Order 20 12

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- 1 4

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 18 th day of July

, 20 12

Served: July 18 , 2012

Application of

HAINAN AIRLINES CO., LIMITED Docket DOT

- OST

- 200 7

- 0066

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

ORDER GRANTING EXEMPTION AND TO SHOW CAUSE

Summary

By this order we (1) grant the application of the referenced foreign air carrier for an exemption under 49 U.S.C. §40109, subject to conditions; 1 and (2) tentatively find that it is in the public

interest to grant the applicant the amended foreign air carrier permit attached as Appendix B to

this order.

Background

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

- 2005

- 22228, announcing several steps designed to streamline our regulatory procedures for licensing U.S. and foreign air carriers. Among other things, the Notice stated that:

Assuming, based on the record and on the public interest/public convenience and necessity elements germane to our licensing decisions, that we were in a position to act favorably , we would proceed to issue a single order (1) granting the exemption request for whatever duration we would normally have imposed, or until certificate/permit authority becomes effective, whichever is shorter, and (2) tentatively deciding ( i.e.

, show

- caus e) to award a corresponding certificate (or permit), again for the standard

1 The conditions are attached as Appendix A.2

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 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 June 18 , 20 12 , Hainan Airlines Co., Limited (Hainan Airlines) , a foreign air carrier of the People’s Republic of China (PRC)

, requests an exemption under 49 U.S.C. §40109,

and a n amended foreign air carrier permit under 49 U.S.C. §41301, to permit it to engage in

scheduled f oreign air tran sportation of persons, property and mail between Beijing, PRC, and Chicago, Illinois

. 2

The applicant provided evidentiary materials required by 14 CFR Part 211 of our regulations to support its request for a foreign air carri er permit. 3

No answers were filed to Hainan Airlines’ application.

Decision

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, as described below and subject to conditions, and tentatively to grant, subject to show

- cause procedures, its request

for a n amended foreign air carrier permit, also subject to conditions.

With respect to the applicant’s request for exemption authority, we find tha t 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 operationally qualified to perform the services authorized

. The ownership structure of Hainan Airlin es has not changed since we last granted it a foreign air carrier permit ( see Order 2009

- 12

- 10 ) , and the carrier remains substantially owned and effectively controlled by citizens of the PRC.

The authority sought by the applicant is encompassed by the a viation agreement between the United States and the People’s Republic of China. We therefore find that grant of the requested

2 Hainan Airlines’ current foreign air carrier permit, issued in this Docket on October 13, 2009, by Order 2009

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, authorizes it to engage in (a) scheduled foreign air transportation of persons, property, and mail between (1) Beijing, People’s Republic of China, and Seattle, Washington; and (2) Beijing, People’s Republic of Ch ina, and Honolulu, Hawaii; (b) c harter fore ign air transportation of persons, property, and mail between a point or points in the People’s Republic of China and a point or points in the United States; and (c) other charters pursuant to 14 CFR Part 212 of the Department’s regulations

. 3 Hainan Airli nes incorporated by reference the evidentiary submissions it made in its previous application s for a n initial and amended foreign air carrier permit in the above captioned Docket.3

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 licensed by its homeland to perform the proposed

services. In addition, by memorandum dated July 6 , 20 12 , t he Federal Aviation Administration advised us that it knew of no reason why we should act unfavor ably on the applicant’s request

. We have verified the applicant’s compliance with 14 CFR Parts 203 (Warsaw liability waiver), and 205 (insurance requirements).

Tentative Findings and Conclusions

-- 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

, subject to the conditions

attached and the charter prior approval conditions previously placed on the applicant by Order

2009

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. 4 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 amended foreign air carrier permit it seeks.

In view of the foreg oing and all 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 transportation described in the attached permit and to conform to the provisions of Title 49 of the U.S. Code, and to our rules, regulations, and requirements;

3. The applicant is substantially owned and effectively controlled by citizens of its claimed

homeland ;

4. The public interest requires that the exercise of the privileges granted by the permit should be subject to the terms, conditions, and limitations contained in the attached permit, and to such other reasonable terms, conditions, and limita tions required by the public interest as we may prescribe;

4 The applicant’s request for an amended foreign air carrier permit was su mmarized 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. A s noted above, n o answers to the application were filed.4

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

reg ulations; 5

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 t o 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 consiste nt with Department policy; and (2) with respect to the exemption authority we are conferring on the applicant, the applicant is qualified to perform those operations; and that grant of the exemption authority is consistent with the public

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

Conservation Act of 1975.

