OST-2007-27060 - Zoom Airlines

Zoom seeks a Foreign Air Carrier Permit and an exemption pursuant to 49 U.S.C. § 41302 and 40109 authorizing the Company to engage in scheduled foreign air transportation of persons, property and mail between London Gatwick Airport and New York's John F. Kennedy International Airport. Zoom intends to offer daily LGW-JFK scheduled service with Boeing 767-300 ER aircraft, commencing on June 7, 2007. Additionally, Zoom seeks authority to operate charter foreign air transportation of persons, property and mail between the United Kingdom and the United States and other charters in accordance with Part 212 of the Department's rules.

Zoom proposes to start service on June 7, 2007, as described below. Zoom requests that its application be decided on the basis of written submissions pursuant to DOT Rule 207, the U.K. Government's determinations on Zoom's fitness and citizenship (as required under the US-UK Fitness and Citizenship Agreement) and the Streamlined Licensing Procedures Notice. Specifically, Zoom requests that the Department promptly issue a single order under the show-cause procedures described in the Streamlined Licensing Procedures Notice (a) granting the requested exemption authority for a period of two years, or until the effective date of Zoom's final foreign air carrier permit, whichever occurs earlier and (b) tentatively awarding the corresponding foreign air carrier permit. As soon as possible thereafter, Zoom requests that the Department issue a final order granting the Company its foreign air carrier permit for a period of indefinite duration.

There are serious questions about whether Zoom is a national of the United Kingdom, a prerequisite for obtaining authority under the U.S.-U.K. bilateral air transport agreement. Although Zoom Airlines claims to be a U.K. citizen, it has not provided even a minimal amount of supporting information to support its Application, including any explanation of its relationship with Zoom Airlines, Inc., a Canadian air carrier, which the Department has previously determined to be "substantially owned and effectively controlled by citizens of Canada."

In light of the highly restrictive nature of the U.S.-U.K. agreement, particularly with regard to service to London Gatwick and London Heathrow, airlines that are owned or controlled by entities from third countries should not be permitted to circumvent their own homeland bilateral agreements and gain access to the entry restricted U.S.-U.K. markets. Furthermore, in light of the dearth of information provided by the Applicant concerning its citizenship and fitness, there is no basis for allowing it to enjoy the benefits of the streamlined U.S.-U.K. licensing procedures. Accordingly, the Zoom Application now before the Department should be denied or, at least, deferred until sufficient information adequately clarifying the issues raised herein is provided to the Department.

The only airline to oppose Zoom Airlines Limited's application for an exemption and foreign air carrier permit is also the only airline (Delta Airlines Inc.) that faces head-to-head competition with Zoom in the important LGW-JFK market. Zoom's application complies with the Department's guidelines for applications from United Kingdom carriers, the U.K. Government expects to designate Zoom for LGW-JFK service shortly, and under the May 25, 1989 Exchange of Notes cited by Delta, the Department relies on U.K. Government determinations on citizenship of U.K. carriers. Delta's answer should be rejected as a blatant attempt to protect Delta's monopoly position by delaying Zoom's competitive, value-focused LGW-JFK service and the benefits it will bring to travelers on both sides of the Atlantic.

There is good cause to accept Delta's submission in order to ensure that the Department has an accurate record on which to reach a decision. Zoom failed to respond to the key substantive issues raised in Delta's Answer and instead tries to divert attention from those issues by attacking Delta's motives, claiming that Delta's answer is "a blatant attempt to protect Delta's monopoly position." This claim, apart from being fallacious, is indeed ironic given that the United Kingdom has for decades hidden behind the shield of one of the most restrictive air transport agreements in the world (Bermuda II) which was and still is designed to protect UK airlines from the forces of competition. As the Department well knows, Delta has been one of the staunchest proponents of open skies agreements, and has taken a leadership role in supporting the proposed first stage open skies agreement between the U.S. and the EU, an agreement which the UK has consistently opposed.

Significantly, Zoom also fails to address Delta's concerns about the complete integration of Zoom UK and Zoom Canada within Zoom Canada's website www.flyzoom.com Zoom tries to dismiss the serious problems raised by the overlap between the two companies by claiming it is a merely "marketing alliance." Clearly, this Zoom family relationship is much more than a marketing alliance, and it must be evaluated in that context. The flyzoom website treats the two companies as essentially one and the same.

