Hawaiian Airlines, Inc.

OST-2007-29103 - Exemption - US-Philippines

August 27, 2007

Application for an Exemption

Hawaiian intends to offer scheduled air service starting in March 2008 between Honolulu, Hawaii and Manila, using Boeing 767 aircraft. It is Hawaiian's plan to start service with four or greater frequencies per week. Hawaiian understands that the U.S. has designated Continental Airlines, United Airlines, and Northwest Airlines as the three U.S. carriers to serve these points via Route 2. However, United and Continental are currently not providing service via Route 2, leaving two unused designations for U.S. carriers under the Agreement. As a result, Northwest Airlines, the only U.S.-flag carrier currently providing service to the Philippines, enjoys no competition from other U.S. carriers. Likewise, Philippine Airlines operates without competition to and from Manila and Honolulu, Hawaii. Hawaiian would bring important new competition to the market and is prepared to begin service in March 2008.

Counsel: Dow Lohnes, Jonathan Hill, 202-776-2000, jhill@dowlohnes.com

September 5, 2007

Answer of United Air Lines

Hawaiian urges the Department to award it one of purportedly two presently unused designations on Route 2 of the U.S.-Philippines Air Service Agreement in order to operate its proposed services. These designations are currently held by United and Continental. United has no current plans to restart service to the Philippines. And assuming, as Hawaiian avers, that the same is true of Continental, United requests the Department to withdraw both unused designations and award one to Hawaiian. There is little point in the Department conducting a contest to determine which of the carriers holding dormant authority should be the one to surrender its authority. The Department, if it were to reclaim both unused designations and award one to Hawaiian, will be well positioned to award the remaining designation to any carrier with plans to serve the Philippines.

Counsel: United, Julie Oettinger, 202-296-2370, julie.oettinger@united.com

September 11, 2007

Answer of Continental and Continental Micronesia

Continental and Continental Micronesia have no objection to Hawaiian's application for a U.S.-Philippines Route 2 designation and Honolulu-Manila authority using the Route 2 designation held but unused by United. Although Hawaiian's application claims that Continental has an unused Route 2 designation and United relies on Hawaiian's claim, Continental Micronesia, not Continental, holds a Route 2 designation, and Continental Micronesia uses that designation to operate nonstop Guam-Manila service and to offer connecting service between Manila and Honolulu and other points via Guam.

Should the Department grant Hawaiian's request for broad authority from the United States via intermediate points to the Philippines and beyond it should also grant Continental Micronesia similarly broad Philippines authority.

Continental Micronesia has held nonstop Route 2 Guam-Manila authority since 1993 (See Order 1993-3-16) and used it consistently. Under these circumstances, Continental Micronesia's Route 2 designation could not lawfully be withdrawn. Since United's Route 2 designation is clearly dormant, however, as United's answer has admitted, a designation is available for use by Hawaiian.

Counsel: Crowell & Moring, Bruce Keiner, 202-624-2615, rbkeiner@crowell.com

September 21, 2007

Re: Request for Immediate Exemption Issuance

The reply period having expired in the above-referenced exemption docket, Hawaiian Airlines, Inc. requests that the Department immediately issue Hawaiian the requested exemption and ask the Department of State to designate Hawaiian to the Philippines government for service under Route 2 of the U.S./Philippines Air Transport Agreement. That Agreement allows three U.S. carriers to be designated on Route 2. At least one of the three designations is not being used. United Air Lines stated that they have no current plans to use the authority in this docket.

Counsel: Dow Lohnes, Jonathan Hill, 202-776-2725, jhill@dowlohnes.com

Filed August 27, 2007 | Issued September 28, 2007

Notice of Action Taken

Scheduled foreign air transportation of persons, property and mail between the United States via intermediate points to the Philippines and beyond, and to integrate this authority with all of its other current and future authority.

Hawaiian also requests, in this connection, that it be designated to serve the U.S.-Philippines market on Route 2 of Annex I under the Air Transport Agreement between the United States and the Philippines. We are granting the carrier's request for exemption authority here to the extent that it is consistent with Route 2 of Annex I of the U.S.-Philippines aviation agreement.

The carrier's request for route integration authority is superseded by Order 2006-1-1, where the Department awarded the carrier a blanket route integration certificate. The 1995 Memorandum of Understanding which, interalia, limited frequencies on Route 2, expired September 30, 2003. Therefore, it is unnecessary to allocate frequencies for service on this route.

In its application, Hawaiian said it understood that Continental Airlines, United, and Northwest were all designated for Route 2 of Annex 1 but that only Northwest was using its designation. Hawaiian asks that it be awarded one of the two unused designations. United filed an answer stating that it has no current plans to restart services to the Philippines but if, as Hawaiian states, the same is true for Continental, United asks the Department to withdraw both unused designations and award one of them to Hawaiian. Continental and Continental Micronesia filed a joint answer advising that Continental Micronesia, not Continental, holds a Route 2 designation and does, indeed, operate service in the market. No other answers were filed. After reviewing the record in this proceeding, we have found that it is in the public interest that the designation of United to serve Route 2 under the Agreement be withdrawn and that Hawaiian be designated for the proposed services.

Continental and Continental Micronesia further state that if the Department should grant Hawaiian's request for broad authority in the U.S.-Philippines market that it should also grant such authority to Continental Micronesia. Continental Micronesia has not formally applied for the broader grant of authority. Should it do so, we would be prepared to award it authority comparable to that which we are granting here to Hawaiian.

By: Paul Gretch