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OST-2002-14049

 


Hong Kong Fifth-Freedom All-Cargo Frequencies

Order 02-12-11
OST-02-13753

OST-02-13754
OST-02-13755
OST-02-13757

OST-02-13758

OST-02-13761
OST-02-13762

OST-02-13765
OST-02-14049
Issued and Served December 10, 2002 Order Instituting Proceeding US-Hong Kong Fifth-Freedom All-Cargo Frequencies

Order 2002-12-11 is instituting the 2002/2003 Hong Kong Fifth-All Cargo Frequency Proceeding to select carriers to operate the newly acquired fifth-freedom all-cargo weekly frequencies under the October 19, 2002 U.S.-Hong Kong Memorandum of Understanding. Procedural Timetable: Amended/Supplemented applications: 12/13/02; Petitions for Reconsideration: 12/17/02; Direct Exhibits: 1/24/03; Briefs: 2/7/03.

In allocating the available frequencies, our principal objective will be to maximize the public benefits that will result from award of the authority in this case. In this regard, we will consider which applicants will be most likely to offer and maintain the best service for the shipping public. We will also consider the effects of the applicants' service proposals on the overall competitive environment, including the market structure and the level of competition in the U.S.­-Asia market, and on any other market shown to be relevant, and, where relevant, the positive effect on each applicant's operations. In addition, we will consider other factors historically used for carrier selection where they are relevant.

By: Paul Gretch


2002/2003 Hong Kong All-Cargo Fifth Freedom All-Cargo Frequency Proceeding

OST-02-14049 December 13, 2002 Supplement to Application of Evergreen International 2002/2003 Hong Kong All-Cargo Fifth Freedom All-Cargo Frequency Proceeding
Service List

Counsel:  Global Aviation Associates, Jon Ash, 202 457-0212

OST-02-14049 December 13, 2002 Supplement to Application of Polar Air Cargo 2002/2003 Hong Kong All-Cargo Fifth Freedom All-Cargo Frequency Proceeding

Counsel:  Polar and Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmer.com


2002/2003 Hong Kong All-Cargo Fifth Freedom All-Cargo Frequency Proceeding

OST-02-14049 December 16, 2002 Motion of Federal Express for Leave to File Late 2002/2003 Hong Kong All-Cargo Fifth Freedom All-Cargo Frequency Proceeding
OST-02-14049 December 13, 2002 Supplement of Federal Express 2002/2003 Hong Kong All-Cargo Fifth Freedom All-Cargo Frequency Proceeding
    Attachment:  Exhibits FX-1 Revised / FX-2 Revised / FX-3 Revised / FX-4 Revised  
    Service List  

In light of the Department's counting approach, FedEx Express has reviewed its immediate needs, and believes that it will now need a total of 16 frequencies in Year One, and a total of 28 in Year Two. This supplement incorporates and replaces in toto the proposal submitted by FedEx Express on November 5, 2002.

Counsel:  Federal Express, Thomas Donaldson, 901-434-8580

OST-02-14049 December 13, 2002 Amendment to Application of Northwest Airlines for Frequency Allocation 2002/2003 Hong Kong All-Cargo Fifth Freedom All-Cargo Frequency Proceeding

Hereby amends its application to request an allocation of a total of four U.S.-Hong Kong fifth freedom all-cargo frequencies. In its original application, which was consolidated into this Docket by the Instituting Order, Northwest requested allocation of eight all-cargo fifth freedom frequencies, four to be used to serve Manila, and four to be used to serve Seoul. By this amended application, Northwest removes its request for the allocation of any frequencies to serve Seoul. In its amended application, Northwest will prosecute the allocation of four frequencies only, all to be used to serve Manila, the Philippines. Northwest further requests allocation of a single U.S.-Philippines Route 2 frequency under the terms of the U.S.-Philippines Air Transport Agreement.

Counsel:  Northwest, Megan Rae Rosia, 202-842-3193

OST-02-14049 December 13, 2002 Amendment No. 1 to Application of United Parcel Service 2002/2003 Hong Kong All-Cargo Fifth Freedom All-Cargo Frequency Proceeding
    Service List  

Hereby submits the following Amendment No. 1 to its Application. Included in UPS' original Application was a request for six frequencies in year two between Hong Kong, on the one hand, and UPS' European hub in Cologne, Germany, on the other, with intermediate stops in Mumbai and Dubai in the westbound direction and non-stop service in the eastbound direction. UPS is amending its Application to indicate that, two days per week, the eastbound flights will stop at Mumbai enroute to Hong Kong. A revised schematic diagram reflecting this Amendment is attached hereto as Exhibit 1. This replaces the last page of Exhibit 2 to UPS' original Application in this proceeding. Thus, UPS' basic Application, i.e., double daily service between Hong Kong to its Asian hub at Clark and daily service between Hong Kong and UPS' European hub at Cologne, remains unchanged.

Counsel: Kelley Drye, David Vaughan, 202 955-9792


2002/2003 Hong Kong Fifth Freedom All-Cargo Frequency Proceeding

OST-02-14049 December 17, 2002 Petition of Polar Air Cargo for Reconsideration of Order 02-12-11 2002/2003 Hong Kong Fifth Freedom All-Cargo Frequency Proceeding
    Service List  

A key component of the evidence that applicants are required to submit is the traffic forecast. As currently written, the evidence request states that this and other forecast data are to be based on the 12-month period ended June 30, 2002. Use of such a base year period would create serious evidentiary problems, and Polar accordingly requests that the base year period be changed to the 12 months ended December 31, 2001.

More specifically, the Department's T-100 data, on which carrier applicants normally rely for determining market shares and load factors, are not presently available and will not become available in time to be used in this proceeding. Currently, we understand that T-100 data are available only through March 2002. Furthermore, because of delays in carrier reporting and subsequent data corrections, it often takes a substantial amount of time following the reporting of data to DOT for the database to be considered reasonably accurate and to be released to the public. With direct exhibits due in a mere three weeks (on January 7, 2003), there is virtually no chance that the applicants will have timely access to reliable data for first six months of 2002.

To remedy the situation, Polar requests that the Department change the base year period to calendar year 2001. The data for that period are already available. Moreover, that database will include a smaller amount of aberrational, post-9/11 data than the database for the year ended June 30, 2002, which includes more than nine months of post-9/11 data. Using calendar year 2001 as the base year period therefore will both expedite this proceeding and improve the reliability of the evidentiary foundation.

Counsel:  Polar and Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmer.com


2002/2003 Hong Kong Fifth Freedom All-Cargo Frequency Proceeding

OST-02-14049 December 17, 2002 Petition of Federal Express for Reconsideration of Technical Issues in Order Instituting Proceeding

Microsoft Word File

2002/2003 Hong Kong Fifth Freedom All-Cargo Frequency Proceeding

Federal Express Corporation hereby requests that the Department reconsider two aspects of the Evidence Request attached to Order 2002-12-11. First, the second paragraph, having to do with historic schedules, requires an applicant like FedEx Express, which operates a network of integrated services throughout the world, to produce large amounts of data, most of which is not material to this case.

Counsel:  Federal Express, Thomas Donaldson, 901-434-8580

OST-02-14049 December 18, 2002 Petition of Federal Express for Reconsideration and Decision by the Secretary of Order Instituting Proceeding

Microsoft Word File

2002/2003 Hong Kong Fifth Freedom All-Cargo Frequency Proceeding

FedEx Express would have objected to the conclusion of the MOU in the strongest possible terms had this interpretation of the agreement been made clear at the time of its negotiation. As discussed below, FedEx Express is at a loss to see how the Department can realistically allocate the MOU's limited opportunities in a way that will satisfy the needs of the many U.S. carriers clamoring for these opportunities. In addition, since FedEx Express carries more U.S. exports than any other airline, the agreement's deficiencies could well have a significant adverse effect on broader U.S. economic opportunities and the public interest as a whole.

Counsel:  Federal Express, Thomas Donaldson, 901-434-8580

OST-02-14049 December 18, 2002 Joint Motion of Applicants to Extend Time 2002/2003 Hong Kong Fifth Freedom All-Cargo Frequency Proceeding

The Joint Movants listed below respectfully request the Department for a three­week extension of the procedural timetable established in Order 2002-12-11, pursuant to 14 C.F.R. § 302.9. The Joint Movants request that the procedural timetable be amended as follows:  Direct Exhibits: January 28, 2003 Rebuttal Exhibits: February 14, 2003 Briefs: February 28, 2003. The Joint Movants state that this brief extension is necessary to enable them to prepare their exhibits and to develop an adequate evidentiary record, especially given the holiday season. This short extension should not affect the Department’s ability to make a timely decision awarding the frequencies. The Joint Movants are authorized to state that UPS does not oppose this motion.

Counsel:  Wilmer Cutler, Jeffrey Manley for Polar / Federal Express, Melissa Paul / Evergreen, Thomas Lydon / Northwest, Megan Rae Rosia / Atlas, Russell Pommer / Sher Blackwell, Mark Atwood for Kalitta


2002/2003 Hong Kong Fifth Freedom All-Cargo Frequency Proceeding

OST-02-14049 December 17, 2002 Notice Establishing Response Dates 2002/2003 Hong Kong Fifth Freedom All-Cargo Frequency Proceeding

On December 10, 2002, the Department issued Order 2002-12-11, instituting the 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding, Docket OST-2002-14049, establishing a procedural schedule for the proceeding and attaching an evidence request for the use of the parties in the case. Under the established procedures, petitions for reconsideration of Order 2002-12-11 were to be filed December 17, 2002, and Direct Exhibits are to be filed January 7, 2003. 

The Department received three petitions for reconsideration of its instituting order on December 17, 2002. Polar Air Cargo, Inc. requests reconsideration of certain portions of the evidence request attached as Appendix A to Order 2002-12-11, and also requests that December 19, 2002, be established as an answer date for its petition. Federal Express filed two separate petitions, one seeking reconsideration of technical issues in the instituting order and another requesting that the Secretary of Transportation reconsider the Department's interpretation of the U.S.-Hong Kong Memorandum of Understanding. 

Under the Department's regulations, 14 CFR 302.14, answers to each of the petitions filed December 17, 2002, would be due on December 27, 2002. In order to establish more expeditiously a record to resolve the issues raised, we have decided to establish Monday, December 23, 2002, as the due date for answers to the petitions, and Friday, December 27, 2002, as the due date for replies. 

In view of the above, answers to the petitions for reconsideration of Order 2002-12-11 shall be filed by December 23, 2002, and replies shall be filed by December 27, 2002.

By:  Read C. Van de Water


2002/2003 Hong Kong Fifth Freedom All-Cargo Frequency Proceeding

OST-02-14049 December 23, 2002 Extension of Procedural Dates

Word Document

2002/2003 Hong Kong Fifth Freedom All-Cargo Frequency Proceeding

Notice, the Department grants the motion and extends the procedural dates: Direct Exhibits shall be due January 28 2003 Rebuttal Exhibits due February 14, 2003; and Briefs due February 28, 2003.

By: Susan McDermott

OST-02-14049 December 23, 2002 Consolidated Answer of Northwest Airlines to Petitions for Reconsideration 2002/2003 Hong Kong Fifth Freedom All-Cargo Frequency Proceeding

Northwest supports Polar's petition regarding the base data to be utilized in the traffic forecasts. The latest T-100 data are available only through March 2002. Northwest urges the Department to change the base year to calendar 2001, as petitionedby Polar. Northwest concurs in Polar’s observation that Calendar 2001 data will be less skewed by aberrational post-9/11 data. For these reasons, Northwest also supports Polar’s request that the requirement to submit historic schedule data be modified to require schedules for the two-year period ending December 31, 2001, although as discussed below, Northwest recommends that the DOT approve FedEx’s request that schedule “snapshots” be submitted in lieu of all historic schedules. FedEx FedEx has filed two Petitions for Reconsideration, raising a number of technical and policy issues. Northwest answers these issues as follows

Counsel: Northwest, Andrea Newman, 202 842-3193

OST-02-14049 December 23, 2002 Answer of Evergreen in Opposition to Federal Express Petition for Reconsideration and Decision by the Secretary of Order Instituting Proceeding 2002/2003 Hong Kong Fifth Freedom All-Cargo Frequency Proceeding
    Service List  

The reality is that FedEx has vastly overreached in its efforts to claim all of the new fifth freedom frequencies available in this proceeding. In its initial application for frequencies, FedEx applied for half of the available first-year frequencies and two-thirds of the available second year frequencies. Having seen the applications requested by other carriers, and being fully aware that the frequency requests already outnumbered those available, FedEx nonetheless amended its application to request more frequencies than are available during the first two years to all carriers in total under the MOU. Recognizing the dilemma in which it has placed itself, FedEx now seeks to remedy the situation by seeking an interpretation for which there is no support, intimating that U.S. exports as a whole will be threatened if it does not get its way. Based on prior precedent, FedEx's own publicly stated position, and the public interest, the Department should summarily deny FedEx's petition.

Counsel: Global Aviation, Jon Ash, 202 457-0212

OST-02-14049 December 23, 2002 Answer of Evergreen in Support of Polar Air Petition for Reconsideration and Federal Express Petition for Reconsideration of Technical Issues in Order Instituting Proceeding 2002/2003 Hong Kong Fifth Freedom All-Cargo Frequency Proceeding
    Service List  

Polar has requested that the Department modify the base year period for traffic forecasts to calendar year 2001, and likewise modify the requirement for the submission of historic schedules. Evergreen fully supports this request, which is in the public interest. As noted by Polar, the T-100 data that would be necessary to prepare a traffic forecast for the 12-month period ended June 30, 2002 is not readily available, and a requirement to rely upon it would unnecessarily complicate the proceeding.

Counsel: Global Aviation, Jon Ash, 202 457-0212

OST-02-14049 December 23, 2002 Answer of United Parcel Service to Petition of Federal Express for Reconsideration 2002/2003 Hong Kong Fifth Freedom All-Cargo Frequency Proceeding

Counsel:  UPS and Kelley Drye, David Vaughan, 202-955-9864


2002/2003 Hong Kong Fifth Freedom All-Cargo Frequency Proceeding

OST-02-14049 December 24, 2002
Docketed December 26, 2002
Motion of Federal Express

Word Document

2002/2003 Hong Kong Fifth Freedom All-Cargo Frequency Proceeding

Respectfully requests that the Department grant limited intervention to its Office of the Assistant General Counsel for Aviation Enforcement and Proceedings in this proceeding. The purpose of the Enforcement Office's limited intervention is to assist the parties in developing a proposed allocation of the frequencies at issue in this proceeding.

Counsel: Federal Express, Melissa Paul, 901 434-8580


2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequencies

OST-02-14049 December 27, 2002 Reply of Federal Express to Answer of UPS

Word Document

US-Hong Kong Fifth-Freedom All-Cargo Frequencies
    Service List  

The confusion in the parties' answers confirms that the Department must reconsider its interpretation of the MOU's frequency limitation. In so doing, the Department should grant the interpretation for which the plain language of the MOU calls. That interpretation is also consistent with its policy of interpreting U.S. bilateral agreements in a way that maximizes the benefits derived there-from. Under the text of the MOU, a frequency means one round-trip flight, regardless of whether that flight turns around at, or exercises the bilateral right to continue beyond, the territory of the other party.

Counsel: Thomas Donaldson, 901 434-8580

OST-02-14049 December 27, 2002 Answer of United Parcel Service in Support of Motion US-Hong Kong Fifth-Freedom All-Cargo Frequencies
    Service List  

Like Federal Express, UPS believes that it may be possible for the parties in the above-captioned proceeding to agree to a Hong Kong fifth freedom frequency distribution solution that would eliminate the need for the comparative carrier selection proceeding now underway. A settlement among the parties to this proceeding, supervised and ultimately approved by the Department, would save the carrier applicants and the U.S. Government a great deal of time and valuable resources.  In order to facilitate settlement discussions to this end, UPS believes that the intervention requested by Federal Express is necessary to address and alleviate antitrust concerns. Although this involvement is not required under the antitrust laws, UPS believes that such involvement will be very helpful and could foster a rapid settlement by the parties.

