Order 2010

- 7

- 2

UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.
Issued by the Department of Transportation on the 6 th day of July, 2010

Served: J uly 6, 2010

FINAL ORDER

SUMMARY

By this Order, we make final our tentative findings and conclusions set forth in Order 2010

- 5

- 7

, and a llocate four available slot pairs for daily scheduled combination services between the United States and Tokyo’s Haneda Airport, as follows: 1) one slot pair to Hawaiian Airlines, Inc. (Hawaiian) for its proposed Honolulu

- Haneda service; 1 2) two slot pairs to Delta Air Lines, Inc. (Delta) for its proposed Los Angeles

- Haneda and Detroit

- Haneda services; and 3) one slot pair to American Airlines, Inc. (American) for its proposed New York (JFK)

- Haneda service. We also make final our tentative deci sion not to award backup authority in this case

.

BACKGROUND

On December 11, 2009, the United States and Japan initialed the text of a Memorandum of Understanding (“2009 MOU”) , providing for an Open

- Skies regime between the two countries. The 2009 MOU permits U.S. and Japanese air carriers to provide scheduled combination services between the United States and Tokyo’s Haneda Airport when Haneda’s fourth runway becomes operational. 2

1 In this regard, w e also make final our tentative decision to award Hawaiian exemption authority for its proposed services. F our daily slot pairs will be available to carriers from each country to provide th ese services. The sc heduled operations will also be subject to the following conditions: 1) U.S. operations at Haneda will be permitted between 2200 and 0700 hours local time; 2) departures from Haneda to a point in the 48 contiguous U.S. states are not p ermitted prior to midnight; and 3) extra sections are not permitted.

2 Operational use of the fourth runway is currently scheduled to begin October 31, 2010. In the Matter of

2010 U.S.

- HANEDA COMBINATION SERVICES ALLOCATION PROCEEDING Docket DOT

- OST

- 2010

- 00182 By Order 2010

- 1

- 17, issued January 26, 2010, the Department instituted the 2010 U.S.

- Haneda Combination Services Allocation Proceeding , inviting interested U.S. carriers to apply for allo cation of the four newly available pairs of slots for U.S.

- Haneda scheduled combination services. 3 The Order also set forth a procedural schedule and evidentiary requirements for the establishment of a record for the Department to make a decision in this case.

Six carriers

– American, Continental Airlines, Inc. (Continental), Continental Micronesia, Inc. (Continental Micronesia), Delta, Hawaiian, and United Air Lines, Inc. (United) filed applications for the four available slot pairs to provide daily co mbination services in the U.S.

- Tokyo (Haneda) market. Carriers that requested more than one slot pair were required to prioritize their requests

. The requests, indicating the carrier

- determined precedence, are outlined immediately below.

American reques ted two slot pairs for daily service from both New York (JFK) and Los Angeles using B777 aircraft. Joint applicants Continental and Continental Micronesia requested one slot pair for Continental for daily service from Newark using B777 aircraft and one sl ot pair for Continental Micronesia for daily service from Guam using B767 aircraft. Delta requested four slot pairs for daily services from Seattle, Detroit, Los Angeles, and Honolulu, and proposes to use B747 aircraft for all routes with the exception of Seattle, for which it proposes to use A330 aircraft. Hawaiian requested two slot pairs and proposes to use both for daily services from Honolulu using B767 aircraft. United requested one slot pair for daily service from San Francisco using B777 aircraft

. After examining the complete record of applications and responsive pleadings, by Order 2010

- 5

- 7, issued May 7, 2010, we tentatively decided to allocate the four available slot pairs for daily scheduled combination services between the United States a nd Tokyo’s Haneda Airport, as follows: 1) one slot pair to Hawaiian for its proposed Honolulu

- Haneda service; 2) two slot pairs to Delta for its proposed Los Angeles

- Haneda and Detroit

- Haneda services; and 3) one slot pair to American for its proposed New York (JFK)

- Haneda service. We tentatively decide d not to award backup authority in this case. We also tentatively awarded Hawaiian underlying economic authority to engage in its proposed services. We allowed 10 calendar days for the filing of objection s to our tentative decision and seven calendar days for responses to objections.

