BEFORE THE

U.S. DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

)

Application of )

)

HAINAN AIRLINES CO., LTD. )

)

For an amended foreign air carrier permit ) Docket No. OST

- 2007

- 0066

pursuant to 49 U.S.C. § 41301 and ex emption )

authority pursuant to 49 U.S.C. § 40109 )

)

( China

- US Scheduled Service ) )

)

APPLICATION OF HAINAN AIRLINES CO., LTD.

FOR AN EXEMPTION AND AMENDED FOREIGN AIR CARRIER PERMIT

Communications with respect to this document should be addressed to:

Joel M. Chusid

Executive Director, USA

HAINAN AIRLINES CO., LTD.

18000 International Blvd., Suite 1188

Seattle, WA 98188

Email: joel@hnair.com

January 20 , 2015 Josh Romanow

Peter Nelson

PILLSBURY WINTHROP SHAW

PITTMAN LLP

1200 Sevente enth Street , N.W.

Washington, D.C. 2003 6

Tel: (202) 663

- 8000

Fax: (202) 663

- 8007

E

- mail: romanow@pillsburylaw.com

peter.nelson @pillsburylaw.com

Counsel for Hainan Airlines Co., Ltd.

NOTE: Any person who wishes to support or oppos e this a pplication may: (1) file an answer, and

(2) serve that answer on counsel identified above and all persons served with a copy of this

application. Answers to the exemption application are due on February 4 , 2015 ; answers to the

foreign air carrier p ermit application are due on February 10 , 2015

. Hainan intends to poll on this

application and will advise the Department of the results.2 BEFORE THE

U.S. DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

)

Application of )

)

HAI NAN AIRLINES CO., LTD. )

)

For an amended foreign air carrier permit ) Docket No. OST

- 2007

- 0066

pursuant to 49 U.S.C. § 41301 and exemption )

authority pursuant to 49 U.S.C. § 40109 )

)

( China

- US Scheduled Service ) )

)

APPLICA TION OF HAINAN AIRLINES CO., LTD.

FOR AN EXEMPTION AND AMENDED FOREIGN AIR CARRIER PERMIT

Pursuant to 49 U.S.C. §§ 40109 and 41301, Part 211 of the Department’s economic

regulations, and the Department’s rules of practice, Hainan Airlines Co., Ltd. (“ Hain an

Airlines ”), an air carrier of the People’s Republic of China

, respectfully requests that the

Department amend Hainan Airlines’ foreign air carrier permit to enable it to engage in scheduled

foreign air transportation of persons, property and mail between (i) Be ij i ng , People’s Republic of

China (P EK ) , on the one hand, and San Jose, California (SJC)

, on the other hand , and (ii)

Shanghai, People’s Republic of China (PVG), on the one hand, and Seattle, Washington (SEA),

on the other hand

. Hainan Airlines’ service t o San Jose would represent t he first nonstop service

between China and the fast

- growing Silicon Valley, and its service to Seattle would expand

options for travelers in the Pacific Northwest.

Hainan Airlines also requests exemption authority under 49 U.S.C . § 40109 to the extent

necessary so that it may exercise the rights requested in this a pplication prior to the issuance of

a n amended foreign air carrier permit. Consistent with the Department’s notice of August 23,3 2005 (Docket No. OST

- 2005

- 22228) (the “ August 23, 2005 Notice ”), Hainan Airlines requests

that the Department process this application on an expedited basis and grant Hainan Airlines an

amended foreign air carrier permit so that it can begin offering the proposed services as soon as

possible. In this regard, Hainan Airlines respectfully requests that the Department issue a single

order (1) granting the requested exemption authority for a one

- year period or until after the

effective date of the requested amended permit authority; and (2) approv ing the amended foreign

air carrier permit authority under the streamlined procedures set forth in the August 23, 2005

Notice, unless the Department deems it appropriate to proceed directly to a final order issuing an

amended foreign carrier permit to Hain an Airlines.

In support of this a pplication, Hainan Airlines states as follows:

1. Since Hainan Airlines began service in 1993, it has grown steadily , and inaugurated its

first non

- stop service to the United States on June 9, 2008 with flights between Beijin g

and Seattle. O n September 3, 2013, Hainan successfully launched non

- s top service

between Beijing and Chicago , and on June 20, 2014 initiated service between Boston and

Beijing.

