US-Mexico Economic Authority Issued to US Air Carriers

Order 2008-3-12
OST-2008-0076

Issued and Served March 12, 2008

Order Simplifying Licensing for Certain US-Mexico Codesharing Arrangements

Under the U.S.-Mexico aviation agreement, up to a total of two (and, in certain markets, up to a total of three), U.S. carriers may be designated to provide direct-carrier (own aircraft) services on a given city-pair route. The agreement also provides that the United States may authorize up to ten U.S. carriers to provide code-share services on a given city-pair route and must notify the Government of Mexico of such authorizations.

In granting requests by U.S. carriers for economic authority to support code-share-only service with a U.S. carrier partner, it has been our practice to identify specifically, as part of the authority granted, the U.S. carrier on whose aircraft the code-share service will be provided. This practice has resulted in the need for U.S. carriers to seek amended economic authority whenever they change their U.S. partner, or add an additional partner, with which they intend to provide code-share services.

In furtherance of our streamlining initiatives, and in the interest of easing regulatory burdens and enhancing administrative efficiency, we will no longer make the identity of the U.S. direct-carrier partner a part of the economic authority granted. Effective immediately, and unless a future authority should specifically state otherwise, economic authority to support code-share-only service with another U.S. air carrier(s) will reference, for illustrative purposes only, the U.S. direct-carrier information presented in the application. As a result, the U.S. direct-carrier information will not restrict the underlying economic authority for the U.S. code-share carrier. By removing this limitation, a U.S. air carrier that is authorized to serve a given city-pair route by code sharing on a U.S. direct-carrier’s flights may change, add, or subtract a U.S. direct-carrier partner without the need to amend its underlying economic authority to serve the U.S.-Mexico city-pair market. The U.S. code-share carrier would simply request, through the appropriate procedures already in place and which remain unchanged, that the Department issue an amended code-share notification to the Mexican aviation authorities, changing or adding the name of the new or additional U.S. direct carrier(s) on the subject city-pair route. This new licensing practice will allow carriers to more quickly respond to, and implement, operational changes in this competitive environment.

The relief provided by this Order will also apply to existing U.S. carrier economic authority to provide code-share-only service in a given U.S.-Mexico city-pair market with a U.S. partner. Where the Department has previously issued authority to a U.S. carrier to support code-share-only U.S.-Mexico service, and the U.S. direct-carrier partner(s) was identified as part of the economic authority granted, the U.S. direct-carrier information will now be deemed illustrative only.

By: Michael Reynolds

US-Mexico Economic Authority Issued to US Air Carriers

Order 2008-3-12
OST-2008-0076

Issued and Served March 12, 2008

Order Simplifying Licensing for Certain US-Mexico Codesharing Arrangements

Under the U.S.-Mexico aviation agreement, up to a total of two (and, in certain markets, up to a total of three), U.S. carriers may be designated to provide direct-carrier (own aircraft) services on a given city-pair route. The agreement also provides that the United States may authorize up to ten U.S. carriers to provide code-share services on a given city-pair route and must notify the Government of Mexico of such authorizations.

In granting requests by U.S. carriers for economic authority to support code-share-only service with a U.S. carrier partner, it has been our practice to identify specifically, as part of the authority granted, the U.S. carrier on whose aircraft the code-share service will be provided. This practice has resulted in the need for U.S. carriers to seek amended economic authority whenever they change their U.S. partner, or add an additional partner, with which they intend to provide code-share services.

In furtherance of our streamlining initiatives, and in the interest of easing regulatory burdens and enhancing administrative efficiency, we will no longer make the identity of the U.S. direct-carrier partner a part of the economic authority granted. Effective immediately, and unless a future authority should specifically state otherwise, economic authority to support code-share-only service with another U.S. air carrier(s) will reference, for illustrative purposes only, the U.S. direct-carrier information presented in the application. As a result, the U.S. direct-carrier information will not restrict the underlying economic authority for the U.S. code-share carrier. By removing this limitation, a U.S. air carrier that is authorized to serve a given city-pair route by code sharing on a U.S. direct-carrier’s flights may change, add, or subtract a U.S. direct-carrier partner without the need to amend its underlying economic authority to serve the U.S.-Mexico city-pair market. The U.S. code-share carrier would simply request, through the appropriate procedures already in place and which remain unchanged, that the Department issue an amended code-share notification to the Mexican aviation authorities, changing or adding the name of the new or additional U.S. direct carrier(s) on the subject city-pair route. This new licensing practice will allow carriers to more quickly respond to, and implement, operational changes in this competitive environment.

The relief provided by this Order will also apply to existing U.S. carrier economic authority to provide code-share-only service in a given U.S.-Mexico city-pair market with a U.S. partner. Where the Department has previously issued authority to a U.S. carrier to support code-share-only U.S.-Mexico service, and the U.S. direct-carrier partner(s) was identified as part of the economic authority granted, the U.S. direct-carrier information will now be deemed illustrative only.

By: Michael Reynolds