Order 2013

- 9

- 10

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 18 th day of September, 2013

Served: Sep tember 18 , 2013

Application of

ANTONOV COMPANY T/A ANTONOV AIRLINES Undocketed

for a statement of authorization under 14 CFR Part 212

ORDER DENYING STATEMENT OF AUTHORIZATION

Application

By application dated August 29 , 201 3

, Antonov Company t/a Antonov Airlines (Antonov) , a foreign air carrier of the Ukraine, requests a statement of authorization under 14 CFR Part 212 to operate a

one

- way seventh

- freedom cargo charter flight, using an AN

- 124

- 100 aircraft, between Leipzig, Germany, and Mountain Home AFB, Idaho, with a non

- traffic stop in Washington, D.C. (Dulles), during the period of September 20

- 22, 2013. Antonov states that it has been chartered by Ruslan SALIS GmbH to carry military supplies and equipment, including ten 20

- foot con tainers, in support of German military activities at Mountain Home AFB, Idaho.

Responsive Pleadings

By email to the Department on August 30, 2013, Kalitta Air, LLC (Kalitta) filed an objection to Antonov’s application. Antonov filed a reply and both carriers subsequently filed additional responsive pleadings.

Objection of Kalitta

In its objection, Kalitta asserts that because Antonov has not operated any third

- or fourth

- Freedom flights in 2012 or 2013, approval of its application would contravene the Department’s policy against undue reliance by a foreign air carrier on fifth/seventh

- f reedom charter operations, especially in

instances when the flight at issue could be conducted by a U.S. carrier. Kalitta states that it could transport the cargo a t issue on its B747 cargo aircraft during the specified September 20

- 22, 2013 time frame, but would require two flights to accommodate the cargo. Kalitta contends that because there is no particular urgency indicated in Antonov’s application, shippers or consignees would not be negatively impacted by shipping the cargo on two flights versus the single flight proposed by Antonov.2

Reply of Antonov

On September 6, 2013, Antonov filed a reply. It states the proposed flight will be operated by order of

the G erman Ministry of Defense pursuant to a Strategic Airlift Interim Solution (SALIS) contract between the North Atlantic Treaty Organization (NATO) Support Agency, and Ruslan SALIS GmbH (Ruslan SALIS). Antonov notes that it and another AN

- 124 operator were selected for this two

- year contract in a competitive bidding process, which was established to meet participating NATO and

NATO

- partner nations’ worldwide military airlift needs. Antonov maintains that the AN

- 124 aircraft was selected to provide on

- demand service to NATO and NATO partner countries because of the aircraft’s ability to carry outsized cargo and its ramp

- loading capabilities. It takes the position t hat the availability of Kalitta aircraft is irrelevant, because Kalitta can neither meet the re quirements of the

SALIS contract

, nor match Antonov’s ability to carry outsized cargo, which it contends is a key requirement under the SALIS contract.

Antonov cites international security concerns that it claim s preclude disclosure of the specific detail s of the cargo being shipped pursuant to the SALIS contract and contends that such concerns make it necessary for only Antonov’s AN

- 124 aircraft to be utilized

. 1 It also states that outsized cargo could be added to the flight without notice, which it clai ms routinely occurs with SALIS

- contracted flights,

therefore precluding use of Kalitta’s aircraft

. Antonov further states that there is current evidence of reciprocity from the Ukraine on file with the Department and asserts, as concerns flights transporting

non

- outsized cargo, that it does not rely unduly on fifth

- freedom traffic.

Additional Pleading of Kalitta

On September 9, 2013, Kalitta filed an additional pleading

. Kalitta maintains that neither the reply of Antonov nor the letter from NSPA provides any reason why the cargo involved could not be carried on Kalitta’s B747, or a comparable aircraft operated by a nother carrier. Kalitta asserts that Antonov’s entire argument is based on its contract with NATO and contends that the existence of such a contract does not negate well

- settled U.S. aviation law. Kalitta further asserts that the current reciprocity

stat ement from the Ukraine does not change the fact that the U.S.

- Ukraine bilateral aviation agreement does not permit s eventh

- f reedom cargo service, and in fact is highly restrictive in nature. It acknowledges that Antonov provides a unique service with resp ect to the transport of outsized cargo,

but contends that the doctrine of undue reliance is still relevant and should still be enforced wh en the cargo at issue is not outsized and could be transport ed by a U.S. or other carrier, as is the case here

.

Additional Pleading of Antonov

On September 12, 2013, Antonov filed an additional pleading stating that grant of its application is consistent with Department policy and precedent. 2 It states that the Department has previously recognized adequate recipro city as a primary criterion in making public interest determinations in considering applications for statement s of authorization and should follow the same precedent here.

