1

ANSWER OF JOHN P.T. GILMORE

Re: Application of AirO ne Ventures Limited For An Exemption Under 49 U.S.C. § 40109(c) (U.S.

- Barbados) Docket DOT

- OST

2010

- 0134

I, John P.T. Gilmore, am an interested party with respect to the subject Application. This is my Answer to that Application.

1. AirOne Ventures Limited ( “ Applicant ” or “ AirOne ” ) in this Application “ seeks an exemption under 49 U.S.C. § 40109(c) and Subpart C of the Department ’ s procedural regulations from the requirements of 49 USC § 41301 and § 4130 2 that it obtain a foreign air carrier permit to the extent necessary to allow it to provided scheduled foreign air transportation between t he United States and

Barbados. ” ( “ Permit Exemption ” ).

2. Also “ to the extent necessary, AirOne requests a waiver of the Department ’

s homeland ownership and control policy. ” ( “ Waiver Application ”

.

3. The Permit Exemption

In the Foreign Air Carrier Information Packet issued by the Department of Transportation, Office of International Aviation, Foreign Air Carrier

Licens ing Division (“Department”) in September, 2000 ( “ InfoPak ” ) the Department states :

“ Because under our procedural rules the processing time for foreign air carrier permit request can be lengthy, most foreign air carrier applicants also request, at the time they file their applications for permit authority, an exemption from the permit requirement. Such an exemption allows them to commence operations while the Department is processing the permit request. 3

3 It is important to note that while the exemption p rocess typically allows the Department to act more quickly than the permit process, the public interest
standards for approval are the same

. ”

The InfoPak states that “ the same evidentiary information is required of foreign carriers seeking exemption autho rity ” as for those seeking a foreign air carrier permit ; namely those prescribed in 14 CFR § 211. 20.2

Given that the same standards and the same evidentiary requirement apply to both permit applications and permit exemptions, the rationale
for the latter s eems to be its relative speed over the former . As such it

would seem more reasonably applicable to permits by operational airlines rather than start ups; the latter requiring the in depth assessment of pro forma evidence of fitness and capacity whereas the
former have the actual operational evidence of such fitness / capacity.

There is however no legislative limitation on such permit exemptions other than that they be cons istent with the public interest and exemptions, as a result, have become the standar d procedure in foreign air carrier applications for economic authority.

The applicant proposes to commence the operations for which it seeks its exemption authority on February 1, 2011 and requests that the exemption authority be effective on or before Oc tober 1, 2010.

Since in the case of AirOne the time period between the filing of the application and the proposed start up date is eight and a half months (and four and a half months before the requested effective date of the authority) there would seem t o be no requirement in this case for the

„ fast track ‟ exemption procedure.

It is worth highlighting that there is no similar fast track procedure

available for United States (“US ” ) applicants seeking a certificate for foreign air transportation authority under 49 USC § 41102 whether for an existing certificated airline or a start up carrier.

Since the normal fast track rationale for an exemption is absent in this

instance and no other justification for the exemption procedure has been offered by the appli cant, the application for the exemption should

be denied and the 49 USC § 4 1102 permit procedure followed in this

case.

The applicant has indicated in its application that the provisional authority requested is “ critical to securing all necessary financin g ” for its proposed operations; a reason that in my submission should not be a factor in the Department ‟ s consideration of this application or indeed of any subsequent application it might make for a foreign air carrier permit.3

4. The Waiver Application

AirOne in this Application “ seeks an exemption under 49 U.S.C. § 40109(c) and Subpart C of the Department ’ s procedural regulations from the requirements of 49 USC § 41301 and 49 USC § 41302 that it obtain a foreign air carrier permit to the extent n ecessar y to allow it to provide scheduled foreign air transportation between the United States

and Barbados. ”

.

Also “ to the extent necessary, AirOne requests a waiver of the Department ’

s homeland ownership and control policy. ”.

49 U.S.C. § 40109(c) . Authority t o exempt provides

, in its relevant
parts

, as follows:

“ (c) Other Economic Regulation.

— Except as provided in this section, the Secretary may exempt to the extent the Secretary considers necessary a person or class of persons from a provision of ..., chapte r 413 ... of this title, or a regulation or term prescribed under any of those provisions, when the Secretary decides that the exemption is consistent with the public interest. ”

.

The provisions of 49 USC from which AirOne seeks to be exempted are

§ 41301 a nd § 41302 which provide as follows:

“ Sec. 41301. Requirement for a permit A foreign air carrier may provide foreign air transportation only if the foreign air carrier holds a permit issued under this chapter authorizing the foreign air transportation.