Counsel: Kelley Drye, David Vaughan, 202 955-9864


2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

OST-02-14049 December 30, 2002
Available to Public December 31, 2002
Answer of Evergreen International Airlines to Federal Express' Motion Requesting the Limited Intervention of the Office of Aviation Enforcement Proceedings

Microsoft Word File

2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

FedEx requests the intervention of the Enforcement Office for the purpose of assisting the parties in developing for the Department's consideration a proposed allocation of the frequencies at issue in this proceeding. Evergreen supports the concept proposed by FedEx, and asks that the Department issue an appropriate order that would enable the parties to discuss a proposal for allocation of fifth-freedom frequencies and route rights, under the Department's guidance. Evergreen notes, however, that in the Department's Order cited by FedEx in support of its request, and in order to provide all parties with an appropriate comfort level on antitrust issues, the Department granted the parties antitrust immunity while nonetheless finding that the meeting contemplated would not give rise to antitrust liability. Such an approach also would be in the public interest here.

Counsel:  Evergreen and Global Aviation Associates, Jon Ash, 202-457-0212, jfa@ga2online.com


2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequencies

OST-02-14049 January 2, 2003 Answer of Kalitta Air US-Hong Kong Fifth-Freedom All-Cargo Frequencies
    Service List  

The applicants in this proceeding believe that discussions may enable them to present a joint position to the Department that would permit the Department to allocate the frequencies at issue without the necessity of a fully litigated route proceeding. While Kalitta Air agrees that such a discussion, confined specifically to the allocation of Hong Kong Fifth Freedom frequencies, would not put the participants in jeopardy of antitrust liability, out of an abundance of caution we believe that the presence of a representative of the General Counsel's office would relieve any possible concerns. 

The process proposed by the applicants is little different than discussions authorized by the Department or the Civil Aeronautics Board in the past. The example cited by FedEx is very closely on point. In Order 88-12-12, the Department authorized discussions concerning scheduling adjustments to relieve congestion at O'Hare. It stated "The product of the discussions will not be a private agreement among the carriers but an FAA decision exercising its statutory authority to regulate use of the nation's airspace. Since any restrictions imposed on the carriers' operations will result from FAA action, the carriers' participation in the discussions cannot create a risk of antitrust liability."

The purpose of the proposed discussion is essentially the same: not a private agreement, but a joint proposal to assist the Department in exercising its statutory authority to allocate the frequencies at issue. The Department may decide to allocate the frequencies in accordance with the proposal, or it may decide that the matter should be fully litigated. In any event, the action is the government's, and there should not be any risk of liability. Nonetheless, the ensure full disclose and transparency, Kalitta Air urges the Department to act promptly to authorize the intervention of the Assistant General Counsel for Aviation Enforcement and Proceedings in the proposed discussions amongst the applicant carriers.

Counsel: Sher Blackwell, Mark Atwood, 202 463-2513


2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

OST-02-14049 January 3, 2003 Answer of Atlas to Motion of Federal Express for Limited Intervention

Word Document

2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

By motion dated December 24, 2002, Federal Express Corporation has asked to have the Department's Office of Aviation Enforcement and Proceedings facilitate discussions by the parties in an effort to develop a proposed allocation of Hong Kong 5th freedom frequencies. Atlas Air, Inc. hereby submits its answer to the FedEx motion. 

Atlas supports the premise underlying the motion - that it is in the public interest for the parties to attempt to reach a compromise making it unnecessary for the Department to divvy up the very limited number of available frequencies. Therefore, Atlas believes it is appropriate for the Department to take action to alleviate the antitrust concerns that are standing in the way of settlement discussions.

Counsel: Atlas, Russell Pommer, 202 354-3843


2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

OST-02-14049 January 6, 2003 Answer of Polar Air Cargo 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

Polar joins with the other applicants in seeking to reach a settlement of the issues in this proceeding without recourse to a carrier selection case. Such a result would benefit the applicants as well as DOT staff by avoiding the expanse and delay of such a proceeding. Moreover, any settlement proposed by the applicants would be subject to DOT approval, assuring that the settlement will be consistent with the public interest.

Counsel:  Polar and Wilmer Cutler, Jeffrey Manley, 202-663-6670


2002 Hong Kong Fifth Freedom All-Cargo Proceeding

OST-02-14049 January 16, 2003 Notice Staying Procedural Dates 2002 Hong Kong Fifth Freedom All-Cargo Proceeding

By Order 2002-12-11, the Department instituted the 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding, Docket OST-2002-14049, and established a procedural schedule for the proceeding. In response to a request from a number of the applicants for additional time, the Department extended the original procedural schedule by a Notice, served on December 23, 2002. Under the revised procedural schedule Direct Exhibits are due January 28, 2003; Rebuttal Exhibits, February 14, 2003; and Briefs, February 28, 2003. 

Various applicants in the proceeding have filed petitions and motions whose resolution would affect the parties’ evidentiary submissions in this proceeding. We anticipate that the matters raised by these petitions and motions will be resolved soon. However, in the circumstances presented, we have concluded that pending such resolution, parties should not be burdened with the need to complete and submit their evidentiary materials. Therefore, we are staying the remaining procedural schedule for this proceeding until further notice.

By: Susan McDermott


2002-2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

OST-02-14049 January 22, 2003 Correspondence 2002-2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

Russ, I noted that in acknowledging receipt of our Notice staying procedural dates in Docket OST-2002-14049, you added a thought that might be viewed as a substantive request. In this regard, I feel I should point out that if you indeed are requesting a modification of the instituting order, you will need to comply with 14 CFR 302.14. I am placing a copy of your email to me and my reply in the correspondence section of the docket.

Thanks, Linda. Now that procedural dates have been suspended, one thing The Department might consider addressing in its upcoming order is whether the forecast year for first-year proposals still should be CY 2003.

By: Linda Senese


Federal Express

OST-02-14049 February 21, 2003 Answer of Intel Corporation in Support of Federal Express application US - Hong Kong All Cargo

By: Sally Coffin

OST-02-14049 February 4, 2003 Answer of NEC Electronics (Europe) GmbH in Support of Federal Express application US - Hong Kong All Cargo

By: Peter Sachse


Hong Kong Fifth-Freedom

Order-03-2-27
OST-02-14049
Issued February 28, 2003
Served February 28, 2003
Order on Reconsideration All-Cargo Frequency Proceeding
    Applications as Amended and Supplemented  

By this order, we address various issues raised in three separate petitions for reconsideration to the instituting order, as well as a motion and related requests in the above-referenced proceeding. We deny the relief requested by Federal Express in its petition for reconsideration and request for decision by the Secretary of Order 2002-12-11 which instituted the proceeding. We deny the motion of Federal Express requesting the limited intervention of the Office of Aviation Enforcement and Proceedings, and also deny the requests for antitrust immunity in relation to the Federal Express motion. We grant the petitions of Federal Express and Polar Air Cargo concerning the evidence request, and, upon reconsideration, modify, in part, the evidentiary material to be filed by the applicants. We also establish revised procedural dates for processing this case.

In view of our decisions above, we are revising the remaining procedural schedule for this proceeding as follows: Direct Exhibits: March 21, 2003 Rebuttal Exhibits: April 4, 2003 Briefs: April 14, 2003

By: Read C. Van De Water


2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

OST-02-14049 March 21, 2003 Re:  Atlas Air Withdraw of Request 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

Atlas Air, Inc. wishes to advise the Department and the parties that it is withdrawing its request for two Hong Kong fifth‑freedom all‑cargo frequencies in the captioned proceeding. Accordingly, Atlas will not be submitting direct exhibits, which are due today. The decision to withdraw was not an easy one. Because the overall demand for Hong Kong frequencies is quite high, Atlas has decided against making the expenditure of resources associated with its further participation in this proceeding and instead will focus on other commercial opportunities.

In its application for Hong Kong fifth-freedom rights in Docket OST-2002­13761, which has been consolidated into the above-referenced proceeding, Atlas also is seeking expanded U.S.-Hong Kong route authority to reflect the rights made available to all U.S. carriers under last Fall's U.S.-Hong Kong aviation agreement. Atlas is not withdrawing that portion of its request in Docket OST-2002-13761.

Counsel:  Atlas, Russell Pommer, 202-354-3843, rpommer@atlasair.com

OST-02-14049 March 21, 2003 Direct Exhibits of Evergreen International 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

Counsel:  Evergreen

OST-02-14049 March 21, 2003 Direct Exhibits of Federal Express 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding
    FX-T-1 - Direct Testimony of Michael Ducker  
    FX-T-2 - Direct Testimony of Dr. Brian Campbell  
    FX-100 - Benefits of FedEx Proposal  
    FX-101 - "A Day in the Life of a FedEx Package"  
    FX-102 - Hub & Spoke System  
    FX-103- AsiaOne & EuroOne  
    FX-104 - International Routes and Historical Schedules  
    FX-105 - Proposed Routes and Proposed Schedules  
    FX-106 - Presence in Hong Kong  
    FX-107 - Presence in The Philippines  
    FX-108 - Presence in Paris  
    FX-109 - Presence in South Korea  
    FX-110 - 2002 Form 10-K, Select Financial Statements  
    FX-111 - Internet Tracking  
    FX-112 - Response to Evidence Request  
    FX-200 - Express Fleet  
    FX-201 - History and Overview  
    FX-202 - Supply Chain Services  
    FX-203 - Customs clearance  
    FX-204 - Customer Service, Technology & Features of Service  
    FX-205 - Recognition and Awards  
    FX-206 - Customer Letters  
    FX-207 - Remarks of Frederick Smith  
    FX-300 - Description of Forecasts  
    FX-301 - 2003 Traffic Forecast  
    FX-302 - 2004 Traffic Forecast  
    FX-303 - Authority Will Generate $153 Million in 2003  
    FX-304 - Authority Will Generate $330 Million in 2004  
    FX-305 - 2003 Traffic Forecast Combined   
    FX-306 - 2003 Traffic Forecast with Seven Additional Frequencies  
    FX-307 - 2003 Traffic Forecast with Four Additional Frequencies   
    FX-308 - 2004 Traffic Forecast Combine  
    FX-309 - 2004 Traffic Forecast with Seven Frequencies  
    FX-310 - 2004 Traffic Forecast with Six Frequencies  
    FX-311 - 2004 Traffic Forecast with Five Frequencies  
    FX-312 - Asia Based Traffic 1996-2002  
    FX-313 - Transpacific Capacity  
    FX-314 - Total Air Cargo at Hong Kong International Airport  
    FX-315 - Economic Impact  
    FX-316 - 15 Connection Points  
    FX-317 - Hong Kong Airport Traffic  
    FX-318 - DHL/Cathay Planned Network  
    FX-319 - US Accounts Shipping to Asia in 2001 or 2003  
    FX-320 - US Accounts Shipping to Asia in 2001 or 2003  
    FX-321 - National Accounts with Subaccounts in Asia  
    FX-322 - Profile of US Exporting Companies    
    FX-323 - US Investment in Asia  
    FX-324 - US Regional Headquarters in Hong Kong  
    FX-325 - US-Owned Foreign Affiliates in China  
    FX-326 - Top US Multinational Corporations  
    FX-327 - Summary of Forecast Economic Impact to the US from Increased Revenues  
    FX-328 - Industrial Impacts  
    FX-329 - Transportation Impacts  
    FX-330 - Operating Statistics  
    FX-331 - US Industrial Statistics for Air Transportation, and Trade Sectors  
    Letters in Support of Federal Express  

Counsel:  Federal Express, Nancy Sparks

OST-02-14049 March 21, 2003 Direct Exhibits of Kalitta Air - Cover Page and Index 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding
    KA-T-1:  Direct Testimony  
    KA-100 Series  
    KA-200 Series  
    KA-300 Series  
    KA-400 Series  
    Service List  

Counsel:  Sher & Blackwell, Mark Atwood

OST-02-14049 March 21, 2003 Exhibits of Northwest Airlines & Testimony 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding
    Series 100 Exhibits  
    Series 200 Exhibits  
    Series 300 Exhibits  
    Series 400 Exhibits  

Counsel:  Megan Rae Rosia, 202-842-3193

OST-02-14049 March 21, 2003 Direct Testimony and Exhibits of Polar Air Cargo 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding
    Direct Testimony  
    Series 100 Exhibits  
    Series 200 Exhibits  
    Series 300 Exhibits  
    Series 400 Exhibits  
    Series 500 Exhibits  
    Series 600 Exhibits  
    Supplemental Application  
    Service List  

Counsel:  Wilmer Cutler, Jeffery Manley, 202-663-6670, jeffrey.manley@wilmer.com 

OST-02-14049 March 21, 2003 Comment of Siemens Procurement and Logistics Services 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

By: Axel Frings

OST-02-14049 March 21, 2003 Index to Direct Exhibits of United Parcel Service 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding
    Response to Evidence Request  
    Direct Testimony  
    Series 100 Exhibits  
    Series 200 Exhibits  
    Series 300 Exhibits  

Counsel:  UPS and Kelley Drye, David Vaughan

OST-02-14049 March 21, 2003 Re:  Inadvertently Ommitted Service List of Federal Express 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

The attached service list was inadvertently omitted from the letter transmitting Federal Express Corporation's direct exhibits in the 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding.

Counsel:  Federal Express, Melissa Paul, 901-434-8580


2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

OST-02-14049 March 31, 2003 Revised Exhibit of Federal Express 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

On March 21, 2003, Federal Express Corporation submitted Direct Exhibits in the captioned proceeding. Upon review of those exhibits, we discovered that Exhibit FX-105 inadvertently contained schedules unrelated to this proceeding, and failed to include other schedules to accurately reflect our proposal. With this letter, we enclose revised pages for the entirety of Exhibit FX-105. The Department and parties should discard the whole of Exhibit FX-105 and replace it with Exhibit FX-1 05 (revised), enclosed with this letter.

Counsel: Federal Express, Bailey Leopard, 901-434-6664


2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

OST-02-14049 April 1, 2003 Re:  Errata Notice of Polar Air Cargo 2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

Attached hereto please find corrected versions of the following Polar Air Cargo, Inc. ("Polar") direct exhibits:

PO-302 PO-303, pp. 1,2 PO-304

The corrections relate primarily to Polar's forecast market shares "without award." The "without award" market shares in the direct exhibits were erroneously based on Polar's current schedule, including services operated with the temporary award of fifth-freedom frequencies, rather than on Polar's proposed schedules without any of the requested fifth-freedom frequencies. Consequently, the direct exhibits showed Polar market shares "without award" in markets such as Manila and Penang that would not be served but for the anticipated award of the requested fifth-freedom frequencies. The primary effect of the corrections is to reduce Polar's "without award" market shares to zero in the affected markets.

The primary impact of these corrections has been on the market shares for Polar's services as they would have been without the award of Hong Kong fifth-freedom authority.

Counsel:  Wilmer Cutler, Jeffrey Manley, 202-663-6670, jmanley@wilmer.com


2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

OST-02-14049 April 1, 2003 Re:  Correction of Kalitta Air Exhibit 2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

Enclosed herewith is a corrected Exhibit KA-301, to substitute for the Exhibit KA-301 that was filed in this Docket on March 21, 2003.

Upon reviewing its direct exhibits Kalitta Air noticed that it had incorrectly stated the amount of traffic that it forecast carrying in year two from Hong Kong to Europe via a connection to another aircraft in Dubai. The correct number should be 148,352 pounds per flight rather than the slightly higher number shown in the original page 2 of Exhibit KA-301; critical segment load factors west of Hong Kong drop slightly to reflect that reduction in forecast on-board loads. 

Also, on page 1 of that same exhibit the onboard load factor on the Dubai to Hong Kong segment should be 76% not 74%. Those corrections are included and highlighted in the attached revised KA-301. The changes are minor in nature and will have no effect on the third and fourth freedom traffic that Kalitta Air forecasts carrying or on the viability and competitiveness of its proposal.

