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

)

)

)

)

)

)

)

) 

### Application of Norwegian Air International Limited for an exemption under 49 U.S.C. § 40109 and a foreign air carrier permit pursuant to 49 U.S.C. § 41301 Docket DOT-OST2013-0204

ANSWER OF FEDERAL EXPRESS CORPORATION TO NOTICE SERVED AUGUST 4, 2014

Communications with respect to this document should be sent to: Nancy S. Sparks Managing Director Regulatory Affairs FEDERAL EXPRESS CORPORATION 1700 Pennsylvania Avenue, N.W. Suite 950 Washington, D.C. 20006 (202) 393-9286 (phone) (202) 628-0654 (fax) Email: nssparks@fedex.com M. Rush O'Keefe, Jr. Senior Vice President & General Counsel Steven H. Taylor Vice President — Regulatory Affairs Courtney E. Felts Senior Counsel — Regulatory Affairs FEDERAL EXPRESS CORPORATION 3620 Hacks Cross Road Building B, 3rd Floor Memphis, Tennessee 38125 (901) 434-8632 (phone) (901) 434-8283 (fax) Email - cefelts@fedex.com Attorneys for FEDERAL EXPRESS CORPORATION

Dated: August 18, 2014

### BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.
Application of ) ) Norwegian Air International Limited ) ) for an exemption under 49 U.S.C. § 40109 ) and a foreign air carrier permit pursuant ) to 49 U.S.C. § 41301 ) ) Docket DOT-OST2013-0204

ANSWER OF FEDERAL EXPRESS CORPORATION TO NOTICE SERVED AUGUST 4, 2014

Federal Express Corporation ("FedEx") files this Answer to the Notice, served August 4, 2014 (the "Notice"), by the Department of Transportation (the "Department") in the docket relating to the Application of Norwegian Air International Limited ("NAI") for a foreign air carrier permit. The Notice contains information regarding the interpretation of the U.S.-European Union Air Services Agreement (the "Agreement") by the European Commission ("EC") and its applicability to the Application filed in this docket by NAI (the "Application"). The Application has been pending for many months now, and this docket is filled with a number of pleadings and letters urging the Department to reject the Application based on the business and employment models of NAI and the choice of its principal place of business. NAI has received an air operator's certificate from the Irish regulator, and that regulator has defended itself eloquently in the public record.

### FedEx does not see any reason for the Department to further delay the granting of

this Application and finds in the Notice a very powerful reason — possible retaliation — for the Department to end this public debate forthwith and move forward with the Application. The parties to the Agreement directly addressed whether each side should probe deeply into the determinations of the regulators on the other side in deciding whether a carrier should receive the benefits of an air carrier under the Agreement. This was set against a backdrop of European carrier distrust of sometimes lengthy reviews by the U.S. of foreign air carrier permit applications, with some alleging that the intent was to slow European carrier expansion into the U.S. market. In a move to underscore the truly liberalizing intent of the Agreement, the parties therefore agreed to limit the bases for review of applications and require mutual recognition of the national regulatory decisions. This consensus, achieved after lengthy negotiations, was set forth in Article 6bis, 

### which mandated reciprocal recognition for licensing determinations for carriers covered by the Agreement. Additionally, the Department formally incorporated that special treatment into its procedures by adopting an abbreviated application format for applications under the Agreement. The only exceptions which would permit either side to question a national regulatory decision under Article 6bis 

### were set forth in the conditions of Article 4. In the process of negotiations, each side determined that satisfaction of these factors would comply with their law. The U.S. "side" included the Department, armed with extensive expertise since it is charged with interpreting and implementing U.S. law relating to foreign air carriers. In the Memorandum of Consultation that
2accompanied the Agreement, the parties specifically noted that the normal law

applicable to the factors set forth in Article 4 was not intended to be modified.' Most importantly, the parties did not add any other factor to Article 4 upon which a unilateral rejection could be based. Therefore, it is clear that the Agreement provides that satisfaction of the Article 4 provisions is all that is required to invoke the reciprocal recognition requirement of Article 

