Order 2010-6-1

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

 

Issued by the Department of Transportation

on the 1

st day of June, 2010

 Served: June 1, 2010

FINAL ORDER

Summary

By this Order we make final our tentative findings and conclusions set forth in Order 2010-5-8, 

and award Kalitta Air, L.L.C. (Kalitta) economic authority to provide all-cargo services in the 

U.S.-China market and allocate to Kalitta six weekly all-cargo frequencies for its proposed 

services. The rights are available immediately. 

Background

By Order 2010-5-8, we issued a tentative decision in the 2010 U.S.-China All-Cargo Designation 

and Frequency Allocation Proceeding. We tentatively selected Kalitta to provide all-cargo 

services in the U.S.-China market and tentatively allocated it six weekly frequencies for its 

proposed U.S.-China service. We tentatively decided that the selection of Kalitta would best 

serve the public interest. We tentatively found that Kalitta’s proposal to serve two Chinese 

gateways, Shanghai and Guangzhou, and its proposal to cross-load its westbound China traffic, 

effectively providing service to two China gateways from three major U.S. gateways, Los 

Angeles, Chicago, and New York, would provide greater benefits than the proposal of Southern 

Air, Inc., the only other applicant in this case. 

We also tentatively imposed the following condition on the economic authority to be awarded in 

this proceeding: the selected carrier must operate newly-awarded U.S.-China all-cargo routes 

In the Matter of 

2010 U.S.-CHINA ALL-CARGO 

DESIGNATION AND FREQUENCY 

ALLOCATION PROCEEDING

Docket DOT-OST-2010-0017
2

until March 25, 2011, before that carrier may be permitted to sell or transfer the route in 

question.1 

Objections to the Department’s tentative decision were due on May 17, 2010. No objections 

were filed.

Decision 

We have decided to make final our tentative decision to award Kalitta economic authority to 

provide all-cargo services in the U.S.-China market. We also make final our tentative decision to 

allocate six weekly frequencies to Kalitta for its proposed U.S.-China all-cargo service. These 

rights are available immediately. 

Sale/Transfer Condition

We also make final our decision to impose the following condition on the economic authority to 

be awarded in this proceeding: the selected carrier must operate newly-awarded U.S.-China allcargo routes through March 25, 2011, before that carrier may be permitted to sell or transfer the 

route in question.2 The condition will not apply in the case of a merger or acquisition by another 

carrier of all or a substantial part of the assets of the carrier holding the certificate or frequencies 

containing this condition.

Economic Authority

We will issue to Kalitta two-year exemption authority effective upon issuance of the final order 

in this proceeding.3 4 Consistent with our standard practice, we will also impose a start-up 

condition and our standard 90-day dormancy condition. We will require that Kalitta begin 

service within 90 days of the issue date of the final order.5For any frequency not operated for a 

period of 90 days (once inaugurated and for any reason other than seasonal use) the frequency

 

1 We note that the no sale/no transfer condition will no longer be necessary when designation and frequency limits no 

longer apply to scheduled U.S.-China all-cargo services.

2

Id.

3 We will act separately on Kalitta’s request for certificate authority. We note that Order 2010-5-8, fn 8, indicates 

that Kalitta’s exemption authority granted here would be subsumed by its blanket open-skies certificate effective 

March 25, 2011. However, upon further analysis we have determined that this is not the case as certain restrictions 

in the bilateral agreement would remain in effect even after designation and frequency limitations are removed. 

4 We find that Kalitta is fit to provide the authorized service. The carrier has been found to be a citizen of the United 

States, and fit, willing, and able to provide scheduled foreign air transportation of property and mail as a certificated 

air carrier under section 41102 of Title 49 U.S.C. (see Order 2007-7-4). We further find that issuance of the 

exemption authority granted will result in a near term increase of annual fuel consumption in excess of ten million 

gallons. As a result, our action constitutes a “major regulatory action” under the Energy Policy and Conservation 

Act of 1975, as defined by Section 313.4(a)(1) of the Department’s regulations. We find, however, that the service 

provided under the authority granted and resulting public benefits outweigh any adverse effects that may be caused 

by the increased fuel consumption.

