Undocketed / US-Argentina All-Cargo / Challenge Air Cargo / August 25, 1997

Dated: August 25, 1997

Challenge Air Cargo, Inc.

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Challenge vigorously disputes the suggestion that it has failed to satisfy the 90-day dormancy provision imposed by Notice of Action Taken, Docket OST-96-1042 (Feb. 25, 1997) (the "February 25 Notice of Action Taken"). l/ Such a suggestion is clearly contrary to the facts and the plain language of the Department's own February 25 Notice of Action Taken. Therefore, Challenge requests that the Department promptly issue a notice which (i) clarifies its August 14, 1997 Notice and (ii) removes from the scope of this proceeding any question as to the reallocation of the frequencies allocated to Challenge. In support of this request, Challenge respectfully states as follows:

As a factual matter, the underlying premise upon which the Department's notice was based - namely, that Challenge did not operate the two narrow-body frequencies (i.e., one wide-body equivalent) allocated to it during the 90-day dormancy period specified in the Department's February 25 Notice of Action Taken - is not correct. The facts quite simply are as follows:

1/ Challenge takes no position with regard to the status of the frequency that has been granted to Arrow Air.

Challenge Air Cargo, Inc.

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-- Challenge flight no. 191, a Boeing 767-F bearing FAA registration no. N-315UP 2/ departed Miami at 18:56 on May 17, 1997, bound for Buenos Aires via Bogota and Sao Paulo. The flight arrived in Buenos Aires at 15:55 on May 18, 1997. The return flight - Challenge flight no. 192 - departed for Miami at 17:06 on the same day, and arrived in Miami at 07:59 on May 19, 1997.

-- Four weeks later, Challenge flight no. 191, a Boeing 767-F bearing FAA registration no. N-304UP /3 departed Miami at 20:20 on June 21, 1997, bound for Buenos Aires via Bogota and Sao Paulo. The flight arrived in Buenos Aires at 15:11 on June 22, 1997. The return flight -Challenge flight no. 192 - departed for Miami at 16:43 on the same day, and arrived in Miami at 08:41 on June 23, 1997.

-- Four weeks later, Challenge flight no. 191, a Boeing 767-F bearing FAA registration no. N-302UP departed Miami at 20:04 on July 19, 1997, bound for Buenos Aires via Bogota and Sao Paulo. The flight arrived in Buenos Aires at 17:11 on July 20, 1997. The return flight -Challenge flight no. 192 - departed for Miami at 18:20 on the same day, and arrived in Miami at 09:11 on July 21, 1997. 4/ These flights were operated as scheduled flights, using Challenge flight numbers, using Challenge's scheduled authority and pursuant to schedules that had been duly filed with the Brazilian

2/ All of the flights in question were operated using widebody (l.e., B-767) equipment and were operated for Challenge by United Parcel Service pursuant to a wet lease arrangement.

3/ Although the General Declaration for this flight identifies the FAA registration no. for the aircraft as N-309UP, and the Argentine invoice for landing fees identifies the FAA registration no. as N-404UP, Challenge's own records identify the FAA registration no. as N-304UP.

4/ A copy of the General Declaration for the Sao Paulo-Buenos Aires segment of each flight is set forth as Exhibit A hereto, and a copy of the Argentine invoice for landing fees for each flight is set forth as Exhibit B hereto.

Challenge Air Cargo, Inc.

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and Argentine civil aviation authorities. 5/ Hence, there can be no question that Challenge duly exercised its Argentine authority within 90 days following issuance of the Department's February 25 Notice of Action Taken - and has duly exercised that authority during every subsequent 90 day period thereafter - and thus has satisfied the requirements of the Department's February 25 Notice of Action Taken. 6/

In reviewing the August 14 Notice, it is clear that the Department based its tentative determination as to dormancy on the fact that Challenge failed to list the Miami-Buenos Aires flights on certain reports that were filed with the Department, and the fact that, during the period in question, the flights did not appear in the Air Cargo Guide. While it is perhaps understandable that the Department tentatively might draw certain inferences on the basis of such information, such inferences

5/ On April 8, 1997, Challenge submitted revised schedules to the Brazilian civil aviation authority which identified Challenge flight no. 191/192 (which is the flight number for one of Challenge's regular flights to Brazil) as operating beyond Sao Paulo to Buenos Aires. Similarly, on May 15, 1997, Challenge advised the Argentine civil aviation authority that it would be operating a monthly wide-body flight between Miami and Buenos Aires.

6/ In that regard, Challenge wishes to advise the Department that the flight which was scheduled to operate on August 16-18, 1997 has had to be rescheduled due to the recent strike at United Parcel Service. The flight now will operate on September 6-8.

Challenge Air Cargo, Inc.

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inevitably must give way to the irrefutable evidence, /7 that Challenge did operate the flights enumerated above. To the extent that it may have failed to list the flights on its reports to DOT, such failure was an inadvertent oversight which Challenge regrets and will promptly correct; however, that does not alter the fact that Challenge did operate the flights in question. Similarly, the fact that Challenge may not have listed the Argentine flights in the Air Cargo Guide does not alter the fact that Challenge did operate the flights.

In sum, the facts conclusively demonstrate that Challenge has satisfied in every respect the plain language of the February 25 Notice of Action Taken. The February 25 Notice of Action Taken did not require that Challenge publish its schedule in the Air Cargo Guide, nor did it require that Challenge exercise its authority at any specified minimum frequency (other than the requirement that it operate its allocation at least once during any given 90-day period). To interpret the 90-day dormancy condition otherwise would ignore the plain meaning of the

7/ As noted above, Challenge has attached to this Request a copy of the General Declaration for each flight and a copy of the Argentine receipt for landing fees for each flight. This documentation clearly establishes that Challenge operated the flights in question and should resolve any question the Department might have had as to whether Challenge operated any flights during the 90-day period specified in its February 25 Notice of Action Taken. Nevertheless, if so requested by the Department, Challenge is prepared to submit additional documentary evidence for the purpose of establishing that the May 17-19, June 21-23 and July 19-21 flights in fact were operated.

Challenge Air Cargo, Inc.

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Department's dormancy condition and impose upon Challenge a requirement that is more stringent than that which currently applies to any other carrier now operating under similarly worded restrictions. While the Department obviously is free to change the language of its 90-day dormancy condition, any attempt to do so retroactively would raise serious due process issues and would constitute plain error.

WHEREFORE, for the foregoing reasons, Challenge Air Cargo, Inc. respectfully requests that the Department promptly issue a notice which (i) clarifies its August 14, 1997 Notice and (ii) removes from the scope of this proceeding any question as to the reallocation of the frequencies allocated to Challenge.

Respectfully submitted,

ZUCKERT, SCOUTT & RASENBERGER, L.L.P.

By

William H. Callaway, Jr.

Lonnie A. Pera J

888 Seventeenth Street, N.W.

Suite 600

Washington, D.C. 20006

(202) 298-8660

Counsel for

CHALLENGE AIR CARGO, INC.

August 25, 1997