Order 2011-3-29

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 24th day of March, 2011

 Served: March 24, 2011

Application of

ARIK AIR LIMITED Docket DOT-OST-2010-0279

 

for an exemption under 49 U.S.C. §40109 and a foreign 

air carrier permit under 49 U.S.C. §41301 

ORDER GRANTING EXEMPTION AND TO SHOW CAUSE

Summary

By this order we (1) grant the application of the referenced foreign air carrier for an exemption 

under 49 U.S.C. §40109, subject to conditions;

1 and (2) tentatively find that it is in the public 

interest to grant the applicant the foreign air carrier permit attached as Appendix B to this 

order.

Background

On August 23, 2005, the Department issued a Notice, in Docket DOT-OST-2005-22228,

announcing several steps designed to streamline our regulatory procedures for licensing U.S. 

and foreign air carriers. Among other things, the Notice stated that:

Assuming, based on the record and on the public interest/public convenience and 

necessity elements germane to our licensing decisions, that we were in a position to 

act favorably, we would proceed to issue a single order (1) granting the exemption 

request for whatever duration we would normally have imposed, or until 

certificate/permit authority becomes effective, whichever is shorter, and (2) 

tentatively deciding (i.e., show-cause) to award a corresponding certificate (or 

permit), again for the standard duration we would normally have imposed (such as, 

 1 The conditions are attached as Appendix A.
2

in the case of certificates, five years for limited-entry markets, indefinite for 

open-entry markets, and in the case of permits, five years for comity and reciprocity 

regimes, indefinite for agreement regimes).

Our action in this Order serves to implement these streamlined regulatory procedures for the 

application involved in this proceeding.

Application

By application filed November 11, 2010, Arik Air Limited (Arik Air), a foreign air carrier of 

Nigeria, requests an exemption under 49 U.S.C. §40109 and a foreign air carrier permit under 

49 U.S.C. §41301 to engage in scheduled foreign air transportation of persons, property, and 

mail from points behind Nigeria, via Nigeria and intermediate points, to a point or points in 

the United States and beyond.

2

 

The applicant provided evidentiary materials required by 14 CFR Part 211 of our regulations 

to support its requests for authority. 

Responsive Pleadings

On December 3, 2010, the City of Houston and the Greater Houston Partnership filed an 

answer in support of Arik Air’s request.

On February 24, 2011, SH&E filed an answer to Arik Air’s application.3

 SH&E claimed that 

Arik Air’s corporate parent, Arik Air International Ltd. (Arik International), has failed to pay 

outstanding professional fees and expenses owed to SH&E, calling into question the financial 

fitness of Arik Air. SH&E urged the Department to carefully scrutinize Arik Air’s financial

fitness and withhold granting authority.

On March 1, 2011, Arik Air filed a reply to the answer of SH&E. Arik Air stated that 

SH&E’s private contractual dispute with Arik International has nothing to do with Arik Air, 

or its present request for authority. Arik Air urged the Department to follow its established 

precedent, and not involve itself in this private commercial dispute.

Decision

We have decided, under assigned authority and consistent with our August 23, 2005 Notice 

referenced above, to grant the applicant’s request for exemption authority, subject to 

 2 Arik Air currently holds exemption authority to provide scheduled foreign air transportation of persons, 

property, and mail between Lagos, Nigeria and a specified U.S. point, using aircraft wet leased from an 

appropriately qualified U.S. or foreign carrier. See Notice of Action Taken, dated April 4, 2008, in Docket 

DOT-OST-2007-0029. 3 SH&E accompanied its answer with a motion for leave to file late. We grant the motion.
3

conditions, and tentatively to grant, subject to show-cause procedures, its request for a foreign 

air carrier permit, also subject to conditions.

With respect to the applicant’s request for exemption authority, we find that grant of this 

authority is consistent with the public interest; that the applicant has demonstrated, based on 

the record, that it is financially and operationally qualified to perform the services authorized;

4

and that it is substantially owned and effectively controlled by citizens of its claimed 

homeland.5

 

The authority sought by the applicant is encompassed by the Air Transport Agreement 

between the United States and Nigeria. We also note that the applicant is properly licensed by 

its homeland to perform the proposed services. 

In addition, on February 18, 2011, the Federal Aviation Administration advised us that it 

knew of no reason why we should act unfavorably on the applicant’s requests. We have 

verified the applicant’s compliance with 14 CFR Parts 203 (Warsaw liability waiver), and 205 

(insurance requirements).

With respect to the concerns raised by SH&E, we conclude that those concerns, when viewed 

in the context of the totality of the record, provide no persuasive basis to withhold the 

requested authority. This private contractual matter is a type that we regard as properly 

resolved in other fora.

We therefore find that grant of the requested exemption authority, for a two-year term, or until 

the requested permit authority becomes effective, whichever occurs earlier, is warranted.

Tentative Findings and Conclusions--Foreign Air Carrier Permit Application

We tentatively find and conclude that the public interest warrants granting the applicant a 

foreign air carrier permit, in the form attached as Appendix B and subject to the conditions 

attached.6

 In particular, we tentatively find and conclude that the factors which support our 

grant of exemption authority to the applicant also warrant granting the applicant the foreign 

air carrier permit it seeks.

 4 The applicant has requested confidential treatment of its revenue forecasts, under the provisions of 14 CFR 

302.12. Good cause having been shown, we will grant this request.

5 The record indicates that Sir J.I.A. Arumemi-Ikhide and his wife, Mrs. M. Arumemi-Ikhide, both citizens of 

Nigeria, own ninety-five percent (95%) of the stock of Arik Air; and that Mr. David Mablaku, also a citizen of 

Nigeria, owns the remaining five percent (5%). The record further indicates that of the four directors identified 

by Arik Air in its application, three are citizens of Nigeria.

