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BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Application of

JOINT STOCK COMPANY

AIRCOMPANY “YAKUTIA”

for an amended foreign air carrier permit pursuant

to 49 U.S.C. § 41302

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Docket DOT-OST-2012-0047

APPLICATION OF JOINT STOCK COMPANY AIRCOMPANY “YAKUTIA”

FOR AN AMENDED FOREIGN AIR CARRIER PERMIT

Communications with respect to this document should be addressed to:

Sheryl R. Israel

HOGAN LOVELLS US LLP

Columbia Square

555 Thirteenth Street, NW

Washington, DC 20004

Telephone: +1 202 637 8898

Facsimile: +1 866 728 1992

E-mail: sheryl.israel@hoganlovells.com

Counsel for

JOINT STOCK COMPANY

AIRCOMPANY “YAKUTIA”

August 15, 2013

NOTICE: Any person may support or oppose this application by filing an answer

and serving a copy of that answer on counsel for Joint Stock Company

Aircompany “Yakutia” and all persons served with this application.

Answers are due September 5, 2013.
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BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Application of

JOINT STOCK COMPANY

AIRCOMPANY “YAKUTIA”

for an amended foreign air carrier permit pursuant

to 49 U.S.C. § 41302

)

)

)

)

)

)

)

Docket DOT-OST-2012-0047

August 15, 2013

APPLICATION OF JOINT STOCK COMPANY AIRCOMPANY “YAKUTIA”

FOR AN AMENDED FOREIGN AIR CARRIER PERMIT

Joint Stock Company Aircompany “Yakutia” (“Yakutia” or the “Applicant”) hereby

applies under 49 U.S.C. § 41302 and Subpart B of the Department’s Rules of Practice

(14 C.F.R. § 302.201, et seq.), Part 211 of the Department’s Economic Regulations

(14 C.F.R. Part 211), and the Department’s August 23, 2005 Notice in Docket DOTOST-2005-22228 (the “Streamlined Licensing Procedures Notice”) for an amended

foreign air carrier permit adding authority for Yakutia to engage in scheduled foreign air

transportation of persons, property, and mail between any point or points in the Russian

Federation and Saipan, Commonwealth of the Northern Mariana Islands (CNMI), via

intermediate points, and beyond.1

Yakutia requests that its application be decided on the basis of written

submissions pursuant to 14 C.F.R. § 302.207. Moreover, in accordance with the

Streamlined Licensing Procedures Notice (fn. 2) and 14 C.F.R. § 302.210(a)(2), the

Applicant requests that the Department proceed promptly and directly to a final decision

issuing Yakutia an amended foreign air carrier permit adding the Russia-Saipan route

1

Yakutia acknowledges that service to points beyond Saipan would be limited to those points

specified in the U.S.-Russia Air Transport Agreement being applied and to those points named

by the Russian Federation thereunder.
Application of Yakutia for an Amended Permit

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for a period of indefinite duration. Such processing would be appropriate given that

(a) the Applicant has been designated to provide scheduled service to Saipan by the

Russian Federation, (b) foreign air carriers holding effective Department authority for

scheduled routes are already authorized to serve Saipan and other CNMI international

airports by a blanket exemption granted by the Department, and (c) this application

raises no material issues of fact that warrant further procedures for their resolution.

In support of this application, Yakutia submits the following information:

1. Yakutia is a Russian Far East air carrier that obtained initial DOT

economic authority last year. Pursuant to exemption authority granted by Order

2012-5-15 and a foreign air carrier permit subsequently issued by Order 2012-8-15, the

Department authorized Yakutia to engage in (i) scheduled foreign air transportation of

persons, property, and mail between any point or points in the Russian Federation and

any point or points in Alaska, and (ii) charter foreign air transportation of persons,

property, and mail between any point or points in the Russian Federation and any point

or points in the United States. Under such authority, Yakutia introduced scheduled

service between Petropavlovsk-Kamchatsky (PKC) and Anchorage (ANC) during the

summer 2012 season and resumed summer service on that route this year. In addition,

since March 31, 2013, Yakutia has operated weekly charter service between

Khabarovsk (KHV) and Saipan (SPN). See Statement of Authorization #2013-091,

approved February 14, 2013.

