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JGR/DOT (Department of Transportation) International Aviation Decisions (8 of 10)
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JGR/DOT (Department of Transportation) International Aviation Decisions (8 of 10)
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John Roberts' Subject Files
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Ronald Reagan Presidential Library
Digital Library Collections
This is a PDF of a folder from our textual collections.
Collection: Roberts, John G.: Files
Folder Title: JGR/DOT (Department of Transportation)
International Aviation Decisions (8 of 10)
Box: 17
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https://reaganlibrary.gov/archives/digital-library
To see all Ronald Reagan Presidential Library inventories visit:
https://reaganlibrary.gov/document-collection
Contact a reference archivist at: [email protected]
Citation Guidelines: https://reaganlibrary.gov/citing
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THE WHITE HOUSE
WASHINGTON
March 4, 1986
MEMORANDUM FOR MATTHEW V. SCOCOZZA
ASSISTANT SECRETARY FOR POLICY AND
INTERNATIONAL AFFAIRS
DEPARTMENT OF TRANSPORTATION
FROM:
ASSOCIATE COUNSEL 022 TO THE PRESIDENT
JOHN G. ROBERTS
SUBJECT:
Department of Transportation
International Aviation Decision:
Nippon Cargo Airlines Company, Ltd.
The attached correspondence is referred to you pursuant to
Section 4 of Executive Order 11920. That provision directs
individuals within the Executive Office of the President to
"follow a policy of
referring any written communication from
an interested private party [under section 801], or an attorney
or agent for any such party, to the appropriate department or
agency outside the Executive Office of the President.
Mr. Hart telephoned me about the application of Nippon Cargo
Airlines, with which I was unfamiliar. I advised Mr. Hart that
if the matter were a Section 801 case, the Executive Order would
prohibit me from discussing it with him. Shortly thereafter, I
received this correspondence. I have advised Mr. Hart that,
pursuant to Section 4 of the Executive Order, future contact
should be nonexistent, not "minimal."
WILLIAMS & JENSEN
PAUL ARNESON
A PROFESSIONAL CORPORATION
GEORGE D. BAKER
LAWYERS
WILLIAM T. BRACK
ANN S. COSTELLO
1101 CONNECTICUT AVENUE. N.W
WINFIELD P. CRIGLER
TELEPHONE
JUNE E. EDMONDSON
WASHINGTON, D.C. 20036
ROBERT E. GLENNON
(202) 659-8201
J. STEVEN HART
ROBERT E. JENSEN
February 25, 1986
JOHN J. MCMACKIN, JR.
GEORGE G. OLSEN
MARY LYNNE WHALEN
J.D. WILLIAMS
John G. Roberts, Jr., Esquire
Associate Counsel to the President
112 Old Executive Office Building
Washington, D. C. 20500
Dear John:
You were correct. The Nippon Cargo Airlines (NCA)
application falls under section 801. Apparently, the
NCA issue had not made it to your desk.
I enclose a copy of the Department of Transporta-
tion decision and a recent news article reflecting
Japan's strong interest in a prompt resolution of this
issue. A Japanese delegation will arrive here on March
3 and hopes to be greated with good news.
I thought you might be interested. Due to the 801
restrictions and the fact that our client, NCA, is a
foreign corporation, I will keep future contact minimal.
Sincerely
J. Steven Hart
JSH/ajb
Enclosures
The Journal of Commerce, Friday, February 7, 1986
Nakasone Seeks Reagan's Aid in Talks
By A.E. CULLISON
Japanese who, since 1970, have in-
made too many concessions to the
Journal of Commerce Staff
sisted that JAL be the sole designat-
United States during recent negotia-
TOKYO - President Ronald
ed carrier for Japan.
tions. Particularly disturbing to
Reagan has been sent a personal let-
The Japanese have been com-
many Japanese has been the Naka-
ter by Prime Minister Yasuhiro Na-
plaining as well that JAL's beyond
sone government's permission for
kasone seeking his assistance in ob-
routes are too limited at a time
United Airlines to take over all the
taining key concessions for Japan
when the U.S. airlines themselves
rights now owned by Pan American
during the civil aviation talks sched-
enjoy freedom in principle on routes
World Airways' trans-Pacific divi-
uled to open on March 3.
involving Japan.
sion. These rights were purchased by
Government officials in Tokyo
Japan's negotiators have been
United, including stopovers beyond
disclosed Thursday that Mr. Naka-
pressing the United States to agree
Japan.
sone appealed to President Reagan
to permit JAL to fly to South Ameri-
for an increase in the number of
can destinations after stopping in
United also has been granted the
flights permitted to Nippon Cargo
New York and Los Angeles.
right to fly 53 flights weekly on
Airlines on routes to the United
trans-Pacific routes, more than the
States and to allow Japan Air Lines
It is expected that negotiators
33 flights currently provided by Pan
to launch freight service to Chicago.
from the two nations will launch
American, from February 11, and 56
According to the Japanese offi-
working-level discussions in Tokyo
flights from April 28.
cials, the Prime Minister also asked
on Monday to deal with U.S. requests
President Reagan to use his influ-
that Japan simplify customs proce-
From the Japanese point of view,
ence to see that the U.S. negotiators
dures at Japanese airports and that
these concessions will place Japan's
agree to end the alleged disparity in
controls on night landings at Narita
airlines at a competitive disadvan-
the number of designated companies
and Osaka airports be eased.
Lage. But it is understood that Secre-
permitted to schedule their own
However, it is likely that the Jap-
tary of State George P. Shultz has
number of flights.
anese Prime Minister is counting on
promised that the United States will
In addition, Mr. Nakasone's letter
make positive efforts to eliminate
President Reagan's help in seeing
requested the president to support
the current imbalance in the number
that the Japanese arguments are al-
Japan's efforts to obtain a revision
so placed on the table in preparation
of flights between the two countries.
of the beyond rights issue between
for further consideration when the
the two countries.
Prime-Minister Nakasone's letter
Under the present bilateral civil
talks get down to other matters in
to Mr. Reagan is considered in
March.
aviation pact, JAL, the Japanese
Tokyo as a move to settle the issues
flag carrier, is the only designated
Japan's prime minister has been
on a political level rather than to
airline from Japan allowed to oper-
under increasing pressures from his
leave the problem to the bureau-
ate its own number of flights. In
own civil aviation authorities and
crats. The official U.S. position for
contrast, three U.S. airlines are des-
from high-level members of his rul-
years has been that the present civil
ignated carriers. But the U.S. author-
ing Liberal Democratic Party, who
aviation agreement between Wash-
ities have pointed out that it was the
believe that his administration has
ington and Tokyo is not unbalanced.
Pasted
UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY
WASHINGTON, D..C.
NIPPON CARGO AIRLINES COMPANY
Docket 42023
NOTICE
The attached decision was submitted to the President pursuant to
section 801 of the Federal Aviation Act on February 6, 1986.
Public release has been authorized in accordance with the provisions
of Executive Order 11920, 41 Fed. Reg. 23665 (June 10, 1976). This is
not a final decision since it has not been acted upon by the President.
By:
PHYLLIS T. KAYLOR
Chief, Documentary Services Division
(SEAL)
UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY
WASHINGTON, D. C.
Issued by the Department of Transportation
on the 6th day of February, 1986
Application of
:
:
NIPPON CARGO AIRLINES COMPANY, LTD.
:
Docket 42023
:
for a foreign air carrier permit pursuant:
to section 402 of the Federal Aviation
:
Act of 1958, as amended
:
ORDER ISSUING FOREIGN AIR CARRIER PERMIT
On February 29, 1984, Nippon Cargo Airlines Company, Ltd. (NCA) filed
with the Civil Aeronautics Board an application for an initial foreign
air carrier permit 1/ to engage in scheduled all-cargo services
commencing April 1, 1985, (1) between a point or points in Japan and the
coterminal points San Francisco and New York, and (2) between a point or
points in Japan and the terminal point New York, New York, via the
intermediate point Anchorage, Alaska. 2/ NCA further requested authority
to perform cargo charters in accordance with 14 CFR Part 212.
In support of its application, NCA stated that it has been licensed by
its government to perform the all-cargo services at issue here, and, by
Diplomatic Note dated November 16, 1983, was designated by the Government
of Japan in accordance with :rticle 4(A) (1) of the United States-Japan
Air Transport Services Agreement, as amended. 3/
1/ NCA's application was summarized in the Federal Register,
49 FR 9244, March 12, 1984.
2/ On April 9, 1984, NCA amended its application, defining its request
for Anchorage intermediate authority as a technical stop.
3/ TIAS 2854, 4158, 5939, 6787, 7333 and 8882.
2
ANSWERS
During March, 1984, Federal Express Corporation, The Flying Tiger Line
Inc., and Transamerica Airlines, Inc., filed answers in response to NCA's
permit application. The carriers urged deferral of NCA's application
pending resolution of various aviation issues with Japan. Federal
Express and Flying Tiger also expressed concerns about possible
anticompetitive consequences of NCA's ownership.
Specifically, Federal Express argued that action on NCA's application
should be deferred pending the concurrent grant of all-cargo authority to
Federal Express or until an indication of willingness by the Government
of Japan to grant such authority to Federal Express.
Flying Tiger listed (1) Japanese domination of the air freight market,
and the likelihood that NCA's entry would increase Japan's market share,
and, (2) the fact that NCA's application cannot be considered independent
of Japan Air Lines' request for expanded cargo rights into and beyond the
U.S.
Transamerica stated that it had no objection to NCA's application
provided the U.S. reached a satisfactory understanding with Japan
regarding additional U.S. carrier designations under the bilateral
agreement. Transamerica also noted that while NCA sought scheduled as
well as charter authority, its Japanese license only provides for the
operation of scheduled services.
On May 14, 1984, NCA filed a reply to the answers of Federal Express,
Flying Tiger and Transamerica. /
On June 28, 1984, NCA filed a motion for expeditious treatment of its
pending application and was answered by Flying Tiger. On July 18, 1984,
NCA responded. /
RESULTS OF U.S.-JAPAN NEGOTIATIONS
On May 1, 1985, the United States and Japan signed an interim agreement,
embodied in a Memorandum of Understanding, which, among other things,
provides for NCA to commence its all-cargo services and to continue them
4/ NCA's reply was accompanied by a motion for leave to file an
otherwise unauthorized document.
5/ We will grant all motions to file otherwise unauthorized documents.
3
until the conclusion of comprehensive revision talks. 6/
On April 30, 1985, we orally granted NCA an exemption, sua sponte, from
section 402 of the Act to perform those services provided for in the MOU,
until September 6, 1985, or the conclusion of the comprehensive revision
talks, whichever was later. This authority was and is subject to our
standard conditions applicable to exemption authority, and to NCA's
adherence to the terms of the MOU. That exemption authority remains in
effect, and NCA is currently conducting operations under that authority.
DECISION
We have decided to issue NCA a foreign air carrier permit authorizing it
to perform all-cargo services between Tokyo, Japan, and San Francisco/New
York. We have thoroughly reviewed the record and have decided to grant
the application using the simplified Subpart Q procedures. / The public
was informed of the carrier's application by notices in the Federal
Register and the CAB's weekly list of applications filed, describing the
authority sought and giving interested persons an opportunity to submit
evidence and objections to the award of the authority. These notices
provided the required notice and filing opportunities. Simplified
procedures are appropriate in this case, because there are no material
issues of fact which require other procedures.
We are granting NCA the authority it seeks to the extent that it is
encompassed by the April 30, 1985, MOU and subject to the conditions
and limitations contained in that agreement.
6/ The MOU provides for NCA to operate six (6) wide-body roundtrip
all-cargo flights per week on a route between Tokyo and San Francisco/New
York as of May 1, 1985. The MOU provides that NCA may increase its
frequencies from April 1, 1986, by a percentage equal to the percentage
increase in the total air cargo traffic between Japan and the United
States for the period January 1, 1985, to December 31, 1985, over the
total air cargo traffic for the period January 1, 1984, to December 31,
1984, and similarly for each succeeding year. The MOU also provides that
any increased frequencies that become available and are not used may be
reserved for later use. The MOU also specified additional rights that
would be available to U.S. carriers.
