Order 201 1

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UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportati on on the 29 th day of April , 201 1

Served: April 29 , 2011

Application of

OPEN JOINT STOCK COMPANY TRANSAERO

AIRLINES Docket DOT

- OST

- 2010

- 0093

for a foreign air carrier permit under 49 U.S.C. §41301

ORDER TO SHOW CAUSE Summary

By this order we tentatively find that it is in the public interest to grant Open Joint Stock Company Transaero Airlines (Transaero) a foreign air carrier permit attached as Appendix A to

this order.

A pplication

By application filed April 13, 2010 , as amended June 28, 2010 , and February 28, 2011

, Transaero , a foreign air carrier of the Russian Federation

, requests a foreign air carrier permit under 49 U.S.C. § 41301, to engage in (i) scheduled foreign air transportation of persons, property, and mail from any point or points behind the Russian Federation, via any point or points in the Russian Federation and intermediate points

, to Los Angeles, California ; New York, New York and Miami, Florida ; (ii) cha rter foreign air transportation of persons, property, and mail between points in the Russian Federation and points in the United States; and (iii) other charters pursuant to the prior approval requirements set forth in the Department’s regulations governin g charters

. 1

1 Transaero currently holds exemption authority in this docket for (i) scheduled foreign transportation of persons, property, and mail from any point or points behind the Russian Federation, via any point or points in th e Russian Federation and intermediate points, to Los Angeles, California; New York, New York and Miami, Florida ; (ii) charter foreign transportation of persons, property , and mail between points in the Russian Federation and points in the United States; and (iii) other charters pursuant to the prior approval requirements set forth in the Department’s regulations governing charters. See Order 2010

- 6

- 11, as amended by Notices of Action Taken dated July 12, 2010, and March 25, 2011, in this Docket.2

The applicant provided evidentiary materials required by 14 CFR Part 211 of our regulations to support its request for a foreign air carrier permit.

No answers were filed to the application.

Tentative Findings and Conclusions

We tentativel y find and conclude that the public interest warrants granting the applicant a foreign air carrier permit, in the form attached as Appendix A and subject to the conditions attached. 2

T he authority sought by the applicant is encompassed by the 1994 U.S.

- Ru ssia Air Transport Agreement. 3 We also note that the applicant is properly licensed by its homeland to perform the proposed services. In addition, the Federal Aviation Administration advised us that it knew of no reason why we should act unfavorably on t he applicant’s request. We have verified the applicant’s compliance with 14 CFR Parts 203 (Warsaw liability waiver), and 205 (insurance requirements).

With respect to the ownership and control of the applicant, we note that Transaero states that it is

pr ivately owned and that the company’s shares are openly traded and registered with the Russian

Federal Secu rities Market Commission. The applicant further states that 73.3% of the shares of the company can be identified as being held by citizens of the Rus sian Federation, through (a) direct ownership of shares, (b) LCC “Transaero

- Finance,” and (c) Sky Stream Corporation. The record shows that the remaining shares are held (a) by Prosperity Voskhod Fund Limited, an

investment fund domiciled in the Channel Islands (5%) and (b) by individuals holding less than 5% interest in the company (16.43%).

In the circumstances presented, to the extent that a question may exist as to whether the applicant is substantially owned and effectively controlled by citizens of the Russian Federation, we tentatively find that a waiver of the ownership and control requirement is warranted

, as there is no evidence on the record which would suggest that the ownership and control of the carrier

would be inimical to U.S. aviation policy or interests.

Finally, we tentatively find that the authority sought by the applicant , if finalized, should be subject to the following conditions:

I n the conduct of the charter services authorized herein, Transaero must adhere to (1) FAA

approved flight routings; and ( 2 ) the Air Transport Agreement between the United States and the Russian Federation, including its Annexes. In accordance with 14 CFR §212.9(d) and (e) of the Department’s rules Transaero shall not perform any charter(s) unless spec ific authority

2 The applicant’s request for a foreign air carrier permit was summarized in the Department’s published weekly list of applications filed. This notice described the authority sought and gave interested persons an opportunity to submit evidence and objections to the award of this foreign air carrier permit authority.

3 On February 13, 2009, the United States and the Russian Federation agreed, ad referendum , to revised Annexes to

the U.S.

