1 BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

________________________________________________ Request of ) ) Silk Way West Airlines ) Docket OST 2014-0111 ) to amend issued exemption authority and ) pending application for a foreign air carrier permit ) and motion to expedite processing ) (Baku-Hong Kong-Chicago-New York-Luxemburg-Baku) ) ________________________________________________)

ANSWER OF NATIONAL AIR CARRIER ASSOCIATION TO APPLICATION OF SILK WAY WEST AIRLINES FOR AMENDED EXEMPTION AUTHORITY Communications with respect to th is document should be sent to: A. Oakley Brooks President

Paul H. Doell Director of Government Affairs

National Air Carrier Association 1000 Wilson Blvd. Suite 1700 Arlington, VA 22209 Jonathan B. Hill J. Parker Erkmann Cooley LLP 1299 Pennsylvania Ave., NW Washington, DC 20004 (202) 842-7800 jhill@cooley.com perkmann@cooley.com Counsel for National Air Carrier Association

October 29, 20142 BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

________________________________________________ Request of ) ) Silk Way West Airlines ) Docket OST 2014-0111 ) to amend issued exemption authority and ) pending application for a foreign air carrier permit ) and motion to expedite processing ) (Baku-Hong Kong-Chicago-New York-Luxemburg-Baku) ) ________________________________________________)

ANSWER OF NATIONAL AIR CARRIER ASSOCIATION TO APPLICATION OF SILK WAY WEST AIRLINES FOR AMENDED EXEMPTION AUTHORITY The National Air Carrier Association (“NACA” ) submits this answer in opposition to the application of Silk Way West Airlines Limited Liability Company (“Silk Way West”) for amended exemption authority. On the basis or comity and reciprocity, Silk Way West seeks to expand the Department’s initial grant of authority to allow scheduled cargo service between New York and Baku, Azerbaijan 1 to include broad intermediate a nd beyond authority to serve major U.S. all-cargo markets of Luxembourg and Hong Kong. NACA respectfully submits that the Department’s initial order was correct. In the absence of a governing bilateral aviation agreement with Azerbaijan or demonstration that Azerbaijan adheres to th e principles of comity and reciprocity, the Department should deny Silk Way West’s request for broad authority that would typically be available to airlines of count ries with a liberalized aviation relationship with

the United States.

1 Order 2014-8-15 (issued Aug. 15, 2014).3 NACA has an interest in ensuring that th e Department’s decisi ons do not disadvantage U.S. carriers. Founded in 1962, NACA is a trade a ssociation comprised of fourteen air carriers, certificated under Title 14, Part 121 of the Code of Federal Regulations. Our members are a diverse group of air carriers, providing non-sc heduled and scheduled passenger and cargo services. NACA carriers fill a unique niche in th e air carrier industry, offering services in response to ever changing demands by the U.S. military, the traveling publ ic and businesses.

Some of NACA’s member s conduct operations to Azerbaijan. In its role representing its members in Washington, NACA seeks to assure that the decisions of the United States government allow U.S. carriers to operate on a level playing field in a competitive global airline industry. Granting Silk Way West’s amended ex emption request would undermine this goal and the public interest. The Department should not grant the expansive authority requested by Silk Way West for two reasons. First, the grant of expansive interm ediate and beyond authority to an Azeri carrier in the absence of a meaningful bilateral aviation agreement reduces the chances of reaching such agreements in the future. Silk Way West has proposed to fly Boeing 747-400F and “brand new” Boeing 747-8F equipment on the round-the-wo rld Baku-Hong Kong-Chicago-New YorkLuxemburg-Baku routing. 2 The ability to serve these Fifth Freedom U.S. cargo markets is a significant commercial opportunity that would ty pically be available to carriers from countries with an open skies agreement with the United States . It should not be granted casually. Indeed, if the Department grants the authority, it would effectively open the U.S. market to Azeri carriers

