Order 2010

- 6

- 11

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportat ion

on the 7 th day of June , 2010

Served: June 7, 2010

Application of

OPEN JOINT STOCK COMPANY TRANSAERO

AIRLINES Docket DOT

- OST

- 2010

- 0093

for a n exemption under 49 U.S.C. §40109 and a foreign air carrier permit under 49 U.S.C. §41301

ORDER GRANTING EXEMPTION AND TO SHOW CAUSE Summary

By this order we grant the application of Open Joint Stock Company Transaero Airlines (Transaero) f

or an ex emption , under 4 9 U.S.C. §40109, su bject to conditions. 1 We also tentatively find that it is in the public interest to grant the applicant the foreign air carrier permit attached as Appendix B to this order.

Background

On August 23, 2005, the Department issued a Notice, in Docket OST

- 200 5

- 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

ne cessity 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

1 The conditions are attached at Appendix A.2

for limited

- entry markets, indefinite for open

- entry markets, and in the case of permits, five years for comity and reciprocity regimes, indefinite for agreement regimes).

Our action in this Order serves to implement these streamlined regulatory pro cedures for the application involved in this proceeding.

Application

By application filed April 13, 2010

, Transaero , a foreign air carrier of the Russian Federation

, requests an initial exemption under 49 U.S.C. § 40109, and a foreign air carrier permit under 49 U.S.C. § 41301, to engage in (i) scheduled foreign transportation of persons, property, and

mail between Moscow, Russian Federation, on the one hand, and New York, New York, and Miami, Florida, on the other hand ; (ii) charter foreign transportati on of persons, property, and

mail between point s in the Russian Federation and point s in the United States ; and (iii) other

charters pursuant to the prior approval requirements set forth in the Department’s regulations governing charters

.

The applicant pr ovided evidentiary materials required by 14 CFR Part 211 of our regulations to support its request for a foreign air carrier permit.

No answers were filed to the application.

Decision

We have decided, under assigned authority and consistent with our Aug ust 23, 2005 Notice referenced above, to grant the applicant’s request for exemption authority, as described below and subject to conditions, and tentatively to grant, subject to show

- cause procedures, its request for a foreign air carrier permit, also sub ject to conditions.

With respect to the applicant’s request for exemption authority, we find that grant of this authority is consistent with the public interest; and that the applicant has demonstrated, based on the record, that it is financially and oper ationally qualified to perform the services authorized

.

With respect to the ownership and control of the applicant, we note that Transaero states that it is privately owned and that the company’s shares are openly traded and registered with the Russian

Federal Secu rities Market Commission. The applicant further states that 73.3% of the shares of the company can be identified as being held by citizens of the Russian Federation, through (a) direct ownership of shares, (b) LCC “Transaero

- Finance,” and (c) Sky Stream Corporation. The record shows that the remaining shares are held (a) by Prosperity Voskhod Fund Limited, an investment fund domiciled in the Channel Islands (5%) and (b) by individuals holding less than 5% interest in the company (16.43%).

In the circumstances presented, to the extent that a question may exist as to whether the applicant is substantially owned and effectively controlled by citizens of the Russian Federation , we find that a waiver of the control and ownership requirement is w arranted

, as there is no evidence on3

the record which would suggest that the ownership and control of the carrier would be inimical to U.S. aviation policy or interests.

In addition, the authority sought by the applicant is encompassed by the 1994 U.S.

- Ru ssia Air Transport A greement. 2 We therefore find that grant of the requested exemption authority for a one year term, or until the requested permit become s effective, whichever occurs earlier, is

warranted.

We also note that the applicant is properly lic ensed 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 request. We have verified the applicant’s compliance with 14 C FR Parts 203 (Warsaw liability waiver), and 205 (insurance requirements).

Finally, in the conduct of the charter services authorized and tentatively authorized herein,

Transaero must adhere to (1) the conditions attached to this order; (2) FAA

- approved fl ight routings; and (3) the Air Transport Agreement between the United States and the Russian Federation, including its Annexes. In accordance with 14 CFR §212.9(d) and (e) of the Department’s rules Transaero shall not perform any charter(s) unless specifi c authority in the form of a statement of authorization for such charter(s) has been granted by the Department. Applications for the statements of authorization required above shall be filed in accordance with the procedures set forth in 14 CFR §212.10.

Tentative Findings and Conclusions

-- Foreign Air Carrier Permit Application

We tentatively find and conclude that the public interest warrants granting the applicant a foreign air carrier permit, in the form attached as Appendix B and subject to the condit ions attached. 3 In particular, we tentatively find and conclude that the factors which support our grant of exemption authority to the applicant also warrant granting the applicant the foreign air carrier permit it

seeks.

In view of the foregoing and a ll facts of record, we tentatively find and conclude that:

1. It is in the public interest to issue the applicant a foreign air carrier permit in the form attached;

2. The applicant is fit, willing and able properly to perform the foreign air transport ation 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;

2 On February 13, 2009, the United States and the Russian Federation agreed, ad referendum , to revised Annexes to

the U.S.

- Russia Air Transport Agreement and stated that, pending their entry into force, their respective aeronautical authorities intend to implement the provisions of those Annexes on the basis of comity and reciprocity.

