UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, DC



### Issued by the Department of Transportation on November 5

, 2010

NOTICE OF ACTION TAKEN

-- DOCKET DOT

- OST

- 2010

- 0266

_________________________________________________________________________________________________________ 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 A pplication of AIR MICRONESIA, INC. (Air Micronesia), CONTINENTAL AIRLINES, INC. (Continental), AND UNITED AIR LINES, INC. (United) filed 10 /22 /10 , for:

XX Exemption for Air Micronesia from certificate condition s, pursuant to 49 U.S.C. § 40109, as follows:

An exemption from (1) the condition in Air Micronesia’s certificate of public convenience and necessity for interstate and overseas air transportation and (2) the condition in Air Micronesia’s

certificate of public convenience and necessity for Route 17 0

, that limit Air Micronesia to flight operations conducted under the direction, control, and responsibility of Continental Micronesia,

Inc. d /b/a Continental/Air Micronesia to permit Air Micronesia flights to b e operated by
Continental and United. 1

XX Exemption for Continental and United, pursuant to 49 U.S.C. § 40109 :

To the extent necessary to permit Continental and United to transport persons, property, and mail

on (1) Air Micronesia’s interstate routes ; (2) Air Micronesia’s routes between Saipan, Guam, Palau (Belau) and a point or points in the Philippines (Route 170) ; and (3) all of Continental Micronesia’s

routes.

Applicant rep s : R. Bruce Keiner (Air Micronesia and Continental) (202) 624

- 2500,

Bruce H. Rabinovitz (United) (202) 663

- 6960 DOT Analyst: Linda L. Lundell (202) 366

- 2336

D I S P O S I T I O N

1. We grant Air Micronesia an exemption from the condition in its certificate for interstate and overseas air transportation that limit s Air Micronesia to flight operations conducted under the direction, control, and responsibility of Continental Micronesia, Inc. d/b/a Continental/Air Micronesia , to the extent

necessary, to permit Air Micronesia’s flight operations also t o be co nducted by Continental (subject to conditions, see below);

2

. We grant Air Micronesia an exemption from the condition in its certificate for Route 170 that limit s Air Micronesia to flight operations conducted under the direction, control, and responsibility of Continental Micronesia, Inc. d/b/a Continental/Air Micronesia , to the extent necessary

, to permit Air Micronesia’s flight operations also to be conducted by Continental (subject to conditions, see below) ;

3. We grant exemption authority to Continental, to the extent necessary, to permit Continental to operate flights pursuant to Air Micronesia’s certificate of public convenience and necessity for interstate and overseas air transportation (subject to conditions, see below) ;

1 The Joint Applicants also state that Air Micronesia’s certificates should be amended to permit such operations.2

4

. We grant exemption authority to Continental, to the extent necessary, to permit Continental to operate flights pursuant to Air Micronesia’s certificate of public convenience and nece ssity for Route 170,

b etween Saipan, Guam, Palau (Belau) and a point or points in the Philippines (subject to conditions, see below);

5. We grant exemption authority to Continental, to the extent necessary, to permit Continental to
transport persons, pro perty, and mail on all of Continental Micronesia’s routes as described in Attachment

A in Order 2010

- 8

- 15 (pages 11

- 14) (subject to conditions, see below);

6

. The exemption authority granted in paragraphs 1 through 5, above, is effective immediately and shall remain in effect until the Department has ruled on the applican ts’ de facto route transfer application filed

in Docket DOT

- OST

- 2010

- 0163 (subject to conditions, see below); and

7

. We defer action on the remainder of the captioned application rega rding requests for authority involving United (see remarks, below). 2

Action taken by: Paul L. Gretch, Director

Office of International Aviation

XX The authority granted is consistent with the Compact of Free Association between the

Government of the United States and the Government of Palau. The authority involving the Philippines is granted on an extrabilateral basis, but is consistent with the overall state of aviation relations between the United States and the Philippines.