S ec. 41302. Permits of foreign air carriers The Secretary of Transportation may issue a permit to a person ( except a citizen of the United States) authorizing the person to provide foreign air transportation as a foreign air carrier if the Secretary finds t

hat

- ( 1) the person is fit, willing, and able to provide the foreign air transportation to be authorized by the permit and to comply with this part and regulations of the Secretary; and ( 2)(A) the person is qualified, and has been designated by the

gover nment of its country, to provide the foreign air transportation under an agreement with the United States Government; or ( B) the foreign air transportation to be provided under the4

permit will be in the public interest

. ”

AirOne is a private Barbados corpo ration which is wholly owned by AirOne Holdings Limited (“AirOne Holdings ” ) ,a St. Lucia corporation over three quarters of whose issued shares are owned by nationals of member states of the European Union (“EU” or (“EU nationals”))

.

AirOne has been recogn ised

, as a matter of policy

, by the Government

of Barbados as a Barbados carrier in terms under which it will be designated by Barbados under air services agreements to which Barbados is a party. AirOne does not appear to contravene the corporate eligibili ty requirements to be considered for the issuance of a Barbados Air Operator ‟ s Certificate under the Civil Aviation (Air Operator Certification and Administration) (Amendment) Regulations 2009 (made by the Minister on December 30th, 2009) once it meets
the substantive Barbados Air Operator‟s Certificate requirements.

Neither Barbados nor St. Lucia is party to an Open Skies Agreement

with the US . St. Lucia, through its membership in the Organisation of

Eastern Caribbean States

, is a FAA IASA Category 1 stat e

– Barbados has not yet been assessed a n IASA category by the FAA.

With respect to ownership and control, it has long been Department policy to require foreign carriers to be substantially owned and effectively controlled by citizens of their respective homelands. The

U.S

- Barbados bilateral agreement expressly establishes homeland ownership and effective control as a condition for securing a license from the other party. In the absence of such ownership and control, the grant of a license to a carrier i s entirely within the discretion of the Department. (See Lan Ecuador Order 2002

- 12

- 15

- December 20,

2002 : DOT

- OST

- 2002

- 13661 )

The Applicant is a private corporation organised under the laws of

Barbados and is a wholly owned subsidiary of AirOne Holdings whose registered office is in St. Lucia ( it is presumably a private St. Lucia corporation ) which itself is presently owned as to 76.67% of its issued shares by EU nationals, 10.92% by US nationals (Allegiant Airlines) and 10.88% by nationals of Barbados w ith the remaining 1.53% of the issued shares held equally by Jamaican and South African nationals.

The current three person Board of Directors of Air O ne comprises its CEO/Chairman and its Director of Business Development, both5

nationals of Ireland (an EU member state) and a national of Barbados.

The size , present composition and nationalities of the Board of

Directors of AirOne Holdings are not specified.

While it cannot be said who owns and controls AirOne Holdings and thereby AirOne ( without knowledge o f the nature of the issue in question , the make up of the Board of Directors of AirOne Holdings

and the l aws of St. Lucia and Barbados ) since the Barbados interest is limited to a 10.92% shareholding in AirOne Holdings and a single Director (out of three a t present) in AirOne it can be said that AirOne is not substantially owned or effectively controlled by nationals of Barbados, the homeland of the applicant.

On the issue of effective control not a single member of the current
seven member senior manageme nt team of AirOne is a national of Barbados (six being nationals of EU membe r states and one a US national)

– leaving operational and management control also in the
hands of non nationals of AirOne‟s homeland.

A reasonable conclusion based on the facts pr esented in the application is that substantial owne rship and effective control

of AirOne is in the hands of EU nationals not homeland nationals.

The US has an Open Skies Agreement with the EU which has been provisionally applied since October 28, 2007 and which has recently

been agreed to be amended in a Protocol contained in a Memorandum

of Consultation initialled on March 25, 2010 in which “ both delegations expressed their e xpectation that their respective aeronautical authorities would permit operations consistent with the terms of the agreement as amended by the March 25, 2010 Protocol, on the basis of comity or reciprocity, or on an administrative basis, from the date of signature of the Protocol

. ” ( This Protocol is as yet unsigned).

Article 6

- Additi onal Matters related to Own ership, Investment, and Control of the 2007 Agreement provides as follows:

“ Notwithstanding any other provision in this Agreement, the Parties shall implement the provisions of Annex 4 in their decisions under their respective l

aws and regulations concerning ownership, investment and

control. ”

.6

Article 2 (1) of Annex 4 provides as follows:

“(1) Neither Party shall exercise any available rights under air services arrangements with a third country to refuse, revoke, suspend or l imit authorizations or permissions for any airlines of that third country on the grounds that substantial ownership of that airline is vested in the other Party, its nationals, or both.”

Were it to be determined in the instant application that “ substanti al ownership ” of AirOne was vested in EU nationals, under the EU

– US Open Skies Agreement

, the US would not have the right to refuse the authority requested by AirOne in its application on the basis that substantial ownership of AirOne was vested in EU na tionals.

The argument made by the Applicant that this also applied to Article 3 of Annex 6 to the March 25, 2010 Protocol ( substantially identical to Article 2 of Annex 4 of the 2007 Agreement but with respect to

“ effective control ” rather than “ substanti al ownership ” ) is incorrect.