### 6bis. However, opponents of the NAI application want the Department to go beyond the Article 4 exceptions and examine NAI' s labor and business practices, under the purported authority of Article 

### 17bis. FedEx agrees with the conclusion of the EC that "Article 

### 17bis does not provide a legal basis for unilaterally denying an application under Article 4." 

### Notice, at 2. Article 

### 17bis was also the subject of lengthy negotiations. Despite thefact that certain interests wanted to use this Agreement as a springboard to a transAtlantic labor standard, that was not the result. Instead, the parties agreed that the Agreement was "not intended to undermine labour standards or the labour-related rights and principles contained in the Parties' 

### respective laws." 

### Article 17bis(1) (emphasis added). FedEx asserts that the inclusion of the word "respective" means that each participating nation would retain and enforce its own laws on its own carriers, rather than creating a new standard to which all parties would adhere. Therefore, FedEx agrees with the view expressed by the EC that "Article 

### 17bis itself

1 "The delegation affirmed that the procedures for reciprocal recognition of regulatory determinations with regard to airline fitness and citizenship in the new Article 6bis are not intended to modify the conditions prescribed under the laws and regulations normally applied by the Parties to the operation of international air transportation referred to in Article 4 of the Agreement." MOC, paragraph 5 (emphasis added). 3does not formulate a legal rule that can be applied unilaterally by one party." 

### Notice,

at 2. According to the Notice, the representative of the EC "reiterated ...that any unilateral decision to deny an application using Article 

### 17bis runs against the letter and spirit of the Agreement." 

### Notice, at 4. At the time of signing the Agreement, both parties recognized that at some point, one party might "take measures contrary to the Agreement." 

### MOC, at paragraph 20. In that case, "the other Party may avail itself of any appropriate and proportional measures in accordance with international law, including the Agreement." If the U.S. denies the application of NAI, the EC representative has already made his view clear that such an action would indeed be contrary to the Agreement. While the EC has not specified which retaliatory measures it might employ, it can be assumed that valuable and liberal rights could be subject to limitation, a potentially disastrous result which the Department must avoid. It is not in the best interests of the U.S. travelling and shipping public, U.S. airlines, or U.S. airline employees for this matter to escalate to a situation of retaliatory measures. Air transport rights across the Atlantic were liberalized under this Agreement specifically to benefit those groups. A limitation of air rights could disrupt the marketplace and cause some U.S. carrier operations to be curtailed or even halted. Too much rests upon this critical trade relationship with the European Union to have this Agreement, a model of progressive U.S. international aviation policy, to become the basis for such a harmful and dangerous dispute.

4

### Respectfully submitted,

FEDERAL EXPRESS CORPORATION

/s/ Nancy S. Sparks Nancy S. Sparks Managing Director Regulatory Affairs
August 18, 2014

5

### CERTIFICATE OF SERVICE A copy of the foregoing Reply has been served, this 18 th day of August 2014, upon the following persons via email: romanow@pillsburylaw.com peter.nelson@pillsburylaw.com russell.bailey@alpa.org steve.morrissey@united.com dan.weiss@united.com sascha.vanderbellen@delta.com howard.kass@aa.com robert.wirick@aa.com francis.heil@aa.com robert.land@jetblue.com rpommer@atlasair.com anita.mosner@hklaw.com jennifer.nowak@hklaw.com mlbenge@zsrlaw.com dberg@airlines.org jcasey@airlines.org kglatz@airlines.org cbethke@airlines.org edw@ttd.org ejames@jamhoff.com elytle@portoakland.com kgeorge@broward.org mrichardson@swapa.org sshur@traveltech.org pbrown@goaa.org leo@washingtonairports.com keith@washingtonairports.com jesse.elliot@faa.gov douglas.schwab@faa.gov nicholas.tsokris@faa.gov john.allen@faa.gov paul.gretch@dot.gov brian.hedberg@dot.gov reese.davidson@dot.gov esta.rosenberg@dot.gov brett.kruger@dot.gov englets@state.gov Cristinasa@state.gov eugene.alford@trade.gov info@airlineinfo.com 

### Is/ Courtney E. Felts Courtney E. Felts

6