71 14 CFR 302.1701 et seq. Under Rule 29(b), we may, in our
discretion, omit a tentative decision in proceedings under Subpart Q and
proceed directly to a final decision.
4
In reaching our decision, as more fully discussed below, we find that,
based on the record, NCA is substantially owned and effectively
controlled by nationals of Japan, and that it is fit, willing and able to
conduct the authorized services and adhere to the provisions of the Act,
and our rules, regulations, and requirements.
PUBLIC INTEREST CONSIDERATIONS
The permit authority granted by this order is provided for in the May 1,
1985, Memorandum of Understanding between the United States and
Japan. 8/ On August 13, 1983, NCA was issued a license by the Japanese
Ministry of Transport (NCA Exhibit 402, Docket 42023) to perform
scheduled "all freight service" over the routing Tokyo-San Francisco-New
York. In November 1983, NCA was designated by the Government of Japan
under Article 4(A) (1) of the United States-Japan Air Transport Services
Agreement to serve Japanese routes 1 and 3 of the Route Schedule appended
to the Agreement.
We find that the view of the U.S. carrier respondents that we should
defer action on NCA's request until resolution of pending U.S.-Japan
aviation issues has been effectively dealt with by the signing of the
May 1, 1985 interim agreement, which specifically provides for this
authority to be granted to an airline of Japan.9/
We have also considered arguments concerning the possible anticompetitive
consequences of NCA's ownership. Although we do not believe that this
factor warrants withholding permit authority, we intend to monitor the
situation. We also note that the Department of Justice has been fully
apprised of the situation and has filed no objections to the issuance of
the permit.
NCA'S OWNERSHIP AND CONTROL
NCA was formed on September 21, 1978, by four Japanese shipping
companies 10/ and All Nippon Airways, a domestic Japanese scheduled
8/ The authority granted is subject to the limitations of the MOU.
Thus, NCA is limited to six flights per week and any request to operate
extra sections would require additional authority.
9/ The MOU also provides for additional passenger and cargo rights for
U.S. carriers. The Department has instituted a case to determine which
U.S. carriers should exercise those rights. See Order 85-11-29, November
13, 1985, instituting the U.S. -Japan Gateways Case, Docket 43575.
10/ The Japanese shipping companies are Kawasaki Kisen Kaisha, Ltd. ("K"
Line); Nippon Yusen Kaisha (NYK Line); Mitsui O.S.K. Lines; and
Yamashita-Shinnihon Steamship Co., Ltd. (Y.S. Line). Japan Line, Ltd.
(Japan Line) and Showa Line, Ltd. subsequently became stockholders.
5
carrier. Subsequent stock transactions diversified NCA's ownership. As
of April 1, 1984, the company had 6,400,000 shares of stock issued and
outstanding, 100% owned by Japanese citizens.)
OPERATIONAL FITNESS
We find that NCA is operationally fit to conduct the operations at issue
here. Biographical data supplied by the applicant demonstrate that all
of NCA's officers, directors and key management personnel have
considerable transportation experience. NCA management personnel have
been drawn from companies with extensive experience in shipping, air
freight forwarding, rail and air carrier operations. NCA stated that it
would inaugurate its proposed services with dry-leased All Nippon
Airways' B-747-200 aircraft to be used exclusively by NCA. Maintenance
of NCA's aircraft will be performed in accordance with ICAO standards by
All Nippon Airways at Tokyo. Transit checks on the aircraft will be
performed under contract supervised by NCA maintenance representatives.
NCA stated that it had not been involved in any safety or tariff
violations during the five years preceeding the filing of the permit
application.12/
11/ NCA's stock is issued as follows: "K" Line (10%), NYK Line (10%),
Mitsui O.S.K. Lines (10%), Y.S. Line (10%), All Nippon Airways (10%),
Japan Line (5%), Showa Line (5%), 23 Japanese Banks (15.47%), 16 Japanese
insurance companies (11.09%), and 34 other Japanese citizen companies
(13.44%). See Exhibit NCA-103, Docket 42023.
12/ By letter dated March 13, 1984, the CAB requested that the FAA
provide a safety and compliance evaluation of NCA. By letter dated March
22, 1984, the FAA's Office of Flight Operations stated that although NCA
held no operating authority, it knew of no reason why the CAB should act
unfavorably on NCA's pending permit application, so long as it made any
authority granted to NCA subject to the customary conditions. A copy of
the CAB's letter and the FAA's response have been placed in Docket
42023. On July 18, 1985, the FAA advised the Department that on May 1,
1985, NCA had been issued FAR Part 129 Operations Specifications and it
knew of no reason why we should act unfavorably on NCA's application.
6
FINANCIAL FITNESS
We find that NCA is fit to conduct the operations we are authorizing
without exposing the public to undue financial- risk. The applicant
stated that because its proposed operations were not to commence until
1985 it was unable to provide historical financial statements based on
operations. NCA did, however, provide forecast balance sheets for
April 1, 1984 and 1985, which are summarized in Appendix A to this
order. In addition, NCA provided current balance sheets and profit and
loss statements for the seven original NCA stockholders. 13/ NCA further
stated that it does not receive, or expect to receive, financial
assistance from the Government of Japan. The applicant stated that it
had been able to meet its financial obligations, had never defaulted on
transportation commitments, and had never been refused debt
financing.
In view of the foregoing and all of the facts of record, we find and
conclude that:
1. Nippon Cargo Airlines Company, Ltd. is qualified and has been
designated by its government to perform the air services described in the
attached permit;
2. Nippon Cargo Airlines Company, Ltd. is fit, willing and able
properly to perform the foreign air transportation described in the
attached permit and to conform to the provisions of the Act, and to our
rules, regulations, and requirements;
3. The public interest requires that the exercise of the privileges
granted by the permit should be subject to the terms, conditions, and
limitations contained in the attached permit, and to such other
reasonable terms, conditions, and limitations required by the public
interest as we may prescribe;
4. Nippon Cargo Airlines Company, Ltd. is substantially owned and
effectively controlled by nationals of Japan;
5. The issuance of this foreign air carrier permit will not constitute
a "major regulatory action" under the Energy Policy and Conservation Act
of 1975, as defined in section 313.4(a)(1) of our Regulations; 15/
6. The public interest does not require an oral evidentiary hearing on
the application; and
7. Except to the extent granted, the application of Nippon Cargo
Airlines Company, Ltd. in Docket 42023 should be denied.
13/ See Exhibit NCA-300, pages 1-27, Docket 42023.
14/ On May 6, 1985, NCA filed the requisite Certificate of Insurance
which satisfies the requirements of 14 CFR Part 205.
15/ This finding is based on the fact that the grant of this permit will
not result in a near-term increase in fuel consumption in excess of 10
million gallons.
7
ACCORDINGLY,
1. We issue Nippon Cargo Airlines Company, Ltd. a foreign air carrier
permit, in the form attached, authorizing it to perform all-cargo
services between the terminal point Tokyo, Japan, and the coterminal
points San Francisco, California, and New York, New York;
2. Nippon Cargo Airlines Company, Ltd. may operate a maximum of six
wide-body roundtrip all-cargo flights per week as of May 1, 1985, and
shall be permitted, by subsequent Department order, to increase its
frequencies beginning April 1, 1986, by a percentage equal to the
percentage increase in the total air cargo traffic between Japan and the
United States for the period January 1, 1985, to December 31, 1985, over
the total air cargo traffic for the period January 1, 1984, to
December 31, 1984, under procedures set forth in the April 30, 1985 MOU,
and similarly for each succeeding year (available increased frequencies
not used may be reserved for later use);
3. Flights exceeding the number described above are not authorized;
4. The exercise of the privileges granted above are subject to Nippon
Cargo Airlines' compliance with the conditions listed in the permit and
the Attachment to the permit, and the terms of the April 30, 1985 MOU;
and
5. We will grant all motions in Docket 42023 to file otherwise
unauthorized documents.
6. Unless disapproved by the President of the United States under
section 801 (a) of the Act, this order and the permit attached shall
become effective on the 61st day after its submission to the
President, 16/ or upon the date of receipt of advice from the President
that he does not intend to disapprove the Department's order under that
section, whichever is earlier; and
7. We will serve a copy of this order on all persons that have filed
pleadings in Docket 42023, the Ambassador of Japan in the United States,
the Secretary of State and the Federal Aviation Administration (San
Francisco-FSDO #3 and AFS-220).
By:
MATTHEW V. SCOCOZZA
Assistant Secretary for Policy
and International Affairs
(SEAL)
16/ This order was submitted to the President on February 6, 1986.
The 61st day is April 10, 1986.
APPENDIX A
SUMMARY OF APPLICATION
NIPPON CARGO AIRLINES
Docket 42023
Homeland Country: Japan
Authority Covered By Bilateral Agreement: Yes-United States Japan Air
Transport Services Agreement, as amended, and the April 30, 1985,
Memorandum of Understanding.
Designated By Its Government: Yes--Exhibit 401, Docket 42023
Holds Government License For Authority Sought: Exhibit 402 - Docket
42023
Operating History: None--new applicant
Aircraft Owned (0) And Leased (L): 2 B-747-200F dry-leased from All
Nippon Airways - Aircraft will be used exclusively by NCA.
Aircraft Maintenance Performed By: All Nippon Airways in accordance with
ICAO standards.
Financial Indicators (Last 2 years): April 1, 1985
April 1, 1984
(forecast)
(forecast)
(millions)
(millions)
Total Assets
$ 16.0
$ 10.0
Total Liabilities
-
$ 7.0
Owners' Equity
$ 16.0
$ 3.0
Operating Profit (Loss)
(No historical financial data based
on operations)
Majority Ownership By Nationals Of: Japan
Effective Control By Nationals Of: Japan
Insurance Coverage: Yes--meets minimum requirements of 14 CFR 205
Insurance Refused Or Involuntarily Canceled During Last 3 Years: No
Refused Debt Financing Last 3 Years: No
Defaulted On Transportation Commitments Last 3 Years: No historical data
available
Failed To Meet Current Financial Obligations Last 3 Years: No historical
data available
Safety Violations During Last 5 Years: No historical data available
Tariff Violations During Last 5 Years: No historical data available
Subscribes To Standard Permit Conditions Regarding Insurance, to Annex 6
Of the Chicago Convention, and to C.A.B. Agreement 18900: Yes
UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY
WASHINGTON, D.C.
PERMIT TO FOREIGN AIR CARRIER
NIPPON CARGO AIRLINES COMPANY, LTD.
is authorized, subject to the provisions set forth, the provisions of the
Federal Aviation Act of 1958, as amended, and the orders, rules, and
regulations of the Department of Transportation, to engage in scheduled
foreign air transportation with respect to property, as follows:
Between the terminal point Tokyo, Japan, and the coterminal points San
Francisco, California, and New York, New York.
This permit and the exercise of the privileges granted in it shall be
subject to the terms, conditions and limitations attached, and to those
contained in Order
This permit shall be subject to all applicable provisions of any treaty,
convention, or agreement affecting international air transportation now
in effect, or that may become effective during the period this permit
remains in effect to which the United States and Japan shall be parties.
This permit shall be effective on
Unless otherwise
terminated at an earlier date pursuant to the terms of any applicable
treaty, convention, or agreement, this permit shall terminate (1) upon
the dissolution or liquidation of the holder to which issued; or (2) upon
the effective date of any treaty, convention, agreement or amendment,
which shall have the effect of eliminating the route or routes authorized
by this permit from the routes which may be operated by airlines
designated by the Government of Japan (or in the event of the elimination
of any part of the authorized route or routes, the authority granted
shall terminate to the extent of such elimination), or (3) upon the
effective date of any permit granted by the Department to any other
carrier designated by the Government of Japan in lieu of the holder, or
(4) upon the termination or expiration of either the Air Transport
Services Agreement between the Government of the United States of America
and the Government of Japan effective September 15, 1953, as amended, or
of the Memorandum of Understanding ratified May 1, 1985: However, clause
(4) of this paragraph shall not apply if, prior to occurrence of the
event specified in clause (4), the operation of the foreign air
transportation authorized becomes the subject of any treaty, convention,
or agreement to which the United States and Japan are or shall become
parties.