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

indicated:

XX The holder s ’ certificates of public convenience and necessity

XX Standard exemption conditions (attached)

Background : On June 24, 2010, Continental, Continental Micronesia, Air Micronesia, and United (Joint Applicants) filed an application pursuant to 49 U.S.C. § 41105, requesting the Department to, among other things , (1) approve the de facto transfer of the economic aut horities held by Continental, Continental Micronesia, and Air Micronesia to the same carriers under common ownership with United ; (2) reissue the economic authorit ies held by Continental, Continental Micronesia, and Air Micronesia to

Continental and/or Uni ted; and (3) reissue the economic authorit ies held by United to United and/or Continental, Continental Micronesia and Air Micronesia. That application remains pending in Docket

DOT

- OST

- 2010

- 0163.

The Joint Applicants concurrently filed a separate applica tion, in Docket DOT

- OST

- 2010

- 0165, for an interim exemption from the requirements of 49 U.S.C. § 41105 to the extent necessary to permit the carriers to operate under the common ownership of United, pending the Department’s action on the de facto transfer application described above, in Docket DOT

- OST

- 2010

- 0163

. By Order 2010

- 8

- 15, t he Department granted the Joint Applicant s’ request for an interim exemption in this matter, subject to the

condition that United and Continental remain separate entities and c ontinue to be independently operated until a ruling has been made in the underlying de facto transfer case

. Subsequently, on October 1, 2010, Continental, Continental Micronesia, and Air Micronesia came under the common ownership of United.

2 We will handle, separately, the Joint Applicants’ request to amend Air Micronesia’s certificates to permit its operations also to be condu cted by Continental and United.3

In the instant proceeding, the carrier s state that they seek the requested exemption s , to the extent

necessary, to permit Continental and United to conduct the operations of Air Micronesia and Continental

Micronesia

, pending the Department’s final action on the J oint Applicants’ route transfer application in

Docket DOT

- OST

- 2010

- 0163.

Decision : We reviewed the requests of the Joint Applicants in the captioned docket and determined that there is no basis to withhold the authority involving the exemption requests of Continental and Air Micronesia in this matter. We recognize that Continental, Air Micronesia, and Continental Micronesia were related entities prior to coming under common ownership with United and, as such, the Department would not have prohibited th ese related carriers from integrating their services

. Therefore, we have granted the requested exemption authorities to Continental and Air Micronesia as described above

. We have deferred action on that portion of the captioned application that involves United

– an airline that was not related to the other carriers prior to the ownership transaction on October 1, 2010. Based on the nature of the requests involving United, along with the terms of the pendente lite exemption granted to the Joint Applicants by Order 2010

- 8

- 15, we 

### believe that the requests for economic authority involving

United should be considered in the pending route transfer proceeding, in Docket DOT

- OST

2 010

- 0163.

Remarks: We acted on this application without awaiting expiration of the 15

- day answer period with the consent of all parties served with a copy of the application.

Conditions: Any air transportation services operated by Air Micronesia and /o r Continental pursuant to the exemption authority granted here must be operated in a manner consistent with the provisions of the exemption authority granted to the Joint Applicants by Order 2010

- 8

- 15 , in Docket DOT

- OST

- 2010

- 0165 , and the terms and conditi ons of this Notice.

The exemption authority granted here (1) to allow Continental to operate flights pursuant to Air

Micronesia’s certificates and (2) to allow Continental to operate flights on Continental Micronesia’s

routes shall not be construed as additional U.S. air carrier authority in limited

- entry markets. With regard

to limited

- entry markets involving Continental Micronesia’s routes, either Continental Micronesia or Continental, but not both, shall be authorized by this Notice to operate in th ese markets

.

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 CF R 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 Co nservation Act of 1975. To the extent not granted or deferred , 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 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, a nd 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 Departm ent, 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 app licable 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 a ll 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 that security is adequate to allow such airport(s) to be served; and

(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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