Order 2016-6-5 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on the 10th day of June, 2016

Served: June 10, 2016

2016 U.S.- FREQUENCY ALLOCATION PROCEEDING

DOCKET DOT -OST-2016 -0021

ORDER

Summary

By this order the Department approves the requests of six U.S. carriers seeking authority to provide scheduled passenger services between the United States and points in Cuba, other than .1

Background

On February 16, 2016, the United States and Cuba signed a Memorandum of Understanding (MOU) that allows for the resumption of scheduled air services between the United States and Cuba. For scheduled combination or all-cargo services to and from Havana, under the terms of the MOU, U.S. carriers may operate up to twenty (20) daily round-trip frequencies. For scheduled combination or all-cargo services to and from each of the other nine (9) international in Cuba, U.S. carriers may operate up to ten (10) daily round-trip frequencies, for a total of ninety (90) daily non-Havana U.S.-Cuba round-trip frequencies.2

Also on February 16, 2016, by Order 2016-2-12, the Department instituted the 2016 U.S.-Cuba Frequency Allocation Proceeding to allocate the 20 daily round-trip frequencies that may be used for scheduled combination or all-cargo services between the United States and Havana, Cuba to the carrier or carriers selected, and to allocate the 10 daily round-trip frequencies that are

1 The Department will address the applications for scheduled services to Havana subsequently. 2 The nine airports, other than Havana’s José Marti International (HAV), that are authorized for international services are: the Ignacio Agramonte International Airport in Camagüey (CMW); the Jardines del Rey Airport in Cayo Coco (CCC); the Vilo Acuña Airport in Cayo Largo (CYO); the Jaime González Airport in Cienfuegos (CFG); the Frank País Airport in Holguín (HOG); the Sierra Maestra Airport in Manzanillo (MZO); the Juan Gualberto Gómez Airport in Matanzas (VRA); the Abel Santamaría Airport in Santa Clara (SNU); and the Antonio Maceo Airport in Santiago de Cuba (SCU). The MOU does not place limits on the number of carriers that may provide U.S.-Cuba services. available for scheduled combination or all-cargo service at each other point in Cuba to the carrier or carriers selected. The Department stated that it intends to award carriers that receive allocations underlying exemption authority to support their services. The Department also stated that it recognizes the eagerness of U.S. carriers to take advantage of these new Cuba opportunities and the benefits to the traveling and shipping public of enabling them to do so, and that it intends to reach a final decision in this matter as promptly as possible.

Applications

Seven U.S. carriers propose scheduled services to points in Cuba other than Havana. Each carrier requested an allocation of frequencies, and underlying exemption authority to support their proposed services.3 The non-Havana proposals are summarized below, and in chart form in Appendix A.

American Airlines, Inc. (American) proposes to begin eight daily year-round scheduled combination services in five non-Havana U.S.-Cuba city-pair markets, beginning within 90 days of a final order.4 Specifically, American proposes (1) daily service between Miami and Camagüey, using 144-seat A319 aircraft; (2) daily service between Miami and Cienfuegos, using 144-seat A319 aircraft; (3) twice daily service between Miami and Holguin, using 160-seat B737-800 aircraft; (4) twice daily service between Miami and Matanzas, using 144-seat A319 aircraft; and (5) twice daily service between Miami and Santa Clara, using 160-seat B737-800 aircraft.

Eastern Air Lines Group, Inc. (Eastern) proposes to begin year-round scheduled combination services in two non-Havana U.S.-Cuba city-pair markets using 147-seat B737-800 aircraft, beginning on or before July 1, 2016. Specifically, Eastern proposes (1) three times weekly service (i.e., Thursdays, Fridays, and Sundays) between Miami and Camagüey; and (2) three times weekly service (i.e., Mondays, Wednesdays, and Saturdays) between Miami and Holguin.

Frontier Airlines, Inc. (Frontier) proposes to begin year-round scheduled passenger services in five non-Havana U.S.-Cuba city-pair markets, using A320 and A320neo aircraft with between 180 and 186 seats. Specifically, Frontier proposes (1) once weekly service (i.e., Saturdays) between Chicago and Matanzas, commencing on January 7, 2017; (2) daily service between Chicago and Santiago de Cuba, commencing on October 27, 2016; (3) four times weekly service (i.e., Mondays, Wednesdays, Fridays, and Saturdays) between Philadelphia and Camagüey, commencing on December 15, 2016; (4) once weekly service (i.e., Saturdays) between Philadelphia and Matanzas, commencing on January 7, 2017; and (5) three times weekly service (i.e., Tuesdays, Thursdays, and Sundays) between Philadelphia and Santa Clara, commencing on December 15, 2016.

