			  UNITED STATES OF AMERICA

		        DEPARTMENT OF TRANSPORTATION

			  OFFICE OF THE SECRETARY

			          WASHINGTON, D.C.

    Issued by the Department of Transportation on  December 3, 2003

NOTICE OF ACTION TAKEN – DOCKET OST-2003-15758

________________________________________________________________________
________________________________

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).

Joint Application of UNITED AIR LINES, INC., AND BRITISH MIDLANDS
AIRWAYS LIMITED d/b/a bmi (“bmi”), filed  July 23, 2003, for: 

XX  Exemption for two years for United under 49 U.S.C. §40109 to
provide the following service:

Scheduled foreign air transportation of persons, property, and mail
between (1) any point or points in the United States and a point or
points in the United Kingdom, directly and via intermediate points; (2)
any point or points within the United Kingdom; and (3) any point or
points in the United Kingdom and any point or points in third countries,
by code-sharing on flights operated by bmi; and to integrate this
authority with authority at other points United is authorized to serve
by certificate or exemption.

XX  Exemption for two years for bmi under 49 U.S.C. §40109 to provide
the following service:

Scheduled foreign air transportation of persons, property, and mail
between (1) any point or points in the United States and any point or
points in the United Kingdom, directly or via intermediate points;
(2) any point or points within the United States; and (3) any point or
points in the United States and any point or points in third countries,
by code-sharing on flights operated by United.

XX Statement of Authorization for United under 14 CFR Part 212 to:

Display bmi’s “BD*” designator code on flights operated by United
between (1) points in the United States; (2) points in the United States
and points in the United Kingdom, directly or via intermediate points;
and (3) points in the United States and points in third countries.

XX Statement of Authorization for bmi under 14 CFR Part 212 to:

Display United’s “UA*” designator code on flights operated by bmi
between (1) points within the United Kingdom; (2) points in the United
States and regional airports in the United Kingdom, directly and via
intermediate points; and (3) points in the United Kingdom and points in
third countries.

The applicants initially propose to conduct code-share operations under
this authority over various routes (see Appendix D to this Notice). 

Applicant reps:  Jeffrey Manley (United) (202) 663-6670 and Marshall
Sinick (bmi) (202) 626-6651

DOT Analyst:    Linda Lundell (202) 366-2390

D I S P O S I T I O N

XX  Granted, in part (subject to limitations and conditions, see below)

XX  Balance Denied (see below)

The above action was effective when taken: December 3, 2003, through 
Decemberv3, 2005.

Responsive Pleadings:  Continental Airlines, Inc. (Continental), Delta
Air Lines, Inc. (Delta), and Northwest Airlines, Inc. (Northwest) filed
answers to the request.  United/bmi filed a consolidated reply to the
answers.

Continental, Delta, and Northwest oppose the United/bmi application,
stating that the proposed code-share arrangement would grant
extrabilateral U.S.-Heathrow access to bmi while doing nothing to
improve the plight of U.S.

- see next page -

													2

carriers that remain locked out of Heathrow by the restrictive policies
of the U.K. Government.  The carriers argue that, contrary to the
applicants’ arguments, the Department’s prior approvals of the
Delta/Virgin Atlantic and Continental/Virgin Atlantic code-share
arrangements do not support the UA/bmi request here.  The carriers
explain that the Department’s extrabilateral approvals of the
Delta/Virgin and Continental/Virgin arrangements secured new Heathrow
access for U.S.-flag non-incumbent carriers where grant of the UA/bmi
request would promote new U.S.-Heathrow access for a U.K. carrier (and,
in this particular case, a U.K. carrier that is a member of one of the
two dominant alliances at London Heathrow).

In its joint reply, United/bmi maintain that the “lion’s share of
the economic benefits of expanded codesharing between United and bmi,
including most particularly transatlantic codesharing, will inure to
United”and will provide needed financial resources to United at a
difficult juncture in its history.  The applicants state that this
benefit and the improvement of service options for travelers, provide
compelling reasons for approval of the request.  United/bmi argue that
the bilateral environment that existed two and one-half years ago when
the Department denied a similar UA/bmi request has completely changed. 
United/bmi assert that, at that time, the Department hoped the denial
would bring pressure on the United Kingdom to move toward aviation
liberalization; however, this previous bilateral framework has been
replaced by the multilateral United States-European Union negotiation
– a process that will “consume several years under the most
optimistic estimates.”  United/bmi state that, during the interim, the
United States and the United Kingdom should approve balanced exchanges
of “procompetitive opportunities such as the United/bmi codeshare.” 
United/bmi assert that grant of the application will have an immediate
and substantial beneficial impact on consumers and on United, and will
not adversely affect the current multilateral negotiating process. 

