Undocketed / US-Argentina All-Cargo Services / Motion for Leave to File and Consolidated Reply of Challenge Air Cargo / September 11, 1997

Challenge Air Cargo, Inc. Page 2

What is remarkable about the Southern and Fine Air filings is not so much what they say, but what they do not say. Neither carrier has contested any of the facts set forth in Challenge's Petition for Clarification. Therefore, it is beyond dispute that

--within the 90-day period specified in Order 97-3-6, Challenge commenced operating the equivalent of two weekly narrow body flights (i.e., one weekly wide body flight) to Argentina during the third week of every month and has continued operating at that level of service ever since 1/;

--the flights operated as scheduled flights, using Challenge flight numbers and under scheduled authority granted to Challenge by the Department and the Argentine and Brazilian authorities; and

--the flights operated pursuant to schedules which had previously been filed with the Argentine and Brazilian authorities.

Hence, neither carrier denies that Challenge used its Argentine frequencies within the 90-day period specified in Order 97-3-6 and is continuing to do so today.

Having in effect conceded the foregoing facts, Southern and Fine Air are reduced to offering strained interpretations of Order 97-3-6 to support their claim that Challenge's Argentine frequencies are "dormant". Their arguments, however, amount to

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little more than a bald invitation to the Department to redraw the language of the dormancy condition contained in Order 97-3-6, something which the Department cannot do retroactively without violating long-standing and well-established principles of administrative law. Each of the carriers' arguments is addressed briefly below.

Southern. While acknowledging the Argentine frequencies that Challenge has operated since May of this year, Southern nevertheless attempts to bolster its claim of dormancy by propounding a test of dormancy which goes far beyond anything contemplated by Order 97-3-6. To that end, it attempts to read a dormancy requirement into the 1995 Order which initially awarded the Argentine frequencies to Challenge (and other carriers), thereby overlooking the fact that the dormancy condition was only added by Order 97-3-6. Southern goes even further, at various times suggesting that Challenge's Argentine frequencies somehow are dormant because Challenge (i) utilized different equipment for its Argentine service from that which was included in its original service proposal, (ii) operated the service via intermediate points and/or (iii) operated the service with aircraft that were wet-leased from other carriers, even though there is nothing in Order 97-3-6 which suggests that dormancy is to be determined on the basis of anything other than an

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assessment as to whether the Argentine frequencies have been "used" during any given 90-day period.

Fine Air. One obvious defect in Fine Air's argument is that it advances a line of reasoning which is completely different from that upon which the Department's August 14, 1997 Notice relies. Moreover, having imposed upon carriers a specific dormancy requirement - such as the one set forth in Order 97-3-6 - and having thereby articulated the precise standard of dormancy to which carriers must adhere, any attempt to hold carriers retroactively to a different standard, statutory or otherwise, would raise serious due process issues. 2/

In the final analysis, this case is not about what Southern and/or Fine Air might want the dormancy condition to say (or how the Department could draft such a condition if it were to begin doing so from scratch). It is about the plain language of Order 97-3-6. That Order states simply that the Argentine frequencies must be "used" within any given 90-day period (i.e., they "will expire automatically" and "revert back to the Department if they are not used for a period of 90 days"). It does not specify a

2/ Additionally, it is far from settled that the statutory provision upon which Fine Air relies - which applies to certificate authority - applies in the case of exemption authority awarded by the Department.

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minimum number of weeks within any given 90-day period that the frequencies must be operated, only that the frequencies must be "used." Given this fact, the only plausible conclusion to be drawn from the literal wording of Order 97-3-6 is that the allocated frequencies must be operated during at least once (i.e., once during any given week) during the relevant 90-day period, a requirement which Challenge clearly - and undisputedly - has satisfied. Any other interpretation would contravene the plain language of Order 97-3-6 and read into the Department's standard dormancy condition a requirement that does not today exist.

Respectfully submitted,

ZUCKERT SCOUTT, William Callaway, Jr.
Counsel for CHALLENGE AIR CARGO, INC.

September 11, 1997