Annex 6

– Article 3 of the Protocol provides as follows:

“( 3 ) Neither Party shall exercise any available rights under air services arrangements with a third country to refuse, revoke, suspend or limit authorizations or permi ssions for any airlines of that third country on the grounds that effective control of that airline is vested in the other Party, its nationals, or both , provided that the third country in question

has established a record of co

- operation in air services r elations with both parties.”

.

This “ effective control ” exemption for third country airlines controlled by EU nationals is subject to the proviso that the third country is considered by both the EU and the US to have an “ established record of cooperation i n air servic es relation s with both parties

. ” a s certified by the Joint Committee established by the Agreement

– a certification

that has not yet been made.

M oreover the amended Article 21 (3) of the Agreement ( contained in Article 6 of the March 25, 2010 Protocol ) which specifies the implementation criteria for Annex 6 o f the P rotocol, provides that

Annex 6 only comes into effect when the Joint Committee has provided

written confirmation “ that the laws and regulations of each party7

permit majority ownershi p and effective control of its airlines by the other party or its nationals. ”

.

The Department policy to require foreign carriers to be effectively controlled by citizen s of their respective homelands is not therefore affected by the EU

– US Open Skies Agr eement.

The April 8, 1982 US

– Barbados Air Transport Agreement ( “ ATA ” ) provides in Article 3 (2) that on application by a n airline designated by either party, the other party shall grant appropriate authorisation provided that “ substantial ownership an d effective control ” of the designated airline “ are vested in the party designating the airline, nationals of that party, or both ; ”

- 3(2) (a); that the designated airline is qualified to meet the international air transportation regulations of the designat ing party

- 3(2) (b) ; and that the designated airline is maintaining and administering the safety standards specified in the agreement 3(2) (c).

Article 3 (2) of the US

– Barbados ATA is substanti vely identical to Section 3 (2) of the US

– Ecuador ATA signe d on September 26, 1986. Neither ATA is an Open Skies Agreement.

In two cases involving the latter ATA and a combined foreign air

carrier permit exemption and ownership and control waiver application (similar to the current AirOne application) by LAN ECUA DOR : DOT

OST

- 2002

- 13661 and DOT

- OST

- 2003

- 14291, the Department gave

exhaustive consideration to the conditions under which such a waiver
could be granted to a n airline from a country with which the US had an

ATA that was not an O pen S kies agreement.

The Department in its ORDER DENYING EXEMPTION by Order 2002

- 12

- 15 on December 20, 2002 in DOT

- OST

- 2002

- 13661 summarised

the relevant facts as follows:

“ Lan Ecuador noted that 100% of its voting shares are owned by Lan Chile Investment Limited, a Cayman Islan ds corporation, which in turn is 100% owned by Lan Chile S.A. Lan Ecuador states that its board of directors consists of three Chilean, one U.S. and one Ecuadorian citizen, and all four key management positions are held by citizens of

Chile.8

Lan Ecuador requests a waiver of the ownership and control requirements contained in Article 3(2) of the U.S.

- Ecuador Air Transport Agreement (U.S.

- Ecuador Agreement). 3 Lan Ecuador states that, in light of the Open

- Skies agreement between the United States and Chile, ownership and control by nationals of Chile would not be inimical to U.S. aviation policy or interests, and it cites ownership and control waivers the Department has granted to four other foreign carriers to support its position. 4

3 Article 3(2) provides that each side will grant appropriate authorizations and permissions provided that “substantial ownership and effective control of that airline are vested in the party designating the airline, nationals of that party, or both.”

4 Air Aruba, N.V.; Aerovias Nacionales Ecuatorianas, S.A. (Aeronem); Air Plus Argentina, S.A.; and Cielos del Peru, S.A. (Export Air). ”

.

The Department ‟ s decision and the reasons therefore were as follows:

“ Decision

We have decided to deny Lan Ecuador ’ s request. In determining

whe ther to grant an exemption to a foreign carrier under 49 U.S.C. § 40109, the statutory finding we must make is that the exemption would be consistent with the public interest. In the case before us here, we cannot make that finding.

It has long been Depar tment policy to require foreign carriers to be substantially owned and effectively controlled by citizens of thei r respective homelands. The U.S.

- Ecuador bilateral agreement expressly establishes homeland ownership and effective control as a condition

for securing a license from the other party. In the absence of such ownership and control, the grant of a license to a carrier is entirely within our discretion. In recognition that there are occasionally non

homeland ownership interests in foreign carriers, w e have sometimes granted waivers of our ownership and control policies where we could find that such a grant would not be inimical to U.S. aviation policy or interests. However, we are unable to make the necessary determination to support the grant of a wa iver in this instance.

The record shows that Lan Ecuador is ultimately owned, in its entirety, by Lan Chile.

