Order 201 5

- 5

- 4

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 8 th day of M ay
, 201 5

Served: M ay 8

, 201 5

Application s of

LUFTHANSA CITYLINE GMBH Docket s DOT

- OST

- 201 5

- 0 0 2 3

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

and

a statement of authorization under 14 CFR Part 212 DOT

- OST

- 2003

- 15485

ORDER GRANTING EXEMPTION , STATEMENT OF AUTHORIZATION, 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 (2) grant the application of the referenced foreign air carrier for a statement of authorization under 14 CFR Part 212, subject to conditions; and (3) 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

By Notice dated May 3, 2007, we invited foreign air carriers of the European Union (EU) to apply for Department economic authority to conduct operations to and from the United States

under the U.S.

- EU Air Transport Agreement. In that Notice, we stated our intent to process requests for this authority under the “streamlining” procedures set out in our Au gust 23, 2005

Notice in Docket DOT

- OST

- 2005

- 22228, in which we announced several steps designed to simplify our regulatory procedures for licensing foreign (and U.S.) air carriers. Our action in this

1 The conditions are attached as Appe ndix A.2

Order serves to implement those streamlined regulatory procedures for the application involved in this proceeding.

Application s

By application filed February 9 , 201 5 (as supplemented March 30, 2015 )

, Lufthansa CityLine

GmbH ( CityLine ), a foreign air carrier of Germany

, request s an exemption under 49 U.S.C §4 0109 and a foreign air carrier permit under 49 U.S.C. §41301, to engage in the following

services : 2

a. Foreign scheduled and charter air transportation of persons

, property , and mail from any point or points behind any Member State of the European Union via any point or points in any Member State and via intermediate points

, to any point ( s ) in the United States and beyond;

b. Foreign scheduled and charter air transportation of persons

, property , and mail between any point or points in the United States and any point or points in any member of the European Common Aviation Area;

c. Foreign scheduled and charter air transportation of cargo between any point or p oints in

the United States a nd any other point or points;

d. Other charters pursuant to the prior approval requirements set forth in 14 CFR Part 212 of the Department’s economic regulations governing charters; and

e. T ransportation authorized by any additional route rights made available to European

Union carriers in the future.

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

In it s March 30 , 201 5 supplemental filing

, CityLine provided the Department with a copy of its

homeland Operating L icense

, Air Operator Certificate , and Operations Specifications.

In addition, by application filed February 9, 2015, CityLine request s in Docket DOT

- OST

- 2003

- 15485 an amended blanket statement of authorization under 14 CFR Part 212 to the extent

necessary to permit CityLine to display the ( UA *) designator code of United Airlines, Inc. (United) on flights operated by City L ine in scheduled foreign air transportation between: 1) any points or points in the United States and any point or points in the European Union (on a non

stop basis and intermediate routings via open skies points); 2) any point or points in the United

States and any point or points in any member of the European Common Aviation Area, where an open skies agreement is being applied; 3) any point or points within the European Union; 4) any

2 CityLine currently holds exemption authority permitting it to conduct scheduled foreign air transportation of persons, property and mail by displaying the code of any duly authorized U.S. air carrier on flights it operates on

behalf of Deutsche Lufthansa AG (Lufthansa) between any point or points in any Member State of the European Union and beyond the Europea n Union to any point or points. See Notice of Action Taken dated September 16,

2013 , in Docket DOT

- OST

- 2003

- 15485

.3

point or points in the European Union and any open skies point or points beyond the Euro pean Union; and 5) any point or points in the United States and any open skies point or points be yond

the United States. 3 4

No answers were filed to CityLine’s application s

.

Decision

We have decided, 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 a foreign air carrier permit, also subject to conditions.

Specifically, we will grant CityLine exemption authority for the services set forth in ordering paragraph 1 below. We will tentatively grant CityLine a foreign air carrier permit for these

services.

As an additional matter, CityLine requested that we gr ant it, in addition to authority currently

contained in the U.S.

- EU Agreement, authority to conduct transportation authorized by any additional route rights made available to EU carriers in the future. We are granting the request of CityLine f or this auth ority by exemption (and tentatively granting it by foreign air carrier permit). We are, however, requiring CityLine

, before it commences any new service under this authority, to provide us with evidence that it holds a homeland license for that new servic e, unless it has already provided such evidence. 5

With respect to the applicant’s request for exemption authority, we find that grant of this authority, as conditioned, is consistent with the public interest. We also find that the applicant is

financiall y and operationally qualified to perform the services authorized, and that it is substantially owned and effectively controlled in a manner consistent with the provisions of the

U.S.

