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OST-2006-24671 - US-Mexico All-Cargo Service Proceeding
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2006 US-Mexico All-Cargo Service Proceeding Order 2006-5-14 Issued and Served May 18, 2006 Order Instituting Proceeding - Bookmarked In view of the opportunity to designate additional U.S. carriers to serve the U.S.-Mexico all-cargo market, and in light of the competing applications for this authority, we have decided to institute proceedings to select (1) two carriers and one backup carrier to provide scheduled foreign air transportation of property and mail between U.S. points and Mexico City (Benito Juarez) and (2) one primary and one backup carrier to provide scheduled foreign air transportation of property and mail on each of the following transborder routes: Miami-Mexico City (Benito Juarez), Miami-Guadalajara, and Los Angeles-Guadalajara. The subject U.S.-Mexico all-cargo authority is available now. We intend to process this case on an expedited procedural schedule to ensure that the selected carrier will be in a position to commence services as soon as possible. We are, accordingly, establishing the following procedural schedule for submissions:
By: Michael Reynolds
OST-2005-22751 - Kitty Hawk - Exemption - US-Mexico Scheduled Cargo Service May 23, 2006 Motion of Kitty Hawk Aircargo for Leave to Withdraw Application While Kitty Hawk applied for the Mexico City authority last October believing that scheduled service to Mexico would be a significant revenue opportunity for the carrier, the passage of time since the initial application filing and subsequent events have caused Kitty Hawk to now determine that it must focus its efforts away from Mexico City and toward the completion of a recent transaction acquiring a substantial less-than-truckload ground network serving a seven state area. This transaction, just announced on May 10, 2006, has required management to devote a significant amount of time and resources to integrate the trucking operation into the existing Kitty Hawk ground network. Given the limitations on management time and the capital resources of the company, it is with regret that Kitty Hawk seeks leave to the extent necessary to withdraw its application for exemption authority to serve Mexico City now consolidated in Docket OST-2006-24671. The Department has granted Kitty Hawk exemption authority to service the Ft. Wayne-Guadalajara and Ft. Wayne-Monterrey markets (OST-2005-22751), including corresponding route integration authority. On May 1, 2006, the Department granted the application of Kitty Hawk for waiver of the dormancy condition imposed on this exemption authority until further notice. Kitty Hawk stated in its dormancy waiver application that its service to Guadalajara and Monterrey is liked with it providing service to Mexico City. Kitty Hawk is now in the process of evaluating its use for the Ft. Wayne-Guadalajara/Monterrey exemption authority without also providing service to Mexico City and will advise the Department as soon as it makes a determination. Counsel: Silverberg Goldman, Robert Silverberg, 202-944-3300
June 2, 2006 Supplement Application of Centurion Air Cargo - Bookmarked Centurion proposes to operate one roundtrip five days a week. starting on Monday on the routing of MIA-MEX-GDL-LAX and a second roundtrip five days a week starting on Tuesday on a LAX-MEX-GDL-MIA routing. This combination of 10 roundtrips a week will maximize service to the shipping public and provide maximum competition to Mexican carriers in these markets. Logic and common sense dictates that two companies having significant common ownership are not likely to be aggressive competitors. The fact that FWIA meets the statutory citizenship test does not in any way mean it would vigorously compete with MasAir, when such competition could have a negative impact on the profits of Lan. Indeed, the government has long recognized, in the context of Section 7 of the Clayton Act, that partial acquisitions cannot only lead to less aggressive competition but to anticompetitive conduct Counsel: Greenberg Trauig, Joanne Young, 202-530-8520
June 2, 2006 Supplement of Florida West International Airways to Application for Exemption and Designation - Bookmarked FWIA will serve Mexico City and Guadalajara from Miami and Los Angeles on a year‑round basis with multiple weekly flights. FWIA proposes to operate (a) six weekly flights serving Miami and Mexico City; (b) three weekly flights serving Miami and Guadalajara; and (c) four weekly flights serving each of the Los Angeles‑Guadalajara and Los Angeles‑Mexico City markets. During the peak September 15‑December 15 period, FWIA will supplement its year‑round schedule with an additional two weekly roundtrip flights between Miami and Mexico City. Counsel: Squire Sanders, Marshall Sinick, 202-626-6651
June 13, 2006 Answer of Centurion Air Cargo - Bookmarked Centurion files this Answer to the Supplement to the Application of Florida West International Airways. Award of primary authority to Centurion for both Miami and Los Angeles to Mexico City and Guadalajara will best advance the public interest by providing quality service and ensuring strong competition in the restricted U.S.