The Department of Transportation has executed this permit and affixed its
seal February 6, 1986.
MATTHEW V. SCOCOZZA
Assistant Secretary for Policy
and International Affairs
(SEAL)
ATTACHMENT
PERMIT TO FOREIGN AIR CARRIER
Docket 42023
The holder's authority to conduct operations under the permit to which this
is attached shall also be subject to the following terms, conditions, and
limitations:
(1) The privileges granted by this permit are subject to the condition
that the foreign air carrier complies with the requirements of 14 CFR 203,
concerning waiver of Warsaw Convention liability limits and defenses;
(2) The privileges granted by this permit are subject to the condition
that the foreign air carrier complies with the requirements for minimum
insurance coverage contained in 14 CFR 205;
(3) By accepting this permit, the holder waives any right it may possess
to assert any defense of sovereign immunity from suit in any action or
proceeding instituted against the holder in any court or other tribunal in
the United States (or its territories or possessions) based upon any claim
arising out of operations by the holder under this permit;
(4) The holder shall not operate any aircraft under the authority granted
by this permit, unless the holder complies with operational safety
requirements at least equivalent to Annex 6 of the Chicago Convention;
(5) The holder shall conform to the airworthiness and airman competency
requirements prescribed by its home Government for international air
service;
(6) Except as specifically authorized by the Department of Transportation,
all flights to/from the United States must originate or terminate in the
holder's homeland;
(7) The holder shall not provide the foreign air transportation authorized
by this permit unless it holds a currently effective authorization from its
Government for such operations and such document is on file with the
Department of Transportation;
(8) The exercise of the privileges granted by this permit shall be subject
to such other reasonable terms, conditions, and limitations required by the
public interest as may be prescribed by the Department of Transportation;
and shall be subject to compliance with all applicable orders and
regulations of other U.S. agencies and courts, and with all applicable laws
of the United States; and
(9) This permit cannot be sold or otherwise transferred without explicit
Department approval under section 402(g) of the Federal Aviation Act of
1958, as amended.
5/85
THE WHITE HOUSE
WASHINGTON
March 7, 1986
MEMORANDUM FOR DAVID L. CHEW
STAFF SECRETARY
FROM:
ASSOCIATE COUNSEL DR THE PRESIDENT
JOHN G. ROBERTS
SUBJECT:
DOT International Aviation Decisions:
Certain Canadian Air Carriers and
Nippon Cargo Airlines
Our office has reviewed the above-referenced Department of
Transportation International Aviation decisions, and has no
legal objection to the procedure that was followed with respect
to Presidential review of such decisions under 49 U.S.C.
§ 1461 (a).
We also have no legal objection to OMB's recommendation that the
President not disapprove these orders or to the substance of the
letter from the President to the Secretary of Transportation.
ID #
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Name of Correspondent: Dow chew
MI Mail Report
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Subject: DOT International amation Decisions.
certum canadian air carriers & neppon
Cargo airlines
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5/81
Document No.
WHITE HOUSE STAFFING MEMORANDUM
3/06/86
DATE:
ACTION/CONCURRENCE/COMMENT DUE BY:
3/13/86
SUBJECT: DOT INTERNATIONAL AVIATION DECISIONS: CERTAIN CANADIAN AIR CARRIER
& NIPPON CARGO AIRLINES
ACTION FYI
ACTION FYI
VICE PRESIDENT
LACY
REGAN
POINDEXTER
MILLER
RYAN
BALL
SPEAKES
BUCHANAN
SPRINKEL
CHAVEZ
SVAHN
CHEW
P
SS THOMAS
DANIELS
TUTTLE
FIELDING
HENKEL
HICKS
KINGON
REMARKS:
Please provide any comments/recommendations by
Thursday, March 13th. Thank you.
RESPONSE:
David L. Chew
Staff Secretary
Ext. 2702
EXECUTIVE OFFICE OF THE PRESIDENT
AUDGET
JHIVED
OFFICE OF MANAGEMENT AND BUDGET
/
WASHINGTON. D.C. 20503
SEXS
March 6, 1986
ACTION
MEMORANDUM FOR THE PRESIDENT
SUBJECT: Department of Transportation International
Aviation Decisions:
Certain Canadian Air Carriers
Nippon Cargo Airlines
Dockets 40848, 40996, 42197,
Company, Ltd.
42121, 39403, 40410
Docket 42023
and 40411
Date due: April 9, 1986
Date due: March 28, 1986
The Department of Transportation (DOT) proposes to take the
following action with regard to the above international aviation
cases:
-- Authorize certain Canadian air carriers, to engage in
scheduled foreign air transportation of persons, property
and mail between Canada and the United States.
-- Authorize Nippon Cargo Airlines Company, Ltd., to engage
in scheduled foreign air transportation of property
between Japan and the United States.
The National Security Council and the Departments of State,
Defense, and Justice have not identified any foreign policy or
national defense reasons for disapproving the orders in whole or
in part.
The Office of Management and Budget recommends that you approve
DOT's decisions by signing the attached letter to the Secretary
which indicates that you do not intend to disapprove DOT's orders
within the 60 days allowed by statute for your review.
Cannet Cranged
Carol T. Crawford
Associate Director for
Economics and Government
Attachments:
DOT letters of transmittal
DOT orders
Letter to the Secretary
2
in
Options and Implementation Actions:
( ) (1)
Approve DOT's orders (DOS, DOD, DOJ, NSC, OMB)
.
-- Sign the attached letter to the Secretary.
( ) (2)
Disapprove DOT's orders.
-- Implementation materials to be prepared.
( ) (3)
See me.
THE WHITE HOUSE
WASHINGTON
Dear Madam Secretary:
I have reviewed the orders proposed by the Department of
Transportation in the following cases:
Certain Canadian Air Carriers Nippon Cargo Airlines
Dockets 40848, 40996, 42197,
Company, Ltd.
42121, 39403, 40410
Docket 42023
and 40411
I have decided not to disapprove the proposed orders.
Sincerely,
The Honorable Elizabeth Dole
Secretary of Transportation
Washington, D.C. 20590
FOR OFFICIAL
UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY
WASHINGTON, D. C.
Issued by the Department of Transportation
on the 27th day of January, 1986
Applications of
:
:
AUSTIN AIRWAYS LIMITED
:
Dockets 40848
AIR ONTARIO LIMITED
40996
42197
BRADLEY AIR SERVICES LIMITED
:
42121
d/b/a FIRST AIR
QUEBEC AVIATION LIMITED
:
39403
TORONTO AIRWAYS LIMITED
40410
d/b/a TORONTAIR
40411
for foreign air carrier permits under
section 402 of the Federal Aviation Act
:
of 1958, as amended
:
ORDER ISSUING FOREIGN AIR CARRIER PERMITS
Applications
Each of the above-noted Canadian carriers filed one or more applications
for foreign air carrier permits to conduct scheduled foreign air
transportation of persons, property, and mail between specified points in
the United States and Canada, using commuter size aircraft (aircraft with
60 or fewer seats). 1/ The carriers rely upon the 1966 Exchange of Notes
(Regional Notes) between the United States and Canada as the basis for the
authority sought. 2/ The route authority requested by each carrier is as
follows:
1/ Each application was noticed in the Federal Register. See Attach-
ment B for the Federal Register citation of each application.
2/ Also, Kelowna Flightcraft Air Charter Ltd. d/b/a Inter City Air,
filed a request in Docket 42095 for authority under the Regional Notes to
conduct scheduled service between Penticton, British Columbia, and
Spokane, WA. The Civil Aeronautics Board issued the carrier long-term
exemption authority, effective August 20, 1984 (see Order 84-10-64), to
conduct the service. However, Kelowna has never commenced it. On
December 5, 1985, the company informally advised Department staff that it
no longer has a firm proposal to conduct Penticton-Spokane service and
will withdraw its request in Docket 42095 in the near future.
Fdh
- 2 -
Carrier
Route Requested
Austin Airways Limited
Thunder Bay, Ontario-Minneapolis,
(Austin Airways)
MN
Air Ontario Limited
London, Ontario-Cleveland, OH
(Air Ontario)
Toronto, Ontario-Hartford, CT/
Springfield, MA
Bradley Air Services Limited
Ottawa, Ontario-Boston, MA 3/
d/b/a First Air
Quebec Aviation Limited
Quebec City, Quebec-Boston, MA 4/
(Quebec Aviation)
Toronto Airways Limited
Toronto (Buttonville), Ontario-
d/b/a Torontair
White Plains, NY
Toronto (Buttonville), Ontario-
Syracuse, NY
Attachment A to this order contains a description of each application, and
a discussion of the pleadings in each case. Briefly, answers have been
filed to four of the seven applications. Three answers are objections to
the grant of authority, because of reciprocity problems between the United
States and Canada which existed at the time the answers were filed. As
discussed later in this order, a U.S.-Canada intergovernmental agreement
now specifically provides for the authority sought by the applicants and
effectively responds to the problems which prompted objections to the
applications. Therefore, we believe those objections are now moot. The
other answer is an objection to the name one applicant has chosen. We
discuss, infra, the basis of our decision not to prevent the particular
applicant from using its chosen name.
3/ First Air also seeks permission under Part 215 of the Department's
rules to use the name First Air. We will dismiss this request as moot,
because no additional authority is needed for Bradley Air Services Limited
d/b/a First Air to do business under a name that is readily identifiable
with the name in which its operating authorization is issued. (See
section 215.2 of the Department's rules.)
4/ On November 2, 1984, Quebec Aviation withdrew its request for
authority to serve two other routes--Sherbrooke-Boston and Quebec City-
Portland, ME. Therefore, we will consider Quebec Aviation's application
to the extent it seeks a foreign air carrier permit to serve Quebec City-
Boston.
- 3 -
Background
On June 21, 1984, the United States and Canada signed a Memorandum of
Consultations (MOC) which, among other things, contains two ad referendum
agreements: one providing for an experimental transborder air services
program at Mirabel Airport in Montreal, Canada; the second outlining a new
exchange of notes on regional, local and commuter services replacing the
previous, 1966 notes. In addition, the MOC provides for expeditious
action on applications for regional and local services already pending
before the respective aeronautical authorities, including the Canadian
applications for authority at issue here. The MOC also anticipates that
the United States will take expeditious and favorable action on specified
Canadian route applications, and anticipates that Canada will take
expeditious and favorable action to grant Empire Airlines authority to
serve the routes Syracuse-Ottawa and Syracuse-Montreal. 5/
On August 21, 1984, the United States and Canada exchanged diplomatic
notes which placed in force the ad referendum agreements entered into on
June 21, 1984. Each of the applicants has been granted authority to
conduct its proposed operations pursuant to exemption authority issued by
the Civil Aeronautics Board or the Department (see Attachment A).
Decision
We have reviewed the record of each case, including the applications,
which are summarized in Attachment B, and have decided to grant the
requests using the simplified Subpart Q procedures. 6/ The public was
informed of each carrier's application by notices in the Federal Register
and the Board's weekly list of applications filed, describing the
authority sought and giving interested persons an opportunity to submit
evidence and objections to the award of the authority. The notices
provided the required notice and filing opportunities. Simplified
procedures are appropriate in this case, because there are no issues that
would require a different process.
5/ Empire's applications were subsequently approved by Canadian
authorities, and Empire continues to serve both markets.
6/ 14 CFR 302.1701 et seq. Under Rule 29(b), the Department may in its
discretion omit a tentative decision in proceedings under Subpart Q and
proceed directly to a final decision, after provision of an opportunity
for interested parties to submit evidence and to support or object to
grant of authority under section 402 of the Act.