Counsel:  Sher & Blackwell, Mark Atwood, 202-463-2513


2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

OST-02-14049 April 4, 2003 Rebuttal Testimony and Rebuttal Exhibits of Evergreen International 2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding
    Statement of Anthony Bauckham  
    Introduction to Exhibits  
    Rebuttal Exhibits  
    Service List  

Counsel:  Evergreen

OST-02-14049 April 4, 2003 Rebuttal Testimony and Exhibits of Federal Express - Cover Page, Exhibit Index and Service List 2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding
    FX-RT-1:  Rebuttal Testimony of Michael Ducker  
    FX-RT-2:  Rebuttal Testimony of Brian Campbell  
    FX-RT-3:  Rebuttal Testimony of William Langham  
    FX-R-1 through FX-R-128  

Counsel:  Federal Express, G. Bailey Leopard

OST-02-14049 April 4, 2003 Rebuttal Testimony and Exhibits of Kalitta Air 2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

Counsel:  Sher & Blackwell, Mark Atwood, 202-463-2513

OST-02-14049 April 4, 2003 Rebuttal Exhibits of Northwest Airlines 2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding
    Rebuttal Testimony of James Friedel  
    Series 100 Exhibits  
    Series 200 Exhibits  
    Service List  

Counsel:  Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com 

OST-02-14049 April 4, 2003 Rebuttal Testimony and Rebuttal Exhibits of Polar Air Cargo 2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding
    Direct Testimony of Ronald Lane  
    Direct Testimony of David Blond  
    Series 100 Exhibits  
    Series 200 Exhibits  
    Series 300 Exhibits  
   

Letters in Support of Polar

 
    Service List  

Counsel: Northwest

OST-02-14049 April 4, 2003 Rebuttal Testimony and Exhibits of United Parcel Service 2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding
    Direct Testimony of Thomas Weidemeyer  
    Series 100 Exhibits  
    Series 200 Exhibits  
    Series 300 Exhibits  
    Service List  

Counsel: UPS and Kelley Drye, David Vaughan


2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

OST-02-14049 April 8, 2003 Re:  Revised Rebuttal Exhibits of Northwest Airlines 2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

Enclosed on behalf of Northwest Airlines, Inc. please find an original and five copies of Revised Rebuttal Exhibits NW-R-101 (Rev.), NW-R-104 (Rev.) and NW-RT-1 (Rev.) in the above­referenced proceeding. Copies of these Revised Rebuttal Exhibits have been served today by hand delivery or overnight mail on all parties to this proceeding. These revisions are necessary to take into account the expanded city cap applicable to Seoul, Korea in Year 2 of the MOU. The Rebuttal Exhibits distributed on April 4 relied on the Year One cap only. These corrections do not change any material conclusions contained in Northwest’s Rebuttal Exhibits or Testimony.

Counsel:  Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com


2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

OST-02-14049 April 14, 2003 Brief of Evergreen International Airlines, Inc 2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

Hereby submits its brief in this proceeding, in which it has applied for a modest four (4) of the forty (40) Hong Kong fifth-freedom frequencies that are available, which Evergreen would use to inaugurate viable, effective, competitive new fifth-freedom services in the Cologne-Hong Kong, Singapore-Hong Kong, and Seoul-Hong Kong markets, as well as new service in the New York-Hong Kong market and in other en-route markets. As Evergreen has demonstrated in its exhibits and will amplify here, there are multiple pro-competitive reasons that justify an award to Evergreen of the four frequencies it seeks, which, among other benefits, will introduce important new competition in the U.S.-Hong Kong and third-country-Hong Kong markets; provide critical new service options for the shipping public; and further strengthen Evergreen as a viable competitive force to balance the dominance of the existing U.S.-Hong Kong fifth-freedom incumbents and other major U.S.-Asia and Europe-Asia carriers.

Counsel: Global Aviation, Jon Ash, 202-457-0212, jfa@ga2online.com 

OST-02-14049 April 14, 2003 Brief of Kalitta Air 2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

Despite their protestations of being "all things to all shippers," it is apparent that neither of the express carriers is particularly interested in stimulating the low cost heavy freight market in Hong Kong or anywhere else. Indeed, if you asked someone to read their testimony and exhibits in this case without disclosing the name of the proceeding, they would assume that the Department is conducting The Intra-Asia Express Service Case. FedEx boasts that the entire amount of new U.S.-Hong Kong freight that it projects generating from a full 18 frequency award will be express (FX-RT-2, p.9) and even criticizes UPS for forecasting carrying some "general freight" with the new authority that it seeks.

Counsel:  Sher & Blackwell, Mark Atwood, 202-463-2513

OST-02-14049 April 14, 2003 Brief of Northwest Airlines

Microsoft Word

2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

It should be kept firmly in mind, however, that if no government interference in market entry and capacity decision-making is the ideal, then it necessarily follows that when governmental decision-making is unavoidable, less interference is always better than more. The closer the DOT can come to letting the invisible hand of the market make decisions, the better and more sound those decisions will be, and the closer the DOT will have come to achieving its fundamental policy objective, which is to let markets work. The approach Northwest has taken in its Direct and Rebuttal Exhibits is premised on advancing this core DOT objective. We believe that the unique attributes of this case - the number of opportunities available, the number of opportunities sought, and the statements of the applicants regarding their highest priorities - allows the DOT largely to replicate a market-based outcome and thus achieve its most important policy objective, at least insofar as the allocation of thirty-one of the forty frequencies is concerned.

Counsel:  Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com

OST-02-14049 April 14, 2003 Brief of Polar Air Cargo 2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

The full value of fifth-freedom rights does not exist in isolation, confined solely to the two foreign points between which the carriage of traffic is permitted. Rather, the full value of fifth-freedom traffic rights is realized through the economic and competitive leverage the sound use of these rights provides to a carrier seeking to mount, sustain and increase underlying third- and fourth-freedom operations. Used in this manner, broad benefits flow both to the carrier and to the transportation consumers of the country conferring the rights, rather than accruing exclusively to the carrier exercising the rights. Applicants for Hong Kong fifth-freedom frequencies in this proceeding fall into two distinct categories. One is comprised of those applicants intent on enhancing already-significant fifth-freedom market participation and advantage, while proposing no new or meaningful increase in capacity between the U.S. and Asia. FedEx, UPS and Northwest fall into this category. The other category is comprised of carriers seeking to build new service to and from the U.S. through the economic and competitive benefits that flow from a grant of fifth-freedom traffic rights. Polar falls into this category.

Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jmanley@wilmer.com 

OST-02-14049 April 14, 2003 Brief of United Parcel Service 2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding
    Table 1 - The Blend of UPS Price and Service Options Produces Necessary Revenue Benefits  
    Table 2 - Evergreen can Serve the Europe-Hong Kong Market Using Singapore  

As a longstanding proponent of a more open Hong Kong agreement, UPS respectfully submits that it can best utilize the fifth freedom opportunities offered by the new agreement. The grant of UPS' Application would do most to enhance competition and improve service by forging robust links between this critical Asian cargo market and the UPS all-points European and Asian hubs which form the backbone of UPS' worldwide network. While its competitors have enjoyed unique access to such large markets as Japan and China, UPS is eager to achieve meaningful access to Asia's largest cargo market, and market access equal to its global network rivals. The very nature of the new agreement-explicitly recognizing that once Hong Kong traffic transits its first "beyond point," a U.S. airline may carry that traffic anywhere in the world-underscores that this allocation proceeding must focus on building networks. Only through efficient global networks can these new "beyond" rights be most effectively used. The newly-available frequencies should accordingly be awarded to those carriers that can best use them for global distribution network operations, not merely point-to-point, stub-end transport. Aside from Federal Express, which is already the dominant U.S. incumbent carrier, UPS is the only applicant in this case with a true global cargo network. As such, UPS also presents the greatest competitive spur to the major market incumbents-including DHL, whose market share today dwarfs that of UPS.

Counsel: Kelley Drye, David Vaughan, 202-955-9864, dvaughan@kelleydrye.com


2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

OST-02-14049 April 14, 2003 Supplemental Exhibits of Kalitta Air 2002 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

Supplemental Exhibits of Kalitta Air, which contain letters from Members of Congress in support of the application of Kalitta Air.

Counsel: Sher & Blackwell, Mark Atwood, 202-463-2513

April 30, 2003

OST-02-14049

Re: Letter from Federal Express Correcting the Record

FedEx Express has reviewed the briefs filed in this docket and wishes to correct the record in one respect: In its brief, Evergreen takes issue' with the portrayal of its financial condition in Exhibit FX-R-116. In regard to the stockholders' equity portion of the exhibit, FedEx Express should have removed the brackets (signifying negative numbers) from its source data. Evergreen's Form 41 reported stockholders' equity has been positive since 1995, as shown in its brief.

Exhibit FX-R-1 16 was intended to support the statement that during the nine years from 1993 through 2001, Evergreen reported net losses in seven of those years. This statement is, in fact, correct. The column title in the exhibit used the term "net operating profit/(loss)". Insertion of the word "operating" was in error.

Counsel: Federal Express, Nancy sparks, 202-756-2461


2002/2003 U.S.-Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

Issued and Served July 14, 2003

Order 03-7-17
OST-02-14049 - 2002 U.S.-Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

Order to Show Cause | Charts | Word

We tentatively believe that one of the most important uses of the new opportunities achieved by the MOU is the ability for U.S. carriers to link services to their regional hubs, thus enabling U.S. carriers to provide effective global operations and strengthening their networks and consequently providing greater shipping and competitive options for U.S. shippers worldwide. In these circumstances, we have tentatively decided to allocate frequencies to FedEx and UPS that will permit them to link their Asian and European hubs with Hong Kong. We tentatively conclude that allocating FedEx and UPS frequencies to provide effective daily service to both their hubs in Europe and in Asia is critical to our goal of improving service and competitive choices for U.S. shippers and strengthening the market structure for U.S. carrier services in fifth-freedom markets.

By: Susan McDermott


July 16, 2003

OST-02-14049

Correspondence of Stephen Roach

UPS fails on all criteria set forth by the U.S. Department of Transportation to distribute the fifth-frequencies to maximize their benefits to the U.S. public. UPS has unrelentlingly focused its energy on domestic ground and air carrier services while neglecting international opportunities. While domestic ground and air carrier services have subdued, UPS has applied for fifth-freedom rights as an afterthought and not a well planned attack on international air carrier service. UPS will only add excess capacity to alreadly well-served general air freight markets.

By: Stephen Roach


OST-02-14049 - Hong Kong Fifth Freedom All-Cargo Frequencies

July 28, 2003

Comments and Objections of Evergreen International Airlines

Evergreen is extremely disappointed by the Department's tentative decision to award to UPS all of the frequencies for Cologne - Hong Kong services that are available under the MOU, and respectfully objects to the proposed award. There is ample room in this proceeding to achieve a balanced award for Cologne rights through a split award to Evergreen and UPS, and a solid basis in the record for making such a choice, which offers by far the most pro-competitive benefits. The tentative decision, if finalized, would effectively preclude any competition in the Cologne - Hong Kong market for the foreseeable future. It would create a monopoly in the Cologne - Hong Kong fifth-freedom market and, combined with the Paris frequencies award to FedEx, an integrated/express carrier duopoly in the Europe - Hong Kong market.

By: Evergreen, Thomas Lydon, 202-466-2929, tom.lydon@evergreenaviation.com


July 28, 2003

Response of Federal Express to Order to Show Cause

FedEx Express agrees with the Department's tentative allocation of seven weekly frequencies (six in the First Year and one in the Second Year, as defined in the Order) to FedEx Express for its proposed Subic Bay services and of six weekly second-year frequencies for FedEx Express's proposed Paris services. As indicated by the Department in the Order, one of the most important uses of the opportunities provided by the 2002 Memorandum of Understanding between Hong Kong and the United States is "the ability for U.S. carriers to link services to their regional hubs, thus enabling U.S. carriers to provide effective global operations and strengthening their networks and consequently providing greater shipping and competitive options for U.S. shippers worldwide." Order at 7. The Department found that the ability to link hubs to beyond points with effective, daily express services is "critical to [the Department's] goal of improving service and competitive choices for U.S. shippers and strengthening the market structure for U.S. carrier services in fifth-freedom markets." Id. The Department's proposed allocation to FedEx Express is an essential and necessary product of the opportunities and goals identified by the Department.

Counsel: Fed Ex, G. Bailey Leopard, 901-434-6664, gbleopard@fedex.com


July 28, 2003

Objection of Kalitta Air to Order to Show Cause

White Kalitta Air received only four of the nine frequencies it requested in this Proceeding, the pattern of those awards will allow it to implement and sustain services of value to U.S. importers and exporters. Kalitta Air also believes that its performance with these new rights will provide compelling support for a future decision by the Department to allocate a portion of the remaining 16 frequencies to the carrier. As a consequence, Kalitta Air's objection here is very narrow in scope; it is designed only to preserve the Department's ability deploy those final 16 allocations in a manner that the Government determines best suits the public interest at that time.

Counsel: Sher Blackwell, Mark Atwood, 202-463-2513


July 28, 2003

Comments of Northwest to Order to Show Cause

Removing the blind sector restriction, and allowing Northwest, at long last, to carry local cargo on its existing flights not only will dramatically improve the efficiency of Northwest's operation, but also improve the operational efficiency of its overall Pacific cargo network. Finally, the Department seeks to promote new entry in the Hong Kong fifth freedom market. As the Department correctly recognizes, Northwest is a new entrant in the Hong Kong-Manila market, and should be selected for that additional reason as well. Order 2003-7-17 at 10 & n.46. In sum, the selection of Northwest to provide four fifth freedom all-cargo services between Manila and Hong Kong clearly advances all of the Department's public interest criteria.

Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com


July 28, 2003

Objections of Polar Air Cargo to Order 2003-7-17

Regrettably, the tentative decision in this proceeding does not accommodate Polar's pressing need for the fifth freedom Hong Kong rights in the India and Malaysia markets which are required to establish and sustain Polar's new round-the-world routings. Offering service on round-the-world routings are particularly important to U.S. shippers and consignees because such operations open up competing services to a variety of new on-line markets consistent with the rationale underlying the Department's other awards in this proceeding ("to promote greater competition, to improve U.S. carriers' overall route systems, and, most important, to provide more service options to shippers.") Order 2003-7-17 at 8. For instance, Polar's new round-the-world service via Hong Kong will offer U.S. shippers direct access to points in Asia via both transpacific and transatlantic routings. In addition, the round-the-world services will enable Polar to add Delhi to the points it already serves in India, creating on-line service to three of that country's top four cargo markets. Operation of these services via Hong Kong with the support of fifthfreedom traffic to/from that point also will help to assure the availability to U.S. shippers and consignees of more frequent services to, from and between a greater variety of points along the route in both directions.

Counsel: Jeffrey Manley, 202-663-6670, jmanley@wilmer.com


July 28, 2003

Response of United Parcel Service to Order to Show Cause

Significant benefits will flow from awarding UPS six weekly frequencies between Hong Kong and the DMIA Hub. Through its DMTA Hub, UPS provides its full array of cargo, express and logistics services to the spoke cities of Tokyo, Osaka, Taipei, Seoul, Beijing, Shanghai, Bangkok, Penang, Singapore, Mumbai, and Sydney. The importance of this network establishment is illustrated by the fact that, upon the opening of the DMIA Hub establishing UPS' intra-Asia network, UPS' traffic in the region more than doubled. The Department's decision to award these frequencies to UPS was clearly correct.

Counsel: Kelley Drye, David Vaughan, 202-955-9864, dvaughan@kelleydrye.com


July 29, 2003

OST-02-14049 - Hong Kong Fifth Freedom All-Cargo Frequencies

Certificate of Service submitted by Federal Express Corporation

Counsel: Thompson Coburn, Patricia Snyder, 202-585-6900


OST-02-14049


August 4, 2003

Answer of Evergreen International Airlines

Should the Department wish to reconsider its prior decision not to award backup authority in this proceeding, it would be left with the complex task of awarding such authority for all of the frequencies awarded, and not just those covered by FedEx's request, action that would cause further delay. The record in this proceeding lacks any information specifically designed to assist the Department in making such awards. In any event, any frequencies that become dormant should be made available to all applicants. See Order 96-10-2, U.S-Peru All-Cargo Service Proceeding, at 5, where the Department also had proposed not making backup awards ('No party opposed our proposal... and the public interest is best served by retaining flexibility in the event services are not operated. Should any of the carriers not implement service, we will determine appropriate procedures at that time to make full use of the frequencies").