Counsel: Delta and Hogan & Hartson, Robert Cohn, 202-637-4999/5659, recohn@hhlaw.com

Zoom Airlines Limited applies for an immediate pendente lite exemption or disclaimer of jurisdiction permitting Zoom to begin holding out, marketing, listing schedules, advertising, sales, accepting reservations, accepting payment and issuing tickets in its homeland, to United Kingdom passengers, for its new value-fare, full service London (Gatwick)-New York (JFK) flights projected to begin in June 2007. Allowing Zoom to begin immediate marketing and sales in its homeland while the Department considers Zoom's pending application is permitted under United Kingdom rules, in the public interest and consistent with the Department's grant of similar pendente lite authority to Delta Air Lines six months ago for JFK-Gatwick presales prior to approving the transfer of United's New York-London certificate authority to Delta.

The Department is currently considering Zoom's application in this docket for a foreign air carrier permit and/or exemption authority to provide new, competitive scheduled service in the important London (Gatwick)-New York (JFK) market. Zoom is eager to offer passengers its new value-fare, full service alternative in the key London-New York market, and Zoom needs to begin promoting, advertising and selling tickets for its new service now to ensure a successful start-up of this new service during the Summer 2007 season.

Delta Air Lines, Inc. hereby answers in opposition to the extraordinary request of Zoom Airlines Ltd. for a pendente lite exemption to permit Zoom to "immediately" begin "holding out, marketing, listing schedules, advertising, sales, accepting reservations, accepting payment and issuing tickets in its homeland, to United Kingdom passengers." Delta takes no position on whether the Department has jurisdiction over Zoom's right to sell or market its proposed London-New York services to consumers in the United Kingdom at a time when it is entirely unclear whether Zoom will ever have the right to actually operate this service. However, Zoom's application is not ripe for consideration and, contrary to Zoom's claim, is clearly not at all similar to the pendente lite authority granted to Delta and Northwest in the context of those carriers' route transfer applications. If the Department concludes that it has jurisdiction over this matter, Zoom's application should be denied.

On March 6, 2007, Zoom Airlines Limited applied for an immediate pendente lite exemption or disclaimer of jurisdiction permitting Zoom to begin holding out, marketing, listing schedules, advertising, sales, accepting reservations and payments, and issuing tickets in its homeland to United Kingdom passengers. Delta Air Lines, Inc. filed an answer taking no position as to jurisdiction and opposing the request for pendente e authority on March 7, 2007, and the answer period has now closed with no other answers submitted. Since Delta's March 7 answer primarily repeats arguments aimed at Zoom's application for underlying route authority, which Zoom has previously addressed in this docket, Zoom does not intend to submit a substantive reply or further pleadings with respect to its request for pendente lite authority or disclaimer of jurisdiction.

To assure Zoom's ability to start its proposed new London (Gatwick)- New York (JFK) service on a fair and competitive basis, Zoom urges the Department to grant the requested pendente lite exemption or to disclaim jurisdiction immediately. Additionally, Zoom asks the Department to act expeditiously on Zoom's application for route authority as soon as Zoom's pending application for such authority is ripe.

We have determined, based on the record in this case, that it is consistent with the public interest to grant Zoom's request to engage in its proposed marketing and sales activities, in the United Kingdom only, pending final Department action on its January 22 request in this Docket for authority to operate in the London (Gatwick)-New York market, and subject to the conditions set forth below. Grant of this limited authority will assist the carrier in beginning full operations in the London (Gatwick)-New York market upon obtaining the requisite regulatory approvals from the United Kingdom and from the Department.

