Order 2011 - 7 - 14 Served: July 28, 2011 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Issued by the Department of Transportation on the 27 th d ay of May , 20 11 Joint Application of ASTAR AIR CARGO, INC. and ASTAR USA, LLC for approval of a transfer of certificate authority under 49 U.S.C. § 41105 Docket DOT - OST
- 2010 - 0223

ORDER TRANSFERRING CERTIFICATE AUTHORITY Summary By this order, we transfer to ASTAR USA, LLC (“AUSA”) , the foreign scheduled all

- cargo certificates currently held by ASTAR Air Cargo, Inc. (“ ASTAR ”) , and reissue to AUSA the foreign certificates previously held by ASTAR, as described in Attachment A. Background On September 3, 2010, ASTAR and AUSA (hereinafter referred to as the “Joint Applicants”) filed an application in Docket DOT

- OST

- 2010

- 0223 to transfer ASTAR’s certificates of public convenience and necessity to AUSA. In that application, the Joint Applicants state that ASTAR intends to merge into AUSA, with AUSA remaining as the surviving entity. In the application, the Joint Applicants state that since ASTAR’s inception in 2003, their largest cust omer and minority shareholder has been DHL Express (USA), Inc. (“DHL”), for whom ASTAR provides domestic and foreign freight air transportation services through a cost

- plus aircraft, crew, maintenance, and insurance service agreement (“ACMI agreement”). I n November 2008, DHL announced its decision to exit the North American domestic market and , a s a result of this decision, ASTAR’s level of operations performed under the DHL ACMI a greement significantly declined. Consequently, three of ASTAR’s owners crea ted a new company, AUSA, in which DHL has no equity interest, which would provide air transportation services for DHL and other potential customers pursuant to fee

- for

- service air transportation2

services agreements. 1 The Joint Applicants state that moving from a cost

- plus to a fee

- for

service business model will better enable them to compete for business from DHL as well as other potential customers. The Joint Applicants indicate that upon completion of the certificate transfer, all of ASTAR’s air transpo rtation operations will be assumed by AUSA.
Interim Action
O n October 15, 201 0, the Joint Applicant s filed in the docket a request for a pendent e lite exemption pursuant to 49 U

. S

. C

. § 41105 to the extent necessary to permit AUSA to close its merger transaction with ASTAR and to conduct the operations currently performed by ASTAR in domestic and foreign air transportation while its route transfer application remain ed pending with the Department

. 2 Subsequently, by Order 2010

- 11

- 19, issued November 17, 2010, the Department granted a pendent e lite exemption and found AUSA fit to operate as an all

- cargo air carrier. In that same order, the Department also issued AUSA a certificate of pub lic convenience and necessity to conduct interstate scheduled air transportation of property and mail. Further, the Department issued to AUSA an exemption to conduct foreign scheduled all

- cargo service between Cincinnati, Ohio, and Mexico City, Mexico.
In Order 2010

- 11

- 19, the Department deferred action on the Joint Applicant’s certificate transfer request. We now find it appropriate to act on ASTAR’s request to transfer its certificates to AUSA. Transfer of Authority The Statute provides that no cer tificate can be transferred unless the Department approves the transfer as being consistent with the public interest. In applying this standard to foreign certificates, the Department considers whether the proposed route transfer is consistent with our in ternational aviation policy, the likely effects of a proposed route transfer on competition in the domestic airline industry, the viability of each applicant, and the trade position of the United States. The Joint Applicants state that the proposed tran sfer is in the public interest and that competition in the domestic industry will be preserved and enhanced by this transaction. Further, the Joint Applicants state that the U.S. trade position will be enhanced by permitting the transfer of ASTAR’s certif

icates to AUSA, which offers opportunity for growth and expansion and has long

- term economic prospects. We agree with the Joint Applicant, and w e find that the proposed transaction is in the public interest and will enable AUSA to expand its operations an d improve its long

- term position in the air cargo market, which will promot e competition. AUSA’s commercial agreement with DHL will not only enhance the viability of the air carrier, it will also allow AUSA to strengthen its operations in the internationa l market, supporting the Department’s international aviation policies and benefiting the trade position of the United States.

1 AUSA is a wholly

- owned subsidiary of New ASTAR Holdings, LLC (“New Holdings”), a company formed by Messrs. Richard Blum, John Dasburg, and Michael Klein, the majority shareholders of ASTAR. Messrs. Blum, Dasburg, and Klein, each of whom is a U.S. citizen, created AUSA to facilitate an ownership change for ASTAR. 2 The Joint Applicants supplemented their pendente lite exemption request on November 1, 3, an d 9, 2010.3

In consideration of the above, we have decided to approve the transfer of ASTAR’s foreign certificate s to AUSA. However, we will not transfer ASTAR’s interstate authority. As noted above, by Order 2010

- 11

- 19, the Department issued to AUSA an interstate certificate of public convenience and necessity to conduct scheduled air transportation of property and mail. Against this background, ASTAR’s request for the transfer of its interstate certificate to AUSA is now moot. Thus, w e will cancel ASTAR’s interstate certificate