- 4 -
All of the authority we confer here is provided for in the August 21,
1984, Exchange of Diplomatic Notes governing regional, local and commuter
services. 7/ This consideration provides a strong basis for finding that
a grant of the authority sought by each applicant is consistent with the
public interest. Moreover, no other factors warrant a different
conclusion. The understanding reflected in the exchange, as noted above,
effectively deals with the concerns that prompted the U.S. carriers to
object on the basis of defective Canadian reciprocity. As to Air One's
objection to the name First Air, we find the possibility of confusion to
be negligible. In this connection, we agree that neither Air One nor
First Air can claim an exclusive right to the word "Air," as both carriers
note. Further, the words "One" and "First" are distinct--"one" is a
cardinal number, and "first" is an ordinal number. Moreover, the
placement of these words in each carrier's name is reversed. The
combination of these factors results in two carrier names which are easily
distinguishable, and clearly different. Therefore, we do not find that
the public will be confused by the names Air One and First Air.
Fitness/Ownership and Control
Each carrier's fitness can be determined based on the submission of
evidence in the dockets. No party has challenged the fitness of any of
these applicants.
All the carriers are Canadian local service airlines which provide
scheduled and/or charter air services within Canada. Except for Quebec
Aviation and Torontair, the carriers have held, for several years, foreign
air carrier permits, issued by the Civil Aeronautics Board, authorizing
charter passenger services into the United States using large aircraft.
Quebec Aviation is registered under Part 294 of the Department's rules as
a Canadian charter air taxi operator to perform charter services between
the two countries, using small aircraft. Torontair is also registered
under Part 294 and holds a foreign air carrier permit authorizing
7/ Notes 300 (U.S.) and ETT-1483 (Canada) formalized the U.S.-Canada
understanding achieved June 18-20, 1984, and recorded in a Memorandum of
Consultation on June 21, 1984. This Exchange of Notes replaced the
Exchange of Notes of 1966, on which the applicants relied. The
applications were filed before the 1984 Exchange of Notes was signed.
- 5 -
scheduled foreign air transportation between Kingston, Ontario, Canada,
and Syracuse, New York, using small aircraft. The financial statements
filed by the carriers show that they are financially sound. 8/
All the carriers have on file with the Department certificates of
insurance which comply with the aircraft accident liability requirements
of Part 205 of the Department's rules. In addition, each carrier states
that for the last three years: its insurance has not been refused or
involuntarily canceled; it has not been refused debt financing; it has not
defaulted on transportation commitments; it has not failed to meet current
financial obligations; and it has had no safety or tariff violations. Our
review of the record in this proceeding discloses no information that
contradicts these statements. In addition, the carriers subscribe to the
standard permit conditions regarding insurance, Annex 6 of the Chicago
Convention, and have waived the liability limits of the Warsaw Convention.
Each applicant carrier has demonstrated that it is owned and controlled by
Canadian citizens.
In view of the foregoing and all the facts of record, we find and conclude
that:
1. Each applicant is fit, willing and able properly to perform the
foreign air transportation described in the attached permits and to
conform to the provisions of the Act, and the Department's rules,
regulations and requirements;
2. The public interest requires that the exercise of the privileges
granted by the permits shall be subject to the terms, conditions, and
limitations contained in the attached permits, and to such other
reasonable terms, conditions, and limitations required by the public
interest as we may prescribe;
3. Each applicant is substantially owned and effectively controlled by
nationals of its homeland country;
4. Issuance of these foreign air carrier permits will not constitute a
"major regulatory action" under the Energy Policy and Conservation Act of
1975, as defined in subsection 313.4(a)( (1) of the Department's
Regulations; 9/ and
5. The public interest does not require oral evidentiary hearings on the
applications.
8/ Two of the carriers, Air Ontario and Austin Airways filed motions to
withhold their financial statements from public disclosure (see Dockets
40996, 42197 and 40848). These carriers have shown good cause not to
release their financial information to the public. Also, the Canadian
Government has granted U.S. carrier requests for similar confidential
treatment. Therefore, we will grant the motions.
9/ Our finding is based upon the fact that each applicant's permit will
not result in a near-term annual increase in fuel consumption in excess of
10 million gallons.
- 6 -
ACCORDINGLY,
1. We are issuing, in the form attached, a foreign air carrier permit to
each applicant authorizing scheduled foreign air transportation of
persons, property, and mail as follows:
Between Thunder Bay, Ontario, Canada, and Minneapolis, Minnesota,
for Austin Airways Limited;
Between London, Ontario, Canada, and Cleveland, Ohio; and between
Toronto, Ontario, Canada, and Hartford, Connecticut/Springfield,
Massachusetts, for Air Ontario Limited;
Between Ottawa, Ontario, Canada, and Boston, Massachusetts, for
Bradley Air Services Limited d/b/a First Air;
Between Quebec City, Quebec, Canada, and Boston, Massachusetts,
for Quebec Aviation Limited; and
Between Toronto (Buttonville), Ontario, Canada, and White Plains,
New York, and between Toronto (Buttonville), Ontario, Canada, and
Syracuse, New York, for Toronto Airways Limited d/b/a Torontair;
2. We grant the motions of Air Ontario Limited and Austin Airways Limited
in Docket 40996, 42197, and 40848 for permission to withhold financial
information from public disclosure;
3. We grant the motions of Air Ontario Limited; Austin Airways Limited;
Empire Airlines, Inc.; Mall Airways, Inc.; and Air One, Inc. in Dockets
40996, 40848, 40411, and 42121 for leave to file otherwise unauthorized
documents;
4. We deny, except to the extent granted, the applications and other
requests for relief in Dockets 40848, 40996, 42197, 42121, 39403, 40410,
and 40411;
5. The permits shall be signed and the Department's seal affixed;
6. Unless disapproved by the President of the United States under section
801 (a) of the Act, this order with the attached permits shall become
effective on the 61st day after its submission to the President, 10/ or
upon the date of receipt of advice from the President that he does not
intend to disapprove the Department's order under that section whichever
is earlier; and
10/ This order was submitted to the President on January 27, 1986.
The 61st day is March 29, 1986.
- 7 -
7. We shall serve this order on each applicant; Kelowna Flightcraft Air
Charter Ltd. d/b/a Inter City Air; Empire Airlines, Inc.; Mall Airways,
Inc.; Air One, Inc.; the Ambassador of Canada in Washington, D.C.; and the
Department of State.
By:
MATTHEW V. SCOCOZZA
Assistant Secretary for Policy
and International Affairs
(SEAL)
Attachment A
Page 1 of 6
DESCRIPTION OF APPLICATIONS AND COMMENTS
Air Ontario Limited, Docket 40996
By application filed September 17, 1982, Air Ontario Limited requests a
foreign air carrier permit to engage in scheduled foreign air
transportation of persons, property, and mail between London, Ontario,
Canada, and Cleveland, Ohio. The applicant also filed a motion to
withhold its financial information from public disclosure.
In support of its application, Air Ontario states that it is owned and
controlled by Canadian citizens and that it has been licensed by its
government to perform the services requested. Air Ontario further states
that the authority requested is consistent with the 1966 Regional Notes.
Air Ontario states that it has been successfully providing service between
the two points by exemption authority since April 1982 when it replaced
Air Canada which terminated 40 years of service in the market on
January 9, 1982. 2/
On July 12, 1983, Air Ontario filed a request for expedited treatment of
its permit application in Docket 40996. Air Ontario states that until a
permit has been issued, it cannot enter into interline agreements with any
U.S. carriers; that this situation prevents it from writting through
tickets, negotiating joint fares, and sharing reservation systems; and
that the resulting inability of Air Ontario to interline passengers with
other air carriers causes substantial inconvenience and financial penalty
not only to Air Ontario, but to the traveling public as well.
On July 21, 1983, Empire Airlines, Inc. and Pilgrim Aviation and Airlines,
Inc. each filed an answer to Air Ontario's application. Generally, Empire
and Pilgrim both argue that action on Air Ontario's request should be
deferred until the Canadian authorities take favorable action on their
applications before the Canadian Government for authority under the
Regional Notes.
1/ We will grant this motion. See footnote 8 of this order.
2/ By Order 82-4-126, Air Ontario was granted an exemption to perform
scheduled service carrying persons and property between London, Ontario,
and Cleveland, Ohio, through September 30, 1982. By Order 82-12-9, this
authority was renewed for one year, until September 30, 1983. On
September 16, 1983, as amended on September 22, 1983, Air Ontario filed
for renewal of its exemption authority in Docket 40520 and invoked the
automatic extension provisions of the Administrative Procedure Act. Since
this renewal application has not yet been acted upon, Air Ontario's
London-Cleveland exemption remains in effect until final action on the
renewal request in Docket 40520.
Attachment A
Page 2 of 6
Air Ontario filed a reply to the answers on August 16, 1983. 3/ Briefly,
Air Ontario states that both U.S. carriers fail to recognize that it is
operating and seeking permanent authority for replacement of service
previously conducted by Air Canada, while, on the other hand, Empire and
Pilgrim are seeking authority to institute new and/or expanded services;
and that it would be unfair to the travelling public and counterproductive
to U.S.-Canada relations to deny Air Ontario the right to continue the
London-Cleveland service.
Air Ontario Limited, Docket 42197
On May 11, 1984, as amended on June 8, 1984, Air Ontario Limited filed an
application for a foreign air carrier permit to engage in scheduled
foreign air transportation of persons, property, and mail between
Hartford, Connecticut/Springfield, Massachusetts, and Toronto, Ontario,
Canada, using 55-seat Convair 580 aircraft. In addition, Air Ontario has
filed a motion to withhold its financial information from public
disclosure.
In support of its application, Air Ontario states that it is owned and
controlled by Canadian citizens; that it holds a Canadian license to
provide the proposed service; that the Canadian authorities have issued
the same authority to a U.S. carrier; and that it has been operating
commercial air services in Canada since 1961. 5/ Also, Air Ontario states
that its proposed service is regional in nature, and therefore is
consistent with the 1966 Regional Notes; and that its services are
consistent with the public interest since no direct service is provided in
the market. 6/
No answers to the application have been filed.
Austin Airways Limited, Docket 40848
By application filed July 16, 1982, Austin Airways Limited requests a
foreign air carrier permit to engage in scheduled foreign air
transportation of persons, property, and mail between Thunder Bay,
Ontario, Canada, and Minneapolis, Minnesota. Austin Airways has also
filed a motion to withhold its financial information from public
disclosure.
3/ The reply was accompanied by a motion to file an otherwise
unauthorized document, which we will grant.
4/ We will grant this motion. See footnote 8 of this order.
5/ Air Ontario is the predecessor company to Great Lakes Airlines
Limited. In 1980 Great Lakes Airlines was the surviving company of three
Canadian companies that were amalgamated. Later, in 1981, the name of
Great Lakes Airlines was changed to Air Ontario Limited.
6/ By Civil Aeronautics Board Order 84-10-64, October 16, 1984, Air
Ontario was issued exemption authority to conduct scheduled services
between Toronto and Hartford, CT/Springfield, MA. On September 12, 1985,
after a short lapse, this authority was reinstated.
7/ We will grant this motion. See footnote 8 of this order.
Attachment A
Page 3 of 6
In support of its application, Austin Airways states that the proposed
services are governed by the 1966 U.S.-Canada Regional Notes; that it
holds the appropriate licenses from its government to provide the desired
services; and that it has been successfully conducting scheduled services
over the proposed route, which are the only direct services available
between Thunder Bay and the United States. 8/
On August 4, 1983, Empire Airlines, Inc. filed an answer to Austin
Airways' application. In its answer, Empire discusses problems it has
been encountering with the Canadian Government in seeking approval of
services under the Regional Notes and requests that no further favorable
action be taken on Austin's request until the Canadian authorities act
favorably on Empire's pending Syracuse-Montreal/Toronto/Ottawa
applications.
On August 31, 1983, Austin Airways filed a reply to Empire's objection. 9/
Generally, Austin states that it would be unfair to the travelling public
and counterproductive to improving U.S.-Canada relations to deny Austin
the right to continue scheduled services in the Thunder Bay-Minneapolis
market pursuant to a section 402 permit.
Bradley Air Services Limited d/b/a First Air, Docket 42121
On April 12, 1984, Bradley Air Services Limited d/b/a First Air filed an
application for a foreign air carrier permit authorizing it to provide
scheduled foreign air transportation of persons, property, and mail
between Ottawa, Ontario, Canada, and Boston, Massachusetts. Also, First
Air requests permission under Part 215 to use the trade name First
Air. 10/ First Air plans to conduct twelve nonstop round-trip flights per
week over the route, using HS-748 aircraft in a 44-seat configuration.