-Mexico all-cargo market. It will provide Miami and Los Angeles with superior service five days a week to both Mexico City and Guadalajara. Significantly, only the selection of Centurion will guarantee a strong competitive response to the current leading carrier in these restricted entry markets, Mas de Carga, given the substantial common ownership of FWIA, and MasAir by Lan Airlines. The Department has stated that its principal objective is to "maximize public benefit," which includes offering and maintaining the best service and promoting a competitive environment. Measured against these criteria, Centurion respectfully contends that it must be selected for the primary award for both LAX-MEX-GDL and MIA-MEX-GDL. Where here the markets at issue are still restricted, ensuring real competition must be the Department's a primary focus given the overlapping ownership of FWIA and MasAir. No matter what FWIA says about its independence, significant co-ownership of a U.S. and foreign carrier operating on identical routes under a non-open skies bilateral must be a competitive concern for the Department. Fortunately, in this case, Centurion, which is completely independent of any Mexican carrier, has proposed service that in all respects is superior to FWIA's proposal and will maximize public benefits both in terms of service and in promoting new competition in these markets. Accordingly, Centurion respectfully urges the Department to approve its request by granting an exemption for a two-year period as set forth in Order 2006-5-14 to enable Centurion to operate its proposed service these U.S.-Mexico markets. Counsel: Greenberg Traurig, Joanne Young, 202-530-8520, youngj@gtlaw.com
June 13, 2006 Answer of Florida West International Airways - Bookmarked FWIA hereby answers the supplement of Centurion Air Cargo. Centurion's supplement leaves no question as to which carrier would best serve the shipping public in the U.S.-Mexico markets at issue in this proceeding-FWIA. FWIA will provide shippers with more overall annual U.S.-Mexico frequencies and greater Miami-Mexico City/Guadalajara frequencies and capacity. FWIA is also proposing service with modem, fuel efficient and low cost B767-300 aircraft. When Centurion's inaccurate, inconsistent and irrelevant arguments and exhibits are stripped from its pleading, the single remaining truth is that FWIA's proposal is markedly superior to Centurion's in every one of these critically important areas. FWIA's U.S.-Mexico proposal will provide measurably greater public benefits than Centurion's proposal, and demonstrates FWIA's strong commitment to serving Mexico. FWIA will operate 546 annual U.S.-Mexico roundtrip flights, exceeding the 520 frequencies proposed by Centurion. In the Miami-Mexico City/Guadalajara market, FWIA will offer six weekly roundtrip flights year round and will increase service to eight weekly flights between Miami and Mexico City during peak periods, compared with Centurion's five flights. FWIA will also offer greater capacity between Miami and Mexico City/Guadalajara than will Centurion - approximately 41,912 tons annually, compared to 39,676 annual tons. Although FWIA will provide greater U.S.-Mexico frequencies, and greater capacity and frequencies between Miami and Mexico City/Guadalajara, FWIA's annual fuel consumption will be vastly lower than Centurion's stated fuel requirements-an undeniably significant factor in today's environment. Finally, Centurion's own cost figures, when corrected to reflect Centurion's stated fuel consumption, confirm that FWIA's cost per ton will be less than Centurion's cost. Unquestionably, FWIA's proposal is superior to that of Centurion. In every conceivable category, FWIA will offer greater benefits to the public, including frequency, Miami-Mexico City/Guadalajara capacity, cost and fuel consumption. When coupled with Centurion's minimal experience in operating scheduled services, it is clear Centurion has failed to make a persuasive case for the award of U.S.-Mexico route authority. Counsel: Squire Sanders, Marshall Sinick, 202-626-6651, msinick@ssd.com
June 20, 2006 Reply of Centurion Air Cargo - Bookmarked Only an award to Centurion of the markets at issue will guarantee a strong competitive environment in these restricted markets. Centurion will provide vastly superior service in the Los Angles - Mexico City/Guadalajara markets, a fact virtually conceded by Florida West International. Centurion will also provide the highest quality service for shippers at its home base in Miami to and from Mexico City and Guadalajara. The critical issue for Department decision-makers is protecting the public interest by ensuring competition at Miami. An award to FWIA will enable FWIA and MasAir, with their substantial common ownership through Lan Airlines, to dominate the MIA-MEX market in the foreseeable future. Only an award to Centurion will ensure that two independent U.S. all-cargo carriers can operate in this market. Counsel: Greenberg Traurig, Joanne Young, 202-530-8520, youngj@gtlaw.com
June 20, 2006 Reply of Florida West International Airways, Inc. FWIA hereby replies to the June 13, 2006, Answer of Centurion Air Cargo, Inc. Centurion’s Answer confirms that its selection would not best serve the interests of the shipping public. To strengthen competition and generate maximum public benefits, as Order 2006-5-14 states, and maximize use of the valuable and hard-won operating rights flowing from the 2005 amendment to the U.S.-Mexico bilateral, the Department should select FWIA to serve Miami-Mexico City/Guadalajara and Los Angeles-Mexico City. Unlike FWIA, Centurion has proposed serving Mexico with an inflexible and highly fuel inefficient fleet of aged, oversized aircraft, which will unquestionably cost more to operate than FWIA’s fleet of modern B767-300 aircraft. Centurion also proposes to operate fewer frequencies and with less capacity in the Miami-Mexico City/Guadalajara markets than FWIA is proposing. These inescapable truths, which Centurion does not and cannot deny, mean that awarding FWIA Miami-Mexico City/Guadalajara authority as well as Los Angeles-Mexico City authority will result in greater competition and lower prices for shippers at Miami and Los Angeles. When this reality is coupled with the fact that two U.S. carrier opportunities are available under the U.S.-Mexico bilateral, the most logical way in which to resolve this case’s competing applications becomes readily apparent—the Department should award Miami-Mexico City/Guadalajara and Los Angeles-Mexico City to FWIA while also awarding Los Angeles-Mexico City/Guadalajara to Centurion. Counsel: Squire Sanders, Marshall Sinick, 202-626-6651, msinick@ssd.com