Counsel: Evergreen, Thomas Lydon, 202-466-2929, tom.lydon@evergreenaviation.com


August 4, 2003

Reply of Federal Express Corporation

Files this response to the comments and objections filed by the parties relating to the Department's Order to Show Cause in this Hong Kong Fifth Freedom All-Cargo Frequency Proceeding. FedEx Express is not seeking any additional allocation or amendment to the proposed allocation in this proceeding. Instead, FedEx Express is requesting that it be awarded a back-up designation for frequencies to Seoul, Korea.' Additionally, FedEx Express is seeking clarification of the notice provisions relating to the cessation of operation of the pendente lite frequencies. Those two requests, as set forth in the Response of Federal Express Corporation to Order to Show Cause, are incorporated herein by reference.

Counel: Fed Ex, Nancy Sparks, 901-434-6664


August 4, 2003

Consolidated Answer of Kalitta Air to Comments and Objections to Order to Show Cause

Kalitta Air asks that the final order, at least with respect to the allocations it has tentatively received, not be delayed while the Department attempts to parse out the latest iteration of what it is that Polar/Atlas wants from this Proceeding. The carrier now wishes to shift the markets in which its tentative allocations can be used. Providing that the requested changes do not affect the tentative award to Kalitta Air or any other party, as the applicant contends, Kalitta Air does not oppose the relief requested. However, so as not to further delay a final order on Year One awards, Kalitta Air requests that the Polar/Atlas request be dealt with in a separate order.

Counsel: Sher Blackwell, Mark Atwood, 202-463-2513


August 4, 2003

Consolidated Answer of Polar Air Cargo

Collectively, the six responses to the show-cause order demonstrate the continuing strong demand for Hong Kong fifth freedom frequencies. Polar, for its part, will continue to use the Seoul-Hong Kong frequencies already assigned pendente lite and is eager to start the Delhi/Penang-Hong Kong service that the final order hopefully will allow. In this regard, Polar again notes the relative importance of the Deihi/Penang frequencies to which Polar assigned the highest priority of any service in Year Two of the allocation process.

Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jmanley@wilmer.com


August 4, 2003

Answer of United Parcel Service

Evergreen's objections, if heeded, would block UPS from establishing a critical link between Hong Kong and its European hub at Cologne. Only six total frequencies are available, and Evergreen is requesting two. Additionally, Kalitta has asked that the Department grant UPS only three permanent and two pendent lite allocations to Dubai. The objections of Evergreen and Kalitta should be denied because both are proposing point-to-point, stub-end services for general air freight only, as opposed to the full network pattern of UPS' operations serving both the general air freight and the important door-to-door fully-integrated express market.

Counsel: Kelley Drye, David Vaughan, 202-955-9864, dvaughan@kelleydrye.com


OST-02-14049

August 6, 2003

Motion for Leave to File an Otherwise Unauthorized Document and Rejoinder of Polar Air Cargo

Evergreen has failed to express even a remote desire for Delhi and/or Penang frequencies. Its presentation in this proceeding was confined to supporting its request for two Seoul frequencies in Year One and two Cologne frequencies via Singapore in Year Two. Evergreen never indicated an interest in Hong Kong fifth freedom rights in either the India or Malaysia markets despite applications of Polar as well as three other carriers for authority to serve one or both of those countries. Indeed, Evergreen's Cologne-Singapore-Hong Kong service proposal contemplated a Mumbai, India stop without Hong Kong fifth freedom rights.

Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jmanley@wilmer.com


August 6, 2003

Response of Kalitta Air to Answer of United Parcel Service and Motion to File an Otherwise Unauthorized Document

Kalitta Airis very reluctant to take action which might delay a final decision in this Proceeding. However, in its Answer to Kalitta Air's request that two of the five permanent Dubai city allocations to UPS be made temporary in nature pending the final round of frequency allocations, UPS mischaracterized both the evidence and its own service proposal with respect to Dubai. Because of the potential importance of Dubai to Kalitta Air's long-term expansion, the carrier hereby requests that the Department grant it leave to clarify the record by filing this otherwise unauthorized Response to Answer of United Parcel Service Co.

Counsel: Sher Blackwell, Mark Atwood, 202-463-2513


August 12, 2003

OST-02-14049

Motion to Strike of Evergreen

Polar Air Cargo, Inc. filed a "motion for leave to file and rejoinder" in this docket on August 6, 2003, responding to the August 4, 2003 answer of Evergreen International Airlines, Inc.. Polar's pleading was not authorized by the Order to Show Cause (Order 2003-7-17), and Polar has failed either to allege or to show good cause for the filing of an unauthorized document pursuant to 14 C.F.R. § 302.6(c). Based on Polar's violation of the Department's procedural rules, Evergreen respectfully moves pursuant to 14 C.F.R. § 302.3(d)(2) and 14 C.F.R.302.11 (a) that the Department strike Polar's pleading from the docket.

As the Department knows all too well, in every proceeding there must be an endpoint to responsive pleadings. To that end, when the Department issued an order to show cause in this proceeding, it specifically provided for objections and answers thereto, and for no further pleadings. By its Rejoinder, Polar has in effect requested that the Department now override its procedural plan and allow Polar to have the last bite at the apple. Polar's actions are wholly inappropriate in several respects: first, Polar waits until the eleventh hour, after the filing of exhibits and briefs, to modify its service proposal, a proposal that has been on record in this case for nearly five months. Then, in its unauthorized Rejoinder, Polar presents no new factual or legal arguments in response to Evergreen's objections to that change. Finally, Polar uses an unauthorized filing to make allegations concerning Evergreen that are new and have absolutely no foundation, and to which Evergreen has no opportunity to respond under the procedural rules established for this proceeding. Polar argues, for example, that Evergreen has no interest in India or Malaysia frequencies, when there is no basis for making such a claim. Contrary to the approach taken by several of the applicants, Evergreen submitted a frequency request tailored specifically to, and based on a realistic assessment of, its current needs and goals, rather than greedily requesting more frequencies than it believed it could implement at this time. This approach in no way delineates Evergreen's long term goals and interests in the Hong Kong fifth-freedom markets, which are both serious and extensive, and will be addressed in the next frequency allocation proceeding.

By: Evergreen, Thomas Lydon, 202-466-2929, tom.lydon@evergreenaviation.com


August 13, 2003

Motion for Leave to File an Otherwise Unauthorized Document and Surreply of Northwest Airlines | Word

Hereby responds to the request by Federal Express Corporation that it be allocated backup authority in the Department’s Final Order in this proceeding, and requests leave to file this otherwise unauthorized document pursuant to 14 C.F.R. § 302.6(c). The Department explicitly stated in the Order instituting this proceeding that “we will not place at issue the selection of backup carriers for these frequencies” (Order 2002-12-11 at 4). To the extent the Department is inclined to entertain the request by Federal Express for backup authority at this late stage of the proceeding, the Department should reopen the record and permit all carriers to submit proposals for backup authority.

Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com


OST-02-14049

August 15, 2003

Answer of Polar Air Cargo to Evergreen's Motion to Strike

Evergreen wrongly asserts that Polar has failed to make the good-cause showing required by 14 C.F.R. §302.6(c). As Polar explained in its Motion and Rejoinder, Evergreen's answer of August 4, 2003, had misconstrued Polar's show-cause objection and claimed prejudicial impact where none exists. Polar moved for leave to file a responsive pleading in order to clarify its position in light of Evergreen's answer. The Department characteristically grants motions for leave to file otherwise unauthorized documents submitted for that purpose and Polar respectfully requested the Department provide the same relief in that instance.

Evergreen uses its motion primarily to reinforce its own previously expressed opposition to Polar's request for three Delhi/Penang frequencies in lieu of the three Manila frequencies tentatively allocated to Polar by the Department. Yet, Evergreen offers arguments with little relevance to its request to strike Polar's Motion and Rejoinder. No constructive purpose would be served by granting Evergreen's motion to strike. On the contrary, if Evergreen's view prevailed, an assessment of Polar's objection and standing request for reconsideration of its tentative award in this proceeding would be, without the benefit of clarification, prejudiced.

Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jmanley@wilmer.com


2002/2003 US-Hong Kong Fifth Freedom All-Cargo Frequency Proceeding

Order 03-9-9
OST-02-14049

Issued and Served September 12, 2003

Final Order | Word

We share FedEx's desire to maximize the use of the available frequencies. However, FedEx's proposed approach is focused only on the city caps. Since our awards here will not duplicate the pendente lite authority, the overall year-one and year-two frequency limits could be reached as carriers initiate their services, even though the frequency cap for a particular city being served under pendente lite authority might not be exceeded. Therefore, in responding to FedEx's request, we must also take account of the overall cap on fifth-freedom frequencies.

We have determined that the best approach is for all selected carriers in this proceeding to notify the Department and all parties to this case of their plans for the institution of service under the present allocations. We ask that this notice be provided within seven calendar days of the service of this order (this is equally applicable for first-year and second-year allocations). Only once we have a complete picture of proposed inauguration of service with frequencies allocated in this case will we be in a position to know how long (but in any event not to exceed 90 days) pendente lite frequency holders may continue operating.

By: Susan McDermott


OST-02-14049

September 22, 2003

Notice of Evergreen | Word

Notice of Evergreen International Airlines, Inc., pursuant to the request in Order 2003-9-9, notifying the Department and all parties to the proceeding of their plans for the institution of service under the applicable frequency limitations.

Counsel: Evergreen, Tom Lydon, 202-638-5500, tom.lydon@evergreenaviation.com


September 22, 2003

Notice of Federal Express

For Year One, FedEx Express will begin services between Subic Bay, the Philippines and Hong Kong on September 29, 2003. The incremental services are four frequencies (in addition to the two pendente lite frequencies that we are presently operating). One of the four incremental frequencies will be operated only on a one-way basis (between SFS and HKG).

For the Year Two award, FedEx Express will begin operations on October 27 on the CDG-HKG award. However, instead of serving Moscow, we will be stopping (west bound) en route at Almaty, Kazakhstan on four flights, and as originally planned at Mumbai (BOM) on one flight. Eastbound, all six frequencies will be in use, with blind sector stops except for one day a week, when we will make a traffic stop at BOM. Additionally, we also will institute the single additional Year Two SFS-HKG flight on October 27.

Counsel: Fed Ex, Nancy Sparks, 202-755-2461


September 22, 2003

Notification of Kalitta

Kalitta Air expects to begin service using its allocations during the week of November 10, 2003, subject to the receipt of government authority.

Counsel: Sher Blackwell, Mark Atwood, 202-463-2513


September 22, 2003

Notice of Northwest Airlines

In the Department's Order, Northwest was allocated four weekly frequencies for fifth freedom all-cargo operations between Manila and Hong Kong from the pool of frequencies available immediately under the U.S-Hong Kong bilateral. As the Department is aware, Northwest already operates three frequencies, on a pendente lite basis, LAX-ANC-NRT-MINL-HKG, and Northwest intends to continue those flights. In addition, Northwest plans to implement a fourth frequency on the same routing effective December 1, 2003.

Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com


September 22, 2003

Notification of Polar Air Cargo

hereby notifies the Department that it will use all of the five frequencies allocated to it in that order effective October 26, 2003, as follows:

Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manely@wilmer.com


September 22, 2003

Notice of United Parcel Service

The six Hong Kong-Macapagal Diosdado Airport frequencies (the former Clark Air Force Base) have already been commenced pursuant to a pendente lite exemption. UPS will continue to operate those frequencies.

UPS will commence service utilizing the six Hong Kong-Cologne frequencies, via the intermediate points Mumbai and Dubai, as authorized by Order 2003-9-9, on October 26, 2003.

Counsel: Kelley Drye, David Vaughan, 202-955-9864, dvaughan@kelleydrye.com


OST-02-14049

September 24, 2003

Supplemental Notification of Polar Air Cargo and Request for Extension of Temporary Allocation

Supplements and clarifies its notification filed September 22, 2003, in the above-captioned proceeding. Polar has been allocated four (4) frequencies on a pendente lite basis and will continue to use those frequencies for currently scheduled services until October 26, 2003, when Polar's permanent allocation becomes effective. Polar uses these pendente lite frequencies to operate the following services:

The Seoul-Hong Kong frequencies will continue to be operated after October 26, 2003, as indicated in Polar's original notification. The two frequencies now used for Manila-Hong Kong fifth-freedom service will be used to operate Polar's new Delhi-Hong Kong services via Penang after October 26. Polar will, however, continue to operate services between Manila and Hong Kong on a blind-sector basis after October 26, 2003.

Polar requests that the effectiveness of its temporary allocation of two weekly frequencies for Manila-Hong Kong service continue until these carriers are prepared to start using their frequencies. Evergreen has advised the Department that it may not use its two frequencies until sometime in December or January, and Kalitta' s usage is dependent upon its acquisition of authority from various foreign governments. Polar requests that it be allowed to continue using two out of the total of six frequencies allocated to Evergreen and Kalitta to continue Polar's twice weekly Manila-Hong Kong service on a temporary basis.' Should the Department allow Polar to use these two frequencies, Polar would further ask that the Department require notice from Evergreen or Kalitta, as the case may be, 30 days in advance of that carrier's intention to start using these frequencies so that Polar may effect an orderly withdrawal of service from the market.

Counsel: Wilmer Cutler, Jeffery Manley, 202-663-6670, jeffrey.manley@wilmer.com


OST-02-14049

September 26, 2003

Supplemental Notice of Evergreen | Word

Supplemental Notice of Evergreen International Airlines, Inc., pursuant to the Department's request, in Order 2003-9-9, that all selected carriers in the 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding notify the Department and all parties to the proceeding of their plans for the institution of service under the applicable frequency limitations Evergreen will institute its first flight to Seoul and Hong Kong on December 11, 2003, and will operate its second allocated frequency to Seoul and Hong Kong beginning on January 24, 2004.

Counsel: Evergreen, Tom Lydon, 202-638-5500, tom.lydon@evergreenaviation.com


OST-02-14049

September 29, 2003

Correspondence of Federal Express

When FedEx Express applied for these Year Two rights over nine months ago, we proposed that the route include a traffic stop at Moscow. However, since that time, the Russian Federation has informed the U.S. Government and FedEx Express of additional operational requirements that impose formidable burdens on this flight. After much consideration, we finally decided to drop the Moscow stop and reroute to a point outside the Russian Federation, stopping closer to the midpoint of the flight. We believe that the dropping of a traffic stop - a stop that clearly was not material to the Department's award of rights between HKG and CDG - should not require modification of the Final Order. Instead, the legal effect will be that, after 90 days, FedEx will lose its HKG-DME rights under the automatic provisions of the dormancy clause of that Order. Until various U.S. and Kazakhstan authorities are obtained, this can and will be only a Second Freedom refueling stop.

Our plan continues to be to exercise the valuable rights to connect Hong Kong with our European hub, a goal firmly embraced by the Department in the Final Order. Unfortunately, for reasons beyond our control, the proposed Moscow stop can no longer be maintained. We will move forward with the requisite procedures for seeking rights to serve Kazakhstan when the time is ripe. In the meantime, we see no legal basis for limiting blind sector rights to Kazakhstan.

Counsel: Fed Ex, Nancy Sparks


September 30, 2003

Application of United Parcel Service for an Immediate, Interim Allocation of Frequencies

Six weekly frequencies will go unused during the pendency of Evergreen's and Kalitta' s service commencement. Specifically, UPS recognizes that four of these six weekly frequencies, which have been earmarked for service between Seoul, Korea, and Hong Kong, are immediately useful to UPS. UPS believes that such valuable public resources should not lie fallow and, thus, requests use of all of these frequencies, as they are now or may soon come available, to provide all-cargo service between Seoul, Korea and Hong Kong.

