BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

WASHINGTON, D.C. 

) 

Request ) 

) 

of Silk Way West Airlines ) Docket OST 2014-0111 

to amend issued exemption authority and ) 

pending application for a foreign air carrier permit ) 

and motion to expedite processing ) 

(Baku-Hong Kong-Chicago-New York-Luxemburg-Baku) ) 

CONSOLIDATED REPLY OF SILK WAY WEST AIRLINES 

TO ANSWERS OF NATIONAL AIRLINES, KALITTA AIR 

AND NATIONAL AIR CARRIER ASSOCIATION 

Communications with respect to this document should be sent to: 

KAMRAN GASIMOV 

Director/CEO 

SILK WAY WEST AIRLINES 

Heydar Aliyev International Airport 

Baku, AZ-1 044, Republic of Azerbaijan 

Dated: November 5, 2014 

GLENNP. 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: SILK WAY WEST AIRLINES 
BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

WASHINGTON, D.C. 

) 

Request ) 

) 

of Silk Way West Airlines ) Docket OST 2014-0111 

to amend issued exemption authority and ) 

pending application for a foreign air carrier permit ) 

and motion to expedite processing ) 

(Baku-Hong Kong-Chicago-New York-Luxemburg-Baku) ) 

CONSOLIDATED REPLY OF SILK WAY WEST AIRLINES 

TO ANSWERS OF NATIONAL AIRLINES, KALITTA AIR 

AND NATIONAL AIR CARRIER ASSOCIATION 

On October 8, 2014, Silk Way West Airlines ("Silk Way West) submitted to 

the Department of Transportation ("Department") a request that the exemption authority 

granted to it by Order 2014-8-125 in Docket DOT-OST-2014-0111be expanded to allow it 

to implement scheduled air transportation of property and mail on the route Baku-Hong 

Kong-Chicago-New York-Luxemburg-Baku, with no US domestic cargo transportation 

between the points of Chicago and New York ("Request to Amend"). Silk Way West 

further motioned the Department for expedited consideration of its Request to Amend, and 

was polling the US carriers on the attached service list. 

In its Request to Amend Silk Way West stated that it was requesting the 

broader authority and the expedited consideration of its request in order to ensure greater 

economic efficiency and a better benefit to the current market of cargo air transportation. 

Silk Way West further maintained that an expedited consideration and grant of its Request 

to Amend is in the public interest as Silk Way West will provide the much needed services 

in the U.S.-Azerbaijan aviation market, as well as in the broader international market of 

cargo air transportation by providing additional capacity and helping to meet the 

requirements for cargo air transportation services in the high season and peak demand. Silk 

- 2 -
Way West's ability to timely implement its service during the high season will also serve as 

a justification and incentive for its recent acquisition of brand new Boeing 747-8F aircraft. 

Silk Way West also stated that, pending finalization of the broader bilateral 

undertakings between the United States and the Republic of Azerbaijan, its proposed 

services that are the subject of the Request to Amend are based upon comity and reciprocity 

between the Government of the United States and the Government of Azerbaijan, and that 

Silk Way West had been formally designated by the State Civil Aviation Administration of 

the Republic of Azerbaijan (SCAA) to operate the proposed services. A formal letter from 

the State Civil Aviation Administration ofthe Republic of Azerbaijan confirming Silk Way 

West's designation for the specific route requested herein, as well as reiterating SCAA's 

adherence to the principles of comity and reciprocity in considering any similar applications 

from US carriers, is being currently transmitted to the Department. Silk Way West 

continued polling its Request to Amend past the requested shortened comment period 

pending transmission of the designation and reciprocity letter to the Department. 

On October 20, 2014, Silk Way West received the Answer of National Airlines 

("National") to Silk Way West's Motion to Expedite Processing containing an objection to 

the Motion to Expedite and a statement that National will be filing answers to the 

application to amend Silk Way West's authority "due to problems it has encountered in 

Azerbaijan." 