2. Based on the success of the KHV-SPN charter program, Yakutia intends

to transition to scheduled service on this route as soon as all regulatory approvals have

been secured. Yakutia is already authorized by DOT to serve this route on a scheduled

basis by Order 2007-4-9 (“CNMI Expanded Air Services Order”), which grants, among

other things, foreign air carriers that hold or may subsequently receive effective
Application of Yakutia for an Amended Permit

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Department authority to engage in scheduled foreign air transportation exemption

authority to serve the CNMI from authorized homeland points. See CNMI Expanded Air

Services Order, ordering paragraph 3. The authority granted under the CNMI Expanded

Air Services Order remains in effect under the automatic extension provisions of the

Administrative Procedure Act, 5 U.S.C. § 558(c). See Application of the CNMI for

Renewal and Amendment, dated April 2, 2009 (Docket DOT-OST-2006-25663), which

remains pending. Thus, although Yakutia is already authorized to commence scheduled

service on the KHV-SPN route by exemption, the Applicant is also seeking, in

accordance with the Streamlined Licensing Procedures Notice (see Notice, fn. 2), an

amended foreign air carrier permit to add longer-term authority to serve Saipan to the

full extent contemplated under the U.S.-Russia air transport agreement.

3. Yakutia is fit, willing, and able to provide the additional scheduled foreign

air transportation described in this application. By application dated March 27, 2012 in

Docket DOT-OST-2012-0047, Yakutia furnished information to the Department that

supports a determination that it is operationally and financially qualified to engage in

scheduled and charter foreign air transportation. Pursuant to 14 C.F.R. § 211.14,

Yakutia hereby incorporates by reference the information in that application responsive

to paragraphs (a), (b), (o), (r) and (s) of § 211.20, which, except as stated and

supplemented below, is substantially unchanged. Yakutia requests, pursuant to

Rule 24(g) of the Department’s Rules of Practice, that the Department take official

notice of the relevant facts contained in Docket DOT-OST-2012-0047 and otherwise on

file with the Department to support approval of this permit amendment application.

4. Updated and additional fitness information required under

14 C.F.R. § 211.21 establishing Yakutia’s qualifications for issuance of an amended
Application of Yakutia for an Amended Permit

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foreign air carrier permit authorizing scheduled Russia-Saipan air transportation is as

follows:

§ 211.20(c) & (p) Statement of the additional authority requested, a description

of the new services proposed, and an estimate showing the

total traffic and financial results of the new services for the first

full year of normal operations.

Yakutia is seeking an amended foreign air carrier permit under the

Department’s streamlining procedures to authorize Yakutia to provide -- in

addition to the scheduled Russia-Alaska services and charter services

authorized under its foreign air carrier permit issued by Order 2012-8-15 --

scheduled foreign air transportation of persons, property, and mail between any

point or points in the Russian Federation and Saipan, CNMI, via intermediate

points, and beyond. Such authority is available to Russian air carriers under the

1994 U.S.-Russia Air Transport Agreement, as amended, including the

February 14, 2013 ad referendum agreement to revise the Annexes to the

agreement, the provisions of which are being implemented on the basis of

reciprocity and comity pending their entry into force.2

Pursuant to the CNMI Expanded Air Services Order and the amended

permit authority requested in this application, Yakutia plans to introduce yearround scheduled service between KHV and SPN using Boeing 737-700 or -800

aircraft seating up to 170 passengers. The scheduled services will initially be

operated once a week on Sundays. Yakutia may make seasonal adjustments to

2 Under revised Annex I attached to the ad referendum agreement, rights for designated

Russian airlines to provide scheduled service beyond Saipan and the other named U.S. points

include an unlimited number of points on a code-share only basis without traffic rights, and are

otherwise limited to Sao Paulo, Bogota, Quito and twelve additional points named by the

Russian Federation. Yakutia proposes to exercise beyond rights under its amended permit

only to the extent authorized by the air transport agreement being applied.
Application of Yakutia for an Amended Permit

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the service frequency and may also introduce other scheduled services to

Saipan in the future.

For the winter season, the proposed KHV-SPN schedule is as follows (all

times local):

Flight # Route A/C Type Departure Arrival

R3549 KHV-SPN B737 12:45 17:35

R3550 SPN-KHV B737 18:55 01:45 / +1

Based on the load factors with respect to Yakutia’s current charter

service on the KHV-SPN route, Yakutia reasonably projects generating gross

operating revenues of approximately $4.3 million and an operating profit of

approximately $130,000 for the first year of scheduled KHV-SPN passenger

operations.

§ 211.20(d) & (e) Updated ownership and control information.

Yakutia remains substantially owned and effectively controlled by

Russian citizens. All of Yakutia’s shares remain held by the regional government

of the Republic of Sakha (Yakutia), and Mr. Ivan A. Prostit, a Russian citizen and

resident of the Republic of Sakha (Yakutia), remains Yakutia’s Director General.