8/ Austin Airways has been providing scheduled services between Thunder
Bay and Minneapolis for some time in accordance with its exemption
authority. Initially the exemption authority was issued to Superior
Airways. After the amalagmation of Austin and Superior, we tranferred
Superior's exemption authority to Austin. (See Orders 81-7-157, 82-4-143,
and 82-10-75.)
9/ Austin's reply was accompanied by a motion for leave to file an
otherwise unauthorized document. We will grant the motion.
10/ We will dismiss this request as moot. No additional authority is
needed for Bradley Air Services Limited d/b/a First Air to do business
under a name that is readily identifiable with the name in which its
operating authorization is issued. (See section 215.2 of the Department's
rules.)
Attachment A
Page 4 of 6
In support of its application, First Air states that it is a Canadian
corporation owned and controlled by Canadian citizens; that it has been
operating commercial air services in Canada since 1946; that it conducts
charter passenger services into the United States under its foreign air
carrier permit; and that it is fit, willing, and able properly to perform
the requested air transportation and to conform to the provisions of the
Act and the rules, regulations, and requirements of the Department. In
addition, First Air states that the Canadian authorities have licensed
both First Air and Pilgrim Airlines to provide scheduled service between
Ottawa and Boston, which shows that reciprocity exists; that there is a
public need for the service since no airline provides nonstop scheduled
services over the route and passengers and cargo must therefore make time
consuming, expensive and circuitous connections; and that First Air's
services would make possible same-day roundtrip business travel between
two major metropolitan areas. 11/
On May 10, 1984, Air One, Inc., filed an answer to First Air's
application. 12/ Air One states that it does not object to the route
authority, per se, but objects to the carrier's use of the name "First
Air." Air One believes that the close connection between "One" and
"First" would unduly confuse the travelling public, travel agents, and
other members of the trade; that it has spent significant amounts of money
to purchase exclusive rights to the name Air One and to advertise in
newspapers, radio and television the company name, and its unique
services; and that the similarity of names would significantly damage Air
One's national reputation and undermine its ability to develop and market
its product at Boston and other national markets.
First Air did not file a reply to Air One's answer in this proceeding. 13/
11/ By Civil Aeronautics Board Order 84-10-64, First Air was issued
exemption authority to provide scheduled services between Ottawa and
Boston. On August 16, 1985, First Air filed for renewal of its exemption
authority and invoked the automatic extension provisions of the
Administrative Procedure Act. Therefore, First Air's exemption authority
remains in effect until we take final action on this renewal application
in Docket 42120.
12/ Air One's answer was accompanied by a motion to file an otherwise
unauthorized document. We will grant the motion.
13/ First Air did reply to Air One's answer that was filed in the
exemption proceeding. See Docket 41220 and Civil Aeronautics Board Order
84-10-64.
Attachment A
Page 5 of 6
Quebec Aviation Limited, Docket 39403
By application filed March 10, 1981, Quebec Aviation Limited requests a
foreign air carrier permit to engage in foreign air transportation of
persons, property, and mail between Quebec City, Quebec, Canada, and
Boston, Massachusetts. 14/
In support of its application, Quebec Aviation states that the authority
sought is provided for under the 1966 "Regional Notes" between the United
States and Canada; that it is owned and controlled by Canadian citizens;
and that no other carrier provides service over the proposed route. 15/
No answers to the application have been filed.
Toronto Airways Limited d/b/a Torontair, Docket 40410
By application filed January 22, 1982, Toronto Airways Limited d/b/a
Torontair requests a foreign air carrier permit authorizing it to provide
scheduled foreign air transportation of persons and property between
Toronto (Buttonville), Ontario, Canada, and White Plains, New York, using
small aircraft. 16/
In support of its application, Torontair refers to information in Docket
36932 to show that it is owned and controlled by Canadian citizens; that
it is fit to provide the proposed service in a safe and reasonable manner;
and that its maintenance program and crew requirements comply with the
requirements specified by the Canadian aviation authorities. Also,
14/ Quebec Aviation originally sought a permit to conduct scheduled
service between Sherbrooke, Quebec-Boston; between Quebec City,
Quebec-Portland, Maine; and between Quebec City-Boston. By letter dated
October 25, 1984, the carrier advised that its Canadian license had been
amended authorizing services only between Quebec City-Boston. Therefore,
Quebec Aviation stated that it seeks a permit for the route Quebec
City-Boston, and that it withdraws its request for the other two routes.
15/ Quebec Aviation currently provides scheduled services between Quebec
City and Boston, using Beechcraft aircraft, in accordance with its
exemption authority (see Orders 81-7-131, 82-9-73, and 84-8-65).
16/ By Civil Aeronautics Board Order 83-1-80, Torontair was granted a
one-year exemption to perform these scheduled services, until January 23,
1984. On November 18, 1983, Torontair filed for renewal of its exemption
authority and invoked the automatic extension provisions of the
Administrative Procedure Act. Therefore, Torontair's exemption authority
remains in effect until we take final action on this exemption renewal
application (see Docket 41094).
Attachment A
Page 6 of 6
Torontair states that it holds the appropriate Canadian licenses to
provide the proposed scheduled service; that many corporations with major
offices in the Toronto and White Plains areas have shown a need for
direct, nonstop service; and that its request is within the spirit of the
1966 Regional Notes between the United States and Canada.
No answers to the application have been filed.
Toronto Airways Limited d/b/a Torontair, Docket 40411
By application filed January 22, 1982, Toronto Airways Limited d/b/a
Torontair requests a foreign air carrier permit so as to engage in
scheduled foreign air transportation of persons and property between
Toronto (Buttonville), Ontario, Canada, and Syracuse, New York, using
small aircraft. 17/
In support of its application, Torontair refers to information in Docket
36932 to show that it is owned and controlled by Canadian citizens; that
it is fit to provide the proposed service in a safe and reasonable manner;
and that its maintenance program and crew requirements comply with the
requirements specified by the Canadian aviation authorities. Torontair
states that several businesses have indicated a need for direct service in
the proposed market; that tourist travel should benefit from direct
services as well; and that the proposed operation is within the spirit of
the 1966 Regional Notes.
On June 28, 1982, Mall Airways, Inc. filed an answer to Torontair's
application. 18/ Mall states that the Canadian authorities have denied
its application for Syracuse-Toronto authority on the basis that Torontair
holds a Canadian license to provide scheduled services in the market, and
that this market is not large enough to support service by two carriers.
Mall believes that the Canadian Government's action violates the spirit of
the Regional Notes and asks that we not grant Torontair's application
until the Canadian Transport Commission reverses its decision, and allows
it to operate service between Syracuse and Toronto. (Mall subsequently
obtained Canadian authority and started serving Toronto-Syracuse.)
17/ By Civil Aeronautics Board Order 83-6-18, Torontair was granted a
one-year exemption to perform these scheduled services, until May 13,
1984. On March 12, 1984, Torontair filed for renewal of its exemption
authority and invoked the automatic extension provisions of the
Administrative Procedure Act. Since this renewal application has not yet
been acted upon, Torontair's exemption authority remains in effect until
final action on the exemption renewal application (see Docket 41396).
18/ Mall's answer was accompanied by a motion for leave to file an
otherwise unauthorized document, which we will grant.
Attachment B
Page 1 of 4
SUMMARY OF APPLICATIONS
Applicant: Austin Airways Limited
Docket No: 40848
Federal Register Cite: 47 FR 31909, July 23, 1982
Charter Permit Issued By Order 77-3-46, effective March 5, 1977
Authority Covered By: U.S.-Canada Exchange of Notes, dated August 21,
1984.
Holds Government License For Authority Sought: Exhibit No. 3
Operating History: Conducted commercial air services for 50 years; serves
50 communities on scheduled basis throughout Ontario, Quebec, and NW
Territories; and provides charter services within Canada and between the
U.S. and Canada.
Fleet: 8 single and multi-engine Cessna; 2 DHC-3 Otter; 8 HS-748; 3 DC-3;
and 11 DHC-6.
Aircraft Maintenance Performed By: Austin Airways at Thunder Bay, Ontario
Financial Indicators: At applicant's request this information is withheld
from public disclosure. Our review of its financial statements for
CY 1980 and 1981 demonstrate that it is in sound financial condition,
and show that it earned a profit in each of those years.
*
*
*
*
*
Applicant: Air Ontario Limited
Docket Nos. 40996 and 42197
Federal Register Cite: 47 FR 42130, September 24, 1982, and 49 FR 21556,
May 22, 1984
Charter Permit Issued By Order 82-4-37, effective April 23, 1982
Authority Covered By: U.S.-Canada Exchange of Notes, dated August 21,
1984.
Holds Government License For Authority Sought: Exhibit 3, Docket 40996;
and Exhibit 3 and correspondence section of Docket 42197.
Operating History: Domestic Canada serve since 1961 as Great Lakes
Airlines Limited. Name changed to Air Ontario Limited, April 1982
(Order 82-4-37). Initial permit issued May 20, 1965, Order E-22201.
Aircraft Owned: 5 Convair 580 turbo-props
Attachment B
Page 2 of 4
SUMMARY OF APPLICATIONS
Aircraft Maintenance Performed By: Air Ontario provides the majority of
its aircraft maintenance, with the exception of engine and airframe
overhauls, at its Sarnia, Ontario facility.
Financial Indicators: At applicant's request this information is withheld
from public disclosure. Our review of its financial statements for the
year ended 9-30-83 and for nine months ended 9-30-82 demonstrate that
Air Ontario is in sound financial condition and show that it earned a
profit in 1983.
*
Applicant: Bradley Air Services Limited d/b/a First Air
Docket No. 42121
Federal Register Cite: 49 FR 17058, April 23, 1984
Charter Permit Issued By: Order 80-9-48, effective September 11, 1980
Authority Covered By: U.S.-Canada Exchange of Notes, dated August 21,
1984.
Holds Government License For Authority Sought: Exhibit No. 5
Operating History: First Air has conducted charter operations within
Canada for more than 30 years, and has provided scheduled services
within Canada for 10 years.
Aircraft Owned: 3 HS-748, 4 DC-3, 3 DHC-6, and 1 D18S
Aircraft Leased: 5 DHC-6, 1 DHC-2, and 1 C-500
Aircraft Maintenance Performed By: First Air performs own maintenance in
its facility located at Carp, Ontario.
Financial Indicators For Years Ending:
Dec. 31, 1983
Dec. 31, 1982
(000)
(000)
Total Assets
$ 12,182
$ 13,126
Total Liabilities
9,673
10,974
Owners' Equity
2,509
2,153
Net Profit (Loss)
431
151
*
*
Page 3 of 4
SUMMARY OF APPLICATIONS
Applicant: Quebec Aviation Ltd.
Docket No. 39403
Federal Register Cite: 46 FR 17817, March 20, 1981
Registered Under Part 294: Yes, Registration No. 80, dated October 22,
1982.
Authority Covered By: U.S.-Canada Exchange of Notes, dated August 21,
1984.
Holds Government License For Authority Sought: Yes. See correspondence
section, letter dated October 25, 1984.
Operating History: Quebec Aviation was founded in 1961. Currently
serves points throughout the Provinces of Quebec and Ontario and the
Maritimes. In addition to providing domestic and international charter
services, the carrier offers specialty flight services.
Aircraft Owned (0) And Leased (L): 16 Cessna--14(0) 2(L), and 9 Piper--
6(0) 3(L)
Aircraft Maintenance Performed By: Quebec Aviation performs its own
maintenance at its base of operations in Quebec City, Quebec.