. Also, as stated previously, in Order 2010

- 11

- 19, the Department issued to AUSA an exemption to conduct foreign scheduled all

- cargo service in the Cincinnati

- Mexico City market. Since authority to conduct operations on the Cincinnati

- Mexico City route segment is contained in ASTAR’s certificate for Route 725, which is being transferred to AUSA, the exemption granted to AUSA by Order 2010

- 11

- 19 is no longer necessary. 3 Under these circumstances, we will cancel the Cincinnati

- Mexico City exemption authority granted to AUSA , by Order 2010

- 11

- 19 , upon the effectiveness of AUSA’s certificate for Route 725.
CONDITIONS & LIMITATIONS
We remind AUSA of the requirements of 49 U.S.C. 41110(e). Specifically, that section requires that, once an air carrier is found fit initially, it must remain fit in order to hold its authority. To be assured th at U.S. certificated air carriers continue to be fit after effective authority has been issued to them, we require that they supply information describing any subsequent substantial changes they may undergo in areas affecting fitness. Further, should AU SA propose other substantial changes in its management or operations, it must first comply with the requirements of section 204.5 of our rules. 4 The compliance of the company with this requirement is essential if we are to carry out our responsibilities u nder the section 41110(e). 5 Finally, to aid the Department in monitoring the fitness of new air carriers, we ask that all newly certificated air carriers submit a detailed progress report within 45 days following the end of the

3 The certificate for Route 725 was originally issued to authorize scheduled all

- cargo service on various U.S.

- Mexico city

- pair route segments ( see Order 2008

- 7

- 15). However, the Cincinnati

- Mexico City route segment is the only route that rem ains on the certificate. Pursuant to the terms of the certificate for Route 725, the following U.S.

- Mexico city

- pair route segments expired automatically and reverted to the Department due to dormancy: Austin

Guadalajara, Austin

- Mexico City, Austin

- Monte rrey, Austin

- Saltillo, Cincinnati

- Guadalajara, Cincinnati

- Monterrey, Cincinnati

- Saltillo, El Paso

- Saltillo, Houston

- Guadalajara, Houston

- Mexico City, Houston

- Monterrey, Houston

Saltillo, Los Angeles

- Mexico City, San Antonio

- Saltillo, Wilmington

- Guadalajara , Wilmington

- Mexico City, Wilmington

- Monterrey, and Wilmington

- Saltillo ( see dormancy notices dated October 16, 2009, and November 16, 2010, in Docket DOT

- OST

- 2005

- 20808). 4 The air carrier may contact our Air Carrier Fitness Division to report proposed su bstantial changes in its operations, ownership, or management, and to determine what additional information, if any, will be required under section 204.5. If the air carrier fails to file this updated information or if the information fails to demonstrate that the air carrier will continue to be fit upon implementation of the substantial change, the Department may take such action as is appropriate, including enforcement action or steps to modify, suspend, or revoke the air carrier's certificate authority. 5 We also remind AUSA about the requirements of section 204.7 of our rules. This section provides, among other things, that (1) if the company ceases all operations for which it was found fit, it may not resume such operations unless its fitness has been redetermined, and (2) if the company does not resume operations within one year of its cessation, its authority shall be revoked for dormancy.4

first year of certificated operations, to the Air Carrier Fitness Division. The report should include a description of the air carrier’s current operations (number and type of aircraft, principal markets served, total number of full

- time and part

- time employees), a summary of how t hese operations have changed during the year, a discussion of any changes it anticipates from its current operations during its second year, current financial statements, 6 and a listing of current senior management and key technical personnel. The air carrier should also be prepared to meet with staff members of the Fitness Division to discuss its current and future operations. ACCORDINGLY,
1. We grant the request of ASTAR Air Cargo, Inc., and ASTAR USA, LLC , for approval of the transfer to ASTAR USA, LLC, of the foreign c ertificate s of p ublic c onvenience and
n ecessity currently issued to ASTAR Air Cargo, Inc. , in accordance with 49 U.S.C. § 41105.
2. We transfer to AST AR USA, LLC , the certificates of public convenience and necessity currently issued to ASTAR Air Cargo, Inc. (set forth in Attachment B), authorizing the air carrier to engage in foreign scheduled air transportation of property and mail , and amend them, in the form attached (Attachment A )

. 3. We cancel the interstate all

- cargo certificate issued to ASTAR Air Cargo, Inc. , by Order 81

- 6

- 22

. 4. We will cancel the exemption authority issued to ASTAR USA, LLC , by Order 2010

- 11

- 19 , to provide foreign scheduled air transportation of property and mail between Cincinnati, Ohio, and Mexico City, Mexico , upon the effectiveness of the certificat e transferred to ASTAR USA, LLC , for Route 725

. 5. We direct ASTAR USA, LLC, to submit to the Air Carrier Fitness Division a first year progress report within 45 days following the end of its first year of certificated operations. 7

6. Unless disapproved by the President of the United States under section 41307 of the Statute, this order shall become effective on the 61 st day after its s ubmission for section 41307 review or upon the date of receipt of advice from the President or his designee under Executive Order 12597 and implementing regulations that he or she does not intend to disapprove the Department’s order under that section, whi chever comes earlier. 8