Chilean interests are also in a position to exercise effective control. Lan

Ecuador ’

s board of directors consists of three Chilean, one U.S. and9

one Ecuadorian citizen. 6 Moreover, all four key management positions of Lan Ecuador are held by citizens of Chile with recent affiliations with Lan Chile. The record also clearly demonstrates that the management
structure of Lan Ecuador is characterized b y the presence of Chilean rather than Ecuadorian influence in the day

- to

- day operations and decision making of the company.

The question thus becomes one of whether, given these facts, we can find that Lan Ecuador meets our test to grant the waiver necess ary for approval of its application. We conclude that in this case we cannot make that finding.

Of principal concern is that we have a restrictive aviation regime with Ecuador. The record plainly shows that U.S. carriers currently have unmet operating asp irations in the U.S.

- Ecuador market, and given the restrictive nature of our relationship, U.S. carriers do not have full flexibility to respond to changing market demands in the future.

Furthermore, the extent of non

- homeland ownership and control

pres ented by the applicant here is significantly greater than in any comparable case where we have found a waiver to be warranted in
recent years. 7 In our view, in the circumstances presented, an Open

Skies agreement with Ecuador would be a prerequisite for ev en considering a waiver of our ownership and control policy. Against this background, we cannot find that the grant of an ownership and control

waiver here is warranted.

Given that we cannot find that grant of the requisite ownership and

control waiver is justified in this case, we cannot conclude that grant to Lan Ecuador of the exemption authority it seeks is in the public interest. Therefore we shall deny its application.

ACCORDINGLY

,

1. We deny the request of Lan Ecuador for an exemption from 49

U.S. C. § 41301 to engage in scheduled foreign air transportation of persons, property and mail between Guayaquil and Quito, Ecuador, on the one hand, and Miami and New York, on the other hand; ”

6 The U.S. citizen on the board of directors is also an employee of Lan Chile.

7 In each of the cases cited by Lan Ecuador, we found that there was a significant measure of homeland ownership and control. In the Air Aruba case (Order 99

- 3

- 21), we noted a significant amount of the authorized share capital of Air Aruba wa s to be10

held by the Government of Aruba and that the government insisted on certain conditions to the proposed arrangement with the Venezuelan corporation to retain

control of Air Aruba ’ s corporate structure and its status as the national airline of

Aruba. Similarly, we found significant homeland ownership and control in the other cases cited by Lan Ecuador. For example, in the case of Aerovias Nacionales Ecuatorianas, S.A. (Aeronem ) in Docket OST

- 95

- 713, the carrier reported that it was 60% owned by Ecuad orian citizens and 40% by French citizens, while in Air Plus Argentina (Docket OST

- 99

- 6400), we noted that the carrier was 27% owned by two Argentine citizens, with the remainder owned by an Argentine corporation which in turn was majority owned by a Urugu ayan corporation (in addition, eight of Air Plus Argentina ’

s nine directors, officers and key management personnel were citizens of Argentina). Finally, in the case of Cielos del Peru, S.A. (Export Air) in Docket OST

95

- 617, we noted the presence of 30% ho meland ownership and the fact that two of Export Air ’

s three directors and substantially all of its key management personnel were citizens of Peru, the homeland of the applicant. ”

The “ substantial ownership ” element of the “ ownership and control ”

test is not a factor in the instant application under the provisions of the

US

- EU Open Skies Agreement.

However “ effective control ” by homeland nationals remains an operative “ condition ”

.

In the case of AirOne ( with two of three AirOne Directors being non

homel and nationals, no information on the nationality or number of the

Directors of AirOne Holdings and no members of the executive management of AirOne being homeland nationals ), EU “ interests are also in a positio n to exercise effective control” ; t he record c learly demonstrates that the management structure of AirOne is characterized by the presence of EU rather than Barbados influence in the day

- to

- day operations and decision making of the company ; and

“ the extent of non

- homeland ..... control presented by the applicant ”

“ is significantly greater than in any comparable case where we have found a waiver to be warranted in recent years. ”

Lan Ecuador in the following year (2003) submitted a second application for the same foreign air transportation economic author ity after restructuring its ownership and control structure.

The Department in its Order 2003

- 3

- 9 on March12, 2003 in OST

- 2003

- 14291 stated as follows:11

“ Background

By Order 2002

- 12

- 15, we denied an earlier exemption request by Lan Ecuador to provide scheduled foreign air transportation of persons, property and mail between Guayaquil and Quito, Ecuador, on the one hand, and Miami and New York, on the other hand, on the basis that the carrier was not substantially owned and effectively controlled by

ci tizens of Ecuador. 1

In that Order, we found that the record showed that Lan Ecuador, as then structured, was ultimately owned, in its entirety, by Lan Chile and

that Lan Ecuador ’

s management structure was characterized by the presence of Chilean rather t han Ecuadorian influence in the day

- to

- day operations and the decision making of the company

1 See Docket OST

- 2002

- 13661. Lan Ecuador would have provided the service with

aircraft wet leased from Lan Chile.

