Order 2010-5- 5 Served : Ma

y 7 , 201 0 UNITE D STATE S O F AMERIC A DEPARTMEN T O F TRANSPORTATIO N OFFIC E O F TH E SECRETAR Y

. ^ WASHINGTON , D.C

. Actio n o n lAT A Agreement Issue db y th e Department

o f Transportatio n o n th e 4 * da

y o f May , 201 0
Amendmen t

of exemptio n unde r

4 9 U.S.C

. 4010 9 fro mth e condition s o f CA B Orde r 68-7-5 5 fo r

Passenge r

Tarif f Coordinatin g Conferenc e Actio n Docket OST-2009-006 4

ORDE R Backgroun d B y Order 2008-7-4 , serve dJul y 7 , 2008 , Docke t OST-2006-25307 , th e Department grante d exemption s fromconditio n # 2 impose db y Order 68-7-5 5 o n Procedure s o f th e International Ai r Transpor t Associatio n (lATA ) fo

r th e Conduc t

o f th e lAT A Traffi c Conferences , t o th e exten t tha t LAT A nee dno t

fil e certai n tarif

f conferenc e resolution s fo

r revievi ^ an dapproval b y th e Department

. Th e exempte dagreement s establishe dane w "Fle x Fares " mechanis mfo r th e establishmen t

o f lAT A interlin e passenger

fare s fo r trave l betwee n th e Unite dState s an dth e LAT A "Europe " an d"Southwes t Pacific " sub-areas

. lAT A adopte dth e flex fare s mechanis mi n respons e t o th e Departinent' s Order 2007-3-23 , Docket

OST-2006-25307

. In that order , w e disapprove dth e lAT A Provision s insofa r a s th e Provision s authorize dU.S

. an dforeig n carrier s t o discus s an dagre e upo n fares , rates , condition s o f service , an dpric e an drat e applicabilit y conditions , eithe r

directl y or

indirectl y or

throug h tarif

f conference s o r

other relate dmean s o f informatio n sharing , fo

r passenger

an dcarg o ai r

service s (i ) betwee n th e Unite dState s an dth e Europea n Unio n (together

wit h Iceland , Norway , Switzerlan dan dLiechtenstein) ; (ii ) betwee n th e Unite dState s an dth e oversea s territorie s o f th e member

state s o f th e Europea

n Unio n subjec t

t o a n ai r service s agreemen t

betwee n th e Unite dState s an damember state ; an d(iii ) betwee n th e Unite dState s an dAustralia

. Under th e Fle x fare s mechanism , lATA establishe s interlin e fare s b y computin g a n averag e o f LAT A carriers ' marke t

fare s fo r eac h cit y pair , base do n certai n criteria , an dthe n addin g a n "interlin e premium. " Th e flex fare s ar e recompute dperiodically , an dth e interlin e premiu mma y b e amende dthroug h th e E-Tariff s process , a

n interne t platfor moperate db y LATA

. Essentially , th e ne w LAT

A mechanis mwa s originall y designe db y LAT A to compl y wit

h th e Europea

n Commission' s denial o f

abloc k exemptio n fo

r tarif f coordinatio n fromEU competitio n law , b y eliminatin g consultation s amon g carriers , throug h face-to-fac e meetings , mai l votes , or other mean s o f direc t communication , fo

r th e periodi c establishmen t o f fare s fo r interlin e fravel withi n-1

-

th e Europea

n Commo n Aviatio n Are a(ECAA ) an dbetwee n th e ECAA an dother countries. ' Th e mechanis mwa s subsequentl y extende dt o other markets

. Th e Department' s order s exempte dth e ne w resolution s fromou r agreement-filin g condition , provide dtha t th e resolution s an damendment s theret o were limite dto th e establishmen t o f fare s fo r trave l withi n th e area s covere db y th e respectiv e exemptio n applications

. LATA' s applicatio n LAT A ha s sinc e fileda

n agreement

wit h th e Departmen t

under section s 4130 8 an d4130 9 o f Titl e 4 9 o f th e Unite dState s Cod e (th e Code) , an dPar t 30 3 o f th e Department' s regulation s (1 4 CFR Par t 303 ) that woul destablis h interlin e Fle x Fare s i n th e North/Mid/Sout h Atlantic

