Order 20 1 2

- 8

- 29

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 22 nd day of August, 201 2

Ser ved: August 22 , 20 1 2

Application of

SKYMARK AIRLINES INC. Docket DOT

- OST

- 2010

- 0096

for an amended exemption under 49 U.S.C. §40109 and a foreign air carrier permit under 49 U.S.C. § 4130 1

ORDER GRANTING AMENDED EXEMPTION AND TO SHOW CAUSE

Summary

By this order we (1) grant the application of the referenced foreign air carrier for renewed an d

amended exemption authority under 49 U.S.C. §40109, subject to conditions ; 1 and (2) tentatively

fin d tha t it is in the public interest to grant the applicant a foreign air carrier permit attached as Appendix B to this order.

Background

On August 23, 2005, the Department issued a Notice, in Docket DOT

- OST

- 2005

- 22228, announcing several steps designed to st reamline our regulatory procedures for licensing U.S. and foreign air carriers. Among other things, the Notice stated that:

Assuming, based on the record and on the public interest/public convenience and necessity elements germane to our licensing decisi ons, that we were in a position to act favorably, we would proceed to issue a single order (1) granting the exemption request for whatever duration we would normally have imposed, or until certificate/permit authority becomes effective, whichever is shorte r, and (2) tentatively deciding ( i.e. , show

- cause) to award a corresponding certificate (or permit), again for the standard duration we would normally have imposed (such as, in the case of certificates, five years for limited

- entry markets, indefinite for

open

- entry markets, and in the case of permits, five years for comity and reciprocity regimes, indefinite for agreement regimes).

1 The conditions are attached as Appendix A.2

Our action in this Order serves to implement these streamlined regulatory procedures for the application involved in this pro ceeding.

Application

By application filed April 20 , 20 1 1

, as amended June 13, 2012, Skymark Airlines Inc. (Skymark)

, a foreign air carrier of Japan

, requests renewed and amended exemption authority under 49 U.S.C. §40109 and a foreign air carrier permit under 49 U.S.C. §41301, to engage in charter foreign air transportation of persons, property, and mail between any point or points in Japan 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 in aircraft, that includes service to or from Japan for the purpose of carrying local traffic to or from Japan; and othe r charters pursuant to the prior approval requirements set forth in the Department’s regulations

. 2

The applicant provided evidentiary materials required by 14 CFR Part 211 of our regulations to support its request s for authority.

No answers were filed to Skymark’s application

.

Decision

We have decided, under assigned authority and consistent with our August 23, 2005 Notice referenced above, to grant the applicant’s request for amended exemption authority, subject to conditions, a nd tentatively to grant, subject to show

- cause procedures, its request for a foreign air carrier permit, also subject to conditions.

With respect to the applicant’s request for amended exemption authority, we find that grant of this authority is consistent with the public interest; that the applicant has demonstrated, based on the record, that it is financially and operationally qualified to perform the services authorized,

and that it is substantially owned and effectively controlled by citizens of its claimed homeland. 3

The authority sought by the applicant is consistent with the 2010 Memorandum of Understanding between the United States and Japan ( 2010 MOU). We therefore find that grant of the requested exemption authority, for a two

- year term, or until the requested permit authority becomes effective, whichever occurs earlier, is warranted.

2 Skymark currently holds exemption authority to engage in charter foreign air transportation of persons, property,

and mail betwee n any point or points in Japan and any point or points in the United States; and other charters pursuant to the prior approval requirements set forth in the Department’s regulations. Skymark’s current exemption is subject to the condition that Skymark sha ll not perform any Third and Fourth Freedom charters unless specific authority in the form of a statement of authorization for such charter(s) has been granted by the Department ( see Notice of Action Taken dated May 20, 2010, in Docket DOT

- OST

- 2010

- 0096).

