Order 2014-6-2

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 5th June, 2014

Served: June 5, 2014

Application of

CHINA SOUTHERN AIRLINES COMPANY 

LIMITED

Docket DOT-OST-1996-2008

 

for an exemption under 49 U.S.C. §40109 and an amended

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 amended foreign air carrier permit attached as Appendix B to 

this order.

Background

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

 1 The conditions are attached as Appendix A.
2

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).

Our action in this Order serves to implement these streamlined regulatory procedures for the 

application involved in this proceeding.

Application

By application filed May 21, 2014, China Southern Airlines Company Limited (China Southern), 

a foreign air carrier of the People’s Republic of China (PRC), requests an exemption under 49 

U.S.C. §40109, and an amended foreign air carrier permit under 49 U.S.C. §41301, to permit it to

engage in scheduled foreign air transportation of persons, property and mail between Guangzhou, 

PRC, and New York, New York.2

The applicant provided evidentiary materials required by 14 CFR Part 211 of our regulations to 

support its request for an amended foreign air carrier permit.

Interested Parties were polled and there were no objections to the granting of this 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 exemption authority, as described below 

and subject to conditions, and tentatively to grant, subject to show-cause procedures, its request 

for an amended foreign 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, 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 

 2 China Southern’s current foreign air carrier permit, issued in this Docket on September 10, 2001 by Order 2001-

11-4, authorizes it to engage in (1) scheduled foreign air transportation (A) of persons, property, and mail between 

Guangzhou, People’s Republic of China, and the terminal point Los Angeles, California; and (B) of property and 

mail between Shenzhen, People’s Republic of China, and the coterminal points Anchorage, Alaska, and Chicago 

Illinois; and (2) charter trips in foreign air transportation subject to the terms, conditions, and limitations of the 

Department’s regulations governing charters. 3 The record indicates that China Southern Air Holding Company (“CSAHC”), which is owned and managed by the 

Chinese government through the State-owned assets Supervision and Administration Commission, is the controlling 

shareholder of China Southern, currently holding slightly more than 53% of its total shares either directly or 

indirectly through subsidiaries, including Nan Lung Holding Limited (“Nan Lung”), a wholly owned subsidiary of 

CSAHC that holds approximately 10.5% of China Southern’s total shares. Approximately 29.3% of China 

Southern’s total shares are traded on the Shanghai Stock Exchange (“A Shares”) and approximately 17.6% of its 

total shares are foreign-funded shares (“H Shares”) traded on the Hong Kong Stock Exchange or American 

Depositary Receipts representing H Shares on the New York Stock Exchange. Aside from CSAHC and Nan Lung, 
3

The authority sought by the applicant is encompassed by the aviation agreement between the 

United States and the People’s Republic of China. We therefore find that grant of the requested

exemption authority for a one year term, or until the requested permit becomes effective, 

whichever occurs earlier, is warranted.

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

services. In addition, by memorandum dated May 29, 2014, the Federal Aviation Administration 

advised us that it knew of no reason why we should act unfavorably on the applicant’s request. 

We have verified the applicant’s compliance with 14 CFR Parts 203 (Warsaw liability waiver), 

and 205 (insurance requirements).

Tentative Findings and Conclusions--Foreign Air Carrier Permit Application

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

amended foreign air carrier permit, in the form attached as Appendix B, subject to the conditions 

attached and the charter prior approval conditions previously placed on the applicant by Order 

2001-11-4.

4

 In particular, we tentatively find and conclude that the factors which support our 

grant of exemption authority to the applicant also warrant granting the applicant the amended 

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 

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 

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

prescribe;

 

China Southern states that it is not aware of any beneficial owners of 5% or more of the Company’s total shares 

except for HKSCC Nominees Limited, which owns approximately 17.8% of the total shares strictly as a custodian of 

the Depositary for American Depositary Share representing H Shares. China Southern further states that its listed 

Directors and senior officers are citizens of the PRC. 4 The applicant’s request for an amended foreign air carrier permit was summarized in the Department’s published 

weekly list of applications filed. 
4

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

6. 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.

5

ACCORDINGLY,

1. We grant the request of China Southern Airlines Company Limited, for an exemption under 

49 U.S.C. §40109 to permit it to engage in scheduled foreign air transportation of persons, 

property and mail between Guangzhou, People’s Republic of China, and New York, New York;

2. The exercise of the privileges granted above is subject to compliance by China Southern

Airlines Company Limited with the conditions listed in Appendix A;

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 revoke our action regarding 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 Docket DOT-OST-1996-2008;

 5 The applicant states that the introduction of its services will result in a near-term annual change in fuel consumption 

exceeding 10 million gallons. Under the provision of the Energy Policy and Conservation Act of 1975 and 14 CFR 

Part 313 of our rules, we have considered the matter of China Southern’s anticipated fuel consumption along with 

other public interest factors we consider in taking action in a proceeding of this kind. We find, in the circumstances 

presented, that in view of our obligations under 49 U.S.C §40105 to act consistently with international agreements 

(in this case the aviation agreement between the United States and China), and the public benefits that will be 

derived from China Southern’s services, approval of the request notwithstanding the anticipated level of fuel 

consumption is warranted.
5

6. With respect to the applicant’s request for an amended 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 an amended 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 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 relied 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 of 

Title 49 of the U.S. Code) make final our tentative findings and conclusions set forth in this 

order; and

10. We will serve a copy of this order on China Southern Airlines Company Limited, the 

Embassy of the People’s Republic of China in Washington, D.C., the Department of State, and 

the Federal Aviation Administration.

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. 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.gov
Foreign Air Carrier Exemption Conditions Appendix A

In the conduct of the operations authorized, the foreign carrier applicant 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. 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 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 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 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 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 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.

12/2007
Appendix B

Issued by

Order 2014-_-_

 UNITED STATES OF AMERICA 

 DEPARTMENT OF TRANSPORTATION 

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

----------------------------------------------------------------------------

PERMIT TO FOREIGN AIR CARRIER

(as amended)

-----------------------------------------------------------------------------

China Southern Airlines Company Limited 

A Foreign Air Carrier of the People’s Republic of China 

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 foreign 

air transportation as follows:

A. Scheduled foreign air transportation of persons, property, and mail between: 1)

Guangzhou, People’s Republic of China, and the terminal point Los Angeles, 

California; and 2) Guangzhou, People’s Republic of China, and New York, New 

York. 

B. Scheduled foreign air transportation of property and mail, between Shenzhen, 

People’s Republic of China, and the coterminal points Anchorage, Alaska, and

Chicago, Illinois.

The holder shall also be authorized to engage in 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 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 the 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 shall 

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 authorized by this permit from the service 

which may be operated by airlines designated by the People’s Republic of China (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 designated by the 

Peoples’ Republic of China in lieu of the holder; or (4) upon the termination or expiration of the 

applicable air services agreement between the United States and the People’s Republic of China. 

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 United States and the People’s Republic of China become parties. 

The Department of Transportation has executed this permit and affixed its seal on , 2014.

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 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. 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 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 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 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 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 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.

12/2007