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OST-97-2764

Federal Express Corporation and Florida West International Airways, Inc. (Approval of a Transfer of Route Authority, US-Colombia, All-Cargo)

OST-97-2764 | July 25, 1997

Joint Application (Page 6 is Missing - Will be Corrected)

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Federal Express, as Buyer, and FW1A, as Seller, have entered into a Route Purchase And Transfer Agreement, dated as of July 1, 1997, for the purpose of contracting for the sale of the U.S.-Colombia certificate authority currently held by FWIA to Federal Express, in exchange for a purchase price of $5.5 million, subject to Department approval. The Joint Applicants desire to consummate the foregoing transaction on October 1, 1997, or as soon thereafter as possible.

The specific Route Authority to be transferred pursuant to the Transfer Agreement is the U.S.-Colombia all-cargo authority contained in the Certificate of Public Convenience and Necessity for Route 599 originally issued to FWIA by Order 96-8-38, served August 30, 1996, and reissued to FWIA by Order 97-2-19, served February 24, 1997, subject to the expiration date and other conditions applicable to that authorization." The route transfer will not have any effect on the "viability" of Federal Express, since the economic impact of expanded U.S.-South America operations will have a positive effect on the already-strong financial and operational health of Federal Express. Approval of the Route Authority transfer will have a positive impact on FWIA resulting from the contribution of $5.5 million in new working capital to FWIA resulting from the sale of its existing U.S.-Colombia all-cargo operating authority to Federal Express. That capital infusion will be used by FWIA to expand its service levels in other markets.

• JA-1 Route Purchase And Transfer Agreement between Federal Express and FWIA dated as of July 1, 1997
• JA-2 Proposed New U.S.-Colombia Service To Be Operated By Federal Express
• JA-3 First-Year Operating Statistics (U.S.-Colombia Operations)
• JA-4 Map Of Planned U.S.-Colombia Operations By Federal Express
• JA-5 Affidavit of Jerry Ogawa, Managing Director, International Flight Scheduling, Federal Express Corporation
• JA-6 Federal Express Press Release Dated June 30, 1997 Relating ToFinancial Results For The Fourth Quarter And Fiscal Year Ending May 31, 1997
• JA-7 U.S. And Foreign-Flag Competing Services And Capacity In The U.S.-Colombia Air Cargo Market

Answers are due by August 22, 1997, Subpart Q

Service List

Counsel: Squire Sanders, Marshall Sinick, 202-626-6651 for FWIA / Federal Express and Shaw Pittman, Nathaniel Breed, 202-663-8078 for Federal Express

Federal Express Corporation and Florida West International Airways, Inc. (Approval of Transfer of Route Authority, US-Colombia) / Florida West International Airways, Inc. (Renewal of Certificate and Exemption Authority)

OST-96-2764 | OST-97-2646 | August 22, 1997

Answer of Fine Air Services and Motion for Leave to File

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This is the second application in as many months in which FedEx seeks to purchase - in exchange for massive amounts of cash—authority to operate in a highly restricted South American market from a carrier that has never used the authority. In Docket OST-97-2548, FedEx sought to acquire for $1.5 million two U.S.-Argentina allcargo scheduled frequencies awarded by the Department to Arrow Air, Inc. (harrows). Arrow, it turned out, had not utilized these frequencies since being allocated them 17 months ago. In the instant proceeding, FedEx seeks to purchase for $5.5 million FWIA's authority to operate scheduled all-cargo services in the restricted-entry U.S.-Colombia market (and with it, FWIA's status as an Authorized carrier" under the U.S.-Colombia bilateral agreement), even though FWIA has not utilized this authority since it was transferred to the carrier a year ago. It is antithetical to Departmental policy and the public interest to permit a carrier to sell for private profit a valuable public franchise which it applied for, was granted, but has never used.

Exhibit A - Information Request for FWIA

Service List

Counsel: Wilmer Cutler, Jeffrey Shane, 202-663-6000

Federal Express Corporation and Florida West International Airways, Inc. (Transfer of Route Authority, US-Colombia All-Cargo)

OST-97-2764 | August 27, 1997

Joint Reply of Federal Express and FWIA and Motion for Leave to File

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In summary, Fine Air's Answer is no more than an expression of Fine Air's dissatisfaction with the failure of Colombia to allow it to operate service to Colombia at the present time. Fine Air is, of course, wholly free to compete for its selection to be designated as the next U.S.-flag cargo carrier which Colombia has agreed to accept in September 1998 -- exactly one year hence. Fine Air has utterly failed to present any cognizable argument of fact, law or policy establishing that the Joint Application should not be approved forthwith.

