			  UNITED STATES OF AMERICA

		        DEPARTMENT OF TRANSPORTATION

			  OFFICE OF THE SECRETARY

			          WASHINGTON, D.C.

Issued by the Department of Transportation on ______________ 

NOTICE OF ACTION TAKEN 

2004 U.S.-MEXICO COMBINATION SERVICE PROCEEDING – DOCKET
OST-2004-18692

________________________________________________________________________
_____________________________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 UNITED AIR LINES, INC. (formerly Docket OST-2004-17299),
filed 3/10/04,  amended on: 6/18/04, for:

XX  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 Denver, Colorado, and Cancun, Mexico.  United states that it
will serve the market on a year-round basis.  

Application of UNITED AIR LINES, INC. (formerly Docket OST-2004-17491),
filed 4/5/04, for:

XX  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 Denver, Colorado, and Puerto Vallarta, Mexico.  United states
that it will serve the market on a seasonal basis. 

Applicant rep:   Jeffrey A. Manley (202) 663-6670     DOT Analyst: 
Linda L. Lundell (202) 366-2336

Background

Under the U.S.-Mexico aviation agreement, two U.S. airlines may be
designated to provide direct carrier service in any given city-pair
market.  At the time United filed the captioned applications, only one
designation was available for each of the city-pair markets under the
aviation agreement, and competing applications were filed to United’s
requests--Allegiant Air, Inc. (Allegiant), and Grand Holdings, Inc.,
d/b/a Champion Air (Champion Air) to United’s Denver-Cancun
application, and Champion to United’s Denver-Puerto Vallarta
application.  

By Order 2004-7-17, the Department instituted the 2004 U.S.-Mexico
Combination Service Proceeding, in Docket OST-2004-18692, and
consolidated the already-filed applications into this proceeding to
select one primary and one backup carrier for four U.S.-Mexico city-pair
markets, including the Denver-Cancun and Denver-Puerto Vallarta
city-pair markets.  The order also established a procedural timetable
for the case, including a deadline for the filing of direct exhibits by
August 16, 2004. 

On August 16, 2004, United timely filed its direct exhibits for the
Denver-Cancun and Denver-Puerto Vallarta requests.  On that same day,
Allegiant filed a motion for leave to withdraw its application for
Denver-Cancun authority.  Champion Air did not file direct exhibits for
any of the city-pair markets at issue in the proceeding, including the
two sought here by United.  On August 18, 2004, Champion Air orally
advised the Department that it did not intend to pursue its requests for
authority to serve the Denver-Cancun and Denver-Puerto Vallarta markets.

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On August 18, 2004, United filed a motion requesting that the
Department: (1) grant Allegiant’s motion to withdraw its Denver-Cancun
application, (2) dismiss Champion Air’s applications for Denver-Cancun
and Denver-Puerto Vallarta authority due to the carrier’s failure to
prosecute those requests, and (3) immediately grant United’s now
unopposed applications for exemption authority to serve the
Denver-Cancun and Denver-Puerto Vallarta markets.  On ___________,
United advised the Department that no party opposed its request.

Responses to United’s motion were filed by Spirit Airlines, Inc.
(Spirit), Frontier, and Brendan Airways, LLC d/b/a USA 3000 Airlines
(USA 3000), including motions filed by Spirit, Frontier, and USA 3000. 
These submissions all raise matters going to other routes at issue in
the 2004 U.S.-Mexico Combination Service Proceeding and to procedural
issues relating to our consideration of those route requests.  No party
opposed United’s August 18 motion.  United filed a reply saying that
it did not oppose the other requests so long as they did not delay
action on United’s motion, but noting that the United motion was now
ripe, whereas the other requests were not.  

Decision

Under the circumstances presented, United is now the only applicant
requesting exemption authority in both the Denver-Cancun and
Denver-Puerto Vallarta markets.  In light of the fact that there are no
longer competing requests for these markets, no party has opposed
United’s request for an immediate award of Denver-Cancun and
Denver-Puerto Vallarta exemption authority, and  and there is one
designation opportunity available for both the Denver-Cancun and
Denver-Puerto Vallarta services, we have decided to grant United’s
August 18 motion and (1) grant Allegiant’s request to withdraw its
application for Denver-Cancun authority; (2) dismiss Champion Air’s
applications for authority to serve the Denver-Cancun and Denver-Puerto
Vallarta markets; and (3) award United the Denver-Cancun and
Denver-Puerto Vallarta exemption authority it requests.  We acted on
this motion without awaiting expiration of the 7-day answer period with
the consent of all parties served with the motion.

D I S P O S I T I O N

1.  We grant exemption authority to United Air Lines, Inc., to provide
foreign scheduled air transportation between (1) the terminal point
Denver, Colorado, and the terminal point Cancun, Mexico; and (2) the
terminal point Denver, Colorado, and the terminal point Puerto Vallarta,
Mexico;

2.  The exemption authority granted is effective immediately for a
period of two years from the date of this notice, subject to the
conditions outlined below;

3.  The exemption authority granted 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
United’s proposed start-up dates in the subject markets, as follows: 
September 11, 2004, for the Denver-Cancun market; and December 16, 2004,
for the Denver-Puerto Vallarta market;

4.  We grant the motion of Allegiant Air, LLC for leave to withdraw its
request for exemption authority to serve the Denver-Cancun market in the
2004 U.S.-Mexico Combination Service Proceeding, Docket OST-2004-18692; 

5.  We dismiss the requests of Grand Holdings, Inc., d/b/a Champion Air
for exemption authority to serve the Denver-Cancun/Puerto Vallarta
markets in the 2004 U.S.-Mexico Combination Service Proceeding, Docket
OST-2004-18692;

6.  We dismiss, as moot, the July 19 motion of United Air Lines, Inc.,
for pendente lite authority to serve the Denver-Cancun market in the
2004 U.S.-Mexico Combination Service Proceeding, Docket OST-2004-18692;

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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)

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													3

________________________________________________________________________
____________________

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 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 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:

  HYPERLINK "http://dms.dot.gov/reports_aviation.asp" 
http://dms.dot.gov/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.

    Frontier Airlines, Inc. (Frontier), holds exemption authority and is
designated to serve the Denver-Cancun and Denver-Puerto Vallarta
markets.

    Champion Air also advised us that it did not intend to prosecute its
requests for exemption authority to serve the Detroit-Cancun and St.
Louis-Cancun markets (markets that are also at issue in the 2004
U.S.-Mexico Combination Service Proceeding in Docket OST-2004-18692). 
We will dispose of Champion Air’s Detroit-Cancun and St. Louis-Cancun
requests separately.   

   At United’s request, and with the consent of all parties served
with a copy of United’s motion, we shortened the date for answers to
United’s motion to August 20, and replies to August 23 (see Notice
dated August 20, 2004, in the 2004 U.S.-Mexico Combination Service
Proceeding, Docket OST-2004-18692.

   On July 19, 2004, United filed a motion for pendente lite grant of
exemption authority to serve the Denver-Cancun market.  In light of our
action here, we are dismissing the July 19 motion as moot.  With regard
to the motions of Spirit, Frontier, and USA 3000 filed after United’s
August 18 motion, we will handle them separately after they become ripe.
 

   See United’s Direct Exhibits, at 3.

05/2004

