Order 2012-1-26

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 27th day of January, 2012

Served: January 27, 2012

Application of

ICELANDAIR EHF. Docket DOT-OST-2011-0183

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

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 an amended 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, in the case of certificates, five 

years for limited-entry markets, indefinite for open-entry markets, and in the case of 

 1 The conditions are attached as Appendix A.
2

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 September 21, 2011, Icelandair ehf. (Icelandair), a foreign air carrier of 

Iceland, requests an exemption under 49 U.S.C. §40109 and an amended foreign air carrier 

permit under 49 U.S.C. §41301,2 to permit it to conduct the new rights made available in the 

U.S.-EU-Norway-Iceland Air Transport Agreement of June 21, 2011 (the Agreement). 

Specifically, Icelandair requests authority to engage in:

a. foreign scheduled and charter air transportation of persons, property, and mail from any 

point or points behind any Member State of the European Union, via any point or points 

in any Member State and via intermediate points, to any point or points in the United 

States and beyond;

b. foreign scheduled and charter 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; 

c. foreign scheduled and charter air transportation of cargo between any point or points in 

the United States and any other point or points; 

d. other charters pursuant to the prior approval requirements set forth in 14 CFR Part 212 of 

the Department’s economic regulations; and

e. transportation authorized by any additional route rights made available to European 

Union carriers in the future.

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

support its requests for authority.

No answers were filed to the application.

Decision

We have decided, consistent with our August 23, 2005 Notice referenced above, to grant the 

applicant’s request for exemption authority, subject to conditions, and tentatively to grant, 

subject to show-cause procedures, its request for an amended foreign air carrier permit, also 

subject to conditions.

 2 Icelandair’s current foreign air carrier permit was issued in Docket DOT-OST-1997-2634 on June 19, 1998, by 

Order 98-6-23, and authorizes the carrier to engage in: 1) foreign scheduled air transportation of persons, property 

and mail between points behind Iceland, via Iceland and intermediate points, and any point or points in the United 

States, and beyond; and 2) charter operations subject to 14 CFR Part 212. 
3

Specifically, we will grant Icelandair exemption authority for the services set forth in ordering 

paragraph 1 below. We will also tentatively grant Icelandair an amended foreign air carrier 

permit for these services in addition to the authority it currently holds pursuant to its existing 

foreign air carrier permit.

As an additional matter, Icelandair has requested that we grant it, in addition to authority 

currently contained in the Agreement, authority to conduct transportation authorized by any 

additional route rights that may be made available to European Union carriers under the 

Agreement in the future. We are granting the request of Icelandair for this authority by 

exemption (and tentatively granting it by amended foreign air carrier permit). We are, however, 

requiring Icelandair, before it commences any new service under this authority, to provide us 

with evidence that it holds a homeland license for that new service, unless it has already 

provided such evidence.3

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

authority, as conditioned, is consistent with the public interest. We find that the applicant is 

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

substantially owned and effectively controlled consistent with the provisions of the Agreement.

4

We also find that the authority sought by the applicant is encompassed by the Agreement. 

Further, we 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 the applicant’s requests. We have verified the applicant’s 

compliance with 14 CFR Parts 203 (Warsaw liability waiver) and 205 (insurance requirements).

In view of the above, we find that grant of the requested exemption authority, as conditioned, for

a two-year term, or until the requested permit authority becomes effective, whichever occurs 

earlier, is warranted.

Tentative Findings and Conclusions—Amended Foreign Air Carrier Permit Application

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

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

conditions attached.5

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

support our grant of exemption authority to the applicant, as discussed above, also warrant 

granting the applicant the amended foreign air carrier permit it seeks.

 3 See Orders 2007-6-19 and 2007-10-1, and Orders 2007-7-13 and 2007-10-16, where we granted this authority to 

British Airways Plc. and Virgin Atlantic Airways Ltd., respectively.

4 We make this finding based on the Agreement provision on reciprocal recognition of fitness and citizenship 

determinations. 

