OST-97-2627 / 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 2, 1997, and must serve that answer upon UPS and all persons served with this Application.

Application of

for an exemption Pursuant to 49 U.S.C. 40109 (U.S.-Mexico)

United Parcel Service Co. ("UPS") hereby applies, pursuant to 49 U.S.C. section 40109 and Part 302.400 of the Department of Transportation's (the "DOT" or "the Department") Procedural Regulations for an exemption from 49 U.S.C. 41102 to authorize UPS to provide scheduled all-cargo air transportation over the following two route segments:

UPS further requests any authority necessary to enable it to integrate service over the foregoing two segments with its existing Mexico authority.

UPS requests that the foregoing exemption authority be effective for a period of two years or until 90 days after final action on UPS's simultaneously filed application for an amendment to its Route 569 authority, whichever occurs first. The grant of a two year exemption is consistent with the Department's policy regarding the grant of exemption authority to serve limited-entry international markets (14 C.F.R. 399.18).

Operational and traffic flow requirements require a change in UPS's Mexico service pattern. This change will not result in UPS's serving any new cities; however, the service pattern change will result in service between new city pairs. Accordingly, UPS is required to file for an amended certificate adding these new city pairs and is requesting this exemption so that it may change its service pattern promptly.

UPS is a designated U.S. all-cargo carrier under the September 23, 1988 All-Cargo Air Services Memorandum of Understanding between the U.S. and Mexico, as amended. Although that Memorandum speaks in terms of one U.S. carrier per city-pair, and DHL is currently serving the Houston - Guadalajara market, the U.S. Government has been successful in the past in obtaining double designations. For example, the U.S. Government obtained double designations in the Houston - Mexico City market. UPS respectfully requests the U.S. Government to seek to obtain double designations in the Houston - Guadalajara market so that UPS may operate the service pattern described above.

As demonstrated in its Application filed simultaneously herewith, UPS is fit, willing and able to perform the air transportation applied for and to conform to the provisions of the Federal Aviation Act and the Rules and Regulations of the Department. Additionally, the service for which authority is requested herein is consistent with the public convenience and necessity.

UPS requests that this application be granted on an expedited basis so that UPS may complete the Mexican licensing process in time to commence, service on or about July 14, 1997.

WHEREFORE, UPS respectfully requests the Department of Transportation to grant the above-described exemption and to grant such other and further relief as may be 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