OST-2004-19966 - USA 3000 Airlines - Chicago-Zihuatanejo; Detroit-Puerto Vallarta/Cozumel

OST-2004-19966 - Exemption - Chicago-Zihuatanejo; Detroit-Puerto Vallarta/Cozumel

By this application, USA 3000 seeks an exemption from 49 U.S.C. 41101 to engage in scheduled foreign air transportation of persons, property and mail between the U.S. and Mexico as more fully described in Exhibits USA3K-100-103 herein. USA 3000 plans to begin service to Mexico on these routes on or about January 27, 2005, or as soon thereafter as all necessary Mexican licenses have been obtained. USA 3000 intends to operate these services with its growing fleet of new, state-of-the-art, Airbus A-320 aircraft (168Y).

United has no objection to the grant of a temporary exemption for USA 3000 to operate Chicago‑Zihautanejo service for the period January 27 ‑ April 30, 2005. United objects to any longer term exemption authority for that city pair being issued at this time. United is hopeful that the present bilateral negotiations with Mexico will result in an expansion of U.S. carrier designations in Chicago‑Zihautanejo and other U.S.Mexico city pairs. Such an agreement could permit both United and USA 3000 to offer Chicago‑Zihautanejo services in the future. Because one U.S. carrier (ATA) is already designated and operating in this city pair, however, under the present bilateral agreement United and USA 3000 could not both operate Chicago‑Zihautanejo services (assuming ATA continues).

United recently began service to Zihautanejo from its hubs at Los Angeles and Denver. United plans to analyze the results of that service and, based on that analysis, will assess the feasibility of introducing service between Zihautanejo and its hub at Chicago. That analysis will be possible only after the end of the winter 2004‑05 service season.

USA 3000 has filed an application herein for, inter alia Chicago-Zihuatanejo, Mexico Exemption authority seeking grant of such authority for the usual two-year (renewable) term awarded by the Department in such cases. USA 3000's application is for the second available designation on this city-pair, with ATA being the currently designated carrier operating seasonal service.

No other carrier, United included, has applied for any authority on Chicago-Zihuatanejo, and USA 3000's application for such valuable, unused, bilaterally-negotiated rights should be promptly granted for the normal full 2-year term. United's suggestion that because United might (or might not) decide to apply for authority sometime later this year somehow requires the Department to award USA 3000 only temporary authority for a few months and then institute a carrier-selection proceeding if United ultimately decides it might want to begin operating service on this city-pair in the Winter 2005/2006 season is without precedent and would be patently unfair and commercially unworkable. United's answer should be dismissed.

USA 3000 in its reply has attempted to pre‑empt any opportunity for carrier selection based on the relative merits of its service and the service which United could offer between Chicago and Zihautanejo. United can offer service to Zihautanejo from its entire network via its Chicago hub, and USA 3000 would obviously prefer to avoid a comparison between its own point‑to‑point service and United's network service by acquiring a long‑term route authorization now and avoiding any comparison based on public benefits.

Conspicuous by absence from USA 3000's latest pleading is any claim that it must have a two‑year exemption immediately in order to start the seasonal service it has proposed for this winter. Indeed, at the very time United was filing its answer requesting that USA 3000's exemption be granted for the January‑April 2005 period, USA 3000 was issuing a press release announcing its introduction of Chicago- Zihautanejo service starting January 17, 2005, with three weekly flights to be operated through April 8, 2005.

Scheduled foreign air transportation of persons, property, and mail between (1) the terminal point Chicago, Illinois, and the terminal point Zihuatanejo, Mexico[1], (2) the terminal point Detroit, Michigan, and the terminal point Cozumel, Mexico, and (3) the terminal point Detroit, Michigan, and the terminal point Puerto Vallarta, Mexico. USA 3000 intends to begin service on these routes on or about January 27, 2005. USA 3000 proposes to serve the Chicago-Zihuatanejo/Ixtapa and Detroit-Cozumel markets on a seasonal basis.

On January 6, 2005, United Air Lines, Inc. filed an answer in partial objection to USA 3000’s application. United states that it has no objection to USA 3000’s application for Detroit-Puerto Vallarta and Detroit-Cozumel authority. United states, however, that it does object to USA 3000’s application to the extent that it is requesting two-year exemption authority to serve the Chicago-Zihuatanejo market. In this regard, United maintains that it has recently begun service to Zihuatanejo from Los Angeles and Denver and that, after the end of the winter 2004-2005 season, it will have completed its analysis of that service, along with an assessment of the feasibility of introducing additional service to Zihuatanejo from Chicago. United states that, under these circumstances, the Department should grant to USA 3000 a temporary exemption to permit USA 3000 to operate the Chicago-Zihuatanejo service during the Winter 2005 season, and invite applications for longer-term authority after the winter season has concluded.

