### ^i'PARTMENTO F ^:A^iSPORTATIO N .;KE TOPERATION S 

## .: ; m?L ! p 3=2 5 lAWOFHCfi S 

## GAROFAL O GOERLIC H HAINBAC H P C
130 0 NE W HAMPSHIK E AVENU E N V • SurT E SO D • W,\6HINCTON D C 20036-680 2 TEI^PHON E 20 2 776-397 0 • FACSlMlu e 20 2 776-397 5

WV«iT('.COfr-AI»UW.CO

M Augus t 6 , 201 0 Pau l L
. Gretch , Directo r Offic e o f Internationa

l Aviatio n U.S
. Departmen

t o f Transportatio n 1200 Ne w Jerse y Avenue , S.E
. Washington , D.C
. 2059 0 Re : Consolidate dRespons e to Submission s o f Atla s Air
. FedEx an d UP S Dea r Mr
. Gretch : Souther n Ai r

Inc
. subniit s th e following consolidate d respons e t o th e Jul y 30 , Augus t 2 an dAugus t 3 submissions , respectively , o f Atla s Air , Inc. , Unite d Parce l Servic e Co
. an d Federa l Expres s Corporation
. T o th e extent necessary . Souther

n request s leav e t o submit thi s respons e i n order to provid e anecessar

y rejoinder

t o Atlas' s lates t

argument s an

d t o respon d t o UPS' s an dFedEx' s assertions
. Atlas , FedE x andUP S urg e th e Department to confe r upo n themth e immediate benefit o f bein g bot h aschedule dandacharter carrie r in th e bifurcate d U.S.-Brazi l market
. Howeve r thes e carrier s ma

y dres s u p thei r

arguments , th e fac

t remain s tha

t Souther n and th e other

carrier s wh o mus t rel y o n th e charter

poo l fo r marke t acces s woul d b e prejudice d significantl y wer e DO T t o grant th e requeste dwaiver
. No r woul d i t otherwis e b e i

n th e publi c interes t

for th e Department t o cas t aside th e charter

procedure s it

ha s tailore d for

th e capacity-controlle d U.S.-Brazi l market
. Atlas' s characterizatio n o f it s waiver

reques t a s a"n o brainer" ' i s wholl y incoaect
. A s th e Departmen

t ha s stated , "Our

procedure s ar

e designe d t o ensur

e tha t new entrant

an d a d ho c charte r operator s are abl e t o secur e charter authorization s throughou t th e charter

year , les t the y b e preclude dfromconductin g U.S.-Brazi l operations , an d hav e prove n effectiv e i n thi s regard." ^ I n issuin g it s 2010-1 1 Brazi l charter notic e afe

w week s ago , th e Department undoubtedl y considere dwhethe

r i t woul db e prudent

t o revis e th e procedure s discusse d i n Order 2008-11-10 , an d decide dt o maintai n th e statu s quo . I f th e matter

i s a"n o brainer " now , i t

woul d hav e bee n a "n o brainer " afe

w week s ag o a s well
. Clearly DO T di dno t se e i t tha t wa y .. . no r shoul d it hav e seen i t tha t way . Moreover , even i f

th e Department

wer e prepare d t o revisi t

it s conclusions , an y chang e shoul db e effecte donl y a s aresul t o f acomprehensiv e polic y analysis , no t i n th e abbreviate dcontext

o f awaiver application
. Atla s Reply , Jul y 30
. 2010 , at 2
. I n the Matte r

o f Brazi l Carg o Charte r

Authorizations , Order

2008-11-1 0 a

t 4
.

### GAROFAL O GOERLIC H 

## HAINBAC H v c Pau l L
. Gretch , Directo r Augus t 6 , 201 0 Pag e 2 I n it s mos t

recent submission
. Atla s attempt s t o Justif y it s positio n a s pro-competitiv e - a n argument

tha t wa s absent

fromAtlas' s original waiver application , apar

t fix>mth e absurd suggestio n tha

t th e waiver

woul dplac e Atla s an

d other schedule d carrier s o n "equa l footing"^ wit h charte r carrier s i n th e Brazi l market
. A s noted , tmde r th e propose d waiver , al l right s o f schedule dan dcharter

carrier s woul d accru e immediatel y t o th e severa l carrier s holdin g U.S.