Financial Indicators For Years Ending: Dec. 31, 1980
Dec. 31, 1979
(000)
(000)
Total Assets
$ 1,740
$ 1,939
Total Liabilities
1,104
1,437
Owners' Equity
636
502
Operating Profit (Loss)
134
20
*
*
*
*
*
Attachment B
Page 4 of 4
SUMMARY OF APPLICATIONS
Applicant: Toronto Airways Limited d/b/a Torontair
Docket Nos. 40410 and 40411
Incorporates By Reference Information And Exhibits Contained In: Docket
36932
Federal Register Cite: 47 FR 4544, January 22, 1982
Scheduled Permit Issued By: Order 80-7-96, effective July 16, 1980
Authority Covered By: U.S.-Canada Exchange of Notes, dated August 21,
1984.
Holds Government License For Authority Sought: Exhibit B of each docket.
Operating History: Torontair has provided charter passenger services in
the Southern Ontario region for more than 20 years and has provided
occasional U.S.-Canada charter services.
Aircraft Owned: 6 Piper, 1 Cessna, and 1 Mitsubishi
Aircraft Maintenance Performed By: Torontair performs its own maintenance
at its home base in Toronto-Buttonville Airport.
Financial Indicators For Years Ending:
Dec. 31, 1980
Dec. 31, 1979
(000)
(000)
Total Assets
$11,116
$10,974
Total Liabilities
1,701
993
Owners' Equity
9,414
9,981
Operating Profit (Loss)
384
(186)
UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY
WASHINGTON, D.C.
PERMIT TO FOREIGN AIR CARRIER
AUSTIN AIRWAYS LTD.
is authorized, subject to the following provisions, the provisions of the
Federal Aviation Act of 1958, as amended, and the orders, rules, and
regulations of the Department of Transportation, to engage in scheduled
foreign air transportation of persons, property, and mail, as follows:
Between Thunder Bay, Ontario, Canada and Minneapolis,
Minnesota.
This permit and the exercise of the privileges granted in it shall be
subject to the terms, conditions and limitations attached, and to the
following:
1. The holder shall not use any aircraft or conduct
any operations except in accordance with the
authority and conditions contained in its applicable
Canadian licenses.
2. This permit shall be subject to all applicable
provisions of any treaty, convention, or agreement
affecting international air transportation now in
effect, or that may become effective, to which the
United States and Canada shall be parties.
This permit shall be effective on
Unless otherwise
terminated at an earlier date pursuant to the terms of any applicable
treaty, convention, or agreement, this permit shall terminate (1) upon the
dissolution or liquidation of the holder to which it was issued, or (2)
upon the termination or expiration of the United States-Canada Exchange of
- 2 -
Notes on Regional, Local, and Commuter Services (Note Nos. ETT-1483 and
300), effective August 21, 1984. However, clause (2) shall not apply if,
prior to the occurrence of the event specified in clause (2), the
operation of the foreign air transportation authorized becomes the subject
of any treaty, convention, or agreement to which the United States and the
Government of Canada are or shall become parties.
The Department of Transportation has executed this permit and affixed its
seal on January 27, 1986 .
MATTHEW V. SCOCOZZA
Assistant Secretary for Policy
and International Affairs
(SEAL)
ATTACHMENT
PERMIT TO FOREIGN AIR CARRIER
Docket 40848
The holder's authority to conduct operations under the permit to which this
is attached shall also be subject to the following terms, conditions, and
limitations:
(1) The privileges granted by this permit are subject to the condition
that the foreign air carrier complies with the requirements of 14 CFR 203,
concerning waiver of Warsaw Convention liability limits and defenses;
(2) The privileges granted by this permit are subject to the condition
that the foreign air carrier complies with the requirements for minimum
insurance coverage contained in 14 CFR 205;
(3) By accepting this permit, the holder waives any right it may possess
to assert any defense of sovereign immunity from suit in any action or
proceeding instituted against the holder in any court or other tribunal in
the United States (or its territories or possessions) based upon any claim
arising out of operations by the holder under this permit;
(4) The holder shall not operate any aircraft under the authority granted
by this permit, unless the holder complies with operational safety
requirements at least equivalent to Annex 6 of the Chicago Convention;
(5) The holder shall conform to the airworthiness and airman competency
requirements prescribed by its home Government for international air
service;
(6) Except as specifically authorized by the Department of Transportation,
all flights to/from the United States must originate or terminate in the
holder's homeland;
(7) The holder shall not provide the foreign air transportation authorized
by this permit unless it holds a currently effective authorization from its
Government for such operations and such document is on file with the
Department of Transportation;
(8) The exercise of the privileges granted by this permit shall be subject
to such other reasonable terms, conditions, and limitations required by the
public interest as may be prescribed by the Department of Transportation;
and shall be subject to compliance with all applicable orders and
regulations of other U.S. agencies and courts, and with all applicable laws
of the United States; and
(9) This permit cannot be sold or otherwise transferred without explicit
Department approval under section 402(g) of the Federal Aviation Act of
1958, as amended.
5/85
UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY
WASHINGTON, D.C.
PERMIT TO FOREIGN AIR CARRIER
AIR ONTARIO LTD.
is authorized, subject to the following provisions, the provisions of the
Federal Aviation Act of 1958, as amended, and the orders, rules, and
regulations of the Department of Transportation, to engage in scheduled
foreign air transportation of persons, property, and mail, as follows:
1. Between London, Ontario, Canada and Cleveland,
Ohio.
2. Between Toronto, Ontario, Canada and Hartford,
Connecticut/Springfield, Massachusetts.
This permit and the exercise the privileges granted in it shall be
subject to the terms, conditions and limitations attached, and to the
following:
1. The holder shall not use any aircraft or conduct
any operations except in accordance with the
authority and conditions contained in its applicable
Canadian licenses.
2. This permit shall be subject to all applicable
provisions of any treaty, convention, or agreement
affecting international air transportation now in
effect, or that may become effective, to which the
United States and Canada shall be parties.
This permit shall be effective on
Unless otherwise
terminated at an earlier date pursuant to the terms of any applicable
treaty, convention, or agreement, this permit shall terminate (1) upon the
dissolution or liquidation of the holder to which it was issued, or (2)
upon the termination or expiration of the United States-Canada Exchange of
- 2 -
Notes on Regional, Local, and Commuter Services (Note Nos. ETT-1483 and
300), effective August 21, 1984. However, clause (2) shall not apply if,
prior to the occurrence of the event specified in clause (2), the
operation of the foreign air transportation authorized becomes the subject
of any treaty, convention, or agreement to which the United States and the
Government of Canada are or shall become parties.
The Department of Transportation has executed this permit and affixed its
seal on January 27, 1986 .
MATTHEW V. SCOCOZZA
Assistant Secretary for Policy
and International Affairs
(SEAL)
ATTACHMENT
PERMIT TO FOREIGN AIR CARRIER
Dockets 40996
42197
The holder's authority to conduct operations under the permit to which this
is attached shall also be subject to the following terms, conditions, and
limitations:
(1) The privileges granted by this permit are subject to the condition
that the foreign air carrier complies with the requirements of 14 CFR 203,
concerning waiver of Warsaw Convention liability limits and defenses;
(2) The privileges granted by this permit are subject to the condition
that the foreign air carrier complies with the requirements for minimum
insurance coverage contained in 14 CFR 205;
(3) By accepting this permit, the holder waives any right it may possess
to assert any defense of sovereign immunity from suit in any action or
proceeding instituted against the holder in any court or other tribunal in
the United States (or its territories or possessions) based upon any claim
arising out of operations by the holder under this permit;
(4) The holder shall not operate any aircraft under the authority granted
by this permit, unless the holder complies with operational safety
requirements at least equivalent to Annex 6 of the Chicago Convention;
(5) The holder shall conformito the airworthiness and airman competency
requirements prescribed by its home Government for international air
service;
(6) Except as specifically authorized by the Department of Transportation,
all flights to/from the United States must originate or terminate in the
holder's homeland;
(7) The holder shall not provide the foreign air transportation authorized
by this permit unless it holds a currently effective authorization from its
Government for such operations and such document is on file with the
Department of Transportation;
(8) The exercise of the privileges granted by this permit shall be subject
to such other reasonable terms, conditions, and limitations required by the
public interest as may be prescribed by the Department of Transportation;
and shall be subject to compliance with all applicable orders and
regulations of other U.S. agencies and courts, and with all applicable laws
of the United States; and
(9) This permit cannot be sold or otherwise transferred without explicit
Department approval under section 402(g) of the Federal Aviation Act of
1958, as amended.
5/85
UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY
WASHINGTON, D.C.
PERMIT TO FOREIGN AIR CARRIER
BRADLEY AIR SERVICES LIMITED
d/b/a FIRST AIR
is authorized, subject to the following provisions, the provisions of the
Federal Aviation Act of 1958, as amended, and the orders, rules, and
regulations of the Department of Transportation, to engage in scheduled
foreign air transportation of persons, property, and mail, as follows:
Between Ottawa, Ontario, Canada and Boston, Massachusetts.
This permit and the exercise of the privileges granted in it shall be
subject to the terms, conditions and limitations attached, and to the
following:
1. The holder shall not use any aircraft or conduct
any operations except in accordance with the
authority and conditions contained in its applicable
Canadian licenses.
2. This permit shall be subject to all applicable
provisions of any treaty, convention, or agreement
affecting international air transportation now in
effect, or that may become effective, to which the
United States and Canada shall be parties.
This permit shall be effective on
Unless otherwise
terminated at an earlier date pursuant to the terms of any applicable
treaty, convention, or agreement, this permit shall terminate (1) upon the
dissolution or liquidation of the holder to which it was issued, or (2)
upon the termination or expiration of the United States-Canada Exchange of
- 2 -
Notes on Regional, Local, and Commuter Services (Note Nos. ETT-1483 and
300), effective August 21, 1984. However, clause (2) shall not apply if,
prior to the occurrence of the event specified in clause (2), the
operation of the foreign air transportation authorized becomes the subject
of any treaty, convention, or agreement to which the United States and the
Government of Canada are or shall become parties.
The Department of Transportation has executed this permit and affixed its
seal on January 27, 1986
MATTHEW V. SCOCOZZA
Assistant Secretary for Policy
and International Affairs
(SEAL)
ATTACHMENT
PERMIT TO FOREIGN AIR CARRIER
Docket 42121
The holder's authority to conduct operations under the permit to which this
is attached shall also be subject to the following terms, conditions, and
limitations:
(1) The privileges granted by this permit are subject to the condition
that the foreign air carrier complies with the requirements of 14 CFR 203,
concerning waiver of Warsaw Convention liability limits and defenses;
(2) The privileges granted by this permit are subject to the condition
that the foreign air carrier complies with the requirements for minimum
insurance coverage contained in 14 CFR 205;
(3) By accepting this permit, the holder waives any right it may possess
to assert any defense of sovereign immunity from suit in any action or
proceeding instituted against the holder in any court or other tribunal in
the United States (or its territories or possessions) based upon any claim
arising out of operations by the holder under this permit;
(4) The holder shall not operate any aircraft under the authority granted
by this permit, unless the holder complies with operational safety
requirements at least equivalent to Annex 6 of the Chicago Convention;
(5) The holder shall conform to the airworthiness and airman competency
requirements prescribed by its home Government for international air
service;
(6) Except as specifically authorized by the Department of Transportation,
all flights to/from the United States must originate or terminate in the
holder's homeland;
(7) The holder shall not provide the foreign air transportation authorized
by this permit unless it holds a currently effective authorization from its
Government for such operations and such document is on file with the
Department of Transportation;
(8) The exercise of the privileges granted by this permit shall be subject
to such other reasonable terms, conditions, and limitations required by the
public interest as may be prescribed by the Department of Transportation;
and shall be subject to compliance with all applicable orders and
regulations of other U.S. agencies and courts, and with all applicable laws
of the United States; and
(9) This permit cannot be sold or otherwise transferred without explicit
Department approval under section 402(g) of the Federal Aviation Act of
1958, as amended.
5/85
UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY
WASHINGTON, D.C.
PERMIT TO FOREIGN AIR CARRIER
QUEBEC AVIATION LIMITED
is authorized, subject to the following provisions, the provisions of the
Federal Aviation Act of 1958, as amended, and the orders, rules, and
regulations of the Department of Transportation, to engage in scheduled
foreign air transportation of persons, property, and mail, as follows:
Between Quebec City, Quebec, Canada and Boston,
Massachusetts.