6 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.
4

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. The applicant is substantially owned and effectively controlled by citizens of its claimed 

homeland;

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 prescribe;

5. The public interest does not require an oral evidentiary hearing on the application; and

6. 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 decision 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 find that (1) our actions are consistent with Department policy; and (2) 

with respect to the exemption authority we are conferring on the applicant, the applicant is

qualified to perform those operations.

7

 

ACCORDINGLY,

1. We grant the request of Arik Air Limited for an exemption under 49 U.S.C. §40109 to

permit it to engage in scheduled foreign air transportation of persons, property, and mail from 

points behind Nigeria, via Nigeria and intermediate points, to a point or points in the United 

States and beyond;

 7 The applicant states that the introduction of its services will result in a near-term annual change in fuel 

consumption exceeding 10 million gallons. Under the provisions of the Energy Policy and Conservation Act of 

1975 and 14 CFR Part 313 of our rules, we have considered the matter of Arik Air’s anticipated fuel 

consumption along with the other public interest factors we consider in taking action in a proceeding of this kind. 

We find, in the circumstances presented, that in view of our obligations under 49 U.S.C. 40105 to act consistently

with international agreements (in this case the U.S.-Nigeria Air Transport Agreement), and the public benefits 

that will be derived from Arik Air’s services, approval of the request notwithstanding the anticipated level of fuel 

consumption is warranted.
5

2. The exercise of the privileges granted above is subject to compliance by Arik Air Limited

with the conditions listed in Appendix A and to the condition that, in the conduct of the 

services authorized herein, Arik Air Limited must adhere to the provisions of the Air 

Transport Agreement between the United States and Nigeria; 

3. We grant the motion of Arik Air Limited for confidential treatment of its projected revenue 

forecasts, consistent with the provisions of 14 CFR §302.12;

4. Our action granting the exemption authority described herein is effective immediately, for 

a period of two years from the issue date of this order, or until the attached permit becomes 

effective, whichever is earlier;

5. We may amend, modify, or revoke the exemption authority set forth in ordering paragraph 

1 at our discretion at any time and without hearing;

6. To the extent not acted upon above, we dismiss the applicant’s request for exemption 

authority in Docket DOT-OST-2010-0279;

7. With respect to the applicant’s request for a foreign air carrier permit in this proceeding, 

we direct all interested persons to show cause why our tentative decision on that application, 

set forth above, should not be made final;

8. Any interested person objecting to the issuance of an order making 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 objections; if objections are filed, answers to objections are due no later than seven (7) 

calendar days thereafter;

9. If timely and properly supported objections are filed, we will give further consideration to 

the matters and issues raised by the objections before we take further action;

10. 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

11. We will serve a copy of this order on Arik Air Limited, the City of Houston and the 

Greater Houston Partnership, SH&E, the Embassy of Nigeria in Washington, D.C., the 

Department of State, and the Federal Aviation Administration.
6

Persons entitled to petition the Department for review of this order under the Department’s 

regulations, 14 CFR §385.30, may file their petitions within seven (7) days after the date of 

issuance of this order. Our action with respect to the applicant’s request for exemption 

authority under 49 U.S.C. §40109 is effective immediately, and the filing of a petition for 

review will not alter such effectiveness.

By:

PAUL L. GRETCH

Director

Office of International Aviation

(SEAL)

Appendices

An electronic version of this document is available on the World Wide Web at:

http://www.regulations.gov
Foreign Carrier Exemption Conditions Appendix A

In the conduct of the operations authorized, the foreign carrier applicant(s) 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 applicable 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 holder 

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 International 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 for 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 Management 

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 equivalent 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, comply 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 with 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 or 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 the 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 scheduled, 

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) Comply 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 of the U.S. Code.

12/2007
Appendix B

Issued by

Order 2011-_-_

 UNITED STATES OF AMERICA 

 DEPARTMENT OF TRANSPORTATION 

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

--------------------------------------------------------

PERMIT TO FOREIGN AIR CARRIER

---------------------------------------------------------

Arik Air Limited

A Foreign Air Carrier of Nigeria

is authorized, subject to the following provisions, the provisions of Title 49 of the U.S. Code, 

and the orders, rules, and regulations of the Department of Transportation, to engage in:

Scheduled foreign air transportation of persons, property, and mail from points behind 

Nigeria, via Nigeria and intermediate points, to a point or points in the United States 

and beyond.

This permit and the exercise of the privileges granted in it shall be subject to 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 become 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 _____________. 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 shall 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 Nigeria (or, if the right is 

partially eliminated, then the authority 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 Nigeria in lieu of the holder; or (4) upon the termination or expiration of the 

applicable air services agreement between the United States and Nigeria. However, clause (4) of 

this paragraph shall not apply if prior to such termination or expiration, the foreign air 

transportation authorized herein becomes the subject of another treaty, convention or agreement 

to which the United States and Nigeria become parties.
9

The Department of Transportation has executed this permit and affixed its seal on 

 , 2011.

By:

PAUL L. GRETCH

Director

Office of International Aviation

(SEAL)
Foreign Carrier Permit Conditions

In the conduct of the operations authorized, the foreign carrier applicant(s) 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 applicable 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 holder 

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 International 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 for 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 Management 

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 equivalent 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, comply 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 with 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 or 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 the 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 scheduled, 

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) Comply 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 of the U.S. Code.

12/2007