OST-96-1695 / FedEx (US-Macau All-Cargo) / October 15, 1997

Application of

for grant of an exemption pursuant to 49 U.S.C. § 40109 (U.S.-Macau All-Cargo Service)

Federal Express Corporation (Federal Express) hereby submits this Supplement No. 1 to its pending application, filed on September 12, 1996, 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 to authorize Federal Express to provide scheduled all-cargo service between points in the United States and Macau, in conjunction with Federal Express' existing scheduled all-cargo air transportation between points in the United States, on the one hand, and points in the Asia/Pacific region, on the other hand. 1/

1/ No motion for leave to file pursuant to Rules 5 and 18 of the Rules of Practice is required in the case of this Supplement because: (1) it is not an "amendment" to FedEx's initial application, and (2) no Answers were filed in response to that application.

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The purpose of this Supplement is to furnish additional information to the Department describing the planned operations by Federal Express serving Macau as part of Federal Express' Asia/Pacific route network. That information

was not available at the time that Federal Express filed its initial application for authority to serve Macau. In its initial operations serving Macau, Federal Express plans to operate two roundtrip flights a week between Anchorage and Macau utilizing the MD-11 freighter aircraft having a maximum gross payload capacity of 194,600 pounds. As shown in the proposed flight schedule set forth in Exhibit FX-101, infra, one weekly roundtrip flight will operate eastbound between Macau and Anchorage via an intermediate stop at Tokyo, and will operate westbound via intermediate stops at Tokyo and Subic Bay. The second weekly roundtrip flight will operate eastbound between Macau and Anchorage via an intermediate stop at Osaka, and will operate westbound via intermediate stops at Osaka, Subic Bay and Manila. In accordance with Section 313.5(c) of the Department's Procedural Regulations, Federal Express projects that the foregoing operation will consume a total of 7,397,000 gallons of fuel on an annual basis (Exhibit FX-102, infra).

The foregoing service will enable Federal Express to connect Macau to Federal Express' major flight network and traffic-sorting hubs in the United States and at Subic Bay in the Philippines, and will provide a full pattern of air express and expedited air freight services to shippers and consignees requiring

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service to and from Macau, to the maximum extent permitted by the United States-Macau Bilateral Agreement. 2/

Federal Express requests that its Macau exemption application be processed on an expedited basis in order to enable Federal Express to initiate and complete the Macau civil aviation licensing process in time to commence service to Macau on or about October 26, 1997.

2/ As noted in Federal Express' initial application for Macau authority, the October 24, 1995 Bilateral Air Transport Services Agreement between the U.S. and Macau places no limitation on the number of U.S. all-cargo air carrier designations or frequencies, and provides that U.S. all-cargo carriers may provide scheduled all-cargo service between any point in the United States, on the one hand, and Macau, on the other hand, via intermediate points and beyond to points in other countries. The U.S.-Macau Bilateral Agreement also provides, however, that no carrier of either country may serve Hong Kong, Taiwan or China as an intermediate or beyond point in conjunction with service to Macau. In conformity with that restriction, Federal Express plans to serve Macau in conjunction with its service to points in its Asia/Pacific operations other than Hong Kong, Taiwan and China.

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WHEREFORE, for all of the reasons set forth in its Application in this proceeding, as supplemented herein, Federal Express requests the Department to issue an Order or Notice of Action Taken granting Federal Express' application for U.S.-Macau all-cargo exemption authority for a period of two years, commencing immediately.

Respectfully submitted,

SHAW PITTMAN, Nathaniel Breed, Jr.
Attorneys for FEDERAL EXPRESS CORPORATION

A. Doyle Cloud, Jr. , Sarah S. Prosser, Gina Adams
FEDERAL EXPRESS CORPORATION

October 15, 1997