Order 2014

- 6

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UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 5 th June

, 20 1 4

Served: June 5

, 2014

Application of

CHINA SOUTHERN AIRLINES COMPANY

LIMITED Docket DOT

- OST

- 1996

- 2008

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

ORDER GRANTING EXEMPTI ON 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 applica nt 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 licensi ng 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

favorab ly, 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

- ca use) 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 Ma y 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 a n amended foreign air carrier permit under 49 U.S.C. §41301, to permit i t to engage in scheduled f oreign air tran sportation 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 a n am ended 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 gra nt 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 a n 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 se rvices 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 Se ptember 10

, 2001 by Order 200 1

- 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 a nd

mail between Shenzhen , People’s Republic of Ch ina, and the coterminal points Anchorage, Alaska

, and Chicago

Illinois ; and ( 2 ) c harter 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 C hina Southern, currently holding slightly more than 53% of its total shares either directly or indirectly through subsidiaries, including Nan Lung Holding Limited (“ N an Lung”), a wholly owned subsidiary of CSAHC that holds approximately 10.5% of China Sout hern’s total shares. Approximately 29.3% of China Southern’s total shares are traded on the Shanghai Stock Exchange (“A Shares”) and approxim ate ly 17.6 % of its total shares are foreign

- funded shares (“H Shares”) traded on the Hong Kong Stock Exchange or A merican 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 become s 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

, t he Federal Aviation Administration advised us that it knew of no reason why we should act unfavor ably 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 a n

ame nded 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

200 1

- 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 p rovisions 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 p rivileges 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 Limi ted, which owns approximately 17.8% of the total shares stric t ly 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 T he 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 publ ic interest does not require an oral evidentiary hearing on the a pplication; 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, bec ome 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 portio n 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 polic y; and (2) with respect to the exemption authority we are conferring on the applicant, the applicant is qualified to perform those operations

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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, a nd New York

, New York ;

2. The exercise of the privileges granted above is subject to c ompliance by C hina 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 p ermit 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 app licant’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 inter est 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 be tween 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 a n amended foreign air carrier permit in this proceeding, we direct all interested persons to show cause why our tentative decision on th at 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 n amended foreign air carrier permi t 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 conclus ions 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 deeme d 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 D epartment’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, a nd 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.govForeign 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 curr ently 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 Admini stration, 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 requiremen ts 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) Co mply 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 Aviati on 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 safet y 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 2 8 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 tre aty 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 H igh 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, conc erning 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 a pplicable 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 Departm ent approval under Title 49 of the U.S. Code.

12/2007Appendix B

Issued by

Order 20 1 4

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_ -

_

UNITED STATES OF AMERICA

DEPARTMENT OF TRA NSPORTATION

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 provision s 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 b etween : 1) Guangzhou , Peop le’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 o f 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 char ters.

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 ef fective 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 w as 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 designa ted by the People’s Republic of China (or, if the rightis 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 pri or 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 Transport ation has executed this permit and affixed its seal on , 20 1 4

.

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 o f 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 applic able. 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 t he 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 co verage, 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 operat e 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 a uthority 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 operation s 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, compl y 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 applicabl e 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 a uthority cannot be sold or otherwise transferred without explicit Department approval under Title 49 of the U.S. Code.

12/2007