Order 2013-4-9

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

 Issued by the Department of Transportation

 on the 12th day of April, 2013

 

 Served: April 12, 2013

 

 

 Dockets:

DOT-OST-2013-0041

DOT-OST-2013-0045

DOT-OST-2013-0046

ORDER INSTITUTING PROCEEDING

Summary

By this order we institute the 2013/2014 U.S.-Brazil Combination Frequency Allocation Proceeding to 

select U.S. carriers to use (1) the 14 weekly combination frequencies that may be used to serve any point 

in Brazil, which become available October 1, 2013; and (2) the 14 weekly combination frequencies that 

may be used to serve any point in Brazil, which become available October 1, 2014; as set forth in the 

Memorandum of Consultations between the United States and Brazil dated March 19, 2011 (MOC). 

These frequencies are referred to as “unrestricted” in this order.1 Three applicants, American Airlines, 

Inc. (American), Delta Air Lines, Inc. (Delta), and US Airways, Inc. (US Airways), have applied for an 

 1 Unrestricted frequencies are the only newly available frequencies that can be used for service between 

U.S. points and Sao Paolo, Brazil.

2013/2014 U.S.-BRAZIL COMBINATION FREQUENCY PROCEEDING

DOCKET-DOT-OST-2013-0072

Applications of

 

 AMERICAN AIRLINES, INC.

 DELTA AIR LINES, INC.

for allocation of combination service frequencies

(U.S.-Brazil)

 

 

Application of 

 US AIRWAYS, INC.

for exemption authority under §40109 of Title 49 U.S.C., 

and allocation of combination service frequencies

(U.S.-Brazil)
2

award of unrestricted frequencies, and will have an opportunity to file supplemental

information/evidence and comments so that we may proceed with a decision in this matter. 

Background

On March 19, 2011, the United States and Brazil signed an agreement (the Agreement) that will 

establish Open Skies between the United States and Brazil by October 2015. Pending the exchange of 

diplomatic notes bringing the Agreement into force, the terms of the MOC are being applied on a comity 

and reciprocity basis. The four-stage increase in frequencies available for scheduled combination and 

all-cargo services provided for by the MOC will apply until October 1, 2015. On that date, provided 

that the Agreement has entered into force, all numerical and destination limitations on frequencies will 

be removed. 

By Notice dated February 15, 2013, we invited applications for the third and fourth stages of the newly 

available frequencies.2 In response, we received applications from three U.S. carriers for the 

unrestricted frequencies in order to provide combination service from various points in the United States

to Sao Paulo. The applicants seek more frequencies to serve Sao Paulo than become available under the 

MOC, thus, we are instituting this proceeding to allocate (1) the 14 unrestricted frequencies that are 

available as of October 1, 2013; and (2) the 14 unrestricted frequencies that become available October 1, 

2014.3

Applications

On February 28, 2013, American filed an application in Docket DOT-OST-2013-0041. American 

requests an allocation of seven U.S.-Brazil combination frequencies available October 1, 2013; and 

seven U.S.-Brazil combination frequencies available October 1, 2014. American proposes to institute 

daily nonstop service to Sao Paulo from Los Angeles beginning November 21, 2013. American also 

proposes to institute daily nonstop service to Sao Paulo from Chicago beginning November 20, 2014. 

On March 4, 2013, Delta filed an application in Docket DOT-OST-2013-0045. Delta requests an 

allocation of the 14 frequencies that become available October 1, 2013; and seven frequencies that 

become available October 1, 2014. Delta proposes to use the October 2013 frequencies to add a second 

daily Atlanta-Sao Paulo service, and to add a second daily New York (JFK)-Sao Paulo service, both 

beginning December 15, 2013.4 Delta proposes to use the October 2014 frequencies to continue its 

current daily Detroit-Sao Paulo nonstop service after it transfers seven of its currently-held frequencies 

to US Airways under an agreement between the two carriers.5

 2 We previously invited applications for the first and second stages of scheduled combination and all-cargo 

frequencies that became available in October 2011 and October 2012. See Notice dated April 6, 2011.

3 See our February15, 2013, Notice for a full description of the combination and all-cargo frequencies 

available.

4 Delta currently operates once-daily services in the Atlanta-Sao Paulo and New York (JFK)-Sao Paulo 

markets.

