(i) Matters pertaining exclusively to foreign air carriers, or

(ii) Changes only in matter pertaining exclusively to foreign air carriers when included on the same page together with matter (other than matter pertaining exclusively to foreign air carriers) which is issued without change.

(4) The filing fee is not applicable to a blank looseleaf page unless it cancels matter on the preceding issue of the page other than matter pertaining only to foreign air carriers exclusively.

(5) Where two pages are published back-to-back on the same leaf and one page is not subject to a fee pursuant to § 389.25 (q) (3) and the page on the re

verse side is issued without change (except for pagination, correction number, and issued and effective dates), no fee is applicable to the latter page.

(6) The filing fee is applicable to a loose-leaf page containing a correction number check sheet unless all other pages of the tariff are exempt from filing fees.

(31 U.S.C. 483a) [OR-27, 33 F.R. 70, Jan. 4, 1968, as amended by OR-27A, 33 F.R. 3633, Mar. 1, 1968; OR-32, 33 F.R. 12138, Aug. 28, 1968; OR 35, 34 F.R. 5598, Mar. 25, 1969; OR-41, 34 F.R. 12266, July 25, 1969; OR 43, 34 F.R. 16869, Oct. 18, 1969; OR-44, 34 F.R. 18382, Nov. 18, 1969; OR-50, 35 F.R. 15986, Oct. 10, 1970; OR-55, 36 F.R. 6591, Apr. 7, 1971]

AUTHORITY: The provisions of this Part 399 issued under sec. 204, 204 (a), 1001, Federal Aviation Act of 1958, 72 Stat. 743, 788, 49 U.S.C. 1324, 1481; sec. 102(2) (C), National Environmental Policy Act of 1969, 83 Stat. 853; sec. 3, 60 Stat. 238; 5 U.S.C. 1002, unless otherwise noted.

SOURCE: The provisions of this Part 399 contained in Policy Statement 21, 29 F.R. 1446, Jan. 29, 1964, unless otherwise noted.

Subpart A Applicability and Effect of Policy Statement

The following types of policies are not included in this part:

(a) Policies relating solely to the internal management of the Board;

(b) Policies requiring secrecy in the public interest or in the interest of national defense;

(c) Policies that are repetitive of section 102 of the Act;

(d) Policies that are fully expressed in a procedural or substantive rule of the Board, or in any opinion, decision, order, certificate, permit, exemption, or waiver of the Board;

(e) Expressions of encouragement or admonition to industry to follow a certain course of action;

(f) Positions on legislative items and on other matters that are outside the

No statement contained in any Board opinion, decision, order, certificate, permit, exemption, or waiver shall be considered a statement of policy within the meaning of this part, even though such statements may constitute a precedent in future cases or declare future policy to be followed in like cases. Similarly, a denial by the Board or relief sought, or statements of the Board's reasons for failure to issue a rule upon which rule making proceedings have been commenced shall not be considered statements of policy, except to the extent that it is specifically stated that such denial or failure is based upon a policy thereafter to be followed.

§ 399.4 Nature and effect of policy

statements.

Policy statements published in this part will be observed by the Board until rescinded, but any policy may be amended from time to time as experience or changing conditions may require. Changes in policy may be made with or without advance notice to the public and will become effective upon publication in the FEDERAL REGISTER unless otherwise provided. If it appears to the Board, in its consideration of any matter before it, that the application of a policy published in this part would run counter to an express provision of law or policy enunciated by Congress in the Act, the published policy shall not be applicable to such matter.

§ 399.5 Arrangement of policy state

transportation, as distinguished from the service rendered by scheduled trunkline ari carriers. The language that will be included is substantially as follows:

This certificate is issued pursuant to a determination of policy by the Civil Aeronautics Board that, in the discharge of its obligation to encourage and develop air transportation under the Federal Aviation Act of 1958, as amended, it is in the public interest to establish certain air carriers who will be primarily engaged in short-haul air transportation as distinguished from the service rendered by scheduled trunkline air carriers. In accepting the certificate, the holder acknowledges and agrees that the primary purpose of the certificate is to authorize and require it to offer short-haul air transportation services of the character de

scribed above.

§ 399.11 "Use it or lose it" policy for subsidized local service carriers.

