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 27 th 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 a n 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 a n 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

favorab ly, 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 2 1 , 2011

, Icelandair ehf. ( Icelandair )

, a foreign air carrier of

Iceland

, requests an e xemption under 49 U.S.C. §40109 and a n 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 M ember 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
, pr operty , 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. o ther 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 request s 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 a n amended foreign ai r 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, b y 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) cha rter 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 a n amended foreign air carrier permit for these s ervices in addition to the authority it currently holds pursuant to its exi sting 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 co nduct 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 lice nse 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 appli cant 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 a n 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 f oreign 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 a n amended foreign air carrier permit was summarized in the Department’s published weekly list of applications filed. This not ice 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 for egoing 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 a n 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 requir ements;

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 t erms, 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 c onstitute 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 abov e, 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 appli cant 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 o n 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 pe rsons
, 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 Stat es 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, prov ide the Department

, in Docke t DOT

- OST

- 20 11

- 0 18 3

, wi th 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 paragraph s 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

- 20 11

- 0 18 3 ) ;

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

proce eding, 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 conclu sions with respect to the applicant’s request for a n 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 stat ement 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, a nswers 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;

1 0 . 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 a nd conclusions set forth in this order; and

1 1 . We will serve a copy of this order on Icelandair ehf.; the Embassy of I celand 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.govForeign Air Carrier Exemption Conditions Appendix A

In the conduct of the operations authorized, the foreign carrier applicant shall:

(1) Not cond uct 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 Intern ational 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 chang es 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 airworth iness 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

stopp ing 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 "internati onal 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 Depar tment, 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 charte r 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 l imitations 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 0 1 /200 8Appen dix B

Issued by

Order 20 1 2

- 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 Dep artment 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 ;

F oreign scheduled a nd 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;

F oreign scheduled and charter air transportation of pe rsons , 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 s cheduled and charter air transportation of cargo between any point or points in the United Stat es and any other point or points;

O ther charters pursuant to the prior approval requirements set forth in 14 CFR Part 212 of the Department’s regulations; and

T ransportation authorized by any additional route rights made available to European Union carri ers 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 DOT

OST

- 20 11

- 018 3

.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 pe riod 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 tre aty, 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 eliminat ing 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 subj ect 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 Aviati on



### (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 a ny 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 In spector) 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 containe d 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

St andards 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, concerni ng 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 aga inst 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 destinat ion, 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 aut horized 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 d ata;

(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 term s, 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 01/20 08