 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, DC

Issued by the Department of Transportation on January 9, 2004

NOTICE OF ACTION TAKEN -- DOCKET OST-2002-14049

______________________________________________________________________

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).

Applications and/or Requests of  Federal Express Corporation  (FedEx)
filed December 9, 2003, and supplemented December 15, 2003; Northwest
Airlines, Inc. (Northwest) filed December 9, 2003 and supplemented
December 15, 2003; Polar Air Cargo, Inc. (Polar) filed December 10,
2003, and supplemented December 15, 2003; United Parcel Service Co.
(UPS) filed December 15, 2003, for:

	Interim use of fifth-freedom frequencies for service in the Seoul-Hong
Kong market.

By Notice of Action Taken, in the above referenced docket, on December
10, 2003, the Department granted Evergreen International Airlines
(Evergreen) and Kalitta Air, LLC (Kalitta) waivers from the startup
dates for their combined four fifth-freedom frequencies allocated for
Seoul-Hong Kong Service.  That Notice also permitted Federal Express
Corporation (FedEx) to continue using its existing two pendente lite
frequencies for Seoul-Hong Kong service through March 10, 2004, and
stated that we would issue a Notice regarding use of the remaining two
frequencies soon, noting that Northwest, FedEx, and Polar had expressed
interest in using the frequencies.  On December 11, 2003, the Department
issued a procedural notice regarding the remaining two frequencies.

FedEx seeks two additional frequencies; Northwest seeks one frequency;
Polar seeks two frequencies to supplement its existing long-term
frequencies in the market; and UPS seeks two frequencies.  Each carrier
acknowledges that it operates in the market now on a blind-sector basis;
that it can immediately begin using the interim frequencies; and that
grant of additional authority would enhance its operations and would
improve its competitive position. 

Northwest, Polar, and UPS filed answers, opposing the applications of
the other applicants.  Northwest and Polar filed consolidated replies.

Northwest argues that Polar should not be granted frequencies while
Northwest has no access to the local market; that FedEx should not be
permitted to monopolize the available temporary frequencies; that UPS
operates daily Hong Kong-Seoul service while Northwest operates a single
weekly Hong Kong-Seoul flight; and that UPS controls the second-most
Hong Kong fifth-freedom frequencies after Federal Express.

Polar argues that FedEx and UPS can already offer services between Seoul
and Hong Kong via their hubs in the Philippines and that an award to
either carrier would only serve to supplement that service via the
Philippine hubs.  It argues that FedEx and Northwest would use the
frequencies to support only one-way operations.  Polar maintains that it
will use the frequencies to operate between Seoul and Hong Kong on a
round-trip basis and notes that Seoul is a hub for its operations.

UPS argues that it would maximize U.S. carrier service by being a third
carrier in the market that can provide general air freight.  It argues
that of the applicants, it is the only one that operates Hong Kong-Seoul
routing on a round-trip basis and maintains that an award to any other
applicant will waste half of the instant authorization. 

Applicant rep: G. Bailey Leopard, Jr.  (FedEx)( 901)434-6664; Megan Rae
Rosia (Northwest) (202)842-3193;

	          Jeffrey N. Manley (Polar) (202) 663-6670; and David L.
Vaughan (UPS) (202)955-9864

 DOT analyst: Linda Senese, (202)366-2367

DISPOSITION

XX Granted:  one frequency to Northwest and one frequency to Polar (see
Remarks below)

Each allocated frequency is effective:  January  9, 2004, through March
10, 2004.

XX Denied:  Balance of requests (See Remarks below)

Action taken by:  Susan McDermott

	                Deputy Assistant Secretary for

     Aviation and International Affairs

________________________________________________________________________
___________________________

Remarks:   The matter before the Department involves immediate
replacement for interim authority for two Hong Kong-Seoul fifth-freedom
frequencies.  Our focus here is thus much narrower than it would be in a
proceeding where we were deciding selections and allocations for the
long term.  Here, we are seeking a temporary solution for a specific
problem—i.e., that two carriers we selected in the long-term
proceeding have not yet begun service and might not do so for a period
of some weeks.  Thus, the type of service that we anticipated would be
present in the market by this time is not yet available to the public. 
Our goal is to provide, to the extent possible, comparable public
benefit during this interim period.  

Against this background, we have decided to award one frequency each to
Northwest and Polar through March 10, 2004.  We will thereby be awarding
authority to two carriers whose cargo operations concentrate on the type
of cargo service—i.e., general all-cargo services—that most closely
corresponds to that of the long-term award holders, Kalitta and
Evergreen, whose entry has been delayed.  We will also, by awarding this
interim authority to two different carriers in addition to our earlier
award of two interim frequencies to FedEx, be adding to shipper options
and promoting competition.  In the circumstances presented, we have
determined that this result best serves the public interest. 

Since we expect Kalitta and Evergreen to be in a position to begin
services to Seoul on or before March 10, 2004, we will require them to
inform the Department, Northwest, and Polar at least two weeks prior to
their inaugurating service so that Northwest and Polar can take down
their services in a timely fashion.

________________________________________________________________________
___________________________

We found that our action was consistent with Department policy; and
grant of the waiver was consistent with the public interest.  To the
extent not granted, we denied all requests in the referenced Docket.  We
may amend, modify, or revoke the authority granted in this Notice at any
time without hearing at our discretion.

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

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

Evergreen’s waiver from the startup condition for the first-year
frequency is effective through March 10, 2004; Evergreen’s waiver from
the startup condition for the second-year frequency is effective through
April 23, 2004, or until the date on which Evergreen begins service with
each of these frequencies, whichever occurs earlier.  Kalitta’s waiver
from the startup for both frequencies is effective through March 10,
2004, or until the date on which Kalitta begins service with each of
these frequencies, whichever is earlier. 

 The December 11 Notice invited any other carrier parties to the
2002/2003 Hong Kong Fifth-Freedom All-Cargo Frequency Proceeding willing
and able promptly to implement service on an interim basis with one or
both of the available fifth-freedom frequencies to file an application
by noon December 15, 2003.  The Notice directed that comments on all
requests and applications should be filed by noon December 17 and any
replies should be filed by noon December 18, 2003.

 We recognize that Evergreen has received a startup waiver for one of
its frequencies through April 23, 2004.  Evergreen is under an
obligation to report periodically on its progress on inaugurating
services.  Should it appear that this one frequency will in fact remain
available after March 10, 2004, we will address the matter of its
interim use at a later date. 

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