§ 5402. Contracts for transportation of mail by air

§ 5402. Contracts for transportation of mail by air

(a) In this section—

(1) the term “acceptance point” means the point at which nonpriority bypass mail originates;

(2) the terms foreign air carrier,11 So in original. Probably should be set off by quotation marks and the term “foreign air carrier” probably should appear only once. “air carrier”, “interstate air transportation”, “foreign air carrier”.22 So in original. The period probably should be a comma and the term “foreign air carrier” probably should appear only once. and “foreign air transportation” have the meanings given such terms in section 40102(a) of title 49, United States Code;

(3) the term “base fare” means the fare paid to the carrier issuing the passenger ticket or carrying nonmail freight which may entail service being provided by more than 1 carrier;

(4) the term “bush carrier” means a carrier operating aircraft certificated within the payload capacity requirements of subsection (g)(1)(A)(iv)(I) on a city pair route;

(5) the term “bush passenger carrier” means a passenger carrier that meets the requirements of subsection (g)(1)(A)(iv)(I) and provides passenger service on a city pair route;

(6) the term “bush route” means an air route in which only a bush carrier is tendered nonpriority bypass mail between the origination point, being either an acceptance point or a hub, as determined by the Postal Service, and the destination city;

(7) the term “certificated air carrier” means an air carrier that holds a certificate of public convenience and necessity issued under section 41102(a) of title 49;

(8) the term “city pair” means service between an origin and destination city pair;

(9) the term “code-share relationship” means a relationship pursuant to which any certificated air carrier or foreign air carrier’s designation code is used to identify a flight operated by another air carrier or foreign air carrier;

(10) the term “composite rate”—

(A) means a combination of mainline and bush linehaul rates and a single terminal handling payment at a bush terminal handling rate paid to a bush carrier for a direct flight from an acceptance point to a bush destination beyond a hub point; and

(B) shall be based on the mainline rate paid to the hub, plus the lowest bush rate paid to bush carriers in the State of Alaska for the distance traveled from the hub point to the destination point;

(11) the term “equitable tender” means the practice of the Postal Service of equitably distributing mail on a fair and reasonable basis between those air carriers that offer equivalent services and costs between 2 communities in accordance with the regulations of the Postal Service;

(12) the term “existing mainline carrier” means a mainline carrier (as defined in this subsection) that on January 1, 2001, was—

(A) certified under part 121;

(B) qualified to provide mainline nonpriority bypass mail service; and

(C) actually engaged in the carriage, on scheduled service within the State of Alaska, of mainline nonpriority bypass mail tendered to it under its designator code.33 So in original. The period probably should be a semicolon.

(13) the term “mainline carrier” means a carrier operating aircraft under part 121 and certificated within the payload capacity requirements of subsection (g)(1)(A)(iv)(II) on a given city pair route;

(14) the term “mainline route” means a city pair in which a mainline carrier is tendered nonpriority bypass mail;

(15) the term “new”, when referencing a carrier, means a carrier that—

(A) meets the respective requirements of subclause (I) or (II) of subsection (g)(1)(A)(iv), depending on the type of route being served and the size of aircraft being used to provide service;

(B) began providing nonpriority bypass mail service on a city pair route in the State of Alaska after January 1, 2001; and

(C) is not comprised of previously qualified existing mainline carriers as a result of merger or sale;

(16) the term “part 121” means part 121 of title 14, Code of Federal Regulations;

(17) the term “part 135” means part 135 of title 14, Code of Federal Regulations;

(18) the term “scheduled service” means—

(A) flights are operated in common carriage available to the general public under a published schedule;

(B) flight schedules are announced in advance in systems specified by the Postal Service, in addition to the Official Airline Guide or the air cargo equivalent of that Guide;

(C) flights depart whether full or not; and

(D) customers contract for carriage separately on a regular basis;

(19) the term “Secretary” means the Secretary of Transportation;

(20) the term “121 bush passenger carrier” means a bush passenger carrier providing passenger service on bush routes under part 121;

(21) the term “121 mainline passenger carrier” means a mainline carrier providing passenger service through scheduled service on routes under part 121;

(22) the term “121 passenger aircraft” means an aircraft flying passengers on a city pair route that is operated under part 121;

(23) the term “121 passenger carrier” means a passenger carrier that provides scheduled service under part 121;

(24) the term “135 bush passenger carrier” means a bush passenger carrier providing passenger service through scheduled service on bush routes under part 135; and

(25) the term “135 passenger carrier” means a passenger carrier that provides scheduled service under part 135.

(b) International Mail.—

(1) In general.—

(A) Except as otherwise provided in this subsection, the Postal Service may contract for the transportation of mail by aircraft between any of the points in foreign air transportation only with certificated air carriers. A contract may be awarded to a certificated air carrier to transport mail by air between any of the points in foreign air transportation that the Secretary of Transportation has authorized the carrier to serve either directly or through a code-share relationship with one or more foreign air carriers.

