OST-96-1381 / OST-97-2877 / Korean Air Lines / Seoul-Denver / Intermodal Cargo Service / Consolidated Reply of Korean to Answer of World Airways / September 26, 1997

Application of

KOREAN AIR LINES CO., LTD.

for an exemption from

49 U.S.C. §41301

(Seoul-Denver, CO)

Application of

KOREAN AIR LINES CO., LTD.

for renewal of an exemption from 49 U.S.C. §41301 and 14 C.F.R. Part 222 (Intermodal cargo service)

Reply of Korean Air Lines to the Answer of World Airways

Dockets OST 97-2877 and 96-1381

these two exemption modification applications as it has generally done in the past when faced with similar objections made by World. (See, for example, Notice of Action taken dated March 5, 1997, and a Statement of Authorization dated March 6, 1997.)

2. World's basis for its objections to KAL's applications is World's claim that the Government of the Republic of Korea has not allowed World to institute new scheduled all-cargo service in the U.S.-Korea market and beyond Korea to Malaysia. While KAL has not been involved in any of the discussions between World and the civil aviation authorities of the Republic of Korea, KAL understands that the service to which World refers in its answer was in some manner a substitution for a service previously provided by a non-U.S. carrier pursuant to a wet-lease agreement with World which service included a technical stop at Seoul. (KAL has addressed these arguments to the Department in response to similar World pleadings in, inter alia, Dockets OST 95-234; 96-1235; 96-1380; 96-1381; 96-2021; 96-2020; and 95-911 filed since January 1997.) KAL does not agree with World that the Government of Korea (which does not own KAL) has failed to live up to its bilateral agreements with the United States.

3. As noted above, on several previous occasions, the Department has considered the issues raised by World in the context of KAL renewal applications. World's latest filing presents no new information that should alter the Department's

Reply of Korean Air Lines to the Answer of World Airways

Dockets OST 97-2877 and 96-1381

determination that these issues can more appropriately be dealt with through other means rather than by taking action that potentially could affect services which have brought clear and substantial benefits to the tavelling public. Consequently, the Department's previous findings that World's dispute should be addressed through other means applies with equal force here. For these reasons, KAL respectfully requests that the Department promptly grant KAL's applications for amended exemption authority in the above-referenced dockets.

4. In Docket 96-1381, KAL is asking the Department to modify an exemption granted by Order 96-8-46. That exemption allows KAL to serve the Denver, CO - Seoul market via Los Angeles. For operational reasons, KAL desires, effective October 26, 1997, to route that Denver -- Seoul service over San Francisco. KAL would extend three of its Seoul-San Francisco frequencies operated each week in that market to Denver. In essence, there would be no change in the substantive economic authority for KAL. KAL can operate Denver - Seoul now and would continue to do so but via a different West Coast gateway point. Holding this minor modification hostage to World's complaints against the Government of Korea would not be a proper exercise of the Department's discretion. As KAL's initial application in this docket as well as the Denver parties' answer to the instant

Reply of Korean Air Lines to the Answer of World Airways

Dockets OST 97-2877 and 96-1381

exemption modification request indicate, there is strong civic support for approval of the request in Docket OST-96-1381.

5. With respect to KAL's request in Docket OST-97-2877, again the modification sought is minor. In 1985, the Department renewed KAL's intermodal authority in three U.S. city pairs. KAL still seeks intermodal authority in only three U.S. city pairs; but it seeks to substitute three different city pairs for the three currently authorized. While technically this is new authority because the names of the city pairs would change, it does not constitute any expansion of KAL's authority because KAL is still asking to serve only three city pairs on an intermodal basis.

WHEREFORE, Korean Air Lines Co., Ltd. requests the Department to approve the exemption amendment applications pending in Dockets OST-97-2877 and OST-96-1381.

Respectfully submitted,

HERBERT A. ROSENTHAL, ESQ.

HERBERT A. ROSENTHAL, CHTD.

Attorney for KOREAN AIR LINES CO., LTD.

Dated: September 26, 1997