O rder 2010 - 6 - 1 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Is sued by the Department of Transportation on the 1 st day

of June , 20 10

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 . W e tentatively selected Kalitta to provide all
- cargo services in the U.S.
- China market and tentatively allocated it six weekly

frequencies for i ts proposed U.S.
- China service. We tentatively decided that th e selection of Kalitta would best serve the public interest. We tentatively f ound that Kalitta’s proposal to serve two Chinese gateway s, Shanghai and Guangzhou, and its proposal to cross
- load its westbound China traffic, effectively

providing service to two China gateway s from three major U.S. gateway s , L os Angeles, Chicago, and New York , would provide greater benefits than the proposal of S outhern Air, Inc., the only

other applicant in this ca se . We also tentatively

impose d 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 Inthe Matt er of 2010 U.S. - CHINA ALL - CARGO DESIGNATION AND FREQUENCY ALLOCATION PROCEEDING Docket DOT - OST - 2010 - 00172

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 W e have decided to make final our tentative decision to award Kalitta economic authority to prov ide 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 W e 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 all
cargo routes through March 25, 2011, before that carrier may be permi tted 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 condit ion. Economic Authority We will issue to Kalitta two - ye ar 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 day s of the issue date of the final order. 5 For any frequency

not operated for a period of 90 day s (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 s cheduled 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. How ever, 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, how ever, 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 frequenc y will automatically revert to th e Department for reallocation.3

would be de emed dormant and the allocation as to that frequency w ould expire automatically and the unused frequency

w ould 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 C hina, 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 remai n in effect for two years, s ubject 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 day s 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 day s (once inaugurated an d 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. W e deny

the application of Southern Air, Inc. for its proposed U.S.
- Chin a 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 paragra ph s 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 r esult 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, c ertificated 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 Wash ington, 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.govATTACHMENT U.S. Carrier Exemption Conditions Inthe 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 cert ifying 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 req uired 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 effectiv e only during the period when the holder is in compliance with the conditions imposed above.

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