UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on March 10

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### NOTICE OF ACTION TAKEN

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

Application of Southwest Airlines Co. (Southwest) filed 12/11/14 for: 1

XX E xemption 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 (1) Mexico City, Mexico; and ( 2 ) San Jose del Cabo, Mexico, on the other hand. 2

Applicant rep: Robert W

. Kneisley (202) 263

- 6284 DOT Analyst: Brett D. Krug er (202) 366

- 8025

D I S P O S I T I O N

XX Granted
, subject to conditio ns

.

The above action granting Houston

- Mexico City and Houston

- San Jose del Cabo exemption authority

was effective when taken: March 10 , 2015

, through January 22 , 201 7

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Action taken by: Paul L. Gretch, Director

Office of International Aviation

XX The authority granted is consistent with the overall state of aviation relations 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 H older’s certificate s of public convenience and necessity

XX Standard Exemption Conditions (attached)

____________________________________________________________________________________ Background: Under the U.S.

- Mexico aviation agreement, two U .S. carriers may be designated to provide scheduled foreign air transportation of persons, property, and mail between Houston and Mexico City; and three U.S. carriers may be designated to provide scheduled foreign air transportation of
persons, property, a nd mail between Houston and San Jose del Cabo. Currently, SkyWest and United are designated to provide service between Houston and Mexico City; and SkyWest, Spirit, and United are

1 Our action here addresses the remaining portion of Southwest’s pending request in this Docket. On January 22, 2015, the Department granted e xemptio n authority to Southwest, permitting it to serve the Houston

- Cancun and

Houston

- Puerto Vallarta markets. In that Notice of Action Taken, the Department deferred action on Southwest’s request for exemption authority to serve the Houston

- Mexico City and Hou ston

- San Jose del Cabo markets.

2 Southwest proposes to begin daily service in these markets beginning on or about October 15, 2015

. 3 We are approving Southwest’s exemption authority through January 22, 2017, coextensive with its existing exemption auth ority in this Docket.

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designated to provide service between Houston and San Jose del Cabo, leavin g those markets fully

subscribed.

Southwest asserts that in the Houston

- Mexico City and Houston

- San Jose del Cabo markets, two U.S. carrier designations are being used on behalf of one U.S. airline, United. In those circumstances, Southwest requests (1) that the Department withdraw one of the two authorities held by United and its United Express partner SkyWest in both the Houston

- Mexico City and Houston

- San Jose del Cabo markets; and (2) that the Department grant Southwest’s request for exemption authori ty and corresponding designations.

Responsive Pleadings : The Southwest Airlines Pilots’ Association (SWAPA) and Spirit filed answers in support of Southwest’s application. United and SkyWest filed an answer opposing the withdrawal of one of their design ations to accommodate Southwest’s application and urging instead that the Department grant extra bilateral authority to Southwest without disrupting existing United and/or United Express service . The City of Houston filed an answer stating that it has no d esire to lose any of its existing service, and it urges the Department to explore all opportunities available so that all carriers can obtain the necessary authority.

Southwest, SWAPA, the City of Houston, and United and SkyWest each filed replies. Uni ted and SkyWest filed a surreply and Southwest filed a contingent answer. 4

Diplomatic Development: In light of the circumstances of this case , the U.S. Government asked the

Mexican Dirección General de Aeronáutica Civil (DGAC) whether it would favorably consider an application for extrabilateral authority in the subject markets. In doing so, the Department noted that the United States has positively considered requests from the DGAC to grant certain extrabilateral authority

to Mexican carriers. The DGAC advised the Department that it will , on the basis of reciprocity, favorably consider an application from Southwest for Houston

- Mexico City and Houston

- San Jose del

Cabo services.

De cision: W e have decided to approve the balance of Southwest’s request for exemption authority. In doing so we note the representations of the DGAC that it will favorably consider a request from

Southwest to serve the Houston

- Mexico City and Houston

- San Jose del Cabo markets on an extrabilateral basis . Therefore, we find th at the public interest warrants our approval of Southwest’s application , and that we can proceed to such approval without needing to withdraw or otherwise place in issue the designations or authorities of any of the currently authorized U.S. carriers in th ese city

- pair

markets

.

Conditions : The U.S.

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

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- 2. Consistent with our standard policy, the dormancy notice period will begin on October 15, 2015, Southwest’s proposed start

- up date for the subject services.

On the basis of data officially noticeable under Rule 24(g) of the Department's regulations, we found the applicant qualified to provide the exemption services author ized.

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 application was consistent with the public interest; and (3) grant of the authority would not constitute a major regulatory action under the Energy Policy and Conservation Act of 1975. To the extent not granted, we denied all requests in the referenced

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

4 We grant the motions for leave to file otherwise unauthorized documents.

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Persons entitled 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

issua nce of this Notice. This action was effective when taken, 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: http:// www.regulations.gov

### A TTACHMENT 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 co ncerning oversales contained in 14 CFR 250 (for scheduled operations, if authorized);

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

(4) Comply with requirements for minimum insurance coverage, and for certifying that cove rage 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 all applicable U.S. Government requirements concerning security, including, but not limited to, 49 CFR Part 1544. To assur e 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 PS I 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;

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

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

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