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OST-99-5140

Fine Air Services Corp. and Arrow Air, Inc.

The only restricted-entry markets where Fine Air and Arrow both hold DOT authority are Colombia and Ecuador. However, as in the case of Peru, Fine Air does not hold authority from the Colombian authorities due to the bilateral situation and does not operate there. Arrow does operate scheduled all-cargo service to Colombia in competition with Federal Express, Challenge, Atlas and AIA plus TAMPA, as well as the substantial belly capacity offered by the U.S. and foreign combination carriers.  The only restricted-entry market route held by Arrow alone is the Buenos Aires, Argentina - Miami, Florida route and companion weekly frequency allocations However, it is the Joint Applicant's understanding that the Government of Argentina has effectively agreed to deregulate all cargo services subject to reciprocity with individual foreign governments. It is Joint Applicant's further understanding that, as regards the U.S., the cargo open-entry issue remains pending due to the continuation of U.S. - Argentina negotiations aimed at an overall "open skies" agreement

Counsel:  Allan Markham, 202-337-2149 for Arrow / Pierre Murphy, 202-872-1679, pmurphy@lopmurphy.com for Fine Air

Fine Air Services, Inc. and Arrow Air, Inc.

Given that (i) the FTC has decided to terminate early its review process permitting the transaction to go forward; and (ii) the proposed common control of Arrow and Fine Corp does not raise any competitive issues in the domestic or international marketplace that warrant concern, or any issues that adversely affect the Department's international aviation policy objectives or U.S. trade position in international markets, there is no basis for concluding that transfer of the route authority herein is inconsistent with the public interest. Moreover, the common control of both airlines will generate synergies to the economic benefit of both and, therefore, should enhance the economic viability of both airlines, which in turn will provide competitive benefits to the public.

Counsel:  Allan Markham, 202-337-2149 for Arrow / Counsel:  Pierre Murphy, 202-872-1679, pmurphy@lopmurphy.com for Fine Air

Fine Air Services Corp. and Arrow Air, Inc.

In their Amendment/Motion the Joint Applicants advise that the Federal Trade Commission has removed any barrier to the merger worth. respect to matters under FTC jurisdiction, but the Joint Applicants do not explain why this FTC action should be a basis for shortening Departmental consideration of the Joint Application.. The further assertion by the Joint Applicants that the Department should shorten the answer period and approve the Joint Application because approval is in the public interest is not of itself a reason to shorten the answer period.

Counsel:  Roller & Bauer, PLLC, Moffett Roller for Gemini Air Cargo, 202.331.3300

Fine Air Services Corp. and Arrow Air, Inc. / Fine Air Services, Inc.

The Department of Transportation should not approve the above--captioned Joint Applications of Fine Air Services Corporation and Arrow Air, Inc., for transfer of route authority, and for an exemption to permit Fine Air to acquire Arrow immediately, unless and until the Department determines that the consolidation of route authority to the eighteen countries to which Fine Air and Arrow both hold authority would not jeopardize the ability of another U.S. air carrier, such as Gemini Air Cargo, Inc., to operate to each of those countries. The approval of the Joint Applications in question would result in one aviation enterprise -- Fine Air Services Corp., owning and operating both Fine Air Services, Inc. and Arrow Air, Inc.

Counsel:  Roller & Bauer, Moffett Roller, 202-331-3300

Fine Air Services Corp., Fine Air Services, Inc. and Arrow Air, Inc.

Gemini's argument is essentially that because at some unspecified, indeterminate date of its choosing in the future, Gemini may (or may not) wish to operate scheduled (or charter) all cargo service to any one of eighteen (18) countries it identifies, all three (3) of the above captioned applications should be denied, including the March 4, 1999 de facto Route Transfer Exemption Application. Since Gemini has never made any serious attempt to apply for, much less operate, scheduled all-cargo service to any of eighteen (18) countries identified by Gemini, Gemini's objection to the proposed transaction must be motivated by other unidentified improper commercial reasons and is intended to delay indefinitely this commercial business transaction. Gemini's improper delaying tactics should be promptly dismissed to permit the closing of this transaction as soon as possible

Counsels:  Allan W. Markham, P.C. Allan Markham for Arrow Air, 202.337.2149 and Law Offices of Pierre Murphy, Pierre Murphy, 202.872.1679 pmurphy@lopmurphy.com

Fine Air Services Corp and Arrow Air, Inc.

As Gemini stated in the Conclusion to its Answer filed in the above dockets, the Department should not approve the above-captioned Applications until the Department determines that such approval will not prejudice the ability of any U.S. air carrier to operate to each of the countries where Fine Air and Arrow hold overlapping authority.

Counsel:  Roller & Bauer, Moffett Roller for Gemini, 202.331.3300

Fine Air Services, Inc. and Arrow Air, Inc.

By this Amendment, the Joint Applicants wish to amend the Joint Application to the extent necessary to permit the full merger of both certificated air carriers into one surviving air carrier company, Arrow Air.  Given that (i) the FTC decided to terminate early it review process permitting the transaction to go forward; (ii) the Department granted the exemption to permit Fine Corp's acquisition of Arrow Air (See Order 99-4-5); and (iii) the proposed merger and common control of Arrow and Fine Corp does not raise any competitive issues in the domestic or international marketplace that warrant concern, or any issues that adversely affect the Department's international aviation policy objectives or U.S. trade position in international markets, there is no basis for concluding that the de facto and dejure transfer of the route authority herein is inconsistent with the public interest.

Counsel:  Arrow, Allan Markham, 202-364.8886, awmpc@aol.com, Fine Air, Pierre Murphy, 202-872-1679, pmurphy@lopmurphy.com

Fine Air Services Corp. and Arrow Air, Inc.

By this order, we (1) find that Arrow Air, Inc. (Arrow) continues to be fit, willing, and able to conduct all-cargo operations as a certificated air carrier, and (2) approve the transfer of the certificate and exemption authority among Arrow Air and Fine Air Services, Inc. (Fine Air) currently held by each . All frequency allocations currently held by Fine Air will also be transferred to Arrow.

By:  Bradley Mims

Arrow Air, Inc.

Counsel:  Pierre Murphy, 202.872.1679

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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