Expanded Air Cargo Transfer and Service Opportunities at Alaska Airports

1. Expanded Air Cargo Transfer and Service Opportunities at Alaska Airports George Wellington, Chief Foreign Air Carrier Licensing Division Office of International Aviation U.S. Department of Transportation Alaska International Air Cargo Summit August, 2010

2. What We’ll Discuss • the special status of Alaska as an international air service hub • regulatory and legislative actions that have been taken to promote service • what does it mean for carriers operationally? • specific examples of what can be done, and how to do it • what can’t be done

3. Promoting Alaskan international aviation has long been U.S. Government policy Initial CAB emergency transfer/stopover actions in the 1970’s DOT exemptions from 1996 Congressional action in 2003

4. DOT Exemption Authority and Cabotage DOT exemption actions constrained by cabotage prohibition in the aviation law The law prohibits the carriage by a foreign air carrier of revenue traffic wholly between two U.S. points except in certain emergency circumstances

5. DOT Exemption Authority – Cargo Transfers - 1 Foreign carriers may transfer at Alaska cargo from any of their aircraft to any of their other aircraft, provided that both aircraft are operating to/from a point in the carrier’s homeland KAL: SEL-ANC-ATL SEL-ANC-ORD KAL can transfer cargo between its aircraft at ANC

6. DOT Exemption Authority – Cargo Transfers - 2 Foreign carriers may make changes, at points in Alaska, in the type or number of aircraft used to transport cargo, provided that in the outbound direction the transportation beyond Alaska is a continuation of the transportation from the carrier’s homeland to Alaska, and in the inbound direction, the transportation to the carrier’s homeland is a continuation of the transportation from behind Alaska KAL: SEL-ANC-ORD – B747 (change of gauge and ANC-ATL-LHR – A300 “starburst” change of ANC-GIG – A310 gauge)

7. DOT Exemption Authority-Cargo Transfers - 3 Foreign carriers may commingle on the same aircraft cargo moving in foreign air transportation with cargo traffic not moving in foreign air transportation LH: FRA-ANC-NRT FRA-ANC-LAX Traffic can be carried on same aircraft

8. DOT Exemption Authority-Cargo Transfers - 4 Foreign carriers may discharge cargo in Alaska for transfer to a U.S. carrier for onward carriage to a final destination in the United States or in a third country, and uplift from Alaska cargo transferred from a U.S. carrier which was transported by that carrier to Alaska from a point of origin elsewhere in the United States or in a third country CA: PEK-ANC or: CA: PEK-ANC DL: ANC-ATL DL: ANC-LHR

9. DOT Exemption Authority-Cargo Transfers - 5 Foreign carriers may discharge cargo in Alaska for transfer to another foreign carrier for onward carriage to a final destination in a third country, and uplift from Alaska cargo transferred from another foreign carrier which was transported by that carrier to Alaska from a point of origin in a third country TG: DMK-ANC LH: ANC-FRA (no transfer of traffic to a foreign carrier for an internal U.S. flight)

10. Additional DOT Exemption Authority Another exemption, originally granted later than the transfer exemption, allows all foreign air carriers that hold DOT authority to serve points in the United States, also to serve any point or points in Alaska, and to coterminalize points in Alaska with other U.S. points for which they hold authority –applies to passenger service as well as cargo

11. DOT Invitation DOT has invited foreign air carriers to apply for authority to serve additional U.S. points on an extrabilateral basis, where those additional U.S. points would be served on flights also serving Alaska

12. 2003 Legislative Action In 2003 Congress passed a law granting a limited exception to the cabotage prohibition for certain cargo operations at Alaska

13. 2003 Legislative Action 49 U.S.C. §41703(e) Cargo in Alaska. - (1) In general. - For the purposes of subsection (c) [the general cabotage prohibition], eligible cargo taken on or off any aircraft at a place in Alaska in the course of transportation of that cargo by any combination of two or more air carriers or foreign air carriers in either direction between a place in the United States and a place outside the United States shall not be deemed to have broken its international journey in, be taken on in, or be destined for Alaska.

14. 2003 Legislative Action (2) Eligible cargo. - For purposes of paragraph (1), the term "eligible cargo" means cargo transported between Alaska and any other place in the United States on a foreign air carrier (having been transported from, or thereafter being transported to, a place outside the United States on a different air carrier or foreign air carrier) that is carried – (A) under the code of a United States air carrier providing air transportation to Alaska; (B) on an air carrier way bill of an air carrier providing air transportation to Alaska; (C) under a term arrangement or block space agreement with an air carrier; or (D) under the code of a United States air carrier for purposes of transportation within the United States.

15. Term Arrangement ‘A ‘term arrangement’ is a cargo relationship between air carrier(s) and foreign air carrier(s) on an ongoing basis, including, for example, preferential rates or joint marketing up to and including a full cargo alliance.’ (Conference Report (108-334))

16. A. Operations under the code of a United States air carrier providing air transportation to Alaska JAL: NRT-ANC under DL code KAL: ANC-ATL under DL code JAL: NRT-ANC under JAL code KAL: ANC-ATL under DL code US code only has to be on the domestic sector

17. B. Operations on an air carrier way bill of an air carrier providing air transportation to Alaska JAL: NRT-ANC under JAL code LH: ANC-ORD under CO waybill  (waybill would not have to be all the way to NRT) JAL: NRT-ANC under JAL code LH: ANC-ORD under U.S. air freight forwarder waybill (waybill would not have to be all the way to NRT)

18. C. Operations under a term arrangement or block space agreement with an air carrier - 1 DL: TPE-ANC JAL: ANC-LAX under JAL code (term arrangement between JAL and DL) No need for US code on domestic sector if there is a JAL/DL term arrangement that covers this sector

19. C. Operations under a term arrangement or block space agreement with an air carrier - 2 CX: HKG-ANC under Fed Ex code JAL: ANC-SFO under blocked space agreement with FedEx CX: HKG-ANC under CX code Fed Ex: ANC-SFO under JAL code (JAL blocked space agreement on FedEx aircraft)

20. C. Operations under a term arrangement or block space agreement with an air carrier - 3 Term arrangement or blocked space agreement must apply to the specific operation; to the specific eligible cargo This one would NOT work: CAL: TPE-ANC under JAL code JAL: ANC-LAX under JAL code (Assuming a term arrangement between JAL and DL, but where ANC-LAX traffic is not being carried under the term arrangement)

21. D. Operations under the code of a U.S. air carrier for purposes of transportation within the United States. This provision effectively provides the same opportunities as provision A U.S. carrier does not have to be one that operates to Alaska

22. General cabotage prohibitions still apply Foreign carriers cannot do 8th freedom/fill-up/ “consecutive cabotage” – Congress did not address that, and DOT does not have the statutory power to approve it

23. General cabotage prohibitions still apply ZZ-Air: ANC-LAX local traffic, ZZ-Air code, ZZ-Air aircraft/crews CABOTAGE ZZ-Air: ANC-LAX local traffic, ZZ-Air aircraft, CO waybill/code CABOTAGE ZZ-Air: ANC-LAX local traffic, CO aircraft, ZZ-Air code CABOTAGE

24. Conclusion Promotion of expanded Alaska aviation opportunities is an important program that can facilitate air services and work to the benefit of: Alaska airports and the state economy U.S. carriers Foreign carriers The shipping public

25. Contact Information • Phone (DOT Foreign Air Carrier Licensing) (202) 366-2390 • email: george.wellington@dot.gov