- Brazi l schedule dall-carg o authorit y .. . whil e th e best-cas e scenari o for U.S.-Brazi l charter carriers , includin g Southern , woul db e charter opportunitie s onl y for

upward s o f

ayear . Tha

t i s no t a t all equal
. Further , th e effect o f th e propose d waiver

woul d actuall y b e fl«ft'-competitive: It s existenc e woul ddiscourag e ne w entr y i n th e U.S.-Brazi l charte r market , an

d it s effect s coul d driv e existin g carriers , suc h a s Southern , fromth e market
. I n their Jul y 3 0 an

dAugus t 2 submissions
. Atla s and UP S impl y tha t th e solutio n fo

r Souther n i s t o appl y for

andreceiv e schedule d U.S.-Brazi l authorit y s o tha t Southern , too , ma

y becom e abeneficiar

y o f th e propose d waiver
. Even assumin g adequate schedule d frequencies woul db e available , that

"solution " i s totall y illusor y a s it woul d likel y take ayea

r o r more for Soirthemto obtai n aBrazilian schedule d license
. Further , Southern , whe n face d wit h th e scheduled-or-charter

choic e al l carrier s hav e face d in th e U.S.-Brazi l all-carg o market , opte d fo r th e flexibilit

y inherent i n th e charter

mod e i n tha

t market
. Wh

y shoul d Souther

n b e penalize d - an dAtla s an

dother carrier s rewarde d - under circumstance s wher e Atla s and th e other s ma y hav e erre di n thei r

choice ? A t th e ver y least , i f th e Department

i s prepare d t o chang e th e rule s o n whic h Souther n an dother charter carrier s hav e relie d in thei r decision-making , i t

shoul d d o s o onl y o n th e basi s o f show-caus e procedures * an dwit h aminimumo f

on e year' s prio r

notice
. Tha

t perio d woul d b e necessar y to provid e carrier s tha

t hav e selecte d th e charter

mode , suc h a s Southern , areasonabl e opportunit y t o obtai n effectiv e U.S
. an d Brazilia

n schedule d authorit

y s o a s t o hav e a

n opportunit y t o compet

e wit h th e like s o f

FedEx , UP S an

d Atlas
. I t i s tellin g that

Florid aWes t

an d Centurio n - th e primar

y marke t participant s other

tha n Souther n tha t rel y o n th e charter

poo l - decline d t o provid e non-objection s t o Atlas' s application. * Indeed , given tha t Pola r Ai r i s affiliate d wit

h Atla s and tha

t Arro w Ai r ha s cease d operations , th e carrier s independentl y supportin g Atlas' s applicatio n ar e limite d t o FedEx an d

' Atla s Application , Jul y 22,2010 , a t 3
. * Th e Departmen t

issue dU.S.-Brazi l schedule dauthority t o Centurio n Ai r Carg o o n Augus t 5 , 2008
. I

n respons e t o Centurion' s subsequen t request s stemmin g prinuu'ily fromBrazilian administrativ e procedure s an d complications , DO T ha s extende dCenturion' s start-up deadlin e nearl y tw o year s whil e th e carrier await s Brazilia

n schedule dlicensing ; se e Docke t DOT-OST-2008-0228
. Thoug h no t ever y applican t

may experienc e th e difficultie s Centurio n ha s faced , i t

i s clea r th e Brazilia

n licensin g proces s i s extraordinaril y time-consuming
.
^ Such procedure s were used , appropriately , i n conjunctio n wit h th e late 200 8 expansio n o f U.S.-Brazi l charter opportunities
. Se e Docket DOT-OST-2008-0349
. * Se e Atla s Reply , Jul y 30,2010 , Gis t paragraph
.

### GAKOFAJL O GOERLIC H 

## HAINBAC H p c Pau l L , Gretch , Directo r Augus t 6 , 201 0 Pag e 3 UPS
. Tha

t suppor t i s onl y natural give n tha t th e tw o industr

y behemoth s stan d t o benefit a s muc h i f no t mor e than Atla s under

th e requeste d waiver

- but tha t statu s hardl y excuse s th e injur y Souther n andother s woul dsuffe r b y asudden chang e t o th e competitiv e rule s o f engagement

in th e U.S.-Brazi l market
. UPS' s alternativ e proposa l - tha t fo r th e firs t si x month s o f

th e charter

year , schedule d carrier s b e permitte d1 0 flight s pe r mont h fromth e charte r

poo l wit h unlimite d acces s thereafte r

- i s onl y marginall y les s deficien t tha n Atlas' s proposal
. U p t o 6 0 charter s pe r schedule d carrier over asix-mont

