Document ID: DOT-OST-2002-12683-0015-0002
Agency: dot
Document Type: Notice
Title: Notice - In the Matter of the 2002 U.S.-Brazil All-Cargo Service Proceeding
Posted Date: 2002-08-07T04:00Z

UNITED STATES OF AMERICA

            DEPARTMENT OF TRANSPORTATION

                    OFFICE OF THE SECRETARY

                             WASHINGTON, DC

Docket: OST-2002-12683					Served:  August 7, 2002 

NOTICE

In the Matter of the 2002 U.S.-Brazil All-Cargo Service Proceeding

SUMMARY

By this Notice, we have decided to decline to require that incumbent
U.S.-Brazil all-cargo carriers report on their U.S.-Brazil frequency
utilization in the 2002 U.S.-Brazil All-Cargo Service Proceeding, Docket
OST-2002-12683.

DISCUSSION AND SUMMARY OF PLEADINGS

By Order 2002-6-20, the Department instituted the 2002 U.S.-Brazil
All-Cargo Service Proceeding to select a carrier for an authorization to
be designated to serve the U.S.-Brazil all-cargo market and for
allocation of four U.S.-Brazil all-cargo frequencies under the
U.S.-Brazil aviation agreement.  The instituting order established a
procedural schedule for the submission of evidentiary material needed by
the Department to make its selection(s), as follows: Applications by
July 19, 2002; Direct Exhibits by August 2; Rebuttal Exhibits by August
16; and Briefs by August 30.  Gemini Air Cargo, Evergreen International
Airlines, and Amerijet International filed applications for the
available authorization and an allocation of frequencies.  

On July 31, 2002, Amerijet filed a letter in the above-captioned docket
requesting that the Department require each all-cargo carrier currently
designated to provide service in the U.S.-Brazil market (Federal
Express, UPS, and Atlas/Polar) to submit, by no later than August 9, a
complete description of their services in the U.S.-Brazil market for the
period June 1, 2001 through May 31, 2002.  In the alternative, Amerijet
states that the incumbent carriers may agree to voluntarily submit the
requested information for the record of the case.  

By Notice dated August 1, 2002, in this Docket, we stated that we would
treat Amerijet’s letter as a motion, and we required that answers to
Amerijet’s letter be filed by August 5, 2002 and replies by 

August 6, 2002.  Atlas/Polar and Evergreen filed answers.  UPS,
Amerijet, and Atlas/Polar filed replies.  

In general, Atlas/Polar and UPS are opposed to Amerijet’s request
whereas Evergreen supports the request. 

In its letter, Amerijet states that a relevant consideration in this or
any other route proceeding is the degree to which incumbent carriers are
and have been using frequencies allocated to them.  Amerijet maintains
that neither the Department nor the applicants in this case currently
have access to that information, and that the T-100 reports do not allow
the parties to determine completely and accurately the extent to which
the incumbent carriers are and have been using their frequencies. 
Amerijet further indicates that dormancy information with respect to
frequency utilization is unreliable.  

Amerijet states that the Department’s instituting order appears to
have recognized this issue when it required that any incumbent carrier
applicant include a complete description of its services in the market. 
In this regard, Amerijet notes that this information was not submitted
since none of the incumbent carriers applied for additional frequencies.
 To help minimize any burden on the incumbent carriers, Amerijet
requests that the incumbents submit the requested information by August
9, one week after directs and one week before rebuttals are due in this
proceeding.  

Atlas/Polar state that Amerijet’s own letter indicates that the T-100
reports for the U.S.-Brazil market are available to all applicants in
the proceeding, and that Amerijet has failed to specify the manner in
which these T-100 reports are inadequate or how the information that
Amerijet seeks would enhance the record of the proceeding.  Moreover,
Atlas/Polar contend that Amerijet’s request expresses only a vague,
general interest in determining U.S.-Brazil frequency usage, which does
not validate the request for new information requirements.  

Atlas/Polar further argue that incumbent carrier frequencies are beyond
the scope of the proceeding.  In this connection, Atlas/Polar state that
this case arose because the Department decided to replace Polar’s
Brazil designation and reallocate its four frequencies.  Atlas/Polar
also note that the instituting order allowed for petitions for
reconsideration, and none were filed.  

UPS argues that Amerijet’s request harkens back to the time of strict
regulation when incumbents were required to provide extensive
information about their existing services.  UPS states that the burden
of producing the data, when viewed in relation to its complete lack of
relevance to the proceeding, warrants a denial of the request.  UPS
maintains that any information regarding frequency usage, aircraft
routings, schedules, etc. has no bearing whatsoever on this proceeding
since none of the applicants has requested any frequencies now held by
incumbents.  UPS also notes that it is too late in this proceeding for
the requested information to be of use to the applicants, and that
questions concerning confidentiality and business sensitive information
need to be considered.  

Evergreen states that it supports Amerijet’s request, and that
information concerning existing services could prove useful to the
Department and the parties in this proceeding.  Evergreen maintains that
specific issues such as the need for service to intermediate points and
interior U.S. points justify the filing of the requested information
even though incumbents do not seek to increase Brazil service. 
Evergreen urges the Department to require incumbents to provide
operational information by month and by direction and to identify all
Brazilian, U.S., and third-country points in their single-plane,
U.S.-Brazil scheduled services for the period June 1, 2001 to May 31,
2002.  Evergreen indicates that the Department required similar
information by its June 21, 2000 Notice in the last U.S.-Brazil
all-cargo proceeding.    