Decision:  We have decided to grant the applicants’ request to expand
their existing code-share arrangement to the extent that it is
consistent with the terms of the aviation agreement between the United
States and the United Kingdom.  We have decided to deny the
applicants’ request for extrabilateral authority to provide code-share
services at London Heathrow (see Appendix D for a summary of the
applicants’ initially proposed code-share routes, and the
Department’s corresponding action) and for unlimited U.S.-London
exemption authority.

Our action here grants the applicants the following authority, subject
to the conditions described herein:

	United:

I.  Exemption authority to conduct scheduled foreign air transportation
of persons, property, and mail between any point or points in the United
States and regional airports in the United Kingdom, directly and via
intermediate points, and beyond the United Kingdom to any point or
points in third countries, limited to operations under its code-sharing
agreement with bmi, whereby United will place its code on flights
operated by bmi; and to combine this authority with authority at other
points United is authorized to serve by certificate or exemption.

II.  A statement of authorization to display bmi’s “BD” designator
code on flights operated by United 

between (1) points in the United States; (2) points in the United States
and regional airports in the United Kingdom, either nonstop or via
third-country intermediates; and (3) points in the United States and
points in third countries, either nonstop or via third-country
intermediates.

bmi:

I.  Exemption authority to conduct scheduled foreign air transportation
of persons, property, and mail between regional airports in the United
Kingdom and any point or points in the United States, via bmi’s
authorized U.S. gateways, and beyond the United States to any point or
points in third countries, limited to operations under its code-sharing
agreement with United, whereby bmi will place its code on flights
operated by United.

II.  A statement of authorization to display United’s “UA”
designator code on flights operated by bmi

between (1) points in the United Kingdom; (2) points in the United
States and regional airports in the United Kingdom, either nonstop or
via third-country intermediates; and (3) points in the United Kingdom
and points in third countries, either nonstop or via third-country
intermediates.

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													3

Our basis for grant of this authority, as limited and conditioned by
this Notice, is the 1995 Memorandum of Consultations between the United
States and the United Kingdom (MOC).  We also find that the services we
are authorizing will enhance competition in the markets involved, to the
benefit of the traveling and shipping public.  Moreover, the authority
granted is comparable to authority we have granted to America/British
Airways and Continental/Virgin Atlantic.  See Order 2003-5-33 (in Docket
OST-2002-13861), and Notice of Action Taken dated August 22, 2003 (in
Docket OST-1997-2880).  

As stated above, we have decided not to grant the applicants the broad
authority sought between any point in the United States and London. 
While United has argued that it would benefit financially from the
Heathrow code-share services proposed at a difficult time in the
carrier’s history, the grant of such extrabilateral authority to bmi
is beyond what we are prepared to grant to a carrier of the United
Kingdom at this time.  Accordingly, given the current state of our
aviation relationship with the United Kingdom, we continue to believe
that the best course of action here is to deny, without prejudice, that
portion of the application involving the extrabilateral authority at
London.

Action taken by:   Paul L. Gretch, Director	

                               Office of International Aviation	

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

	XX   United’s certificates of public convenience and necessity

	XX   Standard Exemption Conditions (attached as Appendices A and B)

------------------------------------------------------------------------
------------------------------------------------------------------------
------------Conditions:  The exemption authority granted to United and
bmi is limited to services provided on a code-share basis only.  The
code-share operations conducted under this authorization are subject to
the conditions contained in Appendices A, B, and C below.  United and
bmi may initially conduct the authorized code-share operations over the 
approved routes set forth in Appendix D to this Notice; and may conduct
code-share operations in additional markets subject to the terms,
conditions, and limitations of this Notice, and in particular conditions
(b) and (e) of Appendix C.

