\\DC - 043304/000001 - 6258876 v1

BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Application of

AIR BUSAN CO., LTD.

for an exemption pursuant to 49 U.S.C. § 40109

and a foreign air carrier permit pursuant to

49 U.S.C. § 41302

(Republic of Korea - United States Open-Skies)

)

)

)

)

)

)

)

)

Docket DOT-OST-2014-______

APPLICATION OF AIR BUSAN CO., LTD.

FOR AN EXEMPTION AND A FOREIGN AIR CARRIER PERMIT

Communications with respect to this document should be addressed to:

George U. Carneal

HOGAN LOVELLS US LLP

Columbia Square

555 Thirteenth Street, NW

Washington, DC 20004

Telephone: +1 202 637 6546

Facsimile: +1 202 637 5910

E-mail: george.carneal@hoganlovells.com

Counsel for

AIR BUSAN CO., LTD.

December 19, 2014

NOTICE: Any person may support or oppose this application by filing an answer

and serving a copy of that answer on counsel for Air Busan Co., Ltd. and

all persons served with this application. Answers to the exemption

request are due January 5, 2015, and answers to the permit request are

due January 9, 2015.
\\DC - 043304/000001 - 6258876 v1

BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Application of

AIR BUSAN CO., LTD.

for an exemption pursuant to 49 U.S.C. § 40109

and a foreign air carrier permit pursuant to

49 U.S.C. § 41302

(Republic of Korea - United States Open-Skies)

)

)

)

)

)

)

)

)

Docket DOT-OST-2014-______

December 19, 2014

APPLICATION OF AIR BUSAN CO., LTD.

FOR AN EXEMPTION AND A FOREIGN AIR CARRIER PERMIT

Air Busan Co., Ltd. (“Air Busan” or the “Applicant”), a foreign air carrier based in

Busan, Republic of Korea (“ROK”), hereby applies under 49 U.S.C. §§ 41302 and

40109, Subparts B and C of the Department’s Rules of Practice (14 C.F.R. §§ 302.201

and 302.301, et seq.), Part 211 of the Department’s Economic Regulations (14 C.F.R.

Part 211), and the Department’s Streamlined Licensing Procedures1for an exemption

and a foreign air carrier permit authorizing Air Busan to engage in (1) scheduled foreign

air transportation of persons, property, and mail from points behind the Republic of

Korea via the Republic of Korea and intermediate points to a point or points in the

United States and beyond; (2) charter foreign air transportation of persons, property,

and mail between any point or points in the Republic of Korea and any point or points in

the United States, and between any point or points in the United States and any point or

1

See DOT Notice in Docket DOT-OST-2005-22228, dated August 23, 2005. Air Busan

requests that the Department grant this application under the show-cause procedures

described in that Notice by issuing a single Order (a) granting the exemption authority

described in this application for a period of two years, or until the effective date of the

Applicant’s foreign air carrier permit, whichever occurs first, and (b) tentatively awarding the

foreign air carrier permit. As soon as possible thereafter, Air Busan requests that the

Department issue a Final Order issuing Air Busan its ROK-U.S. open-skies foreign air carrier

permit for a period of indefinite duration.
Application of Air Busan Co., Ltd.

for an Exemption and a Permit

Page 2

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points in a third country or countries, provided that such service constitutes part of a

continuous operation, with or without a change of aircraft, that includes service to the

Republic of Korea for the purpose of carrying local traffic between the Republic of Korea

and the United States; and (3) other charter foreign air transportation subject to the

terms, conditions, and limitations of 14 C.F.R Part 212.

Air Busan plans to introduce scheduled service between Busan and Guam on or

about June 30, 2015. Air Busan seeks to obtain economic authority and all other

regulatory approvals as early as possible for the introduction of Busan-Guam service,

and desires to begin advertising and selling tickets to consumers sufficiently in advance

of the launch date to promote the earliest possible success of the service. Accordingly,

Air Busan requests the Department’s prompt consideration and approval of this

application.

In support of this application, Air Busan submits the following information:

1. Air Busan is a growing, low-cost regional Korean air carrier that was

established in August 2007 and began providing scheduled service in October 2008.

The Applicant currently operates a fleet of 13 aircraft on 14 domestic ROK and

international routes with plans for gradual growth within the Asian/Pacific region.