5 The applicant’s request for an amended 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. As noted 

above, no answers were filed to the application.
4

In view of the foregoing and all facts of record, and acting under authority assigned by the 

Department in its regulations, 14 CFR Part 385, we tentatively find and conclude that:

1. It is in the public interest to issue the applicant an amended 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 in a manner consistent with 

the provisions of the Agreement;

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 issuance of this amended 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;6

6. The public interest does not require an oral evidentiary hearing on the application; 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 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; and that grant of the exemption authority is consistent with the public 

interest and would not constitute a major regulatory action under the Energy Policy and 

Conservation Act of 1975. 

ACCORDINGLY,

1. We grant the request of Icelandair ehf. for an exemption under 49 U.S.C. §40109 for the 

services set forth below: 

a. foreign scheduled and charter air transportation of persons, property, and mail from any 

point or points behind any Member State of the European Union, via any point or points 

 6

 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.
5

in any Member State and via intermediate points to any point or points in the United 

States and beyond;

b. foreign scheduled and charter 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;

c. foreign scheduled and charter air transportation of cargo between any point or points in 

the United States and any other point or points;

d. other charters pursuant to the prior approval requirements set forth in 14 CFR Part 212 of 

the Department’s regulations; and

e. transportation authorized by any additional route rights made available to European 

Union carriers under the Agreement in the future.

2. Icelandair ehf. shall, before it commences any new service under subparagraph (e) of ordering 

paragraph 1 above, provide the Department, in Docket DOT-OST-2011-0183, with evidence that 

it holds a homeland license for that new service, unless it has already provided such evidence to 

the Department;

3. The exercise of the privileges granted above is subject to compliance by Icelandair ehf. with 

the conditions listed in Appendix A;

4. Our action granting the exemption authority described herein, subject to the provisions of 

ordering paragraphs 1 through 3 above, 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 herein at our discretion 

at any time and without hearing;

6. To the extent not acted upon above, we dismiss all requests for exemption authority in this 

Docket (DOT-OST-2011-0183);

7. With respect to the applicant’s request for an amended 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 an amended 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;
6

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 Icelandair ehf.; the Embassy of Iceland in 

Washington, D.C.; the Department of State; and the Federal Aviation Administration.

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 Air Carrier Exemption Conditions Appendix A

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 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

Iceland or 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
Appendix B

Issued by

Order 2012- X-X

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

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

PERMIT TO FOREIGN AIR CARRIER

(as amended)

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

ICELANDAIR EHF.

A Foreign Air Carrier of Iceland

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:

Foreign scheduled air transportation of persons, property, and mail between points 

behind Iceland, via Iceland and intermediate points, and any point or points in the 

United States, and beyond;

Foreign scheduled and charter air transportation of persons, property, and mail from 

any point or points behind any Member State of the European Union, via any point 

or points in any Member State and via intermediate points to any point or points in 

the United States and beyond;

Foreign scheduled and charter 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;

Foreign scheduled and charter air transportation of cargo between any point or 

points in the United States and any other point or points;

Other charters pursuant to the prior approval requirements set forth in 14 CFR Part 

212 of the Department’s regulations; and

Transportation authorized by any additional route rights made available to 

European Union carriers under the U.S.-EU-Iceland-Norway Air Transport 

Agreement in the future; provided, that the holder shall, before it commences any new 

service under such additional route rights, provide the Department with evidence 

that it holds a homeland license for that new service (unless it has already provided 

such evidence to the Department). Such evidence shall be filed in Docket DOTOST-2011-0183.
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 right for the service authorized by this permit from the service which 

may be operated by airlines of Iceland (or, if the right is partially eliminated, then the authority 

of this permit shall terminate in like part); or (3) upon the termination or expiration between the 

United States and Iceland of the applicable air services agreement. However, clause (3) 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 Iceland become parties.

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

By:

PAUL L. GRETCH

Director

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 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 

Iceland or 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