UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on May 4, 2010

NOTICE OF ACTION TAKEN -- DOCKET DOT-OST-2008-0386

____________________________________________________________________________________________ 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: AEROLINEAS REGIONALES, S.A. de C. V. D/B/A REGIONALCARGO (Regional)

Date Filed: December 9, 2008, as supplemented April 2, 2009

Relief requested: Exemption under 49 USC § 41301 to permit the applicant to conduct charter foreign air transportation of property between points in Mexico and points in the United States, and other cargo charters in

accordance with 14 CFR Part 212.

Applicant representative: Herbert A. Rosenthal, 202-785- 9773 DOT analysts: Thuy H. Cooper, 202-366-5423 Robert J. Finamore, 202-366-2405

DISPOSITION

Action: Approved. Action date: May 4, 2010

Effective dates of authority granted: May 4, 2010, through May 4, 2011.

Basis for approval (bilateral agreement/reciprocity): Un ited States-Mexico Air Transport Services Agreement.

Except to the extent exempted/waived, this authority is subject to the te rms, conditions, and limitations of our standard exemption conditions (attached).

Special conditions/Remarks: Based on the record in this case, we found that the applicant is operationally and financially qualified to con duct its proposed operation, and that it is s ubstantially owned and effectively controlled by citizens of its homeland. 1 We also note that the applicant is prop erly licensed by its homeland to perform the proposed services. Furthermore, the FAA advised us that it knows of no reason to withhold this authority.

In accordance with 14 CFR §212.9(d), Regional shall not pe rform any charter flights to or from the United States unless the Department has granted a statement of authorization for such operations. 2

Action taken by: Paul L. Gretch, Director

Office of International Aviation

Responsive pleadings : The City of Houston and the Greater Houst on Partnership filed an answer in support of Regional’s application.

1 The record indicates that 99.99% of Regional’s shares are held by the Mexican company Re gionalCargo Holdings, S.A. de C.V. (RegionalCargo), with the remaining .01% of its shares held by a Mexican citizen. In turn, Mexican citizens hold approximately 91.44% of the shares of RegionalCargo. The ap plicant states that its Director General and all of its key management personnel are citizens of Mexico.

2 See, e.g. , Order 91-5-25, where the Department placed this condition on the foreign air carrier permit granted to Aerovias de Mexico, S.A. de C.V. We note, however, that the Department has granted blanket exemption authority to existing and future Mexican carriers, relieving them of this prior approval requirement for third and fourth freedom charter operations if they submit to the Department advance notice of their charter operations as described in Orders 98-4-2 and 99-7-23.Amerijet International, Inc. (Amerijet) filed an answer and supplemental response objecting to the application of Regional. Regional and Capital Cargo International Airlines, Inc. (Capital Cargo) filed replies. Amerijet, Regional, and Capital Cargo also f iled additional responsive pleadings. 3

Amerijet asserts that Regional and its affiliates have held out and operated scheduled all-cargo services in the Merida-Miami market using aircraft leased by Capital Cargo, without holding any economic authority from the Department required to engage in such services. Amerijet contends that those services are a clear violation of law and that the Department should therefore conclude that Regional does not possess the necessary favorable compliance disposition required for its application to be approved. In response, Regional and Capital Cargo assert that Amerijet’s allegations are incorrect. Regional maintain s that it acts as a foreign air freight forwarder for cargo it solicits, and that it does not currently hold itself out as a di rect air carrier. Capital Cargo states that it holds the necessary economic authority to operate charter service between Miami and Merida and that space on these charter flights is sold by several entities, including Regional, ac ting in its capacity as a Mexican freight forwarder.

Decision : Based on the totality of the record, and in the circ umstances presented, we are not disposed to withhold the bilaterally-provided-for economic authority requested by Regional. We have referred Amerijet’s assertions concerning Regional to the Department’s Office of Aviati on Enforcement and Proceedings (Enforcement Office). Our action here does not serve to insulate Regional from any enforcement action that the Enforcement Office may

take in the future.

______________________________________________________________________________________________________ Under authority assigned by the Department in its regula tions, 14 CFR Part 385, we found that (1) our action was consistent with Department policy; (2) the applicant was qualified to perform its proposed operations; (3) grant of the authority was consistent with the public interest; a nd (4) grant of the authority would not constitute a major regulatory action under the Energy Policy and C onservation 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 an y time without hearing at our discretion.

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

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

3 Certain pleadings were accompanied by motions to late-file. In the interest of ensuring a complete record, we will grant the

various motions.Foreign Carrier Exemption Conditions

In the conduct of the operations authorized , the foreign carrier applicant(s) shall:

(1) Not conduct any operations unless it holds a currently effective aut horization from its homeland for such operations, and it has filed a copy of su ch authorization with the Department;

(2) Comply with all applicable requirements of the Fe deral Aviation Administration, the Transportation Security Administration, and with all applicable U.S. Govern ment requirements concerning security, including, but not limited to, 14 CFR Parts 129, 91, and 36 and 49 CFR Pa rt 1546 or 1550, as applicable. To assure compliance with all applicable U.S. Government requirements concerni ng 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 Representativ e (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 Administra tion’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 provi ded 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 s overeign 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 opera tions 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 c ourt or other tribunal of the United States. In this condition, the term "international air transportation" mean s "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 terminat e 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 otherwi se provided in the applicable aviation agreement, comply with the Department's rule s 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. ag encies and courts, and with all applicable laws of the United States. This authority shall not be effective during any period wh en 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.

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