Delta filed comments to our tentative decision stating that it is pleased by the Department’s selection of its Los Angeles and Detroit proposals to provide service to Haneda and requests that the Department finalize its decision as quickly as possible. Continental/Continental Micronesia, Hawaiian, United, and the San Francisco International Airport (SFO) filed objections to our tentative decision. 4 Responses to objections we re filed by American, Delta, Hawaiian, and the Delta Master Executive Council of the Air Line Pilots Association, International (Delta MEC)

.

3 We instituted this proceeding in advance of the effective date of the 2009 MOU to provide U.S. carriers the opportunity to fully utilize the new rights when they become available.
4 In its objection, SFO moved for leave to file one day late. In the interest of a complete record in this proceeding, we will gra nt the request.3 RESPONSIVE PLEADINGS

Objections of Continental/Continental Micronesia, Hawaiian, and United 5

Continental and Continental Micronesia (joint applicants) do not contest the tentative awards but do object to the Department’s tentative decision not to award them backup authority. 6

Hawaiian states that it is pleased with the Department’s tentative decision to award i t one slot pair for Honolulu

- Haneda service but objects that it was not awarded a second Honolulu

- Haneda slot pair

. Hawaiian asserts that it is entering a market that is overwhelmingly dominated by U.S. and Japanese alliance carriers and argues that an aw ard of two slot pairs would enhance its competitive position against entrenched incumbent s in the U.S.

- Tokyo market. 7 Hawaiian makes note of Honolulu

- Tokyo service reductions announced by Japan Airlines International Co., Ltd. (JAL) and asserts that an aw ard to Hawaiian of a second slot pair would address the job and revenue losses in Hawaii that it claims would result from JAL’s service reductions

. 8 It maintains that the public benefits associated with the selection of its second daily Honolulu

Haneda fl ight would exceed those offered by the Department’s other tentative selections and contends that the Department should alter its tentative decision and grant Hawaiian a second slot pair for Honolulu

- Haneda service.

United contends that its San Francisc o

- Haneda proposal offers the strongest combination of local and connecting service at both ends of the route and would benefit more U.S.

- originating
passengers than would any of the other proposals at issue . It urges the Department to reconsider its tenta tive decision and award United a single slot pair in preference either to Hawaiian’s Honolulu service or Delta’s Detroit or Los Angeles service. 9

United is critical of the Department’s tentative selection of Hawaiian

. United contends that (1) Hawaiia n will be able to initiate Honolulu

- Narita service once the U.S.

- Japan Open

- Skies Agreement takes effect , and (2) there is no evidence that Hawaiian , as a new entrant, can or will institute Honolulu

- Tokyo service only if it can serve Haneda. United also m aintains that , if a separate Haneda market does exist, all of the applicants in the proceeding would be new entrants at Haneda and Hawaiian is not entitled to favored treatment as a new entrant carrier in the U.S.

- Haneda market

. It asserts that

, although an award to Hawaiian would add another competitor on an already well

- served and competitive nonstop route, it will generate no competitive or service benefits for U.S. mainland passengers. United states that

5 SFO also filed an objection request ing that the Department reconsider its tentative decision and award one slot pair to United for San Francisco

- Haneda service.
6 Specifically, the joint applicants state that Continental’s Newark

- Haneda proposal should be selected for backup authority to Delta’s Detroit

- Haneda and American’s New York (JFK) awards, and Continental Micronesia’s Guam

- Haneda proposal should be selected for backup authority to Hawaiian’s Honolulu

- Haneda award.
7 Hawaiian Obj ection , at 2.
8 Hawaiian Objection , at 3

- 4.
9 United notes that although it does not challenge the Department’s tentative decision to award one of the four available slot pairs to American for Haneda service from New York, it takes issue with the Departmen t’s tentative finding that an award to American should enhance alliance competition by improving the competitive posture of the oneworld alliance in the U.S.

- Asia market as compared to the Star and Skyteam alliances.4 Honolulu

- Haneda traffic is over whelmingly Jap anese

- originating leisure traffic and Hawaiian’s service would therefore provide little benefit to U.S.

- originating passengers. Finally, United contends that Hawaiian’s service will not materially benefit the Hawaiian tourist economy u nless the service dr aws Japanese leisure passengers who otherwise would not visit Hawaii, and it states that the record does not indicate that to be the case

. 10

In addressing the tentative awards to Delta, United asserts that Delta already dominates U.S.