2. Air Busan provides domestic scheduled service to Seoul (Gimpo) and

Jeju and international scheduled service to points in Japan, China (including Hong Kong

and Macau), Taiwan, the Philippines and Cambodia, all from its focal city of Busan.

Air Busan has grown steadily since it first started flying in 2008, and plans further fleet

and route expansions in the coming years. Additional information concerning

Air Busan’s operating history is set forth in the Applicant’s response to the Information

Requirements of 14 C.F.R. § 211.20(j), contained in Exhibit BX-1.
Application of Air Busan Co., Ltd.

for an Exemption and a Permit

Page 3

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3. Air Busan requests timely approval of this application in order to fulfill its

imminent and long-term South Korea-U.S. scheduled service aspirations. On or about

June 30. 2015, Air Busan plans to introduce year-round scheduled foreign air

transportation of persons, property, and mail between Busan (PUS) and Guam (GUM).

The proposed schedule for these flights is set forth in Exhibit BX-1, in response to the

Information Requirements of § 211.20(c). The Applicant initially intends to offer four

weekly roundtrip flights on the PUS-GUM route using Airbus A320-200 or A321-200

aircraft. In accordance with the liberal rights available under the ROK-U.S. Open-Skies

Agreement, Air Busan might in the future offer service with other airplanes from its fleet,

adjust its proposed service patterns, and introduce service to other points in the

United States, including Hawaii and the U.S. mainland.

4. Air Busan also requests authority to conduct South Korea-U.S. charters

and other charter flights to and from the United States under Part 212 of the

Department’s Regulations, to enable Air Busan to respond to charter opportunities as

they arise.

5. Air Busan is fit, willing, and able to provide the foreign air transportation

described in this application and to conform to the provisions of Title 49 of the

United States Code and the applicable rules, regulations and requirements of the DOT

and other Federal governmental agencies. The Applicant has been found to be

qualified to engage in domestic and foreign air transportation by the Ministry of Land,

Infrastructure and Transport (“MOLIT”) of the Republic of Korea. MOLIT issued Air

Operator Certificate No. 2008-A05 to Air Busan on October 24, 2008 and Air

Transportation Business License no. 180111-0605121 initially on June 11, 2008 and

most recently on April 11, 2014 (see Exhibit BX-2). The attached Exhibits contain
Application of Air Busan Co., Ltd.

for an Exemption and a Permit

Page 4

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additional fitness information required under 14 C.F.R. § 211.20 establishing the

qualifications of the Applicant to hold a foreign air carrier permit (and an exemption in

the interim).

6. Issuance to Air Busan of the requested exemption and foreign air carrier

permit is consistent with the 1998 ROK-U.S. Open-Skies Air Transport Agreement.

Under Annexes I and II of the Open-Skies Agreement, designated airlines of the

Republic of Korea are entitled to perform the scheduled and charter services that are

the subject of this application. Furthermore, Air Busan understands that the Ministry of

Foreign Affairs of the Republic of Korea will transmit a note formally designating

Air Busan under Annexes I and II in the very near future.

7. The fact that the authority requested by Air Busan is consistent with the

rights available under the ROK-U.S. Air Transport Agreement provides prima facie

evidence that approval of this application is in the public interest. Moreover, approval is

also in the public interest because it will enable the Applicant to introduce valuable

service that will improve transportation options for passengers seeking service between

South Korea and Guam, and potentially other U.S. points in the future.

8. The introduction of the services proposed by Air Busan will not involve a

near-term net annual change in aircraft fuel consumption exceeding 10 million gallons.2

Approval of this application would not constitute a “major federal action significantly

affecting the quality of the human environment” within the meaning of Section 102(2)(c)

of the National Environmental Policy Act or a “major regulatory action” under the Energy

2

Air Busan estimates that it will burn approximately 1.4 million gallons of fuel during the first full

year of its proposed scheduled operations.
Application of Air Busan Co., Ltd.

for an Exemption and a Permit

Page 5

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Policy and Conservation Act. In addition, the Applicant does not anticipate encountering

any difficulty in obtaining adequate supplies of fuel for its proposed services.

9. Pursuant to 49 U.S.C. § 41313(c), Air Busan will submit to the

Department (in Docket DOT-OST-1998-3304) and the National Transportation Safety

Board its plan to address the needs of families of passengers involved in aircraft

accidents.