2. Hainan Airlines has received several awards, including a five

- star certifica tion by

Skytrax, a prestigious service quality award, for four consecutive years . It has been voted

the “ Best Airline in China ” by the readers of Premier Traveler Magazine twice and four

times by the readers of Global Traveler magazine. Hainan Airlines is a service

- oriented

airline, providing features such as complimentary limo service for long

- haul premium

travelers in Beijing and in the United States , flat

- bed seats, upgraded amenities and

gourmet meals. As one of the launch customers for the Boeing 787 Dreamliner, Hainan

Airlines aims to provide a n innovative and high quality service option for passengers4 traveling between the People’s Republic of China, Silicon Valley , and the Pacific

Northwest

.

3. Hainan holds a foreign air carrier permit issued by the Department authorizing it to

engage in scheduled foreign air transportation of person, property and mail between

Beijing, People’s Republic of China and Seattle ; Beijing and Chicago ; and Beijing and

Boston; as well as authority to engage in charter 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 ( See Order 201 3

- 11

- 26 ).

4. Authority Requested: Hainan Airlines hereby seeks authority to conduct schedul ed

foreign air transportation of persons, property and mail between (i) Beijing , People’s

Republic of China (P EK )

, on the one hand, and S an Jose, California (SJC)

, on the other

hand , and (ii) Shanghai, People’s Republic of China (PVG), on the one hand, and Seattle,

Washington (SEA) , on the other hand

. Hainan intends to operate scheduled flights to San

Jose using a Boeing 787

- 8 aircraft with a two class configuration and proposes to operate

initially five flight s per week beginning in the second quarter of 201 5

. Scheduled flights

to Seattle operate would be operated with an Airbus 330

- 200 aircraft with a two class

configuration, at a frequency of four flights per week beginning in the second quarter of

2015.

5. Approval of Hainan Airlines’ request for an amend ed foreign air carrier permit is fully

consistent with the Agreement between the Government of the United States of America

and the People’s Republic of China Relating to Civil Air Transport

, signed September 17,

1980, as amended, which authorizes airlines designated by the Chinese government to

operate scheduled combination services from any point or points in the People’s Republic5 of China to any point or points in the United States open to scheduled international

services . It would benefit travelers in both the United States a nd China by providing the

first scheduled service in the San Jose market and additional travel options in the Seattle

market, and would therefore serve the public interest. 1 The relaxation of new U

. S

. - China

visa requirements is exp ected to dramatically increase travel between the two countries,

resulting in more demand for air capacity , which Hainan Airlines’ new service would

provide.

6. The Government of the Peopl e’s Republic of China has designated Hainan Airlines to

conduct t he pro posed flights from San Jose to Beijing and from Seattle to Shanghai . A

copy of Hainan Airlines’ authorization issued by the Civil Aviation Administration for

China (“CAAC”) is attached hereto as Exhibit A

.

7. Hainan Airlines hereby incorporates by reference the fitness and citizenship information

contained in its earlier applications. See Docket OST

- 2007

- 0066.

8. A n updated copy of Hainan Airlines’ Air Operator’s Certificate (AOC) is attached as

Exhibit B

.

9. E stimate s showing the total traffic and the financial r esults of the proposed services for

the first full year of normal operations are attached hereto as Exhibit C

- 1 (San Jose) and

Exhibit C

- 2 (Seattle)

.

10. Grant of the authority sought herein will not result in a near

- term increase in fuel

consumption of ten mi llion gallons or more, and therefore will not comprise a “major

1 That the authority sought by Hainan Airlines in this application is authorized under a bilateral agreement is

indicative that approval of this application is in the public interest. See S. REP. NO. 96

- 329, at 4 (1979), reprinted in

1980 U.S.C.C.A.N. 54, 57 (“[T]he negotiation of a bilateral agreement itself represents a determination by the

Government of the United States that the grant of route authority provided for under the bilateral is in the ‘public

interest.’”).6 regulatory action” under the Energy Policy and Conservation Act of 1975, as defined in

14 C.F.R. § 313(a)(1).

11. Hainan Airlines has not been involved in any safety or tariff violations or any fa tal

accidents in the past five years.

12. Hainan Airlines’ maintenance program continues to comply with the provisions of ICAO

Pilots and Airmen Annexes 1, 6 (Part 1) and 7.

13. The verification required by 14 C.F.R. 302.4(b) is attached hereto as Exhibit D

.

