information is to be filed no later than 14 calendar days from the date of this order. Responses to these submissions will be due 7 calendar days thereafter. By: Karan Bhatia US-China Cargo Undocketed Issued July 16, 2004 We have decided to grant Kalitta the charter frequencies it seeks for its Shanghai-Chicago service. It is our policy to ensure that the operating rights available to U.S. carriers are fully utilized. Significantly, Kalitta is the only carrier with demonstrably firm plans to use any of the available U.S.-China charter opportunities at this time. While Evergreen has stated that it “expects to operate approximately 25 charter flights from China during the next 12 calendar months….” it has presented neither an application nor firm plans for any such flights, nor has it persuasively demonstrated that the granting of Kalitta’s request, which would still leave a pool of 46 available charters, would preclude Evergreen’s plans. No other carrier responded to Kalitta’s request. Against this background, we find that, under the circumstances presented, the public interest supports a decision to approve Kalitta’s request now. Saying that, we nevertheless appreciate Evergreen’s desire for some greater degree of procedural guidance on future awards of U.S.-China charters. Thus, we intend, on an expedited basis, to address by subsequent separate action the question of procedures for allocating the remaining numerically limited charter opportunities available under the U.S.-China agreement. While we have not yet decided on what those procedures might be, if comparative procedures should need to be employed, we intend to take into consideration the award we have made here to Kalitta. By: Karan Bhatia August 2, 2004 Additional Information of Arrow Air in Support of Application While Arrow believes that a new all‑cargo entrant to the China market would need to have immediately a minimum of five frequencies to effectively meet the demands of the shipping public, it does not state any minimum number of frequencies that it would accept. With regard to the issue of priority of requests for August 1, 2004 frequencies and March 25, 2005 frequencies and the points to be served if not all of the frequencies requested to Arrow are not allocated to it, Arrow states it would allocate its frequencies on the basis of the size of the demand and whether or not there were other competitive services awarded by the Department in any given market. While the listings of proposed weekly capacity shown in Exhibit JW‑Supp‑3 provide some basis for indicating priority of request for August 1, 2004 and March 25, 2005 frequencies and which points would be served if all frequencies are not granted to this applicant, Arrow is of the view that it would have to take into account all of the market conditions and level of competing services before final determination could be made. Counsel: Lawrence Wasko, 202-862-4370
August 2, 2004 Additional Information of Evergreen International Airlines Evergreen would accept a partial grant of frequencies down to a minimum of five per week. If Evergreen were granted fewer than the seven frequencies it has requested, it would prioritize operating EIA Route 2 as many days per week as possible up to five days per week, thereby giving shippers maximum opportunity for point‑to‑point traditional cargo service between the U.S. and China. In terms of priority, Evergreen would prefer to receive as many August 1, 2004 frequency allocations as possible (up to the seven requested), with the remainder to be allocated from the March 25, 2005 frequencies, for a total of seven. Evergreen's specific priorities and proposal for utilization of fewer than the seven requested frequencies is set forth on Exhibit EIA‑2. Counsel: The Wicks Group, Glenn Wicks, 202-457-7790
August 3, 2004 Erratum of Evergreen International Enclosed please find corrected pages 2 and 4 for the above‑referenced Evergreen filing. The maximum structural payload and total cubic capacity numbers relating to the B‑747‑200 and MD‑ II aircraft have been corrected to conform with Exhibit EIA‑3. Counsel: Glenn Wicks and Lisa Harig, 202-457-7790
August 2, 2004 Additional Information to Further Support the Application of FedEx Two allocation paths present themselves for the Department's consideration: (1) an innovative air express/cargo operator with a worldwide network and a strong commitment to and investment in U.S.‑China markets; or (2) a traditional air cargo operator that will shift its aircraft assets to the next "hot" market or to meet the demands of its most recent customers. U.S. shippers and exporters, including the National Association of Manufacturers ‑ the largest U.S. industrial trade association ‑ are now watching to see if the Department will take the path that plays to the competitive strengths of the United States: its intellectual prowess, entrepreneurial economy, and innovative spirit. Of the applicants, only FedEx Express has used these strengths to develop a comprehensive worldwide network express service with a strong commitment to U.S.‑China markets. Counsel: Federal Express, Nancy Sparks
