UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, DC


### Issued by the Department of Transportation on July 29 , 201 4

NOTICE OF ACTION TAKEN

-- DOCKET S DOT

- OST

- 201 4

- 0100 and DOT

- OST

- 201 4

- 0 101

This serves as notice to the public of the action described below, taken by the Department official indicated (no additional confirming order will be issued in this matter).

Joint Application of UNITED AIRLINES, INC. ( United ) and SKYWEST AIRLINE S, INC. d/b/a UNITED EXPRESS (SkyWest)

, filed 6/9 /14 for :

XX E xemption for SkyWest for two years under 49 U.S.C. 40109 to provide the following service:
Scheduled foreign air transportation of persons, property, and mail between Houston, Texas , on the one hand, and Puerto Vallarta and San Jose del Cabo , Mexico , on the other hand

. 1 2

Applicant R ep resentative s : Gerald F. Murphy and Steven J. Seiden (202) 624

- 2500

DOT Analyst: Brett D. Kruger (202) 366

- 8025

D I S P O S I T I O N

XX Granted, subject to conditions (see below)

The above action granting exemption authority was effective when taken: July 29 , 2014 , through July 29 , 2016

. Action taken by: Paul L. Gretch, Director Office of International Aviation

XX The authority granted is consistent with the aviation agreement between the United States and Mexico.



### Except to the extent exempted or waived, this authority is subject to the terms, conditions, and limitations indicated:
XX The holder s’ certificate s of public convenience and necessity XX Standard Exemption Conditions (attached)

Responsive Pleadings/ Remarks : Under the U.S.

- Mexico aviation agreement, three U.S. carriers may be designated to provide own

- aircraft scheduled foreign air transportation of persons, property, and mail in the Houston

- Puerto Vallarta and Houston

- San Jose del Cabo markets . Currently, United and ExpressJet are designated to provide t hese services. The joint applicants state that they intend to replace the United Express services provided by ExpressJet in the market s with United Express services provided by SkyWest beginning on or about November 1, 2014 , and that no additional designa tions will be required

.

1 SkyWest states that it will display the “UA” designator code of United in the Houston

- Puerto Vallarta and Houston

- San Jose del Cabo market s on a seasonal basis beginning on or about November 1 , 2014.
2 United holds certificate authority to provide scheduled foreign air transportation of pe rsons, property, and mail in the Houston

- Puerto Vallarta and Houston

- San Jose del Cabo markets using its own aircraft and by placing its code on services provided by ExpressJet Airlines, Inc. (ExpressJet)

. See Orders 2000

- 5

- 31, 2010

- 5

- 17, and 2013

- 4

- 11. The j oint a pplicants state that United plans to substitute the service that ExpressJet currently provides in the markets with service operated by SkyWest

.On June 24 , 2014 Southwest Airlines Co. (Southwest) filed an answer to the Joint Application. Southwest notes the applicants ’ assertion that SkyWest will substitute the current services provided by ExpressJet in the subject markets, but Southwest questions the timing of ExpressJet’s return of its designations. Southwest points out that the joint application states that “Express Jet will retain its operating designations until the Department has taken action on the Joint Application, the Joint Applicants have begun providing the service requested herein, and ExpressJet has given notice to the Department that its operating designat ions are no longer required.” 3 Southwest asserts that United appears to contemplate holding all three designations for each market for an unspecified period of time

, and that even if ExpressJet relinquishes its designations, United will continue to control two of the three designations for both city pairs

. Southwest states that it does not oppose the j oint a pplication , but notes that it plans to serve Puerto Vallarta and San Jose del Cabo from Houston’s William P. Hobby airport in the future

. Sou thwest urges the Department to put the joint applicants on notice that if either markets are fully subscribed, one of their authorities and corresponding designations in the market s are subject to being rescinded if Southwest were to actively seek competin g authority to serve the Houston

- Puerto Vallarta or Houston

- San Jose del Cabo market s

. On July 1, 2014, the joint applicants filed a joint reply . The joint applicants contend that Southwest’s answer is without merit. The joint applicants again assert th at SkyWest’s services will simply replace the existing ExpressJet services in the subject markets, and that no additional designations will be required.

Decision: We have decided in the circumstances presented, including the fact that no party opposed th e application, that it is in the public interest to grant SkyWest the requested exemption authority. In reaching this decision, we recognize the concerns raised by Southwest , particularly with respect to the subject markets being fully subscribed for an unspecified period of time . In light of the joint applicants ’ assertion s that SkyWest will simply replace the services that ExpressJet provides and that additional designations will not be required

, we have decided to handle the designation withdrawal of ExpressJet in

a manner consistent with our handling of other recent requests of the joint applicants as set forth below

. 4

Effective Date for Start

- up/Designation: United may begin marketing and selling the subject United E xpress services authorized here, but SkyWest cannot commence the United Express Houston

- Puerto Vallarta and Houston

- San Jose del Cabo services until November 1 , 2014.

