UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation on October 4, 2005

NOTICE OF ACTION TAKEN -- DOCKET OST 2003-16350

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).

Application of	Continental Airlines, Inc. (Continental), filed 9/1/05
for:

XX	Renewal of exemption for two years under 49 U.S.C. §40109 to provide
the following service:

Scheduled foreign air transportation of persons, property, and mail
between Houston, Texas, and Morelia, Mexico, and to integrate this
authority with Continental’s other existing exemption and certificate
authority.  Continental states that it will continue to provide this
service on a seasonal basis.

Applicant rep:	R. Bruce Keiner, Jr. (202) 624-2615   DOT Analyst: 
Tretha Chromey (202) 366-2367

D I S P O S I T I O N

XX  Granted, subject to conditions (see below).

The action above was effective when taken: October 4, 2005 through
October 4, 2007.   

Action taken by:	Paul L. Gretch, Director

			Office of International Aviation

XX  The authority granted is consistent with the aviation agreement
between the 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 certificates of public convenience and necessity

XX  Standard Exemption Conditions (attached)

Special Conditions/Remarks:  The U.S.-Mexico exemption authority granted
is subject to the dormancy notice requirements set forth in condition 7
of Appendix A of Order 88-10-2, and the notice requirements for
seasonal/intermittent services as set forth in Order 96-11-24, at 5.  

The route integration authority granted to Continental 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 Continental rights (including fifth-freedom intermediate
and/or beyond rights) to serve markets where U.S. carrier entry is
limited unless Continental 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; (b) should there be a
request by any carrier to use the limited-entry route rights that are
included in Continental’s authority by virtue of the route integration
exemption granted here, but that are not then being used by Continental,
the holding of such authority by route integration will not be
considered as providing any preference for Continental in a competitive
carrier selection proceeding to determine which carrier(s) should be
entitled to use the authority at issue.

The code-share operations conducted under this authorization are subject
to the following conditions: (a) the code-sharing operations conducted
under this authority must comply with 14 CFR 257 and with any amendment
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; and that the passenger
liability of the operating carrier be unaffected; and (b) the authority
granted here is specifically conditioned so that neither Continental nor
ExpressJet shall give any force or effect to any contractual provisions
between themselves that are contrary to these conditions.

On the basis of data officially noticeable under Rule 24(g) of the
Department’s regulations, we found the applicant 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, 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 

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, 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 any new service
(including charter flights) to or from a foreign airport, contact its
International Principal Security Inspector (IPSI) to advise the IPSI 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.

05/2004

Continental indicates that it would use the exemption authority to
combine its own seasonal large-aircraft service with service provided by
ExpressJet [ExpressJet Airlines, Inc., d/b/a Continental Express] on
which Continental would place its code, so as to offer year-round
service in the market.

