 

			  UNITED STATES OF AMERICA

		        DEPARTMENT OF TRANSPORTATION

			  OFFICE OF THE SECRETARY

			          WASHINGTON, D.C.

Issued by the Department of Transportation on April 13, 2006

NOTICE OF ACTION TAKEN -- DOCKET OST-2005-23236 and Undocketed

________________________________________________________________________
________________________________________________________

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: Aerolane, Lineas Aereas Nacionales del Ecuador S.A. 									
    d/b/a Lan Ecuador  (Docket OST-2005-23236)			Date Filed: December 2,
2005

Relief requested:  Exemption from 49 U.S.C. § 41301 to engage in
charter foreign air transportation of property and mail between a point
or points in Ecuador and a point or points in the United States and
between points in the United States and third countries, in accordance
with the provisions of the U.S.-Ecuador Air Transport Agreement, as
amended, and pursuant to 14 CFR Part 212 of the Department’s
regulations.

Applicant: Lan Airlines, S.A. and Lan Cargo, S.A. (Undocketed)		Date
Filed: December 2, 2005, as 

										    amended December 29, 2005

Relief requested:  Amended statement of authorization under 14 CFR Part
212 for Lan Airlines, and initial statement of authorization for Lan
Cargo, to permit them to wet lease aircraft to Lan Ecuador for the
conduct of the operations described above.

If renewal, date and citation of last action: New authority for Lan
Ecuador and Lan Cargo.  Lan Airlines holds a statement of authorization,
granted on November 2, 2005, to wet lease aircraft to Lan Ecuador for
that carrier’s scheduled operations to and from the United States.

Applicant representative:  Charles J. Simpson, Jr. & Shannon M. Moyer 
(202) 298-8660

                                                                     

DOT Analyst:  Shelita A. Smith  (202) 366-1226

Responsive pleadings:  Continental Airlines, Inc. and Delta Air Lines,
Inc. filed answers to the applications.  Both carriers state that we
should either deny the requests or, in the alternative, grant them, in
whole or in part, for a period of fewer than 180 days.  They state that
Annex II to the U.S.-Ecuador Agreement, which provides for charter
operations, has expired, so Lan Ecuador’s request is extrabilateral in
nature.  They also state that the Government of Ecuador prevents U.S.
carriers from operating under cooperative marketing arrangements, such
as on a third-country code-share basis; that the Department has
previously noted the restrictive nature of the U.S.-Ecuador bilateral
relationship and has attempted to resolve this matter; but that there
has been no meaningful progress to date to resolve this issue.  They
state that, under these circumstances, the Department should grant no
new authority to Ecuadorian carriers until Ecuador is willing to grant
code-sharing authority to U.S. carriers.

Lan Ecuador filed a reply, stating that the services it seeks to conduct
are expressly contemplated by the U.S.-Ecuador Agreement, and that while
Annex II to that Agreement provides for charter operations, it does not
provide for code sharing by carriers of the parties.  It further states
that the objectors have not shown that the Government of Ecuador has
denied U.S. carriers authority similar to that requested by Lan Ecuador.
 It also states that while, as the objectors note, the expiration date
of Annex II has passed, its terms are still being observed by the
parties.  Finally, Lan Ecuador states that it needs to wet lease
aircraft to conduct operations to and from the United States because of
Ecuador’s Category 2 status under the FAA’s International Aviation
Safety Assessment (IASA) program.

DISPOSITION

Action:  Approved, subject to conditions (see below)					Action date: 
April 13 2006

Effective dates of exemption authority granted:  April 13, 2006 –
April 13, 2007

Basis for approval (bilateral agreement/reciprocity): 

 

Except to the extent exempted/waived, this authority is subject to the
terms, conditions, and limitations indicated:

   X    Standard exemption conditions (attached)                  
Foreign air carrier permit   (          )

In the conduct of the services authorized, Lan Ecuador may conduct the
operations authorized herein only by using aircraft wet-leased from a
duly authorized and properly supervised U.S. or foreign air carrier. 
Lan Ecuador may not conduct U.S. operations with its own aircraft and
crews without further action by the Department.  In addition, in
accordance with 14 CFR §212.9(d), Lan Ecuador shall not perform any
charter flight unless the Department has granted a statement of
authorization for such operation (see Order 84-6-90).

Special conditions/Partial grant/Denial basis/Remarks:  

In reaching our decision here, we note that the cargo charter authority
which Lan Ecuador seeks is provided for in Annex II of the U.S.-Ecuador
Agreement, which states that both sides will authorize cargo charters
between Ecuador and the United States on the basis of reciprocity, and
will sympathetically consider requests to operate such charters to
points outside Ecuador and the United States.  Although the Annex has
expired by its terms, the United States and Ecuador are both continuing
to apply its terms as if it were still in place.  Thus, in our view, the
terms of Annex II form a basis for approval of this authority to Lan
Ecuador.  Moreover, as noted above, we are conditioning this authority,
as we have other grants of charter authority to carriers of Ecuador, on
the requirement that the carrier seek prior Department approval before
operating any charter flight to or from the United States (see Order
84-6-90).  

With respect to the request of Lan Airlines and Lan Cargo for authority
to wet lease, we note, as we have in previous grants of authority to Lan
Ecuador, including grants of authority for Lan Airlines to wet lease to
Lan Ecuador, that the IASA Category 2 status of Ecuador leaves Lan
Ecuador no recourse but to conduct its operations by wet lease, and that
the U.S. carrier opponents have not shown any recent cases where Chile,
the homeland of Lan Airlines and Lan Cargo, has withheld wet-lease
authority from a U.S. carrier.

It is true, as Continental and Delta note, that we have not, to date,
been successful in our efforts to persuade the Government of Ecuador to
permit the kinds of cooperative marketing arrangements, most
specifically codesharing, that they seek.  Nevertheless, we find that,
in the circumstances presented, including in particular the above cited
provisions of Annex II (and the absence of comparable provisions on
codeshare), grant of the cargo charter authority Lan Ecuador requests,
as conditioned, is warranted in the public interest, as is the grant to
Lan Airlines and Lan Cargo of the statements of authorization to wet
lease to Lan Ecuador for these services.

Action taken by:  Paul L. Gretch, Director	

		   Office of International Aviation	

________________________________________________________________________
________________________________________________________

Under authority assigned by the Department in its regulations, 14 CFR
Part 385, we found that (1) the applicant is 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:

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

05/2004