- EU Agreement. 6 We also find that the authority sought by the applicant i s encompassed by

the U.S.

- EU Agreement.

Further, we note that the applicant is properly licensed by its homeland to perform the proposed services. In addition, on April 28, 201 5

, the Federal Aviation Administration advised us that it

knew of no reason why we should 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).

3 CityLine’s existing blanket statement of authorization permits it to carry United’s designator code, for an indefinite duration, on flights operated by Lufthansa CityLine wholly within Germany, and, in addition, between points in Germany and points in third countries. See No tice of Action Taken dated July 15 , 20 0 3, in Docket DOT

- OST

- 2003

- 15485

. 4 CityLine also filed an un docketed application for a s tatement of authorization under 14 CFR Part 212 to allow Lufthansa CityLine to wet lease aircraft to Lufthansa for a two

- year per iod. We will act separately on that request.

5 See Orders 2007

- 6

- 19 and 2007

- 10

- 1, and Orders 2007

- 7

- 13 and 2007

- 10

- 16, where we granted this authority to British Airways Plc. and Virgin Atlantic Airways Ltd., respectively.

6 We make this finding based on Article 2 (Reciprocal Recognition of Regulatory Determinations with Regard to Airline Fitness and Citizenship) of the Protocol to amend the U.S.

- EU Air Transport Agreement, signed

June 24, 2010.4

In view of the above, we find that grant of the requested exemption authority, as conditioned, for

a two

- year term, or until the requested permit authority becomes effective, whichever occurs earlier, is warranted.

We also find that grant, subject to the conditions set forth below and those specified in Notice of

Action Taken dated July 15, 2003 in Docket DOT

- OST

- 2003

- 15485 , of the amended blanket statement of authorization requested by CityLine to permit it to display the (UA*) designator code of United on flights operated by CityLine in scheduled foreign air transporta tion between: 1) any points or points in the United States and any point or points in the European Union (on a

non

- stop basis and intermediate routings via open skies points); 2) any point or points in the United States and any point or points in any membe r of the European Common Aviation Area, where an open skies agreement is being applied; 3) any point or points within the European Union; 4) any point or points in the European Union and any open skies point or points beyond the European Union; and 5) any point or points in the United States and any open skies point or points beyond the United States

, is consistent with the provisions of 14 CFR Part 212 and is in the public interest.

Tentative Findings and Conclusions

-- Foreign Air Carrier Permit Applicat ion

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. 7 In particular, we tentatively find and conclude that the factors which support our grant of exemption authority to the applicant, as discussed above, also warrant granting the applicant the foreign air carrier permit it seeks.

In view of the foregoing a nd all facts of record and acting under authority assigned by the Department in its regulations, 14 CFR Part 385, 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

attac hed;

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 in a manner consistent with the provisions of the U.S.

- EU Agreement;

4. The public interest requires that the exercise of the privileges granted by the permit should be subject to the terms, con ditions, 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;

7 The applicant’s request for a foreign air carrier perm it was summarized in the Department’s published weekly list of applications filed. This notice described the authority sought and gave interested persons an opportunity to submit evidence and objections to the award of this foreign air carrier permit auth ority. As noted above, no answers to the application were filed.5

5. The issuance of this foreign air carrier permit will not constitute a major regulatory action under the Energy Policy and Conservation Act of 1975, as defined in 14 CFR §313.4(a)(1) of our regulations; 8

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

7. Our action with respect to th is 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

th e 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, we find that, w ith 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 Lufthansa CityLine GmbH for an exemption under 49 U.S.C. §40109

for the services set forth below:

a. Foreign scheduled and charter air transportation o f persons

, property , and mail from any point or points behind any Member State of the European Union via any point or points in any Member State and via intermediate points to any point or points in the United States and beyond;

b. Foreign scheduled and charter air transportation of persons

, property , and mail between any point or points in the United States and any point or points in any member of the European Common Aviation Area;

c. Foreign scheduled and charter cargo air transportation between any point or points in the United States and any other point or points;

d. Other charters pursuant to the prior approval requirements set forth in 14 CFR Part 212 of the Department’s economic regulations governing ch arters; and

e. Scheduled and c harter t ransportation authorized by any additional route rights made available to European Union carriers in the future.