On October 23, 2014, Silk Way West received a second answer of National 

enumerating its objections that in most general terms boiled down to generally 

unsubstantiated statements that the Department should not grant the requested authority on 

the grounds that it is "incredibly broad" in nature, and that National has "on multiple 

occasions" not received crew visas "in and out of Baku." 

On October 24, 2014, Silk Way West submitted a response to both National's 

filings in which it demonstrated its analysis of the nature ofNational's alleged visa issues as 

really not rising to the level of a bilateral aviation comity and reciprocity issue, and typically 

- 3 -
resolved in the normal course of business for National Airlines, and reiterated its request for 

the amended authority. Silk Way West also notified the Department that it had completed 

the poll of its pending Request to Amend, and, with the exception of National's objection to 

shorten the comment period and its subsequent answer, had not received any procedural or 

substantive objections, comments or answers from any other carrier on the service list. 

Following its Response, on October 29, 2014, Silk Way West received the 

third Answer of National Airlines, as well as Answers ofNational Air Carrier Association 

and Kalitta Air in the above-captioned proceeding, and is hereby submitting its consolidated 

response ("Consolidated Response") to the referenced Answers, as follows: 

l. Reply to National Airlines 

With respect to the October 29, 2014 Answer ofNational Airlines, Silk Way 

West notes that National has failed to add any substance to its previous allegations of 

"effectively being denied crew visas in and out of Baku," but simply restated that in the 

absence of a bilateral agreement between the United States and Azerbaijan it viewed instant 

proceeding as a forum to express its alleged dissatisfaction with the status of visa issuance 

for its crews. Indeed, it is a misnomer to suggest that "visas out of' Azerbaijan can be a 

problem in principle, just like visas "out of' any other country. National's odd reference to 

problems with visas "out of Baku" provides further evidence that there is no substance to 

National's objection. At best, National's allusion to visas "out of Baku" makes Silk Way 

West think that the analysis that it presented in its October 24 Response, that focused on 

instances when an extension of the 72-hour visa-free stay in Baku was required for certain 

crews, was precisely on the point and demonstrated that the issue, that was not by any 

stretch a demonstration of failing comity and reciprocity in the first place (because the visafree stay was being granted to crews consistently), was successfully resolved. 

In its October 29, 2014 Answer National also cited to alleged "significant 

problems associated with the price of fuel required to be uploaded in Baku," and stated that 

"in earlier flights National uploaded fuel at pre-negotiated rates from its regular fuel 

- 4 -
supplier," but "in later flights National was obliged to purchase fuel from a designated fueler 

at a per gallon rate that was 22% higher than National's pre-negotiated price." In 

connection with this allegation, Silk Way West would like to stress that without the benefit 

of a clearer explanation of the circumstances and the nature of "earlier" versus " later" flights 

it would find it hard to comment on this specific statement. However, it would like to refer 

to its broader analysis of the aeronautical services rates and their application at Baku 

International Airport in this pleading below. 

Finally, in its October 29, 2014 Answer National further stressed the 

significance of the Hong Kong and Luxemburg markets for US carriers and stated that there 

is no basis "for the award of such substantial 3rd country authority on the basis of comity and 

reciprocity which has not been demonstratetf' (emphasis added). In this regard, Silk Way 

West would like to once again stress that in the most precise meaning of comity and 

reciprocity as the reciprocal grant of specific equivalent traffic rights and economic 

authority by aviation authorities of one country to carriers from another country (as 

demonstrated by numerous confirmations filed by aviation authorities from numerous 

countries worldwide in Docket DOT-OST-2006-24269), it would be very hard to say that 

comity and reciprocity, including in the grant of 3rd country authority, has not been 

consistently demonstrated by the Azeri aviation authorities to numerous US carriers over the 

period of at least five recent years. Indeed, US carriers, and cargo carriers in particular, 

have been actively operating, including fifth freedom flights, in and out of Baku for many 

years, while Silk Way West is in fact the first Azeri cargo carrier that is effectively trying to 

start an operation and has applied for such authority, and does not seem to be shown much 

comity and reciprocity so far. 