August 6, 2004 Counsel: FedEx, G. Bailey Leopard, 901-434-6664, gbleopard@fedex.com
August 2, 2004 Additional Information Submitted by Gemini Air Cargo Gemini has decided to augment its initial service proposal by operating service to Guangzhou in addition to Shanghai. Gemini will still operate the six flights it requested from the first tranche of August 1, 2004, to Shanghai, but it now plans to operate to Guangzhou the six flights that it requested from the second frequency tranche available on March 25, 2005. In addition, instead of treating Anchorage as a technical stop as initially stated, Gemini will operate via Anchorage as a traffic point to avail itself of any traffic opportunities at Anchorage. Anchorage will also serve as a transfer point between Gemini flights for traffic to and from Shanghai and Guangzhou. The other U.S. points for Gemini's single plane direct service ‑ New York, Chicago, Los Angeles, San Francisco remain unchanged. Counsel: Roller & Bauer, Moffett Roller, 202-331-3300
August 2, 2004 Submission of Northwest Airlines Although China is the largest U.S. international air cargo market, the general freight sector suffers from a severe lack of capacity, particularly U.S. carrier capacity. Over 90 percent of the cargo moving between the U.S. and China today consists of general freight, i.e., manufactured goods, machinery and other heavy items, and large consolidated shipments. Whereas the small package express market is less than 10 percent of the overall U.S‑China air cargo mix, 85 percent of U.S. carrier U.S‑China all cargo frequencies currently are allocated to Federal Express and UPS, carriers focusing on small package express service. The U.S‑China Protocol signed by Secretary Mineta on July 24 in Beijing has created a timely and important opportunity for the Department to add badly needed new capacity for general freight services in the U.S‑China market. Counsel: Northwest, Megan Rae Rosia, 202-842-3950
August 18, 2004 Counsel: Northwest, Megan Rae Rosia, 202-842-3193
August 2, 2004 Supplemental Information of Polar Air Cargo Although this expansion of rights is long overdue, the operations of the new carrier will not be without significant challenges. The imminent increase of air services by numerous other airlines ‑ U.S., Chinese and third‑country carriers ‑ will only serve to intensify competition from the outset. The one historical characteristic of the market that has remained, its pronounced directionality, will compound the difficulties of mounting and sustaining service over this long‑haul, trans‑Pacific route. And lastly, the new carrier will need to establish its services with fewer frequencies than the incumbent air carriers with which it will have to compete. Polar's service proposal, for these reasons, is pragmatic. In the number of frequencies requested, and in the pattern of service, it is built on the expressed needs of the airfreight shippers upon which it will rely for support. Having successfully faced direct competition from some of the strongest and largest freighter operators in the world, and having weathered the vagaries of the Asia-Pacific market since its certification, Polar can, if permitted, use this commercial support and operational experience to produce the maximum public benefit possible through the development of this new opportunity. Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com
August 2, 2004 Consolidated Response of United Parcel Service to Order Requesting Additional Information Of particular importance in the new agreement is the bilateral recognition of the critical role of air cargo hubs in achieving more synchronized global commerce. Reflecting that recognition, UPS seeks immediate allocation of six new U.S-China all-cargo frequencies to allow us to continue to build an express cargo hub in Shanghai, together with six additional frequencies in March 2005 to launch the first daily non-stop U.S. service to Guangzhou and the underserved Southern China region. UPS is committed to building a comprehensive cargo network in Shanghai, China's largest and fastest-growing commercial center. Last year alone, air cargo tonnage at Shanghai's Pudong Airport grew by an astounding 87.5%. Making best use of the new agreement's liberalized change of gauge rights, UPS will use the six requested new frequencies to add to its Chinese air network a new daily flight that will both serve the U.S.