US Airways is applying, subjected to U.S. approval, to start a second Brazil flight, this one to Sao Paulo, Brazil’s largest market, as soon as January 12, 2011. The airline began daily flights to Rio de Janeiro (GIG) this past December.

US Airways really, really wants to start flights between Charlotte and Sao Paulo (GRU). Unfortunately, GRU is a capacity restricted airport. Under the U.S.-Brazil bilateral aviation treaty, the additional frequencies to serve Brazil awarded by the DOT from 2008 on can’t be used to serve GRU (if at all) until a new terminal is complete there. And that’s not going to happen until 2014 or 2015.

So for US Airways to serve Sao Paulo before then, it must acquire unrestricted frequencies, those frequencies which were awarded earlier and do not contain a can’t-be-used-for-GRU-right-now limit. Such unrestricted rights are held by American Airlines (47 weekly frequencies), Delta (23), United (21), and Continental (14). US Airways’ original plan was to swap its seven weekly restrict frequencies for unrestricted frequencies from Delta (DL currently uses seven of its unrestricted frequencies to offer daily Atlanta – Rio de Janeiro service), and then apply for some more restricted frequencies for the Rio de Janeiro flight. This was part of a broader slot swap between US Airways and Delta. The slot swap though is pretty much dead as the airlines don’t want to sell off some slots at LaGuardia and Reagan National as the DOT required as a conditioning for approving the deal.

Instead what US Airways is now proposing is to lease seven of United’s frequencies until 2015. UA has year-round daily flights between Sao Paulo and both Chicago O’Hare and Washington Dulles. It uses its remaining seven unrestricted frequencies to offer seasonal Dulles – Rio de Janeiro flights. And it’s a short season — like a month of the year. So bye-bye IAD-GIG, hello CLT-GRU.

DOT approval is required. That’s very likely to happen though Sao Paulo rights are valuable enough that other airlines (think Delta) may object and request that United be stripped of the seven very underutilized frequencies it occasionally uses to offer IAD-GIG service. Even if this were to happen, US Airways almost certainly would win the rights as a new entrant to Sao Paulo.

Bonus observation: Brazil flights are double red-eyes, and thus it takes two widebodies to offer daily GRU flights. That’s two planes that could be used to offer new CLT – continental Europe service. So there’s no way CLT gets another flight to continental Europe before 2013 (when US Airways next gets new widebodies) unless an existing route gets dropped. CLT-Dublin on a 757 remains a possibility though, especially as a summer seasonal route.

Update: You can read the application, any responses, and the final order when issued by going here and doing a keyword search on “DOT-OST-2010-0183”.