Only one U.S. carrier, USA 3000, has filed an application for Chicago-Zihuatanejo services with firm plans to initiate service in the near future. Neither United nor any other carrier has filed a competing request for this authority. The Chicago-Zihuatanejo route rights involved here constitute a valuable resource obtained in exchange for granting Mexico route opportunities for its airlines to serve the United States, and the public interest calls for use of these rights. In light of the fact that USA 3000 has presented an application to use these valuable limited-route rights, along with a firm service proposal, and no other U.S. carrier has filed a competing request, we find that grant of the application for the full term requested (which is in fact the standard duration of the exemption awards we issue to U.S. carriers for service to Mexico) is in the public interest. United has not provided any evidence to persuade us to take a different approach here.

Due to the current situation in the Cancun/Cozumel area following the recent hurricane and the resulting scarcity of available hotel rooms, USA 3000 hereby moves for a temporary dormancy waiver from the dormancy/start-up conditions with respect to its services between: (i) Detroit, MI and Cozumel, Mexico; and (ii) St. Louis, MO and Cozumel, Mexico.

USA 3000 has been obliged to revise its service plans for the DTW-CZM and STL-CZM routes and it currently anticipates commencing service on these routes on or about December 15, 2006. Accordingly, USA 3000 requests a temporary waiver so that the 90-day dormancy period for DTW-CZM and STL-CZM commence on December 15, 2006.

We will require the carrier to institute services in the Denver-Cozumel and St. Louis-Cozumel markets no later than December 15, 2006.

USA 3000 hereby applies for renewal of its Exemption authorizing USA 3000 to engage in scheduled combination air transportation on the following U.S. - Mexico routes:

By Notice of Action Taken dated January 31, 2005, USA 3000 was granted authority for two years to conduct scheduled foreign air transportation of persons, property and mail on the routes set out above. The authority granted is set to expire by its own terms on January 31, 2007. USA 3000, therefore, requests that its authority to conduct scheduled combination service on this route be extended by a further two years.

USA 3000 was granted a temporary Dormancy Notice for service on, inter alia, the Detroit-Cozumel route, which expires on December 15, 2006. See: DOT Approval dated February 13, 2006.

USA 3000 has been successfully operating scheduled combination service on these routes since grant of authority utilizing Airbus A-320 aircraft.

Renewal of scheduled foreign air transportation of persons, property, and mail between (1) Detroit, Michigan, and Cancun, Mexico; (2) Detroit, Michigan, and Cozumel, Mexico; and (3) Chicago, Illinois, and Zihuatanejo, Mexico.

In its original application, USA 3000 stated that it would serve the Detroit-Cozumel and Chicago-lxtapa/Zihuatanejo markets seasonally. USA 3000 did not indicate any service changes in the instant application.

Although the applicant's request for Zihuatanejo did not include Ixtapa, we have consistently granted Ixtapa/Zihuatanejo as a joint point in our U.S.-Mexico authorizations. Thus, we will grant, sua sponte, the Ixtapa authority here as well.

This Notice of Action Taken, originally dated November 7, 2006, in Docket OST-2004-19966, has been corrected to reflect the grant of (1) Detroit-Puerto Vallarta; (2) Detroit-Cozumel; and (3) Chicago-Ixtapa/Zihuatanejo authority. The November 7 NOAT inadvertently listed authority for Detroit-Cancun service instead of the requested Detroit-Puerto Vallarta service. The carrier does hold Detroit-Cancun exemption authority, which is properly reflected in the NOAT dated December 12, 2005, in Docket OST-2005-22637.

USA 3000 Airlines hereby applies for renewal of its Exemption authorizing USA 3000 to engage in scheduled combination air transportation on the following U.S.-Mexico routes:

By Notice of Action Taken dated November 7, 2006 as corrected by Notice of Action Taken dated April 12, 2007, USA 3000 was granted renewal of its exemption authority for two years to conduct scheduled foreign air transportation of persons, property and mail on the routes set out above. The authority granted is set to expire by its own terms on November 7, 2008. USA 3000, therefore, requests that its authority to conduct scheduled combination service on this route be extended by a further two years.