1 On September 6, 2013, the NATO Support Agency (NSPA) provided a letter, through Antonov’s counsel, stating that the SALIS participants depend on continuous access to dedicated freighter aircraft in order to meet time

- critical requirements, and that, in order to fulfill the objectives of the SALIS contract, it is critical that each fl ight be authorized with a minimum of regulatory impediments.

2 In support of its contention, Antonov cites the Department’s approval in January 2011of a n Antonov request for a

statement of authorization to permit Antonov to ship non

- outsized military suppl ies on behalf of a NATO participant country under the SALIS contract.3

Antonov also identifies several requirements of the shipper that it contends Kalitt a cannot meet. 3
Antonov argues that if its application is not approved, the German military must use its own aircraft to ship the cargo , as due to financial and security reasons, no other civil air carrier can be contracted.

Antonov maintains that it is not the Department ’s policy to deny a s eventh

- f reedom application simply because a U.S. carrier claims to be able to perform the service, or to limit air carriers that fly the AN

124 aircraft strictly to the carriage of outsized cargo. It argues that the operation of this single s eventh

f reedom non

- outsized cargo flight within a two

- year period cannot be deemed to constitute an und u e reliance of such traffic. Finally, Antonov reiterates the difficulties the shipper would face if Antonov’s application is d enied.

Decision

W e have decided to deny the request of Antonov for a statement of authorization. Under the provisions of 14 CFR Part 212, we will grant a foreign air carrier a statement of authorization if we find that the proposed operation meets the r equirements of that Part and is in the public interest. Based on the entirety of the record before us, we find that grant of the authority requested by Antonov would not be in the public interest.

In making our public interest determination in addressi ng a foreign air carrier request for a statement of authorization, we base our findings on a range of decisional criteria

. In addition to ensuring compliance with 14 CFR Part 212 , we consider the state of our overall aviation relationship and charter

reci procity with the foreign applicant’s homeland , as well as the extent of the applicant’s reliance on

fifth/sev enth

- freedom charter operations as related to its third

- and fourth

- freedom operations

. We also take into account the needs of shippers and travelers, and any other circumstances that may be present
in a specific case. E ach application involves various factors for consideration and, rather than applying a rigid formula

, we weigh these factor s based upon the individual circumstances presented in each specific case

.

W e find that the record before us clearly supports a determination of undue reliance by Antonov. By Antonov’s own admission, it has not operated a third

- or fourth

- freedom ch arter flight to/from the United States since December 2011, a period during which its U.S. operations have consisted solely of

fifth/ seventh

- freedom charter operation s. In our view, this represents a manifest undue reliance by

Antonov on fifth/ seventh

- fre edom charter operations

, as compared to its operation of third

- and fourth

freedom charter operations

.

W e do not agree with Antonov’s assertion that denial of its application would be akin to aff ording a

“ first refusal right ” to a U.S. carrier . W hile we have long preferred that charterers be permitted the flexibility to choose an air carrier best suited to meet their requirements

, we exercise discretion to ensure that permitting such flexibility does not contravene any element of our longstanding public

interest decisional criteria. F or the reasons described above

, i n the case before us

, which does not involve outsize cargo and where alternative means of transport are available , we ca nnot make that public interest finding.

We have con sidered Antonov’s assertion that its contractual arrangement with SALIS/NATO warrant s favorable consideration of its request, but we d o not find it persuasive. As we said above, while we take shipper needs into account in reaching decisions on fifth/seventh

- freedom charter requests, that is

3 O n September 12, 2013 , t he German military submitted a letter in support of Antonov ’s application

.4

only one of a number of factors entering into our decision. In the case before us, we find that this particular factor, as well as the various other factors cited by Antonov, are outweighed by Antonov’s extended paucity of homeland

- U.S. operations in the face of our longstanding policy against undue

reliance. 4

In view of the above, and in the circumstances presented in this specific case, we find that grant of the authority requested by Antonov is not in the public interest, and we therefore deny its application.

ACCORDINGLY,

1. We deny the request of Antonov Company t/a Antonov Airlines for a statement of authorization under 14 CFR Part 212 to operate a one

- way seventh

- freedom cargo charter flight, using an AN

- 124

- 100 aircraft, between Leipzig, Germany, and Mountain Home AFB, Idaho, with a non

- traffic stop in Washington, D.C. (Dulles), during the period of September 20

- 22, 2013; and

2 . We will serve a c opy of this order on Antonov Company t/a Antonov Airlines and Kalitta Air, LLC.

By:

SUSAN L. KURLAND Assistant Secretary for

Aviation and International Affairs

(SEAL)

Appendix

An electronic version of this document is available on the World Wide Web at: http://www.regulations.gov

4 We do not find the 2011 case cited by Antonov, which was decided on a different re cord and in different circumstances, dispositive here.