5 See Docket FAA-2010-0109.
3

On March 4, 2013, US Airways filed an application in Docket DOT-OST-2013-0046. US Airways 

requests an allocation of seven U.S.-Brazil frequencies that become available October 1, 2013, and 

seven U.S.-Brazil frequencies that become available October 1, 2014.6 

US Airways proposes to use seven October 2013 frequencies to continue without interruption its 

Charlotte-Sao Paulo service which it will institute on June 8, 2013, using seven frequencies temporarily 

leased from United Airlines, Inc. (United).7 US Airways states that it will return the seven temporarily 

leased frequencies to United, if awarded the seven October 2013 frequencies it seeks here. US Airways 

proposes to use the seven October 2014 frequencies to institute daily Philadelphia-Sao Paulo services.

Proceeding

In light of the competing applications and responsive pleadings filed, we are instituting the 2013/2014

U.S.-Brazil Combination Frequency Allocation Proceeding to select a carrier or carriers to use the 14 

unrestricted U.S.-Brazil combination frequencies that become available October 1, 2013; and to select a 

carrier or carriers to use the 14 unrestricted U.S.-Brazil combination frequencies that become available 

October 1, 2014. To ensure that we have a complete record in this matter, we request that each of the 

captioned applicants amend and/or supplement their existing applications, as specified below, and file 

those amendments and/or supplements in this Docket.

Our principal objective in this proceeding will be to maximize public benefits. In this regard, we will 

consider which applicants will be most likely to offer and maintain the best service for the traveling and 

shipping public. We will also consider the effects of the applicants’ service proposals on the overall 

competitive environment, including effects on the market structure and on competition in the U.S.-Brazil

market, and any other market shown to be relevant. In addition, we will consider other factors 

historically used for carrier selection, where relevant.

We expect to allocate the frequencies for an indefinite term, subject to a start-up condition and our 

standard 90-day dormancy condition. For any frequency not used for a period of 90 days, the allocation 

with respect to that frequency would expire automatically and revert to the Department for reallocation.

We believe that written, non-oral procedures under Part 302 of our regulations (14 CFR 302) are 

appropriate and that by using these procedures we can establish a complete evidentiary record and make 

timely awards with the least possible delay and without unnecessary costs to the applicants. In the 

interest of expediting the award of these valuable route rights, we will reserve the right to go directly to 

a final order, should the complete record in this proceeding justify such action. We find no material 

issues of fact that would warrant an oral evidentiary hearing. We intend to resolve issues and award the 

subject authority on the basis of pleadings filed in this proceeding. If, however, upon review of the 

record, we determine that additional information is required and/or modified procedures are necessary 

 6 US Airways also requests an exemption under 49 U.S.C. §40109 to engage in scheduled foreign air 

transportation of persons, property, and mail from the United States, via intermediate points, to any point 

or points in Brazil and beyond. US Airways currently holds exemption authority for scheduled foreign air 

transportation of persons, property, and mail between Charlotte, North Carolina, and Rio de Janeiro and 

Sao Paulo, Brazil. See Docket DOT-OST-2009-0003.

7 See Docket DOT-OST-2010-0183. 
4

for the adjudication of this case, we reserve the right to request additional information and/or to modify 

our proceeding in this matter.

Evidentiary Requirements

In light of the upcoming availability of new U.S.-Brazil frequencies, we intend to conduct this 

proceeding in a manner that will facilitate our reaching a prompt final decision. As the applications filed 

are already ripe and all interested parties have had an opportunity to file competing requests, we will not 

provide for additional applications here. We will, however, require that the captioned applicants amend 

and/or supplement their existing applications, as per the schedule set out below, with the information 

requested in this section. 

Except for procedural dates, applications should conform to Part 302, Subpart C of the Department’s 

regulations (14 CFR Part 302). All pleadings should be filed with the Department of Transportation, 

1200 New Jersey Avenue, S.E., West Building Ground Floor, Room W12-140, Washington, D.C. 

20590, in the captioned Docket for the 2013/2014 U.S.-Brazil Combination Frequency Allocation 

Proceeding, and should include, at a minimum, the following information. The base year for responding 

to this evidence request should be 12 months ended October 1, 2014, for the combination frequencies 

that become available October 1, 2013; and 12 months ended October 1, 2015, for the combination 

frequencies that become available October 1, 2014.8 9

1. Provide a firm date for instituting service, and single-plane and nonstop-to-nonstop connecting 

schedules proposed to be operated in the applicable base year with a break-down for peak and 

off-peak seasons. Identify all seasonal service, if any, and specify the period during which the 

seasonal services would be offered.