10. Pursuant to 14 C.F.R. § 243.13, Air Busan will file a brief statement with

the Department (in Docket DOT-OST-1998-3305) summarizing how it will collect the

passenger manifest information required by Part 243 and transmit the information to the

Department of State in the event of an aviation disaster.

11. In conclusion, Air Busan is poised and qualified to provide convenient

new air service between the Republic of Korea and the United States that is consistent

with the ROK-U.S. Open-Skies Air Transport Agreement and the public interest. In

order to ensure that Air Busan’s proposed summer 2015 scheduled PUS-GUM service

may proceed as planned and that the Applicant is also able to offer charter air service to

and from the United States in the event near term charter opportunities arise, Air Busan

requests that this application be granted without delay.

Application of Air Busan Co., Ltd.

for an Exemption and a Permit

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EXHIBIT LIST

Exhibit

BX-1 Fitness Information Required by 14 C.F.R. § 211.20

BX-2 Further Response to § 211.20(i) – Homeland Operating Authority

BX-3 Directors, Officers and Key Management Personnel

BX-4 Certificate of Insurance

BX-5 Response to § 211.20(n) – Financial Information

BX-6 Signed OST Form 4523

BX-7 Verification Required by § 211.11
Application of Air Busan Co., Ltd.

for an Exemption and a Permit

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Exhibit BX-1

Fitness Information Required by 14 C.F.R. § 211.20
Exhibit BX-1

Page 1

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FITNESS INFORMATION REQUIRED BY 14 C.F.R. § 211.20

(a) The name and address of the applicant, the nature of its organization and the

country under the laws of which it is organized.

Air Busan Co., Ltd.

6F, 24, Hwangnyeong-daero

Busanjin-Gu, Busan, 614-721

Republic of Korea

Air Busan is a corporation that was formed in 2007 under the laws of the

Republic of Korea.

(b) Name and address of the government air transport authority with regulatory

jurisdiction over the Applicant.

Ministry of Land, Infrastructure and Transport

11 Doum 6-ro

Government Complex-Sejong

Sejong-si 339-012

Republic of Korea

(c) Statement of the authority requested and a description of the services proposed.

Air Busan requests issuance of an exemption and a foreign air carrier

permit authorizing the Applicant to engage in scheduled foreign air transportation

of persons, property, and mail from points behind the Republic of Korea via the

Republic of Korea and intermediate points to a point or points in the

United States and beyond. Air Busan further requests authority to engage in

charter foreign air transportation of persons, property, and mail between any

point or points in the Republic of Korea and any point or points in the

United States, and between any point or points in the United States and any

point or points in a third country or countries, provided that such service

constitutes part of a continuous operation, with or without a change of aircraft,

that includes service to the Republic of Korea for the purpose of carrying local

traffic between the Republic of Korea and the United States; and to conduct

other charter trips in foreign air transportation subject to the terms, conditions,

and limitations of 14 C.F.R. Part 212.
Exhibit BX-1

Page 2

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Air Busan proposes to commence year-round roundtrip scheduled service

on the Busan (PUS) – Guam (GUM) route on or about June 30, 2015. The

Applicant initially plans to operate four weekly roundtrip flights on the PUS-GUM

route (departing from PUS on Mondays, Tuesdays, Thursdays, and Saturdays

and arriving in/departing from GUM the following days) under the following

schedule (all times local):

Segment DEP ARR

PUS-GUM 2130 0310

GUM-PUS 0410 0720

Air Busan plans to introduce these services using Airbus A320-200 aircraft

configured in a single class with 162 seats, but Air Busan may also use Airbus

A321-200 aircraft with 191-195 seats if warranted by demand. Air Busan

reserves the right to adjust its service patterns, schedules, frequencies, and

equipment used with respect to this route, and to serve other ROK-U.S. routes

consistent with the authority granted by the Department, the Applicant’s

homeland and FAA operating authority, and the ROK-U.S. Open-Skies

Agreement.

The Applicant also proposes to provide charter service to the

United States as opportunities arise, subject to the provisions of

14 C.F.R. Part 212.

(d) Information concerning the Directors, Officers and key management personnel of

the Applicant.

