 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, DC

Issued by the Department of Transportation on May 11, 2004

   NOTICE OF ACTION TAKEN -- DOCKET OST-2004-17279

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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).

Background

By Order 2004-3-3 we instituted the 2004 Hong Kong Fifth-Freedom
All-Cargo Frequency Proceeding to select carriers to operate 18
fifth-freedom frequencies available for U.S. carrier services in the
Hong Kong fifth-freedom market.  Four carriers  (Federal Express
(FedEx), Northwest Airlines (Northwest), Polar Air Cargo (Polar), and
United Parcel Service (UPS)) filed initial applications on March 23,
2004.   FedEx, Northwest, and Polar requested frequencies for services
in the Hong Kong-Seoul market, and those requests exceeded the number
available for service to that city.   UPS requested frequencies for Hong
Kong service via Singapore to Macapagal. 

Joint Motion of   Federal Express Corporation, Northwest Airlines, and
Polar Air Cargo filed  4/2/04, for:

XX Allocation of Hong Kong Fifth-Freedom Cargo Frequencies and
Suspension of Procedural Timetable:

The joint carriers propose to allocate the five remaining available
Seoul frequencies among them as follows:  3 frequencies to FedEx, 1
frequency to Northwest, and 1 frequency to Polar.  They state that the
proposed distribution of frequencies will preserve the valuable
resources of the

(See Reverse Side)

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Department, will avoid any unnecessary and protracted proceeding, will
promote competition in the Hong Kong all-cargo market, and will provide
the Department with a mutually agreed upon proposal that will best serve
the public interest.

We received no answers to the joint motion.

Applicant reps:  Nancy S. Sparks (FedEx) 202 756-2461;  Megan Rosia
(Northwest) 202 842-3193; Kevin Montgomery (Polar) 202 828-1002    DOT
Analyst:   Linda Senese   202-366-2367

D I S P O S I T I O N

XX  Granted (Allocation of Hong Kong-Seoul all-cargo frequencies: 3 to
FedEx, 1 to Northwest, 1 to Polar, subject to conditions, see below)

The above action was effective when taken: May 11, 2004, and will remain
in effect indefinitely, subject to conditions.  

By:      Susan McDermott			

            Deputy Assistant Secretary for

	   Aviation and International Affairs	

		    

XX  The authority granted is consistent with the October 19, 2002,
Memorandum of Understanding between the Government of the United States
and the Government of the Hong Kong Special Administrative Region of the
People’s Republic of China and with the aviation agreement between the
United States and the Republic of Korea.

Except to the extent exempted or waived, this authority is subject to
the terms, conditions, and limitations indicated:  XX Holders’
certificates of public convenience and necessity

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Conditions:  Consistent with our standard practice, the frequency
allocation granted is subject to the condition that if any of the
frequencies are not used for a period of 90 days, the allocation as to
each of those frequencies will expire automatically and the frequencies
will revert to the Department for reallocation.  The 90-day dormancy
period for Northwest and Polar will begin immediately, and the 90-day
dormancy period for FedEx will begin on October 26, 2004.

Remarks:  The Department’s instituting order in the 2004 Hong Kong
Fifth-Freedom All-Cargo Frequency Proceeding called for applications on
March 23, 2004, and made no provision for supplemental applications. 
While we view the joint motion filed by FedEx, Northwest, and Polar as a
supplement to their originally filed applications, we will nevertheless
entertain it in the public interest in the circumstances presented. 
This supplement modifies the three carriers’ original requests so that
FedEx now only seeks three Seoul frequencies; and Northwest and Polar 

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only seek one frequency each for Seoul-Hong Kong service.  We have
reviewed the carriers’ joint request and find that grant of this
request will provide public interest benefits and will provide U.S.
carrier service with all of the Seoul-Hong Kong frequencies permitted
under the MOU.  It is our policy to seek to maximize use of valuable
route rights, and we have determined that the allocations we are making
here promise to promote that objective and will enhance the service
options available to the shipping public. The three frequencies for
FedEx will enable the carrier to use local traffic rights between Seoul
and Hong Kong as part of its U.S.-Hong Kong services, as will the one
frequency for Northwest and the one frequency for Polar.  Thus, the
carriers will enhance the diversity of service in the area. We note that
no party has shown any reason why we should not grant the joint request
of FedEx, Northwest, and Polar and award these carriers the Seoul
frequencies they seek.  In these circumstances, we will award these
carriers frequencies for Hong Kong-Seoul service.  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:

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

 Sixteen of these frequencies become available under the MOU on October
26, 2004.  Two frequencies were frequencies that remained available from
an earlier proceeding.  These frequencies were awarded one each to
Northwest and Polar on a pendente lite basis for Seoul-Hong Kong
services.  See Order 2004-3-3,

at 6.

 Certain cities have city-pair caps, and services via those cities are
limited.  The MOU only permits 12 weekly fifth-freedom frequencies in
the Seoul-Hong Kong market.  The Department has allocated 7 of those 12
frequencies on a permanent basis, and thus, only 5 frequencies are
available for Seoul-Hong Kong services. 

 On March 24 (and supplemented March 29) UPS filed a motion for
immediate allocation of frequencies for the Singapore-Macapagal service
and also for UPS’ dismissal from the balance of the proceeding.  In
its motion, it also withdrew the backup authority requested for Seoul
that had been in its original application.  There was no objection to
the UPS request.  Thus, on March 31, 2004, the Department allocated UPS
6 Hong Kong frequencies for its proposed Hong Kong-Singapore-Macapagal
service and also dismissed UPS from the balance of the 2004 Hong Kong
Fifth-Freedom All-Cargo Frequency Proceeding.

 In view of the circumstances presented and pending our resolution of
the joint motion for allocation, by Notice dated April 6, 2004, the
Department suspended the remaining procedural schedule established in
Order 2004-3-3 until further notice.  Answers to the motion regarding
the allocation of frequencies for Seoul service were due April 13, 2004.


 Northwest and Polar are currently operating one Seoul-Hong Kong
frequency each by virtue of pendente lite exemption authority.  (see
Order 2004-3-3 and note 1, supra.)  By this action we are awarding them
the two long-term frequencies (one to each) that had been awarded to
another carrier in a previous proceeding but that subsequently reverted
to the Department.  These frequencies are available for immediate use.
Our action here terminates the pendente lite awards to Northwest and
Polar but in no way alters their ability to continue these services.  We
are awarding FedEx three frequencies from the pool of frequencies that
become available October 26, 2004.

 We note that UPS filed an application in the above-captioned docket on
April 15, 2004, for three frequencies to other points.   We will act on
the UPS application separately.