Counsel: Squire Sanders, Marshall Sinick, 202-626-6651 for FWIA / Federal Express and Shaw Pittman, Nathaniel Breed, 202-663-8078

Federal Express Corporation and Florida West Airways, Inc.

OST-97-2764 | September 4, 1997

Re: Correction to Joint Application

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It has just come to my attention that there are two typographical errors in the Joint Reply of Federal Express Corporation and Florida West International Airways, Inc., filed on August 27, 1997 in the referenced proceeding. In both instances, the name "Fine Air" should be substituted in place of the name "FWIA" in the 4th line on page 3 and in the 1st line on page 5 of the Joint Reply. Revised pages reflecting those corrections, underscored, are attached to this letter.

Service List

Counsel: Shaw Pittman, Nathaniel Breed, Jr., 202 663 8078

Federal Express Corporation and Florida West International Airways, Inc. (for approval of transfer of route authority) and Florida West International Airways, Inc. (for renewal of certificate and exemption authority)

OST-97-2764 | OST-97-2646 | September 5, 1997

Motion for Leave to File and Surreply of Fine Air Services, Inc. to the Joint Reply

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Fine Air does not dispute that the Department has permitted carriers to purchase authority to operate in restricted markets from other carriers, nor that such authority has been purchased from carriers who once utilized that authority but subsequently ceased doing so. But FedEx and FWIA have offered no precedent to support what FWIA seeks to do here: apply for authority (and the accompanying designation) to operate in a restricted market, fail ever to utilize the authority, fail even to seek corresponding authority from the foreign government for over six months, and then seek to sell the authority. Clearly, this is incompatible with Departmental policy and the public interest.

Attachment | Service List

Cousel: Wilmer Cutler, Jeffrey Shane, 202 663 6000

Federal Express Corporation and Florida West International Airways, Inc. (Transfer of Route Authority, US-Colombia All-Cargo)

OST-97-2764 | September 16, 1997

Joint Further Reply of Federal Express and FWIA and Motion for Leave to File

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Once again, Fine Air has failed to present any consideration of fact, law or policy demonstrating that the Joint Application should not be granted. Approval of the Joint Application will result in immediate and substantial benefits to the shipping public, and a significant enhancement of the U.S. competitive presence in the U.S.-Colombia market. For that reason, the Joint Application in this proceeding should be granted without further delay.

Counsel: Federal Express and Shaw Pittman, Nathaniel Breed, 202-663-8078 / Squire Sanders, Marshall Sinick, 202-626-6651

Federal Express Corporation and Florida West International Airways, Inc. / Florida West International Airways, Inc. (Approval of Route Transfer / Renewal of Certificate and Exemption Authority)

Order 97-10-23 | OST-97-2764 | OST-97-2646 | Issued October 23, 1997 | Served October 29, 1997

Order Approving Route Transfer

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By this order we approve that portion of Florida West's renewal application in Docket OST-972646 to the extent that it seeks renewal of its U.S.-Colombia operating authority, and approve the Joint Application of Federal Express Corporation (Federal Express) and Florida West international Airways, Inc. (Florida West) for the transfer to Federal Express of Florida West's certificate authority on Route 599 to provide scheduled all-cargo foreign air transportation between the United States and Colombia.

• FWIA Certificate Amendment for Route 599
• Federal Express Certificate of Public Convenience for Route 746

By: Charles Hunnicutt

Federal Express Corporation and Florida West International Airways, Inc. (Approval of Route Transfer / Exemption, US-Colombia All-Cargo)

OST-97-2764 | OST-97-3091 | November 6, 1997

Joint Application for Grant of an Exemption

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Federal Express understands that it will not be able to formally commence the Colombian Government licensing process until after its newly-issued U.S.-Colombia Certificate for Route 748 has become effective and Federal Express has been formally designated by the U.S. Government to the Government of Colombia through diplomatic channels. In those circumstances, it will not be possible for Federal Express to begin to operate scheduled all-cargo service between the U.S. and Colombia immediately following the effective date of its newly-issued authority. Moreover, while Federal Express is confident that its application for requisite operating authority will be processed expeditiously by the Government of Colombia, it is not possible to predict exactly how long that process will take to complete.

Answers are due by November 21, 1997

Service List

Counsel: Squire Sanders, Marshall Sinick, 202-626-6651 for FWIA / Federal Express and Shaw Pittman, Nathaniel Breed, 202-663-8078

Federal Express Corporation and Florida West International Airways, Inc. (Route Transfer, US-Colombia)

OST-97-2764 | OST-97-2646 | November 10, 1997

Petition for Reconsideration of Fine Air Services

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Fine Air's objections to the Joint Application -- obvious from even a cursory reading of the "Answer of Fine Air Services, Inc. and Motion for Leave to File" which Fine Air filed on August 22, 1997 -- were twofold:

• (1) Florida West International Airways, Inc. should not be permitted to sell valuable scheduled U.S.-Colombia authority in a limited entry market when it has never used that authority; and
• (2) The FWIA/FedEx application remains unripe until the Department has acted upon FWIA's certificate renewal application.