- 5 -
2. Reply to NACA 

In its October 29, 2014 Answer, the National Air Carrier Association 

(''NACA") purports to be speaking on behalf of its broader membership base, but in reality 

restates the position of only one of its members, National, and cites specifically to 

National's October 24 Answer, and the same alleged "difficulty obtaining visas for crew 

members." NACA's submission, therefore, offers no more than the generalized statements 

and scant facts as National's earlier Answer that it is solely based on. While NACA may 

certainly represent its members as it sees fit, the DOT should not give weight to NACA's 

answer as it offers no additional infonnation than that proffered by National, and neither has 

made any effort to respond to Silk Way's detailed response which provides concrete 

evidence that no bilateral issue exists in fact. Indeed, DOT should avoid catering to what 

appears to be no more than an effort to avoid competition which will clearly benefit the 

shipping public and is supported by the existence of comity and reciprocity. 

3 Reply to Kalitta Air 

The Answer of Kalitta Air ("Kalitta") filed on October 29, 2014, carne after 

National's filings of October 20 and 23, and followed an initial no comment response to Silk 

Way West's Request to Amend authority. Kalitta's Answer focuses on two key aspects of 

its, obviously reconsidered, position: the context of the bilateral status between the 

countries, and certain alleged issues that Kalitta experienced in its operations 

to/from/through Baku as having "implications for the state of comity and reciprocity." 

Silk Way West has already addressed the state of comity and reciprocity and 

bilateral aspects of the issue in its consecutive submissions in the captioned Docket. While 

focusing primarily on Kalitta 's purported doing business issues, Silk Way stresses that 

Kalitta has been the beneficiary of extensive fifth freedom operation approvals to/from 

Baku. It is deeply offensive that the narrow business issue ofKalitta (and Mr. Wallace in 

particular) of attempting to shield Kalitta from competition by Silk Way West with 

Mr. Wallace's long standing commercial contacts in Hong Kong should cause them to forget 

- 6 -
the extensive rights already granted to Kalitta over the many years. DOT should not itself 

lose sight of this fact when evaluating Kalitta's now reconsidered position with respect to 

Silk Way West's pending Request to Amend. 

Kalitta alleges that the cost of certain aeronautical services, such as cargo 

handling fees and fueling fees, at Baku International Airport "make it very uneconomical for 

a carrier to operate there unless that carrier has a contractual relationship with Silk Way - in 

which case, the costs are dramatically lower." In providing the examples of varying costs 

and analyzing them, Kalitta indicates that many of the services at the airport are operated by 

companies affiliated with Silk Way through Silk Way Group, and admits that Silk Way 

"should not be penalized for being such a successful conglomerate." However, Kalitta at the 

same time maintains that the described status makes Azerbaijan into a "not an open and 

competitive market for US carriers - unless, of course, they contract with Silk Way." 

Many of the airport services are indeed provided by companies that are 

members of Silk Way Group, however, the key point in the arrangement of services and fees 

does not lay in the absence or presence of a "contract with Silk Way" as Kalitta would put it, 

but rather in the continuous, or contract nature of the operation versus one-off charter 

arrangements. Much as is the case in the operating practices of US airports, including such 

major ones as for example JFK, the rates charged to carriers that are signatories to respective 

airport agreements (involving quite a few criteria required to be met in order to become a 

signatory) differ from the rates for airlines that are not. Similar differentiation may be seen 

in fuel pricing based on the volumes and contractual discounts. The same principle is 

explicitly supported by the Department ofTransportation, Federal Aviation Administration 

("FAA" ) "Policy Regarding Airport Rates and Charges," 78 Fed. Reg. 175, Sept. 10, 

2013, at Sect. 3.1.1., that specifically state that " [t]he prohibition on unjust discrimination 

