Order 20 1 2

- 5

- 15

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 17 th day of May, 20 1 2

Served: May 17 , 201 2

Application of

JOINT STOCK COMPANY AIRCOMPANY

“YAKUTIA” Docket DOT

- OST

- 20 12

- 0047

for an exemption under 49 U.S.C. §40109 and a foreign air carrier permit under 49 U.S.C. §41301

ORDER GRANTING EXEMPTION AND TO SHOW CAUSE

Summary

By this order we (1) grant the application of the referenced foreign air carrier for an exemption under 49 U.S.C. §40109, subject to conditions; 1 and (2) tentatively find that it is in the public interest to grant the applicant the foreign air carrier permit attached as Appendix B to this order.

Background

On August 23, 2 005, the Department issued a Notice, in Docket DOT

- OST

- 2005

- 22228, announcing several steps designed to streamline 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 decisions, 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 w e would normally have imposed, or until certificate/permit authority becomes effective, whichever is shorter, and (2) tentatively deciding ( i.e.

, show

- cause) to award a corresponding certificate (or permit), again for the standard

duration we would normall y have imposed (such as, in the case of certificates, five

1 The c onditions are attached as Appendix A.2

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).

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

Application

By application filed March 27, 2012

, Joint Stock Company Aircompany “Yakutia” (Yakutia) , a foreign air carrier of the Russian Federation , requests an exemption under 49 U.S.C. §40109, and a foreign air carrier permit under 49 U.S.C. §41301, to engage in (1) scheduled foreign air transportation of persons, property, and mail between any point or points in the Russian

Fe d eration an d any point or points in Alaska; (2) charter foreign air transportation of persons,

proper t y, and mail between any point or points in the Russian Federation and any point or points

in the United States ; and (3) other charter operations in accordance with P art 212 of the Department’s economic regulations.

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

No answers were filed to Yakutia’s application.

Decision

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

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

With respect to the applicant’s request for exemption authority, we find that grant of this authority is consistent with the public interest; that the applicant has demonstrated, based on the record, tha t it is financially and operationally qualified to perform the services authorized; and that it is substantially owned and effectively controlled by a regional government and citizens of the

Russian Federation

. 2

2 Yakutia states that the Ministry of Property and Real Estate Affairs of the Republic of Sakha (Yakutia) holds 94.64% of Yakutia’s capital stock, and that the State Unitary Enterprise “Committee for Precious Metals an d Gems of the Republic of Sakha (Yakutia)” holds the remaining 5.36 percent. Thus, all of Yakutia’s shares are held by the regional government of the Republic of Sakha (Yakutia). Yakutia further states that its Director General and key

management personn el are Russian citizens.3

The authority sought by the applicant is encompassed by the 1994 U.S.

- Russia Air Transport Agreement

. 3 We therefore find that grant of the requested exemption authority, for a one

- year
term, or until the requested permit authority becomes effective, which ever occurs earlier, is

warranted.

We also note that the applicant is properly licensed by its homeland to perform the proposed services. In addition, on April 5, 2012 , the Federal Aviation Administration advised us that it knew of no reason why we shoul d act unfavorably on the applicant’s requests. We have verified the applicant’s compliance with 14 CFR Parts 203 (Warsaw liability waiver), and 205 (insurance requirements).

Finally, in the conduct of the charter services authorized and te ntatively autho rized herein,

Yakutia must adhere to (1) the conditions attached to this order; (2) FAA

- approved flight routings; and (3) the Air Transport Agreement between the United States and the Russian Federation, including its Annexes. In accordance with 14 CFR §21 2.9(d) and (e) of the Department’s rules, Yakutia shall not perform any charter(s) unless specific authority in the form of a statement of authorization for such charter(s) has been granted by the Department. Applications for the statements of authorizatio n required above shall be filed in accordance with the procedures set forth in 14 CFR §212.10.

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 and subject to the conditions attached. 4 In particular, we tentatively find and conclude that the factors which support our grant of exemption authority to the applicant also warra nt granting the applicant the foreign air carrier permit it

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

a ttached;

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 On February 13, 2009, the United States and the Russian Federation agreed, ad referendum , to revised Annexes to

the U.S.

- Russia Air Transport Agreement and stated that, pending their entry into force, their respective aeronautica l authorities intend to implement the provisions of those Annexes on the b asis of comity and reciprocity.

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

3. The applicant is substantially owned and effectively controlled by a regional government and 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, condi tions, and limitations contained in the attached permit, and to such 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 r egulatory 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. Our action with respect to this 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 exemption authority we are conferring on the applicant, the applicant is qualified to perform those operations; and that grant of the 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 Joint Stock Company Aircompany “Yakutia” for an exemption under 49 U.S.C. §40109 to permit it to engage in (1) scheduled foreign air transportation of persons, property, and mail between any point or points in the Russian Federation and any point or point s in Alaska; 6 (2) charter foreign air transportation of persons, property, and mail between any point or points in the Russian Federation and any point or points in the United States; and (3) other charter operations in accordance with Part 212 of the Depa rtment’s economic regulations ;

2 . The exercise of the privileges granted above is subject to compliance by Joint Stock Company Aircompany “Yakutia” with the cond itions listed in Appendix A

, and to the conditions that, in

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

- term net annual change in aircraft fuel consumption of 10 million gallons or more.

