Order 2010-10-6 

 UNITED STATES OF AMERICA 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

Issued by the Department of Transportation 

on the 7th day of October, 2010 

 

 Served: October 7, 2010 

 Docket DOT-OST-2010-0241 

 

ORDER TO SHOW CAUSE 

Summary

By this Order, we have tentatively decided to further modify our procedures for 

distributing the available U.S. carrier opportunities for U.S.-Brazil all-cargo charters by 

allowing U.S. carriers holding scheduled U.S.-Brazil authority to have limited access to 

the ad hoc charter pool throughout the 2010/2011 charter year, without the need for a 

waiver. 

Background

Our procedures for distributing U.S.-Brazil all-cargo charters have become increasingly 

liberalized and simplified over the past dozen years, as most recently reflected in the 

revised allocation procedures issued by final order in 2009.1

 The revised procedures 

reflect, in part, the significant expansion of opportunities available to U.S. carriers in the 

U.S.-Brazil cargo market, including the removal of the limit on the number of carriers 

that may be designated to provide scheduled all-cargo services and the increased size of 

the ad hoc charter pool. Most recently, we issued a Notice announcing the availability of 

1,250 all-cargo charter flights in the July 2010-June 2011 charter year, and provided 

advance allotments to two incumbent carriers under the simplified procedures.2 These 

 

1 See Order 2009-1-5, issued January 14, 2009. 2

 Incumbent carriers are allotted, in advance of the charter year, a portion of the available charters on a useor-lose basis, based on their level of operations in the U.S.-Brazil market during the previous two years. 

See Notice of Brazil Cargo Charter Authorizations 2010/2011 (Brazil Notice), issued June 11, 2010. 

In the Matter of Brazil Cargo Charter 

Authorizations 
2 

procedures allow eligible carriers to obtain up to 20 charter flights per month from the 

pool. We retained the restriction on the eligibility of carriers holding scheduled authority 

to have access to the ad hoc charter pool during the first 10 months of the charter year. 

Under the current procedures, scheduled carriers may have access to the pool in the final 

two months of the charter year, beginning May 1, but require a waiver from the 

Department in order to receive an allocation before then. Beginning May 1, there are no 

restrictions on the number of charters for which a carrier may apply for each month 

remaining in the charter year. 

Recently, Atlas Air, Inc. (Atlas), a U.S. carrier holding scheduled U.S. Brazil authority, 

requested a waiver in order to perform two charter flights to Brazil in July, citing special 

circumstances.3

 We granted the request. 

Atlas subsequently submitted a request for a short-term industry-wide waiver, under 

which carriers holding scheduled authority would have immediate access to the ad hoc

charter pool, under the same procedures as charter carriers, through December 31, 2010.4

 

In support of the waiver request, Atlas cited increased ad hoc demand for cargo capacity 

due to the cessation of services by a U.S. carrier and the difficulty, in light of Brazilian 

regulatory procedures, for scheduled carriers to respond to that demand with regularly 

scheduled flights. Atlas argues that allowing scheduled carriers early access to the 

charter pool would not materially impact the ability of charter operators to serve Brazil 

considering the charter flights remaining unused at the end of the previous charter year, 

the increased size of the ad hoc charter pool for the current year, and that allowing such 

access would place scheduled carriers on an equal footing with charter operators and 

promote competition vis-à-vis Brazilian carriers.5 

Southern Air Inc. (Southern) opposes Atlas’s industry-wide waiver request, arguing that 

through the existing charter distribution regime, the Department has struck an appropriate 

balance between scheduled and charter service in recognition of bilateral constraints and 

should not alter it. Instead, Southern asserts that case-by-case waivers, such as that 

granted to Atlas for two flights, are sufficient to address the ad hoc needs of scheduled 

carriers and that scheduled carriers should not get the benefit of operating in both 

worlds. 6

 

In response, Atlas states that the Department should grant the requested waiver to 

increase competition and expand shipping options, and to allow carriers to be responsive 

to continuing shipper demand for service to off-line points in Brazil. Atlas notes that the 

environment has changed significantly since the charter regime was established, and 

points to the fact that a total of 1,250 charters are available in the current year and that 

last year ended with a large number of unused charter flights.7

 

 

3 See Atlas letter dated July 13, 2010, in Docket DOT-OST-2010-0214. 4

 Atlas says that December 31, 2010 is a suggested termination date and that it would welcome a waiver of 

shorter or longer duration should the Department so decide. 