In taking this action, we note that the flight operations proposed by Zoom in its January 22 application are encompassed by the U.S-U.K. Agreement. We note, as did Delta, that Zoom has not yet been licensed or designated by the United Kingdom (and, in the absence of a designation, does not qualify for consideration under the 1989 MOU concerning its fitness and citizenship). However, we also note, based on information provided by Zoom in its January 22 application, that the U.K. Department for Transport has stated that Zoom "is currently in the process of gaining its AOC [Air Operator's Certificate] and operating license" for this service from that agency, and that the U.K. Civil Aviation Authority has stated that it has provisionally concluded that Zoom can demonstrate majority ownership and effective control by nationals of the United Kingdom." We see no reason to question these statements from these U.K. Government agencies; nor do we see anything in those statements that would cause us to withhold the pendente lite authority Zoom requests.

With respect to Delta's concern over whether the pendente lite authority at issue here is comparable to the authority we granted it arid Northwest in past instances, we find that Zoom's request stands on its own merits, and, in the circumstances presented and for the reasons discussed above, that the public interest supports granting Zoom the limited pendente lite exemption it has requested in this proceeding.

Zoom Airlines Limited amends its application in this docket to add a request for authority to serve Bermuda as an intermediate point on its proposed scheduled service between London Gatwick Airport and John F. Kennedy International Airport. Zoom currently plans to begin operating seven weekly roundtrip flights between LGW and JFK on June 21, 2007; five of those flights will be nonstop flights (LGW-JFK), and two of the roundtrip flights will operate via BDA.

On April 2, 2007, the Department granted Zoom's request for pendente exemption authority to hold out, market, list schedules, advertise, sell, accept reservations, accept payment and issue tickets, in its homeland to United Kingdom passengers, for Zoom's new value-fare, full service nonstop London (Gatwick/LGW)-New York (John F. Kennedy International Airport/JFK) flights until final action on Zoom's pending request for authority to operate such services. (Notice of Action Taken in Docket OST-2007-27060, dated April 2, 2007) Zoom is today amending its route authority application in this docket to add a request for authority to serve Bermuda as an intermediate point on some LGW-JFK flights. By this application, Zoom asks the Department to grant Zoom pendente lite authority to market and sell its LGW-BDA-JFK services to non-U.S. citizens in the United Kingdom and Bermuda. Zoom agrees to abide by the same conditions imposed on its current pendente lite exemption authority.

Zoom has polled all airlines served with its April 24, 2007 (1) amendment to Zoom's U.S.-United Kingdom application and (2) application for a pendente lite exemption, and none of the airlines served objects to these two applications. Zoom asks that the requested pendente lite exemption authority be awarded immediately so Zoom may begin advance sales and marketing activities for its new LGW-BDAJFK scheduled services to non-U.S. citizens in the U.K. and Bermuda as soon as possible.

Zoom now requests that we grant it additional pendente lite exemption authority to conduct the kinds of presale activities described above for scheduled operations it proposes to conduct over the routing London (Gatwick)-Bermuda-New York, with such presales limited to passengers in the United Kingdom and Bermuda. Zoom states that it has amended its application in this Docket to include a request to serve Bermuda as an intermediate point on some of its proposed London (Gatwick)-New York services; that both the U.K. and Bermudian authorities have advised Zoom that it may market and sell these proposed services; and that the reasons that supported its previous request for presale authority warrant grant of the additional presale authority it is requesting here.

We have determined, based on the record in this case, and for the reasons set forth in our April 2, 2007, Notice of Action Taken in this Docket, that it is consistent with the public interest to grant Zoom's request to engage in its proposed marketing and sales activities, in the United Kingdom and Bermuda only, pending final Department action on its request in this Docket for authority to operate in the markets involved, and subject to the conditions set forth below. Under these circumstances, we conclude that grant of the limited pendente lite exemption sought by Zoom is warranted.

Zoom Airlines Limited, a United Kingdom airline, submits this Supplement to complete its amended Application for an exemption and a foreign air carrier permit in this docket. Zoom plans to commence seven weekly roundtrip flights between London Gatwick Airport and John F. Kennedy International Airport on June 21, 2007; five of these flights will be nonstop flights, and two of the roundtrip flights will operate via Bermuda. Since Zoom's first transatlantic flight is scheduled to operate next week, Zoom urges the Department to grant the application immediately under the U.S.-U.K. Fitness and Citizenship Agreement.

The Department granted Zoom pendente lite authority to begin presales in the U.K. for the nonstop flights on April 2 and expanded the authority to include sales related to flights via Bermuda on May 9, 2007.