The directors, officers and key management personnel of Air Busan are

identified in Exhibit BX-3. Each individual is a citizen and resident of the

Republic of Korea. To the best of the Applicant’s knowledge and belief, none

are related by blood or marriage. The business address of each individual is

care of Air Busan’s headquarters in Busan (per the response to § 211.20(a),

above).
Exhibit BX-1

Page 3

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(e) Information concerning the ownership of the Applicant.

The entities holding five percent (5%) or more of the capital stock of

Air Busan are Asiana Airlines, Inc. (“Asiana”) (46.00%), which is another ROK air

carrier that has been issued a foreign air carrier permit by the Department of

Transportation, and the Busan Metropolitan City (5.02%). The Department has

previously determined that Asiana is substantially owned and effectively

controlled by citizens of the Republic of Korea. See DOT Order 2000-11-10. In

terms of entities holding 5% or more of the capital stock of Asiana, according to

its financial statements as of December 31, 2013, on that date, Kumho Industrial

Co., Ltd (a ROK corporation) owned 30.08% of Asiana’s shares, Kumho

Petrochemical Co., Ltd (a ROK Corporation) held 12.61%, and The Korea

Development Bank (a ROK government run bank) held 6.25%.

All other Air Busan stockholders are ROK companies, consisting of Seun

Steel Co., Ltd. (4.00%), Lotte Hotel Busan, Inc. (4.00%), Winsteel Co., Ltd

(4.00%), Dongil Holdings Co., Ltd. (4.00%), Bisco Co., Ltd (4.00%), Nexen Corp.

(4.00%), Taewoong Co., Ltd. (4.00%), Samhan Construction Co., Ltd. (4.00%),

IS Dongseo Co., Ltd. (4.00%), Seo Won Distribution Co., Ltd. (4.00%), Meritz

Fire & Marine Insurance Co., Ltd. (3.99%), The Busan Bank (2.99%), ENK Co.,

Ltd (1.00%) and The Busan Ilbo Co., Ltd (1.00%). Each company is a citizen of

the Republic of Korea.

Thus, the management and ownership information concerning Air Busan

fully supports a finding that Air Busan is substantially owned and effectively

controlled by citizens of the Republic of Korea.

(f) Statement concerning the Applicant’s holdings in other aeronautics-related

businesses.

Asiana, which holds 46% of Air Busan’s capital stock, is a ROK air carrier

that is well known to the Department. To the best of Air Busan’s knowledge and

belief, neither the Applicant nor its officers, directors, key managers or other

major shareholder hold any direct or indirect interest in other U.S. or foreign air

carriers or other aeronautical businesses.
Exhibit BX-1

Page 4

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(g) The relationship between the Applicant and its homeland government.

Aside from the local Busan Metropolitan City ownership interest in

Air Busan and the regulatory oversight of various ROK governmental entities

over the Applicant, the Korean government is not involved in the ownership,

management or operations of Air Busan.

(h) Evidence that the Applicant’s insurance coverage meets or exceeds the liability

limits of 14 C.F.R. Part 205.

Insurance coverage for the aircraft Air Busan will use for its proposed

services to the United States exceeds the liability limits of 14 C.F.R. Part 205.

Attached as Exhibit BX-3 is a completed OST Form 6411, Foreign Air Carriers -

Certificate of Insurance, which will also be submitted to the Federal Aviation

Administration.

(i) Evidence of the Applicant’s homeland operating authority.

Attached as Exhibit BX-2 is Air Operator Certificate No. 2008-A05, dated

October 24, 2008, and Air Transportation Business License No. 180111-

0605121, dated April 11, 2014, issued by the Ministry of Land, Infrastructure and

Transport of the Republic of Korea. The Applicant will obtain necessary

amendments to the Operations Specifications associated with this AOC in order

to provide the proposed services to Guam and other destinations in the

United States, and will otherwise ensure that all renewals of and amendments to

its AOC and Air Transportation License are maintained with MOLIT, as

warranted.

(j) Operating history of the Applicant.

Air Busan is a regional low-cost ROK airline that focuses on domestic

and international service from its main base of operations in Busan, the second

largest city in the ROK. It operates domestic passenger services to Seoul

(Gimpo) and Jeju and international services to select destinations in Asia.