-China market and enhance Shanghai's existing connectivity to the UPS intra- Asia network via the Clark hub in the Philippines. Counsel: Kelley Drye, David Vaughan, 202-955-9864 August 9, 2004 Response of Arrow Air to Additional Information of Applicants This case presents the opportunity to add one new competitive airline committed to all cargo services to operate in the most important developing air freight markets of this decade, those between China and the United States. The new entrant must be a carrier with the service proposal, the commitment and the capability of serving the demand for freight movements that is both intense and far-reaching. The new entrant carrier must serve the significant and geographically extended manufacturing locations in China and link them with other commercial and trade centers throughout the U.S. The evidence submitted in this proceeding shows that the only new applicant that has proposed service that will meet the extraordinary U.S.-China demand and serve the shipping public is Arrow Air. Counsel: Lawrence Wasko and Jacquelyn Gluck, 202-862-4370, ldwasko@erols.com and jngluck@erols.com
August 9, 2004 Consolidated Response of Evergreen International Airlines Evergreen notes that it i sthe only one of the four applicants for the new designation to provide the Department with a firm statement f the minimum number of frequencies it would accept. Arrow "does not state any minimum number of frequencies it would accept," although it notes that it beleives that fiv frequencies is the minimum necessary for the new entrant. Similarly, Gemini states hat "there is no minimum number of frequencies that Gemini would accept." Polar merely states that if awarded fewer than the 12 frequencies it has requested, it would "endeavor to maintain a competitive presence in the market." In contrast, Evergreen gave careful consideration to the minimum number of frequencies necessary to commence a sustainable US-China operation and provided a detailed summary of its operating priorities were it to be awarded fewer than the requested seven frequenceis. Counsel: The Wicks Group, Glenn Wicks, 202-457-7790, gpwicks@wicks-group.com
August 9, 2004 Consolidated Reply of Federal Express This case is about public benefits, including responding to the needs of U.S. commerce. One key aspect of commerce is increasing the access of shippers and exporters to foreign markets, which will in turn grow the economy and create jobs. The 14,000 U.S. manufacturers represented by the National Association of Manufacturers agree that FedEx Express' proposal would provide the greatest benefit to the U.S. economy. FedEx Express is the only applicant with a plan to address the imbalance of U.S.-China trade. All other applicants are focused opportunistically on riding the tidal wave of goods from China to the United States, which exacerbates U.S. balance-of-trade concerns, and costs U.S. jobs. The Department has the chance in this case to expand U.S. employment by improving the access of U.S. manufacturers to China through a grant of FedEx Express's complete request. By: Federal Express, Nancy Sparks
August 12, 2004 Counsel: G. Bailey Leopard, Jr., 901-434-6664, gbleopard@fedex.com
August 9, 2004 Consolidated Reply of Gemini Air Cargo Gemini's proposal satisfies the public interest far more than the competing proposals. The differences between the Gemini proposal, on the one hand, and the Polar, Evergreen, and Arrow proposals, on the other, are pronounced and undisputed in all material respects. Under its proposal Gemini will dedicate the entire capacity of its flights (except for marginal quantities of transfer traffic) to the transportation of U.S.‑China Third and Fourth Freedom traffic. Polar and Evergreen are equally candid that their proposals will incorporate a substantial amount of cargo transportation between China and third countries at the expense of capacity that would otherwise be dedicated to the U.S.‑China market. Counsel: Roller & Bauer, Moffett Roller, 202-331-3300, mroller@rollerbauer.com
