OST-97-2487 | May 7, 1997

Application of

for an exemption from 49 U.S.C. § 41303 pursuant to 49 U.S.C. § 40109 )

Dated: May 7, 1997

Pursuant to 49 U.S.C. § 40109, ALM 1997 Airline N.V. ("ALM 1997") hereby applies for exemptions from 49 U.S.C. § 41303 to the extent necessary to provide scheduled foreign air transportation of persons, property and mail between (1) a point or points in the Netherlands Antilles; the intermediate points Aruba, Santa Domingo, Dominican Republic; Port-au-Prince, Haiti; and Kingston and Montego Bay, Jamaica; and the co-terminal points Miami, Florida; New York, New York; and San Juan, Puerto Rico; (2) Curacao and the terminal point Ft. Lauderdale, Florida, via the intermediate point Aruba; (3) Curacao/Bonaire and the terminal point Atlanta, Georgia via the intermediate point Aruba; and (4) Curacao/Bonaire and the terminal point Miami, Florida via the intermediate point Puerto Plats, Dominican Republic. ALM 1997 also requests an exemption from § 41303 to the extent necessary to operate passenger or cargo charters to and from the U.S. in accordance with Part 212 of the Department's Regulations.

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ALM 1997 requests that its exemption to provide scheduled foreign air transportation between a point or points in the Netherlands Antilles; the intermediate points Aruba, Santo Domingo, Dominican Republic; Port-au-Prince, Haiti; and Kingston and Montego Bay, Jamaica; and the co-terminal points Miami, Florida; New York, New York; and San Juan, Puerto Rico; and its exemption to provide charters be granted for a period of two years or until 90 days after the Department transmits to the President a final order granting the contemporaneously filed joint application of ALM 1997 and ALM Antillean Airlines N.V. ("ALM") for the transfer to ALM 1997 of ALM's foreign air carrier permit, which authorizes the same foreign air transportation services. In the case of the exemptions referred to in clauses (2) through (4) above, ALM 1997 requests that its exemptions remain in effect for a period of two years.

In support of its application, ALM 1997 states as follows:

1. ALM 1997 has today filed a joint application with ALM under 49 U.S.C. § 41303 for transfer to ALM 1997 of ALM's foreign air carrier permit in order to authorize ALM 1997 to carry on, as the corporate successor to ALM, the foreign air transportation services which ALM currently provides pursuant to the terms of such permit. Both ALM 1997 and ALM are owned by the Government of the Netherlands Antilles, which has decided to re-organize ALM. As explained in the carriers' joint application, this re-organization involves the transfer to ALM 1997 of all of ALM's assets. Upon the closing of the re-organization, the

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Government intends to have ALM 1997 assume responsibility to operate all of the air transportation services currently being provided by ALM, and for ALM to cease operations. ALM 1997 will accept responsibility to provide transportation to all passengers holding reservations on ALM and to assume all of ALM's other obligations to such passengers; the re-organization should have no effect at all on the traveling public, who will receive the same service, utilizing the same equipment, operated by the same crews, that ALM would have provided.

In order to permit ALM 1997 to commence operations while the joint application to transfer ALM's permit is pending, ALM 1997 is filing this exemption application. Because ALM is incurring substantial, on-going operating losses under its current corporate structure, the Government of the Netherlands Antilles wants to close the re-structuring of ALM as quickly as possible. However, such restructuring cannot be concluded until after ALM 1997 receives from the Department the authority necessary for ALM 1997 to continue the services ALM currently operates to and from the United States. /3

1/ ALM 1997 will separately file with the Department (and serve as required) applications for Statements of Authorization to provide certain code-shared services that the Department has authorized ALM to provide, and to be substituted for ALM as an applicant in all pending proceedings. Upon the grant of all of these applications, ALM 1997 will initiate service to the U.S. and ALM will cease operations. Assuming the Department has acted on all of these applications by May 23, 1997, ALM 1997 would expect to start service to the U.S. immediately thereafter.

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2. The joint application of ALM and ALM 1997 for transfer of ALM's permit to ALM 1997 contains the evidentiary material requested by 14 C.F.R. 211.20 to process that application. That application and exhibits demonstrate that ALM 1997 is fit, willing, and able to operate the services requested herein. ALM 1997 requests that this evidentiary material be incorporated in this exemption application by reference insofar as it is required to process the instant application.

