UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on June 11 , 20 1 2

NOTICE OF ACTION TAKEN

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_______________________________________________________________________________________________ This serves as notice to the public of the action described below, taken by the Department official indicated (no additional confirming

order will be issued in this matter).

Applicant : BRITISH AIRWAYS (BA) LIMITED (BA Limited) Date Filed: May 17 , 2012

Relief requested: Exemption under 49 U.S.C. §40109 to engage in:

i. foreign scheduled and charter air transportation of persons, property, and mail from any point or points behind any Member State of the European Union, via any point or points in any Member State and via intermediate points to any point or points i n the United States and beyond;

ii. foreign scheduled and charter air transportation of persons, pro perty, and mail between any point or points in the United States and any point or points in any member of the European Common Aviation Area;

iii. foreign scheduled and charter cargo air transportation between any point or points in the United States and any p oint or points;

iv. other charters pursuant to the prior approval requirements set forth in 14 CFR Part 212 of the Department’s Economic regulations; and

v. transportation authorized by any additional route rights that may be made available to European Union ca rriers in the future.

The applicant further requests (1) a statement of authorization under 14 CFR Part 212 to the extent necessary to enable it to operate its

two UK

- registered A318 aircraft pursuant to a wet

- lease agreement with British Airways Plc, (2) a statement of authorization under 14 CFR Part 212 to the extent necessary to enable BA Limited to display the IB* designator code of Iberia Lineas Aereas de Es pana Anonima Sociedad Operadora (Iberia) on flights operated by BA Limited to and from the Unit ed States, and (3) a statement of authorization under 14 CFR Part 212 to the extent necessary to enable BA Limited to display the AA* designator code of American Airlines, Inc. (American) on flights operated by BA Limited to and from the United States.

Ap plicant representative: Don H. Hainbach

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- 3970 DOT analyst: Brett D. Kruger , 202

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Responsive pleadings: None.

DISPOSITION

Action: Approved in part (request for exemption authority; and requests for statements of authorization to wet lease aircraft to British Airways Plc, and to display the designator code of Iberia), subject to conditions; remainder (statement of authorization to display the designator code of American) deferred. (See conditions and remarks below.)

Action date: June 11

, 20 1 2

Effective dates of authority granted: The exemption authority granted to BA Limited is effective June 11 , 2012, through June 11

, 2014

.

The statement of authorization granted to BA Limited to wet lease to British Airways Plc is effective June 11 , 2012

, through June 11

, 2014

.

The statement of authorization granted to BA Limited to display the IB* designator code of Iberia is effective June 11 , 2012, for an indefinite period.Basis for approval (bil ateral agreement/reciprocity): U.S.

- EU Air Transport Agreement.

Except to the extent exempted/waived, this authority is subject to the terms, conditions, and limitations of our standard exemption conditions attached as Appendix A and to the code

- share conditions attached as Appendix B

.

Special conditions/Remarks: Bas ed on the record in this case, we found that BA Limited is operationally and financially qualified to conduct the proposed services, and that it is substantially owned and effectively controlled in a manner consistent with the provisions

of the U.S.

- EU Agr eement. 1 We also not e that the applicant is properly licensed by its homeland to perform the proposed services. In addition, on June 4 , 2012, the Federal Aviation Administration advised us that it knew of no reason why we should act unfavor ably on the ap plicant’s request for exemption authority.

However, w e note that American has not yet conducted a safety audit of BA Limited under the Department’s Code

- Share Safety Audit Program . Accordingly

, we have decided to defer action on BA Limited’s request for a statement of authorization to display the

American code until and the FAA has advi sed us that it has reviewed American’s code

- share safety audit of BA Limited and found the audit report to be acceptable.

