UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on June 2 , 20 1 4

NOTICE OF ACTION TAKEN

-- DOCKET DOT

- OST

- 201 2

- 00 81

_______________________________________________________________________________________________ This serves as notice to the public of the action described below, taken by the Department official indicated (no additional confirming

order will be issued in this matter).

Applicant : BRITISH AIRWAYS (BA) LIMITED (BA Limited) Date Filed: April 25, 2014

Relief requested: Renewal of e xemption under 49 U.S.C. §40109 to engage in:

i. 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 i n the United States and beyond;

ii. foreign scheduled and charter air transportation o f 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;

iii. foreign scheduled and charter cargo air transportation between any point or points in the United St ates and any point or points;

iv. other charters pursuant to the prior approval requirements set forth in 14 CFR Part 212 of the Department’s Economic regulations; and

v. transportation authorized by any additional route rights that may be made available to Eur opean Union carriers in the future.

The applicant further requests (1) renewal of its statement of authorization under 14 CFR Part 212 to the extent necessary to enable it to operate its two UK

- registered A318 aircraft pursuant to a wet

- lease agreement wi th British Airways Plc (British Airways)

, and (2) a statement of authorization under 14 CFR Part 212 to the extent necessary to enable BA Limited to display the US * designator code of US Airways, Inc. (US Airways) on flights operated by BA Limited to and f rom the United States.

BA Limited requests that its exemption authority and statement of authorization to wet lease to British Airways be renewed fo r two years, and that its statement of authorization to display the US* designator code be granted for an i ndefinite period.

If renewal, date and citation of last action: June 11, 2012, in this Docket.

Applicant representative: Don H. Hainbach

, 202

- 776

- 3970 DOT analyst: Brett D. Kruger , 202

- 366

- 8025

Responsive pleadings: None.

DISPOSITION

Action: Approved renewal of exemption authority.

Approved in part renewal of statement of authorization to wet lease aircraft to British Airways, subject to conditions

.

Approved statement of authorization to display the US* designator code.

Remainder deferred (request for longer

- term authority to wet lease aircraft to British Airways). See conditions and remarks below.

Action date: June 2

, 20 1 4

Effec tive dates of authority granted: The exemption authority granted to BA Limited is effective June 2 , 201 4 , through June 2 , 201 6

.The statement of authorization granted to BA Limited to wet lease to British Airways Plc is effective June 2 , 201 4

, through January 2 , 201 5

.

The statement of authorization granted to BA Limited to display the US * designator code of US Airways is effective June 2 , 201 4

, for an indefinite period.

Basis for approval (bil ateral agreement/reciprocity): U.S.

- EU Air Transport Agreement.

Except to the extent exempted/waived, this authority is subject to the terms, conditions, and limitations of our standard exemption conditions attached as Appendix A and to the code

- share conditions attached as Appendix B

.

Speci al conditions/Remarks: We have decided to grant BA Limited the requested exemption renewal for two years and the statement of authorization to display the US* designator code for an indefinite period, subject to conditions. We have decided to grant, in part, renewal of the requested statement of authorization to wet lease to British Airways. Specifically

, we will r enew the statement of authorization permitting BA Limited to wet lease its aircraft to British Airways for a period of seven months, effective June 2 , 2014, through January 2 , 201 5 , and defer action on the remainder of BA Limited’s request. In reaching ou r decision, we note that we remain concerned about the limitations U.S. carriers face in engaging in

wet

- lease operations with EU carriers. 1 Under these circumstances, we are not prepared at this time to grant the requested

statement of authorization in its entirety, but will grant a seven

- month extension as noted above. BA Limited may apply to

extend its statement of authorization in the future. Furthermore, we will continue our efforts to resolve this matter with

the U.S.

- EU Joint Committee.

With reg ard to the authority granted here to conduct transportation authorized by any additional route rights made available to European Union carriers in the future, we are requiring BA Limited , before it commences any new service under this authority, to provide us, in Docket DOT

- OST

- 20 12

- 0081 , with evidence that it holds a homeland license for that new service, unless it has already provided such evidence.

We note that US Airways has conducted a code

- share safety audit of BA Limited under the Department’s code

- share safety audit program and the FAA has advised the Department that is has reviewed the relevant audit report and found it to be acceptable

.

