UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, DC


### Issued by the Department of Transportation on October 14 , 201 4

NOTICE OF ACTION TAKEN

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

Joint Application of UNITED AIRLINES, INC. ( United ) and SKYWEST AIRL INES, INC. d/b/a UNITED EXPRESS (SkyWest)

, filed 9/10 /14 for :

XX E xemption for SkyWest for two years under 49 U.S.C. 40109 to provide the following service:
Scheduled foreign air transportation of persons, property, and mail between Houston, Texas , and Monterrey , Mexico

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Applicant R ep resentative s : Gerald F. Murphy and Steven J. Seiden (202) 624

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DOT Analyst: Brett D. Kruger (202) 366

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D I S P O S I T I O N

XX Granted, subject to conditions (see below)

The above action granting exemption authority was effective when taken: October 14 , 2014 , through October 14 , 2016

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

XX The authority granted is consistent with the aviation agreement between the United States and Mexico.



### Except to the extent exempted or waived, this authority is subject to the terms, conditions, and limitations indicated:

XX The holder s’ certificat es of public convenience and necessity XX Standard Exemption Conditions (attached)

Responsive Pleadings/ Remarks : Under the U.S.

- Mexico aviation agreement, three U.S. carriers may be designated to provide own

- aircraft scheduled foreign air transportation of persons, property, and mail in the Houston

- Monterrey market . Currently, United and ExpressJet are designated to provide these services. United intend s to rep lace its own

- aircraft service in the market with United Express service provided by SkyWest beginning on or about March 5 , 2015 , and states that no additional designations will be required

.

1 SkyWest states that it will display the “UA” designator code of United in the Houston

- Monterrey market beginning on or about March 5 , 2015

. 2 United holds certificate authority to provide scheduled foreign air transportation of persons, property, and mail in the Houston

- Monterrey market

. See Orders 199 2

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- 2 0 and 2013

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- 11. The j oint a pplicants state that beginning on or about March 5, 2015, United plans to replace its own

- aircraft service with service operated by SkyWest

.On September 25 , 2014 Southwest Airlines Co. (Southwest) filed an answer to the Joint Application. Southwest notes the applicants’ assertion that SkyWest will substitute the current services provided by United in the subject market, but Southwest questions the timing o f United ’s return of its designation. Southwest points out that the joint application states that “ United will retain its operating designation until the Department has taken action on the Joint Application, the Joint Applicants have begun providing the

s ervice requested herein, and United has given notice to the Department that its operating designation is no longer required.” 3 Southwest asserts that United appears to contemplate holding all three designations for the Houston

- Monterrey market for an unsp ecified period of time, and that even if United relinquishes its designation, United will continue to control two of the three designations for the Houston

- Monterrey city pair.

Southwest states that it does not oppose the joint application, but notes th at it plans to offer a broad range of services to Mexico from Houston’s William P. Hobby airport in the future. Southwest urges the Department to make clear that (1) United and its partner carriers will not be permitted to occupy more than one designation if doing so would block a competing U.S. carrier application, and (2) United and its partner carriers may not occupy all three U.S. carrier designations for any period of time in the Houston

Monterrey market.

On October 3 , 2014, the joint applicants file d a joint reply . The joint applicants note that Southwest does not oppose the joint application, and the joint applicants urge the Department to promptly approve their request

.

Decision: We have decided in the circumstances presented, including the fact that no party opposed the application, that it is in the public interest to grant SkyWest the requested exemption authority. In reaching this decision, we recognize the concerns raised by Southwest , particularly with respect to the subject markets being fully subscribed for an unspecified period of time. In light of the joint applicants’ assertions that SkyWest will simply replace the own

- aircraft services that United provides and that additional designations will not be required, we have decided to hand le the designation withdrawal of United in a manner consistent with our handling of other recent requests of the joint applicants as set forth below. 4

Effective Date for Start

- up/Designation: United may begin marketing and selling the subject United Exp ress service authorized here, but SkyWest cannot commence the United Express Houston