This permit and the exercise of the privileges granted in it shall be
subject to the terms, conditions and limitations attached, and to the
following:
1. The holder shall not use any aircraft or conduct
any operations except in accordance with the
authority and conditions contained in its applicable
Canadian licenses.
2. This permit shall be subject to all applicable
provisions of any treaty, convention, or agreement
affecting international air transportation now in
effect, or that may become effective, to which the
United States and Canada shall be parties.
This permit shall be effective on
Unless otherwise
terminated at an earlier date pursuant to the terms of any applicable
treaty, convention, or agreement, this permit shall terminate (1) upon the
dissolution or liquidation of the holder to which it was issued, or (2)
upon the termination or expiration of the United States-Canada Exchange of
- 2 -
Notes on Regional, Local, and Commuter Services (Note Nos. ETT-1483 and
300), effective August 21, 1984. However, clause (2) shall not apply if,
prior to the occurrence of the event specified in clause (2), the
operation of the foreign air transportation authorized becomes the subject
of any treaty, convention, or agreement to which the United States and the
Government of Canada are or shall become parties.
The Department of Transportation has executed this permit and affixed its
seal on January 27, 1986.
MATTHEW V. SCOCOZZA
Assistant Secretary for Policy
and International Affairs
(SEAL)
ATTACHMENT
PERMIT TO FOREIGN AIR CARRIER
Docket 39403
The holder's authority to conduct operations under the permit to which this
is attached shall also be subject to the following terms, conditions, and
limitations:
(1) The privileges granted by this permit are subject to the condition
that the foreign air carrier complies with the requirements of 14 CFR 203,
concerning waiver of Warsaw Convention liability limits and defenses;
(2) The privileges granted by this permit are subject to the condition
that the foreign air carrier complies with the requirements for minimum
insurance coverage contained in 14 CFR 205;
(3) By accepting this permit, the holder waives any right it may possess
to assert any defense of sovereign immunity from suit in any action or
proceeding instituted against the holder in any court or other tribunal in
the United States (or its territories or possessions) based upon any claim
arising out of operations by the holder under this permit;
(4) The holder shall not operate any aircraft under the authority granted
by this permit, unless the holder complies with operational safety
requirements at least equivalent to Annex 6 of the Chicago Convention;
(5) The holder shall conform to the airworthiness and airman competency
requirements prescribed by its home Government for international air
service;
(6) Except as specifically authorized by the Department of Transportation,
all flights to/from the United States must originate or terminate in the
holder's homeland;
(7) The holder shall not provide the foreign air transportation authorized
by this permit unless it holds a currently effective authorization from its
Government for such operations and such document is on file with the
Department of Transportation;
(8) The exercise of the privileges granted by this permit shall be subject
to such other reasonable terms, conditions, and limitations required by the
public interest as may be prescribed by the Department of Transportation;
and shall be subject to compliance with all applicable orders and
regulations of other U.S. agencies and courts, and with all applicable laws
of the United States; and
(9) This permit cannot be sold or otherwise transferred without explicit
Department approval under section 402(g) of the Federal Aviation Act of
1958, as amended.
5/85
UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY
WASHINGTON, D.C.
PERMIT TO FOREIGN AIR CARRIER
TORONTO AIRWAYS LIMITED
d/b/a TORONTAIR
is authorized, subject to the following provisions, the provisions of the
Federal Aviation Act of 1958, as amended, and the orders, rules, and
regulations of the Department of Transportation, to engage in scheduled
foreign air transportation of persons, property, and mail, as follows:
1. Between Toronto (Buttonville), Ontario, Canada and
White Plains, New York.
2. Between Toronto (Buttonville), Ontario, Canada and
Syracuse, New York.
This permit and the exercise of the privileges granted in it shall be
subject to the terms, conditions and limitations attached, and to the
following:
1. The holder shall not use any aircraft or conduct
any operations except in accordance with the
authority and conditions contained in its applicable
Canadian licenses.
2. This permit shall be subject to all applicable
provisions of any treaty, convention, or agreement
affecting international air transportation now in
effect, or that may become effective, to which the
United States and Canada shall be parties.
This permit shall be effective on
Unless otherwise
terminated at an earlier date pursuant to the terms of any applicable
treaty, convention, or agreement, this permit shall terminate (1) upon the
dissolution or liquidation of the holder to which it was issued, or (2)
upon the termination or expiration of the United States-Canada Exchange of
- 2 -
Notes on Regional, Local, and Commuter Services (Note Nos. ETT-1483 and
300), effective August 21, 1984. However, clause (2) shall not apply if,
prior to the occurrence of the event specified in clause (2), the
operation of the foreign air transportation authorized becomes the subject
of any treaty, convention, or agreement to which the United States and the
Government of Canada are or shall become parties.
The Department of Transportation has executed this permit and affixed its
seal on January 27, 1986.
MATTHEW V. SCOCOZZA
Assistant Secretary for Policy
and International Affairs
(SEAL)
FOR OFFICIAL USE ONLY
UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY
WASHINGTON, D. C.
Issued by the Department of Transportation
on the 6th day of February, 1986
Application of
:
:
NIPPON CARGO AIRLINES COMPANY, LTD.
:
Docket 42023
:
for a foreign air carrier permit pursuant:
to section 402 of the Federal Aviation
:
Act of 1958, as amended
:
ORDER ISSUING FOREIGN AIR CARRIER PERMIT
On February 29, 1984, Nippon Cargo Airlines Company, Ltd. (NCA) filed
with the Civil Aeronautics Board an application for an initial foreign
air carrier permit 1/ to engage in scheduled all-cargo services
commencing April 1, 1985, (1) between a point or points in Japan and the
coterminal points San Francisco and New York, and (2) between a point or
points in Japan and the terminal point New York, New York, via the
intermediate point Anchorage, Alaska. 21 NCA further requested authority
to perform cargo charters in accordance with 14 CFR Part 212.
In support of its application, NCA stated that it has been licensed by
its government to perform the all-cargo services at issue here, and, by
Diplomatic Note dated November 16, 1983, was designated by the Government
of Japan in accordance with Article 4(A) (1) of the United States-Japan
Air Transport Services Agreement, as amended. 3/
1/ NCA's application was summarized in the Federal Register,
49 FR 9244, March 12, 1984.
2/ On April 9, 1984, NCA amended its application, defining its request
for Anchorage intermediate authority as a technical stop.
3/ TIAS 2854, 4158, 5939, 6787, 7333 and 8882.
FOR OFFICIAL USE ONLY
2
ANSWERS
During March, 1984, Federal Express Corporation, The Flying Tiger Line
Inc., and Transamerica Airlines, Inc., filed answers in response to NCA's
permit application. The carriers urged deferral of NCA's application
pending resolution of various aviation issues with Japan. Federal
Express and Flying Tiger also expressed concerns about possible
anticompetitive consequences of NCA's ownership.
Specifically, Federal Express argued that action on NCA's application
should be deferred pending the concurrent grant of all-cargo authority to
Federal Express or until an indication of willingness by the Government
of Japan to grant such authority to Federal Express.
Flying Tiger listed (1) Japanese domination of the air freight market,
and the likelihood that NCA's entry would increase Japan's market share,
and, (2) the fact that NCA's application cannot be considered independent
of Japan Air Lines' request for expanded cargo rights into and beyond the
U.S.
Transamerica stated that it had no objection to NCA's application
provided the U.S. reached a satisfactory understanding with Japan
regarding additional U.S. carrier designations under the bilateral
agreement. Transamerica also noted that while NCA sought scheduled as
well as charter authority, its Japanese license only provides for the
operation of scheduled services.
On May 14, 1984, NCA filed a reply to the answers of Federal Express,
Flying Tiger and Transamerica.4,
On June 28, 1984, NCA filed a motion for expeditious treatment of its
pending application and was answered by Flying Tiger. On July 18, 1984,
NCA responded. 5/
RESULTS OF U.S.-JAPAN NEGOTIATIONS
On May 1, 1985, the United States and Japan signed an interim agreement,
embodied in a Memorandum of Understanding, which, among other things,
provides for NCA to commence its all-cargo services and to continue them
4/ NCA's reply was accompanied by a motion for leave to file an
otherwise unauthorized document.
5/ We will grant all motions to file otherwise unauthorized documents.
3
until the conclusion of comprehensive revision talks. 6/
On April 30, 1985, we orally granted NCA an exemption, sua sponte, from
section 402 of the Act to perform those services provided for in the MOU,
until September 6, 1985, or the conclusion of the comprehensive revision
talks, whichever was later. This authority was and is subject to our
standard conditions applicable to exemption authority, and to NCA's
adherence to the terms of the MOU. That exemption authority remains in
effect, and NCA is currently conducting operations under that authority.
DECISION
We have decided to issue NCA a foreign air carrier permit authorizing it
to perform all-cargo services between Tokyo, Japan, and San Francisco/New
York. We have thoroughly reviewed the record and have decided to grant
the application using the simplified Subpart Q procedures. / The public
was informed of the carrier's application by notices in the Federal
Register and the CAB's weekly list of applications filed, describing the
authority sought and giving interested persons an opportunity to submit
evidence and objections to the award of the authority. These notices
provided the required notice and filing opportunities. Simplified
procedures are appropriate in this case, because there are no material
issues of fact which require other procedures.
We are granting NCA the authority it seeks to the extent that it is
encompassed by the April 30, 1985, MOU and subject to the conditions
and limitations contained in that agreement.
6/ The MOU provides for NCA to operate six (6) wide-body roundtrip
all-cargo flights per week on a route between Tokyo and San Francisco/New
York as of May 1, 1985. The MOU provides that NCA may increase its
frequencies from April 1, 1986, by a percentage equal to the percentage
increase in the total air cargo traffic between Japan and the United
States for the period January 1, 1985, to December 31, 1985, over the
total air cargo traffic for the period January 1, 1984, to December 31,
1984, and similarly for each succeeding year. The MOU also provides that
any increased frequencies that become available and are not used may be
reserved for later use. The MOU also specified additional rights that
would be available to U.S. carriers.
71 14 CFR 302.1701 et seq. Under Rule 29(b), we may, in our
discretion, omit a tentative decision in proceedings under Subpart Q and
proceed directly to a final decision.
4
In reaching our decision, as more fully discussed below, we find that,
based on the record, NCA is substantially owned and effectively
controlled by nationals of Japan, and that it is fit, willing and able to
conduct the authorized services and adhere to the provisions of the Act,
and our rules, regulations, and requirements.
PUBLIC INTEREST CONSIDERATIONS
The permit authority granted by this order is provided for in the May 1,
1985, Memorandum of Understanding between the United States and
Japan. 8/ On August 13, 1983, NCA was issued a license by the Japanese
Ministry of Transport (NCA Exhibit 402, Docket 42023) to perform
scheduled "all freight service" over the routing Tokyo-San Francisco-New
York. In November 1983, NCA was designated by the Government of Japan
under Article 4(A) (1) of the United States-Japan Air Transport Services
Agreement to serve Japanese routes 1 and 3 of the Route Schedule appended
to the Agreement.
We find that the view of the U.S. carrier respondents that we should
defer action on NCA's request until resolution of pending U.S.-Japan
aviation issues has been effectively dealt with by the signing of the
May 1, 1985 interim agreement, which specifically provides for this
authority to be granted to an airline of Japan.9/
We have also considered arguments concerning the possible anticompetitive
consequences of NCA's ownership. Although we do not believe that this
factor warrants withholding permit authority, we intend to monitor the
situation. We also note that the Department of Justice has been fully
apprised of the situation and has filed no objections to the issuance of
the permit.
NCA'S OWNERSHIP AND CONTROL
NCA was formed on September 21, 1978, by four Japanese shipping
companies 10/ and All Nippon Airways, a domestic Japanese scheduled
8/ The authority granted is subject to the limitations of the MOU.
Thus, NCA is limited to six flights per week and any request to operate
extra sections would require additional authority.
9/ The MOU also provides for additional passenger and cargo rights for
U.S. carriers. The Department has instituted a case to determine which
U.S. carriers should exercise those rights. See Order 85-11-29, November
13, 1985, instituting the U.S.-Japan Gateways Case, Docket 43575.