- Middl e East

^ an dAfrica ^ sub-areas

. Th e Nort

h Atlantic-Middl e Eas t

an dAfiic asub-area s includ e trave l to/fro mth e Unite dStates , whil e th e Mi dAtlanti c an dSout h Atlantic-Middl e Eas t

an dAfiic a sub-are ad o no t

involv e U.S

. points

. Althoug h U.S

. - Middl e Eas t an dU.S

. Afiic amarket s ar e no t covere db y our

prohibition , i n Order

2007-3-23 , o f

traditional LAT

A tarif f coordination , LAT A i s nevertheles s engage di n atransitio n proces s t o replac e traditional tariff " coordinatio n wit h flex fare s worldwide

. Under th e Fle x Fare s scheme describe di n th e application , LAT A wil l establis h interlin e first, busines s an deconomy-clas s normal fares , excursio n fares , an d"PEX " fare s b y computin g a n averag e o f LAT A carriers ' oviT

i fiilly-flexible marke t

fare s fo r eac h cit y pair , base do n certai n criteria , an daddin g a

n "interlin e premium " o f

1 0 percent
. Th e Fle x Fare s wil l b e update donc e annually , fo

r trave l on/afte

r Ma y 1

. I n it s application , LAT

A state s tha

t grantin g a

n exemptio n i s justifie dfo r substantiall y th e sam

e reason s th e Departmen t

relie do n i n Order

2006-12-2 4 grantin g th e original exemptio n an d subsequent

order s expandin g th e exemption , where th e Department foundtha t fare s fo r fravel withi n thes e region s typicall y presen t n o publi c interes t

concern s justifyin g pre-implementatio n revie w o f agreement s limite dt o suc h fravel.

' B y Order

2006-12-24 , December

27 , 2006 , Docke t

OST-2006-26409 , w e exempte dintra-ECAA Fle x Fare s from our filing an dapproval requirements

. ^ I AT A define s "Middl e East " fo r passenger

tarif f purpose s a s consistin g o f

Bahrain , Egypt , Iran (Islami c Republi c of) , Iraq , Israel , Jordan , Kuwait , Lebanon , Oman , Qatar , Saud i Arabia , Sudan , Syria

n Ara b Republic , Unite dAra

b Emirates , an dYeme n (Republi c of)

. ^ lAT A define s "Afiica " fo r passenge r

tarif f purpose s a s consistin g o f

Angola , Benin , Botswana , Burkin aFaso , Burundi , Cameroo n (Republi c of)

. Cap e Verd e (Republi c of) , Central Afiica n Republic , Chad , Comoros , Congo , Cote d'lvoire , Djibouti , Equatorial Guinea , Eritrea , Ethiopia , Gabon , Gambia , Ghana , Guinea , Guinea-Bissau , Kenya , Lesotho , Liberia , Liby aAra b Jamahiriya , Madagascar , Malawi , Mali , Mauritania , Mauritius , Mayotte , Mozambique , Namibia , Niger , Nigeria , Reunion , Rwanda , Sa o Tome andPrincipe , Senegal , Seychelles , Sierr a Leone , Somalia , Sout

h Africa , Swaziland , Tanzani a(Unite dRepubli c of) , Togo , Uganda , Uganda , Zambia , and Zimbabwe

.Dispositio n

We wil l grant

th e expande dexemptio n a s requested , under th e same conditions

. lAT A fare s fo r trave l betwee n non-U.S

. market s typicall y presen t n o publi c interes t

concern s justifyin g ou

r revie w o f agreement s limite dt o suc h fravel. W e findtha t a n expansio n o f

th e Fle x Fare mechanis mt o includ e lAT A interlin e fare s fo r trave l i n th e additional non-U.S

. market s i s consisten t wit h th e publi c interes t

fo r th e reason s state di n Order 2006-12-24

. W e als o findtha

t exemptin g th e U.S

. market s include di n th e applicatio n i s consisten t wit h th e publi c interest , fo

r th e reason s state din Order 2008-7-4

. Th e Fle x syste mi s amechanistic , computer-drive n proces s tha t involve s n o direc t

contac t betwee n carriers

. It

produce s lAT A interlin e fare s base do n adjuste daverage s o f marke t fares , rather

than negotiation s amon g competitors

. Th e annual an dexceptional update s t o th e fares , a s wel l a s amendment s t o th e methodolog y o r

th e interlin e premium , likewis e involv e n o direc t contract s betwee n carriers , an dth e proces s i s ope n to participatio n b y non-IAT A carriers