Application

On January 15, 2003, Lan Ecuador f iled a new application requesting the identical exemption authority, i.e., to engage in scheduled foreign air transportation of persons, property and mail between Guayaquil and Quito, Ecuador, on the one hand, and Miami and New York, on the other hand, wit

h aircraft wet leased from Lan Chile. 2

In support of its request, Lan Ecuador states that it recently completed a restructuring of its ownership and management. In that regard, Lan Ecuador states that it is now ultimately 52.5% Ecuadorian and 45%

Chilean owned. 4 Lan Ecuador adds that its board of directors now

consists of three Ecuadorian and two Chilean citizens and that all of its key management personnel are citizens of Ecuador. Lan Ecuador believes that while the composition of the carrier following it s restructuring satisfies the ownership and control provisions of the Agreement, it nevertheless requests a waiver of our policy that it be substantially owned and effectively controlled by homeland nationals, stating that such a waiver would be consistent with Department precedent and in the public interest. 5

2 At the time of Lan Ecuador ’ s original request, Lan Chile filed a corresponding request for a statement of authorization under Part 2 12 to wet lease aircraft to Lan Ecuador, for a period of two ye ars. Lan Chile ’ s request has remained pending. See12

application of Lan Chile, dated October 24,2002 (Foreign Air Carrier Licensing

Division reference 2002

- 447).

3 By Notice dated January 22,2003, we modified the procedural schedule for responsive pleadings to Lan Ecuador ’ s request by requiring that answers be filed no later than January 27, 2003 (rather than the January 23 date requested by Lan Ecuador). We also set January 29, 2003, as the due date for reply comments, The notice was served on all parties in Docket OST

- 2003

- 1429 1.

4 Lan Ecuador provided an exhibit which breaks down in detail its revised ownership

structure. See Exhibit LE

- 1, page 2 of 2, Docket OST

- 2003

- 14291.

5 Lan Ecuador cites the following cases to support its waiver request, noting t hat most recently, we granted exemption authority, including a waiver of our ownership and control policy, to TACA Ecuador, a similarly situated Ecuadorian carrier. Lan Ecuador also cited waivers we have granted in cases involving Aerovias Nacionales

Ecuat orianas, S.A. (Docket OST

- 95

- 7 13); and Air Aruba, N.V. (Order 99

- 3

- 2 1) to support its waiver request.

Decision

We have decided to grant the exemption request of Lan Ecuador. We find that the authority requested is provided for in our bilateral

aviation agreement with Ecuador. We will also grant the request of Lan

Chile for a statement of authorization to wet lease aircraft to Lan

Ecuador in the conduct of its authorized services. 7 The authorities granted will be effective for one year from the service d ate of this

order. 8

The record before us shows that Lan Ecuador has significantly altered its ownership and control structure from that of its previous application. Instead of ultimate 100% Chilean ownership, the carrier is now ultimately 52.5% owned by E cuadorian citizens. Concerning its management structure, when we took our action in Order 2002

- 12

- 15, the record showed virtually no influence on the day

- to

- day operations of the carrier by homeland nationals; now there appears to be almost

total control b y Ecuadorian citizens, none of whom are or has been

affiliated with Lan Chile. 9

Based on the changes to Lan Ecuador ’ s ownership and management noted above, particularly when viewed in light of the bilaterally

provided

- for nature of the Lan Ecuador route a uthority in question, the

open

- skies regime governing U.S.

- Chile aviation relations, and our established ownership precedents, 10 we conclude that there is nothing in the ownership and control of Lan Ecuador that would be inimical to U.S. aviation policy or interests. We therefore find that grant to the carrier of a waiver of our ownership and control standard is

warranted

. 1113 7 Because Ecuador is currently a Category 2 country under the FAA ’ s International Aviation Safety Assessment (IASA) program, we will make the authority granted Lan Ecuador subject to an operational condition that it wet lease aircraft from a duly authorized and properly supervised U.S. or foreign air carrier.

8 We note that Lan Ecuador and Lan Chile each sought authority for a two

- year period. However, as is our usual practice in conferring authority in the circumstances presented, we are limiting the term of authority for each carrier to one year. Lan Ecuador and Lan Chile may, of course, seek renewal of these authorities in

accordance with the Department ” s regulations.

9 We also find that Lan Ecuador is properly licensed and designated by the Government of Ecuador to perform the proposed services and is financially and operationally qualified, subject to the wet lease condition noted ab ove, to conduct the proposed services. The carrier has experienced management and appears financially sound.

10 See, e.g., Notice of Action Taken dated November 22,2002, Docket OST

- 2002

- 13608, granting TACA Ecuador exemption authority.

11 We also find tha t the record before us contains sufficient information on Lan

Ecuador ’

s ownership and control to permit us to proceed without further investigation. ”

As noted above, in the instant application the “ substantial ownership ” condition does not apply; however the “ effective control ” condition is applicable

– and

, absent changes similar to those made by Lan

Ecuador prior to its second application, AirOne must be considered to
fail to meet the “ effective control ” condition

– with a similar result.

