OST-97-2626 / UPS / June 17, 1997

NOTICE: Any person who wishes to support or oppose this Application must file an answer with the Department's Documentary Services Division by July 15, 1997, and must serve that answer upon UPS and all persons served with this Application.

Application of

for an amendment to its Certificate of Public Convenience and Necessity for Route 569 (U.S.-Mexico)

United Parcel Service Co. ("UPS") submits this Application pursuant to Section 41102 of the Federal Aviation Act, requesting an amendment to its Certificate of Public Convenience and Necessity for Route 569 authorizing it to engage in scheduled foreign air transportation of cargo (property and mail) between the United States and Mexico so as to add the following new segments:

UPS further requests such authority as may be necessary to integrate its service over these new segments with service over existing segments on Route 569. In support of this Application, UPS submits the following:

1. UPS is a Delaware corporation whose mailing address is 1400 North Hurstborne Parkway, Louisville, KY 40223. UPS holds various certificates of public convenience and necessity issued by the Department of Transportation (the "DOT" or the "Department") authorizing UPS to engage in both passenger and all-cargo air transportation, (See, e.g., Orders 86-9-39, September 16, 1986; 87-12-61, December 24, 1987, 88-1-20, January 7, 1988; 88-9-44, September 22, 1988; 89-5-38, May 16, 1989; 89-9-36, September 15, 1989; 90-8-57, August 27, 1990; Order 91-1-44, January 1991; 96-8-4, August 2, 1996 and 96-8-37, August 30, 1996). UPS also holds authority to provide scheduled all-cargo service to Mexico on Route 569 (Order 96-11-24, November 7, 1996).

2. UPS is a citizen of the United States as that term is defined in the Federal Aviation Act. All officers, directors, shareholders of UPS, or persons who have the power to influence the management of the applicant or persons holding any voting interest in the applicant are U.S. citizens. An affidavit of citizenship is attached hereto as Exhibit 1.

3. UPS requests that the DOT grant this Application for an amendment to UPS's Certificate of Public Convenience and Necessity for Route 569 so as to authorize UPS to engage in scheduled foreign air transportation of cargo (property and mail) between:

UPS also requests authority to integrate service, to the extent necessary, over these new segments with service over its existing U.S.-Mexico route segments.

4. Specifically, because of operational and traffic-flow considerations, UPS wishes to change the U.S. points from which it serves Guadalajara and Mexico City. UPS currently operates five round-trips per week in both the San Antonio - Guadalajara and the Houston - Mexico City markets. UPS wishes to replace those services with the following two service patterns:

San Antonio to Mexico City to Houston (B-727-200) and

Houston to Guadalajara to San Antonio (B-727-100)

Thus, no new points will be served, but two new city-pairs, Houston- Guadalajara and San Antonio - Mexico City, will be served. Exhibit 2 sets forth the operating statistics for the proposed operation with both the B-727-100 and B-727-200 aircraft. UPS currently owns these aircraft.

5. UPS is fit, willing and able to provide the proposed service and to conform with the provisions of the Federal Aviation Act and the rules, regulations and requirements of the Department of Transportation thereunder.

6. UPS currently owns or leases 479 aircraft. They include 199 large jet aircraft, 51 B-727-lOO's, 8 B-727-200's, 23 DC-8-71's, 26 DC-8-73's, 61 B-757's, 16 B767's, 12 B-747 aircraft, and 2 747-200's. Fourteen additional B-757 aircraft and 14 additional B-767 aircraft are on firm order. As of January 1, 1996, the UPS family of companies had a total of 338,000 employees worldwide and over 157,000 surface vehicles.

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billion and a net income in excess of $1.14 billion. As of December 31, 1996, UPS had assets of $15 billion, and shareholders' equity of $6 billion.

7. UPS is one of the U.S. carriers designated to provide all-cargo service between the U.S. and Mexico under the September 23, 1988 All-Cargo Air Services Memorandum ("MOU") between the U.S. and Mexico, as amended. The MOU generally provides for the designation of only one U.S. carrier per city-pair market. DHL is currently serving the Houston - Guadalajara market, one of the markets for which authority is being requested by UPS in this Application. The U.S. government has been successful in the past in obtaining double designations. For example, a double designation was obtained in the Houston - Mexico City market. UPS respectfully requests that the U.S. Government pursue a double designation in the Houston - Guadalajara market so that UPS may operate there.

8. The grant of this Application will serve the public interest. The requested authority will provide UPS with additional flexibility in serving shippers in both the U.S. and Mexico and in connecting them to UPS's extensive domestic U.S. and worldwide systems.

WHEREFORE, UPS respectfully requests the Department of Transportation to amend UPS's Certificate of Public Convenience and Necessity for Route 569 to add the following segments:

and to grant UPS authority to integrate the service as required on the above-described segments with service over the other segments on Route 569, and for such additional or other authority as the Department of Transportation may deem necessary or appropriate.

Respectfully submitted,

David L. Vaughan

Kelley Drye & Warren

1200 19th Street, N.W., Suite 500

Washington, D.C. 200036

(202) 955-9864

Counsel for UNITED PARCEL SERVICE CO.

June 17, 1997