OST-97-2481 | Dated: May 7, 1997

Notice: Pursuant to 14 C.F.R. § 302.406, any person may support or oppose this application by filing an answer and serving a copy of the answer on all persons served with this application. The due date for answers is May 22, 1997.

Application of

for an exemption from 49 U.S.C. § 41301(code-sharing)

Pursuant to 49 U.S.C. § 40109, Aero California S.A. de C.V. (Aero California) hereby submits this application for exemption from 49 U.S.C. § 41301 to conduct scheduled foreign air transportation of persons, property and mail between various points identified in Attachment 1 hereto. The requested exemption is required to facilitate full implementation of a proposed code-sharing arrangement between Aero California and American Airlines, Inc. (American), as described in the agreement attached to their joint application for statements of authorization under 14 C.F.R. Parts 207 and 212, which has been filed with the Office of International Aviation simultaneously with this Application.

In support of this Application, Aero California submits as follows:

1. Aero California is a corporation organized and existing under the laws of Mexico. It has continuously and successfully engaged in transporting persons, property and mail since 1967. Aero California is headquartered at La Paz, Baja California Sur International Airport. With its fleet of DC-9 aircraft, Aero California currently provides extensive services within Mexico and service between Mexico and the United States.

2. Aero California currently holds exemption authority from the Department to provide scheduled combination service between (1) the coterminal points Loreto, San Jose del Cabo, Culiacan, Hermosillo, La Paz and Manzanillo, Mexico, and the terminal point Los Angeles, California; (2) San Jose del Cabo, Mexico and Phoenix, Arizona; (3) Hermosillo, Mexico and Tucson, Arizona; (4) the coterminal points Mazatlan, Guaymas and Tijuana, Mexico, and the terminal point Los Angeles, California; and (5) Durango, Mexico and Los Angeles, California. This exemption was last renewed by Notice of Action Taken in Docket No. OST 96-1836 issued on October 18, 1996 and is effective through October 18, 1997. /1 Aero California has also filed an Application seeking new exemption authority to serve the

l/ Aero California's application for issuance of a foreign air carrier permit, Docket 42012, was originally filed on February 21, 1984. That application, as amended, is still pending before the Department.

3. DOT has previously found Aero California to be "operationally and financially qualified" to conduct operations between specified points in Mexico and the United States. The factors which supported those findings have not changed. Aero California continues to be licensed by the Mexican Ministry of Communications and Transportation to perform air transportation services .

4. Aero California and American have entered into an agreement under which they will offer code-share services on each other's flights with respect to traffic between the United States and Mexico. Under the Aero California/American agreement, Aero California will initially apply its "JR" designator on flights operated by American and American Eagle on route sectors identified in Attachment 1.

5. The Attachment 1 routes for which exemption authority is requested in this Application fall into two categories, as reflected in that Attachment. Section A lists cross-border gateway city pairs between which American currently operates flights on which Aero California proposes to apply its designator code. Section B lists seventy (70) U.S. points that Aero California would serve by placing its designator code on flights operated to/from those points by American and American Eagle. Aero California would serve these 70 U.S. points solely with respect to U.S./Mexico international traffic transported via any of the American-served gateway pairs identified in Section A (e.q., ACA-DFW-ABQ), or from or to twenty six (26) Mexican points served by Aero California via transborder flights operated either by Aero California (pursuant to its existing exemption authority or the additional authority that is the subject of its pending exemption application in Docket OST-97-2446) or American. /2 These 26 Mexican points are also identified in Section B of Attachment 1. Aero California's designator code would not be displayed with respect to domestic service between two U.S. points. To the extent that Aero California may require authority to integrate its current transborder exemption authority and the additional exemption authority that is the subject of its pending exemption application in Docket OST-97-2446 with the authority requested in this Application, it hereby requests such authority.

2 For example, JR's code would apply on flights from Los Mochis (LMM) to Honolulu (HNL) with Aero California providing transborder flight service from LMM to LAX via one of the Mexican gateway cities it currently serves and AA providing flight service from LAX to Honolulu.

7. Aero California understands that U.S. and Mexican aviation authorities may be discussing the question of whether designations are required for a non-operating carrier in connection with code-sharing services. The Department has expressed the view that "bilateral restrictions on the number of carriers that may operate services from the same city-pair gateways should not apply to code-share services from those gateways, especially in the majority of cases in which the code-sharing carrier does not hold out service from that gateway." See Notice of Action Taken in Dockets OST-96-1896 and OST-96-1332 (Nov. 27, 1996). While the designation question may not yet be resolved, Aero California will request of the Mexican government that it be designated to serve the markets identified in Attachment 1 should a determination be made that such designation is required for code-share services.

