UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, DC



### Issued by the Department of Transportation on May 27 , 201 4

NOTICE OF ACTION TAKEN

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- 00 58 and DOT

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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 AIRL INES, INC. d/b/a UNITED EXPRESS (SkyWest)

, filed 4/18 /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 Leon/Guanajuato , Mexico

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

- 2500

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 amended exemption authority was effective when taken: May 27 , 2014

, through May 27 , 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

between Houston, Texas and Leon/Guanajuato, Mexico. Currently, United and ExpressJet are designated to provide these services. United states that it intends to replace its own

- aircraft services in the market with United Express services provided by SkyWest beginning on or about October 26, 2014.

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

- Leon/Guanajuato market beginning on or about October 26, 2014.

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

between Houston and Leon/Guanajuato using its own aircraft and by placing its code on services provided by ExpressJet Airl ines, Inc. (ExpressJet)

. See Orders 2000

- 5

- 31, 2010

- 5

- 17, and 2013

- 4

- 11. The j oint a pplicants state that beginning on or about October 26, 2014, United plans to replace its own

- aircraft service with United Express service operated by SkyWest.On May 5, 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

- Leon/Guanajuato market would continue to be used on behalf of a single U.S. carrier. Southwest states that it does not oppose the j oint a pplication , but notes that it plans to serve Leon/Guanajuato from Houston’s William P. Hobby airport in the future

. Southwest urges the Departmen t 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

- Leon/Guanajuato market.

On May 12, 2014, t he City of Houston fi led a reply . The City of Houston expresses support for Southwest’s request, and also states that it welcomes United and SkyWest ’s commitment to their

Houston

- Mexico services. The City of Houston states that the limited number of U.S.

- carrier designations available in each U.S.

- Mexico city

- pair market severely limits competition and operational flexibility for carriers. The City of Houston further states that it is hopeful that the upcoming U.S. negotiat ions with Mexico will result in the removal of designation limits.

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 exempt ion authority. In reaching this decision, however, we recognize the concerns raised by Southwest and the City of Houston. In this regard, we note that s hould a competing U.S. carrier present a firm proposal to provide scheduled

Ho uston

- Leon/Guanajuato se rvice, 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 Expr ess services authorized here, but SkyWest cannot commence the United Express Houston

Leon/Guanajuato services until October 26, 2014.

The joint applicants state that United’s own

- aircraft service will be replaced with United Express service operated by Sk yWest commencing on October 26, 2014. Under the circumstances presented in this case,

as noted above , we have decided that it is in the public interest to grant SkyWest the requested exemption authority. In this regard, we will withdraw the designation o f United effective upon the departure of its last scheduled flight in the Houston

- Leon/Guanajuato market, but in no case effective later than 11:59 PM on October 25, 2014, and designate SkyWest for Houston

- Leon/Guanajuato services effective October 26, 201 4. 3

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

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. Consistent with our standard policy, the dormancy notice period will begin on October 26

, 201 4

, 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 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

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

- share service in the market.(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 exemption services authorized.

Under authority assigned by the Department in its regulations, 14 CFR Part 385, we found that (1) our

action was consistent w ith 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 de nied 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 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: 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 con cerning 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 cover age 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 assu re 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 P SI 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 p ublic 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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