UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on January 22

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### NOTICE OF ACTION TAKEN

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__________ ______________________________________________________________________________________________________ This serves as notice to the public of the action described below, taken by the Department official indicated (no additional confirming order will be iss ued in this matter).

Application of Southwest Airlines Co. (Southwest) filed 12/11/14 for:

XX E xemption under 49 U.S.C. 40109 to provide the following service :

Scheduled foreign air transportation of persons, property, and mail between Houston, Texa s , on the one hand, and (1) Cancun, Mexico; (2) Mexico City, Mexico; (3) Puerto Vallar t a, Mexico; and (4) San Jose del Cabo, Mexico, on the other hand. 1

Applicant rep: Robert W

. Kneisley (202) 263

- 6284 DOT Analyst: Brett D. Krug er (202) 366

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D I S P O S I T I O N

XX Granted , in part ( i.e., exemption authority for Southwest to serve the Houston

- Cancun and

Houston

- Puerto Vallarta markets

, subject to conditions ; see below)

XX Deferred, in part ( i.e., exemption authority for Southwest to serve the Houston

- Mexico City and

Houston

- San Jose del Cabo markets

, see Remarks below)

The above action granting Houston

- Cancun and Houston

- Puerto Vallarta exemption authority was effective when taken: January 22 , 2015

, through January 22 , 201 7

.

The above action de ferring on the remainder of the application was effective when taken: January 22 , 2015

.

Action taken by: Paul L. Gretch, Director

Office of International Aviation

XX The authority granted is consistent with the aviation agreement between th e United States and

Mexico.

Except to the extent exempted or waived, this authority is subject to the terms, conditions, and limitations

indicated: XX Holder’s certificate s of public convenience and necessity

XX Standard Exemption Condition s (attached)

____________________________________________________________________________________ Responsive Pleadings/ Remarks : Under the U.S.

- Mexico aviation agreement, three carriers may be designated to provide scheduled foreign air transportation of p ersons, property, and mail between

Houston and Cancun , Houston and Puerto Vallarta, and Houston and San Jose del Cabo. Two carriers may be designated to provide scheduled foreign air transportation of persons, property, and mail between

1 Southwest pr oposes to begin daily service in all four markets beginning on or about October 15, 2015

.

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Houston and Mexico City. Currently, Spirit Airlines, Inc. (Spirit), and United are designated to provide service between Houston and Cancun; and SkyWest Airlines, Inc. d/b/a United Express (SkyWest) and United are designated to provide service between Houston and Puerto Va llarta

, leaving one available designation available for each of those markets. SkyWest, Spirit, and United are currently designated to provide service between Houston and San Jose del Cabo; and SkyWest and United are currently designated to provide servic e between Houston and Mexico City

, leaving those markets fully subscribed.

Southwest asserts tha t in the Houston

- Mexico City and Houston

- San Jose del Cabo markets, two U.S. carrier designations are being used on behalf of one U.S. airline, United. In tho se circumstances, Southwest requests (1) that the Department withdraw one of the two authorities held by United and its United Express partner SkyWest in both the Houston

- Mexico City and Houston

- San Jose del Ca bo

markets ; and (2) that the Department grant Southwest’s request for exemption authority and corresponding designations.

The Southwest Airlines Pilots’ Association (SWAPA) and Spirit filed answers in support of Southwest’s application. The City of Houston filed an answer stating that it has no de sire to lose any of its existing service, and it urges the Department to explore all opportunities available so that all carriers can obtain the necessary authority. United and SkyWest filed an answer to Southwest’s application objecting to

Southwest’s re quests for Houston

- Mexico City and Houston

- San Jose del Cabo authority. 2 Southwest, SWAPA, the City of Houston, and United and SkyWest each filed replies. United and SkyWest filed a surreply and Southwest filed a contingent answer.

In the circumstances presented, including the fact that no party oppose s the application to the extent that

Southwest seeks to serve the Houston

- Cancun and Houston

- Puerto Vallarta markets, we will approve

Southwest’s requests for Houston

- Cancun and Houston

- Puerto Vallarta exem ption authority. 3 We will consider subsequently the request s of Southwest to serve the Houston

- Mexico City and Houston

- San

Jose del Cabo markets

.

Conditions : The U.S.

- Mexico exemption authority granted is subject to the dormancy notice requirements se t forth in condition 7 of Appendix A of Order 88

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- 2. Consistent with our standard policy, the dormancy notice period will begin on October 15, 2015, Southwest’s proposed start

- up date for the subject services.

On the basis of data officially noticeable under Rule 24(g) of the Department's regulations, we found the applicant qualified to provide the exemption services authorized.

Under authority assigned by the Department in its regulations, 14 CFR Part 385, we found that (1) our

action was consistent w ith Department policy; (2) grant of the application was consistent with the public interest; and (3) grant of the authority would not constitute a major regulatory action under the Energy Policy and Conservation Act of 1975. To the extent not granted or d eferred , we denied all requests in the

referenced Docket. We may amend, modify, or revoke the authority granted in this Notice at any time without hearing at our discretion.

Persons entitled to petition the Department for review of the action set forth i n this Notice under the Department’s regulations, 14 CFR §385.30, may file their petitions within seven (7) days after the date of issuance of this Notice. This action was effective when taken, and the filing of a petition for review will

not alter such e ffectiveness.

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

2 United and SkyWest take no position on the remainder of Southwest’s application

. 3 We will address the designation requests for the Houston

- Cancun and Houston

- Puert o Vallarta markets through normal diplomatic channels.

### A TTACHMENT U.S. Carrier Exemption Conditions

In the conduct of the operations authorized, the U.S. carrier applicant(s) shall:

(1) Hold at all times effective operating authority from the government of each country served;

(2) Comply with applicable requirements concerning oversales contained in 14 CFR 250 (for scheduled operations, if authorized);

(3) Comply with the requirements for reporting data contained in 14 CFR 241;

(4) Comply with requirements for minimum insurance coverage, and for certifying that coverage to the Department, contained in 14 CFR 205;

(5) Except as specifically exempted or otherwise provided for in a De partment Order, comply with the requirements of 14 CFR 203, concerning waiver of Warsaw Convention liability limits and defenses;

(6) Comply with all applicable requirements of the Federal Aviation Administration, the Transportation Security Administrati on, and with all applicable U.S. Government requirements concerning security, including, but not limited to, 49 CFR Part 1544. To assure compliance with all applicable U.S. Government requirements concerning security, the holder shall, before commencing

a ny new service (including charter flights) to or from a foreign airport, contact its Principal Security Inspector (PSI) to advise the PSI of its plans and to find out whether the Transportation Security Administration has determined that security is adequa te to allow such airport(s) to be served;

(7) Comply with such other reasonable terms, conditions, and limitations required by the public interest as may be prescribed by the Department of Transportation, with all applicable orders and regulations of oth er U.S. agencies and courts, and with all applicable laws of the United States.

The authority granted shall be effective only during the period when the holder is in compliance with the conditions imposed above.

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