h perio di s fer

mor e tha

n woul d b e necessar

y t o destro y th e balanc e th e Dqpartmen

t ha s craftedtmde

r th e bilaterally-impose d constraints
. Th e answe r fo r UPS , Atla s an d FedE x i s resor

t t o th e Department' s existin g mechanis mfo r case-by-cas e waiver s i n th e publi c interest
. FedEx argue s tha

t give n th e numbe

r o f annua l charte r frequencies availabl e under th e bilataral , acharte

r carrier coul doperat e th e fiinctional equivalen t o f schedule d servic e usio g charte r allocations
. Tha

t propositio n i s highl y doubtful for animibe r o f reasons , bu t

eve n i f i t wer e correct , under

th e propose dwaiver

i t woul d appl y equall y for

schedule d carrier s - i.e. , suc h carrier s coul doperate thei r usua l pattern o f

schedule d servic e plu s a

n extensive , scheduled-like pattern o f charter service
. I n fact , fo

r acarrier possessin g th e resource s o f FedEx , thi s woul d present a n opportunit

y t o expan dit s overal l market share t o achiev e adominant position
. Tha

t woul d scarcel y b e u i th e publi c interest , particularl y i n arestricted-capacit y market
. FedEx argue s additionall y tha t without th e waiver

requeste d b y Atlas , a"wast e o f scarc e opporttmities " wil l occur

durin g th e 2010-1 1 charter year , base d primaril y o n th e existenc e o f unuse dcharter

frequencies for

th e 2009-1 0 year . Th e unuse d 2009-1 0 allocations , however , indicate onl y tha

t th e need s o f

shipper s wer e fulfilled withou t resor t t o th e fiil l con[5>lemen

t o f charter servic e authorize dunder

th e bilateral
. I f

additional shipper

deman d had existed , FedEx an d other s woul dhav e me t it , particularl y durin g th e las t tw o month s o f

th e charter

year . I n shor

t there i s n o logica

l basi s fo r suggestin g tha

t th e Department' s existin g procedure s hav e resulte d o r wil l resu h in waste dopportunities
. A s state dpreviously
. Souther n woul d prefer

ar t ope n skie s U.S.-Brazi l regim e where ther e i s n o nee dfo

r DO T to balanc e th e rights o f competitors
. Unti l then , however , it woul d no t b e i n th e publi c interes t

fo r th e Department

t o trea t thi s non-ope n skie s marke t a s thoug h i t

were a n ope n skie s market
. Souther n thwefor e reiterate s it s stron g objectio n t o th e requeste d waiver
.

Sincerely , Aaro n A
. Goerlic h Garofalo Goerlic h Hainbac h P C Counse l fo r

Souther n AirJnc ,

## GAROFAL O GOERLIC H HAINBAC H P C Pau l L
. Gretch , Director Augus t 6 , 201 0 Pag e 4
cc : Mar

y Street Est aRosenber

g Bria n Hedberg Bemic e Gra

y Al l person s o n attache dservic e lis t

## GAROFAL O GOERLIC H HAINBAC H P C Pau l L
. Gretch , Directo r Augus t 6 , 201 0 Pag e 5 Certificat e of Servic e I hereb y certif

y tha t on Augus t

6 , 2010 , acop y o f

th e followin g Applicatio n of Souther n Air Inc
. wa s servic e vi aemai l t o th e followin g persons : 

### I^UJli^/y^ ^ Knstin aR
. Pickholt

z Pierr e Murph y (Arrow ) pmurphy@lopmurphy.co m Russel l Pomme

r (Atlas ) rpommer@atlasair.co m Willia mEvan s (Centurion ) Bill@mietuslaw.co m Nanc y Spark s (FedEx ) nssparks@fedex.co m Bailey Leopar

d(FedEx ) gbleopard@fedex.co m Marshal l S
. Sinic k

(Florid aWest) msinick@ssd.co m Mar k Atwoo d(Kalitta ) matwood@sherblackwell.co m Kevi n Montgomer

y (Polar) Kevin.montgomery@polaraircargo.co m Davi dVaugha

n (UPS ) dvaughan(gkelleydrye.co m Daniell e Fishe

r (UPS ) dfisher@kelleydrye.co m MalcolmL
. Beng e (World) mlbenge@zsrlaw.co m Rober t Silverberg (AB X Ai

r Inc. ) rsilverberg@sgbdc.co m