Order 20 1 3

- 2

- 6

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 6 th day of February, 201 3

Se rved: Febru ary 6 , 20 1 3

Application of

SKYMARK AIRLINES INC. Docket DOT

- OST

- 2010

- 0096

for an exempti on under 49 U.S.C. §40109 and an amended foreign air carrier permit under 49 U.S.C. § 4130 1

ORDER GRANTING EXEMPTION 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 and (2) tentatively fin d that it is in the public interest to grant the applicant a n amended foreign air carrier permit attached as Appendix B to

this order.

Background

On August 23, 2005, the Department issued a Notice, in Docket DOT

- OST

- 2005

- 22228, announcing several steps d esigned to streamline our regulatory procedures 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 lic ensing decisions, that we were in a position 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, whiche ver is shorter, and (2) tentatively deciding ( i.e. , show

- cause) to award a corresponding certificate (or permit), again for the standard duration we would normally have imposed (such as, in the case of certificates, five years for limited

- entry markets, in definite for

open

- entry markets, and in the case of permits, five years for comity and reciprocity regimes, indefinite for agreement regimes).

1 The conditions are attached as Appendix A.2

Our action in this Order serves to implement these streamlined regulatory procedures for the application involve d in this proceeding.

Application

By application filed January 2 , 20 1 3

, Skymark Airlines Inc. (Skymark)

, a foreign air carrier of Japan

, requests an exemption under 49 U.S.C. §40109 and a n amended foreign air carrier permit under 49 U.S.C. §41301, to engage in scheduled foreign air transportation of persons, property,

and mail from points behind Japan

, via Japan and intermediate points

, to a point or points in the United States and beyond

. 2

The a pplicant provided evidentiary materials required by 14 CFR Part 211 of our regulations to support its request s for authority. 3

No answers were filed to Skymark’s application

.

Decision

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

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

With respect to the applicant’s request for exemption authority, we find that grant of this authority is consistent with the public interest; that the applicant has demonstrated, based on the record, that it is financiall y and operationally qualified to perform the services authorized, and that it is substantially owned and effectively controlled by citizens of its claimed homeland. 4

2 Skymark currently holds a foreign air carrier permit authorizing it to engage in charter foreign air transportation of persons, property, and mail , (1) between any point or points in Japan and any point or points in the United States; (2) between any point or points in the United States an d any point or points in a third country or countries, provided that such service constitutes part of a continuous operation, with or without a change in aircraft, that includes service to or from Japan for the purpose of carrying local traffic to or from Japan; and (3) other charters pursuant to the prior approval requirements set forth in the Department’s regulations. Skymark’s current charter authority is subject to the conditions that (1) Skymark must adhere to the provisions of the 2010 U.S.

- Japan Mem orandum of Understanding; and (2) while Haneda

- U.S. charters remain numerically limited under the 2010 U.S.

- Japan Memorandum of Understanding, Skymark, in accordance with 14 CFR §212.9(d), shall not perform any charter flights between Tokyo’s Haneda airpor t and the United States unless specific authority in the form of a statement of authorization for such charter(s) has been granted by the Department. See Order 2012

- 11

- 23.

3 Skymark incorporated by reference the evidentiary submissions it made in its prev ious application, dated April 20, 2011, as updated June 13, 2012, for amended exemption authority and an initial foreign air carrier permit in the

above referenced Docket.

4 The record indicates that Mr. Shinichi Nishikubo, Skymark’s President/CEO and a Ja panese citizen, owns 36.56 % of the company’s shares. H.I.S. Co., Ltd. (“HIS”), a Japanese travel company listed on the Tokyo Stock Exchange,

owns 7.72% of the company’s shares; and The Master Trust Bank of Japan, Ltd. owns 5.43% of the company’s

shares. Of the remaining shares, 11.9 % are publicly traded on the Tokyo Stock Exchange and no other person owns 5% or more of the capital stock of Skymark. The record further indicates that Skymark’s Chairman, President, Directors, and key management personnel ar e all citizens of Japan.3

The authority sought by the applicant is consistent with the 2010 Memorandum of Understanding between the United States and Japan ( 2010 MOU). We therefore find that grant of the requested exemption authority, for a two

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

We also note that the applicant is properly licensed by its homeland to perform the proposed

services. In addition, on January 29, 2013, 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).

