OST-96-1896 / Aeromexico / Exemption Renewal / Mexico City-Austin/Washington / September 22, 1997

NOTICE: Any person may support or oppose this application by filing an answer and serving a copy of the answer on counsel for Aerovias de Mexico, S.A. de C.V., and upon persons served with this application no later than October 7,1997.

DATED: September 22, 1997

Application of

AEROVIAS DE MEXICO, S.A. DE C.V.

for Renewal of an Exemption from 49 U.S.C. § 41301.

(Mexico City-Austin/Washington)

Pursuant to 49 U.S.C 40109(c), Aerovias de Mexico, S.A. de C.V. ("Aeromexico") respectfully requests renewal of the exemption authority granted by Notice of Action Taken dated November 22, 1996, and confirmed in Order 96-12-38, to engage in foreign air transportation of persons, property and mail between Mexico City, Mexico, on the one hand, and Austin, Texas, and Washington, D.C., on the other. The exemption authority currently is set to expire November 22, 1997. By this application, Aeromexico intends to invoke the automatic extension provisions of 5 U.S.C. § 558(c) and Part 377 of the Department's Special Regulations. The renewal is requested for one year. In support of this application, Aeromexico states as follows:

1. Aeromexico is a flag carrier of the United Mexican States and currently holds a foreign air carrier permit

- 2 - Aerovias de Mexico, S.A. de C.V. Exemption

which authorizes service between Mexico and numerous U.S. points. Order 91-5-25. Pursuant to its permit and various exemption authorities, Aeromexico provides extensive service between Mexico and the United States.

2. By this application, Aeromexico seeks renewal of its exemption authority to provide service between Mexico City, Mexico, on the one hand, and Austin, Texas, and Washington, D.C., on the other. Aeromexico currently is offering two daily round trips in Mexico City-Austin market via a code share arrangement with Delta Airlines at the Dallas gateway, and two daily round trips between Mexico City and Washington via a code share arrangement with Delta at the Atlanta gateway. The authority is set to expire on November 22, 1997. /1 Aeromexico desires to continue serving these markets and, thus, seeks renewal of the exemption authority.

3. Effective November 21, 1991, the governments of the United Mexican States and the United States amended the 1960 Air Transport Agreement by establishing new route annexes describing the routes available for carriers designated by each country. Under Annex I, a carrier designated by the Government of Mexico is entitled to operate "Ef]rom a point

- 3 - Aerovias de Mexico, S.A. de C.V. Exemption

or points in Mexico to a point or point in the United States." The Agreement provides further that "[e]ither Party may designate more than one airline on the same city pair when this has been mutually agreed by the Parties." By Note dated November 1,1996, Aeromexico was designated for the Mexico City-Austin route, and by Note dated May 1, 1991, it was designated for the Mexico City-Washington route. Both designations continue in effect. In addition, Aeromexico continues to hold authority from the DGAC to serve the markets.

4. Under Section 416 (b), the Department may grant an exemption if it finds that such is consistent with the public interest. It is clear that the designation of a carrier by its homeland government is the most significant factor in determining whether grant of an application is in the-public interest. For example, in Linea Aerea Nacional de Chile, Foreign Permit, 26 C.A.B. 604 (1958), the Civil Aeronautics Board stated as follows:

See also Application of Aerovias Venezolanas S.A., Order 868-88 at 3 (provision for authority in a bilateral is prima facie evidence that grant thereof is in the public

- 4 - Aerovias de Mexico, S.A. de C.V Exemption

interest); Aerolineas Peruanas Foreign Permit, 31 CAB. 181 (1960). The same findings are warranted here, where Aeromexico has been designated for the routes in issue.

6. Given the fact that under the bilateral Aeromexico has been designated for the authority requested herein and the fact that the exemption will only be effective for one year, the request is limited in scope and should be noncontroversial. Moreover, grant of the exemption is warranted because of the significant service benefits resulting from Aeromexico's service in the Mexico City-Austin/Washington markets.

WHEREFORE, Aerovias de Mexico, S.A. de C.V. respectfully requests that the Department grant renewal of the exemption referred to herein.

Respectfully submitted,

William C. Evans

VERNER, LIIPFERT, BERNHARD, McPHERSON AND HAND, CHARTERED

Suite 700

901 - 15th Street, N.W.,

Washington, D.C. 20005

(202) 371-6030

Counsel for Aerovias de Mexico, S.A. de C.V.

DATED: September 22, 1997