AirOne, like L an Ecuador in its initial application has only one nat ional

on its Board of Directors. In the initial Lan Ecuador application all four key management positions were held by non nationals

– likewise in the

case of AirOne all key management positions are hel d by non nationals.

The Department ‟ s conclusions in the initial Lan Ecuador application are equally applicable to th is AirOne application: “ The record also clearly demonstrates that the management structure is characterized by the presence of non national rather than national influence in the day

- to

day operations and decision making of the company. ”

The facts in the two cases are the same: the same bilateral, the same domination of the Board of Directors and management structure by

non nationals. The fac ts being the same it would be my submission that the Department ‟ s conclusion should be the same unless and until

AirOne modifies the structure of its Board of Directors and14

management and that of the Board of Directors of AirOne Holdings

– if

it is similar ly controlled by non nationals of AirOne‟s homeland.

It was those modifications and those modifications alone that caused the Department to grant the second Lan Ecuador application

– no other material changes having occurred in the interim on the record o f the application

. Accordingly the Department, in my submission, should reach the same conclusion on the facts of the instant application

.

The A pplicant in its argument in support of its Waiver Application cites certain precedents, in addition to those co nsidered by the Department in the Lan Ecuador cases, namely; Premiair, Lan Argentina and Trans

Latin.

In the Premiair case ( D ocket OST

- 97

- 2167

– Notice of Action Taken : May 14, 1997 ) the requested waiver of the ownership and control requirements was by a Danish carrier and involved charter operations

. Denmark, P remiair ‟ s homeland, was an Open Skies partner of the US
under the Denmark/No rw ay/Swede n ATA

. Moreover t he action was taken over five years prior to the first Lan Ecuador case. For those

reasons it has no application in the instant case.

In the Lan Argentina case ( NOTICE OF ACTION TAKEN

- DOCKET OST

2005

- 22140 : September 30, 2005) 95 percent of its shares were owned by the Argentine company Sociedad Inversora Cordillera S.A.,
which itself was owned 5 I percent by Argentine interests and 49 percent by Chilean interests

. T he President and two of three of the

airline ‟ s Board of Directors were homeland nationals and both Argentina and Chile (the non homeland element in the ownership and

control structur e) were Open Skies partners of the US.

This substantial homeland control at the Board of Director and management level distinguishes this case from the instant case.

In the Trans Latin case (DOCKET

– OST

– 1993

- 4 8425 Order 93

- 2

- 12 : February 4, 1993) 52 per cent of its capital stock, and the majority of its key management positions are held by Panamanian citizens

- neither of which is present in the instant case. The case also predates the Open Skies era

– the first such agreement being with the

Netherlands in 1992 and the next with several related European states

in 1995.15

The applicant in support of its request for a waiver cites the case of the designation by Barbados of Air Jamaica as a Barbados carrier which was accepted by the Department without an owners hip and control waiver, indeed

, without any comment and a Permit Exemption was granted. Docket DOT

- OST

- 2007

- 28221 Notice of Action Taken : May 23, 2007

. (The Application was filed on May 10, 2007)

.

Jamaica had been an Open Skies partner of the US for five years as at
the time the Permit Exemption Application was made.

In this Air Jamaica case the diplomatic note in which it was designated by Barbados as a Barbados carrier drew the attention of the US

authorities to the membership of both Jamaica and Barba dos in the Caribbean Community and asked the US authorities “ to recall Paragraph 3 of Section II (Co

- operation in Regulatory Arrangements) of the International Civil Aviation Organisation (ICAO) Resolution

A35.18 entitled “ Consolidated Statement of Continu ing ICAO Policies in the air transport field ” whereby the ICAO calls upon the Contracting States of ICAO to recognise the designation of an airline of a developing state which is substantially owned and effectively controlled by another developing state or nationals of that state within the same regional and economic grouping to exercise route and other air transport rights on behalf of the developing state. It is on this basis that the Ministry urges the Aeronautical Authorities

of the United States of Ame rica to give early and favourable consideration to this request to enable Air Jamaica Limited to engage in the services as provided for in paragraph 2 of Article 3 of the Air Services Agreement. ”

This ICAO Resolution while non binding in nature is neverth eless both significant and persuasive; particularly in the absence of any conflicting substantive policies or factors having a clear priority.

On that basis the grant of the requested Exemption to Air Jamaica as a Barbados designated airline without a wai ver is unexceptional and consistent with the international obligations of the US and not a precedent for broader application

.

For all the foregoing reasons it is submitted that based on the record the Department should not find that AirOne is “ effective ly controlled ” by homeland nationals

– a requirement of the US

- Barbados bilateral (see Lan Ecuador decisions).16

A finding that the grant of the Waiver Application would not be inimical to U.S. aviation policy or interests is however open to the Departmen t despite the lack of effective control by homeland nationals.

While the grant of a n ownership and control waiver in such control circumstances raises the spectre of “ flags of convenience ” down the

road in the international airline industry, it is neverth eless within the Department ‟s discretion and is not a matter on which I am qualified to express an opinion.