(B) If the Postal Service has sought offers or proposals from certificated air carriers to transport mail in foreign air transportation between points, or pairs of points within a geographic region or regions, and has not received offers or proposals that meet Postal Service requirements at a fair and reasonable price from at least 2 such carriers, the Postal Service may seek offers or proposals from foreign air carriers. Where service in foreign air transportation meeting the Postal Service’s requirements is unavailable at a fair and reasonable price from at least 2 certificated air carriers, either directly or through a code-share relationship with one or more foreign air carriers, the Postal Service may contract with foreign air carriers to provide the service sought if, when the Postal Service seeks offers or proposals from foreign air carriers, it also seeks an offer or proposal to provide that service from any certificated air carrier providing service between those points, or pairs of points within a geographic region or regions, on the same terms and conditions that are being sought from foreign air carriers.

(C) For purposes of this subsection, the Postal Service shall use a methodology for determining fair and reasonable prices for the Postal Service designated region or regions developed in consultation with, and with the concurrence of, certificated air carriers representing at least 51 percent of available ton miles in the markets of interest.

(D) For purposes of this subsection, ceiling prices determined pursuant to the methodology used under subparagraph (C) shall be presumed to be fair and reasonable if they do not exceed the ceiling prices derived from—

(i) a weighted average based on market rate data furnished by the International Air Transport Association or a subsidiary unit thereof; or

(ii) if such data are not available from those sources, such other neutral, regularly updated set of weighted average market rates as the Postal Service, with the concurrence of certificated air carriers representing at least 51 percent of available ton miles in the markets of interest, may designate.

(E) If, for purposes of subparagraph (D)(ii), concurrence cannot be attained, then the most recently available market rate data described in this subparagraph shall continue to apply for the relevant market or markets.

(2) Contract process.— The Postal Service shall contract for foreign air transportation as set forth in paragraph (1) through an open procurement process that will provide—

(A) potential offerors with timely notice of business opportunities in sufficient detail to allow them to make a proposal;

(B) requirements, proposed terms and conditions, and evaluation criteria to potential offerors; and

(C) an opportunity for unsuccessful offerors to receive prompt feedback upon request.

(3) Emergency or unanticipated conditions; inadequate lift space.— The Postal Service may enter into contracts to transport mail by air in foreign air transportation with a certificated air carrier or a foreign air carrier without complying with the requirements of paragraphs (b)(1) and (2) if—

(A) emergency or unanticipated conditions exist that make it impractical for the Postal Service to comply with such requirements; or

(B) its demand for lift exceeds the space available to it under existing contracts and—

(i) there is insufficient time available to seek additional lift using procedures that comply with those requirements without compromising the Postal Service’s service commitments to its own customers; and

(ii) the Postal Service first offers any certificated air carrier holding a contract to carry mail between the relevant points the opportunity to carry such excess volumes under the terms of its existing contract.

(c) Good Faith Effort Required.— The Postal Service and potential offerors shall put a good-faith effort into resolving disputes concerning the award of contracts made under subsection (b).

(d) If the Postal Service determines that service by certificated air carriers or combination of air carriers between any pair or pairs of points in foreign air transportation is not adequate for its purposes, it may contract, without advertising for bids, in such manner and under such terms and conditions as it may deem appropriate, with any air taxi operator or combination thereof for such air transportation service. Contracts made under this subsection may be renewed at the existing rate by mutual agreement between the holder and the Postal Service. The Postal Service, with the consent of the air taxi operator, may adjust the compensation under such contracts for increased or decreased costs occasioned by changed conditions occurring during the contract term. The Postal Service shall cancel such a contract when the Secretary authorizes an additional certificated carrier or carriers to provide service between any pair or pairs of points covered by the contract, and such carrier or carriers inaugurate schedules adequate for its purposes.

(e)

(1) The Postal Service may determine rates and contract with any air carrier for the transportation of mail by aircraft in interstate air transportation either through negotiations or competitive bidding.

(2)

(A) In the exercise of its authority under paragraph (1), the Postal Service may require any air carrier to accept as mail shipments of day-old poultry, honeybees, and such other live animals as postal regulations allow to be transmitted as mail matter. The authority of the Postal Service under this subparagraph shall not apply in the case of any air carrier who commonly and regularly refuses to accept any live animals as cargo.

(B) Notwithstanding any other provision of law, the Postal Service is authorized to assess, as postage to be paid by the mailers of any shipments covered by subparagraph (A), a reasonable surcharge that the Postal Service determines in its discretion to be adequate to compensate air carriers for any necessary additional expense incurred in handling such shipments.

(f) The authority of the Secretary and the Postal Service under subsections (b), (c), and (d) of this section shall also apply, and the authority of the Postal Service under subsection (e) shall not apply, to the transportation of mail by aircraft between any two points both of which are within the State of Alaska and between which the air carrier is authorized by the Secretary to engage in the transportation of mail.