- Tokyo services

, and maintains that the Department should not have awarded multiple slot pairs to Delta over an award of a single slot pair to United. United also questions the capacity benefits associated with Delta’s proposed use of B747 aircraft

. 11

With regard to Delta’s t entative award for Detroit

- Haneda service

, United maintains that the small size of the Detroit

- Tokyo local O rigin & D estination (O&D) market alone should have disqualified Delta from receiving an award for Detroit, and argues that the San Francisco

- Tokyo

m arket is four times larger than Detroit

- Tokyo

. 12 While United concedes that Delta offers extensive connections from its Detroit hub, United claims that many of those passengers that would connect at Detroit have better options for Tokyo travel. United als o contends that, given the Department’s tentative selection of American at New York (JFK), Delta’s Detroit service is less attractive because a disproportionately high percentage of Detroit’s potential connecting passengers would be from the New York/New J ersey area.

United agrees with the Department’s finding of a need for Haneda service from a west coast gateway, but argues that its San Francisco proposal is preferable to Delta’s proposed service at Los Angeles, because it would benefit both local and co nnecting passengers. United acknowledges that the Los Angeles

- Tokyo local O&D market is larger than San Francisco

- Tokyo

, but states that Delta would offer almost no connections via Los Angeles, and no connections that United itself would not offer from San Francisco. United claims that despite the relative local market sizes, its San Francisco

- Tokyo service would be of benefit to almost twice as many passengers as Delta’s Los Angeles proposal when local plus connecting passengers are combined. 13

Answers of American, Delta, and Hawaiian 14

American states that the Department correctly concluded that the second largest mainland U.S.

- Tokyo market should receive new Haneda service and r equests that the Department make final without delay its proposed award of one slot pair to American for service from New York (JFK)

. With respect to the alliance competition comments made by United in its objection, American stat es that the Department’s analysis correctly reflected t hat an award to American sh ould enh ance U.S

. - Japan and U.S.

- Asia alliance competition

. American notes that under JAL’s reorganization plan, that airline proposes to retire all of its B747

- 400 aircraft by the end of 2011, reduce its (New York) JFK

- Tokyo service, and terminate service at Kon a. American

10 United Objection , at 7

- 8.
11 United Objection , at 11.
12 United Objection , at 9.
13 United Objection , at 10

- 11.
14 The Delta MEC also filed an answer in support for the Department’s tentative selection of Delta to provide Haneda service from Detroit and Los Angeles5 states that , as a result of JAL’s reorganization , oneworld’s comparative ranking with Star and Skyteam will diminish. 15 With respect to Hawaiian, American states that the Department appropriately declined to award half of the available slots t o a single route, particularly Honolulu, that is dominated by Japan

- originating leisure traffic and which Hawaiian could serve from Narit a. 16 In response to Continental’s request that the Department grant it backup authority at Newark for American’s New Yo rk (JFK)

- Haneda award, American asserts that the Department clearly articulated its rationale for not selecting backup awards in its tentative decision. However, American states that, should the Department accept Continental’s position, American has no ob jection to an award of backup authority to Continental because it has no intention of leaving the JFK

- Haneda route unserved.

Delta asserts that there is nothing in the objections of United, Continental/Continental Micronesia, or Hawaiian that would jus tify changes to the Department’s tentative decision. Delta states that the Department carefully considered Hawaiian’s request for a second slot pair for Honolulu

- Haneda service, but found that Honolulu did not merit a second award at the expense of import ant mainland gateways including Los Angeles, Detroit, and New York. With respect to the request of Continental and Continental Micronesia for backup authority, Delta states that the Department correctly declined to award backup authority in the unique cir cumstances of this case. Specifically, Delta states that the selected carriers are well

- positioned to begin new Haneda services. Delta further states that should the pending application of United/Continental/ANA (Star) for antitrust immunity be approved, Continental’s Star alliance will be the largest player in the U.S.

- Japan market, a consideration that the Department would clearly want to evaluate on the basis of a fresh record in the unlikely event it needs to select a backup carrier. Delta disagrees with United’s claim that Delta would offer no Haneda connections from Los Angeles other than from Las Vegas. Delta notes that it has a comprehensive domestic marketing alliance with Alaska/Horizon that will enhance connecting opportunities for Delta passe ngers at Los Angeles. 17 With regard to United’s objections to Delta’s award for service from Detroit, Delta asserts that the strength of its Detroit hub will enable service that will ensure maximum U.S.

- Haneda convenience and connectivity from the greatest number of U.S. cities.

Hawaiian states that the Department correctly recognized in its tentative decision that Hawaiian is a true new entrant in the U.S.

