OST-98-911 / Korean Air Lines / Korea-Saipan / Answer of World / March 5, 1998

Application of

for an exemption from 49 U.S.C. § 41301

(Republic of Korea - Saipan)

ANSWER OF WORLD AIRWAYS. INC.

On February 18, 1998, Korean Air Lines Co., Ltd. ("KAL") filed an application for renewal of an exemption authorizing it to provide foreign air transportation between Korea and Saipan. In accordance with Subpart D of the Department's Procedural Regulations, World Airways, Inc. ("World") hereby respectfully submits its answer in opposition to that application.

The Department may not and, of course, will not approve an exemption application unless the Secretary is able to decide that the award of exemption authority to the applicant "is consistent with the public interest." See 49 U.S.C. Section 40109(c). In the circumstances present here, it would be impossible for the Secretary to make such a decision.

It is perhaps noteworthy that, in its application, KAL itself has not even contended that renewal of its Korea-Saipan exemption satisfies the statutory standard set forth above Nowhere in its application does it even suggest that approval

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would be "consistent with the public interest," and it knows that full consideration of all relevant facts would undercut the validity of the kind of public interest assertions which are normally made part of an exemption application. See 14 C.F.R. Part 302.402.

As the Department well knows, the Government of Korea is not and, for almost two years, has not been in compliance with its procedural and substantive obligations under the U.S.-Korea Air Transport Agreement. For that extended period, the Government of Korea has barred World from exercising its indisputable right to provide service in the Korean markets it is designated and licensed to serve. Despite the efforts of the U.S. Government and World, the Government of Korea continues to ignore its bilateral obligations to the U.S. Government and World and, to World's knowledge, has even refused to engage in any discussions which could help resolve this controversy in a fair and equitable manner. In these circumstances, KAL cannot hope to satisfy the relevant "public interest" statutory standard. Accordingly, there can be no basis for continuing approval of KAL's operations in this important and valuable U.S. market.

It is true that the Department renewed KAL's Saipan authority last year in the face of similar objections from World. But, from the Notice of Action Taken issued on March 5, 1997, it is very clear that the Department acted reluctantly and only after declaring its hope and expectation for significant

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improvement in the bilateral relationship in the near term.

Specifically, the Department stated

Unfortunately, the Department's optimism was misplaced. While bilateral negotiations did finally occur, no progress was made toward anything remotely similar to an open skies agreement. Moreover, despite the Department's belief "that a satisfactory resolution of [World's] unresolved issues will be forthcoming," there has been absolutely no change in the Government of Korea's disposition toward World's legitimate request and undeniable right to provide service in the U.S.-Korea market and beyond during the year since the Department's belief was published.

In these circumstances, World believes the Department should terminate KAL's continuing right to serve and prosper in a bilaterally recognized market as long as the Government of Korea continues to deny World the right to conduct business in another bilaterally recognized market. As World has contended in the past, the recalcitrance of the Government of Korea and the absence of economic balance in the bilateral relationship to the substantial disadvantage of World and the U.S. Government should

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result in even more substantial counter-measures against the Government of Korea or its designated carriers. At the very least, however, KAL applications to renew valuable authorities should be denied as they arise until there is clear evidence of a change in the disposition on the part of the Government of Korea.

Therefore, since KAL cannot and has not even tried to satisfy the governing legal requirements for renewal of exemption authority, World respectfully requests that its application be dismissed as inadequate under the Department's Procedural Regulations or denied on its merits.

Respectfully submitted,

John L. Richardson

SEEGER POTTER RICHARDSON

2121 K Street, N.W.

Suite 700

Washington, D.C. 20037

(202) 496-1234

March 5, 1998