Issued and Served November 15, 2006 Order Granting Exemptions and to Show Cause - Bookmarked By this order, we grant exemption authority to Centurion Air Cargo, Inc. and Florida West International Airlines, Inc. to provide foreign scheduled air transportation of property and mail between certain U.S. points and Mexico City's Benito Juarez International Airport. Also, we tentatively award primary exemption authority to Centurion and backup exemption authority to FWIA to provide scheduled all-cargo services in the following city-pair markets: Los Angeles-Guadalajara; Miami-Mexico City; and Miami-Guadalajara. We dismiss the application of Kitty Hawk Aircargo, Inc., to the extent that the carrier requests authority to provide foreign scheduled air transportation of property and mail between Fort Wayne and Mexico City. We will afford interested parties 10 calendar days from the service date of this order to file objections to our tentative decisions here, with answers to objections due 7 calendar clays thereafter. By: Andrew Steinberg
Issued and Served December 19, 2006 By Order 2006-11-11, in the above-captioned docket, we tentatively awarded primary exemption authority to Centurion Air Cargo, Inc. and backup exemption authority to Florida West International Airlines, Inc. to provide scheduled all-cargo services in the following city-pair markets: Los Angeles-Guadalajara; Miami-Mexico City; and Miami-Guadalajara. On balance, we tentatively found that Centurion proposes greater capacity in the subject U.S-Mexico city-pair markets and presents overall the better proposal. Also, we tentatively found that, an award to Centurion of all three city-pair markets at issue in this proceeding would more fully use the valuable limited route rights, offer the greater overall benefits to the shipping public, and thereby offer more meaningful competition to the current U.S. and foreign incumbents. Objections to the Department's tentative decision were due no later than November 27, 2006, with answers due no later than December 4, 2006. No objections were filed to the Department's tentative decision in Order 2006-11-11. In light of the fact that no objections were filed and for the reasons set forth in Order 2006-11-11, we have decided to finalize our tentative decision, By: Andrew Steinberg
March 1, 2007 Re: Dormancy Notice - Boston/Huntsville-Mexico City Due to changes in the market since Centurion Air Cargo originally applied fur authority in the Boston-Mexico City and Huntsville-Mexico City markets, Centurion wishes to advise the Department that it no longer intends to operate these routes. This authority was granted by Order 06-11-11 (November 15. 2006) and the dormancy period began on December 19. 2006. Counsel: Kirstein & Young, Joanne Young, 202-742-6644, jyoung@yklaw.com
March 6, 2007 Motion of Centurion Air Cargo for a Temporary Dormancy Waiver Centurion Air Cargo. Inc. requests a waiver of the 90-day dormancy condition imposed on the Department's award of all-cargo route authority issued to Centurion by Order 2006-11-11 for Los Angeles-Mexico City and by Order 2006-12-18 for Los Angeles-Guadalajara and Miami-Mexico City/Guadalajara. Centurion requests that the dormancy condition he waived for 90 days through June 19, 2007. Centurion has diligently proceeded to seek scheduled operating authority from the Government of Mexico. Centurion met initially with the Direccion General de Aeronautica Civil during the first week of January 2007 and filed the information requested by the DGAC in mid-February. Centurion has also been working with the DGAC to obtain technical approval, which includes an inspection in Miami. The DGAC has advised that it will take approximately 90 days to complete the approval process for Centurion's scheduled service. Accordingly, Centurion requests an extension of the dormancy period to run from March 19, 2007 through June 19, 2007. Counsel: Kirstein & Young, Joanne Young, 202-742-6644, jyoung@yklaw.com
OST-2005-22151 - Exemption and Designation - US-Mexico All-Cargo March 8, 2007 Application for Waiver of Dormancy Condition Florida West International Airways. Inc. hereby requests a waiver of the ninety-day dormancy condition imposed by the Department of Transportation's Order 2006-11-11 on the exemption authority granted to FWIA to provide scheduled all-cargo foreign air transportation between: (1) Chicago and Mexico City; and (2) Los Angeles and Mexico City; and further imposed on the authority granted to FWIA to provide scheduled allcargo foreign air transportation between: (1) Chicago and Guadalajara; and (2) Houston and Guadalajara. FWIA respectfully requests that the dormancy condition be extended through June 18, 2007, by which date FWIA is hopeful that it will have obtained the required corollary scheduled authority from the Government of Mexico. FWIA is prepared to inaugurate scheduled service to Mexico as soon as it receives its Mexican authority. FWIA hopes that it will be able to begin scheduled all-cargo service between the United States and Mexico by June 18, 2007. FWIA therefore requests a waiver of the ninety-day start-up condition, which would otherwise require it to commence service to Mexico by March 19, 2007, to June 18, 2007. Counsel: Squire Sanders, Marshall Sinick, 202-626-6651, msinick@ssd.com
March 13, 2007 Re: Polling Results of Centurion Air Cargo This is to advise and confirm that we have completed our polling of the carriers on Centurion's service list in connection with its Motion for Waiver of Dormancy Condition for Los Angeles/Miami-Mexico City/Guadalajara all-cargo service. Counsel: Kirstein & Young, David Kirstein, 202-742-6645, dkirstein@yklaw.com
