UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on July 29 , 20 1 4



### NOTICE OF ACTION TAKEN

-- DOCKET S DOT

- OST

- 2000

- 7838 and DOT

- OST

- 2012

- 0067

________________________ ________________________________________________________________________ ________ 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).

Applicant : Tyrolean Airways Tiroler Luftfahrt G es mbH (Tyrolean)

Docket DOT

- OST

- 2000

- 7838 Date Filed: April 11, 2014

Relief requested: Renewal of e xemption from 49 USC § 41301 to engage in:

i. scheduled and charter foreign air transportation of persons, property, and mail from any point or points behind any Member State (s) of the European Union, via any point or points in any Member State (s) and via intermediate points

, to any point or points in the United States and beyond;

ii. scheduled and charter foreign air transportation of persons, property, and mail between any point or points in the United States and any point or points in any member of the European Common Aviation Area;

iii. other charter foreign air transportation of persons, property, and mail pursuant to the prior approval requirements set forth in 14 CFR Part 212 of the Department’s Economic regulations; and

iv. transportation authorized by any additional route rights that may be made available to European Union carriers in

the future

.

If renewa l, date and citation of last action: June 26 , 2012 , in Docket DOT

- OST

- 2000

- 7838

.

Docket DOT

- OST

- 2012

- 0067 Date Filed: April 11, 2014

Relief requested: Renewal of statement of authorization under 14 CFR Part 212 to enable Tyrolean to operate ai rcraft pursuant to its wet

- lease agreement with Austrian Airlines AG (Austrian)

. Tyrolean requests that this authority be renewed for a period of at least two years.

If renewal, date and citation of last action: June 26, 2012 , in Docket DOT

- OST

- 2012

- 006 7

.

Applicant representative: Arthur J. Molins

, ( 516 ) 296

- 9234 DOT ana lyst: Brett D. Kruger

, ( 202 ) 366

- 8025

Responsive pleadings: On April 15, 2014, Atlas Air, Inc. (Atlas) filed an answer to Tyrolean’s application

. Atlas states
that is has no objection to the exemption renewal, but believes that the wet

- lease authorization should be renewed for a

seven

- month period , instead of the two

- year period requested by Tyrolean. Atlas asserts that Article 13 of European Commission Regulation No. 100 8/2008 prohibits EU airlines from wet leasing from non

- EU airlines for longer than two

consecutive seven

- month periods. Atlas argues that this restriction discriminates against non

- EU wet lessors and impedes the ability of Atlas and other U.S. airlines to market wet

- lease services to EU airlines. In support of its assertion, Atlas cites the Department’s decision to defer approval, for more than seven months, on a request of Cargolux Airlines International S.A. (Cargolux) for a statement of authorization t o wet lease freighter aircraft to Cargolux Italia S.p.A. (Cargolux Italia)

. 1

1 See Department action on the November 4, 2013, undocketed application of Cargolux (2013

- 511).On April 24, 2014, Tyrolean replied to the answer of Atlas , urging the Department to grant the statement of authorization as requested

. 2 Tyrolean contends that Atlas’ argument is invalid, because the Tyrolean /Austrian wet lease is an arrangement between two EU carriers , and that unlike Cargolux, Tyrolean is a passenger carrier . Tyrolean argues that no U.S. passenger carriers have objected to its request or cited any concerns a bout reciprocity . Tyrolean further argues that

it is unaware of any case in which a U.S. carrier’s authority to operate wet

- lease services has been denied or limited pursuant to European Commission Regulation 1008/2008. Tyrolean asserts that any dispute between the U.S. and EU over air carrier operating rights would be more appropriately addressed under the framework of the respective Joint

Committee of the U.S. and EU Governments

.

DISPOSITION

Action : Approved in part ( renewal of exemption authority for two year s and statement of authorization for seven month s ) , subject to conditions , remainder (request for longer

- term statement of authorization ) deferred , see below

.

Action date: July 29 , 2014

Effective dates of authority granted : The exemption aut hority granted to Tyrolean is effective July 29 , 2014 , through July 29 , 2016

.

The statement of authorization granted to Tyrolean to wet lease to Austrian is effective July 29 , 2014 , through March 1

, 201 5

.

Basis for approval (bil ateral agreement/reciproci ty): U.S.

- EU Air Transport Agreement.

Except to the extent exempted/waived, this authority is subject to the terms, conditions, and limitations of our standard exemption conditions ( attached ) and to the code

- share conditions previously imposed on Tyrolea n

.

Decision: We have decided to grant Tyrolean the requested exemption renewa l in its entirety (i.e., for two years) , and the requested statement of authorization renewal in part . We defer action on the remainder of Tyrolean’s request. Specifically, we will renew the statement of authorization permitting Tyrolean to wet lease its aircraft to Austrian for a period of seven months, effective July 29 , 2014, through March 1 , 201 5

. In reaching our decision, we have taken note of the issues raised by Atlas , and we remain concerned about the limitations U.S. carriers face in engaging in wet

- lease operations with EU carriers. We also considered the two

- year wet

- lease authorizations cited by Tyrolean, but note that those cases presented a different set of cir cumstances than those presented here. In particular, we note that we have been actively engaged in trying to resolve this issue within the U.S.

- EU Joint Committee but have made no progress

. Under these circumstances, we are not prepared at this time to g rant the requested statement of authorization in its entirety, but will grant a seven

- month extension as noted above. 3 Tyrolean may apply to ex t end its statement of authorization in the

future. Furthermore, we will continue our efforts to resolve this ma tter with in the U.S.

- EU Joint Committee.

Special conditions/Remarks: With regard to the authority granted here to conduct transportation authorized by any additional route rights made available to European Union carriers in the future, we are requiring T yrolean, before it commences any new service under this authority, to provide us, in Docket DOT

- OST

- 2000

- 7838, with evidence that it holds a homeland license for that new service, unless it has already provided such evidence.

2 In support, Tyrolean cites a number of undocketed Department approvals of two

- year statements of authorization permitting EU carriers to operate wet

- lease services.

3 The EU limitations on U.S. carriers have affected our recent actions on other wet

- lease arrangements involving EU carriers, including passenger carriers. See e.g., N otice of Action Taken dated June 2, 2014 in Docket DOT

- OST

- 2012

- 0081, granting a seven

- month statement of authorization renewal permitting British Airways (BA) Limited to wet least to British Airways Plc; Department ac tion of May 15, 2014, on the April 7, 2014 undocketed application of PrivatAir S.A., granting a seven

- month statement of au thorization to wet lease to Scandinavian Airlines System (2014

- 224); Department action of July 3, 2014, on the May 28, 2014 undocketed application of Cargolux, extending for two months Cargolux’s statement of authorization to wet lease to Cargolux Italia ( 2014

- 282); and Department action of June 20, 2013, on the June 12, 2013 undocketed application of Air Atlanta Icelandic (AAI), granting a

seven

- month statement of authorization to wet lease to Saudi Arabian Airlines (2013

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

________________________________________________________________________________________________________ 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) the applicant was qualified to perform its proposed operations; (3) grant of the authority was consist ent with the public interest; and (4) 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/deferred/dismissed, 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 entitled to petition the Department for review of the action set forth in this Notice under the Department’s regulati ons, 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 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.regulati ons.govAppendix A 

### Foreign Air Carrier Exemption 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 op erations, 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 c oncerning 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 Insp ector) 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 Stan dards 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 again st 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 destinatio n, 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, t he 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 autho rized by the Department, originate or terminate all flights to/from the United States in a Member State of the European Union;

(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.

EU carrier 01/2008