2

. Lufthansa CityLine GmbH shall, before it commences any new service under subparagraph ( e ) of ordering paragraph 1 above, provide the Department in Docket DOT

- OST

- 201 5

- 0 0 2 3 with

8 This finding is based on the 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

evidence that it holds a homeland license for that new service, unless it has already provided such evidence to the Department;

3 . The exercise of the privileges granted above is subject to compliance by Lufthansa CityLine

GmbH with the conditions listed in Appendix A;

4 . Our action granting the exemption authority described herein, subject to the provisions of the ordering parag raphs above, is effective immediately, for a period of two years from the issue date of this order, or until the attached permit becomes effective, whichever is earlier;

5. We grant, for an indefinite duration, the request of Lufthansa CityLine GmbH for a n amended

blanket statement of authorization under 14 CFR Part 212 to permit it to display the (UA*) designator code of United Airlines, Inc. on flights operated by Lufthansa CityLine GmbH in scheduled foreign air transportation between: 1) any points or points in the United States and any point or points in the European Union (on a non

- stop basis and intermediate routings via open skies points); 2) any point or points in the United States and any point or points in any member

of the European Common Aviati on Area, where an open skies agreement is being applied; 3) any point or points within the European Union; 4) any point or points in the European Union and any open skies point or points beyond the European Union; and 5) any point or points in the United

S tates and any open skies point or points beyond the United States ;

6. The blanket statement of authorization described above is granted subject to the condition s specified in Notice of Action Taken dated July 15, 2003 in Docket DOT

- OST

- 2003

- 15485 and

the conditions that (a) such services must be carried out in compliance with 14 CFR Part 257, and (b) for any U.S.

- EU operations Lufthansa CityLine GmbH conducts on behalf of Deutsche

Lufthansa AG that involve the transport of U.S.

- carrier code

- share t raffic, United Airlines, Inc. must conduct and keep current an FAA

- approved safety audit of Lufthansa CityLine GmbH under the Department’s Code

- Share Safety Audit Program;

7 . We may amend, modify, or revoke the exemption authority set forth herein at ou r discretion at any time and without hearing;

8 . To the extent not acted upon above, we dismiss all requests for authority in Docket s DOT

- OST

- 201 5

- 0 0 23 and DOT

- OST

- 2003

- 15485 ;

9 . With respect to the applicant’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;

10 . 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 and serve on the parties to this proceedi ng, 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 ar e filed, answers to objections are due no later than seven (7) calendar days thereafter;7

11

. 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 furth er action;

1 2 . 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

1 3 . We will serve a copy of this order on Lufthansa CityLine GmbH ; the Embassy of Germany in Washington, D.C. ; the Department of State ; and the Federal Aviation Administration.

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 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 Internat ional 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 o f 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 o f 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 a Member State of the European Union;

(9) Comply with the requirements of 14 CFR Part 217, concerning the reporting of scheduled, nonschedule d, 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 aut hority 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.

EU carrier 01/2008Appendix B

Issued by

Order 201 5

- X

- XX

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

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

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

LUFTHANSA CITYLINE GMBH

A Foreign Air Carrier of Germany

is authorized, subject to the following provisions, the provisions of Title 49 of the U.S. Code, and the orders, rules, and regula tions of the Department of Transportation, to engage in:

Foreign scheduled and charter air transportation of persons

, property , and mail from any point or points behind any Member State of the European Union via any point or points in any Member State and via intermediate points to any point or points in the United States and beyond;

Foreign scheduled and charter air transportation of p ersons , property , and mail between any point or points in the United States and any point or points in any member of the European Common Aviation Area;

Foreign scheduled and charter cargo air transportation between any point or points

in the United State s and any other point or points;

Other charters pursuant to the prior approval requirements set forth in 14 CFR Part 212 of the Department’s economic regulations governing charters; and

T ransportation authorized by any additional route rights made available to European Union carriers in the future; provided , that the holder shall, before it commences any new service under such additional route rights, provide the Department with evidence t hat it holds a homeland license for that new service (unless it has already provided such evidence to the Department). Such evidence

shall be filed in Docket DOT

- OST 2015

- 0023

.

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 ag reement 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.Thi s permit shall be effectiv e on Month XX, 201 5 . 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 right for the service authorized by this permit from the service which may be operated by airlines of the European Union and its Member States (or, if the right is partially eliminated, then the authority of this permit shall terminate in like part); or (3) upon the termination or expiration of the applicable air services agreement between the United States and the European Union and its M ember States. However, clause (3) 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 European Union and its Member States become parties.

The Department of Transportation has executed this permit and affixed its seal on Month XX,

201 5

.

By:

PAUL L. GRETCH

Director

Office of International Aviation

(SEAL)Foreign Air Ca rrier 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 compl iance 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,

con tact 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 adeq uate 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 o f 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) Excep t 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 ai r 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

a Member State of the European Union;

(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, co mply 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 wit h 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.

EU carrier 1/2008