			  UNITED STATES OF AMERICA

		        DEPARTMENT OF TRANSPORTATION

			  OFFICE OF THE SECRETARY

			          WASHINGTON, D.C.

Issued by the Department of Transportation on June 17, 2004  

NOTICE OF ACTION TAKEN -- DOCKET OST-2004-16972

________________________________________________________________________
_____________________________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 CONTINENTAL AIRLINES, INC., and AEROVIAS DE MEXICO,
S.A., DE C.V. (AEROMEXICO),  filed 1/26/04, and supplemented on 4/8/04,
for:

Exemption authority for Aeromexico and its affiliate to engage in
scheduled foreign air transportation of persons, property, and mail
between Villahermosa, Mexico, and Houston, Texas.  The joint applicants
request that this exemption authority be granted for a period of one
year.

Statements of authorization for Continental and its affiliate to display
Aeromexico’s “AM*” designator code on flights operated by
Continental in the Houston-Villahermosa market.  The joint applicants
request that the statements of authorization be granted for an
indefinite period.  

Responsive Pleadings:

The City of Houston and the Greater Houston Partnership filed an answer
in support of the application.  No other responses were received.

Applicant reps: R. Bruce Keiner, Jr. (CO) (202) 624-2615 and William C.
Evans (AM) (202) 861-6459  

DOT Analyst:   Linda L. Lundell (202) 366-2336

D I S P O S I T I O N

1.  We grant exemption authority to Aeromexico, to the extent necessary,
to provide scheduled foreign air transportation of persons, property,
and mail between Villahermosa, Mexico, and Houston, Texas; 

2.  We grant to Continental and ExpressJet statements of authorization
under Part 212 of the Department’s regulations to display the airline
designator code of Aeromexico, on all flights operated by
Continental/ExpressJet (for the carriage of Aeromexico’s authorized
traffic) between Houston, Texas, and Villahermosa, Mexico;

3.  We defer on the request for exemption authority, along with Part 212
and Part 216 authority, for Aerolitoral in the captioned docket (see
remarks, below);												2

4.  The statements of authorization granted above are effective
immediately and shall remain in effect indefinitely, subject to the
conditions outlined below; 

5. The exemption authority granted above to Aeromexico is effective
immediately for a period of one year from the date of this notice,
subject to the conditions outlined below;

6.  The exemption authority granted by this Notice is limited to
operations conducted on a code-share basis only.

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   Continental and ExpressJet’s certificates of public convenience
and necessity

	XX   Aeromexico’s foreign air carrier permits

	XX   Standard Exemption Conditions (attached)

Additional Conditions:

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

 The respective statements of authorizations 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 and/or
alliance agreement providing for the code-share operations remains in
effect; 

 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 is no longer effective or if the carriers decide to
cease operating all or a portion of the approved code-share services. 
(Such notice should be filed in Docket OST-2004-16972);

  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;


 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.												3

Remarks:

	Authority for Aerolitoral

The joint application states that Continental will perform an oversight
review of Aerolitoral’s operations and submit a copy of that
certification to the Department.  The joint applicants have orally
advised the Department that, while this review is being completed, they
wish to proceed with that portion of the application involving services
that have been reviewed (Continental/ExpressJet/Aeromexico).  Under
these circumstances, and consistent with our action in the Notice of
Action Taken dated May 18, 2004, in this matter, we will continue to
defer action on that portion of the application that involves proposed
code-share services with Aerolitoral until further notice.

________________________________________________________________________
_______

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 deferred, 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

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.

   See Notice of Action Taken dated May 18, 2004, in the captioned
docket, for a detailed description of the application filed, along with
our earlier action in this matter.

   Specifically, the joint applicants in this application are as
follows:  Continental and its affiliate ExpressJet Airlines, Inc., d/b/a
Continental Express (ExpressJet), and Aeromexico and its affiliate and
code-share partner, Aerolitoral, S.A. de C.V. (Aerolitoral).  The joint
applicants state that flights designated as Continental flights in the
instant application will be operated by Continental or by ExpressJet. 
The joint applicants also state that Aeromexico seeks authority in the
instant application on behalf of itself and on behalf of Aerolitoral. 
However, for reasons set forth in the Remarks below, we are deferring on
that portion of the application that involves proposed code-share
services with Aerolitoral.

   The supplement contained information that had been redacted from the
copy of the code-share agreement that the joint applicants had
previously submitted with their application.  We would also note that on
May 14, 2004, the joint applicants filed a letter in Docket
OST-2004-16972 to clarify that they were not requesting exemption
authority for Continental to operate code-share flights beyond its
Mexican gateways, or for Aeromexico to operate code-share flights beyond
its U.S. gateways. 

   By Notice of Action Taken dated May 18, 2004, in the captioned
docket, we had deferred, until further notice, on the applicants’
request for authority to provide code-share services in the
Houston-Villahermosa market pending receipt of the necessary security
clearances.  Those security clearances have now been received.  Thus, we
are able to proceed here. 

   Authority granted by this notice is subject to the conditions
outlined below; see also remarks, below.

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

   By letter dated February 10, 2004, Continental advised the Department
that Aeromexico was audited by Continental in accordance with the
Foreign Code Share Safety Program approved for use by Continental and
that Aeromexico met all applicable ICAO standards.  And, by memorandum
dated April 6, 2004, the Federal Aviation Administration (FAA) advised
the Department that it had completed its review of the proposed
code-share arrangement between Continental and Aeromexico and interposed
no objection to the request.  

05/2004