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

________________________________________________________________________________ _______ __________ Under authority assigned by the Department in its regulations, 14 CFR Part 385, we found that (1) our action was consistent w ith Department policy; ( 2 ) the ap plicant was qualified to perform its proposed operations ; (3) grant of the authority was consistent with the public interest; and ( 4 ) grant of the authority would not constitute a major regulatory action under the Energy Policy and

Conservation Act of 1975 . To the extent not granted/deferred/dismissed, we denied all requests in the referenced Docket. We may amend, modify, or revoke the authority granted in this Notice at any time without hearing at our discretion.

Persons entitled to petition the Departm ent for review of the action set forth in this Notice under the Department’s regulations, 14 CFR §385.30, may file their petitions within seven (7) days after the date of issuance of this Notice. This action was effec tive when taken, and the filing of a p etition for review will not alter such effectiveness.

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

1 These limitations derive from Article 13 of Regulation (EC) No. 1008/2008. In light of the limitations, w e have recently taken

similar action on other wet lease arrangements involving EU carriers. See e.g., Department action on the April 7, 2014 undocketed application of PrivatAir S.A., granting a seven month statement of authorization to wet lease to Scandinavian Airl ines System (2014

- 224); Department action on the November 4, 2013 undocketed application of Cargolux, granting a seven month statement of authorization to wet lease to Cargolux Italia (2013

- 511); and Department action on the June 12, 2013 undocketed application of Air Atlanta Icelandic (AAI), granting a seven month statement of authorization to wet lease to Saudi Arabian

Airline s (2013

- 292).Appendix A 

### Foreign Air Carrier Exemption 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 th e 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 t he 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 opera tions 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 als o 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 de fenses;

(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 S tates 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 contra ct 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 "in ternational 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 otherw ise 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 complia nce 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

The code

- share operations authorized here are subject to the following conditions:

(a) The statement of authorization will remain in effect only as long as (i) BA Limited and US Airways continue to hold the necessary underlying authority to operate the code

- share services at issue, and (ii) the code

- share agreement s providing for the code

- share operations remain in effect.

(b ) BA Limited and/or US Airways, as appropriate, must notify the Department no later than 30 days before they begin any new code

- share service under the code

- share services autho rized here. Such notice shall identify the market(s) to be served and the date on which the service will begin. Such notice should be filed in Docket DOT

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.

(c ) BA Limited and/or US Airways , as appropriate, must promptly notify the Departmen t if the code

- share agreement providing for the code

- share operations is no longer effective or if the carriers decide to cease operating all or a portion of the approved code

- share services. Such notice should be filed in Docket DOT

- OST

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. 2

(d ) The code

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

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

- share journey for all obligations established in its contract of carriage with the passenger; that the passenger liability of the operating ca rrier be unaffected; and that the operating carrier shall not permit the code of its U.S. code

- sharing partner to be carried on any flight that enters, departs, or transits the airspace of any area for whose airspace the Federal Aviation Administration has issued a flight prohibition.

(e ) Any service provided shall be consistent with the provisions of the U.S.

- EU agreement, and all applicable agreements with other foreign countries involved. Furthermore, (i) nothing in the award of the blanket statement of authorization should be construed as conferring upon US Airways rights (including code

- share, fifth

- freedom intermediate and/or beyond rights) to serve markets where U.S. carrier rights are limited unless US Airways notifies us

of its intent to serve such market and unless and until the Department has completed any necessary carrier selection procedures to determine which carrier(s) should be authorized to exercise such rights; 3 and (ii) should there be a request by any carrier to use the limited

- entry rou te rights that are included in US Airways’ authority by virtue of the blanket statement of authorization granted here, but that are not being used by US Airways , the holding of such authority will not be considered as providing any preference for US Airways in a carrier selection proceeding to determine which carrier(s) should be entitled to use the authority at issue;

(f) The authority granted here is specifically conditioned so that neither BA Limited nor US Airways shall give any

force or effect t o any contractual provisions between themselves that are contrary to these conditions.

We may amend, modify, or revoke the authority granted at any time without hearing at our discretion.

2 We expect this notification to be received within ten (10) days after such non

- effectiveness or of such decision.

3 The notice reference in condition (b) above may be used for this notification.