ACCORDINGLY,

1. We grant the request of Hainan Airlines Co., Limited for an exemption under 49 U.S.C. §40109 to permit it to engage in scheduled foreign a ir transportation of persons, property and

mail between Beijing, People’s Republic of China, a nd Chicago, Illinois ;

2. The exercise of the privileges granted above is subject to c ompliance by Hainan Airlines Co.,

Limited with the conditions listed in App endix A;

3 . 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;

4 . We may amend, modify , or revoke our action regarding the exemption authority set forth

herein 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

- 200 7

- 0066 ;

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.5

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

7 . Any inte rested 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, file with the Department and serve on the parties to this proceeding, a statement of objections specifying the part or parts of the tentative findings and conclusions objected to, together with a summary of testimony, statistical data, and con crete 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;

8 . If timely and properly supported objections are filed, we will give further conside ration 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 President ial review under §41307 of Title 49 of the U.S. Code) make final our tentative findings and conclusions set forth in this order; and

10 . We will serve a copy of this order on Hainan Airlines Co., L imi t e d

, the Embassy of the People’s Republic of China in W ashington, D.C.

, the Department of State, and the Federal

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 afte r 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. GRE TCH

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 Condition s Appendix A

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

(1) Not conduct any operations unless it holds a currently effective authorization from its homeland for such operations, and it has filed a copy of such authorization with the Department;

(2) Comply with all applicable requirements of the Federal Aviation Administration, the Transportation Security Administration, and with all applicable U.S. Government requirements concerning security,

includin g, 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 chart er 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 i ts 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 th e 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 o f 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 i t 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, o r 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 its homeland;

(9) Comply with the requirements of 14 CFR Part 217, concerning the reporting of scheduled, nonscheduled, and charter data;

(10) If charter operatio ns are authorized, except as otherwise provided in the applicable aviation agreement, comply with the Department's rules governing charters (including 14 CFR Parts 212 and 380); and

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

This authority shall not be effective during any perio d 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.

12/2007Appendix B

Issued by

Order 20 12

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UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.



### ---------------------------------------------------------------------------- PERMIT TO FOREIGN AIR CARRIER (as amended)



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



### H ain an A irlines C o ., Limited

A Foreign Air Carrier of the People’s Republic of China

is authorized, subject to the following provisions, the provisions of Title 49 of the U.S. Code, and the orders, rules, and regulations of the Department of Transportat ion, to engage in foreign air transportation of persons, property and mail, as follows:

Scheduled foreign air transportation of persons, property, and mail b etween : 1) Beijing, People’s Republic of China
, and Seattle, Washington; 2) Beijing, People’s Repu blic of China, and Honolulu, Hawaii; and 3) Beijing, People’s Republic of China, and Chicago, Illinois; and

Charter foreign air transportation of persons, property, and mail b etween a point or points in the People’s Republic of China and a point or points in the United States.

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 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 internationa l air transportation now in effect, or that may become effective during the period this permit remains in effect, to which the United States and the holder’s homeland are or shall become parties.

This permit shall be effective on . Unless otherwise terminated at an earlier date pursuant to the terms of any applicable treaty, convention or agreement, this permit shall terminate (1) upon the dissolution or liquidation of the holder to whom it was issued; (2) upon

the effective da te 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 People’s Republic of Chin a (or, if the rightis 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 Peoples’ Republic of China in lieu of the holder; or (4) upon the termination or expiration of the applicable air services agreement between the United States and the People’s Republic of China. However, clause (4) of this paragraph shall not apply if prior to such termination or expiration, the foreign air transportation authorized herein becomes the subject of another treaty, convention or agreement to which the United States and the People’s Republic of China become parties. The Department of Transportation has executed this permit and af fixed its seal on , 20 12

.

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 a ny 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 a pplicable 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 Interna tional 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 su ch 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 OS T Form 6411, with the Federal Aviation Administration’s Program Management Branch (AFS

- 260), Flight Standards Service (any changes to, or termination of, insurance also shall be filed with that office);

(4) Not operate aircraft under this authority unles s 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 specificall y 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 sover eign immunity, for the purposes of 28 U.S.C. 1605(a), but only with respect to those actions or proceedings instituted against it in any court or other tribunal in the United States that are: (a) based on its operations in international air transportation that, according to the contract of carriage, include a point in the United States as a point of origin, point of destination, or agreed stopping place, or for which the contract of carriage was purchased in the United States; or (b) based on a claim unde r 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

al l 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 r equirements of 14 CFR Part 217, concerning the reporting of scheduled, nonscheduled, and charter data;

(10) If charter operations are authorized, except as otherwise provided in the applicable aviation agreement, comply with the Department's rules governi ng 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.

12/2007