Order 20 1 4

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UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 10 th day of September, 20 1 4

Served: September 10, 2014

Application of



### AZUL LINHAS AÉREAS

BRASILEIRAS S.A. Docket DOT

- OST

- 20 1 4

- 0095

for an exemption under 49 U.S.C. § 4 0109 and a 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 c onditions; 1 and (2) tentatively find that it is in the public

interest to grant the applicant a 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 e lements 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

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 procedures f or the applications involved in this proceeding.

Application

By application filed June 2 , 2014, Azul Linhas A éreas Brasileiras S.A., a foreign air carrier of

Brazil

, r equests an exemption under 49 U.S.C. § 40109 and a foreign air carrier permit under 49

U .S.C. §41301 to engage in : 1) scheduled and charter foreign air transportation of persons, property and mail from any point or points behind Brazil, via Brazil and intermediate points, to any point or points in the United States and beyond, to the full ext ent permitted by the Air Transport Agreement

between the Government of the United States of America and the Government of the Federative Republic of Brazil of 1989, as amended, and the 2011 Memorandum of Consultations between the

two countries ); a nd 2) oth er charters pursuant to 14 CFR Part 212 of the Department’s regulations.

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.

Decisi on

We have decided, under assigned authority and 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 foreign air carrier permit, also subject 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. We also find that the applicant has demons trated, based on the record, that it is financially and operationally qualified to perform the services authorized, 2 and that it is substantially owned and effectively controlled by citizens of its claimed

homeland. 3

The authority so ught by the applicant is encompassed by the Air Transport Agreement between

the United States and Brazil and the Memorandum of Consultations signed March 19, 2011

. We

also note that the applicant is properly licensed by its homeland to p erform the proposed services.

In additi on, o n July 24 , 2014, t he Federal Aviation Admini stration advised us that it knew of no

2 The applicant has requested confidential treatment of its financial statements and traffic and f inancial forecasts under the provisions of 1 4 CFR §30 2 .12. Good cause having been shown, we will grant this request.

3 The record indicates that 99.99 % of the applicant’s report ed shares are held by its parent company Azul S.A. In

turn, all 86.65% of the reported capital stock of Azul S.A. is ultimately held by Brazilian citizens or entities

. The record further indicates that the applicant’s President and all of its key management personnel are Brazilian citizens. In addition, the President/CEO of Azul S.A. is a dual Brazilian/U.S. citizen and the company’s CFO is a U.S. citizen.3

reason why we should act unf a vorably on the applicant’s requests. We have verified the applican t’s compliance with 14 CFR Parts 203 (Warsaw liability waiver), and 205 (i nsurance requirements)

.

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

a one

- year term, or until the requested permit authority becomes effective, whichever occurs earlier, is warranted.

Tentative Fin dings 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 conditions attached

. 4 In particular, w e 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 all facts of r ecord, 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 transportation

describ ed 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 by citizens of its claimed homeland;

4 . The publ ic 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 pub lic interest as we may prescribe;

5 . The issuance of this foreign air carrier permit will not constitute a major regulatory action under the Energy Policy and Conservati on Act of 1975, as defined in 14 CFR §313.4(a)(1) of our

r egulations; 5

6 . The publi c interest does not require an oral evidentiary hearing on the application ; and

4 The applicant’s request for a 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 to the application were filed.

5 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.4

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, beco me 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, an d 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 operation s; 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 Azul Linhas Aéreas Brasileiras S.A. for an exemption under 49 U.S.C. § 40109 to engage in : 1) scheduled and charter foreign air transportat ion of persons, property and mail from any point or points behind Brazil, via Brazil and intermediate points, to any point or points in the United States and beyond, to the full extent permitted by the Air Transport Agreement between the Government of the United States of America and the Memorandum of Consultations signed March 19, 2011 ; a nd 2) other charters pursuant to 14 CFR Part 212 of the Department’s regulations;

2 . T he exercise of the privileges granted above is subject to compliance by Azul Linhas Aéreas

Brasileiras S.A. w ith the conditions listed in Appendix A;

4. We grant the request of Azul Linhas Aéreas Brasileiras S.A. for confidential treatment of its

financial statements and traffic and financial forecasts , consistent with the provisions o f 14 CFR § 302.12;

5

. Our action granting the exemption authority described herein is effective immediately, for a period of one

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

6

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

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

DOT

- OST

- 20 1 4

- 0095 ;

8

. Wi th respect to the applicant’s request for a foreign air carrier permit in this proceeding, w e direct all interested persons to show cause why our tentative decision on that application, set
forth above

, should not be made final;5

9

. 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 a foreign air carrier permit shall, no later than twenty

- one (21) calendar days after the date of service of this order, f ile 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;

10

. 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;

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. 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 un der §41307 of Title 49 of the U.S. Code) make final our tentative findings and conclusions set forth in this order; and

1 2

. We will serve a copy of this order on the applicant ; the Embassy of Brazil in Washington, D.C.; the Departmen t of State ; and the F ederal Aviation Administration

.

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 w ith 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 A viation

(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 appl icant 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 Un ited 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 coverag e, 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 air craft 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 servi ces;

(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 author ity 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 State s; 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 W arsaw 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 h omeland;

(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 wit h 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 ord ers 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 author ity cannot be sold or otherwise transferred without explicit Department approval under Title 49 of the U.S. Code.

1 2 /200 7Appendix B

Issued by

Order 20 14

-

UNITED S TATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.



### -------------------------------- ------------- --------- ------------------------ PERMIT TO F OREIGN AIR CARRIER



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



### AZUL LINHAS AÉREAS BRASILEIRAS S.A.

A Foreign Air Carrier of Brazil

is authorized, subject to the followi ng 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 :

Scheduled and c harter foreign air transportation of passengers, property and mail from points behind Braz il via Brazil and intermediate points to any point or points in the United States and beyond

.

The holder shall also be authorized to engage in other charter trips in foreign air transportation, subject to the terms, conditions, and limitations of the Depa rtment’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 p rovisions 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 becom e 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 liq uidation 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 Brazil (or, if the right is partially eliminated, then the authority of this permit shall terminate in like part); (3) upon the8 effective date of any permit granted by the Department to any other carrier designated by the

Government of Brazil in lieu of the holder; or (4) upon the termination or expiration of the applicable air services agreement between the United States and Brazil

. However, clause (4) of this paragraph shall not apply if prior to such termination or expiration, the foreign air

tr ansportation authorized herein becomes the subject of another treaty, convention or agreement

to which the United States and Brazil become parties.

The Department of Transportation has executed this per mit and affixed its seal on , 20 14

.

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) No t 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 Adm inistration, 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 c ompleted 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 auth ority 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 waiv er 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 tra nsportation 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, exc ept 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, comply with the Department's ru les 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.

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