Order 2011 - 9 - 4 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Issued by the Department of Transportation on the 12 th day of September , 2011 Served: September 12 , 2011

Docket DOT - OST - 2011 - 0076

Docket DOT - OST - 2005 - 22228

ORDER TO SHOW CAUSE Summary By this order we propose to modify certain r egulatory procedures for U.S. carriers serving o r, in the case of small aircraft operations, seeking to serve the U.S.

- Mexico market
. Background The U.S.

- Mexico air services agreement (the agreement) limits the number of U.S. carriers that may provide non

- stop service, with their o wn aircraft or via code

- share arrangements, in all U.S.

- Mexico city

- pair markets. 1 Bef ore a U.S. carrier holding underlying economic authority from the Department to provide scheduled combination or all

- cargo service may commence service with its own air craft, it must be designated to provide service in that city

- pair market. 2 Similarly, before a U.S. carrier holding underlying economic authority from the Department to provide scheduled combination or all

cargo service pursuant to a code

- share arrangeme nt with a U.S. or Mexican carrier may commence service , the Department must transmit a “code

- share notification” to the Mexican Civil Aviation

1 A “U.S.

- Mexico city

- pair market” refers to a trans

- border route segment between a point in the United States and a point in Mexico where international air transportation services can be provided since the necessary facilities are a vailable
. 2 Pursuant to the agreement, designations are transmitted via diplomatic note between the U.S. and the Mexican governments. U.S. - Mexico Procedures for U.S. Carriers (MEXICO PROCEDURAL DOCKET) In the Matter of Consolidated International Route Authority for:

AMERICAN AIRLINES, INC. AMERICAN EAGLE AIRLINES, INC. CONTINENTAL AIRLINES, INC. AND/OR UNITED AIR LINES, INC. DELTA AIR LINES, INC. FRONTIER AIRLINES, INC. JETBLUE AIRWAYS CORPORATION PINNACLE AIRLINES, INC. Under 49 U.S.C. §41102 for a certificate of public convenience and necessity ( U.S. - Mexico only )Authority indicating that the carriers are authorized to provide that service in a given city

- pair market. Under the agreement, scheduled small

- aircraft 3 and large

- aircraft services are treated identically with respect to these requirements. In some cases, U.S. carriers may hold underlying economic authority, but may need to request a designation or a code

- share no tification before they may commence service. P resent Action W e propose to address in this proceeding a number of informal U.S.

- Mexico

- related filing arrangements . 4 These informal arrangements have been used by U.S. carrier s seeking o perational flexibil ity to adjust, delay, or temporarily cease services , or seeking the designation necessary to provide small

- aircraft services in the U.S.

- Mexico market. 5 Becaus e these arrangements have been developed largely by accretion, certain inconsistencies and ineff iciencies have resulted. They have also suffered from a lack of transparency. We tentatively find that we can best address and improve the situation by changing to a more transparent, centralized, u ser - friendly approach. Specificall y, we propose to establish a Mexico Procedural Docket (the “ Mexico Procedural Docket”), in Docket DOT

- OST

- 2011

- 0076, where U.S. carrier requests and notices, previously filed informally (and generally undocketed) , would be filed and where related Departmen t actions would be posted. We believe that this approach would enhance industry and public awareness of newly

- available route opportunities, pending requests , and our action on those requests, and would significantly improve administrative efficiency. 6 F or administrative clarity, and to provide easy identification of submissions for Departmental action and/or interested parties’ use, we tentatively propose that the following titles be used when submitting requests/notices to the Mexico P rocedural Docket , as follows: (1) Small

- Aircraft Designation ; (2) Small

- Aircraft Code

- Share Authorization; (3) Waiver to Extend Start

- Up Deadlines; (4) Temporary Waiver of Dormancy Conditions; (5) Conversion of Authorized Service; 7 (6) Reactivation of Dorman t Exemption A uthority ; 8 (7) Notice of Service

- Level Change(s); 9 and (8) Notice of Dormancy. 10 Filing Fees : There will be no filing fees associated with the above requests/notices filed in the Mexico P rocedural D ocket
. 3 Under Part 298.2 of the Department’s regulations, “small

- aircraft” is defined as any aircraft originally designed to h ave a maximum passenger capacity of 60 seats or less or a maximum payload capacity of 18,000 pounds or less. 4 We are not considering in this proceeding our formal licensing procedures and policies pertaining to U.S.

- Mexico operating authority. For mor e information on policies and procedures, s ee, e.g., Orders 88

- 10

- 2, 88

- 7

- 43, 88

- 10

- 30, 96

- 11

- 24, 98

- 8

- 18, 99

- 6

- 6, 2000

- 5

- 31, 2006

- 10

- 13, and 2008

- 3

- 12. 5 Generally, these informa l/ undocketed U.S.

- Mexico licensing practices call for U.S. carriers to fi le U.S.

- Mexico

- related requests and notices in the form of a letter addressed to the U.S. Air Carrier Licensing Division at the U.S. Department of Transportation. Once filed, these requests/notices are summarized in the Department’s Weekly List of Applicati ons Filed published at the end of each week. Where applicable, answer dates to the submissions are also noted. 6 To eliminate unnecessary duplication, the Weekly List of Applications Filed would no longer include the various types of requests and noti ces covered here. 7 Requests to convert direct

- carrier service to code

- share service, or vice versa. 8 We note that only dormant U.S.

- Mexico authority granted by exemption may be reactivated. U.S.

- Mexico authority granted in a Certificate of Public Convenience and Necessity is not eligible for reactivation once dormant since it reverts to the Department ninety (90) days after a service ceases. Carriers are reminded that they are obligated to inform the Department when they cease operations on any U .S.