Filed March 6, 2007 | Issued March 13, 2007 Department Action on Application of Centurion Air Cargo We will require the carrier to institute service no later than June 18, 2007. We acted on this application without awaiting expiration of the answer period with the consent of all parties served with this application. By: Esta Rosenberg
OST-2005-22151 - Exemption and Designation - US-Mexico All-Cargo
March 15, 2007 This will confirm that FWIA has completed its poll of all persons served with its March 8, 2007, application for waiver of the Mexico dormancy condition. There are no objections to FWIA's application. FWIA therefore requests that the DOT approve its application without delay. Counsel: Squire Sanders, Marshall Sinick, 202-626-6651, msinick@ssd.com
Filed March 8, 2007 | Approved March 15, 2007 Department Action on Application We will require the carrier to institute service no later than June 18, 2007. We acted on this application without awaiting expiration of the answer period with the consent of all parties served with the application. By: Esta Rosenberg
May 30, 2007 Motion of Centurion Air Cargo for Extension of a Temporary Dormancy Waiver Centurion Air Cargo, Inc. files this motion to request an extension of the 90-day temporary dormancy waiver through September 15, 2007 for the start-up of its Los Angeles/Miami-Mexico City/Guadalajara all-cargo scheduled service awarded by the Department in this docket. The current dormancy period expires on June 18, 2007. Centurion is requesting this extension because of the unanticipated delay by the Mexican Dirección General de Aeronática Civil in processing Centurion’s application for operating authority. The DGAC has apparently misunderstood the scope of Centurion’s FAA operating authority which permits Centurion to operate international scheduled all-cargo service. Unfortunately, the action of the DGAC has delayed the issuance of Centurion’s Mexican authority. Centurion is working with the FAA to resolve the confusion of the DGAC with respect to its U.S. authority. Counsel: Kirstein & Young, Joanne Young, 202-331-3348, jyoung@yklaw.com
OST-2006-24671 - US-Mexico All-Cargo Service Proceeding June 11, 2007 Application of FWIA for Further Waiver of Dormancy Condition Florida West International Airways, Inc. hereby requests a further waiver of the ninety-day dormancy condition imposed by the Department of Transportation's Order 2006-11-11 on the exemption authority granted to FWIA to provide scheduled all-cargo foreign air transportation between: Los Angeles and Mexico City; and further imposed on the authority granted to FWIA to provide scheduled all-cargo foreign air transportation between: Houston and Guadalajara. See Notice of Action Taken dated December 12, 2005 in Docket OST-2005-22151. FWIA respectfully requests that the dormancy condition, which currently expires on June 18, 2007, be extended through September 17, 2007, by which date FWIA is hopeful that it will have obtained the required corollary scheduled authority from the Government of Mexico. FWIA is prepared to inaugurate scheduled service to Mexico as soon as it receives its Mexican authority. FWIA hopes that it will be able to begin scheduled all-cargo service between the United States and Mexico by September 17, 2007. FWIA therefore requests a further waiver of the ninety-day start-up condition. Other than approval of the amended operations specifications, FWIA believes that the only aspects of its permit application that must still be prepared for review by the DGAC are its itineraries and schedules, and its rates for scheduled routes. FWIA is working on these tasks in parallel with its work on the technical matters, and understands that a permit for scheduled all-cargo operations can be issued within 10-15 days of approval of its amended operations specifications. Counsel: Squire Sanders, Marshall Sinick, 202-626-6651, msinick@ssd.com
June 11, 2007 Re: FWIA Will Not Inaugurate Chicago-Mexico Routes By Notice of Action Taken in Docket OST-2005-22151 dated December 12, 2005, the Department granted Florida West International Airways, Inc. exemption authority to provide scheduled all-cargo foreign air transportation between , inter alia, Chicago and Guadalajara, and by Order 2006-11-11 in Docket OST-2006-24671, the Department granted FWIA exemption authority to provide scheduled all-cargo foreign air transportation between, inter alia, Chicago and Mexico City. At the time of its applications for these authorities, FWIA believed that the Chicago market would support these operations , but has since concluded that that is not the case. FWIA has therefore determined that, under the current circumstances , it cannot operate Chicago-Guadalajara or Chicago-Mexico City scheduled all-cargo flights, and will rely on its charter authorities to serve the Chicago market. FWIA is therefore, by this letter, notifying you, in accordance with the provisions of the Notice of Action Taken and Order referenced above, that it has decided not to inaugurate Chicago-Guadalajara or Chicago-Mexico City service. Counsel: Squire Sanders, Marshall Sinick, 202-626-6600, msinick@ssd.com