Despite its inability to operate revenue flights in this market today, UPS flies this routing daily on a blind-sector basis. As such, UPS could initiate service immediately, without any costs or network disruption, and it is able to cease service just as quickly when the frequencies are ready to be used by Evergreen and Kalitta, respectively.

Counsel: UPS and David Vaughan, 202-955-9792, dvaughan@kelleydrye.com


October 1, 2003

Response of Kalitta to Supplemental Notice and Request of Polar and Application of UPS

Kalitta Air does not object in principle to the use by Polar and/or UPS of frequencies that it has been awarded but will not be able to use immediately, so long as the Department provide a cut-off of November 10, 2003 for use of Kalitta's frequencies by either of those carriers, and does not impose an additional advance notification requirement.

Kalitta Air plans to inaugurate service as specified in its notice, and is working to secure timely national government authorizations. As required in Order 2003-9-9, Kalitta Air has advised the Department of the date for the startup of its four fifth freedom frequencies in the Hong Kong market: the week of November 10, 2003. Obviously we cannot guarantee that foreign authority will be in hand by that date, but any regulatory delay would far more likely to be measured in days rather than months. Should it become apparent that such a delay will require that the start-up date be correspondingly moved back, the carrier will advise the Department of that fact and of the rescheduled date for the initial flight. Thus, Kalitta Air opposes Polar Air's request for yet another advance notice requirement, which could have the effect of preventing Kalitta Air from commencing service as soon after the planned start-up date as it receives foreign authorization to do so. A firm date for Polar and UPS to vacate the market would provide much greater certainty for their own planning purposes, and would avoid delay in Kalitta Air's entry into these markets.

Counsel: Sher Blackwell, Mark Atwood, 202-463-2513


October 2, 2003

Application of Northwest for Interim Frequency Allocation

Hereby applies for the temporary, interim allocation of one Hong Kong Fifth Freedom frequency in order to provide all-cargo service between Hong Kong and Seoul, Korea. This pleading also responds to the September 24, 2003, request of Polar Air Cargo for an interim allocation of two frequencies and the September 30, 2003, request of UPS for an interim allocation of four frequencies.

In what is a clear reflection of the value of the Hong Kong Fifth Freedom frequencies, even on a temporary basis, two carriers already have requested interim allocations of these unused frequencies. Polar Air Cargo has requested two of the frequencies, which it wants to use for Hong Kong-Manila service, and UPS has requested four of the frequencies, which it wants to use for Hong Kong-Seoul service.

Northwest believes that the competing requests of Polar, UPS and Northwest for temporary allocation of the six unused frequencies can be accommodated fairly and equitably. As mentioned by UPS, Polar's request for two frequencies for Hong Kong-Manila service could be met with an allocation of Kalitta's two Hong Kong-Dubai frequencies. UPS's request could substantially be met with an allocation of Kalitta's two Hong Kong-Seoul frequencies and one of Evergreen's Hong Kong-Seoul frequencies. And Northwest's request could best be met with an allocation of one of Evergreen's Hong Kong-Seoul frequencies, as discussed above. On the other hand, it plainly would be inequitable to allocate all four unused Hong Kong-Seoul frequencies to UPS while denying Northwest's request for a single frequency.

Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com


OST-02-14049

October 3, 2003

Application of Fed Ex for Interim Frequency Allocation

Application of Federal Express Corporation, requesting interim authority for six frequencies to Incheon International Airport at Seoul, Korea, and responds to the application filed by Polar Air Cargo, Inc., United Parcel Service Inc. and Northwest Airlines, Inc. for interim frequency allocations.

The need for interim frequencies to Incheon is borne out by the sudden and rather belated interest in Korea services now expressed by applicants Northwest and UPS. Under the city points cap, there are sufficient Incheon rights available beginning with the IATA Winter 2003 season to allocate four frequencies (in addition to FedEx Express' pendente lite rights) for Hong Kong-Korea service. To allocate rights for Hong Kong-Manila services, given the already fulsome services offered to the Philippines and the current paucity of Fifth Freedom flights to Korea, would be a mistake.

Counsel: Fed Ex, Nancy Sparks


October 3, 2003

Answer of Polar to Pendente Lite Request of UPS and Northwest

Polar, UPS and Northwest each seek an interim Hong Kong fifth-freedom allocation to utilize, on a temporary basis, the frequencies awarded to Kalitta and Evergreen in this proceeding. Northwest and UPS would use the frequencies to commence new revenue service on existing flights in the Seoul-Hong Kong market. Polar would use the frequencies to continue offering Manila-Hong Kong service that is currently in place but scheduled to cease on October 26, 2003 in the midst of the peak season for these markets.

Polar agrees with Northwest that the competing requests of Polar, Northwest and UPS can be accommodated fairly and equitably, but believes that allocating Evergreen's two frequencies to Polar and dividing Kalitta's four frequencies amongst Northwest and UPS would best achieve that goal. Absent an interim frequency allocation, Polar's Manila-Hong Kong service must be withdrawn from the market in a matter of weeks, and the shippers and consignees currently benefiting from Polar's service will lose this transport option at the time of highest market demand. Extending Polar's Manila-Hong Kong service into December and January would offer optimal public benefits from the two frequencies allocated to Evergreen in this proceeding.

Counsel: Wilmer Cutler, Cathleen Peterson, 202-663-6670


2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding

Order 03-10-20
OST-02-14049

Issued and Served October 17, 2003

Order

2003-10-20 address the matter of transition from pendente lite authority to implementation of the authorities awarded to U.S. carriers in the above captioned proceedings.

Effective on the issuance date of this order, the pendente lite authority of FedEx for Subic Bay services, Northwest for Manila services, Polar for Seoul and Manila services, and UPS for Macapagal (formerly Clark Air Base) services will be terminated and immediately supplanted by the long-term authority awarded to these carriers by Order 2003-9-9 in these markets;

Effective November 9, 2003, FedEx must terminate one of its pendente lite frequencies; effective November 30, 2003, FedEx must terminate one of its pendente lite frequencies; effective December 10, 2003, FedEx must terminate one of its pendente lite frequencies; and effective January 23, 2004, FedEx must terminate one of its pendente lite frequencies;

By: Susan McDermott


OST-02-14049

December 2, 2003

Application of Evergreen for Waiver of Start-Up Condition | Word

In Order 2003-9-9, Evergreen received only an award for Seoul, and fewer frequencies than any other applicant.  Because of this, Evergreen has faced particular challenges in establishing its service by the required start-up dates.  This has been further complicated by Evergreen’s extensive commitments to the U.S. military, including its participation in the CRAF program; the continued slackness in the relevant Asian markets; and the authorization of other carriers in this proceeding to simultaneously commence Hong Kong-Seoul fifth-freedom services.  Nevertheless, Evergreen remains extremely enthusiastic about the Hong Kong markets, and is committed to operating the frequencies it has been awarded in this proceeding, commencing services no later than March 10, 2004 and April 23, 2004, respectively, or at earlier dates with 30-day notice being given to the Department and interested parties.

Counsel: Evergreen, Thopmas Lydon, 202-638-5500, tom.lydon@evergreenaviation.com


OST-02-14049

December 3, 2003

Application of Kalitta Air for Exemption for Start-Up Condition

Kalitta Air has inaugurated services utilizing the Dubai frequencies; however, owing to problems it has encountered in Korea, it will require an extension of 90 days to enable it to obtain the necessary authority to institute its fifth-freedom services at Seoul. Kalitta Air has invested a substantial amount of its time and resources to obtain its fifth-freedom frequencies at Dubai and Seoul; as the Department is aware, it has prosecuted its application aggressively. The carrier sees the integration of these points into its developing Europe-Middle East--Hong Kong-United States route network as essential to its ability to establish itself as a long-term competitor in the international scheduled air freight market.

Its efforts to inaugurate scheduled services in Korea, however, have not been as efficient as it originally envisioned. After some unforeseen delays, however, the carrier has made substantial progress in establishing the required infrastructure for it service. The General Sales Agent it initially intended to use was determined to have a conflict of interest that proved irresolvable, forcing the carrier to look elsewhere for this critical service. It has now arranged with Dongbo Aviation Services to act as its general sales agent in Korea, and is in the final stages of negotiating a contract for ground handling services at Incheon. The last remaining step is receipt of operating rights from the Korean Ministry of Construction & Transportation (MOOT). This process originally was to have been handled by the GSA, and it was on this basis that Kalitta Air informed the Department that it intended to start service at Seoul by November 10. That initial assessment proved overly optimistic.

Counsel: Sher Blackwell, Mark Atwood, 202-463-2513


OST-02-14049

Served December 8, 2003

Notice Shortening Answer Period

On December 2, 2003, and December 3, 2003, Evergreen International Airlines, Inc., and Kalitta Air, LLC, respectively, filed, and served on parties to the proceeding in Docket OST­2002‑14049, separate applications for exemption from the startup condition of their respective awards in the 2002/2003 Hong Kong Fifth‑Freedom All‑Cargo Frequency Proceeding, Docket OST 2002‑14049. Under the terms of Order 2003‑9‑9, which awarded these carriers frequencies, each carrier was allocated frequencies in specific markets for an indefinite period, provided that the selected carrier inaugurates service within 90 days of the service of the order (i.e., by December 11, 2003). Both applicants cite problems in being able to begin services at Seoul, Korea.

Therefore, acting under authority assigned in 14 CFR 385.3, we will shorten the answer period and will require that answers to the above‑captioned applications be filed no later than 12:00 noon Tuesday, December 9, 2003, and that replies to any answers be filed no later than 10:00 a.m. Wednesday, December 10, 2003.

By: Paul Gretch


OST-02-14049

December 5, 2003

Correspondence of Evergreen Airlines

On December 2, 2003, Evergreen filed an application in this docket for a waiver of start-up condition, namely requesting a 90-day extension of the start-up dates for the two frequencies it was awarded in Order 2003-9-9 for Hong Kong fifth-freedom services. Evergreen has polled the other parties to this docket, of which Polar Air Cargo, Inc. and Federal Express have indicated an intent to file answers to the application. In light of the fact that the start-up deadline for one of Evergreen's frequencies is December 11, 2003, Evergreen requests that the Department process its application on an expedited basis, and require Polar and FedEx to file their answers by Tuesday, December 9, 2003.

By: Evergreen, Tom Lydon, 202-638-500


December 9, 2003

Answer of FedEx in Opposition to Exemption Applications and Motion to Reallocate Frequencies

At a bare minimum, the Department should: (1) continue FedEx Express' interim authority to operate two Hong Kong-Seoul frequencies; and (2) grant FedEx Express additional interim authority to operate two more Hong Kong-Seoul frequencies. In compliance with Order 2003-10-20, FedEx Express has prepared to stop offering Hong Kong-Seoul services on one regular U.S.-Asia weekly flight tomorrow, December 10, 2003, and is making plans to discontinue another as of January 23, 2004. To avoid allowing these valuable, high-demand frequencies to go unused, if the Department grants Kalitta' s and Evergreen's exemption applications over FedEx Express' objection, it should immediately extend FedEx Express' remaining interim authority indefinitely.

Since the first of FedEx Express' two interim Hong Kong‑Seoul frequencies expires tomorrow, December 10, 2003, the Department should act immediately in this regard. Furthermore, if the Department grants Kalitta' s and Evergreen's exemption applications over FedEx Express' objection, it should allocate the two remaining Hong Kong‑Seoul frequencies to FedEx Express on an interim basis as well. As stated above, these valuable, high‑demand resources should not lie fallow, and FedEx Express stands ready to immediately put them to their highest and best use.

Counsel: Fed Ex, G. Bailey Leopard, 901-434-6664


December 9, 2003

Application of Northwest for Interim Frequency Allocation | Word

Hereby applies for the temporary, interim allocation of one Hong Kong Fifth Freedom frequency in order to provide all-cargo service between Hong Kong and Seoul, Korea.

Northwest hereby requests one of the unused frequencies for use on Hong Kong Seoul service, preferably one of Evergreen's two unused frequencies. Northwest requests this authority to be granted until such time as Evergreen (or Kalitta, as the case may be) commences service using the frequency in question. Northwest currently operates a freighter on a blind-sector basis between Hong Kong and Seoul. Thus, Northwest would be able to commence service promptly and efficiently upon the allocation of the requested frequency and, thereby, maximizing the value of the requested frequency. Likewise, Northwest could promptly cease service when the frequency ceases to be available. In the Department grants this application, Northwest will provide Hong Kong-Seoul fifth freedom service one day a week, on day 7, utilizing B-747F equipment.

Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com


December 9, 2003

Consolidated Answer of Polar Air Cargo

If Evergreen is granted its requested startup postponement until March 10, 2004 and April 24, 2004, respectively, for its two Hong Kong frequencies, the Department can have no confidence that Evergreen's service will commence when now proposed. The uncertainty three ‑ four months from now would likely be no less than it is today. Presumably, the Department intends to institute a proceeding in the early months of next year to assign the 16 new Hong Kong 5th freedom frequencies that will become available October 28, 2004. Should the Department grant Evergreen's requested startup waiver, it likely would find itself having to address Year 3 frequency assignment issues without having the benefit of knowing whether all earners have started to use their Year 1 and 2 frequencies and can be expected to sustain their Hong Kong services.

Evergreen's request for a startup extension, institute an expedited carrier selection proceeding to reallocate Evergreen's unused frequencies and, should the Department determine to provide the relief sought by Kalitta, limit such relief to a period no longer than 30 days.

Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jmanley@wilmer.com


OST-02-14049

Filed December 2, 2003 and December 3, 2003 | Issued December 10, 2003

Notice of Action Taken - Applications of Evergreen and Kalitta

By Order 2003-9-9, the Department finalized its decision in the 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding, and allocated 40 frequencies among six applicants for new services in the Hong Kong fifth-freedom market. In reaching that decision, we recalled the approach we had followed in our tentative decision, where we said:

[a]mong the longstanding U.S. policy goals we would look to accomplish here are expanding the service choices for the U.S. shipper, both as to express and general cargo service; strengthening competition among U.S. carriers and among U.S. and foreign carriers in the Pacific rim region to the benefit of U.S. shippers; providing enhanced U.S. carrier route systems and hub connection possibilities to improve operational efficiencies and service; and promoting new entry into the fifth‑freedom market.

Against this background, we evaluated the proposals and made each of our selections based on the objectives we sought to achieve and in the interest of securing public benefits. In this regard, we allocated two weekly all‑cargo fifth­freedom frequencies each to Evergreen and Kalitta for services between the United States and Hong Kong via the fifth­freedom point Seoul, Korea. We continue to believe that these carriers' services via Seoul will be in the public interest, and we will grant each carrier the 90‑day waiver it has requested.

Taking into account, however, that other carriers have expressed strong and active interest in providing service in this market, we would expect the selected carriers to move expeditiously and vigorously to complete the steps required for inauguration of the authority that we awarded them. In this regard, we will require Evergreen and Kalitta to file in this docket (and to serve on all parties in this proceeding) every 30 days beginning on the 30th day from issuance of this notice a letter apprising the Department in detail of its progress towards meeting the prescribed service start up. This letter should include a complete status report of their application process before the Korean authority, including thorough discussion of Korean government evidentiary and other requirements, whether the carrier has met its target dates (consistent with timely startup) for completion of each such requirement, and, if not, an explanation as to why it did not. Failure to meet this reporting requirement may result in revocation of this waiver.

Notwithstanding this reporting requirement, we are putting both carriers on notice that there should be no expectation that an additional request will similarly be granted. As is our policy in considering waiver requests, we reserve the right to reexamine whether grant of this waiver continues to be in the public interest. Any future request to extend the waiver for the frequencies at issue here will have to be considered in light of the specific arguments offered and responses thereto, and in the context of the circumstances presented at that time, including whether another carrier seeks to use the frequencies at issue.

