UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on July 11 , 2011



### NOTICE OF ACTION TAKEN

-- DOCKET DOT

- OST

- 20 11

- 0 117

________________________________________________________________________________________________________ This serves as notice to the public of the action described below, taken by the Department official indicated (no additional confirming order will be i ssued in this matter).

Applicant: CONCESIONARIA VUELA COMPANIA DE AVIACION, S.A. P.I. de C.V. D/B/A

VOLARIS ( Volaris )

Date Filed: June 20, 2011

Relief requested: E xemption from 49 USC §41301 to permit the applicant to engage in scheduled foreign ai r transportation of persons, property, and mail between : 1) Monterrey, Mexico, and Chicago (Midway), Illinois; 2) Mexico City , Mexico, and Las Vegas, Nevada; and 3) Mexico City

, Mexico, and Los Angeles , California

.

Volaris states that it requests authority from the Department, on a conditional and extrabilateral basis, to serve the referenced routes so that it can provide service in the markets until Compania Mexicana de Aviacion, S.A. de C.V. (Mexicana), a Mexican carrier that is designa ted for these routes but not operating and currently in bankruptcy proceedings, is able to resume service. 1 In support of its request, Volaris states that, under Mexican law, the Government of Mexico is unable to designate another Mexican carrier , even fo r temporary service

, on Mexicana’s routes while the carrier is protected under bankruptcy proceedings. 2

Applicant representative: Alfonso Ascencio Triujeque

DOT anal yst: Robert J. Finamore, 202

- 366

- 2405

Responsive pleadings: American Airlines, Inc. (American) filed an answer stating that it did not object to Volaris’
request

, provided that American’s request in Docket DOT

- OST

- 2011

- 0123 for extra bilateral exemption authority to

serve the New York

- Mexico City route, is also granted.

In its reply to American’s answer , Volaris contends that the relief sought by American is substantially different , and

greater , th an that sought by Volaris. Volaris states that it requests authority only to replace service in three

U.S.

- Mexico markets that was discon tinued by another Mexi can carrier

, and that approval of its request will not result in more than the bilaterally

- authorized number of carriers operating in any U.S.

- Mexico market. Volaris states that , by comparison, approval of American’s request would result in a third U.S. carrier serving a market that only two U.S.

carriers are bilaterally

- authorized to serve

. 3 Vo laris also notes that it specifically stated in its application that it would

terminate service in the affected U.S.

- Mexico market if and when Mexicana resumes operations

.

Delta filed a reply to the applications of both Volaris and American

. 4

1 Under the United States

- Mexico Air Transport Services Agreement (the Agreement) , each party is limited in the number of carriers it may designate in particular city

- pair markets. In each of the city

- pair markets for which Volaris seeks authority here, no Mexican carrier designation remains available, and one of the designations is held by Mexicana. It states that it did not object to Volaris’ request

due to the unique circumstances, the overall positive state of U.S.

- Mexico aviation relations, and the important conditions detailed in Volaris’s application. Delta contends that the American and Volaris requests are not comparable , and takes the position that, s hould the Department be prepared to entertain such extrabilateral requests for

2 Volar is included with its application correspondence from the Government of Mexico requesting the Department’s favorable consideration of Volaris’ applications under the unique circumstances resulting from Mexicana’s bankruptcy. Volaris also not es that the cor respondence makes clear that any authorization would be temporary and would not result in Mexican carrier operations on any U.S.

- Mexico route in excess of the bilateral limit.

3 Delta Air Lines, Inc. (Delta ) and Continental Airlines, Inc. are currently designated by the United States, and are serving the New

York

- Mexico City market.

4 We grant Delta’s request for leave to file.Mexico service by U.S. carriers, applications be invited from all U.S. carriers, so that all extrabilateral service requests can be considered together in a fair and orderly p rocess.

DISPOSITION

Action: Approved , subject to conditions (see below) Action date: July 11 , 2011

Effective dates of authority granted: July 11 , 2011 , through July 11 , 2012

.

Basis for approval (bilateral agreement/reciprocity) : The authority granted is consistent with the overall state of

aviation relations between the United States and Mexico.

Except to the extent exempted/waived, this authority is subject to the terms, conditions, and limitations of our standard exemption conditio ns (attached) , and to the additional conditions set forth below

.

Special conditions/Remarks: In light of the specific circumstances presented in this case, w e find that grant of Volaris’ request for extrabilateral authority, as conditioned

, is consistent with the public interest

. In taking this action, we note that Volaris’ request represent s a replacement for service s that were operated by Mexicana before its bankruptcy. Our grant of authority, as conditioned, will permit Volaris to provide p assengers with an additional service option in the

absence of Mexicana ’s services . It will also allow Mexico to have in these markets the number of carriers to which it is entitled under the Agreement , while also ensuring that this number will not be exceeded should Mexicana reenter the

markets

.

We will grant the authority subject to the following additional conditions : 1 ) Volaris must immediately cease its

services on any route authorized here in which Mexicana resumes service ; and 2) should such resumption of service by Mexicana occur, Volaris must accommodate on another Mexican or U.S. carrier any passengers that may hold Volaris

tickets for the routes on which Volaris must cease service

, or provide such passengers with full re funds. 5

We have taken note of the comments on Volaris’ request made by American in connection with its own application in

Docket DOT

- OST

- 2011

- 0123. We did not find in American’s comments a persuasive basis to withhold favorable action on the Volaris appl ication. W e will address American’s application separately

.

Action taken by: Paul L. Gretch, Director, Office of International Aviation

________________________________________________________________________________________________________ Under authority assigned by the Department in its regulations, 14 CFR Part 385, we found that (1) our action was consistent with Department policy; (2) the applicant was qualified to perform its proposed operations; (3) grant of the authority was consist ent
with the public interest; and (4) grant of the authority would not constitute a major regulatory action under the Energy Policy an d Conservation Act of 1975. To the extent not granted/deferred/dismissed, we denied all requests in the referenced Docket. We

ma y amend, modify, or revoke the authority granted in this Notice at any time without hearing at our discretion.

Persons entitled to petition the Department for review of the action set forth in this Notice under the Department’s regulati ons, 14 CFR §385.30 , may file their petitions within seven (7) days after the date of issuance of this Notice. This action was effective when taken, and the filing of a petition for review will not alter such effectiveness.

An electronic version of this document is availab le on the World Wide Web at: http://www.regulations.gov

5 We note that in its application Volaris expressly stated that it was prepared to accept such conditions.

### Foreign 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, 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 Industr y 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 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 Form 6411, wi th 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 wi th 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 othe rwise 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 immunity, 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, according 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 international

a greement 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 con sidered 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 P art 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 and courts, a nd 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 exp licit Department approval

under Title 49 of the U.S. Code.

1 2/2007