6 These financial statements should include a balance sheet as of the end of the company’s first full year of a ctual certificated operations and a twelve

- month income statement ending that same date. 7 The report shall include a description of the air carrier’s current operations (number and type of aircraft, principal markets served, total number of full

- time and part

- time employees), a summary of how these operations have changed during the year, a discussion of any changes it anticipates from its current operations during its second year, current financial statements, and a listing of current senior management a nd key technical personnel. 8 This Order was submitt ed for section 41307 review on May 27, 2011. The 61 st day is July 27, 2011

. Since the President’s designee did not disapprove this order before that date , it became effective on July 27, 2011.5

7. We will serve a copy of this order on the persons listed in Attachment C

.
By:

SUSAN L. KURLAND Assistant Secretary for Aviation and International Affairs

An electronic version of this document is available on the World Wide Web at: http://www.regulations.govAttachment A
*As amended by Order 2011

- 7

- 14

Page 1 of 1

ASTAR Air Cargo, Inc. , for Routes (see Attachment B )

Amend the holder of the certificate(s) to read as follows:

ASTAR USA, LLC 1

Where certificates involve air transportation service in limited

- entry markets, the following condition will be added:

( ) The authority granted may only be used in a manner consistent with the terms of the air tran sport agreements between the United States and our aviation partners.

This certificate amendment shall become effective July 27, 2011

.

1 The subject certificates are being amended to reflect the Department’s approval, under 49 U.S.C. § 41105, of the transfer of the economic authorities held by ASTAR Air Cargo, Inc

.Attachment B

CERTIFICATES HELD BY ASTAR AIR CARGO, INC
.
CERTIFICATES OF PUBLIC CONVENIENCE AND NECESSITY

1 See DOT letter dated July 16, 2003, approving the request of DHL Airw ays, Inc., to register the name, ASTAR Air Cargo, Inc., for use in DHL’s air transportation operations (Dockets DOT

- OST

- 2002

- 13089 and DOT

- OST

- 2003

- 15678). 2 Id. 3 Pursuant to the terms of the certificate for Route 725, the following U.S.

- Mexico ci ty

- pair route segments expired automatically and reverted to the Department due to dormancy: Austin

- Guadalajara, Austin

- Mexico City, Austin

- Monterrey, Austin

- Saltillo, Cincinnati

- Guadalajara, Cincinnati

- Monterrey, Cincinnati

- Saltillo, El Paso

- Saltillo, Ho uston

- Guadalajara, Houston

- Mexico City, Houston

- Monterrey, Houston

- Saltillo, Los Angeles

- Mexico City, San Antonio

- Saltillo, Wilmington

Guadalajara, Wilmington

- Mexico City, Wilmington

- Monterrey, and Wilmington

- Saltillo ( see dormancy notices dated October 16 , 2009, and November 16, 2010, in Docket DOT

- OST

- 2005

- 20808). Route # Route Description Order(s)
860 Blanket Open

- Skies Route Authority 2007

- 7

- 4 [none] Blanket Route Integration Authority 2010

- 12

- 24
195F V arious F oreign P oints , including Hong Kong 79

- 10

- 16, as amended by various orders including 81

- 1

- 30, 81

- 6

- 77, and 82

- 8

- 69 1

692 Various Foreign Points, including Algeria and Libya 96

- 5

- 9 2

725 Cincinnati

- Mexico City 2008

- 7

- 15 3Attachment C

SERVICE LIST FOR ASTAR Air Cargo, Inc., and ASTAR USA, LLC

MR STEPHEN P DOYLE PRESIDENT ASTAR AIR CARGO INC ASTAR USA LLC 1200 BRICKELL AVENUE MIAMI FL 33131 MR ELLIOTT M. SEIDEN COUNSEL FOR ASTAR AIR CARGO INC AND ASTAR USA LLC BOISE, SCHILLER & FLEXNER LLP 5301 WISCONSIN AVENUE NW WASHINGTON DC 20015
MR BRIAN BAZEMORE FEDERAL AVIATION ADMINISTRATION CINCINNATI FSDO 4358 FERGUSON DRIVE CINCINNATI OH 45245 MR WILLIAM J WEBER CERTIFICATION SECTION MANAGER FAA AFS

- 900 45005 AVIATION DRIVE SUITE 131 DULLES VA 20166
MS ANNE SUISSA RTS

- 42 OFFICE OF AIRLINE INFORMATION DOT/RITA/BTS E

- 34 1200 NEW JERSEY AVE SE WASHINGTON DC 20590 MR PETER LYNCH AGC

- 300 ASST CHIEF COUNSEL FOR ENFORCEMENT FEDERAL AVIATION ADMINISTRATION 800 INDEPENDENCE AVE SW WASHINGTON DC 20591
BERNARD STANKUS OFFICE OF AIRLINE INFORMATION DOT/RITA/BTS RTS

- 42 1200 NEW JERSEY AVE SE WASHINGTON DC 20590