August 9, 2004 Reply Submission of Northwest Airlines NWA Cargo's proposal is modest and realistic and reflects NWA Cargo's actual needs. Although NWA Cargo has access to the fewest frequencies of any of the incumbent carriers, NWA Cargo's proposal involves fewer new frequencies than any incumbent. The strength and superiority of NWA Cargo's service proposal also are readily evident when compared with the proposals of the four aspiring new entrants. Although they correctly focus on carrying general freight, each of them has requested frequencies well in excess of a level that should reasonably be allocated for new start‑up service in the U.S.‑China market. None of these carriers has the history, staying power, network scope or freight forwarder network that NWA Cargo has, and their ability to implement and maintain reliable service is an open question. Counsel: Northwest, Megan Rae Rosia
August 9, 2004 Consolidated Response of Polar Air Cargo to Supplemental Submissions of Other Applicants The supplemental information for the U.S.‑China designation and frequency applications filed pursuant to Order 2004‑7‑13 serves to underscore the commercial soundness and operational practicality of Polar's service proposal. It also draws a sharper line of delineation between Polar and the other prospective new entrants based on scheduled service experience, commitment and proven capabilities. Between Polar and the incumbent carriers vying for a share of the available frequencies, the comparative merits of Polar's service offering emerge from the latest round of pleadings with even greater clarity. While the assignment of additional frequencies to the incumbents will no doubt result in expanded service in the U.S.‑China market, it will not effect as significant nor as positive a change in the competitive environment as an award of nine frequencies to Polar, a new entrant. Counsel: Polar and Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com
August 10, 2004 Re: Erratum of Polar Air Cargo Enclosed please find a table of contents, which was inadvertently omitted from the Consolidated Response of Polar Air Cargo to Supplemental Submissions of Other Applicants, filed August 9, 2004. Also, enclosed are more legible copies of Polar Air Cargo's Exhibits PO‑R‑2 and PO‑R‑6. Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6000
August 9, 2004 With the frequencies that recently became available for allocation, UPS proposes to satisfy the most immediate and critical need ‑‑ enhanced express service to China's preeminent commercial center at Shanghai. Currently, our single daily flight from China to the U.S. operates with a 90%‑plus payload factor, and demand continues to accelerate. There can be no real debate, UPS respectfully submits, that the most immediate priority for use of the newly‑available 2004 frequencies should be to enable UPS to enlarge and expand its U.S.‑China service with a full double‑daily operation that can accommodate both express and general air freight to Shanghai. Counsel: UPS and Kelley Drye, David Vaughan, 202-955-9864, dvaughan@kelleydrye.com 2004 Cargo Designation and 2004/2005 All-Cargo Frequencies (US-China) Order 04-9-4 Issued and Served September 3, 2004 We have tentatively decided to select Polar as the new designated carrier to provide all‑cargo service in the U.S.‑China market and to allocate it nine weekly frequencies (six in 2004 and three in 2005). We have also tentatively decided to allocate twelve weekly frequencies (six in 2004 and six in 2005) each to FedEx and UPS, and six weekly frequencies (three in 2004 and three in 2005) to Northwest to expand their U.S.‑China all‑cargo services. Polar has persuasively argued that its use of an Asian hub to support its services will help the new entrant succeed in an extremely competitive environment. Specifically, we tentatively find that Polar's hub operations should lessen the adverse impact of directionality, while still providing shippers with the options they need. Polar states that, through its networking system, it can increase per‑flight allocations for U.S.‑China shippers during times of greater demand, or if demand should drop, to maintain the number of flights with more support from other markets served on the Polar system. 53 We tentatively find that, by serving China through its Incheon hub and focusing its services from the three largest U.S. origin and destination cities (Chicago, New York, and Los Angeles) and on the major Chinese cargo center (Shanghai), Polar's services not only provide consumers new options in the principal U.S.‑China markets, but Polar is also more likely to implement services quickly and sustain its proposed services. By: Karan Bhatia September 10, 2004 Objection of Arrow Air to Order to Show Cause Arrow objects to the tentative selection of Polar Air Cargo Inc. instead of Arrow to provide scheduled foreign air transportation of property and mail between a point or points in the United States, via any intermediate point, to a point or points in China open to scheduled international operations, and beyond to any points outside of China, with full traffic rights. Arrow should be selected for the award in this case and it should be allocated the frequencies for which it has applied. Arrow objects to the tentative decision of the Department not to select a backup carrier for the new entrant award in this case. If Arrow is not selected for the primary award, at minimum, it should be selected as the backup carrier for the new entrant Arrow will implement the authority as the backup carrier and utilize the available frequencies awarded to. Counsel: Lawrence Wasko and Jacquelyn Gluck, 202-862-4370, ldwasko@erols.com and jngluck@erols.com
