OST-96-1496 / OST 97-2825 / US-Thailand All-Cargo / Air Micronesia August 18, 1997

 

NOTICE: Answers supporting or opposing this application are due on or before September 2, 1997. Air Micronesia is polling the carriers served with this application and will notify the Departments of the result

U.S.-THAILAND ALL-CARGO FREQUENCY ALLOCATION CASE 

Application of

AIR MICRONESIA, INC.

for an exemption pursuant to 49 U.S.C.§ 40109 (delay in start-up) and frequency renewal

 

APPLICATION OF

AIR MICRONESIA, INC.

FOR AN EXEMPTION

AND FREQUENCY RENEWAL

 

Pursuant to 49 U.S.C. § 40109 and Rule 400 of the Department's Rules of Practice, Air Micronesia 1/ applies for an exemption from the September 1, 1997 start-up condition in its certificate for Route 704, as amended by Order 97-5-6, and for renewal of the five U.S.-Thailand all-cargo frequencies allocated to Air

1/ Common names of carriers are used.

 

Application of AMI

Page 2

 

Micronesia, so Air Micronesia can institute U.S.-Thailand all-cargo service on November 30, 1997. 2/

 

In support of its application, Air Micronesia states as follows:

 

1. Air Micronesia was awarded a certificate for Route 704 to institute all-cargo service at Bangkok and allocated five Thailand all-cargo frequencies by Order 96-9-16. The certificate authority and the frequency allocation were conditioned originally on the commencement of service by April 1, 1997. By Order 97-5-6, the Department extended Air Micronesia's certificate start-up date to September 1, 1997 and the start-up date for its frequencies to November 30, 1997. 3/ Because of delays in completing operational arrangements and securing additional all-cargo aircraft as well as existing market conditions, Air Micronesia seeks to extend its current start-up date to November 30, 1997. 4/ By this application Air Micronesia seeks renewal of the five weekly frequencies allocated to it by Order 96-9-16 and an exemption from the conditions imposed by Order 97-5-6 to the extent necessary to extend its start-up date to November 30, 1997.

2/ Air Micronesia requests a waiver of the 60-day advance filing requirements under Part 377 to continue its authority in effect pending action by the Department on this application.

 

3/ Similar deferrals were given to Federal Express, Northwest, Polar and UPS.

 

4/ UPS will be phasing its services in on a timetable compatible with Air Micronesia's. Although UPS instituted a token weekly frequency on April 1, 1997, it apparently plans to add five additional flights between September 1 and November 30, 1997 (See Application of United Parcel Service, Docket OST 96-1496, July 17, 1997, at 2).

 

Application of AMI

Page 3

 

2. By granting the requested exemption from the September 1, 1997 start-up requirement in Air Micronesia's frequency and certificate awards, the Department will allow Air Micronesia to initiate its Thailand all-cargo service efficiently at a time when the market can absorb additional capacity. Federal Express has said it will be instituting five additional MD-11 flights at Bangkok on September 1, Northwest will be operating four of its five weekly B-747 frequencies at Bangkok as of September 1, and Polar will be adding an additional weekly B-747F at Bangkok before then. 5/ Under these circumstances, large amounts of additional U.S.-flag capacity will be introduced at Bangkok by September, and the further introduction of Air Micronesia's capacity at the end of November will be appropriate. Air Micronesia already provides all-cargo service in the Philippines, Korea, Taiwan, Indonesia, Malaysia and Hong Kong markets, and deliveries of additional aircraft to expand service further have been delayed. As a result, adding Thailand service by September 1 would require inefficient schedules or reductions in service at other points.

 

3. In light of the Department's policy "to permit the incumbent carrier to retain . . . rights provided that it has a reasonable plan to use them" (Order 96-9-26 at 5; see also Order 96-5-37 at 3), Air Micronesia's plan to expand its

5/ See Federal Express's renewal application in Docket OST-97-2685, Polar's renewal application in Docket OST-97-2752 and Northwest's renewal application in Docket OST-96-1496. Northwest has not yet scheduled utilization of its fifth weekly frequency, although it has sought renewal for all five frequencies.

  

Application of AMI

Page 4

 

Asian cargo system by instituting five weekly Bangkok flights on November 30 justifies grant of the authority necessary for a temporary deferral of its service. The Department has often granted exemptions from start-up conditions on routes where commencement of services at the original time planned would result in carriers facing similar obstacles. (See, eg. Approval of Amerijet's request to delay start-up dated May 8, 1997 and Order 93-12-13) Moreover, the reasons justifying the award of the five frequencies to Air Micronesia in September 1996 remain valid and the reasons justifying the certificate award remain valid as well.

 

4. Approval of Air Micronesia's application for exemption is in the public interest. Grant of the requested exemption will delay start-up of Air Micronesia's Thailand all-cargo service by less than three months and enable Air Micronesia to provide the most effective air cargo service beginning at an appropriate time to match the public demand for Thailand air cargo service with additional capacity. Thailand is an important Asian air cargo market, and Air Micronesia must be able to launch its Thailand all-cargo service successfully to compete effectively with established U.S. and foreign carriers in the Thailand market.

 

Application of AMI

Page 5

 

For the foregoing reasons, Air Micronesia asks that it be exempted from the September 1, 1997 start-up deadline so it can institute its five weekly Thailand all-cargo flights on November 30, 1997, and that its current allocation of five weekly Thailand all-cargo frequencies be renewed for a period of two years. Air Micronesia is polling the carriers served with this application and will notify the Department of the results.

 

Respectfully submitted,

CROWELL & MORING LLP

R. Bruce Keiner, Jr.

Steven A. Mirmina

Counsel for Air Micronesia, Inc.

August 18, 1997