(g)

(1)

(A) The Postal Service, in selecting carriers of nonpriority bypass mail to any point served by more than 1 carrier in the State of Alaska, shall adhere to an equitable tender policy within a qualified group of carriers, in accordance with the regulations of the Postal Service, and shall, at a minimum, require that any such carrier—

(i) hold a certificate of public convenience and necessity issued under section 41102(a) of title 49;

(ii) operate at least to such point at least the number of scheduled flights each week established under subparagraph (B)(i);

(iii) exhibit an adherence to such scheduled flights; and

(iv) have provided scheduled service with at least the number of scheduled noncontract flights each week established under subparagraph (B)(ii) between 2 points within the State of Alaska for at least 12 consecutive months with aircraft—

(I) up to 7,500 pounds payload capacity before being selected as a carrier of nonpriority bypass mail at an applicable intra-Alaska bush service mail rate; and

(II) over 7,500 pounds payload capacity before being selected as a carrier of nonpriority bypass mail at the intra-Alaska mainline service mail rate.

(B)

(i) For purposes of subparagraph (A)(ii)—

(I) for aircraft described under subparagraph (A)(iv)(I) the number is 3; and

(II) for aircraft described under subparagraph (A)(iv)(II), the number is 2, except as may be provided under subparagraph (C).

(ii) For purposes of subparagraph (A)(iv)—

(I) for aircraft described under subparagraph (A)(iv)(I), the number is 3; and

(II) for aircraft described under subparagraph (A)(iv)(II), for any week in any month before the effective date of the Rural Air Service Improvement Act of 2004, the number is 3, and after such date, the number is 2.

(C) The Postal Service, after consultation with affected carriers, may establish for service by aircraft described under subparagraph (A)(iv)(II)—

(i) a larger number of flights than required under subparagraph (B)(i); or

(ii) the days that service will operate.

(2) The Postal Service—

The tender of nonpriority bypass mail under subparagraph (G) shall be on an equitable basis between the qualified carriers that provide the direct service on the city pair route and the qualified carriers that provide service between the hub point being bypassed and the destination point, based on the volume of nonpriority bypass mail on both routes.

(A) may provide direct mainline non-priority bypass mail service to any bush point in the State of Alaska, without regard to paragraph (1)(B), if such service is equal to or better than interline service in cost and quality;

(B) shall deduct the non-priority bypass mail poundage flown on direct mainline flights to bush points within the State of Alaska by any carrier, from such carrier’s allocation of the total poundage of non-priority bypass mail transported to the nearest appropriate Postal Service hub point in any month;

(C) shall offer a bush passenger carrier providing service on a route in the State of Alaska between an acceptance point and a hub not served by a mainline carrier the opportunity to receive equitable tender of nonpriority bypass mail at mainline service rates when a mainline carrier begins serving that route if the bush passenger carrier—

(i) meets the requirements of paragraph (1);

(ii) provided at least 20 percent of the passenger service (as calculated in subsection (h)(5)) between such city pair for the 6 months immediately preceding the date on which the bush carrier seeks such tender; and

(iii) continues to provide not less than 20 percent of the passenger service on the city pair while seeking such tender;

(D) shall offer bush passenger carriers and nonmail freight carriers the opportunity to receive equitable tender of nonpriority bypass mail at mainline service rates from a hub point to a destination city in the State of Alaska if the city pair is also being served by a mainline carrier and—

(i) for a passenger carrier—

(I) the carrier meets the requirements of paragraph (1);

(II) the carrier provided at least 20 percent of the passenger service (as calculated in subsection (h)(5)) on the city pair route for the 6 months immediately preceding the date on which the carrier seeks such tender; and

(III) the carrier continues to provide not less than 20 percent of the passenger service on the route; or

(ii) for a nonmail freight carrier—

(I) the carrier meets the requirements of paragraph (1); and

(II) the carrier provided at least 25 percent of the nonmail freight service (as calculated in subsection (i)(6)) on the city pair route for the 6 months immediately preceding the date on which the carrier seeks such tender;

(E)

(i) shall not offer equitable tender of nonpriority mainline bypass mail at mainline rates to a bush carrier operating from an acceptance point to a hub point in the State of Alaska, except as described in subparagraph (C); and

(ii) may tender nonpriority bypass mail at bush rates to a bush carrier from an acceptance point to a hub point in the State of Alaska if the Postal Service determines that—

(I) the bush carrier meets the requirements of paragraph (1);

(II) the service to be provided on such route by the bush carrier is not otherwise available through direct mainline service; and

(III) tender of mail to such bush carrier will not decrease the efficiency of nonpriority bypass mail service (in terms of payments to all carriers providing service on the city pair route and timely delivery) for the route;

(F) may offer tender of nonpriority bypass mail to a passenger carrier from an acceptance point to a destination city beyond a hub point in the State of Alaska at a composite rate if the Postal Service determines that—

(i) the carrier provides passenger service in accordance with the requirements of subsection (h)(2);

(ii) the carrier qualifies under subsection (h) to be tendered nonpriority bypass mail out of the hub point being bypassed;

(iii) the tender of such mail will not decrease efficiency of delivery of nonpriority bypass mail service into or out of the hub point being bypassed; and

(iv) such tender will result in reduced payments to the carrier by the Postal Service over flying the entire route; and

(G) notwithstanding subparagraph (F), shall offer equitable tender of nonpriority bypass mail in proportion to passenger and nonmail freight mail pools described in this section between qualified passenger and nonmail freight carriers on a route from an acceptance point to a bush destination in the State of Alaska at a composite rate if—

(i)