(a) Expansion of local carrier services. Consistent with the Board's basic policy of affording the advantages of air transportation to as many persons as practicable, the Board has substantially expanded the services of subsidized local carriers and has given many small cities, with marginal or unknown traffic potentialities, a chance to demonstrate that they will use and can support new or improved air services adapted to their specific needs. The Board expects the cities awarded local air service to make a determined effort to generate the traffic forecast in the certification proceedings. Unless adequate use is made of subsidized air services, the cost to the Government is not justified and the Board should terminate the authorization.

(b) Minimum traffic standard for newly certificated cities. It is the policy of the Board to make an early and critical evaluation of the traffic results of new authorizations to determine whether newly certificated cities are making sufficient use of authorized services or should lose such services for lack of use. Under this "use it or lose it" policy, the Board will require each city to originate an average of five or more passengers per day during the 12-month period following the initial 6 months of operations. If a city is certificated on more than one segment, the five-passenger standard will be applied to each segment. If a city fails to meet this minimum traffic standard, the Board will, in the absence of unusual or compelling circumstances, institute a formal investi

66-031 0-72 36

gation to determine whether service should be suspended or terminated. A city generating the bare traffic minimum during this trial period cannot safely assume that continued service is assured; the Board expects most cities to exceed the minimum requirements.

(c) Minimum traffic standard for newly certificated route segments. The Board will also evaluate the traffic results of each new route segment for the same 12-month period, following the initial six months of operations, to determine whether segments that do not adequately respond to air services should be suspended or deleted in whole or in part. If the passenger load per flight serving a segment averages less than five passengers, the Board will institute formal proceedings to delete the segment. If the passenger load per flight averages between five and seven passengers, the Board will institute proceedings to determine whether the segment should be suspended or deleted unless unusual circumstances, such as extreme isolation or national defense needs, dictate otherwise.

(d) Continued use of local carrier services. In evaluating the continuing need for air service at any point or on any route segment served by a local service carrier, the Board will use the minimum traffic standard of five passengers as a guideline, regardless of the type or duration of an authorization. The Board will require the local service carriers to make appropriate periodic reports of traffic results. Air carrier management is expected to suggest route or authorization modifications as soon as deficiencies in service become apparent. When a city or route segment fails to make continued use of subsidized services, the carrier is free, and is encouraged, to apply for suspension of service in advance of a Board proceeding to terminate the certification. The failure of a local service carrier to exercise vigilance in this regard may, in fact, reflect upon the economy and efficiency of management in proceedings to determine subsidy needs under section 406 of the Act.

§ 399.12 Negotiation by air carriers for landing rights in foreign countries. (a) It is the policy of the Board (jointly with the Department of State) that, as a general rule, landing rights abroad for United States flag air carriers will be acquired through negotiation by the United States Government with

It is the policy of the Board that permits issued to foreign air carriers shall provide:

(a) That the permit shall be subject to all applicable provisions of any treaty, convention, or agreement affecting international air transportation now in effect, or that may become effective during the period the permit remains in effect, to which the United States and the foreign government concerned are parties;

(b) That, by accepting the permit, the holder waives any right it may possess to assert any defense of sovereign immunity from suit in any action or proceeding in any court or other tribunal in the United States based on claims arising out of its operations under the permit.

§ 399.14 Issuance of foreign air carrier permits for Canadian transborder operations in small aircraft.

It is the policy of the Board, in accordance with a reciprocal understanding with the Air Transport Board of Canada published March 13, 1952, to facilitate so far as possible under existing law the issuance of foreign air carrier permits to Canadian operators of small aircraft for irregular transborder operations in common carriage. Authorizations granted under this procedure will be only for service of a casual, occasional, and infrequent nature and will be limited to five years' duration. Where requested, permission will customarily be granted, if statutory standards are met, to serve more than one point in the United States on the same flight, provided that no cabotage traffic is carried.

§ 399.16 Military exemptions.

(a) In passing upon applications for exemptions from sections 401 and 403 of the Act to enable air carriers to perform contracts for air transportation for the Department of Defense, the Board will give great weight to the following criteria:

(1) Whether the carrier has contractually committed its CRAF aircraft to the Department of Defense;

(2) Whether the proposed service is in furtherance of the mission of the Department of Defense; and

(3) Whether the level of compensation provided in the contract is fair and reasonable.

(b) The minimum charges considered fair and reasonable for the transportation of Category Z individually ticketed passengers in foreign and overseas air transportation and in air transportation between the 48 contiguous States on the one hand and Hawaii or Alaska on the other hand will be 3.448 cents per passenger mile, applied to the shortest mileage between the commercial air carrier points as set forth in the current IATA Mileage Manual to compute point-topoint passenger fares.