If the Department chooses to grant the AirOne Waiver Application on

that basis I would not be opposed provided such a grant is recognised as being a precedent for approval of future similar applications with respect to the level of non homeland control present here.

5. The Incomplete ness of the AirOne Application

On May 24 I contacted the Department with a “ procedural question ” :

“ Is it the normal procedure for the Department to take steps to ensure that an Application is complete with respect to the requirements of 14 CFR 211.20 or are interested Parties required to request such completion by Motion under 14 CFR 302.11?

While my concern relates pr incipally to the incomplete nature of the application with respect to 14 CFR 211 (k), (n) and (p), a check list approach to 211.20 will reveal other missing elements. ”

Since no response has been forthcoming from the Department and the

deadline for Answers to the Application is approaching I will in this Answer raise my concerns that the Applicant has not provided all the information mandated by 14 CFR § 211.20, information which is
material to a determination of the merits of its Permit Exemption Applicati on and that as an incomplete application it should be neither considered further nor granted until all the required information has been filed and interested parties given an opportunity to comment

thereon.

The Department in its Foreign Air Carrier InfoPa k makes the evidence requirements for Permit Exemptions clear : “ Although Part 211 refers to applications for foreign air carrier permits, the same evidentiary17

information is required of foreign carriers seeking exemption authority. ”

The evidentiary requi rements for an initial foreign air carrier permit (and initial exemption applications) are set forth in 14 CFR §211.20 as follows:

“ §211.20 Initial foreign air carrier permit or transfer of a permit A person applying for an initial foreign air carrier p ermit or the transfer of a permit shall submit the information listed below. The applicant must fully comply with this requirement. If the applicant is unable to respond to an item, the application shall contain an explanation, and
include substitute infor mation most closely approximating the information requested. The Department may require an applicant to provide additional information as necessary. ”

This requirement is mandatory and specifically states that an applicant

“ must fully comply with this requ irement. ”

In this case the Applicant has not fully complied with this requirement and its application is therefore incomplete and ineligible for further consideration until complete.

Without specifying all of the omissions from the information required

b y 14 CFR §211.20 I will highlight the few that are of the most concern to an individual attempting to assess the merits of the application.

These latter omissions relate to 14 CFR §211.20 (c) (ii)

, (k), (n) and (p)

– the material omitted by the applicant is highlighted in bold.

“ 14 CFR §211.20

(c) Supply the following information regarding the services proposed:

(ii) The frequency of service planned at the start of operations

, indicating any seasonal variations; whether the service proposed is

scheduled

, non

- scheduled, or charter; whether the service would be passenger, or property and mail, or a combination; and the type of equipment (and configuration) to be used; and

“ (k) Provide a list of the aircraft owned, leased and operated by the applicant. Sta te each aircraft registration number and the country of18

registration. If leased, state the address and citizenship of each lessor. Describe any plans for the acquisition or lease of additional aircraft if the present permit application is granted as

propos ed. If any of the listed aircraft will not be used exclusively by the applicant, explain its proposed use. State whether any aircraft are

or will be wet

- leased.

(n) Supply financial data summaries, setting forth in U.S. dollars the applicant ’ s profit and loss statements and balance sheets for the 2 most recent available years (calendar or fiscal). These summaries must be accompanied by a statement from the applicant ’ s official responsible for preparation of the summaries that the submissions are complete a nd accurate. These summaries must include the following data, but need not be more detailed than the financial data summaries published by ICAO:

(1) The profit and loss summary shall identify: (i) Total air transport operating revenues (separated into thr ee categories: passenger, cargo, and other transport revenues); (ii) Total air transport operating expenses; (iii) Operating result (difference between (i) and (ii)); (iv) Non

- operating items; and (v) Profit or loss after income taxes.

(2) The balance she et summary shall state and identify: (i) Current assets; (ii) Flight equipment (after depreciation); (iii) Other Assets; (iv) Total assets (sum of (i) through (iii); (v) Current liabilities; (vi) Other liabilities; (vii) Long

- term debt; (viii) Capital stoc k; (ix) Retained earnings (balance including capital surplus); and (x) Total liabilities and equity (sum of (v) through (ix)).

. (p) Submit an estimate showing the total traffic and the

financial r

esults of the proposed services for the first fullyear of

n ormal operations and the supporting data employed to
calculate the financial forecast. ”19

With respect to (c) no frequency of service is indicated (other than daily, non stop

– does this mean once a day or more than once)

.

With respect to the omitted infor mation in (p) the applicant does not indicate the number of aircraft required for the service initially or as intended to be developed. Indeed it only describes the generic aircraft type to be used, its passenger configuration and the nature of the

lease a rrangement.

With respect to (n) no actual Financial Statements are provided.

