 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, DC

Issued by the Department of Transportation on January 31, 2005

   NOTICE OF ACTION TAKEN -- DOCKET OST-2004-19420

________________________________________________________________________
_________________________________

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. (Continental);
Continental Micronesia, Inc.; and Korean Air Lines Co., Ltd (Korean) 
filed  10/18/04 for:

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

Scheduled foreign air transportation of persons, property, and mail
between any point or points in the United States and any point or points
in Korea directly and via intermediate points, and beyond Korea to any
point or points in third countries Continental and Continental
Micronesia are authorized to serve by certificate or exemption, and to
integrate this authority with their existing certificate and exemption
authority.  Initially the carriers intend to use this authority pursuant
to a code-share arrangement with Korean, but seek broad authority to
operate their own flights serving Korea and other points, as well as
offering code-share service.

XX  Statement of authorization for Continental and Continental
Micronesia under CFR Part 212 to:

Display the “KE” code of Korean on flights operated by Continental
and Continental Micronesia between (1) points in the United States, (2)
points in the United States and points in Korea (either nonstop or via
intermediate points in third countries), (3) points in the United States
and points in third countries, and (4) points in Korea and points in
third countries. 

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

Display the “CO” code of Continental on flights operated by Korean
between (1) points in Korea, 

(2) points in Korea and points in the United States (either nonstop or
via intermediate points in third countries, (3) points in Korea and
points in third countries, and (4) points in the United States and
points in third countries.

The City of Houston and the Greater Houston Partnership filed an answer
in support of the joint application. 

Applicant reps: R. Bruce Keiner (202) 624-2615 (Continental and
Continental Micronesia)

William H. Callaway, Jr. (202) 298-8660 (Korean)       DOT Analyst: 
Sylvia Moore (202) 366-6519

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D I S P O S I T I O N

XX  Granted (subject to conditions, see below)

The above action with respect to Continental and Continental
Micronesia’s exemption authority was effective when taken:  January
31, 2005, through   January 31, 2007 

The authority awarded by the statements of authorization granted was
effective when taken:  January___  2005, 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 Korea.

Except to the extent exempted or waived, this authority is subject to
the terms, conditions, and limitations indicated:     XX  Continental
and Continental Micronesia’s certificates of public convenience and 

	               necessity 

      XX  Standard exemption conditions (Attachment B)

Conditions: The route integration authority granted is subject to the
condition that any service provided under this exemption shall be
consistent with all applicable agreements between the United States and
the foreign countries involved.  Furthermore, (a) nothing in the award
of the route integration authority requested should be construed as
conferring upon Continental or Continental Micronesia rights (including
fifth-freedom intermediate and/or beyond rights) to serve markets where
U.S. carrier entry is limited unless the carrier wishing to serve such a
market (Continental or Continental Micronesia, as the case may be),
notifies the Department of its intent to serve that market and unless
and until the Department has completed any necessary carrier selection
procedures to determine which carriers(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
Continental’s or Continental Micronesia’s authority by virtue of the
route integration exemption granted here, but that are not then being
used by Continental or Continental Micronesia, the holding of such
authority by route integration will not be considered as providing any
preference for Continental or Continental Micronesia in a competitive
carrier selection proceeding to determine which carrier(s) should be
entitled to use the authority at issue.

The authority to serve intermediate and beyond points is limited to
countries with which the United States has signed open-skies agreements
and/or countries for which the carrier holds authority to serve under
certificates or exemptions issued by the Department, and for which it
holds route integration authority by virtue of either the present action
or other action of the Department.

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) Continental, Continental Micronesia and Korean 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)	Continental, Continental Micronesia and/or Korean 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-20043-18932.

 

(c)	Continental, Continental Micronesia and/or Korean 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, which carrier will be
operating the aircraft in the code-share market added, and the date on
which the service will begin.  (Such notice should be filed in this
Docket.)

(d)	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.

(e)	The authority to operate to third countries is subject to the
condition that any service provided under the statement of authorization
shall be consistent with all applicable agreements between the United
States and the foreign countries involved.  Furthermore, (i) nothing in
the award of this blanket statement of authorization should be construed
as conferring upon Continental or Continental Micronesia rights
(including code-share, fifth freedom intermediate and/or beyond rights)
to serve markets where U.S. carrier entry is limited unless the carrier
wishing to serve such a market (Continental or Continental Micronesia,
as the case may be), notifies the Department of its 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 (ii) should there be a request
by any carrier to use the limited-entry route rights that are included
in Continental’s or Continental Micronesia’s authority by virtue of
the blanket statement of authorization granted here, but that are not
then being used by Continental or Continental Micronesia, the holding of
such authority will not be considered as providing any preference for
Continental or Continental Micronesia in a competitive carrier selection
proceeding to determine which carrier(s) should be entitled to use the
authority at issue.

(f)	The authority granted here is specifically conditioned so that
neither Continental nor Continental Micronesia nor Korean shall give any
force or effect to any contractual provisions between themselves that
are contrary to these conditions.

________________________________________________________________________
______________

On the basis of data officially noticeable under Rule 24(g) of the
Department's regulations, we found the carriers qualified to provide the
exemption 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 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.

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

										Attachment A

Proposed Initial Routes

“KE” code on flights operated by Continental/Continental Micronesia

Guam		-		Majuro, Marshall Islands*

				Palau, Palau*

				Pohnpei, Federated States of Micronesia*

				Truk, Federated States of Micronesia*

				Yap, Federated States of Micronesia*

Houston	-		Dallas/Ft. Worth

				Honolulu

				Los Angeles

				San Francisco

“CO” code on flights operated by Korean

Seoul		-		Dallas/Ft. Worth

				Guam

				Honolulu

				Los Angeles

				San Francisco

				Tokyo (no local traffic)

* Continental Micronesia flight						

	

				Attachment B

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

 Continental states in its application that the Korean code will also be
displayed on flights operated by Continental’s code-share partner,
ExpressJet Airlines, Inc.  ExpressJet does not require a statement of
authorization since it operates only small aircraft as defined in
section 298.2 of the Department’s regulations (Section 212.1).  See
Attachment A for the routes Continental and Continental Micronesia and
Korean initially propose to serve.

 Continental Micronesia will not be placing its own code on flights
operated by Korean.  

 This condition applies only with respect to flights operated under this
exemption by Continental or Continental Micronesia.  It is not
applicable to flights operated by Korean on which Continental or
Continental Micronesia is holding out service on a code-share basis with
Korean.

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

 The notice in paragraph (c) above can be used for this notification.