3 The applicants have requested exemption authority of varying duration and scope. In the circumstances presented, in the interest of administrative efficiency, and consistent with the Department’s usual policy, the Department will grant the carriers two-year exemption authority for the specific U.S.-Cuba city pairs for which the applicants propose service. 4 With respect to its Miami-Matanzas proposal, American states that it will begin that service the later of 90 days after this final order or TSA approval.

2 JetBlue Airways Corporation (JetBlue) proposes to begin daily year-round scheduled combination services, beginning September 8, 2016, or within 100 days after receipt of all necessary approvals, whichever is earlier, using 162-seat A320 aircraft between (1) Fort Lauderdale and Camagüey; (2) Fort Lauderdale and Holguin; and (3) Fort Lauderdale and Santa Clara.

Silver Airways Corp. (Silver Airways) proposes to begin year-round scheduled combination services in nine non-Havana U.S.-Cuba city-pair markets using 34-seat Saab 340B Plus turboprop aircraft. Specifically, Silver Airways proposes to begin (1) five times weekly service (i.e., not on Mondays and Fridays) between Fort Lauderdale and Camagüey, commencing on September 22, 2016; (2) three times weekly service (i.e., Tuesdays, Thursdays, and Saturdays) between Fort Lauderdale and Cayo Coco, commencing on November 17, 2016; (3) once weekly service (i.e., Saturdays) between Fort Lauderdale and Cayo Largo del Sur, commencing on December 8, 2016; (4) twice weekly service (i.e., Mondays and Fridays) between Fort Lauderdale and Cienfuegos, commencing on October 6, 2016; (5) daily service between Fort Lauderdale and Holguín, commencing on October 20, 2016; (6) three times weekly service (i.e., Tuesdays, Wednesdays, and Fridays) between Fort Lauderdale and Manzanillo, commencing on December 15, 2016; (7) four times weekly service (i.e., Mondays, Wednesdays, Fridays, and Sundays) between Fort Lauderdale and Matanzas, commencing on December 1, 2016; (8) daily service between Fort Lauderdale and Santa Clara, commencing on September 8, 2016; and (9) daily service between Fort Lauderdale and Santiago de Cuba, commencing on November 3, 2016.

Southwest Airlines Co. (Southwest) proposes to begin year-round combination services, using 143-seat B737-700 aircraft, beginning within 90 days of the issuance of a final order (1) twice daily between Fort Lauderdale and Matanzas; and (2) once daily between Fort Lauderdale and Santa Clara.

MN Airlines, LLC d/b/a Sun Country Airlines (Sun Country) proposes to begin winter season combination services between Minneapolis/St. Paul and two cities in Cuba other than Havana, using 126-seat B737-700 aircraft and 162-seat B737-800 aircraft. Specifically, Sun Country proposes (1) once-weekly service (i.e., Saturdays) between Minneapolis/St. Paul and Matanzas; and (2) once-weekly service (i.e., Sundays) between Minneapolis/St. Paul and Santa Clara.

Decision

The Department has decided to grant the applications of American, Frontier, JetBlue, Silver Airways, Southwest, and Sun Country.5

5 Based on officially noticeable data, the Department concludes that American, Frontier, JetBlue, Southwest, and Sun Country are qualified to provide the services proposed. Each carrier has been found fit to provide scheduled foreign air transportation of persons, property, and mail, and each holds exemption authority to provide scheduled combination services in various other international city-pair markets. No information has come to our attention that would lead us to question the qualification of these applicants to conduct the proposed operations at issue here.

3 In response to Order 2016-2-12, the Department received requests to serve each of the nine international airports in Cuba other than Havana. In no instance do these requests total more than the 10 flights per day allowed under the U.S.-Cuba MOU, and the applications are ripe for action. Furthermore, the requests of American, Frontier, JetBlue, Silver Airways, Southwest, and Sun Country are unopposed on the record of the proceeding. In light of these circumstances, the Department concludes that it is in the public interest to grant the requested frequency allocations and to grant the applicants underlying exemption authority to support their services.6

The Department has also decided to defer action on the application of Eastern. In reaching this decision, the Department notes that Eastern has not completed the necessary licensing steps to conduct scheduled air transportation, and that Eastern is currently limited to providing charter flights only.7 A number of carriers have questioned whether Eastern should be eligible to receive any scheduled Cuba authority at this time, particularly with respect to Eastern’s application for scheduled Miami-Havana authority,8 and the Department will consider the issue in the Havana portion of this proceeding.9 In the circumstances presented, the Department believes the best approach is to defer action on Eastern’s request for non-Havana frequencies and exemption authority at this time.