The route integration authority granted to United is subject to the
condition that any service provided under this exemption shall be
consistent with all applicable agreements between the United States and
the foreign countries involved.  Furthermore, (a) nothing in the award
of the route integration authority granted should be construed as
conferring upon United rights (including fifth-freedom intermediate
and/or beyond rights) to serve markets where U.S. carrier entry is
limited unless United notifies the Department of its 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; and (b) should there be a
request by any such carrier to use the limited-entry route rights that
are included in United’s authority by virtue of the route integration
authority granted here, but that are not then being used by United, the
holding of such authority by route integration will not be considered as
providing any preference for United in a competitive carrier selection
proceeding to determine which carrier(s) should be entitled to use the
authority at issue.

________________________________________________________________________
_________________

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

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 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 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_aviation.aspAPPENDIX A 

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
Department 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 and with all applicable U.S. Government requirements
concerning security.  To assure compliance with all applicable U.S.
Government requirements concerning security, the holder shall, before
commencing any 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 adequate to
allow such airport(s) to be served; and

(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 other 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.

												8/2003

APPENDIX B

FOREIGN 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 with all applicable requirements of the Federal Aviation
Administration, including, but not limited to, 14 CFR Parts 129, 91, and
36, and with all applicable U.S. Government requirements concerning
security.  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 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 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 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 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)  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 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 "international
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.

											8/2003CODE-SHARE CONDITIONS			APPENDIX C

The code-share operations authorized here are subject to the following
conditions:

(a)  The statements of authorization will remain in effect only as long
as (i) United and bmi continue to hold the necessary underlying
authority to operate the code-share services at issue, and (ii) the
code-share agreement providing for the code-share operations remains in
effect; 

(b)  United and/or bmi 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, which carrier will be operating the aircraft in the
code-share market added, and the date on which the service will begin. 
Such notices should be filed in Docket OST-2003-15758; 

(c)  United and/or bmi must notify the Department immediately if the
code-share agreement under which these code-share services are operated
is no longer in effect or if the carriers decide to cease operating all
or a portion of the approved code-share services.  We expect this
notification to be received within 10 days of such non-effectiveness or
of such decision.  Such notices should be filed in Docket
OST-2003-15758;

(d)  The code-sharing operations conducted under this authority must
comply with 14 CFR 257 and with any amendments to the Department’s
regulations concerning code-share arrangements that may be adopted. 
Notwithstanding any provisions in the contract between the 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 such service in computer reservation systems and elsewhere;
that the carrier selling such transportation (i.e., 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; that the passenger liability of the operating carrier be
unaffected; and that the operating carrier shall not permit the code of
its U.S. code-sharing 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; 

(e)  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 United and bmi rights (including code-share, fifth
freedom intermediate and/or beyond rights) to serve markets where U.S.
carrier rights are limited unless United and bmi 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;1 and (ii)
should there be a request by any carrier to use the limited-entry route
rights that are included in United and bmi’s authority by virtue of
the blanket statement of authorization granted here, but that are not
being used by United and bmi, the holding of such authority will not be
considered as providing any preference for United and bmi in a
competitive carrier selection proceeding to determine which carrier(s)
should be entitled to use the authority at issue; and

(f)  The authority granted here is specifically conditioned so that
neither United nor bmi shall give any force or effect to any contractual
provisions between themselves that are contrary to these conditions.

________________________

1 The notice in paragraph (b) above can be used for this notification.

APPENDIX D

											Page 1 of 5

Initially-Proposed Code-Share Operations and Department Action

GATEWAY CITY	BEYOND CITY	DISPOSITION

	(intra U.S. – BD* on UA)

	Chicago	Anchorage	Approved

	Atlanta	Approved

	Austin	Approved

	Baltimore	Approved

	Boise	Approved

	Boston	Approved

	Cedar Rapids	Approved

	Charlotte	Approved

	Cincinnati	Approved

	Cleveland	Approved

	Colorado Springs	Approved

	Columbus	Approved

	Dallas/Ft. Worth	Approved

	Dayton	Approved

	Denver	Approved

	Des Moines	Approved

	Detroit	Approved

	Ft. Lauderdale	Approved

	Ft. Myers	Approved

	Grand Rapids	Approved

	Hartford	Approved

	Houston	Approved

	Indianapolis	Approved

	Kansas City	Approved

	Las Vegas	Approved

	Los Angeles	Approved

	Miami	Approved

	Minneapolis/St. Paul	Approved

	New Orleans	Approved

	New York	Approved

	Oakland	Approved

	Omaha	Approved

	Orange County	Approved

	Orlando	Approved

	Philadelphia	Approved

	Phoenix	Approved

APPENDIX D

											Page 2 of 5

Initially-Proposed Code-Share Operations and Department Action

GATEWAY CITY	BEYOND CITY	DISPOSITION

	(intra U.S. – BD* on UA)