5 See Atlas letter dated July 22, 2010, Docket DOT-OST-2010-0214. The letter was served on all carriers 

providing scheduled and charter all-cargo service in the U.S.-Brazil market. 6 See Southern’s letter dated July 28, 2010, Docket DOT-OST-2010-0214. 7 See Atlas letter dated July 30, 2010, in Docket DOT-OST-2010-0214. 
3 

United Parcel Service Co. (UPS) supports Atlas’s waiver request. UPS also suggests, as 

an alternative, should the Department not want to lift all restrictions on scheduled allcargo carriers that the Department permit scheduled carriers to apply for ten charter 

flights per month during the first six months of the charter year. Restrictions would be 

lifted after the first six months.8 Federal Express Corporation (FedEx Express) agrees 

with Atlas and UPS, including but not limited to UPS’s alternate proposal. FedEx 

Express argues that we should not limit shipper choices and artificially constrain 

competition when doing so could lead to valuable rights going unused in the charter 

year.9 

In a consolidated response, Southern reiterates its preference for preserving the status quo 

and urges us to use show-cause procedures to make any changes to the current regime, 

and to do so for the next charter year rather than the current one.10 The charter operator 

Florida West International Airways, Inc. (FWIA) supports Southern’s objections to the 

industry-wide waiver, noting that it is too early in the charter year to make decisions 

about the extent and duration of any material change in the market. Responding to UPS’s 

alternate suggestion, FWIA suggests that if scheduled carriers are allowed early access to 

the charter pool, they should be limited to fewer permitted monthly charters than 

Southern’s current allocation of essentially eight flights per month under the existing 

procedures.11 

Tentative Decision

We have tentatively determined that it is in the public interest to allow scheduled carriers 

immediate but limited access to the ad hoc charter pool in the U.S.-Brazil market without 

the need for a case-by-case Department waiver. 

Specifically, we have tentatively determined to allow carriers holding scheduled authority 

to request up to 10 charter allocations per month, beginning immediately, for this charter 

year, without the need for a waiver from the charter allocation procedures. 

We tentatively find that the increased size of the ad hoc charter pool of 1,250 flights 

available for the current charter year, and the reduced number of charter carriers whose 

sole access to the Brazil cargo market is dependent upon the pool, alleviates the need to 

restrict access by scheduled carriers to the ad hoc pool during the first 10 months of the 

charter year. We further note that out of the 1000 cargo charters available in the ad hoc

pool for the 2009/2010 charter year, more than 400 went unused. In light of these 

circumstances, it is reasonable to anticipate that we will again experience a surplus for 

 

8 See UPS letter dated August 2, 2010, in Docket DOT-OST-2010-0214. 9 See FedEx Express letter dated August 3, 2010, respectively, in Docket DOT-OST-2010-0214. 10 See Southern’s letter dated August 6, 2010, in Docket DOT-SOT-2010-0214. 11 See FWIA’s letter dated, August 9, 2010, in Docket DOT-OST-2010-0214. We note that Southern has 

returned its advance allotment in accordance with the established procedural rules and must now request 

distributions of flights on an ad hoc basis. See Order 2009-1-5. 
4 

the current charter year. Against this background, we have tentatively determined that it 

is in the public interest to remove some of the restrictions imposed on scheduled carriers 

rather than risk allowing valuable charter rights to go unused, and the benefits of 

facilitating full utilization of these valuable rights outweigh charter carrier concerns that 

they will be disadvantaged if scheduled carriers can obtain charter flights without the 

burden of additional process. We remain mindful, however, of the importance of the ad 

hoc charter pool for carriers not holding scheduled authority, and therefore we wish to 

facilitate their ability to obtain allocations from the pool and respond quickly to new 

market opportunities.12 We have tentatively determined to increase the number of charter 

flights that may be requested by a non-scheduled authority charter operator from 20 to 30 

on a monthly basis, without the need for a waiver. 

These changes will ease burdens on U.S. carriers seeking to provide all-cargo charter 

services to Brazil and will also maintain efficient administration of the available charter 

pool. We further anticipate that these changes will be consistent with our objective of 

maintaining a charter environment that addresses the needs of incumbent cargo charter 

carriers (those carriers holding advance allotments), new entrant and ad hoc cargo charter 

operators, as well as carriers operating scheduled all-cargo service. We considered 

Florida West’s suggestion of restricting scheduled carriers to fewer than eight flights per 

month without requiring additional process, but determined, on balance and under the 

circumstances before us, that allowing scheduled carriers to obtain up to 10 flights each 

month, as proposed, would be preferable in terms of easing administrative burdens and 

facilitating use of increased charter opportunities. 

