### BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.
) Request ) ) ofSilk Way West Airlines to amend authority ) Docket OST 2014-0111 (Baku-Hong Kong-Chicago-New York-Luxemburg-Baku) )



### RESPONSE OF SILKWAY WEST AIRLINES TO SURREPLY OF KALITTA AIR AND MOTION FORLEAVE TO FILE

Comm unications with respect to this document should be sent to: KAMRAN GASIMOV Director /CEO SILK WAY WEST AIRLINES Heydar Aliyev International Airport Baku, AZ-1044, Republic ofAzerbaijan



### Dated: January 13, 2015 GLENN P. WICKS EKATERINA A. GRIMES THE WICKS GROUP, PLLC 733 lOth Street NW, Suite 3002 Washington, DC 20001 (202) 457-7790 gpwicks@wicks-group.com ekagrimes@wicks-group

.com 

### For: SILKWAY WEST AIRLINESBEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.
)

**~~~** 

### ) ) ofSilk Way West Airlines to amend authority ) Docket OST 2014-0111 (Baku-Hong Kong-Chicago-New York-Luxemburg-Baku) ) 

# ____________________________________ )
RESPONSE OF SILK WAY WEST AIRLINES TO SURREPLY OF KALITTA AIR AND MOTION FOR LEAVE TO FILEI Following the submissions filed in the above referenced docket and in connection with the December 22, 2014 Surreply ofKa litta Air LLC (" Kalitta") to the Response ofSilk Way West Airlines and Motion for Leave to File, Silk Way West Airlines ("Silk Way West") will briefly respond to several points repeated in Kalitta's most recent filing. Because Kalitta failed to add any substance to its earlier allegations, Silk WayWest, will avoid repetition ofthose allegations or engaging in further polemics over the pricing principles relating to the cargo handling and fuel charges at the Baku Airport. However, Silk Way West will briefly respond to clarify the record before the Department in certain critical respects. 1. Kalitta repeats its allegation ofa "grossly out ofproportion" discrepancy between the published rates and the negotiated rates at Baku Airport creating a noncompetitive environment. That allegation is wrong. Kalitta persists in comparing its one experience as a one offcharter operator with the high frequency arrangements enjoyed by many other carriers at Baku. What Kalitta is really saying is that it thinks that the published


### 1 Silk Way West moves that the Department accept this filing to enable it to address a number of statements in fact and law made in submissions previously accepted in the referenced Docket under the same Rule from other submitters. Silk Way West submits that no party would be prejudiced by acceptance ofthis Response.rates are too high and the negotiated rates based upon use are too low

. Kalitta's position disregards reality that the free market appears to strongly disagree with the argument suggested by Kalitta. As evidenced by its continuous growth, Baku is, in fact, an attractive and cost effective option in the region for cargo operations, including for Kalitta's one-off charter where it did receive reduced pricing after its request for it

- a fact that Kalitta conveniently omitted from its initial filing before the Department and only addressed after Silk Way West pointed it out. 2. Silk Way West would once again stress that though the principle ofpricing the landing fees and cargo handling fees based on the "signatory" status or the volume parameters is essentially the same, the cargo handling process is in itselffar more equipment and labor intensive, and may thus quite naturally command greater discrepancy in pricing. The essentia l point that Silk Way West is making is that airports have a right to charge based upon usage and market demand, whether in Baku or in the United States. 3. That Kalitta appears to request that the Department engage in a pricing
eva luation at a foreign airport where Kalitta, by its own statement, has had one ad hoc charter flight that it was allegedly dissatisfied with, and over 130 (ONE HUNDRED AND THIRTY) fifth freedom fligl1ts where the volume ofservices supported "the very reasonable rates"- all without a bilateral agreement

- is bizarre. Ittherefore bears repeating that Silk Way West is asking for the rights that Kalitta already enjoys, and Kalitta has the unmitigated chutzpah to claim lack ofreciprocity when Silk Way West is not being afforded the same opportunity in the United States that US carriers- including Kalitta

-- have been consistently enjoying in Azerbaijan. 4. Kalitta also states that it "fully understands that airports offer better rates on a variety ofcharges for carriers that are regular users" but continues to say that " [t]hat