June 12, 2007 Answer of ABX Air and Motion for Leave to File Centurion claims that further extension of the waiver is necessary because of an unanticipated delay by the Mexican Direcóion General de Aeronática Civil in processing Centurion's application for operating authority. However, ABX questions whether Centurion has made a good faith effort to obtain operating authority from the Mexican DGAC and to do so on a timely basis. ABX notes that if the Department grants Centurion's motion for a further extension of the waiver through September 15, 2007 that Centurion will be given almost nine months to initiate its U.S.‑Mexico scheduled all- cargo service -- approximately six months longer than the Department's initial 90-day startup condition. ABX is of the opinion that if Centurion had made a diligent effort to obtain the Mexican operating authority that it could be received in a much shorter period of time. In its motion, Centurion summarily states that the "DGAC has apparently misunderstood the scope of its FAA operating authority" and that it "is working with the FAA to resolve the confusion of the DGAC .....". However, Centurion has not provided any specific details, such as when it first received notice that the Mexican DGAC was questioning the scope of Centurion's FAA operating authority or how long Centurion waited before seeking the assistance of the FAA, to show that it as made a wholehearted attempt to quickly resolve the "misunderstanding" of the DGAC. Because Centurion chose to leave out such details from its motion, the DOT should be skeptical that Centurion has not vigorously prosecuted its application to obtain the necessary DGAC operating authority within the timeframe set by the Department for startup of Centurion's U.S.-Mexico all-cargo service (which has already been extended once). Counsel: Silverberg Goldman, Robert Silverberg, 202-944-3300, rsilverberg@sgbdc.com
June 13, 2007 Re: Polling Results of Centurion Air Cargo This is to advise that we have completed our polling of the carriers on Centurion's service list in connection with its Motion for Waiver of Dormancy Condition for Los Angles/Miami‑Mexico City/Guadalajara all‑cargo service. There are no objections with the exception of that filed by ABX Air Inc. Counsel: Kirstein & Young, Joanne Young, 202-441-3348, jyoung@yklaw.com
June 14, 2007 Answer of ABX Air in Opposition to Further Waiver of Dormancy Condition Similar to the motion of Centurion Air Cargo for extension of a temporary dormancy waiver filed in this Docket on May 30, 2007, FWIA claims that further extension of the waiver is necessary in order to obtain from the Government of Mexico the necessary authority to conduct its U.S.-Mexico scheduled operations. While FWIA provides a more detailed account than Centurion of its efforts to amend its Mexican operations specifications and to obtain a scheduled all-cargo service permit from the Mexican Direccion General de Aeronatica Civil, ABX is of the view that if FWIA had truly put its "shoulder to the wheel" in its effort to obtain the required authority from the Mexican Government that it would not be necessary for FWIA to once again seek a waiver of the startup condition. ABX notes that if the Department grants FWIA's request for a further extension of the waiver through September 17, 2007 that FWIA will have been given almost nine months to initiate its U.S.-Mexico scheduled all-cargo service - approximately six months longer than the Department's initial 90-day startup condition. It appears that FWIA has taken a more than casual approach in working to secure the approvals needed to begin scheduled service to Mexico, perhaps working under the assumption that the Department would willingly grant them "two bites of the apple." ABX respectfully suggests that the Department should not condone FWIA's cavalier attitude toward the Department's standard startup condition, which the Department correctly saw fit to impose on FWIA's award of exemption authority to provide service in the highly valuable limited-entry Los Angeles-Mexico City market, by granting FWIA's request for a further waiver of the startup condition. ABX also notes that by letter dated June 11, 2007, counsel for FWIA advised the Department that it no longer intends to inaugurate operates in the Chicago-Guadalajara and Chicago-Mexico City markets, which it was granted exemption authority to serve by NOAT in OST-2005-22151, dated December 12, 2005, and Order 2006-11-11, respectively. This decision by FWIA could suggest that it is not fully committed to commencing service in the Los Angeles-Mexico City market. Counsel: Silverberg Goldman, Robert Silverberg, 202-944-3300, rsilverberg@sgbdc.com
June 18, 2007 The fact that ABX was not an applicant suggests its intention in filing is to prevent legitimate operations so that ABX and Aeromexpress can continue what may well be unlawful operations. As published on Aeromexpress website, ABX is currently operating daily service between LAX and MEX and four times a week between LAX and GDL. Although, shown on its website as ABX flights, Aeromexpress lists these same flights in the OAG Cargo Guide using its own "QO" code. According to the Department's records, there is no wet lease agreement between ABX and Aeromexpress. Accordingly, Centurion believes Aeromexpress is unlawfully holding out scheduled service through its listing of schedules in the OAG Cargo Guide. During the U.S.‑Mexico all‑cargo authority approval process, Centurion and Florida West competed vigorously for the Mexican all‑cargo authority. Delays on the regulatory process and the problems with the DGAC has increased their costs and required revisions to operating plans. ABX did not participate in this process and was not forced to go through the same U.S.‑Mexico authority approval proceedings. Given the highly suspect nature of the ABX/Aeromexpress operations, its opposition is in the least disingenuous. Counsel: Kirstein & Young, Joanne Young, 202-331-3348, jyoung@yklaw.com
Filed May 30, 2006 | Approved June 18, 2007 Department Action on Application of Centurion Air Cargo We note that ABX filed an answer opposing the waiver request, urging the Department to withdraw Centurion's designation and institute a proceeding to select another carrier to provide the subject services. Centurion filed a reply stating, among other things, that it has committed substantial resources to obtaining the requisite authority from the Mexican Government and the remaining issues should soon be resolved. Under the circumstances presented, we found that ABX did not provide any information to persuade us that Centurion failed to provide good cause for requesting and obtaining an extension of its startup date in this matter. By: Esta Rosenberg