- Russia Air Transport Agreement and stated that, pending their entry into fo rce, their respective aeronautical authorities intend to implement the provisions of those Annexes on the basis of comity and reciprocity.3

in the form of a statement of authorization for such charter(s) has been granted by the Department. Applications for the statements of authorization required above shall be filed in accordance with the procedures set forth in 14 CFR §212.10

.

In view of the foregoing and all facts of record, we tentatively find and conclude that:

1. It is in the public interest to issue the applicant a foreign air carrier permit in the form attached;

2. The applicant is fit, willing and able properly to perform the foreign air transportation described in the attached permit and to conform to the provisions of Title 49 of the U.S. Code, and to our rules, regulations, and requirements;

3. W aiver of our ownership and control requirement , to the extent nece ssary, is warranted in the circumstances presented

, as there is no evidence on the record which would suggest that the ownership and control of the carrier would be inimical to U.S. aviation policy or interests ;

4. The public interest requires that the exercise of the privileges granted by the permit should be subject to the terms, conditions, and limitations contained in the attached permit, and to such other reasonable terms, conditions, and limitations required by the public interest as we may prescri be;

5. The issuance of this foreign air carrier permit will not constitute a major regulatory action under the Energy Policy and Conservation Act of 1975, as defined in 14 CFR §313.4(a)(1) of our regulations; 4

6. The public interest does not require an oral evidentiary hearing on the a pplication; and

7. Our action with respect to this foreign air carrier permit should, unless disapproved by the President of the United States under § 41307 of Title 49 of the U.S. Code, become effective on the 61st day after its submission for § 41307 review, or upon the date of receipt of advice from the President or his designee under Executive Order 12597 and implementing regulations that he or she does not intend to disapprove this portion of the Department’s decisio n under that section,

whichever occurs earlier.

In view of the above, and acting under authority assigned by the Department in its regulations, 14 CFR Part 385, we tentatively find that our actions are consistent with Department policy.

4 This finding is based on the fact that the grant of this permit will not result in a near

- term net annual change in aircraft fuel consumption of 10 million gallons or more.4

ACCORDINGLY,

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. We direct all interested persons to show cause why our tentative decision on the application of Open Joint Stock Company Transaero Airlines , set forth above, should not be made final;

2 . Any interested person objecting to the issuance of an order ma king final our tentative findings and conclusions with respect to the applicant’s request for a foreign air carrier permit shall, no later than twenty

- one (21) calendar days after the date of service of this order, file with the Department and serve on the parties to this proceeding, a statement of objections specifying the part or parts of the tentative findings and conclusions objected to, together with a summary of testimony, statistical data, and concrete evidence to be relied upon in support of the obj ections; if objections are filed, answers to objections are due no later than seven (7) calendar days thereafter; 5

3 . If timely and properly supported objections are filed, we will give further consideration to the matters and issues raised by the object ions before we take further action;

4 . In the event no objections are filed, all further procedural steps shall be deemed waived, and the Department will enter an order which will (subject to Presidential review under § 41307 of

Title 49 of the U.S. Code ) make final our tentative findings and conclusions set forth in this order; and

5 . We will serve a copy of this order on Open Joint Stock Company Transaero Airlines ; the Embassy of the Russian Federation in Washington, D.C. ; the Department of State; and the

Federal Aviation Administration.

By:

PAUL L. GRETCH

Director

Office of International Aviation

(SEAL)

Appendi x

A n electronic version of this document is available on the World Wide Web at: http://www.regu lations.gov

5 Because we are providing for the filing of objections to our tentative decision in this order, we will not entertain petitions for review of this order.Appendix A

Issued by

Order 201 1

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UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.



### ---------------------------------------------------------------------------- PERMIT TO FOREIGN AIR CARRIER



### ------------------------------------------------ -----------------------------

OPEN JOINT STOCK COMPANY TRANSAERO AIRLINES

A Foreign Air Carrier of the Russian Federation

is authorized, subject to the following provisions, the provisions of Title 49 of the U.S. Code, and the orders, rules, and regul ations of the Department o f Transportation, to engage in the following:

S cheduled foreign air transportation of persons, property, and mail from any point or points behind the Russian Federation, via any point or points in the Russian Federation

and inter mediate points, to Los Angeles, California; New York, New York and Miami,

Florida ; and charter foreign transportation of persons, property, and mail between points in the Russian Federation and points in the United States

.

The holder shall also be authori zed to engage in other cargo charter trips in foreign air transportation, subject to the terms, conditions, and limitations of the Department’s regulations governing charters.

