OST-95-657 / Federal Express / Exemption Renewal, US-Saudi Arabia Cargo / Supplement No

OST-95-657 / Federal Express / Exemption Renewal, US-Saudi Arabia Cargo / Supplement No. 1 to Application / October 10, 1997

Application of :

FEDERAL EXPRESS CORPORATION

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

(U.S.-Saudi Arabia Cargo Service)

October 10, 1997

SUPPLEMENT NO. 1 TO

APPLICATION OF

FEDERAL EXPRESS CORPORATION

FOR RENEWAL OF AN EXEMPTION

Federal Express Corporation (Federal Express) hereby submits this Supplement No. 1 to its pending application, filed on September 16, 1997, pursuant to 49 U.S.C. § 40109 and Part 302.400 of the Procedural Regulations of the Department of Transportation (the Department), for renewal of its exemption authority to engage in scheduled foreign all-cargo air transportation between a point or points in the United States and a point or points in Saudi Arabia, via two Intermediate points and to two beyond points with full traffic rights, and via other intermediate and beyond points without traffic rights.

This Supplement is being submitted in response to the request of the Department's staff, for the purpose of furnishing additional information pertaining to the contract cargo charter operations performed for Federal Express between

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Dubai, and the one hand, and Jeddah and Riyadh, on the other hand, by Falcon Express, Inc. (Falcon), and to provide additional information pertaining to the identity, nationality and operating authority of Falcon itself.

As indicated in the renewal application of Federal Express, Federal Express currently serves Riyadh and Jeddah by linking those two cities to a daily around-the-world DC-10-30 freighter flight operated by Federal Express which stops at Dubai as one of numerous en route points served. That around-the-world flight is linked to Saudi Arabia through the daily operation of small-aircraft contract cargo charter flights for Federal Express between Dubai and Riyadh/Jeddah by Falcon, utilizing 4,000-pound payload Beech-1900 aircraft (Application, pp. 2-3).

Falcon Express is a subsidiary of Falcon Aviation Ltd., which is a British Virgin Islands corporation having its principal offices at Dubai World Trade Centre, Level 32, Dubai, U.A.E. Federal Express understands that Falcon holds requisite operating licenses issued to it by the Government of the U.A.E. authorizing Falcon to perform all-cargo charter operations between Dubai and numerous foreign points, including Riyadh and Jeddah, Saudi Arabia, and that Falcon also holds requisite operating authority issued to it by the Kingdom of Saudi Arabia to authorize it to serve Riyadh and Jeddah. To the best of Federal Express' knowledge, Falcon does not hold any U.S. Foreign Air Carrier Permit or exemption authority, and does not serve or hold out service to any point in the United States.

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The contractual agreement between Federal Express and Falcon is a cargo charter flight agreement which provides, inter Slid, for the operation by Falcon of cargo charter flights utilizing the Beech-1900 aircraft at a frequency of six roundtrip flights a week over a Dubai-Riyadh-Jeddah-Dubai routing at schedule times which integrate with the arrival and departure of line-haul flights operated by Federal Express serving Dubai. The agreement also provides for the guarantee of certain stated minimum amounts of cargo capacity on the cargo charter flights for the carriage of Federal Express traffic,)' consisting primarily of U.S. origin and destination shipments moving in both directions between Saudi Arabia and Dubai. Inasmuch as Falcon is not a "foreign air carriers within the definition of the Federal Aviation Statutes (49 U.S.C. § 40102(a)(21)) and Part 212 of the Department's Economic Regulations, since it holds no U.S. authority and does not serve any point in the U.S., Falcon believes that it is not subject to the Statement of Authorization requirement of Section 212.4 of the Regulations in connection with its provision of cargo transportation for Federal Express wholly outside of the United States.

WHEREFORE, Federal Express respectfully requests the Department to renew the exemption authority most recently granted by Order 96-1-4, so as to authorize Federal Express to provide scheduled foreign air transportation of property and mail between points in the United States and Saudi Arabia, as

I' The cargo capacity on the charter flights operated by Falcon is not reserved for the exclusive use of Federal Express above the stated daily minimum.

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described in its Application and this Supplement, for a two-year period through November 29, 1999.

Respectfully submitted,

Federal Express and Nathaniel Breed of Shaw Pittman