OST-2006-24671 - US-Mexico All-Cargo Service Proceeding Filed June 11, 2007 | Approved June 18, 2007 Department Action on Application of FWIA We note that ABX filed an answer opposing the waiver request, urging the Department to withdraw Florida West's designation and institute a proceeding to select another carrier to provide the subject services. Under the circumstances presented, we found that ABX did not provide any informarion to persuade us that Florida West failed to provide good cause for requesting and obtaining an extension of its startup date in this matter. By: Esta Rosenberg
OST-2005-22151 - Exemption and Designation - US-Mexico All-Cargo September 13, 2007 Re: FWIA Will Not Seek a Waiver of the Dormancy Condition I am writing on behalf of Florida West International Airways to advise the Department of Transportation that FWIA will not seek a waiver of the dormancy condition applicable to the U.S.-Mexico routes awarded to FWlA in Orders 2006-11-11 and 2006-12-18. FWlA regrets that it will not be able to institute service between the United States and Mexico. FWIA had hoped that commercial conditions would improve sufficiently to permit it to begin service. Unfortunately, conditions have not improved tmd FWIA does not believe improvement in the near term Counsel: Squrie Sanders, Charles Donley, 202-626-6600, cdonley@ssd.com
September 14, 2007 Motion of Centurion Air Cargo For Extension of a Temporary Dormancy Waiver The DGAC had advised in March 2007 that it would need approximately 90 days to complete the approval process but it has not yet been granted the operating authority for Centurion's scheduled service. The DGAC has apparently misunderstood the scope of Centurion's FAA operating authority which permits Centurion to operate international scheduled all-cargo service. Unfortunately, the action of the DGAC has delayed the issuance of Centurion's Mexican authority. On August 22, 2007 the FAA sent a letter to Centurion confirming its authority to operate scheduled all-cargo service to Mexico. This letter was delivered immediately to the CAA, which has still not approved the scheduled service. Notwithstanding this continuing problem with the DGAC, Centurion is starting service in the Miami - Mexico City market but must treat the flight as non-scheduled in Mexico. Centurion still anticipates that the DGAC will approve scheduled service in light of the FAA letter. Given the continuing uncertainty with the DGAC, Centurion has not been able to take the steps necessary to begin service at LAX and to Guadalajara from MIA. Accordingly, Centurion requests an extension of the dormancy period to run from September 18, 2007 through December 17, 2007. The request is in the public interest as Centurion has proceeded diligently by working with the FAA and the DGAC to obtain the necessary authority from the Government of Mexico, and remains committed to bringing competitive all-cargo service to these markets. Counsel: Kirstein & Young, Joanne Young, 202-331-3348, jyoung@yklaw.com
September 17, 2007 ABX Air, Inc. hereby answers in opposition to the motion of Centurion Air Cargo, Inc., dated September 14, 2007, for a further extension of the 90-day dormancy waiver through December 17, 2007 in connection with the initiation by Centurion of scheduled all-cargo service in the Los Angeles-Mexico City, Los Angeles- Guadalajara and Miami-Guadalajara markets. This is the third such request by Centurion to delay the start of its service in these highly valuable limited-entry US.-Mexico markets and therefore ABX urges the Department to deny Centurion's request. (ABX does not object to a temporary extension of Centurion's dormancy waiver for the time required for the DOT to consider the merits of this ABX answer in opposition to Centurion's motion.) ABX hereby incorporates by reference all of the arguments it made in its June 12, 2007 answer in opposition to Centurion's last request, dated May 30, 2007, for an extension of the deadline imposed by the Department on the initiation of Centurion's scheduled all-cargo service in these U.S.-Mexico markets. In addition, ABX notes that in Centurion's current motion it practically recites verbatim its prior May 30th motion and therefore Centurion has not provided the Department with any persuasive evidence that it has made a diligent effort to meet the DOT'S most recent September 17th deadline. The only new piece of information Centurion included in its current motion was to state that on August 22, 2007 the FAA sent a letter to the Mexican DGAC confirming Centurion's authority to operate scheduled all-cargo service to Mexico. Therefore. ABX continues to question whether Centurion is making a good faith effort to obtain scheduled operating authority from the Mexican DGAC and to do so within the timeframe set by the Department for startup of its U.S.-Mexico all-cargo service. ABX also notes that Centurion has not requested an extension of the waiver of the startup condition imposed on Centurion's exemption authority to provide scheduled all-cargo service in the Miami-Mexico City market. Instead, Centurion states that it is starting service in the Miami-Mexico City market but is treating the flight in this market as non-scheduled. The conduct of non-scheduled service dose not meet the startup condition imposed by the Department on Centurion's scheduled all-cargo exemption authority granted by Order 2006-12-18. Counsel: Silverberg Goldman, Robert Silverberg, 202-944-3300, rsilverberg@sgbdc.com