3 The record indicates that Mr. Shinichi Nishikubo, Skymark’s President/CEO and a Japanese citizen, owns 48.26% of the company’s shares. H.I.S. Co., Ltd. (“HIS”), a Japanese travel company listed on the Tokyo Stock Exchange, owns 9.96% of the company’s sh ares. Of the remaining shares, 8.5% are publicly traded on the Tokyo Stock Exchange and no other person owns 5% or more of the capital stock of Skymark. The record further indicates that Skymark’s Chairman, President, Directors, and key management person nel are all citizens of Japan.3

We also note that the applicant is properly licensed by its homelan d to perform the proposed

services. In addition, the Federal Aviation Administration has advised us that it knew of no reason why we should act unfavorably on the applicant’s requests. We have verified the applicant’s compliance with 14 CFR Parts 203 (Wa rsaw liability waiver), and 205 (insurance requirements).

With respect to the condition placed on Skymark’s current authority requiring it to obtain a statement of authorization prior to operating Third

- and Fourth

- Freedom charters, we note that

the 2010 MOU no longer places numerical limitations on the number of charter flights that may be operated by carriers of both countries between the United States and Japan, except for charters to and from Tokyo’s Haneda Airport (Haneda). Therefore, we will

, sua sp onte

, remove the prior approval requirement for all Third

- and Fourth

- Freedom charter operations between the United States and Japan, with the exception of Haneda charters. Accordingly, pursuant to 14 CFR §212.9(d), Skymark shall not perform any charter f lights between Tokyo’s Haneda airport and the United States unless the Department has granted a statement of authorization for such operations. In the event that the numerical limitation for charter flights between Haneda and the

United States is eliminat ed , Skymark will no longer be subject to this prior approval requirement, without further action by the Department. Finally, in the conduct of the services authorized and tentatively authorized herein, Skymark must adhere to the provisions of the 2010 MOU.

Tentative Findings and Conclusions

-- Foreign Air Carrier Permit Application

We tentatively find and conclude that the public interest warrants granting the applicant a foreign

air carrier permit, in the form attached as Appendix B to this order, and subject to the conditions

attached. 4 In particular, we tentat ively find and conclude that the factors which support our grant

of amended exemption authority to the applicant also warrant granting the applicant th e foreign

air carrier permit i t seeks

.

In view of the foregoing and all facts of record, we tentatively find and conclude that:

1. It is in the public interest to issue the applicant a foreign air carrier permit in the form attached;

2. The applicant is fit, willing and able properly to perform the foreign air transportation described in the attached permit and to conform to the provisions of Title 49 of the U.S. Code, and to our rules, regulations, and requirements;

3. The applicant is substantially owned and effectively controlled by citizens of its claimed

homeland ;

4 . The public interest requires that the exercise of the privileges granted by the permit should be subject to the terms, conditions, and limitations contained in the attached permit, and to such

4 The applicant’s request for a foreign air carrier permit was summarized in the Department’s published week ly list of applications filed. This notice described the authority sought and gave interested persons an opportunity to submit evidence and objections to the award of this authority. As noted above, no answers to the application were

filed.4

other reasonable terms, conditions, and limitations required by the public interest as we may prescribe;

5 . The issuance of this foreign air carrier permit will not constitute a major regulatory action under the Energy Policy and Conservation Act of 1975, as defined in 14 CFR §313.4(a)(1) of our regulations; 5

6

. The public interest does not require an oral evidentiary hearing on the application; and

7 . O ur action with respect to th is foreign air carrier permit should, unless disapproved by the President of the United States under §41307 of Title 49 of the U.S. Code, become effective on the 61st day after its submission for §41307 review, or upon the date of receipt of advice from

the President or his designee under Executive Order 12597 and implementing regulations that he or she does not intend to disapprove this portion of the Department’s decision under that section,

whichever occurs earlier

.

In view of the above, and acting under authority assigned by the Department in its regulations, 14 CFR Part 385, we find that (1) our actions are consistent with Department policy; and (2) with respect to the renewed and amended exemption authority we are conferring on the applicant, the applic ant is qualified to perform those operations; and that grant of the amended exemption authority is consistent with the public interest and would not constitute a major regulatory action under the Energy Policy and Conservation Act of 1975.

