UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, DC

Issued by the Department of Transportation on January 24, 2005

   NOTICE OF ACTION TAKEN -- DOCKET OST-2004-19148

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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.  filed 9/15/04 for:

XX  Exemption for at least two years under 49 U.S. C. 40109 to the
extent necessary to permit United to display its designator code on
flights operated by Deutsche Lufthansa AG (Lufthansa) and other carriers
that operate flights on Lufthansa’s behalf on the following services:

Scheduled foreign air transportation of persons, property, and mail
between points in Germany; between points in the United States and
points in Germany, either nonstop or via third country intermediates;
and between points in Germany and points in third countries, either
nonstop or via third-country intermediates.  

The Air Carrier Association of America (ACAA) and Continental filed
answers to United’s application. 

The ACAA stated that under United’s proposal, a carrier could add
code-sharing listings whether or not it could fly to a particular market
on its own, and that United could list these flights even if it did not
have authority to operate them and would not have to identify which of
several carriers is actually operating.  The ACAA maintains that
United’s proposal would have a major impact on consumer choice and the
marketplace.

Continental did not object to United’s request so long as comparable
exemption authority is granted to Continental for code-share purposes. 
Continental urges the Department to grant the same broad code-share
exemption authority currently held by American and United for code
sharing with their U.K. partners to Continental and other carriers such
as United and US Airways.

United filed a consolidated reply and agreed with Continental that the
Department should establish a consistent policy and apply it to all
code-share partnerships between U.S. and foreign airlines.  United
states that ACAA apparently misconstrues United’s application, which
would not affect the ultimate level of United’s code sharing in
international city pairs, but rather would enable United to expedite and
reduce the cost of implementing additional code-share services with
Lufthansa.  United maintains that the Department has documented the many
consumer benefits of international code-share alliances between U.S. and
foreign carriers.

ACAA responded to United’s consolidated reply and stated that it
believes that once the Department completes a review of United’s
request and an analysis of the growth of code-sharing relationships, it
will decide that the authorization requested by United should not be
approved.  The ACAA states that as a result of the continuing expansion
of code-sharing involving multiple relationships, the Department should
review the overall impact of code-sharing on consumers and competition
before it considers any additional exceptions to the code-share
requirements. 

2

Applicant reps:  Jeffrey A. Manley (202) 663-6670)   DOT Analyst: Sylvia
Moore (202) 366-6519

DISPOSITION

XX  Granted (subject to conditions, see below)

The exemption authority granted was effective when taken:  January 24,
2005, through January 24, 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 the Federal Republic of Germany.

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)

	   XX  Conditions attached to United/Lufthansa blanket statements of
authorization (Order 

	           98-4-8)

Remarks:  We have decided to grant United exemption authority comparable
to the exemption authority granted other carriers with similar requests
pursuant to code-share arrangements with their foreign partners (i.e.,
American/British Airways, Northwest/KLM, and US Airways/Lufthansa). 
With regard to the concerns expressed by the ACAA, we find that the
conditions we have imposed, along with the regulations contained in 14
CFR Part 257, should provide the necessary degree of consumer
protection.  With regard to Continental’s comments, we note that we
are actively reviewing Continental’s pending applications in Dockets
OST-2004-19346 and OST-2004-19420 and expect to complete the process
shortly.  

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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 exemption authority was consistent with the
public interest; and (3) grant of the authority would not constitute a
major federal 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 ten (10) 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

								

 Those carriers include Lufthansa CityLine, Air Dolomiti, Condor
Flugdienst, and PrivatAir.

 United intends initially to use this authority to introduce scheduled
combination service between the United States and Libya by displaying
United’s designator code on flights operated by Lufthansa between
Frankfurt and Tripoli.