Initially named Busan International Airlines Co., Ltd., the Applicant was

established in August 2007. It subsequently changed its name to Air Busan Co.,
Exhibit BX-1

Page 5

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Ltd., with initial investment agreements in place in February 2008 for the launch

of the airline. Later that year, Air Busan obtained its air transportation license

and Air Operator Certificate and inaugurated service between Busan, Gimpo and

Jeju using B737-500 aircraft. These domestic ROK services expanded during

2009, when Air Busan reached a fleet size of five B737-500 and -400 aircraft.

Since 2010, Air Busan has gradually expanded into international markets,

beginning with scheduled and charter flights to points in Japan. Air Busan began

taking delivery of Airbus A321-200 aircraft in 2011 and expanded services and

frequencies to a limited number of carefully selected additional Asian

destinations each year since then. Today, Air Busan has a fleet of 13 aircraft

(with a 14th expected this month) and a route network that connects Busan with

each of Gimpo and Jeju, ROK; Tokyo, Osaka and Fukuoka, Japan; Qingdao,

Xi’an, Yanji, Zhangjiajie, Hong Kong and Macau, People’s Republic of China;

Taipei and Kaohsiung, Taiwan; Cebu, Philippines; and Siem Reap, Cambodia.

For the foreseeable future, Air Busan intends to continue its strategy of

incremental annual growth in terms of fleet size and points served, with nonstop

service from Busan as its core business focus. The addition of service to Guam

is a key element of that strategy for 2015.

(k) List of the aircraft owned, leased and operated by the Applicant.

A listing of Air Busan’s current fleet appears below. All aircraft are leased

or subleased from Asiana and registered in the Republic of Korea. They are all

operated exclusively by Air Busan, and none are, or are intended to be, wet

leased.

Aircraft Reg. No.

B737-500 HL7250

B737-400 HL7510

HL7517

HL7508

HL7513

A321-200 HL8213

HL7761
Exhibit BX-1

Page 6

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A321-200

(cont’d)

HL7723

HL7711

HL7712

HL7713

A320-200 HL7753

HL7744

HL7745 (anticipated Dec. 2014)

Air Busan has 7 additional Airbus aircraft on order, with delivery dates

through 2016. Air Busan plans to phase out its B737 classic aircraft during this

same time period, transitioning it to an all-Airbus fleet.

(l) Aircraft maintenance information.

Air Busan’s maintenance procedures are regulated and approved by the

ROK Ministry of Land, Infrastructure and Transport and in compliance with ICAO

pilots and airmen annexes 1, 6 (Part 1) and 7. The Republic of Korea is a

contracting state of the Convention on International Civil Aviation.

Maintenance on Air Busan’s aircraft is contracted to and primarily

performed by Asiana at its maintenance facilities located at Incheon International

Airport.

(m) Description of any agreements or cooperative working arrangements.

Air Busan has not entered into any agreements or cooperative working

arrangements with U.S. or foreign airlines affecting the proposed services to the

United States.

(n) Financial data summaries.

Exhibit BX-5 consists of financial data summaries for 2012 and 2013.
Exhibit BX-1

Page 7

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(o) Financial assistance received or expected from the Applicant’s home

government, if any.

Although the Busan Metropolitan City owns shares of the Applicant, no

direct financial assistance is provided by the Applicant’s home government.

(p) An estimate showing the total traffic and the financial results of the proposed

services for the first full year of normal operations and the supporting data

employed to calculate the financial forecast.

Based on its international air transportation experience on similar leisure

routes from Busan and its analysis of demand and expected growth in the ROKGuam market, Air Busan reasonably projects that it will carry at least 50,000

passengers between Busan and Guam during the first year of operations (based

on an average load factor of approximately 75%). Air Busan estimates that the

route will generate income of approximately $9.67 million during that period.

(q) Issues relating to the air transport agreement between the United States and the

Republic of Korea.

The services proposed by the Applicant are entirely consistent with the

Republic of Korea-U.S. “Open-Skies” Air Transport Agreement, signed and

entered into force on June 9, 1998. Under Annexes I and II of the Open-Skies

Agreement, designated airlines of the Republic of Korea are entitled to perform

the scheduled and charter services that are the subject of this application.

Furthermore, Air Busan anticipates that the Ministry of Foreign Affairs of the

Republic of Korea will transmit a note formally designating Air Busan under

Annexes I and II in the very near future.