September 18, 2007 Centurion, despite its best efforts, has been stymied by the refusal of the Mexican government to recognize the authority issued by the FAA. To resolve this issue Centurion may be forced to file an International Air Transportation Competition Act complaint with the Department. In the meantime, it is strongly against the public interest to withdraw the authority given the time and effort Centurion and the FAA have put into resolving this issue with the DGAC. Centurion's decision to begin Miami-Mexico service notwithstanding this continuing problem with the DGAC demonstrates its desire to operate this service. The sole objective of ABX appears to be to protect the "scheduled" service it now operates on behalf of Aeromexpress in the LAX/MEX/GDL markets. Starting a reallocation proceeding would simply further delay new service, would not solve the problem with the DGAC and would unfairly punish Centurion for the Mexican DGAC's willful disregard of its bilateral obligations. Centurion Air Cargo, Inc. respectfully requests that the Department reject, the ABX's opposition and grant Centurion a waiver of the dormancy requirement imposed by Order 2006-12-18 up to and including December 17, 2007. Counsel: Kirstein & Young, Joanne Young, 202-331-3348, jyoung@yklaw.com
September 20, 2007 Re: Polling Results of Centurion Air Cargo This is to advise that we have completed our polling of the carriers on Centurion's service list in connection with its Motion for Waiver of Dormancy Condition for Los Angeles-Mexico City/Guadalajara and Miami-Guadalajara all-cargo service. There are no objections with the exception of that filed by ABX Air, Inc. and no response from Polar. Counsel: Kirstein & Young, Joanne Young, 202-331-3348, jyoung@yklaw.com
Filed May 30, 2006 | Approved September 26, 2007 Department Action on Application of Centurion Air Cargo ABX filed an answer opposing the waiver request, stating that this is Centurion's third request to delay its startup, and that Centurion has failed to provide the Department with persuasive evidence that it has made a diligent effort to commence the services. ABX urges the Department to withdraw Centurion's authority and institute a carrier selection proceeding to select another U.S. carrier to serve the various markets.' In its reply, Centurion states that it has in fact been working diligently, including with the active assistance of the FAA, to secure the approvals its needs from the Mexican aviation authorities. We have carefully reviewed the pleadings in this matter, and we find that grant of Centurion's request is justified by the record. By: Linda Lundell
December 14, 2007 Motion of Centurion Air Cargo for Extension of a Temporary Dormancy Waiver Centurion Air Cargo files this motion to request an extension of its temporary dormancy waiver through June 15, 2008 for the start-up of its Los Angeles-Mexico City/Guadalajara and Miami-Guadalajara all-cargo scheduled service awarded by the Department in this docket. The current dormancy period expires on December 17, 2007. Centurion is requesting this extension because the Mexican Dirección General de Aeronática Civil did not grant Centurion scheduled operating authority until October 8, 2007 despite Centurion’s diligent efforts, including help from the FAA to obtain the Mexican authority. Counsel: Kirstein & Young, Joanne Young, 202-331-3348, jyoung@yklaw.com
Centurion Air Cargo, Inc. December 28, 2007 Re: Temporary Dormancy Waiver Polling Results This is to advise that we have completed our polling of the carriers on Centurion’s Counsel: Kirstein & Young, David Kirstein
Filed December 14, 2007 | Approved December 28, 2007 Approval of Motion for Extension of a Temporary Dormancy Waiver We will require the carrier to institute service no later that June 15, 2008. By: DOT
June 13, 2008 Application of Centurion Air Cargo for Extension of a Temporary Dormancy Waiver Files this application to request an extension of its temporary dormancy waiver through June 15, 2009 for the start-up of its Los Angeles-Mexico City/Guadalajara and Miami-Guadalajara all-cargo scheduled service awarded by the Department in this docket. The current dormancy period expires on June 15, 2008. Centurion is requesting this extension because of the unexpected continuing increase in jet fuel costs and the slumping economy making it impossible to initiate service at this time. Despite Centurion's best efforts and fulfillment of all the necessary requirements of the Mexican authorities, the DGAC did not grant Centurion's Mexican scheduled authority until October 8, 2007. The Department recognized the difficulty that Centurion experienced in obtaining the Mexican authority and granted Centurion's previous requests for a dormancy waiver. By the time Centurion obtained its operating authority from the Mexican DGAC, the economic downturn spurred by the sub-prime mortgage problems and related credit crunch in the U.S. had already begun to have an impact on demand, the continuing sluggish economy coupled with escalating fuel costs have made it impossible for Centurion to initiate scheduled service at this time. This situation is affecting other cargo services. For example, Northwest Airlines (OST-2006-25275) recently announced that it will discontinue cargo service to Guangzhou, China as of July 1, 2008. Accordingly, Centurion respectfully requests an extension of the dormancy period to run from June 15, 2008 through June 15, 2009. Granting the requested waiver is in the public interest. Despite the unexpected delays commencing its new service, Centurion remains committed to bringing competitive all-cargo service to these markets. Counsel: Kirstein & Young, Joanne Young, 202-331-3348
