Order 201 5

- 2

- 7

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 13 th day of February

, 201 5

Se rved: February 13

, 201 5

Application s of

HAINAN AIRLINES CO., LIMITED Docket DOT

- OST

- 200 7

- 0066

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 EXEMPTION AND TO SHOW CAUSE

Summary

By this order we (1) grant the application s 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 applicant 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 proce dures for licensing 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 positi on to act favorably, 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 decidi ng ( i.e.

, show

- cause) 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 th e 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 s involved in this proceeding.

Application s

By a pplication s filed January 14 , 20 1 5

, and January 20, 2015 (as supplemented February 13, 2015)

, Hainan Airlines Co., Limited (Hainan Airlines) , 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 it to engage in scheduled f oreign air

tran sportation of persons, property and mail between (1) Shanghai , PRC, and Boston,

Massachusetts ; (2) Beijing, PRC, and San Jose, California ; and (3) Shanghai, PRC, and Seattle, Washington

. 2

The applicant provided evidentiary materials required by 14 CFR Part 211 of our regulations to support its request s for a n amended foreign air carrier permit. 3

No answers were filed to Hainan Airlines’ applica tion s

.

Decision

We have decided, under assigned authority and consistent with our August 23, 2005 Notice referenced above, to grant the applicant’s request s for exemption authority, as described below and subject to conditions, and tentatively to grant, subject to show

- cause procedures, its request s for a n amended foreign air carrier permit, also subject to conditions.

With respect to the applicant’s request s for exemption authority, we find that grant of this authority is consistent with the public in terest; and that the applicant has demonstrated, based on the record, that it is financially and operationally qualified to perform the services authorized

.

2 Hainan Airlines’ current foreign air carrier pe rmit, issued in this Docket on February 20 , 20 1 4

, by Order 20 1 4

- 2

- 1 5 , authorizes it to engage in (a) scheduled foreign air transportation of persons, property, and mail between (1) Beijing, People’s Republic of China, and Seattle, Washington; (2) Beijing, People’s Republic of Ch ina, and Honolulu, Hawaii; (3) Beijing, People’s Republic of China, and Chicago, Illinois ; and (4) Beijing, People’s Republic of China, and Boston, Massac h usetts ; (b) c harter foreign air transportation of persons, property, and mail between a point or points in the People’s Republic of China and a point or points in the United States; and (c) other charters pursuant to 14 CFR Part 212 of the Department’s regulations

. Hainan requested the Shanghai

- Boston exemption and permit authority in its application date d January 14, 2015, and the Beijing

- S an Jose and Shanghai

- Seattle exemption and permit authority in its application dated January 20, 2015.

3 Hainan Airlines incorporated by reference the evidentiary submissions it made in its previ ous application s for a n initial and amended foreign air carrier permit in the above captioned Docket.3

The applicant provided updated ownership and management information

, and the record

indicates tha t the applicant remains substantially owned and effectively controlled by citizens of

the PRC.

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 fin d 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

se rvices. In addition, by memorandum dated February 1 1

, 201 5

, t he Federal Aviation Administration advised us that it knew of no reason why we should act unfavor ably on the applicant’s request s

. We have verified the applicant’s compliance with 14 CFR Parts 203 (Warsaw liability waiver), and 205 (insurance requirements).

Tentative Findings and Conclusions

-- Amended Foreign Air Carrier Permit Application s

We tentatively find and conclude that the public interest warrants granting the applicant a n amended fore ign 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

2009

- 5

- 7

. 4 In particular, we tentatively find and conclude that the factor s 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 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 by citizens of its claimed

homeland ;

4. The public interest requires that the exercise of the privileges granted by the permit should be subject to the terms, conditions, and limitations contained in the attached permit, and to such

4 The applicant’s request s for an amended foreign air carrier permit w ere summarized in the Department’s published weekly list of applications filed. T his 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 authority. As noted above, n o answers to the application s were filed.4

other reasonable terms, conditions, and limitations required by the public interest as we may prescribe;

5. The issuance of th is 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; 5

6. The public interest does not require an oral evidentiary hearing o n the a pplication s ; and

7. 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, become effective on the 61st day after its submission for §4 1307 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 portion of the Department’s decision under that section,

whiche ver 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 policy; and (2) with 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

Conservati on Act of 1975.

ACCORDINGLY,

1. We grant the request s of Hainan Airlines Co., 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 (1) Shanghai, P eople’s R epublic of C hina , and Boston, Massachusetts; (2) Beijing,

P eople’s R epublic of C hina , and San Jose, California; and (3) Shanghai, P eople’s R epublic of

C hina , and Seattle, Washington ;

2. The exercise of the privileges granted above is subject to c omplianc e by Hainan Airlines Co.,

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 permit 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 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.5

5 . To the extent not acted upon above, we dismiss the applican t’s request s for exemption authority in Docket DOT

- OST

- 200 7

- 0066 ;

6 . With respect to the applicant’s request s 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 ose application s , 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 s 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 proceeding, a statement of objections specifying the part or parts of the tentative findings and conclusions obje cted 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 a nd 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 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

10 . We will serve a copy of this order on Hainan A irlines Co., L imi t e d

, 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 Department’s regulati ons, 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 s for exemption authority under 49 U.S.C. §40109 is effective immediately, and 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 currently effective auth orization 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 a ll 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 securi ty, 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) Comply with the requir ements 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

le ast 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 Ord er, 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), bu t 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 treaty cognizable in

an y 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 Part ies 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, 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 th e 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 Department approval under T itle 49 of the U.S. Code.

12/2007Appendix B

Issued by

Order 20 1 5

- X

- XX

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.



### ---------------------------------------------------------------------------- PERMIT TO FOREIGN AIR CARRIER (as amended)



### ---------- -------------------------------------------------------------------



### H ainan A irlines C o ., Limited

A Foreign Air Carrier of the People’s Republic of China

is authorized, subject to the following provisions, the provisions 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 of persons, property and mail, as follows:

Scheduled foreign air transportation of persons, property, and mail b etween : 1) Beijing, Peopl e’s Republic of China
, and Seattle, Washington; 2) Beijing, People’s Republic of China, and Honolulu, Hawaii; 3) Beijing, People’s Republic of China, and Chicago, Illinois; 4) Beijing, People’s Republic of China, and Boston, Massachusetts ; ( 5 ) Shanghai, Pe ople’s Republic of China , and Boston, Massachusetts; ( 6 ) Beijing, People’s Republic of China , and San Jose, California; and ( 7 ) Shanghai, People’s Republic of

China , and Seattl e, Washington; and

Charter foreign air transportation of persons, property, and mail b etween a point or points in the People’s Republic of China and a point or points in the United States.

The holder shall also be authorized to engage in other charter trips in foreign air transportation, subject to the terms, conditions, and limitat ions of the Department’s regulations governing

charters.

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 ar e or shall become parties.

This permit shall be effective on Month XX, 2015

. 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 l iquidation of the holder to whom it was issued; (2) uponthe 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

w hich may be operated by airlines designated by the People’s Republic of China (or, if the right is 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 t o 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 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 People’s Republic of China become parties. The Department of Transportation has executed this permit and affixed its seal on Month XX,

2015

.

By:

PAUL L. GRETCH

Director

Office of International Aviation



### (SEAL)Foreign Air Carrier Permit Conditions

In the conduct of the operation s 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 w ith 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 holde r’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 Securi ty 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 au thority, 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 wi th 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 defenses;

(7) A gree 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 of origin, point of destination, or agreed stopping place, or for which the contract of carr iage 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 "internation al 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 flig hts 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 app licable 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 t he 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 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.

12/2007