The DOT has asked airlines that want to add flights to Brazil to submit proposals. Under the U.S.-Brazil bilateral air treaty, 14 additional weekly rights become available for U.S. carriers come October. The big restriction: these new rights can’t be used to serve Sao Paolo, Brazil’s largest market.

You’ll recall getting seven of these 14 new rights is part of U.S. Airways’ plan to offer daily nonstops to both Sao Paolo and Rio from Charlotte. They currently have the authority to fly to Brazil seven times a week, but the specific rights they have don’t allow service to Sao Paolo. The idea was to get Sao Paolo authority as part of the slot swap with Delta, move the existing Rio flight to Sao Paolo (or fly CLT-So Paolo-Rio), then hope to get the rights for replacement nonstop Rio service from this new route award case.

This was always an optimistic strategy, as there was no guarantee that US Airways could win the replacement rights even if the slot swap went through. Other airlines could have submitted stronger applications. But that’s all a moot point at the moment, as the slot swap was approved subject to conditions that Delta and US Airways claim are unacceptable. The two airlines have offered a counter proposal, but whether DOT will accept that is uncertain, and whether it will even act before the Brazil applications are due is also unknown.

Update: The 2010 route awards are the last currently-approved expansion of U.S.-Brazil air service. So it’s a make-or-break for two Brazil flights from CLT and currently looking like a break.

There are rumors though that Brazil might allow more flights in the future, but nothing has been agreed to yet. The focus would likely again be everyplace but Sao Paolo; additional Sao Paolo service depends on building a new terminal, and that maybe five years off.