September 10, 2004 Objection of Evergreen International to Order to Show Cause Counsel: Glenn Wicks and Lisa Harig, 202-457-7790, gpwicks@wicks-group.com and lharig@wicks-group.com
September 10, 2004 Reply of Federal Express to Order to Show Cause By: FedEx, G. Bailey Leopard, Jr. 901-434-6664, gbleopard@fedex.com
September 10, 2004 Objections of Gemini Air Cargo although Polar touts its role as a “scheduled carrier,” the differences in how Polar and Gemini market their services are not of decisional significance in this proceeding. Both carriers rely on contracts for aircraft capacity for specified periods. Polar’s operations tend to emphasize block space arrangements with several forwarders while Gemini’s operations have tended to rely on single contracts. Each carrier, however, uses a variety of marketing arrangements to respond to market requirements as demonstrated by the many wet lease flights and plane-load charters operated by Polar and the scheduled services operated by Gemini to Asia, Europe, and South America. Gemini’s and Polar’s respective marketing models are not, however, critical to this case. What is important is that Gemini does have the experience necessary to implement a program of scheduled all-cargo service between the United States and China that would provide far more benefits to the public than the service proposed by Polar, Evergreen, or Arrow. The Department should reconsider its tentative decision and select Gemini as the next all-cargo carrier in the U.S.-China market, Gemini also requests that the Department reconsider its tentative decision not to select a backup carrier and name Gemini as the backup carrier if it does not select Gemini as the primary carrier. The record in this proceeding amply demonstrates Gemini’s interest and ability to perform scheduled all-cargo service between the United States and China. Counsel: Roller & Bauer, Moffett Roller, 202-331-3300, mroller@rollerbauer.com
September 10, 2004 Objections of Northwest Airlines to Order to Show Cause The Department's explanation of why it has tentatively decided to allocate only six frequencies to Northwest (instead of the 10 frequencies that Northwest requested) consists solely of an observation that the Department is "cognizant of Northwest's ability to carry belly cargo on its scheduled combination services as well as to convert some combination frequencies to all‑cargo frequencies." Order 2004‑9‑4 at 11. This statement either ignores or fails to give proper weight to the fact that Northwest and NWA Cargo compete in two entirely distinct air transportation markets, passenger service and all‑cargo service. Indeed, although several Asian carriers have done so Japan Air Lines, Korean Air, Asiana and Singapore), Northwest is the only U.S. carrier to have made the investments and undertaken the risks associated with competing in both modes of service. The Department's tentative decision effectively penalizes Northwest for serving both the U.S.‑China passenger and all‑cargo markets. If the tentative decision stands, Northwest will have fewer frequencies than any incumbent in both markets: on the passenger side, Northwest will have 21 frequencies 2 compared with United's 28; on the cargo side, Northwest will have eight frequencies compared with Polar's nine, FedEx's 23 and UPS's 18. Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com
September 10, 2004 Response of United Parcel Service to Order to Show Cause UPS supports the Department's continued recognition that express carriers require six weekly frequencies to serve a shipping public with a high and growing demand for express services. (See Order, at p. II). In fact, UPS believes that six weekly frequencies " is the minimum number required to effectively provide a high demand market with competitive express services. The DOT has long recognized the necessity of six weekly flights to conduct efficient express cargo service. In the U.S.