(Sec. 402, 72 Stat. 757, 49 U.S.C. 1872. Secs. 403, 404, 72 Stat. 758, 760, 49 U.S.C. 1373, 1874; and 5 U.S.C. 552, 80 Stat. 383) [Policy Statement 26, 30 F.R. 3878, Mar. 25, 1965, as amended by PS-38, 33 F.R. 6652, May 1, 1968; PS 43, 36 F.R. 4542, Mar. 9, 1971]

§ 399.18 Maximum duration of fixedterm route authorization granted by exemption; renewal of such authority.

It is the policy of the Board to limit the duration of exemptions which authorize fixed-term route service to a maximum period of two years, and to entertain requests for renewal of such authority only when incorporated in a duly filed application for substantially equivalent certificate authority under section 401 of the Act. (See § 302.909 of this chapter (Procedural Regulations) and § 377.10 (c) of this chapter (Special Regulations).)

§ 399.19 Wet leases to foreign air carriers.

(a) This policy statement sets forth the major factors which the Board will consider in acting upon applications for

authorization of long-term ""wet-leases" (i.e., leases in which the lessor provides both the aircraft and the crew) by a United States air carrier to the holder of a foreign air carrier permit. The wet lease need not involve the exclusive use of an aircraft by the foreign air carrierlessee for the entire period of the lease, but may involve use on an intermittent basis such as on certain days of the week. (b) A wet lease of the type described in paragraph (a) of this section will be deemed to be in the public interest only if it meets the following criteria:

(1) The operations under the wet lease must not have a significant adverse competitive impact on any United States carrier. In making this determination, the Board will consider such factors as: The relative size and financial strength of the United States carriers and the foreign carriers operating on the route; whether the proposed operation will require any United States carrier to reduce its level of frequency on the route; and whether the proposed operation will render uneconomic any United States carrier's operations over the route.

(2) The United States air carrierlessor must have an urgent need for additional utilization of its equipment, or have a compelling need to supplement operating revenue. In making this determination the Board will consider such factors as the size and financial strength of the lessor carrier relative to other United States carriers, and the need for strengthening of such carrier in terms of sustaining and promoting a healthy competitive system.

(3) The wet lease must not involve revenue or profit sharing by the United States air carrier-lessor.

(4) The wet lease arrangement must not impair the United States air carrierlessor's ability to fulfill its certificate obligations.

(5) The United States air carrierlessor must not be placing undue reliance on wet leasing as a source of revenue. In this regard the Board will consider the

"The expression "long-term wet lease" refers to a wet lease which is to be performed over a period of more than sixty days or to a wet lease which is one of a series of wet leases amounting to a continuing arrangement to be performed over a period of more than sixty days.

extent to which an applicant has acquired equipment which can be adequately utilized only if it can be wetleased. If the applicant is a supplemental carrier, the Board will also consider the extent to which the wet lease will interfere with the applicant's ability to promote and perform civil charters. If the applicant is a combination or allcargo carrier, the Board will consider the extent to which the wet lease will interfere with the applicant's ability to promote and perform on-route operations.

(c) Approval by the Board of a wet lease of the type described in paragraph (a) of this section will be subject to the following conditions:

(1) Where the foreign air carrierlessee is an established international air service and possesses subtantial equipment of its own, wet leasing arrangements with a single United States carrier may be approved for an initial period of one year. Approvals may be granted for additional periods extending up to a maximum of two years from the beginning of the wet lease arrangement. No wet lease will be approved unless the conditions set forth in paragraph (b) (1) through (5) of this section are met.

(2) Where the foreign air carrierlessee is at an early stage of development and intends to place sole or primary reliance upon wet lease arrangements to support its international operations, wet leasing arrangements with United States carriers may be approved for a maximum period of two years. No wet lease will be approved unless the conditions set forth in paragraph (b) (1) through (5) of this section are met and unless the foreign carrier demonstrates that it will be in a position to establish an independent viable operation by the end of two years from the date it began wet leasing from United States carriers. During the period of approval there may also be periodic Board review to insure that the conditions set forth in paragraph (b) (1) through (5) of this section continue to be met.

(3) Where the sole purpose of the wet lease is to enable the foreign air carrierlessee to replace equipment rendered non-operable by an emergency beyond its control (e.g., by an accident), such a wet lease may be approved for a period not to exceed six months, it being pre