			  UNITED STATES OF AMERICA

		        DEPARTMENT OF TRANSPORTATION

			  OFFICE OF THE SECRETARY

			          WASHINGTON, D.C.

Issued by the Department of Transportation on November 1, 2004

NOTICE OF ACTION TAKEN -- DOCKETS OST-2004-18920 & 2004-18919

________________________________________________________________________
__________________________________________

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).

Applicant:  SriLankan Airlines Ltd. & Emirates				Date Filed:  August
17, 2004

Relief requested:

SriLankan Airlines Ltd. (Docket OST-2004-18920)--Exemption from 49
U.S.C. § 41301 to engage in scheduled foreign air transportation of
persons, property and mail from points behind Sri Lanka via Sri Lanka
and intermediate points to a point or points in the United States and
beyond, pursuant to a code-share arrangement with Emirates, a foreign
air carrier of the United Arab Emirates (U.A.E.).

Emirates (Docket OST-2004-18919)--Statement of authorization under 14
CFR Part 212 to the extent necessary to permit Emirates to display the
designator code of SriLankan Airlines Ltd.(“UL”) on flights operated
by Emirates between the U.A.E. and the United States.

If renewal, date and citation of last action:  New authority

Applicant(s) representative:  Jeffrey A. Manley (202) 663-6670 (for both
carriers)

DOT Analyst:  Gordon H. Bingham (202) 366-2404

Responsive pleadings:  None filed

DISPOSITION

Action:  Approved							Action date:  November 1, 2004

Effective dates of exemption authority granted SriLankan Airlines: 
November 1, 2004-November 1, 2006

Effective dates of the statement of authorization granted Emirates: 
November 1, 2004-November 1, 2006

Basis for approval (bilateral agreement/reciprocity):  Air Services
Agreements between the United States and Sri Lanka (for SriLankan
Airlines) and between the United States and the U.A.E. (for Emirates)

Except to the extent exempted/waived, this authority is subject to the
terms, conditions, and limitations indicated:  X  Standard exemption
conditions attached for both SriLankan Airlines & Emirates.

Special conditions/Partial grant/Denial basis/Remarks:  Based on the
record in this case, we found that SriLankan Airlines is financially and
operationally qualified to perform the services authorized above.  

However, we are unable to find that SriLankan Airlines is substantially
owned and effectively controlled by Sri Lankan nationals.  Specifically,
the applicant states that it is owned by the Government of Sri Lanka
(51%) and its codeshare partner, Emirates (44%).  In addition, SriLankan
Airlines’ chairman and four of its six directors are citizens of Sri
Lanka.  In spite of the fact that we are unable to find that SriLankan
Airlines is substantially owned and effectively controlled by homeland
nationals, we find it appropriate to waive our ownership and 

2

control requirements.  The carrier is properly licensed and designated
by the Government of Sri Lanka to perform the proposed services, and
there is no evidence on the record which would suggest that the
ownership of the carrier would be inimical to U.S. aviation policy or
interests.  

By memorandum dated October 21, 2004, the FAA noted that it has not
conducted an assessment of Sri Lanka’s civil aviation authority under
the FAA’s International Aviation Safety Assessment program, and stated
that it has no safety information on SriLankan Airlines.  Based on the
advice of the FAA and the evidence in the docket, we found that there
was no basis to find that SriLankan Airlines was unqualified to conduct
the proposed code-share operations with Emirates.

The statement of authorization granted to Emirates is subject to the
following conditions:

(a)  The statement of authorization will remain in effect only as long
as (i) Emirates and SriLankan Airlines 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)  Emirates and/or SriLankan Airlines 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 the carriers decide to cease operating any or all of the approved
code-share services.  Such notices should be filed in Docket
OST-2004-18919.

(c)  Emirates and/or SriLankan Airlines 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 and the date on which the service will begin. 
Such notices should be filed in Docket OST-2004-18919.

(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; and that the passenger liability of the operating carrier
be unaffected.

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

Action taken by:   Paul L. Gretch, Director	

		      Office of International Aviation	

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_________

Under authority assigned by the Department in its regulations, 14 CFR
Part 385, we found that (1) the applicant was qualified to perform the
proposed operations; (2) our action was consistent with Department
policy; (3) grant of the authority was consistent with the public
interest; and (4) 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/deferred/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/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.

  Emirates states that, at present, New York is the only U.S. city at
which it operates services using its own aircraft.

  Emirates is wholly owned by the Government of Dubai.  In 1998,
Emirates, the government of Sri Lanka and SriLankan Airlines entered
into a shareholders agreement in which Emirates was granted management
rights over SriLankan Airlines for a period of ten years.  Under the
agreement, the government of Sri Lanka retains majority (51%) share
ownership and control of the applicant and majority representation on
the board of directors, including the sole right to select the chairman
of the board.  

  The two remaining positions are held by citizens of the United
Kingdom.  All but two of SriLankan Airlines’ key management positions
are held by citizens of Sri Lanka.

  SriLankan Airlines may not itself operate flights to or from the
United States without further order of the Department.

  We expect this notification to be received within 10 days of such
noneffectiveness or of such decision.

05/2004