(r) The policy of the applicant’s homeland government with respect to U.S. carriers’

applications for scheduled and charter authority, including whether the homeland

government grants Fifth Freedom traffic rights to U.S. carriers.

It is Air Busan’s understanding that the policy of the Government of the

Republic of Korea is to grant designated U.S. carriers’ applications for scheduled

and charter authority to serve Korea, to the extent that the proposed services are

consistent with the ROK-U.S. Air Transport Agreement and other international
Exhibit BX-1

Page 8

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agreements between the Republic of Korea and third countries. The Korean

government’s approval of traffic rights not covered by the Annexes to the OpenSkies Agreement would be based on a determination that adequate comity and

reciprocity exists.

(s) Statement as to whether the Applicant has, for the preceding 5 years, been

involved in any safety or tariff violations or any fatal accidents.

For the preceding five years, Air Busan has not been involved in any fatal

accidents or any tariff violations. In terms of safety violations, Air Busan or the

responsible flight crew members have been penalized for the following:

 12/26/2010 – Runway incident at Fukuoka Airport due to

miscommunication between cockpit crew and Air Traffic Control

(ATC);

 01/14/2011 – Descent without ATC permission in vicinity of Gimhae

Airport, triggering Traffic Collision Avoidance System alert;

 05/08/2012 – Landing on wrong runway at Gimhae Airport during

adverse weather;

 10/07/2012 – Unauthorized altitude increase in the vicinity of Cebu

Airport due to miscommunication with ATC; and

 05/18/2013 – Insufficient report to MOLIT regarding aircraft change.

(t) OST Form 4523 (Waiver of liability limits under the Warsaw Convention).

A signed copy of OST Form 4523 is set forth as Exhibit BX-6 and will be

submitted to Docket DOT-OST-1995-236.
Application of Air Busan Co., Ltd.

for an Exemption and a Permit

\\DC - 043304/000001 - 6258876 v1

Exhibit BX-2

Further Response to § 211.20(i) –

Homeland Operating Authority
Exhibit BX-2

 Page 1 of 3
Certificate of Air Transportation Business Licence 

○ Company : AIR BUSAN Co., Ltd. 

○ Name : Tae-Keun Han 

○ Registration Number : 180111-0605121 

○ Address : 6F, 24, Hwangnyeong-daero, Busanjin-Gu, Busan, 614-721, 

 The Republic of Korea 

○ Business : Domestic, International Air Transport Services 

(Passenger, Cargo) 

○ (First) Date of Issuance : June 11, 2008 

This Certificate of Air Transportation Business Licence is issued pursuant to 

Article 112 of 『Aviation Act』 of the Republic of Korea. 

11 April 2014 

Ministry of Land, Infrastructure and Transport 

Exhibit BX-2

 Page 2 of 3
Exhibit BX-2

 Page 3 of 3
Application of Air Busan Co., Ltd.

for an Exemption and a Permit

\\DC - 043304/000001 - 6258876 v1

Exhibit BX-3

Directors, Officers and Key Management Personnel

Application of Air Busan Co., Ltd.

for an Exemption and a Permit

\\DC - 043304/000001 - 6258876 v1

Exhibit BX-4

Certificate of Insurance
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Exhibit BX-4

 Page 1 of 2
B.FOREIGNAIRcARRIERSoPERAmNcSMALLAiRCRAFT

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Exhibit BX-4

 Page 2 of 2
Application of Air Busan Co., Ltd.

for an Exemption and a Permit

\\DC - 043304/000001 - 6258876 v1

Exhibit BX-5

Response to § 211.20(n) –

Financial Information
Exhibit BX-5

 Page 1 of 3
AIR BUSAN CO., LTD.