Terms, Conditions, and Limitations

The Department has decided to impose a startup condition for each award. In this regard, the Department will require the carriers to institute their proposed services within 90 days of their proposed startup dates, as described above.

In addition, consistent with the Department’s standard practice, the frequencies allocated here will be subject to the Department’s standard 90-day dormancy condition, wherein any frequency not utilized for a period of 90 days (once inaugurated) would be deemed dormant and the allocation with respect to each such frequency would expire automatically and the frequency would revert to the Department for reallocation.

Finally, the frequency allocations and exemption authority granted here are also subject to the standard condition that the Department may amend, modify or revoke the authority at any time and without hearing, at our discretion.10

6 Silver Airways is a commuter carrier certificated to provide scheduled passenger air transportation using aircraft with 60 seats or less (Order 2011-11-32). Thus, Silver Airways does not require additional underlying exemption authority to conduct its proposed services. 7 See Orders 2015-4-22 and 2015-5-11. See also Order 2015-4-16. 8 See e.g., Consolidated Answer of Alaska Airlines, Inc., at 16; Consolidated Answer of American, at 10; Answer of Delta Air Lines, Inc., at 16; Answer of Frontier, at 8; Consolidated Answer of JetBlue, at 38- 41; Consolidated Answer of Silver Airways, at 27; Consolidated Answer of Southwest, at 52-53; and Consolidated Answer of Spirit Airlines, Inc., at 13-14. 9 Eastern requests frequencies for daily scheduled Miami-Havana service. 10 Carriers are reminded that a number of significant limitations and requirements remain in place concerning air transportation between Cuba and the United States. Nothing in the Department’s award of authority in this proceeding relieves parties from complying with all applicable regulations and requirements of other U.S. agencies and with all applicable laws of the United States.

4 ACCORDINGLY,

1. The Department grants an exemption under 49 U.S.C. § 40109 to American Airlines, Inc. to provide scheduled foreign air transportation of persons, property, and mail between (1) Miami, Florida, and Camagüey, Cuba; (2) Miami, Florida, and Cienfuegos, Cuba; (3) Miami, Florida, and Holguin, Cuba; (4) Miami, Florida, and Matanzas Cuba; and (5) Miami, Florida, and Santa Clara, Cuba;

2. The Department grants an exemption under 49 U.S.C. § 40109 to Frontier Airlines, Inc. to provide scheduled foreign air transportation of persons and property11 between (1) Chicago, Illinois, and Matanzas, Cuba; (2) Chicago, Illinois, and Santiago de Cuba, Cuba; (3) Philadelphia, Pennsylvania, and Camagüey, Cuba; (4) Philadelphia, Pennsylvania, and Matanzas, Cuba; and (5) Philadelphia, Pennsylvania, and Santa Clara, Cuba;

3. The Department grants an exemption under 49 U.S.C. § 40109 to JetBlue Airways Corporation to provide scheduled foreign air transportation of persons, property, and mail between (1) Fort Lauderdale, Florida, and Camagüey, Cuba; (2) Fort Lauderdale, Florida, and Holguin, Cuba; and (3) Fort Lauderdale, Florida, and Santa Clara, Cuba;

4. The Department grants an exemption under 49 U.S.C. § 40109 to Southwest Airlines Co. to provide scheduled foreign air transportation of persons, property, and mail between (1) Fort Lauderdale, Florida, and Matanzas, Cuba; and (2) Fort Lauderdale, Florida, and Santa Clara, Cuba;

5. The Department grants an exemption under 49 U.S.C. § 40109 to MN Airlines, LLC d/b/a Sun Country Airlines to provide scheduled foreign air transportation of persons, property, and cargo12 between (1) Minneapolis/St. Paul, Minnesota, and Matanzas, Cuba; and (2) Minneapolis/St. Paul, Minnesota, and Santa Clara, Cuba;

6. The Department allocates to American Airlines, Inc. (1) one daily frequency for its proposed Miami-Camagüey service; (2) one daily frequency for its proposed Miami-Cienfuegos service; (3) two daily frequencies for its proposed Miami-Holguin service; (4) two daily frequencies for its proposed Miami-Matanzas service; and (5) two daily frequencies for its proposed Miami- Santa Clara service;