In light of the number of flights available in the ad hoc charter pool and the past year’s 

experience, we tentatively find that relaxing certain restrictions on access to the ad hoc

charter pool, as described here, should not result in premature depletion of the pool. We 

will monitor closely the utilization of the available charter flights to ensure that an 

adequate supply exists for the balance of the current charter year. Should we find the ad 

hoc charter pool is being depleted unexpectedly rapidly, we may determine to reinstate 

the restrictions we tentatively remove here. Related to our desire to monitor the situation, 

we have tentatively decided that the changes on pool access shall apply for the current 

charter year only. We will reassess market conditions and utilization of the 2010/2011 ad 

hoc charter pool in determining whether to relax restrictions on allocations from the 

charter pool in future years, consistent with the public interest. 

Finally, for completeness and clarity, we will include in this Order all of the procedural 

rules that will be applicable to carriers seeking a distribution of U.S.-Brazil charter flights 

if we finalize our proposed action in this Order.13

 

12 Recent experience has demonstrated that operators wholly dependent upon the ad hoc charter pool 

frequently use the 20 monthly flights to which they are entitled. When a carrier needs additional flights it 

must seek a waiver from the Department to obtain them. 

13 Carriers that have already provided the required notifications under the Brazil Notice need not resubmit 

them. 
5 

Reporting requirements 

Our ability to administer the ad hoc charter pool efficiently and effectively depends upon 

our knowing, at any time, how many flights remain in the charter pool for distribution. 

We must rely upon prompt and accurate reporting, no later than the tenth day of each 

month, of flight usage by incumbent carriers holding an advance allotment and those 

receiving ad hoc allotments from the pool. The reporting requirements that have applied 

to charter operators are the same reporting requirements that will apply to scheduled 

carriers. 

Carriers must return unused charters promptly should plans for using them not 

materialize. As we have previously stated, “[w]here charter rights are limited, it is 

imperative that full, effective use be made of the available charter opportunities.14 We 

remind carriers that we will not be prepared to distribute additional charters to a carrier 

requesting them where the carrier has not yet reported its usage for the prior month and 

returned any unused charters to the pool. 

All reports and notifications that would be required under the terms of this order should 

be submitted to the Office of International Aviation by electronic mail to the following 

addresses: Bernice.Gray@dot.gov and Esta.Rosenberg@dot.gov. 

ACCORDINGLY, 

 

1. We establish Docket DOT-OST-2010-0241 for submission of views of interested 

parties on our tentative decision to modify and further streamline the simplified 

procedures we are currently using for distributing round-trip all-cargo charters available 

to U.S. carriers for operations in the U.S.-Brazil market; 

2. The advance allotment issued by the June 11, 2011 Brazil Charter Notice for 

operations in the 2010/2011 charter year, as well as distributions to charter and scheduled 

U.S. carriers on an ad hoc basis, would, to the extent consistent with our final order in 

this proceeding, be subject to the following procedures: 

A. Subject to C., below, for the first three months of the charter year, the period 

July 1- September 30, only those carriers that have not received or accepted an 

advance allotment may have access to the ad hoc charter pool; distributions 

will be made on a first-come, first-served basis and eligible applicants may 

request and operate up to 30 charters per month; 

 

B. Any carrier that has received and accepted an advance allotment is not eligible 

to obtain flights from the ad hoc charter pool during the first three months of 

the charter year, i.e., until October 1. Beginning October 1, a carrier that has 

received and accepted an advance allotment may request and operate up to 30 

charters per month, consistent with the terms of this order;

 

14 See Order 98-6-4, at footnote 4. 
6 

 

C. A carrier holding scheduled authority in the U.S.-Brazil market may have 

access to the ad hoc charter pool beginning immediately to request and 

operate up to 10 charters per month; 

D. Beginning May1, there are no restrictions on the number of charters for which 

a carrier may apply for each month remaining in the charter year; 

E. Carriers may continue to request distributions of flights on an ad hoc basis 

from the charter pool within 30 days of the proposed date of operation. 

Requests for distributions from the ad hoc charter pool may also be filed for 

an entire calendar month, beginning on the 15th day of the prior month; 

F. Each application must identify (a) the number of flights requested, 

(b) proposed flight dates including a four-day service window, (c) the 

charterer(s), (d) the city-pair, and markets involved by direction. Copies of 

the charter contract, or some form of written evidence of the charter 

commitment is required at the time a distribution from the charter pool is 

requested. 

