OST-97-2856 / Federal Express / August 25, 1997

NOTICE: Any person wishing to support or oppose this Application must file an answer with the DOT's Documentary Services Division by September 9, 1997. A copy of such answer must be served upon Federal Express and its counsel and all persons named on the attached Service List.

Application of :

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

(U.S.-Vietnam All-Cargo Service)

August 25, 1997

Federal Express Corporation (Federal Express) hereby applies, pursuant to 49 U.S.C. § 40109 and Part 302.400 of the Procedural Regulations of the Department of Transportation (the Department), for grant of an exemption from 49 U.S.C. § 41102 to authorize Federal Express to engage in scheduled all-cargo air transportation between points in United States and Ho Chi Minh City, Vietnam, in conjunction with the existing scheduled all-cargo service provided by Federal Express between various points in the United States and various points in the Asia/Pacific region.

Federal Express hereby requests that the foregoing exemption authority be granted for a period of two years, or until 90 days after final action on the pending application by Federal Express for renewal of its existing U.S.-Vietnam

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certificate authority contained in Federal Express' certificate for Route 205-F, Segment 3, whichever occurs first.

In accordance with Section 302.402, Federal Express submits the following information in support of this application:

1. Federal Express currently holds dormant certificate authority to provide scheduled all-cargo service between the U.S. and Vietnam pursuant to Segment 3 of its certificate of public convenience and necessity for Route 205-F. That certificate authority was initially granted to The Flying Tiger Line, Inc. (Flying Tigers) for a five-year term, through February 13, 1990, by Order 85-2-39, served March 5, 1985. That certificate authority was transferred to Federal Express by Order 89-5-10, served May 5, 1989. On August 16, 1989, Federal Express filed a timely application for renewal of its U.S.-Vietnam certificate authority, and invoked the automatic-extension provisions of Section 558(c) of the Administrative Procedure Act, 5 U.S.C. § 558(c), as implemented by Part 377 of the Department's Special Regulations, 14 C.F.R. § 377, to continue in effect its temporary certificate authority to serve Vietnam pending final action by the Department on its renewal application. To date, the Department has not yet taken action on the foregoing renewal application, and that certificate authority continues in force pursuant to 5 U.S.C. § 558(c).

2. All U.S. commercial air carrier operations between the U.S. and

Vietnam were suspended indefinitely by Executive Order No. 11216, April 24, 1965, in light of the ongoing military combat activities between the U.S. and

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North Vietnam. That prohibition was lifted by Executive Order No. 13002, February 3, 1994, implemented by DOT and Commerce Notice No. 2105-AC04, effective February 3, 1994, lifting the ban on travel and trade with Vietnam.

3. Federal Express is currently preparing to perform all-cargo charter flights between the United States and Vietnam on ad hoc basis. In the near future, Federal Express plans to inaugurate scheduled service between Oakland and Anchorage and Ho Chi Minh City, operated via its Subic Bay hub, at a frequency of five roundtrip flights a week. That service will be operated on a change-of-gauge basis at Subic Bay linking the Oakland/Anchorage-Subic Bay line-haul flights operated by Federal Express utilizing the 170,000-pound payload MD-11 freighter aircraft (limited to 150,000 pounds payload in long-range operations) and the 140,000-pound payload DC-10-30 freighter aircraft, connecting to Subic Bay-Ho Chi Minh City flights operated by Federal Express utilizing the 76,300-pound payload Airbus A-310 aircraft and flights operated on a wet-lease basis for Federal Express by Vietnam Airlines, utilizing comparable aircraft. /1

At the present time, there is no bilateral air transport service agreement in effect between the U.S. and Vietnam. Federal Express requests grant of its exemption application, and plans to seek appropriate authority from

l/ In the event that Federal Express and Vietnam Airlines enter into a mutual code-sharing and blocked-space agreement, as anticipated, both carriers will file applications for the issuance of appropriate Statements of Authorization pursuant to Part 207 and Part 212 of the DOT's Economic Regulations.

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the Government of Vietnam to commence scheduled cargo service, pursuant to principles of comity and reciprocity.

5. Federal Express has been found to be fit, willing and able to perform foreign air transportation similar to the proposed service at issue and to conform to the provisions of the Act and the rules, regulations and requirements of the Department thereunder. The air transportation service which Federal Express proposes to render is consistent with the public convenience and necessity.

6. Federal Express requests that the exemption authority at issue be granted for a two-year period, or until 90 days after final Department action on the pending application of Federal Express for renewal of its U.S.-Vietnam certificate for Route 205-F (Segment 3). Grant of a two-year exemption is consistent with the policy and practice of the Department with respect to the granting of exemption authority to serve limited-entry international markets (see, Statements of Policy, 14 CFR § 399.18).

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WHEREFORE, Federal Express urges the Department to issue an Order or Notice of Action Taken granting an exemption to Federal Express to provide scheduled all-cargo foreign air transportation between the United States and Ho Chi Minh City, Vietnam, pending final action on the pending application of Federal Express for renewal of its U.S.-Vietnam certificate authority.

Respectfully submitted,

Nathaniel Breed of Shaw Pittman

A. Doyle Cloud of Federal Express