- Tokyo market . It further states that its proposal will benefit the state of Hawaii, its citizens, the Hawaiian economy, and travelers in the Hawaii

- Tokyo market. Hawaiian maintains that those important benefits far exceed any alleged benefits arising from United’s duplicative California

- Tokyo service, and states that the arguments raised by United in its objection have already been considered and rejected by the Department.

DEC ISION

We have decided to make final our tentative decision to a llocate four available slot pairs for daily scheduled combination services between the United States and Tokyo’s Haneda Airport, as follows: 1) one slot pair to Hawaiian for its proposed Honolulu

- Haneda service; 2) two slot pairs

15 American Answer , at 3

- 4.
16 American Answer , at 5.
17 Delta Answer , at 2.6 to Delta for its proposed Los Angeles

- Haneda and Detroit

- Haneda services; and 3) one slot pair to American for its proposed New York (JFK)

- Haneda service. We also make final our tentative deci sion not to award backup authority in this case . Further, we make final our tentative decision to award Hawaiian underlying economic authority to engage in its proposed services. 18

As we noted in our tentative decision, Haneda services have been limited to primarily domestic operations and the airport has been unavailable to U.S. carriers for scheduled international operations since 1978. U.S. carriers have been limited to operating U.S.

- Tokyo schedu led services at Tokyo’s Narita airport. The 2009 MOU presents us with a unique opportunity to facilitate the return of more convenient U.S.

- Tokyo access for the traveling public. We further noted that, in past cases where we have had an opportunity to in troduce or re

- introduce service to an area that has long been unavailable to U.S. carriers, the Department has typically attempted, where possible, to satisfy diverse public interest objectives and needs in selecting carrier proposals for award of the avai lable rights. 19 Similarly, in this proceeding, the ability to allocate slot pairs to enable four daily U.S.

- Haneda services allows us to reintroduce convenient U.S.

- Tokyo access while addressing a variety of important public interest objectives. We
tenta tively determined that such an approach would best serve the public interest and we affirm that position here.

Against that background, we tentatively concluded that the proposals of Hawaiian at Honolulu, Delta at Los Angeles and Detroit, and American a t New York (JFK)

, wou ld provide the most effective access to Haneda and result in the greatest degree of overall public interest benefits. The award of one slot pair to Hawaiian for service from Honolulu would not only bring a new entrant to the Tokyo mark et, but also would achieve the important objective of enhancing competition in the largest overall U.S.

- Tokyo market and provide important benefit s to the Hawaiian economy . The selection of Delta for Haneda service from Los Angeles wo uld provide Haneda ac cess to what is

, by far

, the larg est mainland U.S.

- Tokyo market and would inject significant capacity into the U.S.

- Tokyo market by Delta’s use of B747 aircraft. An award to Delta for Haneda service from Detroit would provide a large central and eastern U .S. catchment area with convenient Haneda service through a proven U.S.

- Asia hub and again provide significant capacity. American’s proposed service from New York (JFK) would provide Haneda access to the second largest mainland U.S.

- Tokyo market and enhan ce alliance competition in the U.S.

- Asia and U.S.

- Japan markets.

Taking into consideration th e full range of benefits provided by the tentatively selected proposals, and hav ing reviewed the objections and answers filed by the parties to our tentative de cision , we have d etermined that no party has brought to our attention any new argument that warrants a different conclusion. We address the arguments of the objecting carriers below.

With respect to Hawaiian’s assertion that we did not adequately consid er its request for a second slot pair, w e are cognizant that an award of a second Honolulu

- Haneda slot pair to Hawaiian would enhance its competitive presence in the Honolulu

- Tokyo market and may also result in

18 As we stated in our tentative decision, o ur findings here are made on each application’s merits, and have not been considered in conjunction with, n or have we pre

- judg ed the outcome of, the oneworld (American/JAL) and Star (Continental/United/ANA) applications for antitrust immunity pending before the Department.
19 Order 2010

- 5

- 7, at 8.7 further economic benefit to the state of Hawa ii. However, i n reaching our tentative decision, we determined that any additional benefits that may result from an award of a second slot pair to Hawaiian for Honolulu

- Haneda service would not outweigh the competitive and service benefits that would like ly result from our other tentative selection s of Delta ’s Los Angeles and Detroit proposals and American ’s New York (JFK) proposal . Specifically, selection of Delta’s Los Angeles proposal and American’s New York (JFK) proposal would p rovide Haneda service to the two lar gest mainland U.S.