. We believ e tha t under th e system proposed , there i s muc h les s risk tha t th e Fle x Fare s process , or th e resultin g LAT

A interlin e fares , wil l hav e asignificant spillover effect o n individual airlin e prices

. In addition , there i s n o reaso n t o believ e that

non-IAT A interlin e fare s wil l ceas e t o b e widel y available

. Pursuant t o th e authorit

y dul y assigne dunder

th e Department' s Regulations , 4 9 CFR1.54(b ) (1) : W e findtha

t th e agreement

i n Docke t

OST-2009-0064 , a s set

fort h i n th e attache dAppendix , shoul db e grante da

n exemptio n fro

mfiling wit

h th e Department

fo r prio r approval under conditio n # 2 impose do n lATA' s bylaws

. ACCORDINGLY , 1

. W e exemp t

th e Passenger

Tarif f Coordinatin g Conferenc e resolution s identifie din th e Appendi x t o thi s order , amendment s t o them , an dfare s generate dunder th e resolutions , from conditio n #2 impose do n LATA' s Procedure s fo r th e Conduc t

o f th e LAT A Traffi c Conferences , Agreement

1175 , a s amende db y Order 68-7-55 , t o th e extent

tha t lAT A nee dno t

file th e resolution s fo

r revie w an dapprova

l b y th e Departmen t

prio r t o adeclaratio n o f

effectivenes s b y lAT A an dimplementatio n b y lAT A members , provide dtha t th e resolution s an damendment s theret o ar e limite dt o th e establishmen t o f fare s fo r trave l withi n th e North/Mid/Sout h Atlanti c - Middl e Eas t

an dAfric asub-areas ; 2

. Thi s exemptio n ma

y b e revoke di n whol e or

i n par t a t an y time ; an d 3

. Thi s Order

wil l b e serve don th e International Ai r Transpor t Association

. Person s entitle dt o petitio n th e Department fo r revie w o f th e order , under

1 4 CFR385.30 , ma y file suc h petitio n withi n seve n day s afte r th e date o f

servic e o f

thi s order

.-3
-

Thi s order shal l becom e effectiv e an dbecom e th e actio n o f th e Departmen t

o f Transportatio n upo n expiratio n o f

th e abov e period , unles s withi n suc h perio dapetitio n fo r revie w i s filedor

th e Assistan t Secretar y fo r Aviatio n an dInternational Affair s give s notic e that sh e wil l revie w thi s order o n her ow n motion

. By :

(SEAL ) Pau l L

. Gretc h Director , Offic e of

Internationa l Affair s

A n electroni c versio n o f

thi s document

i s availabl e on the Worl dWid e We b at : http://www.resiilatiom.sov /Appendi x A

Res o No

. R- 1

R- 2

R- 3

R- 4

R- 5 lAT A No

. 00 2 lllp p 44pp i

054p p 064p p Titl e

TCI 2 Amendin g Resolutio n betwee n North/Mid / Sout h Atlanti c an dMiddl e East , Afiic a TCI 2 Fle x Fare s betwee n North/Mid/Sout h an d Betwee n Middl e East , Afric a TCI 2 Intermediate/Busines s Clas s Fle x Fare s betwee n North/Mid/Sout

h Atlanti c an dMiddl e East , Afiic a TCI 2 Firs t

Clas s Fle x Fare s betwee n North / Mid/Sout h Atlanti c an dMiddl e East , Afric a TCI 2 Econom

y Clas s Fle x Fare s betwee n North / Mid/Sout h Atlanti c an dMiddl e East , Afric a Expir y Indefinite
Indefinite
Indefinite

Indefinit e
Indefinite

R- 6 070p aTC1 2 Excursio n Fle x Fare s betwee n North / Mid/Sout h Atlanti c an dMiddl e East , Afric a R- 7 074p aTC 1 2 PE X Fle x Fare s betwee n North / Mid/Sout h Atlanti c an dMiddl e East , Afric a Indefinit e
Indefmit e