-China Air Services (2001) proceeding, the Department explicitly concluded that, "For all-cargo service, and particularly those involving an express service component, the record has demonstrated that six weekly frequencies are necessary." (Order 2000-11-24, at p. 13). Further, in the 2002/2003 Hong Kong Fifth Freedom Proceeding, the Department held that granting less than six weekly frequencies would "negate the benefits that would come with express services, which depend on jiy frequencies." (Order 2003-7-17, at p. 9). UPS agrees with the Department's finding that Northwest is well‑served by its combination frequencies, as well as its cargo frequencies, with regard the carriage of cargo to China. UPS believes that the belly capacity of combination carriers must not be overlooked when evaluating an air cargo market and, importantly, Northwest's ability to convert combination frequencies to cargo frequencies is an important factor when evaluating its request for new all‑cargo frequencies to China. Counsel: Kelley Drye, David Vaughan, 202-955-9864, dvaughan@kelleydrye.com September 16, 2004 Answer of Federal Express to Objections to Order to Show Cause In response to the Objections of Northwest Airlines, Inc. to Order to Show Cause, Federal Express Corporation states as follows: Despite Northwest's arguments to the contrary, the Department's tentative decision to award FedEx Express 12 U.S.-China all-cargo frequencies (6 in 2004 and 6 in 2005) is clearly explained in its Order to Show Cause' and is clearly supported by substantial evidence based on the record. In fact, it is Northwest, not the Department, who is failing to consider and ignoring the record as a whole. As explained below, the Department should overrule Northwest's objections as to FedEx Express and finalize its decision to award FedEx Express 12 frequencies. Counsel: FedEx, G. Bailey Leopard, Jr., 901-434-6664, gbleopard@fedex.com
September 16, 2004 Consolidated Reply of Gemini Air Cargo Gemini Air Cargo, Inc., hereby replies to the Objections and pleadings filed in response to the Department's Order to Show Cause, Order No. 2004-9-4 (SCO). As Gemini has argued in its Objections and in its prior submissions in this proceeding, Gemini continues to be the best qualified applicant to provide new all-cargo service to China. The Objections filed by the other parties contain no new information or arguments that rebut the fact that the selection of Gemini would best serve the public interest by providing the most capacity dedicated to the U.S.-China market among the new entrant carriers, regardless of aircraft size, and by providing more frequent service to more U.S. points than its competing applicants. Counsel: Roller & Bauer, Moffett Roller, 202-331-3300, mroller@rollerbauer.com
September 16, 2004 Answer of Polar Air Cargo to Objections to Order to Show Cause | Word Respectfully submits this answer to the comments submitted by other applicants in response to the Department’s tentative award of newly available U.S.-China all-cargo authority. Polar would also take this opportunity to express its deep appreciation for the Department’s tentative selection of Polar as the new U.S. carrier to serve China with an allocation of nine weekly frequencies. The tentative decision is consistent with U.S. aviation policy and supports the principal objective of maximizing the public benefits that would result from the award of such authority. It will permit Polar to launch, and the nine frequencies will permit Polar to sustain, the services proposed. Combined, these rights will enable Polar to effect a meaningful and positive competitive change in the U.S.-China and Asia-Pacific all-cargo market. For these reasons, Polar would urge the Department to issue a final order confirming its tentative decision. Counsel: Polar and Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmerhale.com
September 16, 2004 Reply of United Parcel Service to Objections to Order to Show Cause United Parcel Service Co. respectfully submits the following Reply to the Objections to the Department of Transportation's Order to Show Cause, Order 2004-9-5. As stated in its Response to the Order, UPS supports the Department's tentative decision to allocate to UPS six (6) new frequencies for immediate use and six (6) new frequencies for use beginning March 25, 2005. As evidenced by the absence of any direct objection to the tentative award to UPS by the other applicants in this proceeding, it is clear that the Department should make its award final to allow UPS to take advantage of these extremely valuable rights. Counsel: Kelley Drye, David Vaughan and Michael Francesconi, 202-955-9864, dvaughan@kelleydrye.com and mfrancesconi@kelleydrye.com September 21, 2004 Polar argues that Polar is better qualified than Gemini to receive the award in