With respect to (p) the applicant has provided only Exhibit E which is

stated to be “ a pro forma financial statement for AirOne ’ s first year of operation. ” It is not clear wheth er this is for AirOne ‟ s first year of operations ( which it states will also involve service on intra Caribbean

routes ) or just for its first year of operations on the Barbados

– Fort
Lauderdale route. Further “ n o supporting data employed to calculate ”

the pro forma forecast has been provided

– precluding assessment.

In my submission this renders the application incomplete and ineli gible for further consideration until completed as required by 14 CFR § 211.

6. Standards Applicable to Initial Permit or Exemp tion Applications

A final issue that I believe to be germane to the consideration of the

AirOne Permit Exemption Application is the standard to be applied in the determination of operational and financial fitness.

The Department ‟ s Foreign Ai r Carrier Inf oPak sets out the factors it considers in making its fitness assessments as follows:

“ While the overall standard we use in considering foreign air carrier applications is a public interest test, there are a number of factors we consider in reaching this p ublic interest determination:

......................................

· whether the air carrier is operationally and financially fit and has a positive compliance disposition. Here we look at whether the air carrier has experienced management, and whether its operating plan and financing appear reasonable. In this context, we are looking primarily at economic fitness, that is, whether the air carrier will be in a position to conduct its proposed20

operations without putting U.S. passengers ’ and shippers ’ funds at risk; ”

I would su bmit that the standard s to be applied, particularly in the case of start up carriers, should not be of a lesser standard than the standards applied to a US applicant for a certificate for foreign air transportation authority under 49 USC § 41102.

A lesser financial and operational standard unfairly prejudices potentially competitive US applicants for similar services

– a pre judice made the more serious by the fast track e xemption authority procedure available to a f oreign applicant but not to a US applican t for similar but US based authority.

In both the financial and operational fitness assessments the n ature and purpose are the same : safety and “ whether the air carrier will be in a position to conduct its proposed operations without putting U.S.

passeng ers ’ and shippers ’ funds at risk ”

.

As an example, one financial requirement a US applicant must meet is for foreign air transportation authority is specified in the C ertificated

Air Carrier InfoPak as follows:

“ This information will be used to assess th e financial position of the applicant, whether the applicant has a reasonable understanding of the costs of starting and conducting its operations, and whether it has access to the capital required to commence operations. Before being granted an effective certificate, an applicant must provide independent, third

- party verification that it has available to it resources (

e.g. , cash, lines

- of

- credit, or bank loans) sufficient to cover all of its pre

- operating costs ( i.e., all of the costs incurred prior to the actual commencement of flight operations) plus the operating expenses that are reasonably projected to be incurred by the applicant during three months of “normal” operations. In determining available resources, projected revenues cannot be included. ”

It is my submission that the rationale for this requirement of a US applicant, if valid, is equally valid, for the same reasons, with respect to foreign applicants

– particularly initial applicants for discretionary fast track exemptions under 49 U.S.C. § 40 109(c) as in this case, and as a consequence should be equally applied.21

Providing more lenient conditions for the grant of foreign air transportation economic authority to foreign carriers than US carriers,

both as to the time required to secure such auth ority and the criteria
for the assessment of operating and financial fitness, will both discourage potential US applicants in competitive situations with foreign applicants and encourage US based applicants to become foreign applicants to take advantage of the more favourable treatment given to such applicants by the Department.

Respectfully submitted electronically this 1st day of June , 2010 at the City of Montreal, Province of Quebec, Canada by and on

behalf of John Gilmore.

/s/ John P.T. Gilmore

___ __________________ John P.T. Gilmore

205

– 4250 St. Ambroise Montreal, Quebec

Canada H4C 3R4 Telephone: 514 716 7665

E

- Mail : jptgilmore@hotmail.com22

CERTIFICATE OF SERVICE

I hereby certify that on this 1st day of June , 2010

, a copy of this Certificate of Service and of my foregoing Answer to the May 17, 2010 Application of AirOne Ventures Limited For An Exemption Under 49 U.S.C. § 40109(c) (U.S.

- Barbados) Docket DOT

- OST

- 2010

- 0134 was served by electronic mail : O n the Attorneys for the Applicant at charles.hunnicutt@troutmansanders.com ; pat.snyder7@verizon.net; and, brent.connor@troutmansanders.com ; on the Chairman of AirOne Ventures Limited at ian.burns@airone.ie ;

on George Wellington of the US Department of Transportation at george.wellington@dot.gov ; and

, on each of the persons named below per the Service List provided by the Applicant

.

/s/ John P.T. Gilmore

______ _________________________ John P.T. Gilmore

205

– 4250 St. Ambroise Montreal, Quebec

Canada H4C 3R4 Telephone: 514 716 7665

E

- Mail : jptgilmore@hotmail.com

carl.nels on@aa.com ; sascha.vanderbellen@nwa.com ; sametta.c.barnett@delta.com ; goodchild2518@rogers.com ; howard_kass@usairways.com ; benjamin.slocum@usairways.com ; joanna.geraghty@jetblue.com ; robert.land@jetblue.com ; contactfll@broward.org ;