- Tokyo markets , and selection of Delta’s Detroit proposal would provide Haneda service to the large st behind

- gateway catchment area in the proceeding through a proven hub . These s elections fulfill important and diverse publ ic interest objectives

. Hawaiian has not presented any new arguments that persuade us that the overall public interest would be furthered by the award of a second slot pair for its Honolulu

- Haneda service, which would require us to forg o th e significant a nd diverse benefits provided by our selections. Th us , we affirm our tentative decision to award Hawaiian one slot pair for Honolulu

- Haneda service.

We fully considered United ’s assertion that its San Francisco

- Haneda proposal offers the strongest combina tion of local and connecting service at both ends of the route and would benefit more U.S.

- originating passengers than would any of the other proposals at issue

. I n formulating our tentative decision , however, we determined that Delta’s Los Angeles propos al represented the most comp elling west coast gateway option. I t would maximize public benefits by providing service in the largest west coast and mainland U.S.

- Tokyo market, and would do so while providing more capacity than would the other west coast pr oposals, and while offering connecting opportunities to Tokyo traffic from the western United States. 20 S election of a second west coast service would undermine our ability to address the divers ity of objectives we had identified , namely : the introduc tion of new compe tition in the U.S.

- Tokyo market; the need for U.S.

- Haneda service in the largest mainland U.S.

- Tokyo O&D markets ; the need to provide a large central and eastern U.S. catchment area with convenient Haneda service through a proven U.S.

- Asia hub; and

, t he benefit of enhancing alliance competition in the U.S.

- Tokyo and U.S.

- Asia markets. We tentatively concluded that the four selected gateways for U.S.

- Haneda services, and the carriers selected at each such gateway to provide those services, woul d make effective use of the limited U.S.

- Haneda opportunities available to U.S. carriers and widen U.S.

- Haneda access, consistent with our goal of addressing the various public interest objectives. 21

We have carefully considered the arguments of United and SFO and are not persuaded to reach a different approach or outcome. W e appreciate, as we said in the show

- cause Order, that United’s service would generate benefits. However, g iven the limited number of slot opportunities available and the public be nefits to be realized from geographically diverse Haneda access

, we believe that the diverse combination of benefits achieved by finalizing our tentative selections, as outlined above, outweighs the benefits associated with a second west coast service at S an Francisco.

Having considered the relative merits of the various proposals, arguments, and objections presented in this proceeding, we have decided to make final our tentative decision to a llocate four available slot pairs for daily scheduled combinati on services between the United States and

20 Order 2010

- 5

- 7, at 9

- 10.
21 Order 2010

- 5

- 7, at 11.8 Tokyo’s Haneda Airport, as follows: 1) one slot pair to Hawaiian for its proposed Honolulu

- Haneda service; 2) two slot pairs to Delta for its proposed Los Angeles

- Haneda and Detroit

- Haneda services; and 3) one slo t pair to American for its proposed New York (JFK)

- Haneda service. We find that the four selected proposals will offer public benefits that, o n balance, outweigh the benefits of the proposals we were not able to select

.

BACKUP AWARD

As a final matter , in our tentative decision, we outlined our rationale for electing not to award backup authority in this case. 22 We have considered the arguments of Continental and Continental Micronesia with respect to backup authority and are not persuaded to alter our tentative decision. The record in this proceeding indicates that the selected carriers are committed to inaugurating their U.S.

- Haneda services in a timely manner. Furthermore, as we also stated in our tentative decision, s hould any of the selected carr iers not begin its proposed services, the public interest would be best served by allowing us to award any unused rights on the basis of a fresh record. Accordingly, we have decided to make final our tentative decision not to award backup authority.

EC ONOMIC AUTHORITY

We find that the selected carriers are fit to provide the authorized services. Each of the selected carriers has been found to be a citizen of the United States, and fit, and willing, and able to provide scheduled foreign air transportat ion of persons, property, and mail as a certificated air carrier under section 41102 of Title 49 U.S.C. 23 24 We will grant Hawaiian exemption authority

, subject to the attached conditions, for a period of two years, subject to renewal, effective immediately upon issuance of a final order in this proceeding. 25 We note that Delta and American already hold certificate authority to provide their proposed services. 26

We will impose a startup condition for each award. We will require the carriers to institute th eir proposed services within 90 days of October 31, 2010 , the date on which the IATA 2010 winter traffic season begins. 27

22 Order 2010

- 5

- 7, at 12. In addition , we propose that the slot pairs allocated in this proceeding be subject to a 90

- day dormancy condition, wherein any slots not utilized for a period of 90 days (once inaugurated) would be deemed dormant and revert to the Department.