this proceeding because presumably more of Polar's operations are labeled "scheduled" than Gemini's. Gemini in contrast strongly disagrees that the carriers' operations are sufficiently distinct to have "decisional significance." While Polar may disagree with Gemini's conclusion, that disagreement does not change the fact that Polar, like Gemini, operates plane-load charters and that Gemini, like Polar, operates scheduled service. Polar is also incorrect when it states that Gemini "does not compete today in any scheduled service market and, if awarded the rights to China, its entry would be its first foray into the Asia-Pacific market and into this category of service." Gemini operates scheduled service today to Korea, Taiwan, Ecuador, and Belgium. Service to China would not be Gemini's "first foray into the Asia-Pacific market." Counsel: Roller & Bauer, Moffett Roller, 202-331-3300, mroller@rollerbauer.com New Route Opportunities (U.S.-China) Order 04-10-08 Issued October 13, 2004 | Served October 18, 2004 We have decided to make final our tentative decision in Order 2004-9-4. Specifically, we are awarding Polar certificate authority to operate in the U.S.-China market, and we are allocating it nine weekly frequencies (six in 2004 and three additional in March 2005). We also are allocating FedEx and UPS twelve weekly frequencies each (six in 2004 and six in March 2005) and Northwest six weekly frequencies (three in 2004 and three in March 2005) for services in the U.S.-China market. In reaching our tentative decision to select Polar for the new U.S.-China all-cargo designation, we said our new agreement with China offers us the opportunity to enhance competition significantly in the U.S.-China air cargo market. We tentatively believed that Polar would provide the greatest public benefits in this case because Polar is in the best position to compete with well-established incumbents in the market, and because it would provide significant service benefits. We said that Polar had an advantage stemming from the facts that it is the only new carrier applicant with extensive operations and resources in the region (including a hub), the only applicant with demonstrated broad experience in scheduled cargo services in the transpacific and intra-Asia markets, and the only applicant that demonstrated it has a road feeder service in the U.S. to provide shippers access to multiple interior points in the U.S. In short, we said that in the circumstances presented, Polar was the applicant that best demonstrated it has the resources to provide vigorous competition to the strong competitors already in the market. None of the new designation applicants has presented evidence that would persuade us to alter our tentative findings in favor of Polar. By: Karan Bhatia
OST-2006-25275 - 2007 US-China Combination and All-Cargo Frequency Allocation Proceeding April 29, 2008 Motion of Northwest Airlines for a Dormancy Waiver Hereby moves for a waiver of the 90 day dormancy condition applicable to seven (7) of Northwest's U.S-China all-cargo frequencies As a result of unprecedented oil prices, now verging on $120 per barrel, Northwest is suspending its daily all‑cargo service to Guangzhou. Northwest ceased operation of two U.S.‑Guangzhou cargo frequencies effective April 27, 2008, and is planning to suspend its remaining five Guangzhou all‑cargo frequencies in July, 2008. Grant of Northwest's dormancy waiver request is in the public interest and will not prejudice any carrier. At present, there are 17 all-cargo frequencies available in the unallocated pool. Fifteen (15) all-cargo frequencies become available on March 25, 2009; a further fifteen (15) additional all-cargo frequencies become available on March 25, 2010; followed by the unlimited availability of all-cargo frequencies on March 25, 2011. The unique hub benefits available to FedEx and UPS provide yet another source of China all-cargo frequencies in the interim. Accordingly, Northwest requests a waiver of the dormancy condition applicable to its seven U.S.-Guangzhou cargo frequencies through March 25, 2011. The requested waiver will enable Northwest to resume service as warranted by fuel and economic conditions. Other U.S.-China carriers have recently sought and received similar dormancy waiver relief due to fuel prices and the slowing economy. See, Motion of United Airlines for a dormancy waiver and Department action approving deferral of startup condition for United's seven U.S.-Guangzhou combination frequencies (Docket OST-2007‑28567). Counsel: Northwest, Alexander Van der Bellen, 202-842-4184, sascha.vanderbellen@nwa.com |
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