Action taken by: Paul L. Gretch, D irector, Office of International Aviation

________________________________________________________________________________ _______ __________ Under authority assigned by the Department in its regulations, 14 CFR Part 385, we found that (1) our action was co nsistent with Department policy; ( 2 ) the applicant was qualified to perform its proposed operations ; (3) grant of the authority was consistent with the public interest; and ( 4 ) grant of the authority would not constitute a major regulatory action under the Energy Policy and Conservation Act of 1975. To the extent not granted/deferred/dismissed, we denied all requests in the referenced Docket. We may amend, modify, or revoke the authority granted in this Notice at any time without hearing at our discretion

. Persons entitled to petition the Department for review of the action set forth in this Notice under the Department’s regulati ons, 14 CFR §385.30, may file their petitions within seven (7) days after the date of issuance of this Notice. This action was effective when taken, and the filing of a petition for review will not alter such effectiveness.

An electronic version of this document is available on the World Wide Web at: http://www.regulations.gov

1 We make this finding based on Article 2 (Reciprocal Recognition of Regulatory Determinations with Regard to Airline Fitness and Citizenship) of the Protocol to amend the U.S.

- EU Air Transport Agreement, signed June 24, 2010.Appendix A 

### Foreign Air Carrier Exemption Conditions

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

(1) Not conduct any operations unless it holds a currently effective authorization from its homeland for such operations,

an d 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 3 6 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 Transportati on 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 thi s 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 changes to, or termination of, insurance also shall be file d with that office);

(4) Not operate aircraft under this authority unless it complies with operational safety requirements at least equivalent to Annex 6 of the Chicago Convention;

(5) Conform to the airworthiness and airman competency requirements of its Govern ment 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 operat ions under this authority constitute a waiver of sovereign immunity, for the purposes of 28 U.S.C. 1605(a), but only with respect to those actions or proceedings instituted against it in any court or other tribunal in the United States that are: (a) based on its operations in international air transportation that, according to the contract of carriage, include a point in the United States as a point of origin, point of destination, or agreed stopping place, or for which the contract of carriage was purchas ed 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 a Member State of the European Union;

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

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

(11) Comply with such other reasonable terms, conditions, and limitations required by the public interest as may be prescribed b y 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 conditi ons imposed above. Moreover, this authority cannot be sold or otherwise transferred without explicit Department approval

under Title 49 of the U.S. Code.

EU carrier 01/2008Appendix B

The code

- share operations authorized here are subject to the foll owing conditions:

(a) The statement of authorization will remain in effect only as long as (i) BA Limited and Iberia continue to hold the necessary underlying authority to operate the code

- share services at issue, and (ii) the code

- share agreement s providing

for the code

- share operations remain in effect.

( b ) BA Limited and/or Iberia, as appropriate, must notify the Department no later than 30 days before they begin any

new code

- share service under the code

- share services authorized here. Such not ice shall identify the market(s) to be served and the date on which the service will begin. Such notice should be filed in Docket DOT

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.

(c ) BA Limited and/or Iberia

, as appropriate, must promptly notify the Department if the code

- share agree ment providing for the code

- share operations is no longer effective or if the carriers decide to cease operating all or a portion of the approved code

- share services. Such notice should be filed in Docket DOT

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( d ) The code

- sharing operations conducted under this authority must comply with 14 CFR 257 and with any amendments to the Department’s regulations concerning code

- share arrangements that may be adopted. Notwithstanding any provisions in the contract between the carriers, our approval here is expressly conditioned upon the requirements that the subject foreign air transportation be sold in the name of the carrier holding out such service in the computer reservation systems and elsewhere; that the carrier selling such transporta tion ( i.e., the carrier shown on the ticket) accept responsibility for the entirety of the code

- share journey for all obligations established in its contract of carriage with the passenger; and that the passenger liability of the operating carrier be unaff ected

.

( e ) The authority granted here is specifically conditioned so that neither BA Limited nor Iberia shall give any force or effect to any contractual provisions between themselves that are contrary to these conditions.

We may amend, modify, or revoke the authority granted at any time without hearing at our discretion.

2 We expect this notification to be received within ten (10) days after such non

- effectiveness or of such decision.