All other senior officers and key management personnel of Yakutia are Russian

citizens and residents of the Republic of Sakha (Yakutia).

§ 211.20(i) Evidence of the Applicant’s homeland operating authority.

Attached as Exhibit A is Air Operator Certificate No. 464 issued by the

Ministry of Transportation of the Russian Federation to Aircompany “Yakutia” on

May 28, 2012, which remains in force until revoked or suspended. The Applicant

will obtain necessary amendments to the Operations Specifications associated

with this AOC in order to provide the proposed services to Saipan.
Application of Yakutia for an Amended Permit

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§ 211.20(l) Updated aircraft maintenance information.

Yakutia’s maintenance program continues to comply with ICAO pilots and

airmen annexes 1, 6 (Part 1) and 7.

§ 211.20(n) Updated financial data summaries.

Exhibit B contains Yakutia’s financial data summaries for 2011 and 2012.

§ 211.20(q) Authorization under the air transport agreement between the

United States and Russia.

The Russia-Saipan scheduled service proposed by Yakutia is consistent

with the 1994 U.S.-Russia Air Transport Agreement, as amended. Annex I,

Section 2.B., attached to the February 14, 2013 ad referendum agreement lists

the scheduled routes for airlines designated by the Government of the Russian

Federation, including “[f]rom a point or points in the Russian Federation via

intermediate points to...Saipan...and beyond....” By Diplomatic Note No.

3321/dsa dated June 15, 2013, the Russian Ministry of Foreign Affairs has

designated Yakutia for scheduled service to Saipan under Article 3 of the Air

Transport Agreement and revised Annex I.

§ 211.20(s) Updated information concerning safety or tariff violations or any

fatal accidents.

Since filing its March 27, 2012 application in this docket, Yakutia has not

been involved in any fatal accidents or any tariff or safety violations.

5. The introduction of the weekly scheduled KHV-SPN services

contemplated by Yakutia in lieu of existing charter services on this route is already

authorized under the CNMI Expanded Air Services Order and, in any event, will not
Application of Yakutia for an Amended Permit

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involve a near-term net annual change in aircraft fuel consumption exceeding 10 million

gallons, meaning approval of this application would not constitute a “major regulatory

action” under the Energy Policy and Conservation Act, as implemented by

14 C.F.R. Part 313. Yakutia does not anticipate encountering any difficulty in obtaining

adequate supplies of fuel for its proposed services from existing sources.

6. Prompt approval of this application is in the public interest. Issuing

Yakutia indefinite permit authority to provide scheduled service to Saipan to the full

extent contemplated by the U.S.-Russia Air Transport Agreement, as amended, will help

encourage and maximize the Applicant’s long-term service commitment in the RussiaSaipan market. Yakutia’s scheduled service between Russian points and Saipan will

promote foreign travel and tourism to the CNMI. As the Department is well aware, air

transportation plays a crucial role in the CNMI’s economy. See Order 2007-2-23 at 7

(“[w]e recognize that air service is vitally important to the CNMI, and that the CNMI...is

geographically isolated and heavily dependent on air transportation as a vital element of

its economy.”) Yakutia’s scheduled flights between Khabarovsk and Saipan will help

meet and stimulate demand for passenger air transportation between the Russian

Federation and the CNMI, to the benefit of the CNMI’s economy. The Department

should promptly issue Yakutia amended permit authority to include Russia-Saipan

routes so that these valuable services may commence and continue without disruption

and, if warranted, expand in the future.

7. In conclusion, Yakutia is eager and well-qualified to introduce valuable

and convenient scheduled air transportation between Russia and Saipan that is

consistent with the U.S.-Russia Air Transport Agreement, as amended, constituting

prima facie evidence that approval of this application is in the public interest. Approval

of this application would also be consistent with the Streamlined Licensing Procedures
Application of Yakutia for an Amended Permit

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Notice, the Department’s and the CNMI’s efforts to promote expanded air transportation

service to the CNMI under the CNMI Expanded Air Services Order, and the

Department’s standards for issuance of amended permit authority to foreign air carriers.