Statements of Financial Position

As of December 31, 2013 and 2012

(In US dollar)

Assets 2013 2012

Cash and cash equivalents $ 7,958,758 4,906,239 

Short-term financial instruments 43,062,201 38,344,048 

Held-to-maturity securities - 9,783,631 

Accounts receivable less allowance for doubtful accounts 6,558,7 4,939,614 88 

Other accounts receivable 2,261,179 2,965,929 

Accrued revenues 487,424 927,230 

Advance payments 732,707 886,299 

Prepaid expenses 728,342 1,029,489 

Prepaid value added tax 835,289 395,636 

Deferred tax assets 986,235 75,065 

Inventories 937,630 1,199,325 

Total current assets 65,190,809 64,810,248 

Held-to-maturity securities 9,569,378 9,407,338 

Property, plant and equipment, net 6,458,644 4,591,357 

Intangible assets 187,538 158,362 

Long-term loans 4,276,794 573,848 

Deposits provided 4,062,527 4,345,243 

Deferred tax assets 367 - 

Total non-current assets 19,076,514 24,554,882 

Total assets $ 89,365,131 84,267,323 

Liabilities

Accounts payable $ 15,284,061 21,706,350 

Accrued expense 1,109,369 1,180,489 

Withholdings 2,959,615 3,907,772 

Advances from customers 13,296,880 8,969,440 

Prepaid income 86,966 - 

Taxes withheld 39,937 9,151 

Current tax liabilities 1,966,228 612,564 

Total current liabilities 35,555,360 35,573,461 

Retirement and severance benefits 6,906,008 4,218,590 

Pension plan assets 6,895,858 - 4,052,516 - 

Total non-current liabilities 166,074 10,150 

Total liabilities 35,721,433 35,583,612 

Shareholders¡ equity

Capital stock 47,036,689 47,846,890 

Capital adjustments 238,072 - 234,041 - 

Retained Earnings 6,172,701 1,743,241 

Total shareholders¡ equity 53,781,519 48,545,889 

Total liabilities and shareholders¡ equity $ 89,365,131 84,267,323 

Exhibit BX-5

 Page 2 of 3
AIR BUSAN CO., LTD.

Statements of Income

For the years ended December 31, 2013 and 2012

(In US dollar)

Sales 2013 2012

Passenger transport revenues $ 254,053,008 197,428,664 

Freight transport revenues 1,481,452 1,408,659 

Other revenue 10,429,135 8,846,377 

Total sales 207,683,699 265,963,594 

Cost of sales 189,743,621 243,851,046 

Gross profit 17,940,079 22,112,548 

Selling, general and administrative expenses 17,281,060 14,265,545 

Operating income 3,674,534 4,831,488 

Non-operating revenues

Interest revenues 2,144,876 2,356,552 

Gain on foreign currency transactions 1,073,037 957,659 

Gain on foreign exchange translation 736,402 553,503 

Gain on disposal of Property, plant and equipment 4,028 7,995 

Other gains 208,170 191,433 

Non-operating expenses

Loss on foreign currency transactions 1,118,138 1,135,518 

Loss on foreign exchange translation 1,680,603 1,188,773 

Donations 281,647 320,940 

Loss on obsolescence of Property, plant and equipment 16,162 61,700 

Other losses 208 63,331 

Income before income taxes 5,090,566 5,782,090 

Income taxes 904,971 1,382,658 

Net income $ 4,399,432 4,185,595 

Exhibit BX-5

 Page 3 of 3
Application of Air Busan Co., Ltd.

for an Exemption and a Permit

\\DC - 043304/000001 - 6258876 v1

Exhibit BX-6

Signed OST Form 4523
Exhibit BX-6
Application of Air Busan Co., Ltd.

for an Exemption and a Permit

\\DC - 043304/000001 - 6258876 v1

Exhibit BX-7

Verification

\\DC - 043304/000001 - 6258876 v1

CERTIFICATE OF SERVICE

I certify that a copy of the foregoing Application of Air Busan Co., Ltd. for an

Exemption and a Foreign Air Carrier Permit has been served this 19th day of December,

2014, upon the following addressees:

robert.wirick@aa.com; howard.kass@aa.com

sascha.vanderbellen@delta.com; chris.walker@delta.com

jhill@cooley.com; perkmann@cooley.com

dan.weiss@united.com; steve.morrissey@united.com

gbleopard@fedex.com

matwood@cozen.com

kevin.montgomery@polaraircargo.com

agoerlich@ggh-airlaw.com

anita.mosner@hklaw.com; jennifer.nowak@hklaw.com

robert.finamore@dot.gov

John.S.Duncan@faa.gov

William.J.McGowan-Jr@faa.gov; Rick.Mayfield@faa.gov; Daniel.W.Abdon@faa.gov

englets@state.gov

thomas.keene@tsa.dhs.gov

chuck.ada@guamairport.net

Jonathan Echmalian