This permit and the exercise of the privileges granted in it shall be subject t o the terms, conditions and limitations in both the order issuing this permit and the attachment to this order, and to all applicable provisions of any treaty, convention or agreement affecting international air transportation now in effect, or that may be come effective during the period this permit remains in effect, to which the United States and the holder’s homeland are or shall become parties.

This permit shall be effective on

____ __ , 20 1 1 . Unless otherwise terminated at an earlier date

pursuant to the terms of any applicable treaty, convention or agreement, this permit shall terminate (1) upon the dissolution or liquidation of the holder to whom it was issued; (2) upon the effective date of any treaty, convention, or agreement or amendment, which sh all have the effect of eliminating the bilateral right for the service authorized by this permit from the service which may be operated by airlines designated by the Government of the Russian Federation (or, if the right is partially eliminated, then the a uthority of this permit shall terminate in like part); (3) upon the effective date of any permit granted by the Department to any other carrier designated by the Government of the Russian Federation in lieu of the holder; or (4) upon the termination or exp iration of the applicable air services agreement between the United States and

the Russian Federation . However, clause (4) of this paragraph shall not apply if prior to such termination or expiration, the foreign air transportation authorized herein becom es the subject ofanother treaty, convention or agreement to which the United States and the Russian Federation become parties.

The Department of Transportation has executed this permit and affixed its seal on _______ __, 2011

.

By:

PAUL L. GRETCH

Dir ector

Office of International Aviation



### (SEAL)Foreign Air Carrier Permit Conditions

In the conduct of the operations authorized, the foreign carrier applicant shall:

(1) Not conduct any operations unless it holds a currently effective authorization from its homeland for such operations, and it has filed a copy of such authorization with the Department;

(2) Comply with all applicable requirements of the Federal Aviation Administration, the Transportation Security Administration, and with all applic able U.S. Government requirements concerning security, including, but not limited to, 14 CFR Parts 129, 91, and 36 and 49 CFR Part 1546 or 1550, as applicable. To assure compliance with all applicable U.S. Government requirements concerning security, the h older shall, before commencing any new service (including charter flights) from a foreign airport that would be the holder’s last point of departure for the United States, contact its International Industry Representative (IIR) (formerly referred to as Int ernational Principal Security Inspector) to advise the IIR of its plans and to find out whether the Transportation Security Administration has determined that security is adequate to allow such airport(s) to be served;

(3) Comply with the requirements fo r minimum insurance coverage contained in 14 CFR Part 205, and, prior to the commencement of any operations under this authority, file evidence of such coverage, in the form of a completed OST Form 6411, with the Federal Aviation Administration’s Program M anagement Branch (AFS

- 260), Flight Standards Service (any changes to, or termination of, insurance also shall be filed with that office);

(4) Not operate aircraft under this authority unless it complies with operational safety requirements at least equiv alent to Annex 6 of the Chicago Convention;

(5) Conform to the airworthiness and airman competency requirements of its Government for international air services;

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

(7) Agree that operations under this authority constitute a waiver of sovereign immunity, for the purposes of 28 U.S.C. 1605(a), but only wi th respect to those actions or proceedings instituted against it in any court or other tribunal in the United States that are: (a) based on its operations in international air transportation that, according to the contract of carriage, include a point in the United States as a point of origin, point of destination, or agreed stopping place, or for which the contract of carriage was purchased in the United States; or (b) based on a claim under any international agreement or treaty cognizable in

any court o r other tribunal of the United States. In this condition, the term "international air transportation" means "international transportation" as defined by the Warsaw Convention, except that all States shall be considered to be High Contracting Parties for t he purpose of this definition;

(8) Except as specifically authorized by the Department, originate or terminate all flights to/from the United States in its homeland;

(9) Comply with the requirements of 14 CFR Part 217, concerning the reporting of sched uled, nonscheduled, and charter data;

(10) If charter operations are authorized, except as otherwise provided in the applicable aviation agreement, comply with the Department's rules governing charters (including 14 CFR Parts 212 and 380); and

(11) Compl y with such other reasonable terms, conditions, and limitations required by the public interest as may be prescribed by the Department, with all applicable orders or regulations of other U.S. agencies and courts, and with all applicable laws of the United States.

This authority shall not be effective during any period when the holder is not in compliance with the conditions imposed above. Moreover, this authority cannot be sold or otherwise transferred without explicit Department approval under Title 49 o f the U.S. Code.

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