On December 1, 2014, Silk Way West Airlines ("Silk Way") filed a response to

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2 BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Request of Silk Way West Airlines to amend issued exemption authority and pending application for a foreign air carrier permit, and motion to expedite processing (Baku-Hong Kong-Chicago-New York Luxembourg-Baku) Docket OST SURREPL Y OF KALITTA AIR, LLC TO RESPONSE OF SILK WAY WEST AIRLINES AND MOTION FOR LEAVE TO FILE 1 On December 1, 2014, Silk Way West Airlines ("Silk Way") filed a response to the surreply filed November 12 by Kalitta. In the interest of avoiding further burdening the record (and Department staff), Kalitta will endeavor to be brief in its rejoinder to Silk Way's assertions. 1. The real point of contention in this lengthy exchange of pleadings still remains clear, despite Silk Way's rhetoric: the "cargo handling fee" charged to U.S. carriers for ad hoc operations over Baku, outside the established contracts in which Silk Way is a participant, is grossly out of proportion to the very reasonable rate charged under those contracts. This makes independent ad hoc charters completely non-competitive. Silk Way's attempts to minimize the significance of this difference only serve to amplify it. 1 Kalitta moves that the Department accept this filing as an otherwise unauthorized document pursuant to Rule 302.6(c) of the Department's Rules of Procedure. The applicant has made significant statements of fact and law that must be addressed on the record if the Department is to make a thorough examination of the issues before it. Kalitta submits that no party would be prejudiced by acceptance of this Surreply.

3 2. Silk Way chides Kalitta for comparing the Baku cargo handling fee with landing fees at va rious U.S. airports, saying that Kalitta is trying to mislead the Department with an inappropriate comparison. However, it was Silk Way that made this comparison in its November 5 filing. It said that the extreme discrepancy in handling fees at Baku are nothing more than the ordinary difference in landing fees experienced by "signatory" versus "non-signatory" carriers in the United States. 2 Kalitta's response showed that this argument is specious. 3 In fact, however, the comparison is not irrelevant. While "signatory" carriers naturally enjoy lower landing fees than do transient carriers, the difference is not dramatic, whereas the discrepancy in cargo handling fees at Baku is more than six-fold. While Silk Way emphasizes that the EUR 0.50 (US$0.64) per kg. handling rate is "a published fee, but is subject to negotiation based upon airport use," this is of no relevance to a U.S. carrier that wishes to operate occasional charters at Baku, outside of an arrangement with Silk Way. The examples Silk Way gives of carriers that enjoy preferred rates are all scheduled carriers that operate more than daily service at the airport - hardly a meaningful comparison. 4 Silk Way also claims that though Kalitta was charged the published 64-cent rate for its partial cargo load on a flight operated in April, had it operated with a full 100,000 kg. load, this rate "would have been discounted 50% off of the published rates, had [Kalitta] simply requested it. " Kalitta has no reason to accept this claim apart from Silk Way's say-so; the lower rates cited by the carrier all pertain to frequency of operation, not the size of the load. In fact, BCT quoted Kalitta " November 5, 2014 Consolidated Reply of Silk Way West Airlines, at November 12, 2014 Surreply of Kalitta Air, LLC, at Silk Way notes in particular the $0.08 rate given to Cargolux. However, Kalitta understands that there is a business relationship between Silk Way and Cargolux that makes Cargolux's experience a poor example. 2

4 only the published rate, did not indicate that any discount was available, and never even asked how large the planned load was. And in any event, a volume discount does nothing to make partial planeload charters competitive. Kal itta fully understands that airports offer better rates on a variety of charges for carriers that are regular users. That "volume discount," however, is not what is represented by the royalty charged by the Baku Cargo Terminal. 3. Silk Way takes great exception to the fact that Kalitta complained that it was charged a 64-cent rate for its own ad hoc flights, but pays nothing when it flies on behalf of OHL/Silk Way. In fact, Silk Way notes, a 10 cent per kilo charge is included in the cost that is paid by the U.S. Transportation Command for these flights. Silk Way is correct - though Kalitta does not itself pay the charge. But this simply, once again, points up the gross difference between the handling charge paid by Silk Way and carriers under contract with it, as compared with that assessed of those who try to compete directly with Silk Way. The 10-cent rate referred to by Silk Way is very much in line with what is charged at airports throughout the world. In Kalitta's experience (which is quite broad), these rates run from $0.05 to $0.15 per kilogram. The carrier has never encountered, other than at Baku, a rate exceeding $0.20 per kg. 4. With respect to fuel prices, Kalitta has consistently been quoted $3.74 per gallon for flights which it has sought to operate outside the OHL contract. It was able to obtain the "special" $2.90 rate for the April flight because it persuaded OHL to purchase the fuel for it; it could not have obtained this rate on its own. The special prices allowed to carriers who do business with Silk Way or that have a very high scheduled utilization 3

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