June 17, 2008 While FedEx Express does not object to Centurion Air Cargo's application, FedEx Express believes that the unused authorities should be available for use by another U.S. carrier during the waiver period. If a U.S. carrier applies for such authority and provides the required information detailing the proposed service, the Department should grant the application to utilize the authority during the period. The mutes subject to Centurion's application are examples of authorities that should be utilized when possible. These routes serve city pair markets between the U.S. and Mexico, and offer the potential for strong competition among carriers. Some if not all of the authorities at issue have been dormant since awarded to Centurion. Centurion now seeks to extend the dormancy period for an additional year. Having valuable authorities going unutilized is the ultimate example of the downside of awarding dormancy waivers. In order to avoid those negative aspects, the Department should make the routes available for use by other U.S. carriers during the waiver period. Doing so would provide an opportunity to recognize the full economic benefit of the authorities and would best serve the interest of the shipping public. Counsel: FedEx, James Davis, 901-434-8488
June 17, 2008 Centurion seeks dormancy waiver relief for U.S.-Mexico routes based on the same facts and circumstances that prompted Northwest other U.S. carriers to seek a blanket dormancy waiver for international authorities. See, Docket OST-2008-0181. Centurion states that “the continued sluggish economy coupled with escalating fuel costs have made it impossible for Centurion to initiate schedule service at this time. ” However, Centurion maintains that a waiver is in the public interest because, despite these current difficulties, “Centurion remains committed to bringing competitive all-cargo service to these markets.” Northwest agrees that all carriers should have the flexibility to respond rationally to the current industry crisis without jeopardizing routes that are of long term importance to their networks, their customers, and the communities they serve. However, for the reasons stated in the joint carrier filing, Northwest urges the Department to immediately approve the blanket waiver request, rather than proceeding in an ad hoc fashion. According to Centurion’s filing, its current dormancy waiver expired on June 15, 2008. In these circumstances, it is not clear that a waiver alone is sufficient. Northwest would have no objection to Centurion seeking new exemptions to reinstate its expired authorities, provided that the earlier-filed joint blanket dormancy waiver request is approved first. Counsel: Northwest, Sascha Van der Bellen, 202-842-4184
June 17, 2008 Joint Answer of American Airlines and United Air Lines Putting aside whether the Department can retroactively grant a dormancy waiver to reinstate authority that has already lapsed, American and United urge the Department to focus on issuing a temporary blanket dormancy waiver to all carriers. Such industry-wide relief was requested on June 3, 2008 by American, United, and four other airlines in light of the fuel cost crisis, and remains pending (OST-2008-0181). The Department should not expend its limited resources processing a succession of individual dormancy applications that are driven by the same fuel cost calamity afflicting all carriers. The Department should promptly approve the joint request for industry-wide relief in OST-2008-0181, and should defer action on ad hoc requests which will become moot once a blanket waiver is in place. Counsel: Jeffrey Manley, 301-229-8571 for United / Carl Nelson, 202-496-5647 for American
June 19, 2008 Centurion’s application is based on the unique circumstances related to the specifics of its attempt to enter these markets. As previously explained to the Department, from the time Centurion received this authority in December 2006, and despite its best efforts with the support of the FAA, it took 10 months, until last October to obtain a scheduled all-cargo license from the Mexican government. At that point it was too late to start service for the peak 2007 Holiday season. At the same time, the U.S. credit crises and declining value of the dollar was depressing this market. These problems were recently exacerbated by the increase in the cost of jet fuel. Centurion did not file an answer to the joint application, in which American, United and Northwest all participated, and which was supported by FedEx, for a two year blanket waiver in Docket OST-2008-0181. Centurion’s application in Docket OST-2006-24671 is based on the specific economic circumstances related to the Mexican markets it is authorized to serve. Centurion’s waiver request is for one year. Centurion does not believe these carriers should be arguing in response to this application about the approval of their own application for a two year blanket waiver, which, as the Department knows, is contested. In this particular case, had they simply responded that they did not object, the Department could have acted expeditiously on the application. This is not a burdensome administrative process. Reviewing dormancy waiver requests on an ad hoc basis enables the Department to make decisions based on the specific facts including the interest, if any, of other carriers to serve the specific markets. Centurion expects to begin service within a year and no other carriers have indicated any interest in these routes. Subsequent to Centurion receiving this authority, ABX obtained LAX-Mexico City/Guadalajara authority. Centurion believes there is currently an additional unused designation available between MIA and Guadalajara. Counsel: Kirstein & Young, Joanne Young, 202-331-3348
Filed June 13, 2008 | Issued July 3, 2008 Centurion requests an additional waiver of its June 15, 2008, start-up deadline for scheduled all-cargo services in the Los Angeles-Mexico City, Los Angeles-Guadalajara, and Miami-Guadalajara markets. In support of its request, Centurion states that, because of the unexpected continuing increase in jet fuel costs and the slumping economy, it is impossible to initiate service at this time, and requests an additional waiver of its start-up deadline through June 15, 2009. See Docket OST-2008-0181, in which a number of U.S. air carriers have filed a joint application for a blanket two-year dormancy waiver due to current fuel costs and other economic factors. By: Paul Gretch |
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