As to the remaining frequencies, regarding FedEx's request for continuation of its pendente lite frequencies at Seoul, we note that when we granted such authority we prescribed a 30-day notice requirement to ensure a smooth transition and thus required awardees to specify startup dates for their proposed services. Under those stated intentions, we thus directed FedEx that it could take down certain frequencies on a graduated basis. In view of the circumstances presented, we will extend FedEx' pendente lite authority for two Seoul frequencies through March 10, 2004. However, since we expect both applicants to be in a position to begin services to Seoul on or before March 10, 2004, we will require Evergreen and Kalitta to inform the Department and FedEx at least two weeks prior to their inaugurating service so that FedEx can take down its services in a timely fashion.

By: Paul Gretch


December 10, 2003

Reply of Evergreen | Word

On December 2, 2003, Evergreen International Airlines, Inc. filed an application to extend the start‑up period for the Hong Kong fifth‑freedom frequencies that it was awarded in this proceeding by Order 2003‑9‑9. Federal Express Corporation and Polar Air Cargo, Inc. have filed answers opposing Evergreen's application. As Evergreen noted in its application, both FedEx and Polar have in other markets requested and been granted repeated extensions of start‑up periods due to economic and other challenges. Evergreen's request for a 90‑day extension is no less meritorious, and Evergreen should be afforded the same opportunities in this case.

Counsel: Evergreen, Thomas Lydon, 202-638-5500, tom.lydon@evergreenaviation.com


December 10, 2003

Reply of Kalitta Air

Contrary to Federal Express' condescending characterization, Kalitta Air's service in Asia is not an "experiment" ‑ but if FedEx wishes to construe it as such, it must also concede that it has been and remains a very successful one. Kalitta Air's focus on providing dependable international 747‑200F service at low cost continues to be well received in the marketplace. Demand for capacity on Kalitta Air's flights from Hong Kong was strong throughout the peak season and remains surprisingly strong for post peak.' Kalitta Air's Atlantic and Pacific scheduled services are profitable.

Counsel: Sher Blackwell, Mark Atwood, 202-463-2513


December 10, 2003

Reply of Polar Air Cargo

In response, Polar wishes to clarify that it is prepared to make immediate use of up to four frequencies for 5th freedom service between Hong Kong and Seoul, either on a pendente lite or permanent basis, and to the extent necessary hereby applies for an allocation of such frequencies. Both FedEx and Northwest already have more extensive route authority than Polar, and an award to Polar will assure more benefits to consumers than would an award to either FedEx or Northwest. Moreover, while Northwest and FedEx operate Asian regional hubs at Tokyo and Subic Bay, respectively, Polar's Asian hub is at Seoul, further assuring Polar's superior ability to put these additional frequencies to use immediately and to continue to use them consistently in the future.

Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jmanley@wilmer.com


OST-02-14049

Served December 11, 2003

Notice

By Notice of Action Taken, dated December 10, 2003, we granted the 90‑day waiver requests (from startup conditions) of Evergreen International Airlines and Kalitta Air LLC for the two Hong Kong‑Seoul fifth‑freedom frequencies each had been awarded in the 2002/2003 Hong Kong Fifth‑Freedom All‑Cargo Frequency Proceeding. In granting those waivers, we indicated that several carriers had expressed interest in using on an interim basis some or all of the frequencies available. The December 10, 2003, Notice of Action Taken permitted Federal Express to continue operating through March 10, 2004, the two frequencies it had already been authorized to use on a pendente lite basis. Thus, two frequencies remain available for interim use.

On December 9, 2003, Northwest filed an application for interim use of one frequency. In pleadings that they filed in connection with Kalitta's and Evergreen's waiver requests, Federal Express and Polar expressed interest in using all the available frequencies.

We invite any other carrier parties to the 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding willing and able promptly to implement service on an interim basis with one or both of the available fifth-freedom frequencies to file an application to this effect no later than noon, Monday, December 15, 2003. Applicants should specify their proposed startup date, how the frequencies will be used, and the type of aircraft to be used. Carriers may also present any additional information which they feel will facilitate a decision in this matter. Comments on all requests heretofore received (FedEx, Polar, and Northwest) and on those filed by noon Monday, should be filed by noon, Wednesday, December 17, and any replies thereto should be filed by noon, Thursday, December 18, 2003.

By: Paul Gretch


December 15, 2003

Supplement of Federal Express to Request for Frequency Allocation

In this supplement, we describe in more detail our proposal to use the two remaining unused frequencies on an interim basis and explain why FedEx Express will make the best use of these highly valuable frequencies. As we stated in our initial request, FedEx Express currently operates seven flights per week from Incheon International Airport at Seoul, Korea, to Hong Kong, on a blind‑sector basis. FedEx Express would use the two interim fifth‑freedom frequencies to make those operations more efficient and to lower the overall cost of our U.S.‑Asia operations. In addition, we would use the frequencies to improve the price and service options available to U.S. shippers and exporters.

FedEx Express has a long-standing unsatisfied interest in the Hong Kong- Seoul market. In Docket 2002-13737, FedEx Express requested pendente lite authority for the market. We then reiterated our request for Hong Kong-Seoul frequencies in the permanent Year One/Year Two case in this Docket.

Counsel: FedEx, Thomas Donaldson, 901-434-6664


December 15, 2003

Supplement to Application of Northwest Airlines for Interim Frequency Allocation

Hereby supplements its application for one Hong Kong-Seoul fifth freedom allcargo frequency, dated December 9, 2003, to clarify that Northwest will start using the requested temporary frequency immediately as soon as approvals are granted. Northwest wants to use the interim Hong Kong-Seoul frequency as long as it can and is prepared to continue doing so beyond April 23, 2004, until Evergreen and Kalitta Air are ready to start up.

Northwest will use the requested temporary frequency to provide all-cargo service carrying general freight between Hong Kong and Seoul (Incheon) on one weekly Boeing 747-200F flight that Northwest is currently forced to operate between those points on a blind sector basis. Removal of the wasteful Hong Kong-Seoul blind sector restriction and permitting Northwest to carry Hong Kong-Seoul local traffic on one weekly Hong Kong-Seoul-Anchorage-Los Angeles flight will expand service options for shippers and forwarders in the Hong Kong-Seoul market, increase Northwest's operating efficiency and introduce effective new network competition for existing fifth freedom service in this important market currently operated by Federal Express, Polar and several foreign carriers. Northwest has been transporting cargo between the U.S. and Asia since it began transpacific operations in 1947, and it will be a strong competitor for Hong Kong-Seoul local traffic for as long as the Department permits it to operate the sector with fifth freedom rights.

Counsel: Northwest, Megan Rae Rosia, 202-842-3193


December 15, 2003

Supplement to Application of Polar Air Cargo for Interim Assignment of Frequencies

Polar requests both 5th freedom frequencies for interim use in the Seoul-Hong Kong market. Because it is today flying services between Seoul and Hong Kong on a blind-sector basis on round-trip operations across the Pacific, Polar is prepared to put the frequencies to use on these routes immediately upon receiving all requisite authorizations. Service would be provided by Boeing-747 freighter aircraft.

Unlike any other applicant of record, Polar has established in Incheon, Korea its principle hub of operations in Asia. Through this hub, Polar provides service on routes across the Pacific, within the Asia/Pacific region and between Asia and Europe. Although Polar immediately put to use the 5th freedom frequencies it was previously awarded, those frequencies have not been sufficient to accomplish the full pattern of connections desired at Polar's hub .3 The 5th freedom frequencies requested herein for interim use will allow Polar to enhance its services through better operational efficiencies at its hub and improve its competitive position vis-à-vis other U.S. carriers with more extensive route authority as well as foreign carriers that are not similarly constrained.

Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jmanley@wilmer.com


December 15, 2003

Application of United Parcel Service for an Immediate, Interim Allocation of Frequencies

Hereby applies, pursuant to Part 302.300 of the DOT's Procedural Regulations, and in response to the Department of Transportation's December 11, 2003 Notice, for a temporary award of two roundtrip frequencies enabling UPS to provide scheduled all-cargo (property and mail) fifth freedom air transportation service between Hong Kong and Seoul, Korea.

UPS currently operates widebody freighter aircraft on a blind-sector basis between Hong Kong and Seoul in both directions six times per week. Thus, UPS would be able to commence service immediately and efficiently upon the allocation of the requested frequencies, thus maximizing the value of the frequencies. UPS would simply open its currently "closed door" on flights already being operated. Likewise, UPS would be able to promptly cease providing the temporary services at such time as Kalitta or Evergreen were ready to commence their services.

Counsel: UPS and Kelley Drye, David Vaughan, 202-955-9864, dvaughan@kelleydrye.com


December 17, 2003

Comments of Northwest Airlines

FedEx does not deserve any of the available temporary frequencies. FedEx already dominates the Hong Kong fifth freedom market, with more total Hong Kong fifth frequencies than any other applicant. FedEx operates daily Hong Kong-Seoul service, had the benefit of four interim Hong Kong fifth freedom frequencies until November 22, 2003, and still retains two interim fifth freedom Hong Kong-Seoul frequencies. With five permanent Hong Kong-Seoul frequencies and a total of eight Hong Kong fifth freedom frequencies, Polar would also be a poor choice for an interim award. Along with FedEx, Polar was a member of the duopoly that held all of the Hong Kong fifth freedom frequencies before the 2002 Proceeding (see Exhibit NW- 106), and Polar received two more permanent Hong Kong-Seoul fifth freedom frequencies, plus three additional frequencies, in that proceeding. Polar greedily complains that its five Hong Kong-Seoul permanent frequencies "have not been sufficient to accomplish the full pattern of connections desired" (Polar Supplement at 2), while Northwest has no fifth freedom access in that local market. Awarding Northwest its first Hong Kong-Seoul fifth freedom frequency for its single Hong Kong-Seoul flight would introduce a new entrant in that local market and do far more to enhance competition than would allocating Polar a sixth fifth freedom frequency in that market. Northwest needs one fifth freedom frequency to compete effectively with Polar's five weekly flights that already have local market access.

Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com


December 17, 2003

Consolidated Answer of Polar Air Cargo

All applicants propose to use the frequencies to carry local freight between Seoul and Hong Kong on existing flights. Consequently, all applicants would be able to start services under apendente lite allocation without delay and without additional capital investment. This is where the similarity ends. Only Polar requires the use of these frequencies to add service at a hub because only Polar among these applicants operates a hub at Incheon International Airport in Seoul, Korea. Through this hub, Polar offers same-plane or connecting service to all principle economic regions of the world. This includes service to and from North America, South America, North Asia, South Asia, the Indian subcontinent, the Middle East and Europe. In the earlier stages of this proceeding, the Department recognized the importance of allocating fifth-freedom frequencies to enable carriers to develop services, as proposed herein by Polar, at their regional hubs.

Historically, Polar has demonstrated its ability to use Hong Kong fifth/freedom frequencies to great effect. Indeed, it was the Department's initial award of such frequencies in 2001 that enabled Polar to establish its hub at Seoul. 2001 Hong Kong Fifth-Freedom All-Cargo Frequencies, Orders 01-10-15 and 01-8-27. Polar sought additional Hong Kong-Seoul frequencies in the 2002/2003 Hong Kong case to expand its hub at Seoul but was awarded only half of what it sought. By contrast, FedEx and UPS each received allocations sufficient to enable them to operate daily frequencies between Hong Kong and two hubs. Indeed, in the case of FedEx, it was granted enough frequencies to be able to offer double daily service at Subic Bay. Similarly, Northwest received all of the frequencies it requested in the 2002/2003 Hong Kong case. Neither Northwest nor UPS even prosecuted applications for authority to serve Seoul in that proceeding.

Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jmanley@wilmer.com


December 17, 2003

Consolidated Answer of United Parcel Service

Of the applicants, only UPS currently operates the Hong Kong-Seoul routing on a round trip basis. The application of FedEx states that it now operates the blind sector routing in one direction only, and, thus, proposes to operate the requested authority on a one-way basis. The applications of Polar and Northwest are unclear as to whether the proposed use of the frequencies will be one-way or round-trip. Our reading is that both carriers propose only one-way service which is clearly not the most efficient use of these frequencies. Northwest appears to propose only Hong Kong to Seoul service, and although Polar states that it conducts "round-trip operations across the Pacific," it appears to be offering only Seoul to Hong Kong service. Such use does not maximize the economic benefits of these valuable frequencies and it ignores half of the shippers and consumers in this market. Thus, an award of the frequencies to any of the other applicants clearly wastes half of the instant authorization.

Counsel: UPS and Kelley Drye, David Vaughan, 202-955-9864, dvaughan@kelleydrye.com


December 18, 2003

Consolidated Reply of Polar Air Cargo

Contrary to the arguments of both Northwest and UPS, the Department's primary objective in making these or previous Hong Kong fifth-freedom frequency awards was not to promote competition among carriers for the business of shippers and forwarders in the Seoul-Hong Kong market exclusively. Rather, the Department has clearly sought to award these fifth-freedom rights in a manner that will offer additional competitive benefits to United States shippers, forwarders, and consignees, as well as to those in the fifth-freedom market at issue, and to spur competition among carriers in the Asia/Pacific region.

Polar is the only applicant that will use these frequencies to strengthen competition in the Seoul‑Hong Kong market and among regional and global cargo networks. With these additional frequencies Polar will offer a more competitive pattern of services to points throughout its network extending from Seoul to the Americas, the Asia/Pacific region, India, the Middle East and Europe. Moreover, Polar will maximize the utilization of these frequencies as the only applicant using B747 aircraft on a round‑trip basis between Seoul and Hong Kong.

Counsel: Wilmer Cutler, Jeffrey Manley, 202-663-6670, jmanley@wilmer.com


December 18, 2003

Consolidated Reply of Northwest Airlines

The crux of Polar's argument is that it should receive both frequencies because it is the only applicant with a hub at Incheon International Airport. This "hub" argument is irrelevant because Polar is not proposing to add more hub flights, but rather to carry local traffic on flights already operated. Polar already benefits from five Hong Kong‑Seoul fifth freedom frequencies and should not receive two more Seoul frequencies before Northwest is granted its first Hong Kong‑Seoul fifth freedom access. Moreover, as Polar recognizes, "the Department awarded FedEx and UPS 25 of the 40 frequencies available for allocation" for hub development in the 2002/2003 Hong Kong Fifth‑Freedom All‑Cargo Frequency Proceeding. When it did so, it also increased Polar's Hong Kong‑Seoul fifth freedom frequencies from three to five for use at Polar's Korean hub. The remaining 13 frequencies were allocated for the non‑hub operations of Kalitta, Evergreen and Northwest, as well as Polar. The two interim frequencies at issue were awarded for non‑hub operations of Kalitta and Evergreen, and they should not be converted to hub frequencies for Polar even on a temporary basis. As UPS explains, the Department decided not to award additional authority to Polar in the 2002 Proceeding because such an award "would not be consistent with our approach of spreading our allocations among the various applicants in ways that best help us achieve our goals in this proceeding." Allocating a temporary frequency for Northwest's non‑hub operations at Seoul is also consistent with the Department's grant of two weekly Hong Kong‑Seoul pendente II frequencies to FedEx, another carrier without a Seoul hub.

As Polar points out, all applicants propose to use the frequencies to carry local freight between Seoul and Hong Kong on existing flights that now have blind sector restrictions, and all applicants can commence their proposed service without delay. Northwest is ready, willing and able to so as soon as possible and urges the Department to grant Northwest's application for one temporary frequency immediately.

Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com


January 9, 2004

Re: Report of Evergreen International

An application has been submitted for Foreign International Air Transport Business Permission to the International Air Transport Division, Korean Ministry of Construction and Transportation (KMOCT) for a start‑up of scheduled all‑cargo services on March 8, 2004. This application includes details of start‑up date, an application for slots, days of operation and routing of the flight.

Counsel: Evergreen, Thomas Lydon, 202-638-5500


January 9, 2004

Re: Report of Kalitta

Kalitta Air's application remains pending before the Korean MOCT. To date Kalitta Air, through its attorneys in Seoul, has received and immediately responded to a number of MOCT inquiries and requests, each of which had to be translated from English to Korean before submission to MOCT by Korean counsel. A few of the requests were for certain registration, airworthiness or noise documents for specific aircraft that Kalitta Air's records show had already been provided to the MOCT. These were, of course, immediately resubmitted. Other recent inquiries were somewhat less germane.

