 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, DC

Issued by the Department of Transportation on November 20, 2003

NOTICE OF ACTION TAKEN –

DOCKETS OST-2003-16272 and OST-2002-12683

________________________________________________________________________
____________________

This serves as notice to the public of the action described below, taken
by the Department official indicated (no additional confirming order
will be issued in this matter).

Application of  Arrow Air, Inc.  filed   10/3/2003  in  Docket
OST-2003-16272  for:

XX Exemption for two years under 49 U.S.C. §40109 to provide the
following service:

Scheduled foreign air transportation of property and mail between a
point or points in the United States and a point or points in Brazil,
nonstop or via intermediate points, to Manaus, Brasilia, Rio de Janeiro,
Sao Paulo, Recife, Porto Alegre, Belem, Belo Horizonte, Salvador de
Bahia, Curitiba and Fortaleza, Brazil, and beyond Brazil to Argentina,
Uruguay, Paraguay, and Chile.  Arrow also requests the authority to
integrate its exemption here with all of its existing certificate and
exemption authority, consistent with the applicable bilateral
agreements.

Applications of  Arrow Air, Inc.  filed   10/3/2003  in  Docket
OST-2003-12683  for:

XX Authorization to be designated as a U.S. scheduled all-cargo air
carrier in the U.S.-Brazil market;

XX Allocation of four U.S.-Brazil all-cargo frequencies to operate its
proposed services; and

XX Request for Clarification and Supplement to Order 2003-5-27:

By Order 2003-5-27, pursuant to the 2002 U.S.-Brazil All-Cargo Service
Proceeding (Docket OST-2002-12683), the Department made final its
decision to award Evergreen International Airlines primary authority and
an allocation of four U.S.-Brazil frequencies to inaugurate scheduled
all-cargo service in the U.S.-Brazil market, subject to a 90-day
start-up condition.  Order 2003-5-27 also awarded backup authority to
Gemini Air Cargo in the event that Evergreen failed to inaugurate its
proposed services. 

On September 24, 2003, Evergreen filed a notice in Docket OST-2002-12683
that it did not intend to inaugurate its proposed services.  
Evergreen’s U.S.-Brazil authority subsequently expired.  The
expiration of Evergreen’s authority automatically activated the backup
authority of Gemini Air Cargo under the terms of Order 2003-5-27.   

In its Request for Clarification and Supplement, Arrow asks that the
Department take steps to determine whether Gemini intends to implement
its backup authority in a timely manner.  Furthermore, Arrow urges the
Department to grant Arrow’s exemption application in the event that
the Department determines that Gemini does not intend to start its
proposed services.  Finally, Arrow requests that its own U.S.-Brazil
proposal be awarded backup authority (i.e., an authorization to be
designated and an allocation of frequencies) in the event that Gemini
does intend to implement its proposed services.   

Gemini Air Cargo and Amerijet International filed answers.  Arrow filed
a reply and Gemini filed a Surreply.  

Arrow argues that Evergreen’s failure to implement its proposed
services fundamentally challenges the rationale on which Order 2003-5-27
was based.  Furthermore, Arrow contends that the rationale for
Gemini’s backup proposal has been similarly undermined as the entire
existence of a viable U.S.-Brazil market has been put at issue by
Evergreen’s surrender of authority.  According to Arrow, the
Department is not merely faced with a situation calling for the
substitution of the backup carrier in this case.  Rather, Arrow alleges
that Evergreen’s surrender of authority raises a question of whether
the proposals and forecasts on which the Department based its selection
decision can be relied upon, and if not, what alternatives are available
to the Department to ensure that the authority at issue is used in a
manner that best serves the public interest.    

Gemini states that it takes no position with respect to Arrow’s
request for backup authority.  However, Gemini opposes Arrow’s
requests to the extent that Arrow seeks to replace Gemini as the carrier
selected to inaugurate U.S.-Brazil services now that Evergreen has
surrendered it award.  Gemini maintains that it is currently taking the
steps that are necessary, including obtaining authority from the
Government of Brazil, to meet the 90-day start-up deadline established
by Order 2003-5-27.  Gemini states that it will promptly notify the
Department in the event that Gemini determines that it will not exercise
its backup award.  