- Mexico route
. 9 Notices to advise that a carrier has changed its level of service in a U.S.

- Mexico city

- pair market (from year

- round service to seasonal service, or vice versa). We note that these notices serve to, among other things, ensure that the Department applies dormancy conditions appropriately, depending on the level of service provided. For information on the application of dormancy conditions with respect to identified seasonal or intermittent services, see , e.g., Order s 96

- 11

- 24, at 3

- 5, and 2000

- 5

- 31, at 4. 10 We remind carriers that the requirement to file dormancy notices is applicable whether the carrier is serving the market with its own aircraft or on a code

- share basis only ( see Order 2000

- 5

- 31, at 3).Cover Page, Docket Requirement(s), and Requir ed Service : We propose that all submissions, as identified above, filed in the Mexico P rocedural Docket include : a cover page with a caption for the Mexico P rocedural D ocket and, where applicable, a caption for the docket where the filing carrier’s underl ying exemption or certificate authority to serve the subject U.S.

- Mexico city

- pair route segment(s) was awarded; the title of the type of submission being filed; the name and address of the filing carrier; the name, address, telephone number, and e

- mail ad dress of the filing carrier’s representative, and the date of the filing. All submissions should be served on all U.S. carriers providing scheduled air transportation service in the U.S.

- Mexico market, with a copy also served on: esta.rosenberg@dot.gov , brett.kruger@dot.gov , and brian.hedberg@dot.gov . We tentatively find that the proposed content of th e cover page closely mirro r s th e type of information currently being provided
. Answers and Replies to Submission s Requiring Department Approval : We p ropose to establish a period of 15 days for answers/objections to submissions filed, and seven calendar days for replies to answers /objections filed. We tentatively conclude that a uniform standardized response date for all submissions requiring Department approval will virtually eliminate response

- and action

- date ambiguities that exist under our current informal licensing arrangeme nts, while providing an adequate opportunity for interested parties to respond. Criteria for Approval of Submissions : For those submissions requiring Department approval, we propose to continue our practice of granting approvals where good cause is shown , no objections are filed, and our action is consistent with the aviation agreement
. 11 We believe that this basis for approvals has worked well to serve the public interest and w e tentatively see no need to alter our approval criteria in this matter. We note that requests that are controverted may require disposition through other Department procedures. Notices : Notices on service

- level changes or dormancy on U.S.

- Mexico city

- pair route segments have not, and will not, require D epartmental action. These notices will continue to provide vital U.S.

- Mexico service information , including immediate notification o f newly

- available route opportunities in the market. Consolidated U.S. - Mexico Certificates

– Docket DOT - OST - 2005 - 22228 We will also continu e our practice to grant, to qualified U.S. air carriers, consolidated U.S.

- Mexico certificate authority pursuant to, and consistent with, the procedures described in the Department’s February 13, 2009 Notice , in Docket DOT

- OST

- 2005

- 22228. However, in furt herance of our continued streamlining measures, and consistent with our c entralization efforts here , we have tentatively decided: (1) to move previously

- issued consolidated U.S.

- Mexico certificates in Docket DOT

- OST

- 2005

- 22228 to the Mexico P rocedural Dock et in Docket DOT

- OST

- 2011

- 0076; (2) to require that all future requests for consolidated U.S.

- Mexico certificate s be filed in the Mexico P rocedural Docket , and served on all U.S. carriers providing scheduled air transportation in the U.S.

- Mexico market, wi th a copy also served on: esta.rosenberg@dot.gov , brett.kruger@dot.gov and brian.hedberg@dot.gov ; and (3) to require that all f uture U.S.

- Mexico

- related requests/notices involving Mexico authority granted in Docket DOT

- OST

- 2005

- 22228 that fall into the earlier

described categories be filed in the Mexico P rocedural Docket 12

– a docket pertaining exclusively to U.S.

- Mexico licensing matters .

11 Se e, e.g., Orders 2008

- 3

- 12, at 2

- 3; 2000

- 5

- 31, at 3; and 88

- 10

- 30, at 6

- 7. 12 These submissions should also be served on all U.S. carriers providing scheduled air transportation in the U.S.

- Mexico market, with a copy also served on: esta.rosenberg@dot.gov , brett.kruger@dot.gov , and brian.hedberg@dot.gov
.ACCORDINGLY, 1. We direct all interested parties to show cause why we should not make final the tentative actions set forth in the text of this order; 2. We direct any interested parties having objections to the tentative actions set forth in this order to file their objections in Dockets DOT

- OST

- 2011

- 0076 and DOT

- OST

- 2005

- 22228 (with a courtesy copy also to esta.rosenberg@dot.gov , brett.kruger@dot.gov , and to brian.hedberg@dot.gov ) no later than 15 calendar days from the date of service of this order; with answers to objections due no later than 10 calendar days thereafter; 13 3 . If timely and properly supported o bjections are filed, we will afford full consideration to the matter or issues raised by the objections before we take further action; 14 4. In the event that no objections are filed, we will deem all further procedural steps to be waived and we will ente r an order finalizing our tentative actions; and 5 . We will serve this order by electronic mail on all U.S. certificated and commuter air carriers; the National Air Carrier Association; the Air Transport Association; the Regional Airline Association; and the Cargo Airline Association. By:

SUSAN L. KURLAND Assistant Secretary for Aviation and International A ffairs (SEAL) An electronic version of this document is available on the World Wide Web at: http://w ww.regulations.gov

13 Filers are encouraged to use the electronic filing submission capability available at the following web site: http://www.regulations.gov
. 14 Because we are providing for the filing of objections to our tentative decisions in this order, we will not entertain petitions for reconsideration of this order.