7. The Department allocates to Frontier Airlines, Inc. (1) one weekly frequency for its proposed Chicago-Matanzas service on Saturdays; (2) one daily frequency for its proposed Chicago- Santiago de Cuba service; (3) four weekly frequencies for its proposed Philadelphia-Camagüey service on Mondays, Wednesdays, Fridays, and Saturdays; (4) one weekly frequency for its

11 Frontier requests exemption authority “to engage in the scheduled foreign air transportation of persons and property on the route operated and with the frequencies granted to it under the Order.” Frontier Application for Exemption, at 2. 12 Sun Country requests exemption authority to provide “scheduled foreign air transportation of persons, property and cargo” between Minneapolis/St. Paul and Matanzas and between Minneapolis/St. Paul and Santa Clara. Application of Sun Country, at 2.

5 proposed Philadelphia-Matanzas service on Saturdays; and (5) three weekly frequencies for its proposed Philadelphia-Santa Clara service on Tuesdays, Thursdays, and Sundays;

8. The Department allocates to JetBlue Airways Corporation (1) one daily frequency for its proposed Fort Lauderdale-Camagüey service; (2) one daily frequency for its proposed Fort Lauderdale-Holguin service; and (3) one daily frequency for its proposed Fort Lauderdale-Santa Clara service;

9. The Department allocates to Silver Airways Corp. (1) five weekly frequencies for its proposed Fort Lauderdale-Camagüey service on Tuesdays, Wednesdays, Thursdays, Saturdays, and Sundays; (2) three weekly frequencies for its proposed Fort Lauderdale-Cayo Coco service on Tuesdays, Thursdays, and Saturdays; (3) one weekly frequency for its proposed Fort Lauderdale-Cayo Largo del Sur service on Saturdays; (4) two weekly frequencies for its proposed Fort Lauderdale-Cienfuegos service on Mondays and Fridays; (5) one daily frequency for its proposed Fort Lauderdale-Holguin service; (6) three weekly frequencies for its proposed Fort Lauderdale-Manzanillo service on Tuesdays, Wednesdays, and Fridays; (7) four weekly frequencies for its proposed Fort Lauderdale-Matanzas service on Mondays, Wednesdays, Fridays, and Sundays; (8) one daily frequency for its proposed Fort Lauderdale-Santa Clara service; and (9) one daily frequency for its proposed Fort Lauderdale-Santiago de Cuba service;

10. The Department allocates to Southwest Airlines Co. (1) two daily frequencies for its proposed Fort Lauderdale-Matanzas service; and (2) one daily frequency for its proposed Fort Lauderdale-Santa Clara service;

11. The Department allocates to MN Airlines, LLC d/b/a Sun Country Airlines (1) one weekly frequency for its proposed Minneapolis/St. Paul-Matanzas service on Saturdays; and (2) one weekly frequency for its proposed Minneapolis/St. Paul-Santa Clara service on Sundays;

12. The exemption authority in ordering paragraphs 1 through 5 above is effective immediately and will remain in effect for two years, subject to the conditions attached as Appendix B, and subject also to the standard condition that the Department may amend, modify or revoke the authority at any time and without hearing, at its discretion;13

13. The frequency allocations in ordering paragraphs 6 through 11 above will not expire, provided that the holder continues to hold the necessary underlying authority to serve the markets authorized; that the holder begins service with the allocated frequencies within 90 days of its proposed startup date;14 and also provided further that the frequencies will become dormant and will revert automatically to the Department if they are not used for a period of 90 days (once inaugurated);

13 The Department finds that its action here would not constitute a “major regulatory action” under the Energy Policy and Conservation Act of 1975, as defined by section 313.4(a)(1) of the Department’s regulations. 14 See the summary of applications above for the carriers’ proposed startup dates.

6 14. The frequency allocations in ordering paragraphs 6 through 11 above are subject to the Department’s standard condition that the Department may amend, modify or revoke the allocation at any time and without hearing, at its discretion;

15. The Department will serve this order on the parties to the proceeding; the U.S. Department of State (Office of Aviation Negotiations); the Federal Aviation Administration; and the Ambassador of Cuba in Washington, D.C.