Service List

Counsel: Wilmer Cutler, Jeffrey Shane, 202-663-6000

Federal Express Corporation and Florida West Internaitonal Airways, Inc. (Route Transfer, US-Colombia / Renewal of Certificate and Exemption Authority)

OST-97-2764 | OST-97-2646 | November 18, 1997

Joint Answer of Federal Express and FWIA to Petition for Reconsideration

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There is no factual or legal basis for reconsideration of Order 97-10-23 on the ground of any non-use by FWIA of its U.S.-Colombia all-cargo certificate authority. Equally important -- and undisputed by Fine Air -- the record demonstrates that Federal Express will make active, effective and aggressive use of the transferred U.S.-Colombia authority as successor to FWIA.

Counsel: Squire Sanders, Marshall Sinick, 202-626-6651 for FWIA / FedEx and Shaw Pittman, Nathaniel Breed, 202-663-8078

Federal Express Corporation and Florida West International Airways, Inc. - (US-Colombia All-Cargo) / Florida West International Airways

Order 97-11-40 | OST-97-2764 | OST-97-2646 | Issued and Served November 25, 1997

Order on Reconsideration

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By this order, we grant the petition of Fine Air Services for reconsideration of Order 97-10-23 and, upon reconsideration, affirm our decision to transfer the U.S.-Colombia certificate authority held by Florida West International Airways to Federal Express Corporation.

By: Charles Hunnicutt

Federal Express Corp. and Florida West International Airways, Inc. - (New - Notice of Action Taken)

OST-97-2764 | OST-97-3091 | Filed November 6, 1997 | Approved November 26, 1997

Notice of Action

Florida West to continue to provide scheduled all-cargo service between the United States and Colombia for a period of six months following the termination of Florida West's U.S.-Colombia certificate authority in Docket OST-97-2764, or until commencement of such service by Federal Express, whichever is sooner. The Joint Applicants state that the requested exemption authority is necessary in order to avoid any interruption in the provision of the U. S.-flag all-cargo service between the U S. and Colombia pursuant to the route transfer approved by the Department in Order 97-10-23.

Applicant reps.: Marshall Sinick, 202.626.66S1; 202.366.2367 Nathaniel Breed, Jr., 202-663-8078

Federal Express Corporation

For renewal and amendment of its Certificate of Public Convenience and Necessity for Route 748, authorizing Federal Express to provide scheduled foreign air transportation of property and mail between points in the United States, on the one hand, and points in Colombia, on the other hand, via intermediate points, and beyond Colombia to points in the western hemisphere, as described in this application.

Federal Express requests that its amended U.S.-Colombia Certificate for Route 748 be renewed for an indefinite term, consistent with the "open skies" provisions of the recently-amended U.S.-Colombia bilateral agreement. Federal Express further requests authority to operate its services between the U.S. and Colombia in conjunction with other scheduled all-cargo services operated by Federal Express between the U.S. and points in Central and South America, Mexico, Canada, Europe, the Middle East and Africa, subject to existing bilateral provisions. Finally, Federal Express requests that this application be processed pursuant to the expedited non-hearing procedures established in Subpart B of the Procedural Regulations of the Department.

At the present time, Federal Express operates five all-cargo flights a week between the U.S. and Colombia, utilizing B-727-200 freighter aircraft having a payload capacity of 49,000 pounds. Those flights are operated between Memphis and Miami and Bogota, Colombia via intermediate and beyond points over the following routing: Miami-Valencia-Bogota-Panama City-Memphis. That line-haul service between Colombia and the major United States freight sorting and flight operations hub of Federal Express in Memphis enables Federal Express to provide air express and expedited air freight service between Colombia and the entire United States, and between Colombia and points throughout the Western Hemisphere portion of the worldwide operations of Federal Express.  Federal Express anticipates that it will make no immediate changes in its existing U.S.-Colombia flight schedules following the grant of this application, although Federal Express anticipates that it will expand its total flight operations serving Colombia in response to increases in air express and air freight traffic stimulated by the more liberal aviation bilateral regime between the U.S. and Colombia, and resulting from the ongoing vigorous marketing and promotional efforts of Federal Express.

Counsel:  Shaw Pittman, Nathaniel Breed, 202.663.8078

Arrow Air, Inc.; Continental Airlines, Inc.; Delta Air Lines, Inc.; Federal Express Corporation; Northwest Airlines, Inc.; Polar Air Cargo, Inc. and United Parcel Service

By:  Read Van de Water

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