Kalitta and Amerijet request extensions for starting Brazil cargo services

Washington DC
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Kalitta Air and Amerijet have both filed respective applications with the US Department of Transportation to extend the start date for scheduled air cargo services from the US to Brazil by an additional six months.

Both carriers were slated to have the new routes started by 30 June, but Amerijet and Kalitta say they have not been able to drum up ample interest from shipping customers to start services as planned, due to economic factors. These new frequencies became available after a bilateral agreement between the US and Brazil that went into effect on 19 March, 2011.

The DOT has authorised Kalitta to start four newly-opened weekly frequencies to Brazil, which it has yet to inaugurate.

Kalitta says in its 18 June filing that it is hopeful that market conditions will improve enough for it to enter the Brazillian market in the fourth quarter.

"Based on this research, Kalitta still believes that the current state of the market will not sustain the additional service that the carrier would bring, and accordingly believes that it would be a strategic mistake to initiate service by the end of this month," reads a passage in the filing.

Amerijet has entereted into the Brazillian market, but it has yet to fill six of the seven new routes it has been allocated by DOT. Since last month, the carrier has been operating a once-weekly service to Cabo Frio, Brazil. In September 2011, the carrier had started up a twice-weekly service to Manaus, Brazil, but those routes have since been suspended.

Amerijet says it has also had trouble capturing interest of potential shippers to fill up its seven routes.

"Despite these expensive efforts at market penetration, the burden of a continuing sluggish worldwide economy coupled with a number of negative economic factors in Brazil have interfered with Amerijet's ability to find the vigorous market it reasonably anticipated at the end of 2010 and early 2011," the carrier says. "As a result, Amerjiet has not been able to provide service utilizing the full level of frequencies the department awarded to it."

Amerijet says in its 15 June application that it will be better positioned to market new routes to potential customers by December, due to the busier holiday season. The carrier says it intends to try to fill out all seven frequencies if granted the extension.

It is unlikely that competition for the newly-opened Brazil routes will have much effect on the DOT's reaction to the filings. Amerijet's filing says that of the 14 cargo frequencies opened in 2011, 11 are unrequested and unused. It adds that 14 more routes will be available each October until 2014, when the bilateral terms will permit unlimited scheduled cargo frequencies.

Kalitta and Amerijet have each requested extensions in the past. Kalitta was originally scheduled to start four newly-opened weekly frequencies to Brazil on 29 December, 2011. On 16 December, Kalitta received the green light to further that deadline for another six months to the current date of 30 June.

Amerijet received an exemption from the DOT on 13 May 2011 to start its seven weekly cargo routes to Brazil. At the time of the approval, three frequencies were available immediately, and the remaining four opened on 1 October. Amerijet asked to extend that deadline to 30 June in November, six months past the DOT's standard 90-day startup rule for new routes.

Both carriers have requested that the DOT respond to their requests before 30 June.