2 Request of Silk Way West Airlines to Amend Issued Exemption Authority and PendingApplication for a Foreign Air Carrier Permit and Motion to Expedite Processing, DOT-OST2014-0111 (Oct. 8, 2014), ¶¶ 4, 7.4 without U.S. carriers receiving the protections of a bilateral and liberaliz ed aviation relationship with Azerbaijan. Second, Silk Way West has not demonstrated th at Azerbaijan adheres to the principles of comity and reciprocity with respect to the proposed services. Indeed, in its most recent pleading, Silk Way West admits that it has not done so: a “formal letter from the State Civil Aviation Administration of the Republic of Azerbaijan . . . reiterating [its] a dherence to the principles of comity and reciprocity in considering any similar applications form US carriers, is being currently transmitted to the Department.” 3 More troublesome, however, is that NACA

understands from its members that U.S. carrier s encounter difficulties conducting business in Azerbaijan. At least one member has reported difficulty obtaining visas for crew members. Other members report discriminatory pricing on cargo handling fees and fuel purchases. If a carrier operates to Azerbaijan pursuant to a contract with Silk Way West, these discriminatory fees do not apply. NACA carriers report that the discrimination is so severe that it makes operating to Azerbaijan uneconomic – unless the operations are conducted under the auspices of Silk Way West. It seems counter intuitive to gr ant broader authority to Silk Way West in the absence of a bilateral framework for resolving these doing-business issues. The frustration of U.S. carriers’ operations in Az erbaijan suggest the De partment reached the correct conclusionwhen it determined that “sufficient reciprocity exists with Azerbaijan” to warrant grant of a oneyear exemption for New York-Baku service, but no more. 4

3 Response of Silk Way West Airlines to An swers of National Airlines to Silk Way West Airlines Motion to Expedite Processing and Re quest of Silk Way West Airlines to Amend Exemption Authority, DOT-OST-2014-0111 (Oct. 24, 2014) at 3.

4 Order 2014-8-15 at 3.5 Wherefore, NACA requests that Silk Way West’s request for an amended exemption be DENIED as inconsistent with the public interest. Respectfully Submitted,

____________________________ Jonathan B. Hill J. Parker Erkmann Cooley LLP 1299 Pennsylvania Ave., NW, Ste. 700 Washington, DC 20004 (202) 842-7800 jhill@cooley.com perkmann@cooley.com Counsel for the National Air Carrier Association6 CERTIFICATE OF SERVICE I, Erin Combs, hereby certify that I have on this day served a copy of the foregoing document upon each of the followi ng electronic mail addresses: gpwicks@wicks-group.com ekagrimes@wicks-group.com sascha.vanderbellen@delta.com sametta.c.bamett@delta.com chris.walker@delta.com dshort@fedex.com sllunsford@fedex.com nssparks@fedex.com gbleopard@fedex.com msinick@ssd.com enisson@nac.aero mwiegele@nac.aero kevin.montgomery@polaraircargo.com peter.beckett@polaraircargo.com dan.weiss@coair.com dan.weiss@united.com robert.wirick@aa.com francis.heil@aa.com howard.kass@aa.com rsilverberg@sgbdc.com jjohnson@sgbdc.com jrichardson@johnrichardson.com mriordan@johnrichardson.com jcanny@amerijet.com john@mietuslaw.com rpommer@atlasair.com matwood@cozen.com nwallace@wallaceair.com agoerlich@ggh-airlaw.com dhainbach@ggh-airlaw.co judy@lac.lynden.com rzerkel@lac.lynden.com gwhite@lac.lynden.com jdavis@lac.lvnden.com TGillies@southemair.com info@airlineinfo.com anita.mosner@hklaw.com jennifer.nowak@hklaw.com dsmalls@ups.com stephen.lachter@lachterlaw.com pmurphy@lopmurphy.com kleake@ggh-airlaw.com EngleTS@state.gov

/s/ Erin Combs Erin Combs