LAN Airlines S.A.

OST-2005-23236 - Exemption - Ecuador-US All-Cargo
Undocketed - Statement of Authorization - Ecuador-US Wet-Lease

The primary objection raised by Continental and Delta is a familiar one, which each has raised in prior proceedings in which Lan Ecuador has requested authority to provide bilaterally- based U.S.-Ecuador service. As in past proceedings, Continental and Delta seek to prevent Lan Ecuador from introducing services that are expressly contemplated by the U.S.-Ecuador bilateral agreement on the grounds that they have been unable to commence services that clearly are outside the agreement. Specifically, each carrier argues that, because the Government of Ecuador thus far has not permitted extra-bilateral code-share services, the Department should deny Lan Ecuador's request for charter authority and Lan Airlines' related request for an amended statement of authorization.

Annex II of the U.S.-Ecuador agreement expressly provides that cargo charter flights will be authorized on the basis of reciprocity and that sympathetic consideration will be extended to Fifth Freedom cargo charter flights. The agreement does not address code-sharing. While the Department has discretion to grant Lan Ecuador's request, such discretion is guided by several factors, the most important of which is reciprocity. See Order 2001-12-10 at 3 (Application of Air 2000 Limited).

Renewal of exemption from 49 U.S.C. 5 41301 to (1) engage in scheduled foreign air transportation of persons, property and mail from points behind Chile via Chile and intermediate points to a point or points in the United States and beyond; and (2) engage in scheduled foreign air transportation of property and mail between the United States and any point or points.

At the time of our last action the applicant was still operating under the name “Lan Chile S. A,” By letter dated September 23, 2004, the Department acknowledged the carrier’s change of name to Lan Airlines S.A.

OST-2005-23236 - Exemption - Ecuador-US All-Cargo
Undocketed - Statement of Authorization - Ecuador-US Wet-Lease

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/

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.

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.

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.

OST-2005-21121 - Exemption under 49 USC 40109 Permitting Registration of Trade Name Pursuant to 14 CFR 215

The TACA Carriers have found, through experience, that the ability to use a common code and brand in their services to the United States is an effective marketing tool, and have no objection to renewal of the LAN Carriers' equivalent authority permitting them to similarly use a common code and brand. However, the TACA Carriers' request for amendment and renewal of their exemption permitting them to use a common code and brand has been pending before the Department of Transportation for nearly nine months, since January 25, 2006 (OST-2004-17355). The TACA Carriers believe fundamental fairness requires that their pending application be approved before or at least contemporaneously with the approval of the LAN Carriers' renewal request.

OST-2005-21121 - Exemption under 49 USC 40109 Permitting Registration of Trade Name Pursuant to 14 CFR 215

The LAN Carriers have no objection to approval of the TACA Carriers' pending application for amendment and renewal of their authority to use a common brand and code. However, the LAN Carriers do not believe a decision on their pending renewal application should be delayed while the Department completes its review of the TACA Carriers' application. Unlike the LAN Carriers' application, the TACA Carrier's application was opposed. Whatever the merits of that opposition, both applications involve different considerations and parties, and the disposition of one application should not affect the other.

OST-2005-21121 - Exemption under 49 USC 40109 Permitting Registration of Trade Name Pursuant to 14 CFR 215

The one-year duration of the authority we granted is consistent with what we granted previously in this matter and with our usual policy in the circurnstanccs presented. We, therefore, dismissed the application to the extent that it sought authority for a longer period.

This order concerns violations by LAN Airlines, S.A. of the requirements of 14 CFR Part 382 (Part 382), limited to the filing of annual reports detailing disability-related complaints that the foreign air carrier received from passengers in calendar years 2004 and 2005. Part 382 implements the Air Carrier Access Act, 49 U.S.C. 41705, and violations of that part also violate the ACAA. This order directs LAN to cease and desist from future similar violations of Part 382 and the ACAA and assesses the carrier $30,000 in civil penalties.

OST-2005-21121 - Exemption under 49 USC 40109 Permitting Registration of Trade Name Pursuant to 14 CFR 215

LAN Airlines, S.A. and LAN Peru, S.A. hereby request that the Department of Transportation renew the exemption and statement of authorization granted to them in the above-captioned docket permitting them to use the trade name "LAN" and the "LA" designator code in their services to and from the United States. The Joint Applicants request renewal of their existing authorities for at least a two-year period on their existing terms and conditions.

Transporte Aereo S.A. d/b/a LAN Express does not request renewal of its authority to use the "LAN" brand and "LA" code in services to and from the United States.

Consumer awareness of the LAN brand continues to grow, generating valuable commercial benefits for the Joint Applicants, just as the Department and the Joint Applicants anticipated. The Joint Applicants' continued ability to use the "LAN" brand and "LA" code is critically important to the ongoing success of their marketing efforts, which incorporate and to a significant and increasing degree rely on a single brand and code.

Counsel: Zuckert Scoutt, Charles Simpson, 202-298-8660, cjsimpson@zsrlaw.com for Lan Airlines and Lan Express / Squire Sanders, Marshall Sinick, 202-626-6651, msincik@ssd.com for Lan Peru

Renewal of exemption from 49 USC §41301 to permit the applicant to engage in: 1) scheduled foreign air transportation of persons, property and mail from points behind Chile via Chile and intermediate points to a point or points in the United States and beyond; and (2) scheduled foreign air transportation of property and mail between the United States and any point or points.