23 See Orders 2007

- 7

- 3 (Hawaiian), 2009

- 1

- 8 (Del ta), and 2007

- 4

- 2 (American).
24 We find that our awards in this proceeding will result in a near term increase of annual fuel consumption in excess of ten million gallons. As a result, our action constitutes a “major regulatory action” under the Energy Policy and Conservation Act of 1975, as defined by section 313.4(a)(1) of the Department’s regulations. We find, however, that the service provided under the authority granted and resulting public benefits outweigh any adverse effects that may be caused by the increased fuel consumption.
25 We note that once the U.S.

- Japan Open

- Skies Agreement is entered into force, Hawaiian’s exemption authority

w ould be subsumed by its blanket open

- skies certificate ( see Order 20 07

- 7

- 3 ).
26 See Order 2009

- 1

- 8 (Delta) and Order 98

- 5

- 16 (American).
27 We are aware that the timing of the Haneda runway completion and the date on which the 2009 MOU is signed are factors that could have an impact on startup of Haneda services. We will entertain requests for modified startup date s in the event that those factors delay the ability of a carrier to institute its proposed services in the time period provided.9 ACCORDINGLY,

1. We make final our tentative findings, conclusions, and decision set forth in Order 2010

- 5

- 7;

2. We grant Hawaiian Airlines, I nc. exemption authority , subject to the attached conditions, to engage in scheduled foreign air transportation of persons, property, and mail between Honolulu, Hawaii, and Tokyo, Japan, and allocate to it one slot pair to provide its proposed Honolulu

Hane da services ;

3. We allocate Delta Air Lines, Inc. two slot pairs for its proposed Los Angeles

- Haneda and Detroit

- Haneda services, respectively;

4. We allocate American Airlines, Inc. one slot pair for its proposed New York (JFK)

- Haneda service;

5. The slot pairs allocated in ordering paragraphs two through four above will remain in effect indefinitely, provided that the holder continues to hold the necessary underlying authority to serve the markets authorized; and provided further that the slot pa irs will become dormant and will revert automatically to the Department if they are not used for a period of 90 days (once inaugurated);

6. We grant the request of the San Francisco International Airport for leave to file;

7. To the extent not granted , we deny the remaining applications in this proceeding;

8. We will not entertain petitions for reconsideration of this order; and

9. We will serve this order on the parties to the captioned docket of the order, the Japanese Ambassador to the United S tates in Washington, DC, the Federal Aviation Administration, and the U.S. Department of State (Office of Aviation Negotiations).

By:

Susan L. Kurland Assistant Secretary for Aviation and International Affairs

(SEAL) An electronic version of this docu ment is available on the World Wide Web at: http://www.regulations.govAttachment

U.S. Carrier Exemption Conditions

In the conduct of the operations authorized, the U.S. carrier applicant(s) shall:

(1) Hold at all times effective operating authority from the government of each country served;

(2) Comply with applicable requirements concerning oversales contained in 14 CFR 250 (for scheduled operations, if authorized);

(3) Comply with the requirements for reporting data contained in 14 CFR 241;

(4) Comply with requirements for minimum insurance coverage, and for certifying that coverage to the Department, contained in 14 CFR 205;

(5) Except as specifically exempted or otherwise provided for in a Departm ent Order, comply with the requirements of 14 CFR 203, concerning waiver of Warsaw Convention liability limits and defenses;

(6) Comply with all applicable requirements of the Federal Aviation Administration, the Transportation Security Administration, a nd with all applicable U.S. Government requirements concerning security, including, but not limited to, 49 CFR Part 1544. To assure compliance with all applicable U.S. Government requirements concerning security, the holder shall, before commencing any ne w service (including charter flights) to or from a foreign airport, contact its Principal Security Inspector (PSI) to advise the PSI 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;

(7) Comply with such other reasonable terms, conditions, and limitations required by the public interest as may be prescribed by the Department of Transportation, with all applicable orders and regulations of other U. S. agencies and courts, and with all applicable laws of the United States.

The authority granted shall be effective only during the period when the holder is in compliance with the conditions imposed above.

1/2008