Gemini argues that Arrow’s filings amount to a petition for
reconsideration.  In this connection, Gemini states that Order 2003-5-27
did not provide for petitions for reconsideration, which Gemini
maintains is a well-founded policy to ensure the finality of the
Department’s decisions.  According to Gemini, Arrow has provided no
justifiable reason for the Department to reconsider Order 2003-5-27 to
require Gemini to make the type of declaration that Arrow seeks. 
Finally, Gemini points out that Order 2003-5-27 already requires the
selected carrier to start services within 90 days and file a written
notice 30 days prior to the actual start date.   

Amerijet argues that it would be unfair, inappropriate, and in violation
of the spirit of the Ashbacker doctrine for the Department to do
anything other than dismiss Arrow’s application without prejudice to
refiling at the appropriate time.  Amerijet maintains that this is not
the place to engage in a comparative evaluation of competing service
proposals.  However, Amerijet states that it shares Arrow’s skepticism
about Gemini’s willingness and ability to use its Brazil service
award.  In this connection, Amerijet argues that if Gemini unreasonably
delays acting, one way or the other, the Department should intervene and
require a decision from Gemini.  Nonetheless, Amerijet states that it is
not convinced that such a decision should be required at this time. 
According to Amerijet, Arrow has not introduced any evidence or argument
to show that such an action is necessary.  Amerijet notes that
Gemini’s backup authority has been activated, and that Gemini has
affirmed that it is taking the necessary steps to commence its services
in a timely manner.  

Applicant rep: Lawrence D. Wasko (202) 862-4370  DOT Analyst:  Michael
D. Bodman  (202) 366-9667

D I S P O S I T I O N

XX  Dismissed, without prejudice (see remarks below).

The above action was effective when taken:  November 20, 2003.  

Action taken by:   Paul L. Gretch, Director	

		    Office of International Aviation

________________________________________________________________________
_____________

Remarks:  We have dismissed, without prejudice, Arrow’s request for
exemption authority, frequency allocation, and authorization to be
designated in the U.S.-Brazil all-cargo market.  We have also dismissed
the relief sought by Arrow in its Request for Clarification and
Supplement to Order 2003-5-27.  Specifically, we will not modify the
terms of Order 2003-5-27 to require Gemini to immediately declare its
intentions with respect to its U.S.-Brazil backup authority, and we will
not grant U.S.-Brazil backup authority to Arrow at this time.   

By Order 2003-5-27, the Department made final its decision to award
Gemini Air Cargo backup authority in the event that the primary carrier
(Evergreen) defaults on its proposed U.S.-Brazil services.  Evergreen
failed to implement its proposed services, and Gemini’s backup
authority has been activated.  

Final Order 2003-5-27 made clear that the selected backup carrier, if
and when its authority is activated, is required to start its proposed
services within 90 days.  The 90-day start-up condition is consistent
with our standard practice.  We find that Arrow has not presented any
persuasive reason to deviate from our standard practice here.  The 90th
day is December 24, 2003.  The 30th day before that latest possible
start-up date is November 24, 2003.  Thus, Gemini is already under an
obligation to advise us no later than November 24, 2003 regarding its
service plans.  Against this background, we have decided to dismiss
Arrow’s request for authority to serve Brazil, without prejudice to
refiling at a later date.    

___________________________________________

Under authority assigned by the Department in its regulations, 14 CFR
Part 385, we found that (1) our action was consistent with Department
policy; and (2) dismissal of the exemption authority was consistent with
the public interest.  To the extent not granted or dismissed, we denied
all requests in the referenced Docket.  

Persons entitled to petition the Department for review of the action set
forth in this Notice under the Department’s regulations, 14 CFR
§385.30, may file their petitions within seven (7) days after the date
of issuance of this Notice.  This action was effective when taken, and
the filing of a petition for review will not alter such effectiveness.

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

http://dms.dot.gov//reports/reports_aviation.asp

Arrow’s request for clarification was accompanied by a motion for
leave to file an otherwise unauthorized document.  We grant the motion. 


Amerijet’s answer and Gemini’s Surreply were accompanied by motions
for leave to file otherwise unauthorized documents.  We grant the
motions.  

Ashbacker Radio Corp. vs. FCC, U.S. 327 (1945).  

Gemini’s backup authority was activated automatically under the terms
of Order 2003-5-27 when Evergreen allowed its certificate authority to
expire by not starting its proposed services.  

 PAGE   

 PAGE   3 

