Order 95-6-21

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation
on the (date not specified)

Served June 19, 1995

In the matter of the foreign air carrier	|
permits of:					|
                                                |                                
  JAPAN AIR LINES COMPANY, LTD.               	|	Docket 50408
						|
		AND				|
						|
  NIPPON CARGO AIRLINES COMPANY, LTD.		|

ORDER

Summary

By this order we tentatively find that the foreign air carrier permits held by Japan Air Lines Company, Ltd. (JAL) and Nippon Cargo Airlines Company, Ltd. (NCA) should be amended to impose a condition that would, until further Order of the Department, preclude them from carrying on any of their scheduled all-cargo services from Japan to the United States, any cargo which is carried to Japan on any service of any Japanese air carrier from one or more of the following places: Hong Kong, Indonesia, Singapore, Taiwan, and/or Thailand.

This proposed action is taken in response to the refusal of the Japanese aeronautical authorities to authorize Federal Express, a designated U.S. all-cargo air carrier, to perform certain services authorized in the bilateral Air Transport Services Agreement, as amended, in effect between the United States and Japan.

Background

Federal Express has long been designated by the United States to provide scheduled all-cargo services under the U.S.-Japan Air Transport Services Agreement (Agreement) which includes a route description for U.S. carriers in pertinent part as follows:

Pursuant to its designation, Federal Express has also long been authorized by the Government of Japan to provide scheduled all-cargo services between the United States and Japan, and beyond, including scheduled all-cargo services between the United States and Tokyo, Japan, and beyond to Manila, the Philippines, and between the United States and Osaka, Japan.

In February 1995, in accordance with procedures set forth in an "Agreed Minute" between the aeronautical authorities of the United States and Japan, dated January 14, 1959, the United States Government filed with the Japanese Ministry of Foreign Affairs certain revised schedules of service of Federal Express. Thereafter, in response to a request of the Japanese Ministry of Foreign Affairs, on April 11, 1995, Federal Express filed certain of these schedules (including schedules providing for service beyond Tokyo and Osaka (Kansai) to Manila (Subic Bay)) directly with the Japanese Ministry of Transport. Federal Express proposed to commence service May 1. Other revisions to these schedules were filed with the Japanese Ministries of Foreign Affairs and Transport on May 19. The Japanese Government has indicated these schedules also will not be approved.

Despite the clear obligation of the Government of Japan under the Agreement, and the provisions of the 1959 Agreed Minute, to approve all of the schedules filed on behalf of and by Federal Express, the Japanese aeronautical authorities have notified the U.S. of Japan's refusal to approve several of Federal Express' proposed schedules, including its service beyond Tokyo and Osaka (Kansai) to Manila (Subic Bay).

The United States Government has repeatedly advised the Japanese Government that its refusal to approve these bilaterally authorized services constitutes a serious violation of the Agreement, and that continued refusals to approve Federal Express' schedules would force the United States Government to take appropriate countermeasures. Despite these representations by the United States, the Government of Japan, and its aeronautical authorities, continue to refuse to approve Federal Express' proposed schedules.

Decision

Under these circumstances, the United States Government has no alternative but to respond with appropriate countermeasures. We therefore tentatively find that the public interest requires that we amend the foreign air carrier permits held by JAL and NCA, pursuant to 49 U.S.C. 41304, to include the following condition:

The failure of Japan to approve Federal Express' proposed service constitutes a major disruption in its operations between the United States and Manila (Subic Bay) and beyond. We tentatively find that our proposed limitations are an appropriate first step as a countermeasure in response to the Japanese refusal to permit Federal Express to conduct its proposed operations. We will consider, as appropriate, what further actions may be necessary.

In view of the foregoing, we tentatively find that, by failing and refusing to approve the duly filed schedules of Federal Express, the Government of Japan has not complied with the provisions of the Air Transport Services Agreement in effect between the United States and Japan and the 1959 Agreed Minute; that despite repeated objections and warnings by the United States Government, the Government of Japan continues to fail and refuse to comply with its bilateral obligations, and to deny Federal Express operating rights to which it is entitled under the Agreement; and that the public interest therefore requires that the foreign air carrier permits of JAL and NCA be amended to include the above described condition precluding the carriage of certain Asian-U.S. cargo on scheduled all-cargo flights operated from Japan to the United States.

Given the circumstances, we will require that objections and/or comments to this show cause order be filed by July 7, with answers due July 14. The Department anticipates issuing a prompt final decision shortly after the due date for answers to this order.

ACCORDINGLY:

  1. Japan Air Lines Company, Ltd., Nippon Cargo Airlines Company, Ltd., and all other interested persons are directed to show cause why we should not issue an order making final our tentative findings and conclusions;

  2. We direct Japan Air Lines Company, Ltd., Nippon Cargo Airlines Company, Ltd., and all other interested persons wishing to comment on our tentative findings and conclusions, or objecting to the issuance of the order described in paragraph 1, to file in Docket 50408, and serve on all persons on the service list in that docket, a statement of such objections or comments, together with any supporting evidence the objector wishes the Department to notice, not later than July 7, 1995; answers to these submissions will be due July 14, 1995;

  3. If timely and properly supported objections are filed, we will afford full consideration to the matters or issues raised by the objections before we take further action. If no objections are filed, we will deem all further procedural steps to have been waived, and proceed to enter a final order subject to Presidential review under 49 U.S.C. 41304 and 41307;

  4. We will serve this order on Japan Air Lines Company, Ltd., Nippon Cargo Airlines Company, Ltd., All Nippon Airways Company, Ltd., Japan Air System Company, Ltd., Japan Asia Airways Company, Ltd., Japan Air Charter Company, Ltd., Japan Universal System Transport Company, Ltd., World Air Network Company, Ltd., Federal Express, Inc., Northwest Airlines, Inc., United Air Lines, Inc., American Airlines, Inc., Delta Air Lines, Inc., Continental Micronesia, Inc., the Ambassador of Japan in Washington, D.C., the Department of State, the Federal Aviation Administration, and the U.S. Customs Service.

			PATRICK V. MURPHY
			Acting Assistant Secretary for
			  Aviation and International Affairs
(SEAL)