"volume discount," however, is not what is represented by the royalty charged by the Baku Cargo Terminal." The use ofthe wording is pure semantics and is deliberately misleading. Without going further into the definitions and linguistic analyses, Silk Way West wouldonly once again stress that the substantial capacity at the airport has been painstakingly built in order to attract major cargo operators. Were it not for the high quality ser vices, competitive pricing in the region, and substantial added value (such as warehousing and refrigeration facilities), Baku would not have been able to compete as it now does in a robust regional airport market. Kalitta's extensive fifth freedom operations at the airport are evidence ofthis fact. 5. In its December 1, 2014 filing, Silk Way West provided substantial disclosure
on the pricing policies and actual prices at the Baku Airport as they directly affect the operating carriers including Kalitta

. Indeed, this was a highly accurate and detailed treatment ofthe airport' s substantive and objective commercial data. Kalitta' s comments thereon are merely an advocate's attempt to negatively characterize the facts and numbers cited by Silk Way West. Silk Way West submits that it is not in any way involved in a nefarious scheme to discourage ad hoc charters from flying to/from Baku. Rather, it is pointing out that the market is a regional one in which the actual airport prices are reasonable for that region and are based upon the volume and quality ofservices requested. They are in fact charged to Silk Way West itself , as with any other carrier, based upon the volume ofservices. 6. Kalitta is attempting to avoid competition in the US-Hong Kong/China market, not, as it suggests, to "hopefully, create a more fair and competitive environment at Baku than what currently exists." Its complaint that it cannot compete for business in Baku due to high handling and fuel charges is not its primary concern. Indeed, Kalitta weakly suggests that "there is certainly business to be had in Baku. " In fact, Kalitta has no suchbusiness nor is it even able to cite any meaningful examples ofsuch " business to be had" as for example National Air Cargo, Cargolux, or Malaysian Air Cargo might. It is simply a reach. Moreover, it is not unreasonable to find that numerous high volume operators (such as Cargolux, Malaysian, National Air Cargo, Atlas and, yes, Silk Way West) are at a pricing advantage vis a vis Kalitta.Kalitta is not, as it suggests, expending this amount ofenergy in the hope of improving its terms for one ad hoc cargo charter flight. That would be irrational. However, it is highly rational to attempt to protect its space in the US-China market where it is competitive and does have actual business. It is also highly rational to accept disparate treatment as a US carrier when it is to its own advantage. Silk Way West once again submits that the Department should resist Kalitta's invitation to ignore the substantial imbalance in favor ofUS carriers on bilateral rights and to focus instead on a red herring (in the form ofa single ad hoc charter flight) aimed at protecting Kalitta's valuable turfin China, and not condone any further delay tactic by Kalitta to prevent Silk Way West from entering the US market on the eve ofan open skies agreement with Azerbaijan. 

## ******* WHEREFORE, Silk Way West respectfully requests that the Department grant its request to amend the authority granted to it earlier so as to allow it to implement scheduled air transportation ofproperty and mail on the route Baku-Hong Kong-ChicagoNew York-Luxemburg -Baku (with no US domestic cargo transportation between the points ofChicago and New York), or such other or further reliefas the Department determines to be appropriate and consistent with the public interest. Silk Way West also respectfully motions the Department for leave to file and expedited consideration ofits pending Request. Respectfully submitted,



# dJP'~ 

# f!?It)£_

GLENN P. WICKS Counsel for Silk Way West Airlines

EKATERINA A. GRIMES Consultant for Silk Way West AirlinesCERTIFICATE OF SERVICE
I hereby certify that I have on this day served a copy ofthe foregoing document upon each ofthe following electronic mail addresses: sascha.vanderbellen@delta.com sametta.c. bamett@delta

.com chris.walker@delta.com dshort@fedex.com sllunsford@fedex.com nsspa rks@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 pdoell@naca.cc robert.wirick@aa

.com francis

.heil@aa.com howard kass@usairways.com benjamin.slocum@usairways.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.com judy@lac.lvnden.com rzerkel@lac.lvnden.com gwhite@lac.lvnden.com jdavis@lac.lynden.com

Ekaterina A. Grimes TGillies@southemair

.com info@airlineinfo.com anita.mosner@hklaw.com jennifer.nowak@hklaw.com dsmalls@ups.com slachter@cozen.com pmumhy@lopmurphy.com kleake@ggh-air law.com EngleTS@state.gov

Dated: January 13, 2015