ACCORDINGLY,

1. We grant the request of Skymark Airlines Inc. to renew and amend its current exemption authority under 49 U.S.C. §40109 in Docket DOT

- OST

- 20 10

- 0096

, for the services set forth

below:

a. charter foreign air transportation of persons, property, and mail b etween any point or points in Japan 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 oper ation, with or without a change in aircraft, that includes service to or from Japan for the purpose of carrying local traffic to or from Japan; and

b. other charters pursuant to the prior approval requirements set forth in the Department’s regulations ;

2

. The exercise of the privileges granted in paragraph one above is subject to compliance by Skymark Airlines Inc. with the conditions listed in Appendix A

, and subject to the additional conditions that (1) in the conduct of the services authorized herein, Skymark Airlines Inc. m ust
adhere to the provisions of the 2010 U.S.

- Japan Memorandum of Understanding; and (2) while

Haneda

- U.S. charters remain numerically limited under the 2010 U.S.

- Japan Memorandum of

5 This finding is based on the fact that the grant of this permit will not result in a near

- term net annual change in

aircraft fu el consumption of 10 million gallons or more.5

Understanding, Skymark Airlines Inc., in accordanc e with 14 CFR §212.9(d), shall not perform any charter flights between Tokyo’s Haneda airport and the United States unless specific authority in the form of a statement of authorization for such charter(s) has been granted by the Department;

3

. Our actio n granting the renewed and amended exemption authority described herein is

effective im mediately, for a period of two year s from the issue date of this order, or until the attached permit becomes effective, whichever is earlier;

4 . We may amend, modify, or revoke the exemption authority set forth herein at our discretion at any time and without hearing;

5 . To the extent not acted upon above, we dismiss the applicant’s request for exemption authority in this Docket (DOT

- OST

- 20 10

- 0096 );

6 . With respect to the applicant’s request for a foreign air carrier permit in this proceeding, w e direct all interested persons to show cause why our tentative decision on that application, set
forth above

, should not be made final;

7

. Any interested person objecting t o the issuance of an order making final our tentative findings

and conclusions with respect to the applicant’s request for a foreign air carrier permit shall, no later than twenty

- one (21) calendar days after the date of service of this order, file with th e Department and serve on the parties to this proceeding , a statement of objections specifying the part or parts of the tentative findings and conclusions objected to, together with a summary of testimony, statistical data, and concrete evidence to be reli ed upon in support of the objections; if objections are filed, answers to objections are due no later than seven (7) calendar days thereafter;

8

. If timely and properly supported objections are filed, we will give further consideration to the

matters and issues raised by the objections before we take further action;

9

. In the event no objections are filed, all further procedural steps shall be deemed waived, and the Department will enter an order which will (subject to Presidential review under §41307 o f Title 49 of the U.S. Code) make final our tentative findings and conc lusions set forth in this order; and

1 0

. We will serve a copy of this order on Skymark Airlines Inc.

, the Embassy of Japan in Washington, D.C., the Federal Aviation Administration, an d the U.S. Department of State.6

Persons entitled to petition the Department for review of this order under the Department’s regulations, 14 CFR §385.30, may file their petitions within seven (7) days after the date of

issuance of this order. Our action with respect to the applicant’s request for renewed and

amended exemption authority under 49 U.S.C. §40109 is effective immediately , and the filing of a petition for review will not alter such effectiveness.