WHEREFORE, Joint Stock Company Aircompany “Yakutia” respectfully requests

that the Department promptly issue an amended foreign air carrier permit to Yakutia

adding authority for Yakutia to engage in scheduled foreign air transportation of

persons, property, and mail between any point or points in the Russian Federation and

Saipan, Commonwealth of the Northern Mariana Islands, via intermediate points, and

beyond, and grant such further and additional relief as the public interest may require.3

Respectfully submitted,

________________________________

Sheryl R. Israel

HOGAN LOVELLS US LLP

Columbia Square

555 Thirteenth Street, NW

Washington, DC 20004

Telephone: +1 202 637 8898

Facsimile: +1 866 728 1992

E-mail: sheryl.israel@hoganlovells.com

Counsel for

JOINT STOCK COMPANY

AIRCOMPANY “YAKUTIA”

3

Effective July 1, 2013, flights in U.S. territorial airspace by Russian air carriers that maintain

Part 129 operations specifications, including scheduled and charter flights operated by

Yakutia, are no longer subject to prior flight routing authorizations from the FAA’s System

Operations Support Center. Accordingly, Yakutia requests that the conditions associated with

its amended foreign air carrier permit be modified appropriately to reflect this change in policy

concerning FAA-approved flight routing requirements applicable to Russian air carriers serving

the United States.
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CERTIFICATE OF SERVICE

I certify that a copy of the foregoing Application of Joint Stock Company

Aircompany “Yakutia” for an Amended Foreign Air Carrier Permit has been served this

15th day of August, 2013, upon the following addressees:

marshall.sinick@squiresanders.com

robert.wirick@aa.com; francis.heil@aa.com

sascha.vanderbellen@delta.com; chris.walker@delta.com

dan.weiss@united.com; steve.morrissey@united.com; jonathan.linde@united.com

howard_kass@usairways.com

ranjit.seth@evergeenairlines.com

cefelts@fedex.com; sllunsford@fedex.com

kevin.montgomery@polaraircargo.com

enisson@nac.aero

william.s.schweizer@faa.gov; patrick.crowley@faa.gov; herb.herzog@faa.gov

john.allen@faa.gov

urskr@state.gov

ptenorio@mymarianas.com

Jonathan Echmalian
Application of Yakutia for an Amended Permit

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EXHIBIT LIST

Exhibit

A Air Operator Certificate No. 464

B Financial Data Summaries

C Verification Required by § 211.11
Application of Yakutia for an Amended Permit

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Exhibit A

Air Operator Certificate No. 464

Application of Yakutia for an Amended Permit

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Exhibit B

Financial Data Summaries
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Mаy 08' 2013

Тo Whom It May Goncern

Re: Summary of Finаnсiаl Stаtements of Yakutiа Air

27t 23в

Dear Sir/Madаm'

Heгewith, we enс|ose the Profit & Loss Summary of the FinanсiaI Statement of open

Joint Stoсk Company Yakutia Air for the fisca| years o,f 2011-2012.

2011 2012 2011 2012

line

сodе

RF

in thousand RUB in thousand USD

тotaI аir trаnsport

operatinq revenues: 2110 10970944 1 1960806 340754 з93801

Passenqer transpoгtation 9зз3570 10426934 289897 з43300

сarqo transpoгtation 320458 З41227 9953 112З5

Other revenues 1з.l6916 1192645 40903 SYZO I

тotаI air transpoЁ

operating expenses: 2120 11199503 12248292 34785з 40З266

oрeratinq result 2100 226Эc3 287486 7099 9465

Non-operatinq items: 2350 519767 415292 16144 1З673

Profit and loss after inсome

taxes 2400 80з0 20З 264

сurrent аssets 1200 3241305 4з20960 100674 1422в5

Flight equipment (after

deрreсiation) З42756 243252 10646 8009

othеr assеts: 720757 778648 22388 25636

тotaI assets 1600 4304858 53428в0 1з3707 175910

сurrent IiabiIities 1500 2537644 4137З27 78818 136219

otheг |iаbiIities 15208 58846 I SZUO 1828 2410

Lonotеrm dеbt 1400 1342993 т74589 41713 2550з

CapitaI stoсk 1з{ 0 402в37 402837 12512 1З263

Rеtained earnings (baIanсe

inс|udinq сapitaI surpIus): { 300 424221 430944 13176 14189

Totа| Iiаbi|ities аnd еquity 1700 4304858 5342860 133707 175910
Acсording to provision ru|es of aссounting of Russian Federation .

As a|| the aсcounting is done in Russian Roubles, sums in US Do|Iars are stated as per

exсhange rate for period mentioned.

Herewith Ia|so certify that these stаtements are сomp|ete and aосurate.

Sinсerely'

-l ffi

P,R\VI ' /1!/.fl;J

ё.
Application of Yakutia for an Amended Permit

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Exhibit C

Verification Required by § 211.11
August 15