G. Each carrier granted either an advance allotment or a distribution of flights 

from the ad hoc charter pool for a given month is required to report to the U.S. 

Air Carrier Licensing Division, Office of International Aviation, by electronic 

mail, by the tenth day of the following month, or within 10 days of having 

used all of its pool charters, whichever is earlier, the following; (a) if the 

reported flights were from the ad hoc charter pool, the date of the Notice of 

Consistency under which the flight was operated; (b) the number of Brazil allcargo charters operated during the preceding month; (c) the city-pairs served 

by direction; (d) the date each flight; (e) the charterers(s); and (f) the number 

of charters for which Brazilian authority was obtained for that month which 

subsequently were canceled or rescheduled.15 Unless its advance allotment 

has been exhausted, a carrier that has received an advance allotment is 

required to report its usage from the allotment, on a monthly basis, consistent 

with this order, even if it operated no charters in the preceding month; and 

H. In addition to the reporting requirements in paragraph G., above, a carrier that 

has received an advance allotment must inform the U.S. Air Carrier Licensing 

Division, Office of International Aviation, by electronic mail, by January 5 of 

each charter year after 2009, of the number of charters it has operated or has 

committed to operate by a firm contract.16 For charters under contract, the 

carrier shall indicate the charterer(s), dates, and city-pair markets. Where a 

 

15 Carriers are advised that they must follow the Brazilian government’s procedures for notification of 

change or cancellation or be subject to forfeiture of those charter flights by the Brazilian government and 

that they should include a statement verifying that the Government of Brazil has been notified in writing of 

any changes and/or cancellations of flights. 

16 The annual reporting requirement for the current charter year is set forth in paragraph 3, below. 
7 

carrier has not used or committed for use, at least 40 percent of its allocated 

charters in the first six months of the charter year (July 1-December 31), that 

carrier will forfeit a portion of its allotment. A forfeiting carrier may retain, 

for the second half of the charter year, that portion of its advance allotment 

that is equal to the number of charters used or committed for use in the first 

half of the charter year. The forfeited flights will be returned to the ad hoc

charter pool; 

3. For the current charter year, we require that each carrier holding an advance allotment 

of U.S.-Brazil all-cargo charters inform the U.S. Carrier Licensing Division (X-44), 

Office of International Aviation, by electronic mail, no later than 10 days after the service 

date of this final order, if it has not yet done so, as to how many of the flights in its 

advance allotment it has plans to operate and how many it is returning to the charter 

pool;17

4. Any carrier holding an advance allotment of U.S.-Brazil all-cargo charters that elects 

to opt out of its advance allotment as set forth in the May 30, 2008 Brazil Charter Notice 

must so notify the U.S. Carrier Licensing Division (X-44), Office of International 

Aviation, by electronic mail, no later than 10 days after the service date of this final 

order; 

5. We delegate to the Director of the Office of International Aviation authority to 

administer distribution of flights from the ad hoc charter pool and, where deemed in the 

public interest, to waive the restrictions set forth in this order for all U.S. certificated air 

carriers; 

6. We direct all interested parties objecting to the tentative decisions described in this 

order to file their objections with the Department, Dockets, in Docket DOT-OST-2010-

0241, U.S. Department of Transportation, Docket Operations, M-30, West Building 

Ground Floor, Room W-12-140, 1200 New Jersey Avenue, SE, Washington, DC 20590, 

no later than 10 calendar days from the date of service of this order. Answers to 

objections shall be filed no later than five calendar days thereafter;18

7. If timely and properly supported objections are filed, we will accord full consideration 

to the matters or issues raised by the objections before we take further action;19

8. In the event that no objections are filed, we will deem all further procedural steps to be 

waived and we will enter an order finalizing our tentative decision; and 

 

17 We remind carriers receiving advance allotments of the importance of returning charters promptly at any 

time should the plans for their use not materialize. 

18 All pleadings should be unbound without tabs on 8 1⁄2” x 11” paper using dark (not green) ink to facilitate 

use of the Department’s docket imaging system. 

19 We will not entertain petitions for reconsideration of the tentative decision set forth in this order as we 

are providing for objections and answers. 
8 

9. We will serve a copy of this order on U.S. air carriers holding an advance allotment 

under the June 11, 2010 Brazil Notice; all other U.S. certificated air carriers operating 

large aircraft; the Ambassador of Brazil in Washington, DC; and the U.S. Department of 

State (Office of Aviation Negotiations). 

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