UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, DC



### Issued by the Department of Transportation on September 3 , 201 4

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).

Joint Application of UNITED AIRLINES, INC. ( United ) and SKYWEST AIRLINES, INC. d/b/a UNITED EXPRESS (SkyWest)

, filed 7/30 /14 for :

XX E xemption for SkyWest for two years under 49 U.S.C. 40109 to provide the following service:

Scheduled foreign air transportation of persons, property, and mail between Houston, Texas , and Mexico City , Mexico

. 1 2

Applicant R ep resentative s : Gerald F. Murphy and Steven J. Seiden (202) 624

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DOT Analyst: Brett D. Kruger (202) 366

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D I S P O S I T I O N

XX Granted, subject to conditions (see below)

The above action granting exemption authority was effective when taken: September 3 , 2014

, through September 3 , 2016

.

Action taken by: Paul L. Gretch, Director

Office of International Aviation

XX The authority granted is consistent with the aviation agreement between the United States and

Mexico.



### Except to the extent exempted or waived, this authority is subject to the terms, conditions, and

limitations indicated:

XX The holder s’ certificate s of public convenience and necessity

XX Standard Exemption Conditions (attached)

Responsive Pleadings/ Remarks : Under the U.S.

- Mexico aviation agreement, two U.S. carriers may be designated to provide own

- aircraft scheduled foreign air transportation of persons, property, and mail in

the Houston

- Mexico City market . Currently, United and ExpressJet are designated to provide these

services. The joint applicant s state that they intend to replace the United Express service provided by

1 SkyWest states that it will display the “UA” designator code of United in the Houston

- Mexico City market on a seasonal basis beginning on or about January 6, 2015

. 2 United holds certificate authority to provide scheduled foreign air transportation of persons, property, and mail in

the Houston

- Mexico City market using its own aircraft and by placing its code on services provided by ExpressJet Airlines, Inc. (ExpressJet)

. See Orders 199 2

- 5

- 2 0 and 2013

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- 11. The j oint a pplicants state that United plans to substitute the service that ExpressJet currently provides in the market with service operated by SkyWest

.ExpressJet in the market with United Express service provided by SkyWest beginning on or about January 6, 2015

.

On August 1 4 , 2014 Southwest Airlines Co. (Southwest) filed an answer to the Joint Application. Southwest notes that with an approval of the instant application, the two designations available to U.S.

carriers to serve the Houston

- Mexico City market would continue to be used on behalf of a single U.S.

carrier. Southwest states that it does not oppose the joint application, but notes that it plans to serve Mexico City from Houston’s William P. Hobby airport in the future. Southwest urges the Department to put the joint applicants on notice that their authority and corresponding designations in the market are subject to being rescinded if Southwest were to actively seek competing authority to serve the Houston

Mexico City market.

On August 2 1 , 2014, the City of Houston filed a reply. The City of Houston states its interest in promoting additional services and competition, and in seeing that all carriers seeking to provide Mexico services from Houston receive the authority they need. The City of Houston notes that United and Southwest have both made substantial facility funding commitments at Houston’s two airports, and that a more liberal bilateral agreement would allow carriers to provide the services that traffic demands.

On August 22 , 2 014, the joint applicants filed a joint reply . The joint applicants note that Southwest does not oppose the joint application, and the joint applicants urge the Department to promptly approve their

request

.

Decision: We have decided in the circumstances presented, including the fact that no party opposed the application, that it is in the public interest to grant SkyWest the requested exemption authority. In reaching this decision, we recognize the concerns raised by Southwest

. In this regard, we note that should a competing U.S. carrier present a firm proposal to provide scheduled Houston

- Mexico City service, we would be prepared to reconsider whether, in those circumstances, award of the authority granted here continues to be in the public interest.

Effective Date for Start

- up/Designation: United may begin marketing and selling the subject United Express services authorized here, but SkyWest cannot commence the United Express Houston

- Mexico City service until January 6, 2015

.

The joint applicants s tate that United Express service operated by ExpressJet will be replaced with United Express service operated by SkyWest commencing on January 6, 2015 . Under the circumstances presented in this case, as noted above , we have decided that it is in the publi c interest to grant SkyWest the requested exemption authority. In this regard, we will withdraw the designation of ExpressJet effective upon the departure of its last scheduled flight s in the Houston

- Mexico City market, but in no

case effective later than 11:59 PM on January 5, 2015 , and designate SkyWest for Houston

- Mexico City

service effective January 6, 2015

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Conditions : The U.S.

- Mexico exemption authority granted is subject to the dormancy notice requirements set forth in condition 7 of Appendix A of Order 88

- 10

- 2

, and the notice requirements for

seasonal/intermittent services as set forth in Order 96

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- 24, at 5

. Consistent with our standard policy, the dormancy notice period will begin on January 6, 2015

, SkyWest’s propose d start

- up date for the subject services

.

The code

- share operations conducted under this authorization are subject to the following conditions:

(a) The code

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

- share arrangements that

may be adopted. Notwithstanding any provisions in the contract between the carriers, our

3 We will also provide the necessary notification to the Government of Mexico confirming United’s authority to provide code

- share service in the market.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 computer reservation systems and elsewhere; that the carrier selling such transportation ( 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 unaffected; and

(b) The authority granted here is specifically conditioned so that neither United nor SkyWest shall give any force or effect to any contractual provisions between themselves that are contrary to these

conditions.

On the basis of data officially noticeable under Rule 24(g) of the Department's regulations, we found the applicants qualified to provide the exemptio n services authorized.

Under authority assigned by the Department in its regulations, 14 CFR Part 385, we found that (1) our action was consistent with Department policy; (2) grant of the authority was consistent with the public interest; and (3) 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, we denied all requests in the referenced

Docket s

. 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 regulations, 14 CFR §385.30, may file their petitions within seven (7) days after t he 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: 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 Department 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, and 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 new 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 th at 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.



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