 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, DC

Issued by the Department of Transportation on July 26, 2004

   NOTICE OF ACTION TAKEN -- DOCKET OST-2004-16945           

________________________________________________________________________
_________________________________

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 American Airlines, Inc. (and its affiliates TWA
Airlines, LLC; American Eagle Airlines, Inc.; and Executive Airlines,
Inc. d/b/a American Eagle) and Compania Mexicana de Aviacion, S.A. de
C.V. (and its affiliate Aerovias Caribe, S.A. de C.V. d/b/a Aerocaribe)
filed  6/10/04 and clarified on  July 26, 2004, for:

XX  Exemption for American under 49 U.S.C. 40109 to provide the
following service:

Scheduled foreign air transportation of persons, property, and mail
between Chicago, Illinois, and San Luis Potosi, Mexico, and to integrate
this authority with its existing certificate and exemption authority. 
American intends to operate this service pursuant to a code-share
arrangement, whereby the “AA” code will be placed on Mexicana
flights in the Chicago-San Luis Potosi market.  The joint applicants
request that the exemption authority be granted for a period
co-extensive with the exemptions granted previously in the instant
docket (through April 26, 2006, for American and through April 26, 2005,
for Mexicana.) 

XX  Statement of authorization for Mexicana under 14 CFR Part 212 to:

Permit the “AA” code to be placed on the flights of Mexicana between
Chicago and San Luis Potosi, Mexico, in conjunction with foreign air
transportation of persons, property, and mail.

XX  Exemption for Mexicana under 49 U.S.C. 40109 to provide the
following service:

Scheduled foreign air transportation of persons, property, and mail
between Dallas/Ft. Worth, Texas, and Torreon, Mexicos.  Mexicana intends
to operate this service pursuant to a code-share arrangement with
American, whereby the “MX” code will be placed on American Eagle
flights in the Dallas/Ft. Worth-Torreon/Chihuahua markets. 

XX  Statement of authorization for American Eagle under 14 CFR Part 212
to:

Permit the “MX” code to be placed on flights of American Eagle
between (1) Dallas/Ft. Worth and Torreon, Mexico, and (2) Dallas/Ft.
Worth and Chihuahua, Mexico, in conjunction with foreign air
transportation of persons, property, and mail. 

2

Applicant rep: Carl B. Nelson, Jr.  (202) 496-5647 (American)   DOT
Analyst: Sylvia Moore

         Charles Donley  (202) 626-6840 (Mexicana)	                     
       (202) 366-6519

D I S P O S I T I O N

XX  Granted  (subject to conditions, see below)

The above action granting American’s exemption authority was effective
when taken:   July 26, 2004, through   April 29, 2006 

The above action granting Mexicana’s exemption authority was effective
when taken:  July 26, 2004, through           April 29, 2005

The statements of authorization granted were effective when taken:      
     , 2004, and will remain in effect indefinitely, subject to the
conditions listed below.

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 American’s
certificates of public convenience and necessity 

	   XX  Mexicana’s foreign air carrier permit      

	   XX  Standard exemption conditions (attached)

Conditions:  The U.S.-Mexico exemption authority granted to American is
subject to the dormancy notice requirements set forth in condition 7 of
Appendix A of Order 88-10-2.  Consistent with our policy, the dormancy
notice period will begin on August 1, 2004, the proposed start-up date
for the Chicago-San Luis Potosi service.  The exemption authority
granted to American and Mexicana is limited to services provided on a
code-share basis only. 

The route integration authority granted to American is subject to the
condition that any service provided under this authority shall be
consistent with the applicable bilateral aviation 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 American rights (including code-share,
fifth-freedom intermediate and/or beyond rights) to serve markets where
U.S. carrier entry is limited unless American notifies the Department 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; and (b)
should there be a request by any carrier to use the limited-entry route
rights that are included in American’s authority by virtue of the
route integration authority granted here, but that are not then being
used by American, the holding of such authority will not be considered
as providing any preference for American in a competitive carrier
selection proceeding to determine which carrier(s) should be entitled to
use the authority at issue.

The statements of authorization granted are subject to the following
conditions:

(a)	The statements of authorization will remain in effect only as long
as (i) the subject U.S. carriers and the subject Mexican-flag carrier
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.

3

(b)	The subject U.S. carriers and/or the subject Mexican-flag carrier
must promptly notify the Department (Office of International Aviation)
if the code-share agreement providing for the code-share operations is
no longer effective or if the carriers decide to cease operating all or
a portion of the approved code-share services.  Such notices should be
filed in Docket OST-2004-16945.4

 (c)	The code-sharing conducted under this authority must comply with
Part 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 the 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.  Further, the operating carrier shall
not permit the code of its U.S. air carrier code-sharing partner to be
carried on any flights that enter, depart, or transit the airspace of
any area for whose airspace the Federal Aviation Administration has
issued a flight prohibition.

(d)	The authority granted here is specifically conditioned so that
neither the subject U.S. carriers nor the subject Mexican-flag carrier
shall give any force or effect to any contractual provisions between
themselves that are contrary to these conditions.

(e)	The carriers will comply with section 4.4 of the code-share
agreement as amended March 16, 2004, which was submitted to the
Department on that date.

________________________________________________________________________

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 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, 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

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

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, including, but not limited to, 49 CFR Part 1546 or 1550, as
applicable.  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 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;

(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.

											05/2004

 Although the joint applicants are described in the instant application
as including TWA and Aerocaribe, the applicants do not request authority
for either TWA or Aerocaribe here.

 Mexicana holds the underlying route authority to operate the proposed
Chicago-San Luis Potosi code-share services.  (See Notice of Action
Taken dated June 17, 1999, with timely renewal application pending, in
Docket OST-1997-3238.)

 Mexicana holds the underlying route authority to operate the proposed
Dallas/Ft. Worth-Chihuahua code-share services.  (See Notice of Action
Taken dated December 2, 1992, timely renewal application pending in
Docket OST-1995-452.)

 American Eagle holds the underlying route authority to operate the
proposed code-share services.  (See Notices of Action Taken dated April
30, 2004, in Docket OST 2004-17469 for Dallas/Ft. Worth-Torreon and June
25, 2004, in Docket OST-2004-18042 for Dallas/Ft. Worth-Chihauahua.) 

4 We expect this notification to be received within 10 days of such
non-effectiveness or of such decision.

