BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

Request of 

Silk Way West Airlines 

to amend issued exemption authority and 

pending application for a foreign air carrier 

permit, and motion to expedite processing 

(Baku-Hong Kong-Chicago-New YorkLuxembourg-Baku) 

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Docket OST 2014-0111 

SURREPL Y OF KALITTA AIR, LLC 

TO RESPONSE OF SILK WAY WEST AIRLINES 

AND MOTION FOR LEAVE TO FILE 

Communications with respect to this document should be addressed to: 

December 22, 2014 

Mark W. Atwood 

Cozen O'Connor 

The Army & Navy Club Bldg. 

1627 I Street, N.W. 

Washington, DC 20006 

(202) 463-2513 

matwood@cozen.com 

Counsel for 

Kalitta Air, LLC 
Request of 

BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

Silk Way West Airlines 

to amend issued exemption authority and 

pending application for a foreign air carrier 

permit, and motion to expedite processing 

(Baku-Hong Kong-Chicago-New YorkLuxembourg-Baku) 

Docket OST 2014-0111 

SURREPL Y OF KALITTA AIR, LLC 

TO RESPONSE OF SILK WAY WEST AIRLINES 

AND MOTION FOR LEAVE TO FILE1 

On December 1, 2014, Silk Way West Airlines ("Silk Way") filed a response to 

the surreply filed November 12 by Kalitta. In the interest of avoiding further burdening 

the record (and Department staff), Kalitta will endeavor to be brief in its rejoinder to Silk 

Way's assertions. 

1. The real point of contention in this lengthy exchange of pleadings still remains 

clear, despite Silk Way's rhetoric: the "cargo handling fee" charged to U.S. carriers for 

ad hoc operations over Baku, outside the established contracts in which Silk Way is a 

participant, is grossly out of proportion to the very reasonable rate charged under those 

contracts. This makes independent ad hoc charters completely non-competitive. Silk 

Way's attempts to minimize the significance of this difference only serve to amplify it. 

1 Kalitta moves that the Department accept this filing as an otherwise unauthorized document 

pursuant to Rule 302.6(c) of the Department's Rules of Procedure. The applicant has made 

significant statements of fact and law that must be addressed on the record if the Department is 

to make a thorough examination of the issues before it. Kalitta submits that no party would be 

prejudiced by acceptance of this Surreply. 
2. Silk Way chides Kalitta for comparing the Baku cargo handling fee with 

landing fees at various U.S. airports, saying that Kalitta is trying to mislead the 

Department with an inappropriate comparison . However, it was Silk Way that made this 

comparison in its November 5 filing . It said that the extreme discrepancy in handling 

fees at Baku are nothing more than the ordinary difference in landing fees experienced 

by "signatory" versus "non-signatory" carriers in the United States. 2 Kal itta's response 

showed that this argument is specious.

3 In fact, however, the comparison is not 

irrelevant. While "signatory" carriers naturally enjoy lower landing fees than do transient 

carriers, the difference is not dramatic, whereas the discrepancy in cargo handling fees 

at Baku is more than six-fold . 

While Silk Way emphasizes that the EUR 0.50 (US$0.64) per kg . handling rate is 

"a published fee, but is subject to negotiation based upon airport use," this is of no 

relevance to a U.S. carrier that wishes to operate occasional charters at Baku , outside 

of an arrangement with Silk Way. The examples Silk Way gives of carriers that enjoy 

preferred rates are all scheduled carriers that operate more than daily service at the 

airport- hardly a meaningful comparison. 4 Silk Way also claims that though Kalitta was 

charged the published 64-cent rate for its partial cargo load on a flight operated in April , 

had it operated with a full 100,000 kg . load , this rate "would have been discounted 50% 

off of the published rates, had [Kalitta] simply requested it." Kalitta has no reason to 

accept this claim apart from Silk Way's say-so; the lower rates cited by the carrier all 

pertain to frequency of operation , not the size of the load. In fact, BCT quoted Kalitta 

" November 5, 2014 Consolidated Reply of Silk Way West Airlines , at 7-8. 3 November 12, 2014 Surreply of Kalitta Air, LLC, at 3-4. 4 Silk Way notes in particular the $0.08 rate given to Cargolux. However, Kalitta understands 

that there is a business relationship between Silk Way and Cargolux that makes Cargolux's 

experience a poor example. 

2 
only the published rate, did not indicate that any discount was available, and never even 

asked how large the planned load was . And in any event, a volume discount does 

nothing to make partial planeload charters competitive. 

Kal itta fully understands that airports offer better rates on a variety of charges for 

carriers that are regular users. That "volume discount," however, is not what is 

represented by the royalty charged by the Baku Cargo Terminal. 