- Monterrey service until March 5 , 2015

. The joint applicants state that United’s own

- aircraft service will be replaced with United Express service operated by SkyWest comm encing on March 5 , 2015 . Under the circumstances presented in this case, as noted above , we have decided that it is in the public interest to grant SkyWest the requested exemption authority. In this regard, we will withdraw the designation of United effe ctive upon the departure of its last scheduled flight in the Houston

- Monterrey market, but in no case effective later than 11:59 PM on March 4 , 2015 , and designate SkyWest for Houston

- Monterrey service effective March 5 , 2015

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Conditions : The U.S.

- Mexico exemption authority granted is subject to the dormancy notice requirements set forth in condition 7 of Appendix A of Order 88

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. Consistent with our standard policy, the dormancy notice period will begin on March 5 , 2015

, SkyWest’s prop ose d start

- up date for the subject services

.

3 Joint Application, at 3, n. 4.
4 See e.g., Notice of Action Taken dated May 12, 2014, in Dockets DOT

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- 01 14; Notice of Action Taken dated May 27, 2014, in Dockets DOT

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- 0059 ; Notice of Action Taken dated July 29, 2014, in Dockets DOT

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- 2014

- 0100 and DOT

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- 0101; and Notice of Action Taken dated September 3, 2014, in Dockets DOT

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- 0129 and DOT

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. 5 We will also provide the necessary notification to the Government of Mexico confirming United’s authority to provide code

- share service in the market.The code

- share operations conducted under this authorization are subject to the following conditions:

(a) The code

- sharing operations conducted under this authority must comply with 14 CFR 257 and with any amendment to the Department’s regulations concerning code

- share arrangements that
may be adopted. Notwithstanding any provisions in the contract between th e carriers, our approval here is expressly conditioned upon the requirements that the subject foreign air transportation be sold in the name of the carrier holding out such service in computer reservation systems and elsewhere; that the carrier selling suc h transportation ( i.e. , the carrier shown on the ticket) accept responsibility for the entirety of the code

- share journey for all obligations established in its contract of carriage with the passenger; and that the passenger liability of the operating carr ier be unaffected; and

(b) The authority granted here is specifically conditioned so that neither United nor SkyWest shall give any force or effect to any contractual provisions between themselves that are contrary to these conditions.

On the basis of data officially noticeable under Rule 24(g) of the Department's regulations, we found the applicants qualified to provide the exemption services authorized.
Under authority assigned by the Department in its regulations, 14 CFR Part 385, we found that (1) our

a ction was consistent with Department policy; (2) grant of the authority was consistent with the public interest; and (3) grant of the authority would not constitute a major regulatory action under the Energy Policy and Conservation Act of 1975. To the ext ent not granted, we denied all requests in the referenced Docket s

. We may 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 se t forth in this Notice under the Department’s regulations, 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 alt er such effectiveness.

An electronic version of this document is available on the World Wide Web at: www.regulations.govATTACHMENT

U.S. Carrier Exemption Conditions

In the conduct of the operations authorized, the U.S. carrier applicant(s) shall:

(1) Hold at all times effective operating authority from the government of each country served;

(2) Comply with applicable requirements concerning oversales contained in 14 CFR 250 (for scheduled operations, if authorized);

(3) Comply with the requirements for reporting data contained in 14 CFR 241;

(4) Comply with requirements for minimum insurance coverage, an d for certifying that coverage to the Department, contained in 14 CFR 205;

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

(6) Comply with all applicable requirements of the Federal Aviation Administration, the Transportation Security Administration, and with all applicable U.S. Government requirements concerning security, including, but not limited to, 49 CFR Part 1544. To assure compliance with all applicable U.S. Government requirements concerning security, the holder shall, before commencing any new service (including charter flights) to or from a foreign airport, contact its Principal Security Inspe ctor (PSI) to advise the PSI 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;

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

The authority granted shall be effective only during the period when the holder is in compliance with the conditions imposed above.



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