By:

PAUL L. GRETCH

Director

Office of International Aviation

(SEAL)

Appendices

An electronic version of this document is available on the World Wide Web at: http://www.regulations.govAppendix A

F oreign Carrier Exemption Conditions

In the conduct of the operations authorized, the foreign carrier applicant(s) shall:

(1) Not conduct any operations unless it holds a currently effective authorization from its homeland for such operations, and it has filed a copy of such authorization with the Department;

(2) Comply with all applicable requirements of the Federal Aviation Administration, th e Transportation Security Administration, and with all applicable U.S. Government requirements concerning security, including, but not limited to, 14 CFR Parts 129, 91, and 36 and 49 CFR Part 1546 or 1550, as applicable. To assure compliance with all appl icable U.S. Government requirements concerning security, the holder shall, before commencing any new service (including charter flights) from a foreign airport that would be the holder’s last point of departure for the United States, contact its Internatio nal Industry Representative (IIR) (formerly referred to as International Principal Security Inspector) to advise the IIR 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;

(3) Comply with the requirements for minimum insurance coverage contained in 14 CFR Part 205, and, prior to the commencement of any operations under this authority, file evidence of such coverage, in the form of a completed OST Fo rm 6411, with the Federal Aviation Administration’s Program Management Branch (AFS

- 260), Flight Standards Service (any changes to, or termination of, insurance also shall be filed with that office);

(4) Not operate aircraft under this authority unless it complies with operational safety requirements at least equivalent to Annex 6 of the Chicago Convention;

(5) Conform to the airworthiness and airman competency requirements of its Government for international air services;

(6) Except as specifically exemp ted or otherwise provided for in a Department Order, comply with the requirements of 14 CFR Part 203, concerning waiver of Warsaw Convention liability limits and defenses;

(7) Agree that operations under this authority constitute a waiver of sovereign imm unity, for the purposes of 28 U.S.C. 1605(a), but only with respect to those actions or proceedings instituted against it in any court or other tribunal in the United States that are: (a) based on its operations in international air transportation that, ac cording to the contract of carriage, include a point in the United States as a point of origin, point of destination, or agreed stopping place, or for which the contract of carriage was purchased in the United States; or (b) based on a claim under any inte rnational agreement or treaty cognizable in any court or other tribunal of the United States. In this condition, the term "international air transportation" means "international transportation" as defined by the Warsaw Convention, except that all States s hall be considered to be High Contracting Parties for the purpose of this definition;

(8) Except as specifically authorized by the Department, originate or terminate all flights to/from the United States in its homeland;

(9) Comply with the requirements of 14 CFR Part 217, concerning the reporting of scheduled, nonscheduled, and charter data;

(10) If charter operations are authorized, except as otherwise provided in the applicable aviation agreement, comply with the Department's rules governing charters (including 14 CFR Parts 212 and 380);

and

(11) Comply with such other reasonable terms, conditions, and limitations required by the public interest as may be prescribed by the Department, with all applicable orders or regulations of other U.S. agencies

an d courts, and with all applicable laws of the United States.

This authority shall not be effective during any period when the holder is not in compliance with the conditions imposed above. Moreover, this authority cannot be sold or otherwise transferred without explicit Department approval under Title 49 of the U.S. Code.

12/2007A ppendix B

Issued by

Order 20 1 2

-

__ -

__

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.



### -------------------------------------------------------- PERMIT TO FOREIGN AIR CARRIER



### --------------------------------------------------------- Skymark Airlines Inc

.

A Foreign Air Carrier of Japan

is authorized, subject to the following provisions, the provisions of Title 49 of the U.S. Code, and the orders, rules, and regulations of the Department of Transportation, to engage in:

C harter foreign air transportation of persons, property, and mail between any point or points in Japan 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 in aircraft, that inc ludes service to or from Japan for the purpose of carrying local traffic to or from Japan

.

The holder shall also be authorized to engage in other charter trips in foreign air transportation, subject to the terms, conditions, and limitations of the Department’s regulations governing

charters.

This permit and the exercise of the privileges granted in it shall be subject to the terms, conditions and limitations in both the order issuing this permit and the attachment to this order, and to all applicab le provisions of any treaty, convention or agreement affecting international air transportation now in effect, or that may become effective during the period this permit remains in effect, to which the United States and the holder’s homeland are or shall b ecome parties.