3. Silk Way takes great exception to the fact that Kalitta complained that it was 

charged a 64-cent rate for its own ad hoc flights , but pays nothing when it flies on behalf 

of DHL/Silk Way. In fact, Silk Way notes, a 10 cent per kilo charge is included in the 

cost that is paid by the U.S. Transportation Command for these flights . Silk Way is 

correct - though Kalitta does not itself pay the charge. But this simply, once again, 

points up the gross difference between the handling charge paid by Silk Way and 

carriers under contract with it, as compared with that assessed of those who try to 

compete directly with Silk Way. The 1 0-cent rate referred to by Silk Way is very much 

in line with what is charged at airports throughout the world . In Kalitta's experience 

(which is quite broad), these rates run from $0.05 to $0.15 per kilogram. The carrier 

has never encountered, other than at Baku, a rate exceeding $0.20 per kg . 

4. With respect to fuel prices , Kalitta has consistently been quoted $3.74 per 

gallon for flights which it has sought to operate outside the DHL contract. It was able to 

obtain the "special" $2.90 rate for the April flight because it persuaded DHL to purchase 

the fuel for it; it could not have obtained this rate on its own . The special prices allowed 

to carriers who do business with Silk Way or that have a very high scheduled utilization 

3 
of the airport are of no use to an ad hoc operator - unless they can manage to obtain a 

special favor from one of these carriers . 

5. However Silk Way may try to make it appear so, Baku is simply not a 

competitive environment for U.S. air carriers wishing to provide their own services. The 

"simple fact that, by its own statement, Kalitta operated as many as 130 (ONE 

HUNDRED AND THIRTY) [sic] fifth freedom flights in and out of Baku in the past 12 

months" proves nothing about the competitiveness of the environment. As Kalitta has 

said repeatedly, these flights were operated under the APL!Silk Way/DHL arrangement, 

and thus have no bearing on how other flights are treated. Though there is certainly 

business to be had in and out of Baku , Kalitta cannot compete for it because the high 

handling fees and fuel charges (it cannot always depend on DHL for special favors on 

fuel) make its flights too expensive. 

Kalitta's interest in engaging in this exchange of pleadings is, hopefully, to create 

a more fair and competitive environment at Baku than what currently exists . Protecting 

its Hong Kong service from outside competition is not Kalitta's motivation. In fact, 

Kalitta has no service to Hong Kong at present - all scheduled service at HKG was 

moved to Shanghai as of April of this year. But Hong Kong nonetheless remains an 

important but limited-access cargo point for U.S. carriers. Silk Way has presented 

4 
no convincing reasons why the Department should reverse its earlier decision to deny 

fifth freedom rights to the carrier when it is the beneficiary of anticompetitive policies 

and practices. 

Dated: December 22, 2014 

tl ~ 

5 

Mark W. Atwood 

Cozen O'Connor 

The Army & Navy Club Bldg. 

1627 I Street, N.W. 

Washington , DC 20006 

(202) 463-2513 

matwood@cozen. com 

Counsel for 

Kalitta Air, LLC 
CERTIFICATE OF SERVICE 

I hereby certify that I have this 23rd day of December, 2014, caused this Surreply 

of Kalitta Air, LLC to be served upon each person listed below via e-mail: 

sascha.vanderbellen@delta.com 

sametta .c.barnett@delta.com 

chris.walker@delta.com 

dshort@fedex.com 

sllunsford@fedex.com 

nssparks@fedex.com 

gbleopard@fedex.com 

msinick@ssd.com 

enisson@nac.aero 

mwiegele@nac.aero 

kevin.montgomery@polaraircargo.com 

peter.beckett@pol<;:traircargo.com'. 

pdoell@ naca.cc 

robert. wirick@aa.com 

francis.heil@aa .com 

howard kass@usairways.com 

rsilverberg@ sgbdc.com 

jjohnson@sgbdc.com 

jcanny@amerijet.com 

jrichardson@ johnrichardson.com 

mriordan@ johnrichardson.com 

john@mietuslaw.com 

rpommer@atlasair.com 

nwallace@wallaceair.com 

agoerlich@ggh-airlaw .com 

dhainbach@ggh -airlaw .com 

judy@lac.lvnden.com 

rzerkel@ lac.lvnden .com 

gwhite@lac.lynden .com 

jdavis@ lac.Lynden .com 

info@ airline info. co m 

anita .mosner@ hklaw.com 

1ennifer.nowak@hklaw.com 

dsmalls@ups.com 

stephen. lachter@cozen. com 

EngleTS@state.gov 

gpwicks@wicks-group.com 

ekagrimes@wicks-group.com 

pmurphy@lopmurphy.com