OST-97-3261 / Federal Express / Thailand Cargo Service Start-Up Delay / Reply of Federal Express / January 8, 1998

Application of :

for grant of an exemption pursuant to 49 U.S.C. § 40109

(Thailand Cargo Service)

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U.S.-Thailand All-Cargo

reversion provision and substitute a notification procedure in its place, or (2) terminate the applicability of the 90-day dormancy condition to its 6th Thailand cargo frequency, so as to make the utilization of that single weekly frequency discretionary and thus enable Federal Express to make limited adjustments to its Thailand service in response to market conditions from time to time without recourse to cumbersome regulatory procedures.

Federal Express hereby replies to the points raised in the foregoing three Answers.

None of the three carriers which filed Answers to the application of Federal Express opposes grant of an exemption from the dormancy condition with respect to Federal Express' 6th weekly frequency through June 30, 1998.

Similarly, and significantly, all three answering carriers support modification of the dormancy condition to make one of Federal Express' six frequencies discretionary, subject only to the proviso that the same relief be granted to all other carriers which hold Thailand all-cargo frequency allocations. Federal Express, of course, has no objection to uniform treatment in the case of all other U.S.-Thailand cargo carriers. /1

Two of the answering carriers (Air Micronesia and Northwest) support the proposal of Federal Express to eliminate the 90-day

1/ Federal Express also has no objection to grant of Air Micronesia's request that its U.S.-Thailand certificate authority be made discretionary, rather than mandatory. Grant of that request appears to be wholly consistent with established DOT practice in the case of other countries in which, like Thailand, carrier designations are not limited but scheduled-service frequency limitations exist.

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automatic-forfeiture condition entirely with regard to all Thailand cargo frequency allocations, and to replace it with a mandatory notification procedure which would require all carriers to provide written notice of all unused frequencies, but would permit such carriers to retain their unused frequencies until another qualified carrier (or carriers) applied for, and was granted, reallocation of the unused frequencies to itself. /2

Polar Air opposes that proposal, on the ground that such a change would leave the "use of the U.S.-Thailand frequencies . . . wholly discretionary, as FedEx proposed [footnote omitted]" (Polar Answer, pp. 2-3).

In all due respect, Polar Air apparently has failed to grasp the essence of the Federal Express proposal, under which unused Thailand frequencies would become potentially available for reallocation immediately upon the mandatory publication of their dormant status. /3 The new feature offered by the Federal Express notice proposal is that the frequencies would not automatically terminate and revert to the Department on the 91st day of non-use, but would remain with the carrier to which they had been allocated until: (1) another qualified carrier (or

2/ The notice mechanism which Air Micronesia describes as a "modified" procedure in its Answer (Air Mic Answer, pp. 2-3, pare. no. 2) is, in fact, exactly the procedure which Federal Express also envisions -- Em, the carrier holding dormant frequencies, and notifying the DOT and all other carriers that they are dormant, would not automatically lose the frequencies at that point, but could hold (and use) them until another carrier requested, and was granted, the reallocation of the frequencies at issue to itself.

3/ In the interest of clarity, Federal Express assumes, and proposes, that the mandatory notice of dormancy would have to be given by the carrier not later than the 90th day of non-use of the frequency or frequencies at issue.

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carriers) applied for the reallocation of the frequencies to itself, and (2) the Department issued an order terminating the existing allocation and reallocating the frequencies to another carrier. The Federal Express proposal assumes that the original carrier could also apply to retain (and use) its dormant frequencies, but would have no assurance that it would be able to retain frequencies which it had allowed to remain dormant for 90 days or longer.

The Federal Express proposal poses no risk of allowing any carrier to "sit on" and retain unused frequencies, if another carrier is ready, willing and able to utilize them, but does allow unused frequencies to remain with the original carrier until another carrier claims, and obtains, their reallocation. That procedure assures the full and effective utilization of valuable operating frequencies just as effectively as the current 90-day dormancy and automatic-forfeiture condition, but it eliminates the necessity for filing and processing repeated exemption requests when temporary market conditions do not support full utilization of some or all currently-allocated frequencies. That is precisely the situation which exists at the moment in Thailand, as evidenced by the recent exemption applications which have been filed by every carrier holding Thailand cargo frequencies.

In summary, as Federal Express argued in its application in this Docket, the salutary purposes of the 90-day dormancy condition can be accomplished equally effectively, and with reduced administrative burdens on carriers and the Department, by simply eliminating the 90-day dormancy

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automatic-termination provision and replacing it with a mandatory 90-day dormancy notification provision. Such a notification procedure would enable the Department (and interested carriers) to determine whenever a frequency allocation was not being utilized, and to consider applications to use it by other interested carriers. If no interested carriers filed applications, there would be no need to take the dormant allocation away from the original carrier until another interested carrier appeared in the future.

WHEREFORE, Federal Express hereby requests the Department to modify the 90-day dormancy condition applicable to its U.S.-Thailand cargo frequency allocation as requested in its Application, or, alternatively, to grant Federal Express an exemption from the applicability of that condition to its sixth weekly Thailand cargo frequency until June 30, 1998.

Respectfully submitted,

Nathaniel P. Breed, Jr.

SHAW, PITTMAN, POTTS & TROWBRIDGE