This permit shall be effective on

__________ . Unless otherwise terminated at an earlier date pursuant to the terms of any applicable treaty, convention or agreement, this permit shall terminate (1) upon the dissolution or liquidation of th e holder to whom it was issued; (2) upon the effective date of any treaty, convention, or agreement or amendment, which shall have the effect of eliminating the bilateral right for the service authorized by this permit from the service which may be operate d by airlines designated by the Government of Japan (or, if the right is partially eliminated, then the authority of this permit shall terminate in like part); (3) upon the effective date of any permit granted by the Department to any other carrier designa ted by the

Government of Japan in lieu of the holder; or (4) upon the termination or expiration of the applicable air services agreement between the United States and Japan . However, clause ( 4 ) of this paragraph shall not apply if prior to such terminatio n or expiration, the foreign air transportation authorized herein becomes the subject of another treaty, convention or agreement

to which the United States and Japan become parties.The Department of Transportation has executed this permit and affixed its seal on

By:

PAUL L. GRETCH

Director

Office of International Aviation



### (SEAL)Foreign Air Carrier Permit Conditions

In the conduct of the operations authorized, the foreign carrier applicant(s) shall:

(1) Not conduct any operations unless it holds a currently effective authorization from its homeland for such operations, and it has filed a copy of such authorization with the Department;

(2) Comply with all applicable requirements of the Federal Aviation Administration, the Transport ation Security Administration, and with all applicable U.S. Government requirements concerning security, including, but not limited to, 14 CFR Parts 129, 91, and 36 and 49 CFR Part 1546 or 1550, as applicable. To assure compliance with all applicable U.S. Government requirements concerning security, the holder shall, before commencing any new service (including charter flights) from a foreign airport that would be the holder’s last point of departure for the United States, contact its International Industry Representative (IIR) (formerly referred to as International Principal Security Inspector) to advise the I IR of its plans and to find out whether the Transportation Security Administration has determined that security is adequate to allow such airp ort(s) to be served ;

(3) Comply with the requirements for minimum insurance coverage contained in 14 CFR Part 205, and, prior to the commencement of any operations under this authority, file evidence of such coverage, in the form of a completed

OST Form 6 411, with the Federal Aviation Administration’s Program Management Branch (AFS

- 260), Flight Standards Service (any changes to, or termination of, insurance also shall be filed with that office);

(4) Not operate aircraft under this authority unless it comp lies with operational safety requirements at least equivalent to Annex 6 of the Chicago Convention;

(5) Conform to the airworthiness and airman competency requirements of its Government for international air services;

(6) Except as specifically exempted or otherwise provided for in a Department Order, comply with the requirements of 14 CFR Part 203, concerning waiver of Warsaw Convention liability limits and defenses;

(7) Agree that operations under this authority constitute a waiver of sovereign immunit y, for the purposes of 28 U.S.C. 1605(a), but only with respect to those actions or proceedings instituted against it in any court or other tribunal in the United States that are: (a) based on its operations in international air transportation that, accord ing to the contract of carriage, include a point in the United States as a point of origin, point of destination, or agreed stopping place, or for which the contract of carriage was purchased in the United States; or (b) based on a claim under any internat ional agreement or treaty cognizable in any court or other tribunal of the United States. In this condition, the term "international air transportation" means "international transportation" as defined by the Warsaw Convention, except that all States shall be considered to be High Contracting Parties for the purpose of this definition;

(8) Except as specifically authorized by the Department, originate or terminate all flights to/from the United States in its homeland;

(9) Comply with the requirements of 1 4 CFR Part 217, concerning the reporting of scheduled, nonscheduled, and charter data;

(10) If charter operations are authorized, except as otherwise provided in the applicable aviation agreement, comply with the Department's rules governing charters (inc luding 14 CFR Parts 212 and 380); and

(11) Comply with such other reasonable terms, conditions, and limitations required by the public interest as may be prescribed by the Department, with all applicable orders or regulations of other U.S. agencies and courts, and with all applicable laws of the United States.

This authority shall not be effective during any period when the holder is not in compliance with the conditions imposed above. Moreover, this authority cannot be sold or otherwise transferred wi thout explicit Department approval under Title 49 of the U.S. Code.

12/2007