 

			  UNITED STATES OF AMERICA

		        DEPARTMENT OF TRANSPORTATION

			  OFFICE OF THE SECRETARY

			          WASHINGTON, D.C.

Issued by the Department of Transportation on July 15, 2003

NOTICE OF ACTION TAKEN -- DOCKET OST 2003-15485

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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 issued in this matter).

Applicant:  LUFTHANSA CITYLINE GmbH                                     
                               Date Filed:  June 20, 2003

Relief requested:  Exemption under 49 U.S.C. 40109 to permit Lufthansa
CityLine to conduct, for a period of two years, scheduled foreign air
transportation of persons, property, and mail, by displaying the code of
United Air Lines on flights operated by Lufthansa CityLine wholly within
Germany, and, in addition, between points in Germany and points in third
countries.

Statement of Authorization under 14 CFR Part 212 to permit Lufthansa
CityLine to carry United Air Lines’ code, for an indefinite duration,
on flights operated by Lufthansa CityLine wholly within Germany, and, in
addition, between points in Germany and points in third countries.

If renewal, date and citation of last action:  New authority.

Applicant representative:  Ali M. Stoeppelwerth, 202-663-6000          
DOT analyst:  Allen F. Brown, 202-366-2405

Responsive pleadings:  None.

	DISPOSITION

Action:  Approved, subject to conditions (see below).                   
                                   Action date:  July 15, 2003

Effective dates of authority granted:  The exemption authority granted
to the applicant is effective July 15, 2003, through July 15, 2005.  The
Statement of Authorization granted to the applicant is effective July
15, 2003, for an indefinite duration.

Basis for approval:  The authority is encompassed by the United
States-Germany Air Transport Agreement, as amended.  We found, based on
the record, that Lufthansa CityLine is substantially owned and
effectively controlled by citizens of Germany, properly licensed by its
homeland, and operationally and financially qualified to undertake the
proposed operations.

Conditions:  Except to the extent exempted or waived, the exemption
authority granted to Lufthansa CityLine is subject to the terms,
conditions, and limitations of our Foreign Air Carrier Standard
Exemption Conditions.

The code-share authority that we granted to Lufthansa CityLine is
subject to the following conditions:  1) This Statement of Authorization
will remain in effect only as long as Lufthansa CityLine and United
continue to hold the necessary underlying authority to operate the
code-share services at issue and their code-share agreement providing
for these operations remains in effect.  2) Lufthansa CityLine and/or
United must notify the Department no later than 30 days before they
begin any new code-share service under the code-share services
authorized here.  Such notice shall identify the market(s) to be served,
and the date on which the service will begin.  Such notices should be
filed in Docket OST-2003-15485.  3) Lufthansa CityLine and/or United
must promptly notify the Department (Office of International Aviation)
if the subject agreement providing for these operations is no longer
effective or the carriers decide to cease operating any or all of the
approved services.  (We expect this notice to be received within ten
days of such noneffectiveness or of such decision and filed in Docket
2003-15485).  4) The code-share operations conducted under this
authority must comply with 14 CFR Part 257 and with any amendments to
the Department’s regulations concerning code-share arrangements that
may be adopted.  5) Notwithstanding any provisions in the contract
between the subject carriers, our approval here is expressly conditioned
upon the requirements that the subject foreign air transportation be 

sold in the name of the carrier holding out the service in computer
reservation systems and elsewhere; that the carrier selling such
transportation (that is, the carrier shown on the ticket) accept
responsibility for the entirety of the code-share journey for all
obligations established in its contract of carriage with the passenger;
and that the passenger liability of the operating carrier be unaffected.
 6) The operating carrier shall not permit the code of its U.S.
code-share partner to be carried on any flight that enters, departs, or
transits the airspace of any area for whose airspace the Federal
Aviation Administration has issued a flight prohibition.  7) The
authority to operate to third countries is subject to the condition that
any service provided under the statement of authorization shall be
consistent with all applicable agreements between the United States and
the foreign countries involved.  Furthermore, i) nothing in the award of
this blanket statement of authorization should be construed as
conferring upon Lufthansa CityLine and United rights (including
code-share, fifth freedom intermediates and/or beyond rights) to serve
markets where U.S. carrier rights are limited unless Lufthansa CityLine
and United notify us of their intent to serve such a market and unless
and until the Department has completed any necessary carrier-selection
procedures to determine which carrier(s) should be authorized to
exercise such rights (the 30-day notice provision set forth above in
this paragraph can be used for this notification); and ii) should there
be a request by any carrier to use the limited-entry route rights that
are included in Lufthansa CityLine’s and United’s authority by
virtue of the blanket statement of authorization granted here, but that
are not then being used by Lufthansa CityLine and United, the holding of
such authority will not be considered as providing any preference for
Lufthansa CityLine and United in a competitive carrier-selection
proceeding to determine which carrier(s) should be entitled to use the
authority at issue; and  8) The code-share authority granted here is
specifically conditioned so that neither carrier shall give any force or
effect to any contractual provisions between themselves that are
contrary to these conditions.

Action taken by:   Paul L. Gretch, Director	

		      Office of International Aviation	

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Under authority assigned by the Department in its regulations, 14 CFR
Part 385, we found that (1) our action was consistent with Department
policy; (2) grant of the authority 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/deferred/dismissed, 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 in 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 effectiveness.

An electronic version of this document is available on the World Wide
Web at:

http://dms.dot.gov//reports/reports_aviation.asp