3 The applicant’s request for a foreign air carrier permit wa s 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

.4

3. W aiver of our ownership and control requirement , to the extent necessary, is warranted in the

circu mstances presented

, as there is no evidence on the record which would suggest that the ownership and control of the carrier would be inimical to U.S. aviation policy or interests ;

4. The public interest requires that the exercise of the privileges grant ed 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 fo reign 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; 4

6. The public interest does not require an oral evidentiary hearing on the a pplication; 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 co nferring 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 Open Joint Stock Company Transaero Airlines for an exemption under 49 U.S.C. §40109 to permit it to engage in (i) scheduled foreign transportation of persons, property, and mail between Moscow, Russ ian Federation, on the one hand, and New York, New York, and Miami, Florida, on the other hand ; (ii) charter foreign transportation of persons, property, and mail between point s in the Russian Federation and point s in the United States ; and (iii) other cha rters subject to the provisions of 14 CFR Part 212 ;

2. The exercise of the privileges granted above is subject to compliance by Open Joint Stock Company Transaero Airlines with the conditions listed in Appendix A

, and to the conditions that,

in the condu ct of the charter services authorized herein, Open Joint Stock Company Transaero

Airlines must adhere to (1) FAA

- approved flight routings; and (2) the Air Transport Agreement between the United States and the Russian Federation, including its Annexes. In accordance with

4 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

14 CFR § 212.9(d) and (e) of the Department’s rules, Open Joint Stock Company Transaero

Airlines shall not perform any charter(s) unless specific authority in the form of a statement of authorization for such charter(s) has been granted by the Department. Applications for statements of authorization required above shall be filed in accordance with the procedures set forth in 14 CFR § 212.10;

3. Our action granting the exemption authority described herein is effective immediately, for a

pe riod of one year from the issue date of this order, or until the attached permit becomes effective, whichever is earlier;

4 . We may amend, modify, or revoke our action regarding the exemption authority set forth in ordering paragraph 1 at our discretion at any time and without hearing;

5 . To the extent not acted upon above, we dismiss the applicant’s request for exemption authority in Docket DOT

- OST

- 2010

- 0093 ;

6 . With respect to the applicant’s request for a foreign air carrier permit in this proceedi ng, we direct all interested persons to show cause why our tentative decision on that application, set forth above, should not be made final;

7 . Any interested person objecting to the issuance of an order making final our tentative findings

and conclusio ns with respect to the applicant’s request for a 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 obj ections 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 ob jections are due no later than seven (7) calendar days thereafter;

8 . 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;

9 . 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 conclusi ons set forth in this order; and

1 0 . We will serve a copy of this order on Open Joint Stock Company Transaero Airlines ; the Embassy of the Russian Federation in Washington, D.C. ; the Department of State; and the

Federal Aviation Administration.6

Persons entitled to petition the Department for review of this order under the Department’s regulations, 14 CFR § 385.30, may file their petitions within seven (7) days after the date of issuance of this order. Our action with respect to the applicant’s request for exemption authority under 49 U.S.C. § 40109 is effective immediately, and the filing of a petition for review will not

alter such effectiveness.

By:

PAUL L. GRETCH

Director

Office of International Aviation

(SEAL)

Appendices

A n electronic version o f 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 carrie r 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 appli cable. 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 c overage, 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 opera te 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 operatio ns 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 its homeland;

(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, comp ly 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 applicab le 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.

1/200 8Appendix B

Issued by

Order 2010

- X

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UNITED S TATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.



### -------------------------------------- --------------------------------------

PERMIT TO FOREIGN AIR CARRIER



### -----------------------------------------------------------------------------

OPEN JOINT STOCK COMPANY TRANSAERO AIRLINES

A Foreign Air Carrier of the Russian Federation

is authorize d, subject to the following provisions, the provisions of Title 49 of the U.S. Code, and the orders, rules, and regulations of the Department o f Transportation, to engage in the following:

scheduled foreign transportation of persons, property, and mail be tween Moscow, Russian Federation, on the one hand, and New York, New York, and Miami, Florida, on the other hand; and charter foreign transportation of persons, property, and mail between points in

the Russian Federation and points in the United States

.

The holder shall also be authorized to engage in other cargo charter trips in foreign air transportation, subject to the terms, conditions, and limitations of the Department’s regulations governing charters.

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 transportati on 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 Month XX, 20 10 . Unless otherwise terminate d 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 bilateral right for the service authorized by this permit from the service which may be operated by airlines designated by the Government of the Russian Federation (or, if the right is partially eliminated, then the authority of this permit shall terminate in like part); (3) upon the effective date of any permit granted by the Department to any other carrier designated by the Government of the Russian Federation in lieu of the holder; o r (4) upon the termination or expiration of the applicable air services agreement between the United States and

the Russian Federation . However, clause (4) of this paragraph shall not apply if prior to such termination or expiration, the foreign air trans portation authorized herein becomes the subject ofanother treaty, convention or agreement to which the United States and the Russian Federation

become parties.

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

Month XX , 2 0 10

.

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 cu rrently 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 Admi nistration, 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 requirem ents 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 (II R) (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 Avia tion 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 saf ety 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 f or 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 o f 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 t reaty 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 its homeland;

(9) Comply with the requirements of 14 CFR Part 217, co ncerning 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 Part s 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 Depar tment approval under Title 49 of the U.S. Code.

1/2008