Proposed schedules should contain flight numbers, complete routings from origin to destination 

(including behind-gateway and beyond-gateway points and elapsed time for services), airports 

served, departure and arrival times, equipment types (including seat configuration by class of 

service), days scheduled, and classes of service offered;

2. A brief description of the types of service the applicant currently provides, if any, between the 

United States and Brazil, including the types of service (state whether the services are code-share 

operations, seasonal or year-round, charter, and/or scheduled) and include frequency levels and 

type (restricted or unrestricted) by city-pair market;10

 8 The original filing should be on 81⁄2" x 11" white paper using dark ink (not green) and be unbound 

without tabs, which will expedite use of our docket imaging system. In the alternative, parties are 

encouraged to use the electronic submission capability available through the Dockets FDMS Internet site 

(http://www.regulations.gov) by following the instructions on the web site. Additionally, service by 

facsimile or electronic mail is authorized. 

9 Applications and responsive pleadings should contain sufficient detail, including sources, bases, 

assumptions and methodologies, so that, without further clarification, any party can derive the final 

results from the basic data.

10 There are three types of restricted frequencies. One type can be used at any point or points in Brazil 

subject to the restriction that these frequencies may not be used at Sao Paulo’s Guarulhos International 

Airport until infrastructure-related constraints at the airport are removed; the second type can be used at 

any point or points in Brazil, except Sao Paulo Terminal; and the third type can be used at any point or 
5

3. If the carrier seeks an award for both the October 2013 and October 2014 frequencies and/or 

seeks authority to serve more than one city-pair market, indicate the carrier’s order of preference 

for selection. Also provide, for each city-pair market request, the minimum number of 

frequencies that the carrier would accept to institute service; and

4. Should the Department decide to make backup awards in this proceeding, provide a statement as 

to whether the carrier will accept backup authority with a condition that (a) permits it to 

implement the authority within the first year should the primary carrier withdraw from the 

market; and (b) should the authority not be activated, the authority expires at the end of one year.

To the extent that any of the requested information has already been provided on the record, applicants 

may refer to that information in their supplemental pleadings. Applicants may, of course, also submit 

any additional information beyond that requested if they believe it would be useful to us in reaching a 

decision.

We view adherence to these directives as critical to our consideration of the proposals in carrier

selection cases. We put the applicants in this case on notice that we expect full compliance with the 

evidence request in this order. Any carrier not in full compliance in any material respect with our 

request will be subject to elimination from consideration for an award in this case.

Motion of Delta

On March 7, 2013, Delta filed a motion requesting that the Department compel US Airways and United 

to file additional information. Delta takes issue with the US Airways position that it would be required 

to discontinue its Charlotte-Sao Paulo services if it is not awarded the seven October 2013 frequencies it 

has requested. Delta states that the temporary allocation of United’s seven frequencies to US Airways 

will remain in effect until the conclusion of the IATA winter 2014-15 traffic season, a time that 

coincides with Delta’s transfer of seven U.S.-Brazil frequencies to US Airways under the Delta/US 

Airways arrangement. Delta contends, therefore, that US Airways will have the necessary frequencies 

to continue its Charlotte-Sao Paulo services uninterrupted, unless the United/US Airways lease 

agreement requires US Airways to return those frequencies as a result of the recently announced merger 

between US Airways and American. Delta asserts that the Department should compel US Airways and 

United to file their lease agreement in the record for this case, and that US Airways should state its 

planned use of the seven frequencies it will obtain from Delta in 2015. Delta further asserts that the 

Department should compel United to state its planned use for the seven frequencies it is currently 

leasing to US Airways, when they are returned.

On March 18, 2013, United and US Airways filed answers opposing Delta’s motion. United asserts that 

it is not a party to this frequency proceeding and is not obligated to provide information as to how it 

would elect to use the frequencies, should they be returned by US Airways. United further asserts that 

disclosure of its lease agreement with US Airways is not necessary for the Department to evaluate the 

applications in this proceeding.