Tentative Findings and Conclusions

— Amended Foreign Air Carrier Permit Application

We tentatively find and conclude that the public interest warrants granting the applicant a n amended foreign air carrier permit, in the form attached as Appendix B

, subject to the conditions

attached and the Haneda

- U.S. charter prior approval conditions previously placed on the applicant by Order 2012

- 11

- 23

. 5 In particular, we tentat ively find and conclude that the factors which support our grant of exemption authority to the applicant also warrant g ranting the applicant the amended foreign air carrier permit i t 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 n amended 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 requirem ents;

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 limi tations contained in the attached permit, and to such other reasonable terms, conditions, and limitations required by the public interest as we may prescribe;

5

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

6

. O ur 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 da te of receipt of advice from

5 See footnote 2 above. The applicant’s request for a n amended foreign air carrier permit was summarized in the Department’s published week ly 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 authority. As noted above, no answers to the application were filed.4

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,

whichever 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 appli cant, the applicant is qualified to perform those operations. 6

ACCORDINGLY,

1. We grant the request of Skymark Airlines Inc. for an exemption under 49 U.S.C. §40109 in

Docket DOT

- OST

- 20 10

- 0096 , to permit it to engage in scheduled foreign air transportation of persons, property, and mail from points behind Japan

, via Japan and intermediate points

, to a point or points in the United States and beyond ;

2

. The exercise of the privileges granted in paragraph one above is subject to compliance by Skymark Airlines Inc. with the conditions listed in Appendix A ;

3

. Our action granting the exemption authority described herein is effective im mediately, for a period of two year s from the issue date of this order, or until the attached permit becomes

ef

fective, whichever is earlier;

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

5 . To the extent not acted upon above, we dismiss the applicant’s request for exemption

author ity in Docket DOT

- OST

- 20 10

- 0096 ;

6 . With respect to the applicant’s request for a n amended foreign air carrier permit in this proceeding, w e direct all interested persons to show cause why our tentative decision on that application, 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 for a n amended foreign air carrier permit shall, no later than twenty

- on e (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 objected to, together with a summary of

6 The applicant states that the introduction of its services will result in a near

- term annual ch ange in fuel consumption exceeding 10 million gallons. Under the provisions of the Energy Policy and Conservation Act of 1975 and 14 CFR Part 313 of our rules, we have considered the matter of Skymark ’s anticipated fuel consumption along with the other pu blic interest factors we consider in taking action in a proceeding of this kind. We find, in the circumstances presented, that in view of our obligations under 49 U.S.C. § 40105 to act consistently with international agreements (in this case the 2010 Memor andum of Understanding between the United States and Japan ), and the public benefits that will be derived from Skymark’s services, approval of the request notwithstanding the anticipated level of fuel consumption is warranted.5

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 and properly supported o bjections 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 wil l 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 conc lusions set forth in this order; and

1 0

. We will serve a copy of this order on Skymark Airlines Inc.

, the Emb assy of Japan in Washington, D.C., the Federal Aviation Administration, and the U.S. Department of State.

Persons entitled to petition the Department for review of this order under the Department’s regulations, 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 for exemption authority under 49 U.S.C. §40109 is effective im mediately , 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.govAppendix A

F oreign 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 authorization from its homeland for such operations, and it has filed a copy of such authorization with the Department;

(2) Comply wi th 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 aut hority, 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 wit h 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 Gov ernment 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) 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 of origin, point of destination, or agreed stopping place, or for which the contract of carriage w as 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 tran sportation" 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/f rom 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 a viation 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 Depart ment, 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.

12/2007A ppendix B

Issued by

Order 20 1 3

-

__ -

__

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.



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



### --------------------------------------------------------- Skymark Airlines Inc

.

A Foreign Air Carrier of Japan

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:

Scheduled foreign air transportation of persons, property, and mail from points behind Japan

, via Japan and intermediate points

, to a point or points in the United States and beyond ; and

C harter foreign air transportation of persons, property, and mail between any point or points in Japan and any point or points in the Un ited States, and between any point or points in the United States and any point or points in a third country or countries, provided that such service constitutes part of a continuous operation, with or without a change in aircraft, that includes service to or from Japan for the purpose of carrying local traffic to or from Japan

.

The holder shall also be authorized to engage in other charter trips in foreign air transportation, subject to the terms, conditions, and limitations of the Department’s regulatio ns 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 t reaty, 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 are or shall become parties.

This permit shall be effective on

__________ . 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 bilateral right for the service authorized by this permit from the service which may be operated by airlines de signated by the Government of Japan (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 to any other carrier designated by the

Gover nment of Japan in lieu of the holder; or (4) upon the termination or expiration of theapplicable air services agreement between the United States and Japan . 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 Japan become parties.

The Depart ment of Transportation has executed this permit and affixed its seal on

By:

PAUL L. GRETCH

Director

Office of International Aviation



### (SEAL)Foreign Air Carrier Permit 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 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, a nd 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 I IR of its plans and to find out whether the Transpor tation 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 u nder 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 requiremen ts 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) 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 Sta tes 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 any court or other tribunal of the United States. In this condition, the term "international air transportation" means "inter national 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 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 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