For t he reasons set forth above, Hainan Airlines is fully qualified to operate the services

for which authority is here in requested, and grant of the authority will serve the public interest.

WHEREFORE, based upon the foregoing information, Hainan Airlines resp ectfully

requests that it be granted an exemption and amended foreign air carrier permit to engage in

scheduled foreign air transportation of persons, property and mai l as more fully described above.

Respectfully submitted,

Josh Romanow

Peter Nelson

P ILLSBURY WINTHROP SHAW PITTMAN L LP

1200 Seventeenth Street , N

. W

. Washington, DC 2003 6

Phone: (202) 663

- 8000

Fax: (202) 663

- 8007

Email: romanow@pillsburylaw.com

peter.nelson@pillsburylaw.com

January 20 , 2015 Counsel for Hainan Airlines Co., Ltd

.CERTIFICATE OF SERVICE

I hereby certify that a copy of the foregoing application of Hainan Airlines Co., Ltd. for an amended

foreign air carrier permit and exemption has been served by electronic mail this the 20 th day of

January, 2015 , upon each of th e parties listed below

.

David Henthorn

Rick Mayfield

Federal Aviation Administration

david.e.henthorn@faa.gov

rick.mayfield@faa.gov

Mark E. Kiehl

Manager, Air Service Development

Norman H. Mineta San Jose Intl. Airport

1701 Airport Blvd., Suite B

- 1 153

S an Jose, CA 95110

mkiehl@sjc.org

Kazue Ishiwata

Senior Manager, Air Service Development

Seattle

- Tacoma International Airport

P.O. Box 68727

Seattle, WA 98168

Ishiwata.K@portseattle.org

Sascha Vanderbellen

Chris Walker

Delta Air Lines, Inc.

sascha.vander bellen@delta.com

chris.walker@delta.com

Robert Wirick

Howard Kass

American Airlines, Inc.

r obert.wirick@aa.com

howard.kass@aa.com

Nancy S. Sparks

Bailey Leopard

Federal Express Corporation

gbleopard@fedex.com

nssparks@fedex.com Russell E. Pommer

Assoc iate General Counsel & Sr. Director

Regulatory Affairs

Atlas Air Inc.

rpommer@atlasair.com

A nita Mosner

Jennifer Nowak

Counsel for UPS

Holland & Knight

anita.mosner@hklaw.com

jennifer.nowak@hklaw.com

Dan Weiss

Steve Morrissey

United Air Lines

dan.wei ss@united.com

steve.morrissey@united.com

Robert Silverberg

Counsel for ABX Air, Inc.

rsilverberg@sgbdc.com

Mark W. Atwood

Counsel for Kalitta Air

matwood@cozen.com

/s/ Peter Nelson

Peter NelsonTABLE OF EXHIBITS

Exhibit A Authorization from the Govern ment of the People’s Republic of China

Exhibit B Air Operator’s Certificate

Exhibit C Estimate of Traffic and Financial Forecast for Proposed Operations

Exhibit D Verification9 EXHIBIT A

AUTHORIZATION FROM T HE

GOVERNMENT OF THE PE OPLE’S REPUBLIC OF C HINA

(ATTACHED)1011 EXHIBIT B

AIR OPERATOR’S CERTIFICATE12 PUBLIC AIR TRANSPORT

AIR OPERATOR ’ S CERTIFICATE

DUPLICATE

A.T. REGISTERED NO.029

EXAMINED AND APPROVED OF THE OPERATION IN

ACCORDANCE WITH THE CIVIL AVIATION LAW OF

PEOPLE ’ S REPUBLIC OF CHINA.

N ame: Hainan Airlines Company Limited

Address: Hainan Airlines Plaza

, No. 7 Guoxing Road, Haikou City, Hainan Province

Base Airport: Haikou Meilan International Airport

B usiness Entity Type: Limited Liability Company

R egistered Capital: RMB 3,530,252,801

Legal Person: Di XIN

Scope of Operation: A uthorized domestic and international air passenger, cargo and mail

transportation ( include those to Hong Kong and Macau); services related to air transportation.