10/ The Japanese shipping companies are Kawasaki Kisen Kaisha, Ltd. ("K"
Line); Nippon Yusen Kaisha (NYK Line); Mitsui O.S.K. Lines; and
Yamashita-Shinnihon Steamship Co., Ltd. (Y.S. Line). Japan Line, Ltd.
(Japan Line) and Showa Line, Ltd. subsequently became stockholders.
5
carrier. Subsequent stock transactions diversified NCA's ownership. As
of April 1, 1984, the company had 6,400,000 shares of stock issued and
outstanding, 100% owned by Japanese citizens.]
OPERATIONAL FITNESS
We find that NCA is operationally fit to conduct the operations at issue
here. Biographical data supplied by the applicant demonstrate that all
of NCA's officers, directors and key management personnel have
considerable transportation experience. NCA management personnel have
been drawn from companies with extensive experience in shipping, air
freight forwarding, rail and air carrier operations. NCA stated that it
would inaugurate its proposed services with dry-leased All Nippon
Airways' B-747-200 aircraft to be used exclusively by NCA. Maintenance
of NCA's aircraft will be performed in accordance with ICAO standards by
All Nippon Airways at Tokyo. Transit checks on the aircraft will be
performed under contract supervised by NCA maintenance representatives.
NCA stated that it had not been involved in any safety or tariff
violations during the five years preceeding the filing of the permit
application.12/
11/ NCA's stock is issued as follows: "K" Line (10%), NYK Line (10%),
Mitsui O.S.K. Lines (10%), Y.S. Line (10%), All Nippon Airways (10%),
Japan Line (5%), Showa Line (5%), 23 Japanese Banks (15.47%), 16 Japanese
insurance companies (11.09%), and 34 other Japanese citizen companies
(13.44%). See Exhibit NCA-103, Docket 42023.
12/ By letter dated March 13, 1984, the CAB requested that the FAA
provide a safety and compliance evaluation of NCA. By letter dated March
22, 1984, the FAA's Office of Flight Operations stated that although NCA
held no operating authority, it knew of no reason why the CAB should act
unfavorably on NCA's pending permit application, so long as it made any
authority granted to NCA subject to the customary conditions. A copy of
the CAB's letter and the FAA's response have been placed in Docket
42023. On July 18, 1985, the FAA advised the Department that on May 1,
1985, NCA had been issued FAR Part 129 Operations Specifications and it
knew of no reason why we should act unfavorably on NCA's application.
6
FINANCIAL FITNESS
We find that NCA is fit to conduct the operations we are authorizing
without exposing the public to undue financial risk. The applicant
stated that because its proposed operations were not to commence until
1985 it was unable to provide historical financial statements based on
operations. NCA did, however, provide forecast balance sheets for
April 1, 1984 and 1985, which are summarized in Appendix A to this
order. In addition, NCA provided current balance sheets and profit and
loss statements for the seven original NCA stockholders. 13/ NCA further
stated that it does not receive, or expect to receive, financial
assistance from the Government of Japan. The applicant stated that it
had been able to meet its financial obligations, had never defaulted on
transportation commitments, and had never been refused debt
financing.
In view of the foregoing and all of the facts of record, we find and
conclude that:
1. Nippon Cargo Airlines Company, Ltd. is qualified and has been
designated by its government to perform the air services described in the
attached permit;
2. Nippon Cargo Airlines Company, Ltd. is fit, willing and able
properly to perform the foreign air transportation described in the
attached permit and to conform to the provisions of the Act, and to our
rules, regulations, and requirements;
3. The public interest requires that the exercise of the privileges
granted by the permit should be subject to the terms, conditions, and
limitations contained in the attached permit, and to such other
reasonable terms, conditions, and limitations required by the public
interest as we may prescribe;
4. Nippon Cargo Airlines Company, Ltd. is substantially owned and
effectively controlled by nationals of Japan;
5. The issuance of this foreign air carrier permit will not constitute
a "major regulatory action" under the Energy Policy and Conservation Act
of 1975, as defined in section 313.4(a) (1) of our Regulations; 15/
6. The public interest does not require an oral evidentiary hearing on
the application; and
7. Except to the extent granted, the application of Nippon Cargo
Airlines Company, Ltd. in Docket 42023 should be denied.
13/ See Exhibit NCA-300, pages 1-27, Docket 42023.
14/ On May 6, 1985, NCA filed the requisite Certificate of Insurance
which satisfies the requirements of 14 CFR Part 205.
15/ This finding is based on the fact that the grant of this permit will
not result in a near-term increase in fuel consumption in excess of 10
million gallons.
7
ACCORDINGLY,
1. We issue Nippon Cargo Airlines Company, Ltd. a foreign air carrier
permit, in the form attached, authorizing it to perform all-cargo
services between the terminal point Tokyo, Japan, and the coterminal
points San Francisco, California, and New York, New York;
2. Nippon Cargo Airlines Company, Ltd. may operate a maximum of six
wide-body roundtrip all-cargo flights per week as of May 1, 1985, and
shall be permitted, by subsequent Department order, to increase its
frequencies beginning April 1, 1986, by a percentage equal to the
percentage increase in the total air cargo traffic between Japan and the
United States for the period January 1, 1985, to December 31, 1985, over
the total air cargo traffic for the period January 1, 1984, to
December 31, 1984, under procedures set forth in the April 30, 1985 MOU,
and similarly for each succeeding year (available increased frequencies
not used may be reserved for later use);
3. Flights exceeding the number described above are not authorized;
4. The exercise of the privileges granted above are subject to Nippon
Cargo Airlines' compliance with the conditions listed in the permit and
the Attachment to the permit, and the terms of the April 30, 1985 MOU;
and
5. We will grant all motions in Docket 42023 to file otherwise
unauthorized documents.
6. Unless disapproved by the President of the United States under
section 801 (a) of the Act, this order and the permit attached shall
become effective on the 61st day after its submission to the
President, 16/ or upon the date of receipt of advice from the President
that he does not intend to disapprove the Department's order under that
section, whichever is earlier; and
7. We will serve a copy of this order on all persons that have filed
pleadings in Docket 42023, the Ambassador of Japan in the United States,
the Secretary of State and the Federal Aviation Administration (San
Francisco-FSDO #3 and AFS-220).
By:
MATTHEW V. SCOCOZZA
Assistant Secretary for Policy
and International Affairs
(SEAL)
16/ This order was submitted to the President on February 6, 1986.
The 61st day is April 10, 1986.
APPENDIX A
SUMMARY OF APPLICATION
NIPPON CARGO AIRLINES
Docket 42023
Homeland Country: Japan
Authority Covered By Bilateral Agreement: Yes--United States-Japan Air
Transport Services Agreement, as amended, and the April 30, 1985,
Memorandum of Understanding.
Designated By Its Government: Yes--Exhibit 401, Docket 42023
Holds Government License For Authority Sought: Exhibit 402 - Docket
42023
Operating History: None--new applicant
Aircraft Owned (0) And Leased (L): 2 B-747-200F dry-leased from All
Nippon Airways - Aircraft will be used exclusively by NCA.
Aircraft Maintenance Performed By: All Nippon Airways in accordance with
ICAO standards.
Financial Indicators (Last 2 years): April 1, 1985
April 1, 1984
(forecast)
(forecast)
(millions)
(millions)
Total Assets
$ 16.0
$ 10.0
Total Liabilities
-
$ 7.0
Owners' Equity
$ 16.0
$ 3.0
Operating Profit (Loss)
(No historical financial data based
on operations)
Majority Ownership By Nationals Of: Japan
Effective Control By Nationals Of: Japan
Insurance Coverage: Yes--meets minimum requirements of 14 CFR 205
Insurance Refused Or Involuntarily Canceled During Last 3 Years: No
Refused Debt Financing Last 3 Years: No
Defaulted On Transportation Commitments Last 3 Years: No historical data
available
Failed To Meet Current Financial Obligations Last 3 Years: No historical
data available
Safety Violations During Last 5 Years: No historical data available
Tariff Violations During Last 5 Years: No historical data available
Subscribes To Standard Permit Conditions Regarding Insurance, to Annex 6
Of the Chicago Convention, and to C.A.B. Agreement 18900: Yes
UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY
WASHINGTON, D.C.
PERMIT TO FOREIGN AIR CARRIER
NIPPON CARGO AIRLINES COMPANY, LTD.
is authorized, subject to the provisions set forth, the provisions of the
Federal Aviation Act of 1958, as amended, and the orders, rules, and
regulations of the Department of Transportation, to engage in scheduled
foreign air transportation with respect to property, as follows:
Between the terminal point Tokyo, Japan, and the coterminal points San
Francisco, California, and New York, New York.
This permit and the exercise of the privileges granted in it shall be
subject to the terms, conditions and limitations attached, and to those
contained in Order
This permit shall be subject to all applicable provisions of any treaty,
convention, or agreement affecting international air transportation now
in effect, or that may become effective during the period this permit
remains in effect to which the United States and Japan shall be parties.
This permit shall be effective on
Unless otherwise
terminated at an earlier date pursuant to the terms of any applicable
treaty, convention, or agreement, this permit shall terminate (1) upon
the dissolution or liquidation of the holder to which issued; or (2) upon
the effective date of any treaty, convention, agreement or amendment,
which shall have the effect of eliminating the route or routes authorized
by this permit from the routes which may be operated by airlines
designated by the Government of Japan (or in the event of the elimination
of any part of the authorized route or routes, the authority granted
shall terminate to the extent of such elimination), or (3) upon the
effective date of any permit granted by the Department to any other
carrier designated by the Government of Japan in lieu of the holder, or
(4) upon the termination or expiration of either the Air Transport
Services Agreement between the Government of the United States of America
and the Government of Japan effective September 15, 1953, as amended, or
of the Memorandum of Understanding ratified May 1, 1985: However, clause
(4) of this paragraph shall not apply if, prior to occurrence of the
event specified in clause (4), the operation of the foreign air
transportation authorized becomes the subject of any treaty, convention,
or agreement to which the United States and Japan are or shall become
parties.
The Department of Transportation has executed this permit and affixed its
seal February 6, 1986.
MATTHEW V. SCOCOZZA
Assistant Secretary for Policy
and International Affairs
(SEAL)
ATTACHMENT
PERMIT TO FOREIGN AIR CARRIER
Docket 42023
The holder's authority to conduct operations under the permit to which this
is attached shall also be subject to the following terms, conditions, and
limitations:
(1) The privileges granted by this permit are subject to the condition
that the foreign air carrier complies with the requirements of 14 CFR 203,
concerning waiver of Warsaw Convention liability limits and defenses;
(2) The privileges granted by this permit are subject to the condition
that the foreign air carrier complies with the requirements for minimum
insurance coverage contained in 14 CFR 205;
(3) By accepting this permit, the holder waives any right it may possess
to assert any defense of sovereign immunity from suit in any action or
proceeding instituted against the holder in any court or other tribunal in
the United States (or its territories or possessions) based upon any claim
arising out of operations by the holder under this permit;
(4) The holder shall not operate any aircraft under the authority granted
by this permit, unless the holder complies with operational safety
requirements at least equivalent to Annex 6 of the Chicago Convention;
(5) The holder shall conform to the airworthiness and airman competency
requirements prescribed by its home Government for international air
service;
(6) Except as specifically authorized by the Department of Transportation,
all flights to/from the United States must originate or terminate in the
holder's homeland;
(7) The holder shall not provide the foreign air transportation authorized
by this permit unless it holds a currently effective authorization from its
Government for such operations and such document is on file with the
Department of Transportation;
(8) The exercise of the privileges granted by this permit shall be subject
to such other reasonable terms, conditions, and limitations required by the
public interest as may be prescribed by the Department of Transportation;
and shall be subject to compliance with all applicable orders and
regulations of other U.S. agencies and courts, and with all applicable laws
of the United States; and
(9) This permit cannot be sold or otherwise transferred without explicit
Department approval under section 402(g) of the Federal Aviation Act of
1958, as amended.
5/85