Filed March 6, 2007 | Amended April 24, 2007 | Supplemented June 11, 2007 | Issued June 19, 2007

Exemption under 49 U.S.C. 40109, and foreign air carrier permit under 49 U.S.C. 41301, to permit Zoom to engage in (1) scheduled foreign air transportation of persons, property and mail between London (Gatwick), United Kingdom, and New York, New York, on a nonstop basis or via the intermediate point Bermuda, and (2) charter foreign air transportation of persons, property and mail between point(s) in the United Kingdom and point(s) in the United States, and other charters under 14 CFR Part 212 of the Department's rules. Zoom requested that the exemption authority it seeks be granted for a term of two years or until a final order is issued granting its application for foreign air carrier permit covering the proposed services.

With respect to the issues raised by Delta, we note that its concerns as to the eligibility of Zoom for our consideration under the U.S.-U.K. Air Services Agreement and the 1989 Exchange of Notes have now been resolved by virtue of Zoom's designation, and issuance of a homeland license, by the U.K. Government. With respect to Delta's concerns over the ownership of Zoom, we note that the Chairman and principal owner of Zoom, Mr. Hugh Boyle, is a citizen of the United Kingdom, and that the Government of the United Kingdom has licensed and designated Zoom as a U.K. carrier under the U.S.-U.K. Air Services Agreement. While Mr. Boyce also holds Canadian citizenship and the majority interest in Zoom Canada: we are not persuaded, in the circumstances presented, that these factors should cause us to withhold the authority sought by Zoom. We have generally considered dual nationals to be nationals of both countries involved.

OST-2007-28677 - US-EU Open Skies Authority
OST-2007-27060 - Exemption and Foreign Air Carrier Permit - UK-US Scheduled Passenger

On March 6, 2007, Zoom filed an application for an exemption and a foreign air carrier permit in Docket OST-2007-27060, seeking authority to provide foreign scheduled air transportation between London (Gatwick) and New York's John F. Kennedy International Airport. The application was subsequently amended on April 24, 2007 to include a request to serve Bermuda as an intermediate point, and supplemented on June 11, 2007. The Department granted Zoom an exemption for the requested authority on June 19, 2007.

Zoom's request for a foreign air carrier permit was deferred and remains pending. (See Notice of Action Taken in Docket OST-2007-27060, issued June 9, 2007) By this application, Zoom seeks to amend its application in light of the U.S.-E.U. Air Transport Agreement and requests corresponding open skies exemption authority.

Grant of the requested authority will permit Zoom to offer its new value-focused scheduled service between Gatwick, where Zoom's operations are centered, and other U.S. points. This will increase competition and benefit travelers in the United States and the European Union by providing consumers with additional choices in air transportation, expand the transatlantic service options currently available and increase competition, thereby benefiting the traveling and shipping public in the U.S. and the E.U.

We will grant Zoom exemption authority to the extent necessary to permit it (1) immediately to accept payments, issue tickets, and enter into charter contracts, and (2) effective March 30, 2008 (the date for provisional application of the U.S.-EU Agreement), to commence flight operations. We will tentatively grant Zoom a foreign air carrier permit for these services, to be effective March 30, 2008.

As an additional matter, Zoom has requested that we grant it, in addition to authority currently contained in the U.S.-EU Agreement, authority to conduct transportation authorized by any additional route rights made available to European Community carriers in the hture. We are granting Zoom’s request for this authority by exemption (and tentatively granting it by foreign air carrier permit). We are, however, requiring Zoom, before it commences any new service under this authority, to provide us with evidence that it holds a homeland license for that new service, unless it has already provided such evidence.

By Order 2007-8-31, issued August 31, 2007, we directed all interested persons to show cause why we should not make final our tentative findings and conclusions stated therein and award a foreign air carrier permit in the form attached to the Order and subject to the conditions attached thereto. We gave interested persons 21 days to file objections to the Order. We said that if no objections were filed, all further procedural steps would be deemed waived, and the Department would enter an order (subject to Presidential review under 49 U.S.C. §41307) which would make final the findings and conclusions of the Order.