8. Assuming that designations are required for non-operating carriers, and to the extent that another carrier may already be designated in a particular market not already identified as a double designation market in the U.S./Mexico bilateral agreement, Aero California will request that the market be identified as a double designation market under the procedures provided in the bilateral agreement. To the extent that available designations are fully utilized in a particular market, and assuming again designations are deemed required for code-share services, Aero California will not operate in excess of allowable designations.

9. American and Aero California are planning to implement their code share agreement by August 1, 1997, and require several months to arrange for that implementation. Accordingly, they request expedited approval of this Application so that advance marketing and sales of the proposed services can commence as soon as possible and the public can begin to benefit from the enhanced competition that will result from approval of the Application.

WHEREFORE, for the reasons stated above, Aero California respectfully requests that the Department of Transportation expeditiously approve this application for exemption authority so that it may provide code-share services on the routes described herein.

Respectfully submitted,

David H. Coburn

STEPTOE & JOHNSON ALP

1330 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 429-8063

Attorney for Aero California

Dated: May 7, 1997

ATTACHMENT 1

Section A.

Dallas/Fort Worth (DFW) - Acapulco (ACA)

Dallas/Fort Worth (DFW) - Cancun (CUN)

Dallas/Fort Worth (DFW) - Guadalajara (GDL)

Dallas/Fort Worth (DFW) - Leon (BJX)

Dallas/Fort Worth (DFW) - Mexico City (MEX)

Dallas/Fort Worth (DFW) - Monterrey (MTY)

Dallas/Fort Worth (DFW) - Puerto Vallarta (PVR)

Dallas/Fort Worth (DFW) - San Jose del Cabo (SJD)

Miami (MIA) - Cancun (CUN)

Miami (MIA) - Mexico City (MEX)

Los Angeles (LAX) - Guadalajara (GDL)

Chicago (ORD) - Mexico City (MEX)

Chicago (ORD) - Acapulco (ACA)

Section B.

Albuquerque (ABQ) Houston (IAH/HOU) Phoenix (PHX)

Amarillo (AMA) Indianapolis (IND) Pittsburgh (PIT)

Atlanta (ATL) Kansas City (MCI) Portland (PDX)

Austin (AUS) Las Vegas (LAS) Raleigh-Durham (RDU)

Bakersfield (BFL) Los Angeles (LAX) Reno (RNO)

Baltimore (BWI) Lubbock (LBB) Sacramento (SMF)

Boston (BOS) Maui (OGG) Salt Lake City (SLC)

Burbank (BUR) Memphis (MEM) San Antonio (SAT)

Carlsbad (CLD) Miami (MIA) San Diego (SAN)

Charlotte (CLT) Milwaukee (MKE) San Francisco (SFO)

Chicago (ORD) Minneapolis/St. Paul (MSP) San Jose (SJC)

Cincinnati (CVG) Monterey (MRY) San Juan (SJU)

Cleveland (CLE) Nashville (BNA) San Luis Obispo (SBP)

Columbus (CMH) New Orleans (MSY) Santa Barbara (SBA)

Corpus Christi (CRP) New York (JFK/LGAIEWR) Seattle (SEA)

Dallas/Fort Worth (DFW) Oakland (OAK) St. Louis (STL)

Denver (DEN) Oklahoma City (OKC) Tampa (TPA)

Des Moines (DSM) Omaha (OMA) Tucson (TUS)

Detroit (DTW) Ontario (ONT) Tulsa(TUL)

Fort Lauderdale (FLL) Orange County (SNA) Vail (EGE)

Fresno (FAT) Orlando (MCO) Washington (IAD/DCA)

Greensboro (GSO) Palm Springs (PSP) West Palm Beach (PBI)

Hartford/Springfield (BDL) Philadelphia (PHL) Wichita (ICT)

Honolulu (HNL)

Aero California will serve the above U. S. points as a code-share carrier in conjunction with American or American Eagle-operated flights via American-served transborder points identified in Section A above, as well as from/to the following points in Mexico served by Aero California: Aguascalientes (AGU), Chihuahua (CW), Ciudad Obregon (CEN), Cindad Victoria (CVM), Colima (CLQ), Culiacan (CUL), Durango (DGO), Guadalajara (GDL), Guaymas (GYM), Hermosillo (HMO), La Paz (LAP), Loreto (LTO), Los Mochis (LMM), Manzanillo (ZLO), Mazatlan (MZT), Mexico City (MEX), Monterrey (MTY), Morelia (MLM), Puebla (PBC), Puerto Vallarta (PVR), San Jose del Cabo (SJD), San Luis Potosi (SLP), Tepic (TPQ), Tijuana (TIJ), Torreon (TRC), Zihuatanejo (ZIH). All flights between these Mexican points and the above-listed U.S. points would be served through Aero California's or AA's U.S./Mexico gateway cities.