The joint applicants state that United Express service operated by ExpressJet will be re placed with United Express service operated by SkyWest commencing on November 1 , 2014. Under the circumstances presented in this case, as noted above , we have decided that it is in the public interest to grant SkyWest the requested exemption authority. In this regard, we will withdraw the designation s of ExpressJet effective upon the departure of its last scheduled flight s in the Houston

- Puerto Vallarta and Houston

- San Jose del Cabo market s respectively , but in no case effective later than 11:59 PM on Oc tober 31 , 2014, and designate SkyWest for Houston

- Puerto Vallarta and Houston

- San Jose del Cabo services effective November 1 , 2014. 5

Conditions : The U.S.

- Mexico exemption authority granted is subject to the dormancy notice requirements set forth in cond ition 7 of Appendix A of Order 88

- 10

- 2

, and the notice requirements for seasonal/intermittent services as set forth in Order 96

- 11

- 24, at 5

. Consistent with our standard policy, the dormancy notice period will begin on November 1 , 201 4

, SkyWest’s propose d start

- up date for the subject services

.

3 Joint Application, at 3, n. 4.
4 See e.g., Notice of Action Taken dated May 12, 2014, in Dockets DOT

- OST

- 2014

- 0060 and DOT

- OST

- 2013

- 0114; and Notice of Action Taken dated May 27, 2014, in Dockets DOT

- OST

- 2014

- 0058 and DOT

- OST

- 2014

- 0059.
5 We will also provide the necessary notification to the Government of Mexico confirming United’s authority to provi de code

- share service in the market s

.The code

- share operations conducted under this authorization are subject to the following conditions:

(a) The code

- sharing operations conducted under this authority must comply with 14 CFR 257 and with any amendment to the Department’s regulations concerning code

- share arrangements that
may be adopted. N otwithstanding any provisions in the contract between the carriers, our approval here is expressly conditioned upon the requirements that the subject foreign air transportation be sold in the name of the carrier holding out such service in computer reserva tion systems and elsewhere; that the carrier selling such transportation ( i.e. , the carrier shown on the ticket) accept responsibility for the entirety of the code

- share journey for all obligations established in its contract of carriage with the passenger ; and that the passenger liability of the operating carrier be unaffected; and

(b) The authority granted here is specifically conditioned so that neither United nor SkyWest shall give any force or effect to any contractual provisions between themselves that are contrary to these conditions.

On the basis of data officially noticeable under Rule 24(g) of the Department's regulations, we found the applicants qualified to provide the exemption services authorized.
Under authority assigned by the Department in its regulations, 14 CFR Part 385, we found that (1) our action was consistent with Department policy; (2) grant of the authority was consistent with the public interest; and (3) grant of the authority would not constitute a major regulatory action under th e Energy Policy and Conservation Act of 1975. To the extent not granted, we denied all requests in the referenced Docket s

. We may amend, modify, or revoke the authority granted in this Notice at any time without hearing at our discretion.

Persons entitl ed to petition the Department for review of the action set forth in this Notice under the Department’s regulations, 14 CFR §385.30, may file their petitions within seven (7) days after the date of issuance of this Notice. This action was effective when ta ken, and the filing of a petition for review will not alter such effectiveness.

An electronic version of this document is available on the World Wide Web at: www.regulations.govATTACHMENT

U.S. Carrier Exemption Conditions

In the conduct of the operations authorized, the U.S. carrier applicant(s) shall:

(1) Hold at all times effective operating authority from the government of each country served;

(2) Comply with applicable requirements concerning oversales contained in 14 CFR 250 (for scheduled operations, if authorized);

(3) Comply with the requirements for reporting dat a contained in 14 CFR 241;

(4) Comply with requirements for minimum insurance coverage, and for certifying that coverage to the Department, contained in 14 CFR 205;

(5) Except as specifically exempted or otherwise provided for in a Department Order, comply with the requirements of 14 CFR 203, concerning waiver of Warsaw Convention liability limits and defenses;

(6) Comply with all applicable requirements of the Federal Aviation Administration, the Transportation Security Administration, and with al l applicable U.S. Government requirements concerning security, including, but not limited to, 49 CFR Part 1544. To assure compliance with all applicable U.S. Government requirements concerning security, the holder shall, before commencing any new service (including charter flights) to or from a foreign airport, contact its Principal Security Inspector (PSI) to advise the PSI of its plans and to find out whether the Transportation Security Administration has determined that security is adequate to allow suc h airport(s) to be served;

(7) Comply with such other reasonable terms, conditions, and limitations required by the public interest as may be prescribed by the Department of Transportation, with all applicable orders and regulations of other U.S. agenci es and courts, and with all applicable laws of the United States.

The authority granted shall be effective only during the period when the holder is in compliance with the conditions imposed above.



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