4. The name and address of the air transport authority of the Government of the Netherlands Antilles having regulatory jurisdiction over ALM 1997 is:

The Department of Civil Aviation of the Netherlands Antilles

Seroe Mahuma

Curacao, Netherlands Antilles

5. ALM 1997 requests an exemption authorizing it to engage in scheduled and charter foreign air transportation of persons, property and mail to the same extent that ALM has been authorized to provide such transportation

2/ ALM 1997 is wholly owned by a holding company, ALM 1997 Holding N.V., a Netherlands Antilles corporation. The Government of the Netherlands Antilles owns 95% of the capital stock of the holding company; the remaining 5% is owned by KLM Royal Dutch Airlines.

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pursuant to the terms of the foreign air carrier permit issued to it, and the terms of various exemptions that ALM has been granted by the Department. /3

ALM 1997 intends to provide scheduled foreign air transportation over the same routes, utilizing the same aircraft and crews as ALM. /4 ALM 1997 intends to initiate these services as soon as possible, and the carrier therefore requests the Department to act on this application as soon as possible to enable it to commence operations to replace those of ALM without interruption.

6. The grant of this application will be consistent with the public interest. The services that ALM 1997 proposes to operate either are provided for in the 1957 Air Transport Services Agreement between the U.S. and the Kingdom of the Netherlands pertaining to air services between the U.S. and Kingdom territory in

3 ALM has been granted exemptions pursuant to Order 96-10-13 (October 8, 1996) (renewing exemption to serve Puerto Plato, Dominican Republic as an intermediate point on Curacao/Bonair-Miami operations, through September 20,1997), Notice of Action Taken in Docket OST-96-1720 (October 8, 1996) (renewing exemption to serve Curacao/Bonaire-Atlanta via Aruba, through September 20,1997), and Order 96-12-28 (December 30, 1996) (granting an exemption to serve Curacao-Ft. Lauderdale via Aruba, through October 22, 1997). In re-issuing each of these exemptions, ALM 1997 requests that the Department grant it authority to provide these services for a period of two years in order to reduce the administrative burden on the Department of having to process renewal applications sooner. None of these exemptions is controversial and granting ALM 1997 authority for a period of two years would not be inconsistent with actions the Department has taken previously with regard to foreign air carrier exemptions. See, e.g., Order 96-6-24 (June 10, 1996).

4 ALM 1997 will operate its services with three (3) leased MD-82 series aircraft and four (4) leased DHC-8-300 aircraft. Exhibit ALM-1.

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the Caribbean, or have already been authorized by the Department on the basis of comity and reciprocity.

7. As noted above, the Government of the Netherlands Antilles has decided to reorganize ALM in an effort to reduce costs and avoid further operating loses on the essential air services ALM has been providing. The reorganization will result in the transfer of all of ALM's assets to ALM 1997. So that ALM 1997 may continue to provide the same high quality air service between the Netherlands Antilles and the United States currently offered by ALM, ALM 1997 requests this exemption so that it may assume responsibility for the operation of ALM's current schedules.

The services that ALM 1997 proposes to operate will provide numerous public benefits. The air services available between points in the U.S. and the islands of Curacao and Bonaire are quite limited, and are essential to the wellbeing of the islands' tourist-based economy; Curacao is the most populous of the five island territories that comprise the Netherlands Antilles and is the seat of the Central Government. /5 Any interruption of this service would have a severe adverse effect on the economy of the Netherlands Antilles, would reduce the air service options available to U.S. and Antillean consumers traveling between points in the

5/ American Airlines is the only U.S. carrier that operates scheduled passenger service to Curacao. United Airlines presently serves Curacao and the island of Bonaire through a code-sharing arrangement with ALM.

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U.S. and the Netherlands Antilles, and would reduce competition in the U.S.Netherlands Antilles air travel market.

8. Grant of this application will not constitute a major action within the meaning of 14 C.F.R. Part 313. As a result, ALM 1997 need not submit additional information about the energy consumption and energy efficiency consequences of its proposal.

WHEREFORE, ALM 1997 Airline N.V. requests the Department to grant this application or to grant it such other or further relief as is consistent with public interest. Respectfully submitted,

BRUCE H. RABINOVITZ

LISA A. HARIG

GINSBURG, FELDMAN & BRESS, CHARTERED

1250 Connecticut Avenue, N.W.

Suite 700

Washington, D.C 20036

(202) 637-9036

Counsel for ALM 1997 AIRLINE N.V.

DATED: May 7, 1997