OST-98-3739 / Air France / US-France All Points Authority / April 14, 1998

NOTICE: Answers supporting or opposing this application would normally be due on or before April 29, 1998. Air France however is requesting expedited action by the Department by Monday, April 20, 1998, and will poll carriers on the Service List to determine if there is any opposition. If there is potential opposition, Air France requests that the Department set Friday, April 17, 1998 as the due date for answers.

Application of

COMPAGNIE NATIONALE AIR FRANCE / Docket OST 98-3739

for exemption pursuant to 49 U.S.C. § 40109 )

(U.S.-France All Points Authority)

In support of its application, Air France states as follows:

1. - Air France is the flag carrier of the Republic of France. It has been providing scheduled service to the U.S. market since the close of the Second World War, and currently offers service with its own aircraft from Paris, France to New York, Newark, Chicago, Washington, Boston (effective June 19, 1998) Miami, Houston, Los Angeles and San Francisco. Air France provides U.S.-France service with a modern fleet of B-747, B-777, Airbus A340, Airbus A310, B-767 and Concorde aircraft.

2. Under the terms of the new Air Transport Agreement between France and the United States, signed ad referendum April 8, 1998, an Open Transatlantic regime is now in effect on U.S.-France routes. /1 The amended Route Schedule in Annex I authorizes services by Air France as a French carrier over the following route:

3. To take advantage of the new Agreement Air France is contemplating inauguration of a number of new code-share services on or about June 1, 1998. Illustrative schedules for new nonstop

1/ Under the new U.S.-France Agreement there is an open U.S.-France route description for French and U.S. carriers, but overall services are subject to weekly frequency limits and designation limits to be phased-out by April 1, 2003. In addition, code-sharing between U.S. and French carriers is authorized without restriction under the new Agreement, as is code-sharing with third-country carriers to points beyond France. However, U.S.-France code-sharing with third-country carriers via intermediate points is limited to four U.S. carrier code-share arrangements until April 1, 2003, when these restrictions on third country carrier code-sharing expire. See DOT Notice on New U.S.-France Route Opportunities (U.S.-France), dated April 13, 1998.

code-share services are set out in Exhibit A. In particular, Air France is contemplating new nonstop code-share services from Paris to Atlanta and Cincinnati on aircraft operated by Delta Air Lines. /2

In addition, Air France is contemplating new code-sharing services in cooperation with its U.S. alliance partners, Continental and Delta, from points in France to interior U.S. cities. At the present time code-share services beyond Air France's U.S. gateways of New York(JFK), Newark, Atlanta, Cincinnati, Houston and Los Angeles are planned for a number of U.S. cities including Cleveland, New Orleans, Denver, Dallas/Fort Worth, Detroit, Minneapolis, Orlando, Seattle, and San Diego. Exhibit B contains a complete list of the proposed U.S. domestic code-share services, and the U.S. airline that will operate the code-share flight over each of the domestic U.S. segments to be served. Other U.S. cities may be added to this list and served on a code-share basis as Air France gets closer to the June 1, 1998 start-up date for these new services.

4. Air France holds a foreign air carrier permit last issued by Order 76-2-25, January 7, 1976, and holds other U.S. operating authority by exemption. /3 Air France continues to be

3/ See Orders 93-3-3 and 95-2-47. Air France filed for renewal of its foreign air carrier permit and exemption authority in Docket 48777 on April 27, 1993, and invoked the automatic extension provisions of federal law (5 U.S.C. 558(c) as implemented by 14 CFR Part 377) to maintain the effectiveness of its permit and exemption authorities pending renewal. By Notice

owned by the government and nationals of France and to be licensed by the aeronautical authorities of France.

5. Air France requests that the exemption authority requested be granted as soon as possible and no later than April 30, 1998 and continue in effect for at least two years so that there is sufficient time to allow for an amended foreign air carrier application by Air France to be acted on by the Department. 4/ Air France requests that it be granted authority to serve "all points" in the United States so that Air France will have sufficient flexibility to mount code-share and other new services expeditiously and on short notice as authorized under the new Open Transatlantic Agreement.

6. Air France further requests that the exemption authority granted provide sufficient operational flexibility so that Air France can, among other things, coterminalize its U.S.-France services at various U.S. points; operate via intermediate and beyond points with full traffic rights where available; serve points on the routes in any combination and in any order; and transfer traffic from any of its services to any of its other services at any point on the routes.

WHEREFORE, Compagnie Nationale Air France requests that it be granted exemption authority to provide scheduled foreign air transportation of persons, property and mail between points in

4/ Air France intends to file an amended foreign air carrier application within the next 60 days.

France to and from a point and points in the United States. Air France requests that this authority be granted as soon as possible and no later than April 30, 1998, so that Air France can begin the advance marketing and sale of new U.S.-France code-share services scheduled to be inaugurated on or about June 1, 1998. Air France further requests that the exemption authority granted be for a duration of at least two years.

Respectfully submitted,

Michael F. Goldman

Bagileo, Silverberg & Goldman, L.L.P.

1101 30th St., N.W., Suite 120

Washington, DC 20007

Counsel for Compagnie Nationale Air France

April 14, 1998