	Chicago (cont’d)	Pittsburgh	Approved

	Portland (PDX)	Approved

	Rochester	Approved

	Sacramento	Approved

	St. Louis	Approved

	St. Thomas	Approved

	Salt Lake City	Approved

	San Antonio	Approved

	San Diego	Approved

	San Francisco	Approved

	San Jose	Approved

	San Juan	Approved

	Seattle	Approved

	Spokane	Approved

	Tampa	Approved

	Tucson	Approved

	Wichita	Approved

Washington, D.C.	Atlanta	Approved

	Austin	Approved

	Boston	Approved

	Chicago	Approved

	Cincinnati	Approved

	Dallas/Ft. Worth	Approved

	Denver	Approved

	Detroit	Approved

	Hartford	Approved

	Houston	Approved

	Indianapolis	Approved

	Kansas City	Approved

	Las Vegas	Approved

	Los Angeles	Approved

	Miami	Approved

	Minneapolis/St. Paul	Approved

	New Orleans	Approved

	New York	Approved

	Oakland	Approved



APPENDIX D

											Page 3 of 5

Initially-Proposed Code-Share Operations and Department Action

GATEWAY CITY	BEYOND CITY	DISPOSITION

	(intra U.S. – BD* on UA)

	Washington, D.C. (cont’d) 	Orange County	Approved

	Orlando	Approved

	Philadelphia	Approved

	Phoenix	Approved

	Portland (PDX)	Approved

	St. Thomas	Approved

	Salt Lake City	Approved

	San Diego	Approved

	San Francisco	Approved

	San Jose	Approved

	San Juan	Approved

	Seattle	Approved

	Tampa	Approved

	Tucson	Approved

	(beyond U.S. – BD* on UA)

	Chicago	Mexico City	Approved

Washington, D.C.	Mexico City	Approved

	(intra U.K. – UA* on BD)

	London (LHR)	Belfast	Approved     

	Edinburgh	Approved

	Glasgow	Approved

	Leeds/Bradford	Approved

	Manchester	Approved

	Teeside	Approved

Manchester	Aberdeen	Approved

	Edinburgh	Approved

	Glasgow	Approved

	(beyond U.K. – UA* on BD)

	Birmingham	Brussels	Approved 

East Midlands	Amsterdam	Approved 

	Brussels	Approved 

	Frankfurt	Approved 

	Paris	Approved 



APPENDIX D

											Page 4 of 5

Initially-Proposed Code-Share Operations and Department Action

GATEWAY CITY	BEYOND CITY	DISPOSITION

	(beyond U.K. – UA* on BD)

	London (LHR) 	Amsterdam	Approved

	Barcelona	Approved

	Berlin	Approved

	Brussels	Approved

	Budapest	Approved

	Cologne/Bonn	Approved

	Copenhagen	Approved

	Dresden	Approved

	Dublin	Approved

	Faro	Approved

	Frankfurt	Approved

	Geneva	Approved

	Hanover	Approved

	Helsinki	Approved

	Lisbon	Approved

	Madrid	Approved

	Malaga	Approved

	Milan	Approved

	Nice	Approved

	Paris	Approved

	Prague	Approved

	Rome	Approved

	Stockholm	Approved

	Stuttgart	Approved

	Warsaw	Approved

Manchester	Dusseldorf	Approved

	Frankfurt	Approved

	(U.S.-U.K. – UA* on BD)

	Manchester	Chicago	Approved

	Washington, D.C.	Approved



APPENDIX D

											Page 5 of 5

Initially-Proposed Code-Share Operations and Department Action

GATEWAY CITY	BEYOND CITY	DISPOSITION

	(U.S.-U.K. – BD* on UA)

	London (LHR)	Chicago	Denied

	Los Angeles	Denied

	New York/Newark	Denied

	San Francisco	Denied

	Washington, D.C.	Denied



 “Regional airports” in the United Kingdom include all U.K.
airports, except Heathrow and Gatwick.

