Avolar Aerolineas, S.A. de C.V.

OST-2008-0314 - Exemption and Foreign Air Carrier Permit - Mexico-US

October 27, 2008

Application for an Exemption and Foreign Air Carrier Permit - Bookmarked

Motion for Confidential Treatment

Avolar requests authority to (1) provide scheduled foreign air transportation of persons, property and mail between Los Angeles and San Jose del Cabo and between Oakland and Tijuana, and (2) to conduct charters pursuant to Part 212 of the Department's regulations. Avolar proposes to begin services on these routes as soon as possible after receiving all necessary government authorizations. These flights will be operated utilizing B737-500 and B737-300 aircraft.

Avolar is a new Mexican airline, having commenced operations on September 7, 2005, as the original low-cost Mexican carrier. Avolar currently offers two flights per day between seven cities in Mexico. Avolar's service to the U.S. will allow U.S. travelers to experience and enjoy Avolar's extraordinary service and amenities, more fully discussed below.

Avolar's fleet consists of two B737-300 and one B737-500 aircraft. These aircraft are configured in an all-economy configuration with 136 and 120 seats, respectively. Avolar has two B-737 aircraft on order and holds an option for an additional two aircraft.

Avolar plans to focus its initial international operations on serving Los Angeles and Oakland, and as its fleet grows with demand, Avolar plans on expanding its affordable service to other U.S. cities.

Counsel: Zuckert Scoutt, John Gillick, 202-973-7939

November 12, 2008

Supplement No. 1

Recent industry press reports have indicated that Avolar's operating authority has not been renewed. On October 24, 2008, the Secretaria de Comunicaciones y Transportes did announce that it would not renew Avolar's operating authority, which was set to expire on October 28, 2008.

Earlier in the day on October 24, 2008, however, the Regional Court of Center II, Federal Court of Fiscal and Administrative Justice issued an order which maintains Avolar's operating authority in force.

Avolar does not believe that there is any merit to SCT's announcement and Avolar intends to continue to pursue this matter vigorously. The SCT has filed a response to the Court's order and Avolar expects that this matter will be resolved in the near future, perhaps as early as the end of next week. Avolar will keep the Department informed concerning further developments in this case.

As the comment period for Avolar's exemption application expires today, Avolar has no objection to a brief extension of the period for interested parties to file comments on its application.

Counsel: Zuckert Scoutt, John Gillick, 202-973-7939