V alidity: from 05/10 /2013 to 05/09 /2016

I ssued by: Civil Aviation Administration of China ( Sealed)

04 /3 0 /201413 EXHIBIT C

- 1

ESTIMATE OF TRAFFIC AND FINANCIAL FORECA ST

FOR PROPOSED OPERATI ONS

– SAN JOSE

( 5 x Week )

Month # of

Flights Passengers*

1 Revenue* 2 Cargo Revenue*

3 Total Costs* 4 Profit* 5

Unit: USD Unit: USD Unit: USD Unit: USD

15

- Jun

- 15 11 1,524 2,850,436.28 638,246.43 3,301,861.55 186,821.16

31

- Jul

- 15 22 3,549 6,336,133.92 1,276,492.87 6,6 03,723.10 1,008,903.68

31

- Aug

- 15 23 3,733 8,254,192.59 1,334,515.27 6,903,892.34 2,684,815.52

30

- Sep

- 15 21 3,365 5,097,577.05 1,218,470.46 6,303,553.87 12,493.64

31

- Oct

- 15 22 3,549 4,232,477.98 1,276,492.87 6,603,723.10

- 1,094,752.26

30

- Nov

- 15 22 3,549 3,981,961.04 1,276,492.87 6,603,723.10

- 1,345,269.20

31

- Dec

- 15 21 3,365 4,355,716.90 1,218,470.46 6,303,553.87

- 729,366.51

31

- Jan

- 16 23 3,733 6,596,134.66 1,334,515.27 6,903,892.34 1,026,757.60

29

- Feb

- 16 21 3,365 4,103,007.23 1,218,470.46 6,303,553.87

- 982,076.18

31

- Mar

- 16 21 3,365 3,464,183.21 1,218,470.46 6,303,553.87

- 1,620,900.20

30

- Apr

- 16 22 3,549 4,391,481.88 1,276,492.87 6,603,723.10

- 935,748.36

31

- May

- 16 22 3,549 5,791,631.35 1,276,492.87 6,603,723.10 464,401.11

Total 251 40,192 59,454,934.08 14,563,623.18 75,342,477.23

- 1,323,919.98

* 1 non

- directional passengers;

* 2 revenue based on round trip ticket price;

* 3 cargo revenue based on average hourly cargo income;

* 4 cost based on fixed hourly total cost;

* 5 Profit = Revenue + Cargo Revenue

– Total Cost.14 EXHIBIT C

- 2

ESTIMATE OF TRAFFIC A ND FINANCIAL FORECAS T

FOR PROPOSED OPERATI ONS

– SEATTLE

( 4 x Week )

Month # of

Flights Passengers

* 1 Revenue* 2 Cargo

Revenue* 3 Total Costs* 4 Profit* 5

Unit: USD Unit: USD Unit: USD Unit: USD

22

- Jun

- 15 5 948 1,302,501.27 302,200.02 1,611,733.42

- 7, 032.14

31

- Jul

- 15 18 3,566 5,569,826.58 1,087,920.06 5,802,240.31 855,506.33

31

- Aug

- 15 18 3,681 6,398,482.24 1,087,920.06 5,802,240.31 1,684,161.99

30

- Sep

- 15 17 3,186 4,097,306.38 1,027,480.05 5,479,893.63

- 355,107.19

31

- Oct

- 15 18 3,336 3,914,851 .09 1,087,920.06 5,802,240.31

- 799,469.17

30

- Nov

- 15 17 3,005 3,142,756.04 1,027,480.05 5,479,893.63

- 1,309,657.53

31

- Dec

- 15 17 3,295 4,064,916.10 1,027,480.05 5,479,893.63

- 387,497.47

31

- Jan

- 16 18 3,527 4,887,993.14 1,087,920.06 5,802,240.31 173, 672.89

29

- Feb

- 16 16 2,965 3,617,494.91 967,040.05 5,157,546.94

- 573,011.98

31

- Mar

- 16 17 3,186 3,138,974.25 1,027,480.05 5,479,893.63

- 1,313,439.32

30

- Apr

- 16 17 3,259 3,740,814.86 1,027,480.05 5,479,893.63

- 711,598.71

31

- May

- 16 18 3,527 4,599,193 .36 1,087,920.06 5,802,240.31

- 115,126.89

Total 196 37,482 48,475,110.22 11,846,240.63 63,179,950.04

- 2,858,599.18

* 1 non

- directional passengers;

* 2 revenue based on round trip ticket price;

* 3 cargo revenue based on average hourly cargo income;

* 4 cost based on fixed hourly total cost;

* 5 Profit = Revenue + Cargo Revenue

– Total Cost.15 EXHIBIT D

VERIFICATION

(ATTACHED )16