CAL, Fly Jamaica denied permission for direct NY flights

Amidst objections from the Air Line Pilots Association (ALPA) and Airlines for America (A4A) the US Department of Transportation (DOT) on Monday denied applications by Caribbean Airlines and Fly Jamaica to have direct flights from Georgetown to New York.

“We deny the request of Fly Jamaica Airways Limited for an exemption under 49 U.S.C. §40109, to engage in scheduled foreign air transportation of persons, property, and mail, on a seventh-freedom turnaround basis, between New York, New York and Georgetown, Guyana;

“We deny the request of Caribbean Airlines Limited for an exemption under 49 U.S.C. §40109, to engage in scheduled foreign air transportation of persons, property, and mail, on a seventh-freedom turnaround basis, between New York, New York and Georgetown, Guyana,” the DOT said in its official ruling.

Both Fly Jamaica and CAL had presented letters with their applications saying that they had been granted flag carrier status by the Guyana Government.

According to the ruling, the DOT said that in considering foreign air carrier requests for extra-bilateral authority it weighs various criteria specific to the type of extra-bilateral request, as well as any other factors that are germane to a particular case.

It said that with respect specifically to requests for extra-bilateral seventh-freedom turnaround service, the department has historically viewed such requests as extraordinary and have granted such authority only when the circumstances presented on the record in individual cases show compelling public interest considerations.

It said against that background, it reviewed the applications of CAL and Fly Jamaica and determined that “we cannot make the necessary public interest finding.”

The ruling stated that in this case, the Open-Skies Agreements that are in place both with Jamaica and with Trinidad and Tobago provide rights for licensed carriers of both countries to conduct fifth-freedom services with full traffic rights on all segments. Such rights are currently being exercised by CAL to transport Georgetown-New York traffic on its existing two flights and Fly Jamaica has begun serving the Georgetown-New York market on a one-stop basis via Kingston, Jamaica.

“In light of these existing Georgetown-New York services and the lack of a showing by the applicants on the record that there is a truly demonstrable need for additional Georgetown-New York services, we are unable to find that the CAL and Fly Jamaica seventh freedom turnaround proposals satisfy our public interest test for the type of extraordinary authority at issue. We will, therefore, deny the applications of CAL and Fly Jamaica,” DOT said in its ruling.

Objections

Following the applications by the two airlines in July, Fly Jamaica on July 16 and CAL on July 18, ALPA and A4A each filed consolidated objections against the applications and both airline filed responses.

ALPA asserted that the requests of Fly Jamaica and CAL are extra-bilateral, and that DOT should deny the applications. ALPA further asserted that CAL’s operations are being subsidized by the government of Trinidad and Tobago. In this regard, ALPA cited a press article in which Trinidad and Tobago’s Finance Minister is reported to have acknowledged a TT$40 million fuel subsidy paid to CAL in 2012. ALPA asserts that a foreign subsidy of the alleged type would impede the ability of U.S. carriers to compete.

A4A stated that CAL’s seventh-freedom operations and alleged fuel subsidies negatively impact U.S. carriers’ ability to compete. It further argued that instead of granting CAL or Fly Jamaica extra-bilateral seventh-freedom exemption authority, the Department should focus on the resolution of various doing-business issues that affect U.S. carriers in the Caribbean region.

DOT said in its reply to A4A, CAL essentially restated the reasons it provided in its application supporting its contention that grant of its request would be in the public interest. CAL compared its current request with the Department’s grant of extra-bilateral exemption authority for CAL to serve between New York and Grenada. CAL also asserted that since it is the only carrier serving the Georgetown-New York route, that there is a compelling need for CAL to continue and expand its services.

Fly Jamaica on the other hand asserted that denial of its application would result in the continuation of anti-competitive conditions whereby CAL would have been the only carrier providing nonstop service in the New York (JFK)-Georgetown market, if it had been granted permission. Fly Jamaica further asserted that the majority of the arguments raised by ALPA and A4A pertain exclusively to the application of CAL and to the government of Trinidad and Tobago.

Both CAL and Fly Jamaica would have been seeking direct flight permission to corner more of the market here. The denial to both would leave Guyanese without a direct flight option to New York. The last such option was provided by Delta Airlines which pulled out of Guyana in May this year without fully explaining why. It was felt in some quarters that Delta believed that it was being unfairly competed against. The denial of the applications will also mean that Guyanese will have to pay relatively high fares between Guyana and New York. The government may also be further pressed to try to attract a branded American carrier here.

Seventh freedom rights are defined as the right or privilege, in respect of scheduled international air services, granted by one State to another State, of transporting traffic between the territory of the granting State and any third State with no requirement to include on such operation any point in the territory of the recipient State, i.e the service need not connect to or be an extension of any service to/from the home State of the carrier.

 

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