[in aeronautical fees] does not prevent an airport proprietor from making reasonable 

distinctions among aeronautical users (such as signatory and non-signatory carriers) and 

assessing higher fees on certain categories of aeronautical users based on those distinctions 

- 7-
(such as higher fees for non-signatory carriers, as compared to signatory carriers)." The 

concept is the same: similar users pay similar prices. If a carrier signs a contract, agrees to a 

longer term and meets the requisite level of service then such carrier receives the same 

pricing as any other carrier doing the same. U.S. airports typically demonstrate this by 

creating categories of users with separate pricing applicable to each category. Any user that 

fits into the category receives that pricing. It may be noted that while such an approach may 

be viewed as "discriminatory", in that not everyone pays the same pricing, it is not 

"unjustly" so, in that there is a rational reason for the approach and it is applied consistently. 

Kalitta would urge the Department to believe that there is a defect in comity and reciprocity, 

when in fact what is happening in Baku is precisely what happens at many airports in the 

United States. The reality is that there is a substantially similar approach being used at Baku 

International Airport, as occurs at US airports and is accounted for in applicable US 

regulatory guidance. The mere fact that Silk Way holding is an airport service provider, and 

that prices for services at the airport are pinned to demand, does not constitute a defect in 

comity and reciprocity. 

What Kalitta is attempting to do is to suggest that there are problems without 

accounting for the airport specific environment and the volume of airport services used by 

each operator. Indeed, it should be noted that many non-Azeri carriers benefit from volume 

prices for airport services. Baku has become a powerful hub airport in the region by 

competing with alternative airports such as Dubai or Astana. Kalitta fails to account for this 

because it has a narrow commercial purpose- to protect its position in the US-Hong Kong 

market, at all costs. Ignoring the fact that any itinerant carrier at any airport might well be 

subject to higher charges, and reasonably so, is highly misleading. The Department should 

not accept the argument suggested by Kalitta as it is, like the arguments of National before 

it, an invitation to protect another failing US carrier from the very market forces that the 

open bilateral market of the U.S and Azerbaijan have been fostering over the past five or 

more years. Indeed, it was highly convenient for Kalitta (and National) to take advantage of 

- 8-
the de facto open skies available to them in Baku at least since 2009. But now, when Silk 

Way West wishes to receive the same treatment in the United States, they are the first to 

object. 

* * * * * * * 

WHEREFORE, Silk Way West respectfully requests that the Department grant 

its request for a foreign air carrier permit and exemption, as amended, to allow it to 

implement scheduled air transportation of property and mail on the route Baku-Hong KongChicago-New York-Luxemburg -Baku (with no US domestic cargo transportation between 

the points of Chicago and New York), or such other or further relief as the Department 

determines to be appropriate and consistent with the public interest. Silk Way West also 

respectfully motions the Department for expedited consideration of its pending Request. 

Respectfully submitted, 

~ffl):(/_ 

GLENN P. WICKS 

Consultant for 
CERTIFICATE OF SERVICE 

I hereby certify that I have on this day served a copy of the foregoing document upon 

each of the following electronic mail addresses: 

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@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 

j j ohnson@sgbdc.com 

jrichardson@johnrichardson.com 

mriordan@johnrichardson.com 

j canny@amerijet.com 

john@mietuslaw.com 

mommer@atlasair.com 

matwood@cozen.com 

nwallace@wallaceair .com 

agoerlich@ggh-airlaw .com 

dhainbach@ggh-airlaw .com 

judy@lac.lynden.com 

rzerkel@lac.lvnden.com 

gwhite@lac.lynden.com 

jdavis@lac.lynden.com 

Ekaterina A. Grimes 

TGillies@southemair.com 

info@airlineinfo.com 

anita.mosner@hklaw .com 

j ennifer.nowak@hklaw .com 

dsmalls@ups.com 

stephen.lachter@lachterlaw .com 

pmumhy@lopmumhy.com 

kleake@ggh -airlaw .com 

EngleTS@state. gov 

Dated: November 5, 2014