Counsel: Sher & Blackwell, Mark Atwood, 202-463-2513


Issued January 9, 2004

Notice of Action Taken

The matter before the Department involves immediate replacement for interim authority for two Hong Kong-Seoul fifth-freedom frequencies. Our focus here is thus much narrower than it would be in a proceeding where we were deciding selections and allocations for the long term. Here, we are seeking a temporary solution for a specific problem— i.e., that two carriers we selected in the long-term proceeding have not yet begun service and might not do so for a period of some weeks. Thus, the type of service that we anticipated would be present in the market by this time is not yet available to the public. Our goal is to provide, to the extent possible, comparable public benefit during this interim period.

Against this background, we have decided to award one frequency each to Northwest and Polar through March 10, 2004. We will thereby be awarding authority to two carriers whose cargo operations concentrate on the type of cargo service—i.e., general all-cargo services—that most closely corresponds to that of the long-term award holders, Kalitta and Evergreen, whose entry has been delayed. We will also, by awarding this interim authority to two different carriers in addition to our earlier award of two interim frequencies to FedEx, be adding to shipper options and promoting competition. In the circumstances presented, we have determined that this result best serves the public interest.

By: Linda Senese


February 9, 2004

Re: Second Monthly Report of Evergreen International | Word

In accordance with the Notice of Action Taken issued by the Department of Transportation on December 10, 2003, in the 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding, Evergreen submits its second report of progress towards meeting the prescribed service start-up of Seoul-Hong Kong air services. Evergreen has scheduled its first flight to depart from the U.S. West Coast mid-day locally on Tuesday, March 9. That flight is scheduled to arrive in Seoul at 2230 local on March 10, and into Hong Kong at 0300 local on March 11, which is 1400 local, March 10, on the U.S. East Coast.

As noted in my report dated January 9, 2004, an application has been submitted to the Korean Ministry of Construction and Transportation for operating authority, and per KMOCT requirements, other documents have been submitted to support the application. Evergreen’s business representative in Korea contacted Mr. S. H. Lee of KMOCT who is assessing our application, and he confirmed that no problems have been found. Mr. Lee is awaiting a response from the Civil Aviation Safety Board, which is reviewing our operation and maintenance manuals. Approval by the Board is expected to be routine, since Evergreen previously operated approved flights into Korea.

Counsel: Evergreen,Thomas Lydon, 202-638-5500


February 9, 2004

Re: Second Monthly Report of Kalitta Air

This letter is a second report to the Department on the status of Kalitta Air's application in Korea for operating rights necessary to implement the carrier's planned JFK-ORD-ANC-ICN-HKG scheduled all-cargo services. This report is required by the terms of the Notice of Action Taken in this docket, dated December 10, 2003.

Kalitta Air is pleased to report that it has been granted the required International Air Freight Carrier Permit for Aliens by the Korean Ministry of Communications and Transportation, authorizing the operation as requested. Kalitta Air is now in the process of making its final arrangements for inauguration of service. It does not anticipate requiring any further extensions of the March 10, 2004 startup date established in the Final Order.

Counsel: Sher & Blacwell, Mark Atwood, 202-483-2500


February 20, 2004

Re: Evergreen International Airways to Return Two Frequencies for Hong Kong and Seoul

I am writing to notify the Department of Transportation and the other carriers in this proceeding that Evergreen International Airlines, Inc. reluctantly has decided to return to the Department its two frequencies for fifth-freedom all-cargo services between Hong Kong and Seoul, allocated to Evergreen in this proceeding. Unfortunately, Evergreen's senior management has decided that a weak economic environment, combined with depressed rates and unidirectional markets, force the company to suspend its plans to inaugurate new services to Korea and Hong Kong. While Evergreen considered submitting a request for an additional delay in start up, the company decided this would not best fulfill the Department's goals for competition and rapid introduction of new air services in these markets.

Counsel: Evergreen, Thomas Lydon, 202-638-5500


February 23, 2004

Notice Shortening Answer Period | Word

In a letter, dated February 20, 2004, Evergreen International Airlines notified the Department and the parties to the proceeding that Evergreen had decided to return to the Department its two frequencies for fifth-freedom all-cargo services between Hong Kong and Seoul allocated to Evergreen in the 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding, Docket OST 2002-14049.

Under the Department’s rules, comments on Evergreen’s letter would be due March 2, 2004.  We have decided to shorten the comment period and to request comments on Evergreen’s letter by Thursday, February 26, 2004.  We request reply comments by Friday, February 27, 2004.

By: Paul Gretch


February 24, 2004

Application of Polar Air Cargo for Hong Kong Fifth-Freedom Frequency Adjustment and US Selection of Indonesia for Hong Kong Fifth-Freedom Service

Upon receiving the award, Polar promptly began operating three weekly Deihi/Penang-Hong Kong flights, in full expectation that the service could be made to work as a substitute for the Mumbai/Chennai/Penang-Hong Kong service initially Polar Application proposed at a level of four flights per week. Unfortunately, with too few frequencies for the connections Polar intended over Penang" and also due to issues with the Hong Kong Civil Aviation Department regarding the scope of Polar's operational flexibility, the service has not lived up to expectations. Counsel has just been informed that, for these reasons, Polar has suspended Delhi/Penang-Hong Kong service, with the intent to restore service in the India and Malaysia markets when the frequencies necessary to support the pattern of service required by these markets are obtained and various issues surrounding the understanding of the Hong Kong Civil Aviation Department in connection with the exercise of these fifth-freedom rights are resolved.

Rather than allow these rights to go unused, Polar would request permission to use them for Jakarta-Hong Kong service, which Polar recently upgraded to three flights per week in response to favorable market dynamics. Having the ability to carry fifth-freedom traffic between Jakarta and Hong Kong will enhance the viability of this expanded service. With the requested adjustment, the frequencies could be employed immediately by Polar upon Hong Kong's acceptance of Jakarta as a selected fifth-freedom point.

Polar is currently operating three weekly services between Jakarta and Hong Kong on a blind sector basis. In these circumstances, Polar is in a position to start offering fifth‑freedom service in this city pair as soon as all necessary governmental approvals have been received. Since these frequencies are subject to standard dormancy provisions, Polar requests expeditious action on this application to allow Polar to put these frequencies to use as soon as possible and to avoid the need for a dormancy waiver.

Counsel: Polar and Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmer.com


February 25, 2004

Re: Notice of Kalitta Air of Intent to Inaugurate Service

This will serve as notice to the Department, pursuant to the requirements of the Notice of Action Taken in this Docket, dated December 10, 2003, that Kalitta Air, L.L.C. intends to commence scheduled twice-weekly Incheon-Hong Kong all-cargo service with full traffic rights on March 10, 2004. This will employ both of the Korea - Hong Kong Fifth Freedom frequencies that Kalitta Air was awarded in this proceeding, within the 90-day startup extension granted by the NOAT referenced above.

Counsel: Sher & Blackwell, Mark Atwood, 202-463-2500


February 26, 2004

Answer and Application of Federal Express

Evergreen's relinquishment of two Hong Kong-Seoul Fifth Freedom frequencies presents the Department with an opportunity to provide some stability in the market and to buttress U.S. participation in a highly competitive market. We urge the Department promptly and permanently to reallocate these valuable opportunities to FedEx Express, the carrier that has been using these rights temporarily for more than a year.

FedEx Express has been offering Hong Kong-Seoul services twice a week since the award of pendente lite frequencies in November 2002. During that time, FedEx Express has offered uninterrupted service, bringing certainty to the U.S. participation in the market as the two new U.S. awardees sought to establish services and the third U.S. operator was undergoing bankruptcy proceedings. The Department should award FedEx Express the two available frequencies on a permanent basis and continue the market certainty that shippers have come to rely upon. Doing so will enable FedEx Express to continue to develop and build this market by providing its service with the stability missing from a pendente lite operation.

FedEx Express currently operates seven flights per week from Seoul to Hong Kong. Because of the lack of Hong Kong‑Seoul frequencies, FedEx Express is forced to operate five of those flights on a blind sector basis. With its two pendente lite frequencies, FedEx Express operates MD 11 service on an Anchorage‑Seoul‑Hong Kong routing. If the Department awards FedEx Express these two frequencies, it will be able to continue this service. Additionally, since such an award would be permanent, FedEx Express could add Hong Kong‑Seoul service on an A310 routed Subic Bay‑Hong Kong‑Incheon‑Subic Bay twice a week, which would fully utilize both directions of both frequencies.

Counsel: FedEx, G. Bailey Leopard, Jr., 901-434-6664


February 26, 2004

Application of Northwest Airlines for a Continued and Permanent Frequency Allocation

Evergreen's return of two fifth freedom frequencies enables the Department to extend Northwest's single Hong Kong fifth freedom frequency allocation on a permanent basis. Allowing Northwest to continue carrying Hong Kong‑Seoul local traffic on one weekly Hong Kong‑Seoul‑Anchorage‑Los Angeles flight will preserve the benefits of expanded service options for shippers and forwarders in the Hong Kong‑Seoul market, maximize Northwest's operating efficiency and maintain the effective network competition for fifth freedom service that now exists in this important market. Northwest has been transporting cargo between the U.S. and Asia since it began transpacific operations in 1947, and will be a strong competitor for Hong Kong‑Seoul local traffic.

Northwest has a fleet of twelve 747-200 freighters (ten of which are nose loading), each with a gross maximum payload of 115 short tons. All of these freighters are dedicated to the Pacific region and transport a broad range of general cargo. Northwest provides scheduled freighter service at nine points in Asia: Tokyo (Narita), Osaka (Kansai), Taipei, Hong Kong, Manila, Singapore, Shanghai, Bangkok and Seoul. Northwest serves Asia through eight U.S. points (New York, Chicago, Los Angeles, San Francisco, Seattle/Tacoma, Cincinnati, Guam and its Anchorage cargo hub).

Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com


February 26, 2004

Comments of Polar Air Cargo

When the Department granted Polar, Northwest and FedEx the right to use frequencies on an interim basis until March 10, 2004, it expected that Evergreen and Kalitta would inaugurate Seoul-Hong Kong service at roughly the same time. As a direct result of Evergreen's recent action, the Department must undertake the difficult task of deciding which carrier(s) shall be given the right to continue interim use of two of the four Evergreen/Kalitta frequencies beyond March 10. Polar requests that the Department be mindful in its deliberations of the fact that FedEx already holds 18 permanent frequencies in comparison to Polar's eight and Northwest's four. Additionally, had Evergreen not initially requested the two frequencies it has just decided not to use, carriers such as Polar might have been permitted to offer the pattern of Hong Kong services intended. The Department is well aware of the schedule changes that Polar has had to make to adapt its actual allocation to its own less-than-optimal frequency award. Polar asks that the Department do what it can to assist in this situation by permitting the continued use of the single Hong Kong-Seoul frequency Polar presently holds on an interim basis.

Polar assumes that the Department will institute a frequency allocation proceeding in the near future covering Year 3 frequencies. That proceeding should include the two frequencies that Evergreen has returned in addition to the 16 that are available for use starting in October 2004. The two returned frequencies could then be allocated on a permanent basis and put to use immediately upon final assignment. Polar intends to be an applicant in that proceeding.

Counsel: Polar and Wilmer Cutler, Jeffrey Manley, 202-663-6670, jeffrey.manley@wilmer.com


February 26, 2004

Comments of United Parcel Service

It would be in the public interest to allocate these frequencies immediately. These are valuable bilateral rights, in return for which the U.S. granted Hong Kong valuable rights. Thus, it is not in the public interest for these rights to go unused any longer. Ensuring the utilization of limited rights is supported by long-standing, and consistently adhered to, Department precedent. The frequencies should be awarded to UPS for several reasons. UPS is a strong network carrier that can make the best use of these valuable rights by leveraging the benefits of its extensive Asian system, and its extensive worldwide network. UPS is currently operating non-stop, direct round-trip flights between Hong Kong and Seoul on a daily basis. Thus, to provide the service requested under this Application, UPS would merely be opening a closed door to provide service on an already existing flight. Because it is already operating in this market, UPS could commence the service immediately upon being granted these frequencies. Similarly, when instructed by the Department, UPS could and would shut down this service just as quickly. Additionally, with its MD11 and B747 widebody aircraft, UPS can immediately serve both the fully-integrated express market as well as the general air freight market on this route.

Counsel: UPS and Kelley Drye, David Vaughan, 202-955-9792, dvaughan@kelleydrye.com


February 26, 2004

Application of United Parcel Service for an Immediate, Pendente Lite Allocation of Frequencies

Hereby applies, pursuant to Part 302.300 of the DOT's Procedural Regulations for a temporary award that will, on a pendente lite basis, authorize UPS to provide scheduled all-cargo fifth-freedom air transportation service between Hong Kong and Seoul, Korea using the two (2) frequencies recently abandoned by Evergreen International Airlines. As stated in its Comments concurrently filed herewith, UPS also requests that the two (2) newly available Hong Kong-Seoul frequencies be added to the pool of sixteen (16) other Hong Kong fifth-freedom frequencies that are to be allocated by the DOT in its upcoming frequency proceeding.

Despite its inability to operate revenue flights in the Hong Kong‑Seoul market today, UPS flies this routing daily round‑trip on a blind‑sector basis. As such, UPS could initiate service immediately, without any costs or network disruption. A temporary award will allow UPS to utilize its high‑efficiency, full‑coverage network to strengthen the U.S. carrier presence in this market. UPS will afford shippers and businesses in the Seoul‑Hong Kong market immediate and enhanced levels of service.

Counsel: UPS and Kelley Drye, David Vaughan, 202-955-9792, dvaughan@kelleydrye.com


February 27, 2004

Reply Comments of Federal Express

FedEx Express submits that the Department's approach to solving this problem should be to maximize the interests of shippers and exporters in the U.S.‑Hong Kong and Hong Kong‑Seoul markets. This overriding objective is consistent with the congressional guidance to act in the public interest, which includes its obligation to encourage "an all­ cargo air transportation system" that is "responsive to the present and future needs of shippers" and the commerce of the United States.' This policy objective requires the Department to take all possible steps to avoid further disruption of U.S.‑flag service in the Hong Kong‑Seoul market.

Counsel: Federal Express, Thomas Donaldson, 901-434-6664


February 27, 2004

Consolidated Reply of Northwest Airlines

Here we go again. This proceeding originally started in December of 2002. Since that time, the Department has been forced to issue multiple notices and orders as a result of carriers submitting excessive requests at the outset, changing their service proposals unabashedly, failing to start service when they said they would and even, in the case of Evergreen, totally abandoning frequencies. With the extensive record in this proceeding, Northwest would hope the Department has sufficient evidence to make an immediate long term allocation of one of Evergreen's two returned frequencies to Northwest. To the extent the Department deems it necessary to engage in additional proceedings to determine long term allocation of Evergreen's two returned frequencies, however, Northwest urges the Department to consolidate such long term allocation into the Year 3 proceeding and commence that proceeding expeditiously.

Northwest looks forward to receiving the volumes of testimony, colored exhibits, brochures, form support letters, and perhaps even a video, certain applicants with seemingly unlimited resources feel compelled to generate. In the meantime, Northwest would like to continue operating its single Hong Kong‑Seoul fifth freedom all‑cargo service.

Counsel: Northwest, Megan Rae Rosia, 202-842-3193, megan.rosia@nwa.com


February 27, 2004

Application of Polar Air Cargo for Interim Frequency Extension

Polar will continue to use the additional frequency to operate a weekly B747 freighter service on a round trip basis between the U.S., Hong Kong and Seoul. The five Hong Kong-Seoul frequencies Polar has been awarded on a permanent basis, plus this one temporary frequency, allow the necessary Tuesday through Sunday pattern of flights for the operation of Polar's hub in Seoul. Polar Air Cargo, Inc. respectfully requests that the Department extend the referenced interim frequency award for fifth-freedom service in the Seoul-Hong Kong market be extended until the two frequencies recently relinquished by Evergreen have been permanently reallocated in a carrier selection proceeding.