 

points in Brazil, except Rio de Janeiro and Sao Paulo Terminal. Carriers should be specific in 

characterizing the frequencies they hold.
6

US Airways argues that there is no basis to require US Airways or United to disclose their private 

agreement, or for US Airways to speculate as to how it will use frequencies it will obtain in 2015. US 

Airways urges the Department to deny Delta’s motion and either allocate the frequencies that were 

advertised in the Department’s February 15, 2013 Notice or institute a carrier selection proceeding.

On March 22, 2013, Delta filed a consolidated reply to the answers of United and US Airways.11 Delta 

states that interested parties and the Department should have access to the United/US Airways frequency 

lease agreement, to determine whether US Airways and American should be considered independent 

entities, in light of the carriers’ planned merger. Delta also stands by its request for information as to 

United’s planned use of the returned US Airways frequencies.

On March 25, 2013, US Airways filed a letter stating that it has already addressed the issues raised in

Delta’s consolidated reply, and urging the Department to deny Delta’s motion.

We have decided to deny Delta’s motion to compel US Airways and United to file additional 

information. In the circumstances presented, we do not see a need to compel the information proposed 

by Delta. In reaching this result, we note that Delta has questioned US Airways’ need for frequencies 

US Airways said it was seeking to continue its Charlotte-Sao Paulo service. Delta’s motion, and the 

pleadings filed in response, have already provided the parties an initial opportunity to address this issue. 

In the applicants’ subsequent submissions, we fully expect this issue to be developed further on the 

record as carriers advance the merits of their proposals. Therefore, we conclude that our above evidence 

request, combined with any other information and argument as the parties may choose to provide, 

should provide for an adequate record upon which to make a decision. 

Procedural Timetable

In light of our stated goal of reaching a prompt final decision, we intend to process this case on an 

accelerated procedural schedule. Therefore, we are establishing the following procedural schedule for 

submissions:

Petitions for Reconsideration: April 17, 2013

Answers to Petitions: April 22, 2013

Supplements/Amendments to Applications: April 24, 2013

Answers: May 3, 2013

Replies: May 14, 2013

In consideration of the accelerated schedule, as discussed above, we authorize service by facsimile or 

electronic mail. Parties should include their fax numbers and/or e-mail addresses on their submissions 

and should indicate on their certificates of service the methods of service used. Applicants not using 

facsimile or electronic mail must provide an original and five copies of all submissions to the 

Department of Transportation, Dockets, no later than the dates indicated. Please also provide an 

electronic copy of all responsive pleadings to: Esta.Rosenberg@dot.gov and Brett.Kruger@dot.gov.

 11 Delta accompanied its reply with a request for leave to file. We grant this request.
7

ACCORDINGLY,

1. We institute the 2013/2014 U.S.-Brazil Combination Frequency Allocation Proceeding in Docket 

DOT-OST-2013-0072, to be decided by written, non-oral procedures under Part 302 of our regulations 

(14 CFR Part 302);

2. We consolidate the applications of American Airlines, Inc. (Docket DOT-OST-2013-0041); Delta 

Air Lines, Inc. (Docket DOT-OST-2013-0045); and US Airways, Inc. (Docket DOT-OST-2013-0046) 

into the 2013/2014 U.S.-Brazil Combination Frequency Allocation Proceeding;

3. This proceeding will consider which carrier or carriers should be selected to operate (1) the 14 U.S.-

Brazil combination frequencies that may be used to serve any point in Brazil, that become available 

October 1, 2013; and (2) the 14 U.S.-Brazil combination frequencies that may be used to serve any point 

in Brazil, that become available October 1, 2014 (as described in the text of this order), and, to the 

extent necessary, underlying exemption authority to provide the service;

4. Further submissions should be filed in accordance with the procedural schedule set forth in this order; 

5. We deny the March 7, 2013 motion of Delta Air Lines, Inc.; and

6. We will serve this order on American Airlines, Inc.; Delta Air Lines, Inc.; US Airways, Inc.; United 

Airlines, Inc.; the U.S. Department of State (Office of Aviation Negotiations); the Federal Aviation 

Administration; and the Ambassador of Brazil in Washington, D.C.

By:

SUSAN L. KURLAND

Assistant Secretary for Aviation

and International Affairs

(SEAL)

An electronic version of this document is available on the World Wide Web at

http://www.regulations.gov