5

If Kalitta does not begin service with the allocated frequencies within 90 days of the issued date of the final order, 

any unused frequency will automatically revert to the Department for reallocation.
3

would be deemed dormant and the allocation as to that frequency would expire automatically and 

the unused frequency would revert to the Department for reallocation.6

ACCORDINGLY,

1. We make final our tentative findings, conclusions, and decisions in Order 2010-5-8 with 

respect to the award to Kalitta Air, L.L.C. of exemption authority to engage in scheduled 

foreign air transportation of property and mail between a point or points in the United 

States, on the one hand, and a point or points in the People’s Republic of China, on the 

other hand, via intermediate points, and beyond China;

2. We allocate Kalitta Air, L.L.C. six weekly frequencies to perform its proposed 

operations;

3. The exemption authority granted in ordering paragraph 1 is effective immediately and 

will remain in effect for two years, subject to the attached conditions; 

4. The frequencies allocated in this proceeding will remain in effect indefinitely, provided 

that the holder continues to hold the necessary underlying authority to serve the 

authorized markets and provided further that the holder begins service with the allocated 

frequencies within 90 days of the service date of this order, and also provided further that 

if any of the frequencies allocated is not used for a period of 90 days (once inaugurated 

and for any reason other than seasonal use), the frequency allocation with respect to each 

such frequency would expire automatically and the frequency would revert to the 

Department; 

5. We deny the application of Southern Air, Inc. for its proposed U.S.-China service;

6. We defer action on the request of Kalitta Air, L.L.C. for certificate authority for its 

proposed U.S.-China service;

7. We restrict, until March 25, 2011, the sale or transfer by Kalitta Air, L.L.C. of the route 

rights awarded in ordering paragraphs 1 and 2;

8. To the extent not granted, we deny all motions and requests in the captioned docket; and

9. We will not entertain petitions for reconsideration of this order; and

 

6 We remind the selected carrier that the frequencies awarded are for weekly operations. A scheduled carrier may 

not bank frequencies from one week to the next. Failure to use the subject frequency on a weekly basis would result 

in the forfeiture of the unused frequency for that particular week.
4

10. We will serve this order on the parties to the captioned docket of the order, certificated 

U.S. air carriers designated for scheduled U.S.-China all-cargo service, the U.S. 

Department of State (Office of Aviation Negotiations), the Federal Aviation 

Administration (AFS-200), and the Ambassador of the People’s Republic of China in 

Washington, D.C.

By:

Susan L. Kurland

Assistant Secretary for Aviation

and International Affairs

(SEAL)

An electronic version of this document is available on the World Wide Web at:

http://www.regulations.gov
ATTACHMENT

U.S. Carrier Exemption Conditions

In the conduct of the operations authorized, the U.S. carrier applicant(s) shall:

(1) Hold at all times effective operating authority from the government of each country served;

(2) Comply with applicable requirements concerning oversales contained in 14 CFR 250 (for 

scheduled operations, if authorized);

(3) Comply with the requirements for reporting data contained in 14 CFR 241;

(4) Comply with requirements for minimum insurance coverage, and for certifying that coverage 

to the Department, contained in 14 CFR 205;

(5) Except as specifically exempted or otherwise provided for in a Department Order, comply

with the requirements of 14 CFR 203, concerning waiver of Warsaw Convention liability limits 

and defenses;

(6) Comply with all applicable requirements of the Federal Aviation Administration, the 

Transportation Security Administration, and with all applicable U.S. Government requirements 

concerning security, including, but not limited to, 49 CFR Part 1544. To assure compliance with 

all applicable U.S. Government requirements concerning security, the holder shall, before 

commencing any new service (including charter flights) to or from a foreign airport, contact its 

Principal Security Inspector (PSI) to advise the PSI of its plans and to find out whether the 

Transportation Security Administration has determined that security is adequate to allow such 

airport(s) to be served;

(7) Comply with such other reasonable terms, conditions, and limitations required by the public 

interest as may be prescribed by the Department of Transportation, with all applicable orders and 

regulations of other U.S. agencies and courts, and with all applicable laws of the United States.

The authority granted shall be effective only during the period when the holder is in compliance 

with the conditions imposed above.

 

1/2008