In its reply, Atlas/Polar state that Evergreen’s support of
Amerijet’s request similarly makes no claim that incumbent operational
data would affect the applicants’ service proposals or the
Department’s decision in any way.  While the Department required the
submission of U.S.-Brazil all-cargo frequency utilization data two years
ago, Atlas/Polar maintain that that precedent is not relevant here
because there has been no suggestion (let alone proof) that the
incumbents have not been using their frequencies, as was the case two
years ago.  Atlas/Polar note that the Department has already determined
that Polar’s designation and four frequencies will be the issue of the
current Brazil proceeding.   

In its reply, Amerijet states that historical precedent shows that in
virtually every proceeding where the issuance of additional certificates
is at issue, the incumbent carrier(s) are called upon to provide data
with respect to the market(s) at issue.  Amerijet maintains that if, as
Atlas/Polar suggest, the T-100 reports are sufficient, then incumbent
carriers would never be called upon to submit market information in
route proceedings.  According to Amerijet, it and the other applicants
in this case must be able to examine market information in the
possession of Atlas/Polar, FedEx, and UPS in order to best determine the
nature of the need for additional service in the relevant market and
sub-markets.  Amerijet states that if, for example, the wide-body
operators in the market are not and have not been fully utilizing
frequencies, it is far more likely that the Department would support the
selection of a carrier such as Amerijet, which would not simply add new
additional capacity between major terminals, but would expand its base
scheduled system in the region into Brazil.  

DECISION

This proceeding began shortly after the Department approved a de facto
route transfer between Atlas and Polar, but did not approve the transfer
of Polar’s Brazil designation and four frequencies.  The Department
found that the transaction with respect to Polar’s Brazil authority
would not be consistent with the public interest, as it would have
resulted in half of the four available designations for all-cargo
service and over half of the 24 available frequencies in the U.S.-Brazil
market being under single corporate control.  Against this background,
the Department subsequently instituted the 2002 U.S.-Brazil All-Cargo
Service Proceeding in this docket to select a carrier for an
authorization to be designated to serve the U.S.-Brazil all-cargo market
and for allocation of four U.S.-Brazil all-cargo frequencies under the
U.S.-Brazil aviation agreement.  

The scope of the authority at issue was already well known at the time
we instituted this case.  In the circumstances presented, the
instituting order did not include a general requirement that incumbent
U.S.-Brazil all-cargo carriers report a complete description of their
services in the market.  Such a requirement would apply only to
incumbents choosing to apply for an allocation of additional
frequencies.  Clearly, the Department would want to know how such an
applicant had been using its own allocation before deciding on whether
to award that applicant additional frequencies.  However, each applicant
in this case (Gemini, Evergreen, and Amerijet) is a non-incumbent
carrier applying for the available designation and an allocation of
frequencies.  Neither Amerijet nor Evergreen has presented any
persuasive reason why it needs incumbent carrier data in order to make
its affirmative case in this proceeding.  Indeed, Amerijet’s own
request only contemplated that the incumbent carrier data be submitted
one week after the direct exhibits in this case were due.   

In these circumstances, we are not persuaded that the Department should
require incumbent U.S.-Brazil all-cargo carriers to report on their
current services in the market.  We believe that such a requirement is
unnecessary in this case, and we continue to believe that the applicants
and the Department have access to the relevant information needed for,
respectively, prosecuting and deciding this proceeding.  For these
reasons, we have decided that the public interest would be best served
here by declining to require that incumbent carriers report on their
U.S.-Brazil frequency utilization in this docket.    

We will serve this notice on Gemini Air Cargo, Inc.; Evergreen
International Airlines, Inc.; Amerijet International, Inc.; Federal
Express Corporation; United Parcel Service Co.; and Atlas Air,
Inc./Polar Air Cargo, Inc.  

By:

						Paul L. Gretch

						Director, Office of International Aviation

(Seal)

Dated:  August 7, 2002  

An electronic version of this order is available on the World Wide Web
at 

http://dms.dot.gov//reports/reports_ aviation.asp

On August 6, 2002, Amerijet filed a separate motion requesting that the
Department issue an order directing Gemini and Evergreen to produce
copies of their respective applications reportedly filed with the Air
Transportation Stabilization Board seeking Federal loan guarantees
pursuant to the Air Transportation Safety and System Stabilization Act,
together with copies of all other related or supportive documents. 
Amerijet’s motion requests that the Department shorten the answer
period to its motion.  Our regulations (14 CFR Part 302.11) would
normally allow seven days for answers (i.e., Thursday, August 15). 
However, to ensure that the issues raised by Amerijet’s letter are
addressed in an expedited manner, we will require that answers to
Amerijet’s motion be filed in the above-referenced docket by Friday,
August 9, 2002.  Any replies shall be filed by Monday, August 12, 2002. 
  

See Order 2002-5-24.  Atlas and Polar had reached an agreement under
which the two carriers would be owned by the same company but continue
to operate as separate airlines.  

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