By:

JENNY T. ROSENBERG Acting Assistant Secretary for Aviation and International Affairs

(SEAL)

An electronic version of this document is available on the World Wide Web at http://www.regulations.gov

7

Appendix A

U.S. Carrier Proposals for City-Pair Markets Other Than Havana

American

Routing Frequency Aircraft & Capacity Miami-Camagüey 1 time daily A319 / 144 Seats Miami-Cienfuegos 1 time daily A319 / 144 Seats Miami-Holguin 2 times daily B737-800 / 160 Seats Miami-Matanzas 2 times daily A319 / 144 Seats Miami-Santa Clara 2 times daily B737-800 / 160 Seats

Eastern

Routing Frequency Aircraft & Capacity Miami-Camagüey 3x per week (Thu, Fri, Sun) B737-800 / 147 Seats Miami-Holguin 3x per week (Mon, Wed, Sat) B737-800 / 147 Seats

Frontier

Routing Frequency Aircraft & Capacity Chicago (O’Hare)-Matanzas 1x per week (Sat) A320 / 180-186 Seats Chicago (O’Hare)-Santiago de Cuba 1 time daily A320 / 180-186 Seats Philadelphia-Camagüey 4x per week (Mon, Wed, Fri, Sat) A320 / 180-186 Seats Philadelphia-Matanzas 1x per week (Sat) A320 / 180-186 Seats Philadelphia-Santa Clara 3x per week (Tue, Thu, Sun) A320 / 180-186 Seats

JetBlue

Routing Frequency Aircraft & Capacity Fort Lauderdale-Camagüey 1 time daily A320 / 162 Seats Fort Lauderdale-Holguin 1 time daily A320 / 162 Seats Fort Lauderdale-Santa Clara 1 time daily A320 / 162 Seats

Silver Airways

Routing Frequency Aircraft & Capacity Fort Lauderdale-Camagüey 5x per week (not on Mon & Fri) Saab 340B Plus / 34 Seats Fort Lauderdale-Cayo Coco 3x per week (Tue, Thu, Sat) Saab 340B Plus / 34 Seats Fort Lauderdale-Cayo Largo del Sur 1x per week (Sat) Saab 340B Plus / 34 Seats Fort Lauderdale-Cienfuegos 2x per week (Mon & Fri) Saab 340B Plus / 34 Seats Fort Lauderdale-Holguin 1 time daily Saab 340B Plus / 34 Seats Fort Lauderdale-Manzanillo 3x per week (Tue, Wed, Fri) Saab 340B Plus / 34 Seats Fort Lauderdale-Matanzas 4x per week (Mon, Wed, Fri, Sun) Saab 340B Plus / 34 Seats Fort Lauderdale-Santa Clara 1 time daily Saab 340B Plus / 34 Seats Fort Lauderdale-Santiago de Cuba 1 time daily Saab 340B Plus / 34 Seats

Appendix A

Southwest

Routing Frequency Aircraft & Capacity Fort Lauderdale-Matanzas 2 times daily B737-700 / 143 Seats Fort Lauderdale-Santa Clara 1 time daily B737-700 / 143 Seats

Sun Country

Routing Frequency Aircraft & Capacity Minneapolis-Matanzas 1x per week (Sat) B737 / 126-162 Seats Minneapolis-Santa Clara 1x per week (Sun) B737 / 126-162 Seats

Appendix B

U.S. Carrier Exemption Conditions

In the conduct of the operations authorized, the U.S. carrier applicant(s) shall:

(1) Hold at all times effective operating authority from the government of each country served;

(2) Comply with applicable requirements concerning oversales contained in 14 CFR 250 (for scheduled operations, if authorized);

(3) Comply with the requirements for reporting data contained in 14 CFR 241;

(4) Comply with requirements for minimum insurance coverage, and for certifying that coverage to the Department, contained in 14 CFR 205;

(5) Except as specifically exempted or otherwise provided for in a Department Order, comply with the requirements of 14 CFR 203, concerning waiver of Warsaw Convention liability limits and defenses;

(6) Comply with all applicable requirements of the Federal Aviation Administration, the Transportation Security Administration, and with all applicable U.S. Government requirements concerning security, including, but not limited to, 49 CFR Part 1544. To assure compliance with all applicable U.S. Government requirements concerning security, the holder shall, before commencing any new service (including charter flights) to or from a foreign airport, contact its Principal Security Inspector (PSI) to advise the PSI of its plans and to find out whether the Transportation Security Administration has determined that security is adequate to allow such airport(s) to be served;

(7) Comply with such other reasonable terms, conditions, and limitations required by the public interest as may be prescribed by the Department of Transportation, with all applicable orders and regulations of other U.S. agencies and courts, and with all applicable laws of the United States.

The authority granted shall be effective only during the period when the holder is in compliance with the conditions imposed above.

1/2008