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## 'f\r:PARTMENTOF**'~";~i'~SPORTATION** 

## GAROFALO GOERLICH HAINBACH**~(/ET** 

## OPERATIONS

1200NEW HAMPSHIREAVENUE NW

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## P ): 25 TELEPHONE 202116-3970• FACSIMILE 202 116-3975 i

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Paul L. Gretch, Director Office ofInternational Aviation U.S. Department ofTransportation 1200 New JerseyAvenue, S.E. Washington, D.C. 20590 WWW.GGH·AIRLAW.COM July**28~** 2010



### Re;' Answer in Opposition to BrazilWaiver Request
DearMr. Gretch:


### SouthemAIr Inc. answers inopposition to the application ofAtlas 

### Air, IDe. 

### dated July 22, 2010. The application requests that DOT allow Atlas and other U.S.-Brazil scheduled a11- cargo earners access to the limited pool ofBrazil charter frequencies some nine months earlier than set by the Department's notice dated June 11,2010.

In Southern's**view~** the June 11 notice, in establishing Brazil cargo charter distribution procedures for the 2010-2011 charter

### year, strock an appropriate balance between theinterests of scheduled carriers and charter carriers operating in the U.S.-Brazil market. Atlas's application provides no persuasive reason the balance should be disturbed, and Atlas's desire to have the benefit ofboth cbarter- and scheduled-carrier status in what is clearly a fish-or-fowl market should berejected.
The essence of Atlas's complaint is that Brazilian licensing procedures render the scheduled mode ofoperation too inflexible for Atlas toresponseto 

### ad

### hoc, off-line demand. But certainly Atlas 

### was well aware ofthe Brazilian procedures when 

### it applied fur and received scheduled U.S.-Brazil authority, and in any event, there is nothing to stop Atlas from surrendering its U.S.-Brazil scheduled authority and reverting to the charter mode ifincreased flexibility is its desire. As Atlas itselfpoints out, Brazil cargo designations are now unlimited; therefore, were Atlas to tbrfeit its scheduled designation, it could very well regain the designation at a laterdate.
The scheduled versus charter dilemma Atlas is facing simply reflects the reality ofthe U.S.-Brazil market. Bilateral constraints on scheduled and charter frequencies have forced the Department to strike a balance betweenthe two modes ofservice, implemented byDOT's annual notices. While Southern, and presumably Atlas, would prefer an open skies regime, the U.S.- Brazil air transport agreement effectively bifurcates scheduled and charter service, limiting the fonner to an aggregate of 1,820 frequencies per year and the latter to 1,250. The Department should not tamperwiththe approach it 

### has developed inrec:ognition oftheserelative constraints.
Atlas asserts there can be no argument that limiting scheduled-carrier access to the charter pool to the last two months ofthe charter year protects carriers (such as Southern) that

## GAROFALO GOERLICH HAlNBACH PC Paul L. Gretch, Director July 28,2010 Page 2
could otherwise be precluded from conducting U.S.-Brazil operations. Atlas's assertion is flawed intwo respects. First, ifAtlas and other scheduled operators were allowed immediate access to the charter pool, interested parties could only speculate as to whether charter frequencies would remain fur 

### use during the last few months ofthe charteryear. The onething that wouldbe certain is that the scheduled 

### versus charter balance 

### crafted by the Department would be upset at the worst time, 

### i.

### e., when 

### market conditions appear to be causing an overall increase in demand. Second, implicit in Atlas's argument is that because Brazil cargo designations are now unlimited and three scheduled all-cargo frequencies are unassigned, a carrier such as Southern desiring "protection" could opt for scheduled service, thereby avoiding reliance on the charter 

### pool. That, however, is precisely the licensing posture that prompted Atlas's present application. Ifthis is a predicament for Atlas, it would likely be no less a predicament for other carriers.
Atlas's argument that an outstanding waiver granted to Centurion is "conceptually" the
same as Atlas's request 

### is equally flawed. Inthe absence ofcontinued access to the charterpool while awaiting Brazilian scheduled licensing, Centurion would be ousted completely from the U.S.-Brazil market under the tenns ofthe Department's June 11 notice 

### and previous similar notices. That is notAtlas's situation at 

### all. Finally, it bears mention that under current circumstances, Atlas is not barred entirely from access to the charter pool. The restrictions ofwhich Atlas complains may be waived on a case-by-case basis in the public interest, as the Department has done fur Atlas. The situation described at Footnote 1ofAtlas's application is a prime example ofsuch case-by-case approval.
As noted, Southernwould prefer 

### an open skies U.S.-Brazil regime where there is 

### no need for DOT to strike a balance between the economic rights ofcompetitors. Until that day comes, however, the Department should not tamper with its tried and true formula. It would not be in the public interest fur the Department to treat a non-open skies market as though it were an open skies 

### market at Atlas's or 

### any othercarrier'srequest.

cc: MaryStreet Esta Rosenberg 

### Brian Hedberg AU persons on attached service 

### list 

# Z:'£**.d/~** Aaron A. Goerlich Garofalo Goerlich Hainbach PC
Counsel for SouthernAirInc.

# GAROFALO GOERLICH HAlNBACH PC Paul L. Gretch, Director July 28, 2010 Page 3

CERTIFICATE OF SERVICE

I hereby certify that on July 28,2010, a copy ofthe foregoing answer ofSouthern Air Inc. was served via email on thepersons listed below.

Nancy Sparks (FedEx) DavidVaughan(UPS) Danielle Fisher (UPS) Kevin Montgomery (Polar) Pierre Murphy (Arrow) William Evans (Centmion) Marshall Sinick (FloridaWest) Russell Pommer (Atlas Air) Kristina R. Pickholtz

nnsparks@fedex.com dvaughan@kelleydrye.com dfisher@kelleydrye.com Kevin.montgomery@polaraircargo.com pmurphy@lopmurphy.com Bi11@mietuslaw.com msinick@Ssd.com rpommer@atlasair.com