6 Yakutia is currently designated by the Russian Federation to serve the Petropavlovsk/Kamchatsky

- Anchorage a nd

Khabarovsk

- Anchorage routes. With regard to the broader scheduled authority granted and tentatively granted herein, the applicant must be appropriately designated by its homeland prior to holding out or operating such

services.5

the conduct of the charter services authorized herein, Joint Stock Company Aircompany

“Yakutia” must adhere to (1) FAA

- approved flight routings; and (2) the Air Transport Agreement between the United States and the Russian Federation, including its Annexes . In accordance with 14 CFR §212.9(d) and (e) of the Department’s rules, Joint Stock Company Aircompany “Yakutia” shall not perform any charter(s) unless specific authority in the form of a statement of authorization for such charter(s) has been granted by the Department. Applications for statements of authorization required above shall be filed in accordance with the procedures set forth in 14 CFR §212.10;

3 . Our action granting the exemption authority described herein is effective immediately, for a period of one year from the issue date of this order, or until the attached permit becomes effective, whichever is earlier;

4 . We may amend, modify, or revok e 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 D ocket DOT

- OST

- 20 12

- 0047 ;

6 . With respect to the applican t’s request for a foreign air carrier permit in this proceeding, we 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 to 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 the Department an d 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 relied upon in supp ort 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 b y 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 of

Title 49 of th e U.S. Code) make final our tentative findings and conclusions set forth in this order; and

1 0

. We will serve a copy of this order on Joint Stock Company Aircompany “Yakutia;” the Embassy of the Russian Federation in Washington, D.C. ; the Department of S tate (Office of Aviation Negotiations) ; and the Federal Aviation Administration.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 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. G RETCH

Director

Office of International Aviation (SEAL)

Appendices

An electronic version of this document is available on the World Wide Web at: http://www.regulations.govForeign Carrier Exemption Conditions Appendix A

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 Transportation Security Administration, and with all applicable U.S. G overnment 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

shal l, 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 airport(s) to be served ;

(3) Comply with the requirements for minimum i nsurance 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, with the Federal Aviation Administration’s Program Management

B ranch (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 Ann ex 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 immunity, for the purposes of 28 U.S.C. 1605(a), but only with respect t o 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 St ates 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 agreement or treaty cognizable in any

court or other tribun al 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 14 CFR Part 217, concerning the reporting of scheduled,

nonschedul ed, 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 othe r 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 au thority 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.

1 2 /200 7Appendix B Issued by

Order 20 1 2

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__ -

__

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.



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



### ---------------------------------------------------------



### Joint Stock Company Aircompany “Yakutia”

A Foreign Air Carrier of the Russian Federation

is authorized, subject to the following provisions, the provisions of Title 49 of the U.S. Code,

and the o rders, rules, and regulations of the Department of Transportation, to engage in :

Scheduled foreign air transportation of persons, property, and mail between any point or points in the Russian Federation and any point or points in Alaska; and

Charter fore ign air transportation of persons, property

, and mail between any point or points in the Russian Federation and any point or points in the United States

.

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 per mit and the attachment to this order, and to all applicable 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 t he United States and the holder’s homeland are or shall become 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 s hall terminate (1) upon the dissolution or liquidation of the 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 aut horized by this permit from the service which may be operated by airlines designated by the Government of the Russian Federation (or, if the right is partially eliminated, then the authority of this permit shall terminate in like part); (3) upon the effect ive date of any permit granted by the Department to any other carrier designated by the Government of the Russian Federation in lieu of the holder; or (4) upon the termination or expiration of the applicable air services agreement between the United State s and

the Russian Federation . However, clause (4) of this paragraph shall not apply if prior to such termination or expiration, the foreign air transportation authorized herein becomes the subject of another treaty, convention or agreement to which the Un ited States and the Russian Federation become parties.The Department of Transportation has executed this permit and affixed its seal on

_____ __ , 20 1 2

.

By:

PAUL L. GRETCH

Director

Office of International Aviation 

### (SEAL)Foreign 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 su ch authorization with the Department;

(2) 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, 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 fli ghts) 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 pla ns 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, 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 exempted or otherwise provided for in a Department Order, comply with the requirements of 14 CFR Part 203, concerning waiver of Warsaw C onvention 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

co urt 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 sto pping place, or for which the contract of carriage was purchased in the United States; or (b) based on a claim under any international agreement or treaty cognizable in any court or other tribunal of the United States. In this condition, the term "interna tional 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 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 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 without explicit Department approval under Title 49 of the U.S. Code.

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