OST-96-2764 / OST-97-2646 / Federal Express and Florida West (for approval of transfer of route authority) and Florida West (for renewal of certificate and exemption authority) / Motion for Leave to File and Surreply of Fine Air Services, Inc. to the Joint Reply / September 5, 1997

In the matter of the Joint Application of

for approval of a transfer of route authority (US-Colombia)

In the matter of the Application of

for renewal of certificate and exemption authority

First, the Joint Reply fails entirely to address one of the two arguments raised by Fine Air in its Answer -- namely, that the Joint Application is unripe until the Department has acted upon FWIA's certificate renewal application.

As pointed out in Fine Air's Answer, the U.S.-Colombia authority which FWIA seeks to transfer to FedEx has, by its explicit terms, expired. It remains exercisable by FWIA only by virtue of the automatic extension provisions of the Administrative Procedure Act as implemented by Part 377 of the Department's Regulations. It is patently am the intent of the APA's automatic extension provisions or Part 377 to enable carriers to extend provisional authority for the purpose of selling that authority before the Department can act on the renewal application. By failing to address this point, FedEx and FWIA have effectively conceded that, until the Department acts upon FWIA's certificate renewal application, the Joint Application is unripe and should not even be considered.

Second, in response to Fine Air's second argument -- that FWIA should not be permitted to sell its certificate authority (and with it, FWIA's designation) to conduct

1/ As noted herein, the Joint Reply seeks to explain why FWIA has to date not utilized its U.S.-Colombia authority. The instant Surreply contains new factual evidence directly responsive to this explanation. In the cause of having before it a complete record on all relevant issues, the Department should entertain the instant Surreply if it accepts the Joint Applicants' unauthorized Joint Reply.

scheduled services in the designation-restricted U.S.-Colombia market when FWIA has never used that authority - the Joint Reply explains that FWIA has sought to use its authority but has not been permitted to do so by the Colombian Government. It states:

[T]he Colombia certificate authority was transferred to FWIA in August 1996 .... Ever since that date, FWIA has been continuously and diligently engaged in the process of attempting to obtain authority from the Government of Colombia to resume its interrupted scheduled cargo operations serving Colombia. FWIA has been prevented from resuming service to Colombia to date due to the policy of the Colombian Government to require that a carrier which has suspended operations for any reason must undergo a formal hearing and lengthy administrative process before it may resume operations.

However, Fine Air has been informed that FWIA in fact did not file an application with the Colombian Government to resume service to Colombia until March 12, 1997. 2/ In short, even after it was recertified by the Department in August 1996, FWIA waited over six months before even filing an application with the Colombian Government to reinstate its scheduled authority. Certainly this belies Joint Applicants' contention that "[e]ver since that date [i.e., August 1996], FWIA has been continuously and diligently engaged in the process of attempting to obtain authority from the Government of Colombia." 3/

2/ In support of this assertion, Fine Air attaches hereto a letter from its wet lease partner, Colombian carrier Aero Transcolombiana de Carga (HATCH), which, at Fine Aids request, researched the date on which FWIA filed its application with the Colombian Government.

3/ The ATC letter also indicates that FWIA was granted a public hearing on May 28 and that FWIA's authorization was issued on June 3. Fine Air has not been able to confirm whether this authorization enables FWIA to commence flights immediately or whether some additional clearances are required. If, however, it turns out that FWIA could already be conducting scheduled flights to Colombia (and is not), FWIA's attempt to blame the Colombian Government for its failure to use its authority would be even further discredited.

Fine Air does not dispute that the Department has permitted carriers to purchase authority to operate in restricted markets from other carriers, nor that such authority has been purchased from carriers who once utilized that authority but subsequently ceased doing so. But FedEx and FWIA have offered no precedent to support what FWIA seeks to do here: apply for authority (and the accompanying designation) to operate in a restricted market, fail ever to utilize the authority, 4/ fail even to seek corresponding authority from the foreign government for over six months, and then seek to sell the authority. Clearly, this is incompatible with Departmental policy and the public interest. Indeed, what FWIA seeks to do here is no different than a carrier applying for economic authority in a competitive carrier selection proceeding, representing to the Department that it intends to use such authority, failing to take even the most basic steps to follow through on that representation, and then seeking to sell the authority without once using it.

It is patently clear, moreover, that the Department possesses the power to stop FWIA: it can simply deny FWIA's application to renew its U.S.-Colombia authority. FWIA's failure to date to make appropriate use of its authority in this limited entry market is more than ample reason for such action. This would effectively leave the

4/ It must be recalled that Florida West - although referred to as "FWIA's predecessor corporation" by Joint Applicants -- was a person entirely separate from FWIA, a carrier newly created in 1995. Simply because FWIA purchased some of Florida West's assets in bankruptcy does not permit FWIA to lay claim to Florida West's use of the U.S.-Colombia authority years ago.

authority (and accompanying designation) to be reallocated to one of the several carriers which seek to conduct scheduled all-cargo service to Colombia.

WHEREFORE, for the reasons set forth herein and in its previously filed Answer, Fine Air respectfully the Department to reject the Joint Application.

Respectfully submitted,

Jeffrey Shane
Karan Bhatia
WILMER CUTLER
Counsel for FINE AIR SERVICES

September 5, 1997