Counsel: Polar and Wilmer Cutler, Jeffrey Manley, 202-63-6670, jmanley@wilmer.com


February 27, 2004

Reply Comments of Polar Air Cargo

The continued use by Polar of an additional Hong Kong-Seoul frequency will enable Polar to compete more effectively via its Seoul hub with the networks of UPS and FedEx via their hubs at Clark and Subic, respectively. Indeed, to award any additional frequencies to either of those carriers would enable them to use the frequencies to protect their present network service from competition in the Hong Kong-Seoul markets and other Hong Kong markets they serve via their hubs. It is only with this additional frequency that Polar can offer a pattern of six weekly services between Hong Kong and its Seoul hub. Through its award of frequencies in increments of six to both FedEx and UPS in the 200212003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding, Order 03-9-9, the Department again reaffirmed its recognition of the importance of hubs and the frequencies necessary to support hub operations. FedEx and UPS are already able to operate into their Clark and Subic, as well as Paris and Cologne, hubs at a level of at least six flights per week with their existing allocations. To award the additional frequency to Polar, in these circumstances, will allow it to establish one such hub and increase network competition. Conversely, an award to UPS or FedEx would be to reduce such network competition as offered by Polar.

Counsel: Polar and Wilmer Cutler, Jeffrey Manley, 202-63-6670, jmanley@wilmer.com


February 27, 2004

Reply Comments and Consolidated Answer of United Parcel Service

With regard to a continuation of temporary authority as opposed to an instant grant of permanent authority, Polar, Northwest and FedEx Express discuss their current operations under the temporary authority granted them in January and each argues that this authority should somehow be extended beyond the expiration date of March 10, 2004. When Evergreen surrendered its permanent authority, in the absence of a back-up award recipient, these frequencies reverted to the Department and became available for both permanent award and further temporary award. (See Order 2003-9-9, at p. 6, Docket OST-2002-14049 (Sep. 12, 2003)). As UPS has already commented, the Department should grant temporary authority to UPS and postpone a decision on a permanent award until its allocation of new Hong Kong fifth freedom frequencies which are available in October 2004. None of the carriers currently holding temporary authority should be given preferential consideration for further temporary authority after March 10, 2004. This new temporary authority should be decided anew, and on the basis of the public interest. Polar, Northwest and FedEx Express should not have any presumption in favor of a new temporary award, and UPS should not be prejudiced because it did not have the benefit of serving the Hong Kong-Seoul market with temporary authority.

As UPS stated in its Application, it is fit, ready and able to serve the Hong Kong– Seoul fifth freedom market immediately upon expiration of the current temporary authority, and UPS can do so with its full range of premium all‑cargo services providing the greatest benefits to competition and shippers in this market. Thus, UPS urges the Department to award it temporary authority to provide Hong Kong‑Seoul fifth freedom service twice per week beginning on March 10, 2004 and ending when the frequencies have been permanently awarded to a carrier following the next route proceeding.

Counsel: UPS and Kelley Drye, David Vaughan, 202-955-9792, dvaughan@kelleydrye.com


2004 Hong Kong Fifth Freedom All-Cargo Frequency Proceeding

Order 04-3-3
OST-02-14049
OST-04-17279

Issued and Served: March 9, 2004

Order Instituting Proceeding | Word

We have decided to institute the 2004 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding to select carriers to operate the available frequencies for weekly Hong Kong fifth-freedom service.  As noted above 16 frequencies become available for U.S.-carrier fifth-freedom services on October 26, 2004.  In addition, on February 20, 2004, Evergreen returned the two frequencies awarded to it by the Department in Order 2003-9-9.  We have decided that the public interest would best be served by including long-term consideration for these two returned frequencies in the proceeding we are instituting in this order.  Thus, in this proceeding, there will be 18 frequencies available for allocation on a long-term basis.

As to the interim period pending completion of this proceeding, we have decided to allocate the two available frequencies to Polar and Northwest.  We find that those two carriers’ operations most closely correspond to the type of cargo service—i.e., general all-cargo services—that Evergreen would have provided. We believe that this result will best serve the public interest. This interim allocation of the two frequencies will permit Polar and Northwest to operate nine and five Hong Kong fifth-freedom frequencies, respectively.  FedEx and UPS will each retain the 18 and 12 Hong Kong fifth-freedom frequencies, respectively, previously awarded to them.  We emphasize that our determination in the previous proceeding that Seoul-Hong Kong frequencies would be awarded to general all-cargo carriers is subject to reexamination in the new proceeding based upon the record that is developed in that docket.

By: Karan Bhatia


OST-02-14049

Filed February 24, 2004 | Issued March 12, 2004

Notice of Action Taken - Polar Air Cargo | Word

Adjustment to its Hong-Kong fifth-freedom frequency allocation and U.S. selection of points as follows:

Order 2003-9-9 allocated Polar Air Cargo, Inc. three frequencies for services in the Delhi/Penang-Hong Kong fifth-freedom market.  Polar began those services, but suspended operations due to too few frequencies for connections and due to issues with the Hong Kong Civil Aviation Department regarding the scope of Polar’s operating flexibility.  Polar seeks permission to use these frequencies for Jakarta-Hong Kong service instead of Delhi/Penang service.  Polar states that this request would not change the number of Hong Kong fifth-freedom frequencies allocated to Polar and notes that no other carrier requested Jakarta service in the proceeding allocating the frequencies.  Polar believes that its request for an adjustment could be granted without prejudice to any other carrier.

By: Paul Gretch


U.S.-Hong Kong Fifth-Freedom Frequencies

Served March 24. 2005

Notice | Word

By letter dated March 11, 2005, UPS returned its two Bangkok-Hong Kong frequencies. Consequently, there are now six frequencies available for U.S. all-cargo carriers to operate fifth-freedom Hong Kong services.

We invite carriers interested to file exemption applications and frequency applications for use of any of these six frequencies. Except for the procedural dates, exemption/frequency applications should conform to Part 302, Subpart C of our regulations (14 CFR Part 302). All applications and other related requests should be filed with the Department of Transportation (Room PL-401, 400 Seventh Street SW, Washington DC 20590), and should include at a minimum and as applicable, proposed startup date(s); routings from origin to destination of all proposed flights; days scheduled; frequencies requested per market; and the duration of service in each market, if not provided on a year-round basis; route integration authority, if desired; equipment types; and existing authority held to conduct the operations. Carriers may also present any additional information which they feel will facilitate a decision in this matter.

Applications should be filed no later than 14 calendar days from the date of service of this notice; answers should be filed 7 calendar days thereafter. Should comparative selection among the applicants be necessary, we will establish further proceedings to handle the requests.

We will authorize service of documents by facsimile and by electronic email. Carriers that are interested in such service, however, should state if they want service by email or fax and should provide interested parties with their fax number and/or email address.

By: Paul Gretch


Hong Kong Fifth-Freedom All-Cargo Frequencies


Issued June 3, 2005 | Served June 3, 2005

Notice

By letter dated June 1, 2005, Kalitta Air, LLC returned its two U.S.-Hong Kong-Seoul fifth-freedom all-cargo frequencies. Consequently, there are now three frequencies available for U.S. all-cargo carriers to operate fifth-freedom Hong Kong-Korea services. We invite interested carriers to file exemption applications and frequency applications for use of these frequencies.

By: Paul Gretch


OST-2002-14049

June 1, 2005

Letter of Kalitta Air Returning Two Frequencies

By Order 2003‑9‑9, the Department allocated to Kalitta Air, L.L.C. two Fifth Freedom frequencies for service between Hong Kong and Seoul, Korea under the October 2002 MOU between the United States and Hong Kong. Although Kalitta has operated scheduled services very successfully at Hong Kong for the past three years, its very limited Fifth Freedom rights in the Hong Kong‑Seoul market have prevented it from gaining a competitively viable foothold.

Given that it does not appear likely in the near term that it will be able to obtain a level of frequencies that will enable it to compete effectively in the Hong Kong-Seoul market, Kalitta Air has determined to defer further efforts to serve that market.

Counsel: Kalitta Air, Mark Atwood, 202-463-2513


June 3, 2005

Re: Polling Letter from Polar Air Cargo - Shorten Answer Period

On behalf of Polar Air Cargo, Inc., I have polled the representatives of all carriers served with the Application for Immediate Pendente Lite Frequency Allocation filed June 2, 2005, in the above referenced docket, with regard to the request contained in the application that the Department shorten the answer period to the application. With the exception of Fedex and UPS, all carriers' representatives have advised me that they have no objection to the granting of the request to shorten the answer period to the application.

Counsel: Wilmer Cutler, Caryn Garvin, 202-663-6000


OST-2002-14049

December 5, 2005

Re: Polar Air Cargo Returns One Frequency

Polar Air Cargo, Inc. hereby returns to the Department one U.S.-Hong Kong fifth freedom all-cargo frequency that the Department granted Polar for operation between Hong Kong and Jakarta, Indonesia.

Counsel: Polar, Kevin Montgomery, 202-828-1002



OST-2009-0147 - Temporary Dormancy Waiver - Hong Kong-Subic Bay; Hong Kong-Paris
OST-2002-14049 - 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequencies
OST-1995-764 - Hong Kong Fifth-Freedom All-Cargo Proceeding

June 23, 2009

Application of FedEx for Temporary Waiver of Dormancy Condition

Federal Express Corporation hereby applies for a temporary waiver of the 90-day dormancy condition applicable to its twelve Hong Kong-Subic Bay all-cargo frequencies and to five of its six Hong Kong-Paris all-cargo frequencies through March 27, 2010, the end of the Winter 2009 lATA schedule season. As the Department is aware, FedEx Express continues to work with relevant government authorities and agencies to implement its new Asia Pacific hub operations in Guangzhou, China, pursuant to the rights available to U.S. cargo carriers under the U.S.-China Air Transport Agreement. As FedEx Express works through these issues with the U.S. government's assistance, FedEx Express may need to use the relevant Hong Kong fifth-freedom frequencies, so it will need the requested period of additional dormancy to provide flexibility and a contingency for providing uninterrupted, outstanding service to the shipping public.

FedEx Express has and will continue to operate one weekly Hong Kong-Paris fifth-freedom frequency, as well as its four weekly Hong Kong-Seoul fifth-freedom frequencies. In a separate proceeding (see Docket OST-2009-0137), FedEx Express has also applied for another Hong Kong-Seoul frequency and has proposed to exchange one of its Hong Kong-Subic Bay frequencies for that Hong Kong-Seoul frequency to comply with the overall frequency cap applicable to U.S.-Hong Kong all-cargo fifth-freedom frequencies.

Counsel: FedEx, Bailey Leopard, 901-434-6664



OST-2002-14049 - 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequencies
OST-1995-764 - Hong Kong Fifth-Freedom All-Cargo Proceeding

June 30, 2009

Email Message - Polling Results

I have polled the parties served with the Application of Federal Express Corporation for Temporary Waiver of Dormancy Condition (re 12 Hong Kong-Subic Bay frequencies and 5 Hong Kong-Paris frequencies), dated June 23, 2009, and they do not have an objection to the Application. Therefore, FedEx Express requests that the Department grant this Application as soon as possible.

Counsel: FedEx, Bailey Leopard, 901-434-6664



OST-2002-14049 - 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequencies
OST-1995-764 - Hong Kong Fifth-Freedom All-Cargo Proceeding

Filed June 23, 2009 | Approved July 2, 2009

Department Approval of Application

We will grant the carrier's request for a waiver of the 90-day dormancy condition applicable to its twelve Hong Kong-Subic Bay all-cargo frequencies and to five of its six Hong Kong-Paris all-cargo frequencies. We will require the carrier to resume service on March 28, 2010.

We acted on this application without awaiting expiration of the answer period with the consent of all parties served with the application.

By: Thuy Cooper



OST-1995-764 - 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequencies
OST-2002-14049 - Hong Kong Fifth-Freedom All-Cargo Frequencies

February 11, 2010

Application of Federal Express for Temporary Waiver of Dormancy Condition and Request for Expedited Treatment

Hereby applies for a temporary waiver of the 90-day dormancy condition applicable to its twelve Hong Kong-Subic Bay all-cargo frequencies and to five of its six Hong Kong-Paris all-cargo frequencies until November 7, 2010. As the Department is aware, FedEx Express continues to work with relevant government authorities and agencies to implement fully its new Asia Pacific hub operations in Guangzhou, China, pursuant to the rights available to U.S. cargo carriers under the U.S.-China Air Transport Agreement. As FedEx Express works through these issues with the U.S. government's assistance, FedEx Express may need to use the relevant Hong Kong fifth-freedom frequencies, so it will need the requested period of additional dormancy to provide flexibility and a contingency for providing uninterrupted, outstanding service to the shipping public.

Counsel: Federal Express, G. Bailey Leopard, 901-434-6664



OST-2002-14049 - 2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequencies
OST-1995-764 - Hong Kong Fifth-Freedom All-Cargo Proceeding

Filed February 11, 2010 | Approved February 17, 2010

Department Approval of Application

We will grant the carrier's request for a waiver of the dormancy condition applicable to its twelve Hong Kong-Subic Bay all-cargo frequencies and to five of its six Hong Kong-Paris all-cargo frequencies. We will require the carrier to resume service by November 7, 2010. In taking this action, however, we put FedEx Express on notice that, there should be no expectation that an additional waiver request will necessarily be granted. Any future request to extend the waiver at issue here will have to be considered in light of any specific arguments offered and responses thereto, and in the context of the circumstances present at that time.

By: Thy Cooper



Filed May 26, 2010 | Issued May 28, 2010

Notice of Action Taken

Allocation of two weekly Hong Kong-Manama, Bahrain all-cargo frequencies, with full fifth freedom traffic rights, in exchange for two Hong Kong-Dubai, UAE, all-cargo frequencies.

Kalitta states that beginning June 2, 2010, these frequencies will be used to provide Bahrain-Hong Kong all-cargo service using Boeing 747-400 aircraft.

Kalitta states that it would return two of its weekly Hong Kong-Dubai frequencies issued by Order 2003-9-9 in exchange for two Hong Kong-Manama, Bahrain frequencies.

By: Paul Gretch



May 26, 2010

Application of Kalitta Air for Exchange of Frequencies

Kalitta Air, LLC hereby requests the allocation of two Hong Kong-Manama, Bahrain all-cargo frequencies, with full traffic rights, in exchange for two Hong Kong-Dubai, UAE, all-cargo frequencies. Kalitta currently holds two Hong Kong-Dubai, UAE fifth freedom frequencies previously granted by the Department in this docket by Order 2003-9-9. The Hong Kong-Manama frequencies will be used twice weekly beginning June 2, 2010, on a BAH-HKG routing, with 240,000 pound capacity Boeing 747-400 aircraft. Kalitta Air seeks the allocation of these fifth-freedom frequencies for an indefinite period consistent with Department practice and will accept the Department's dormancy and other standard conditions.

Counsel: Sher & Blackwell, Mark Atwood, 202-463-2513



Filed September 28, 2010 | Issued September 30, 2010

Notice of Action Taken

Allocation of three weekly Hong Kong-Manama, Bahrain frequencies and one weekly Hong Kong-Delhi, India frequency with full fifth-freedom traffic rights. Kalitta states that it intends to commence operations on October 11, 2010.

Under the Memorandum of Understanding between the United States and the Hong Kong Special Administrative Region of the People’s Republic of China, US all-cargo carriers are limited to a total of 64 weekly fifth-freedom frequencies. With our action here, six frequencies remain available for allocation. We note that the request to serve Manama and Delhi with full traffic rights is available under the Hong Kong-Manama and Hong Kong-Delhi point caps. With our action here, there are no remaining frequencies available under the Hong Kong-Manama point cap and five frequencies available under the Hong Kong-Delhi point cap.

By: Paul Gretch


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