OST-97-3261 / Federal Express / US-Thailand Start-Up Delay / Answer of Polar Air Cargo / January 2, 1998

Application of

for grant of an exemption pursuant to 49 U.S.C. Section 40109 (Thailand Cargo Service)

1. By its application FedEx requests an exemption from the 90-day dormancy condition with respect to one of its six U.S.-Thailand all-cargo frequencies. In the alternative, FedEx requests that the Department either (1) modify the dormancy provision with respect to all six of its U.S-Thailand frequencies and instead rely upon a notice requirement or (2) eliminate the dormancy condition with respect to a single frequency so as to make regular operation of that frequency discretionary.

2. Polar Air has no objection to FedEx's request for an exemption to delay using one of its six frequencies until June 30, 1998. As FedEx notes, similar relief was recently granted to other carriers, including Polar Air.

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3. With respect to FedEx's requests for alternative relief, Polar Air has no objection to the second alternative so long as the same relief is granted to other carriers, including Polar Air. It is reasonable to allow each of the carriers holding U.S.-Thailand frequencies to operate a single frequency on a discretionary basis. This will avoid the need to seek frequent exemptions from the 90-day frequent exemptions from the 90-day dormancy provisions for what may be intermittent utilization of a frequency in present economic conditions.

Polar Air has been allocated two weekly U.S.-Thailand all-cargo frequencies. It uses one of these frequencies on a regular basis to operate a weekly all-cargo service to Bangkok. Although Polar Air has scheduled the inauguration of a second weekly frequency on several recent occasions, it has been unable to meet those schedules due to the increasingly adverse economic conditions in Thailand.

Polar Air, therefore, supports FedEx's second alternative request that a single U.S.-Thailand weekly frequency be allocated for use on an intermittent basis. This will afford Polar Air the same flexibility sought by FedEx to schedule services using its second weekly frequency in response to irregular demand in the Thailand air freight market. As Thailand's economy recovers, Polar Air will be able increasingly to use its second weekly frequency in response to the increasing demand for additional all-cargo services.

4. Polar Air opposes, however, FedEx's request that the 90-day dormancy condition be eliminated entirely and replaced by a notice provision with respect to all of FedEx's U.S.-Thailand frequencies. The use of the U.S.-Thailand frequencies should not be wholly

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discretionary, as FedEx proposes. /1 Some carriers that have been allocated frequencies have failed to use them at all and others leave several weekly frequencies underutilized on a regular basis. It would be preferable that such frequencies that remain unused or underutilized for a long term be returned for reallocation at such time as another carrier has an immediate plan to use them.

Northwest Airlines, Inc., ("Northwest") has already joined FedEx in requesting the elimination of the dormancy condition as proposed by FedEx in its first alternative. /2 Other carriers whose U.S.-Thailand frequencies are not being utilized at all or are regularly underutilized may also file in support of FedEx's first alternative. Such requests along with that of FedEx should be denied.

Polar Air believes that the better course is to allow each carrier holding U.S.-Thailand allcargo frequencies to operate no more than one frequency on a discretionary basis. If, contrary to Polar Air's position, the Department is prepared to grant the first alternative form of relief as requested by FedEx and supported by Northwest, then the same relief should be granted to all holders of U.S.-Thailand all-cargo frequency allocations, including Polar Air. It would be unfair

1/ The example of such a notice provision cited by FedEx predates the Department's decision to impose 90-day dormancy conditions on frequency allocations.

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to allow some carriers to hold allocations affording such flexibility while denying the same flexibility to others.

Respectfully submitted,

JEFFREY A. MANLEY

GINSBURG, FELDMAN & BRESS, CHARTERED

1250 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 637-9057

Attorney for POLAR AIR CARGO, INC.