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BEFORE THEDEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

)

Application of ))

Virgin Nigeria Airways Limited )) Docket OST-2005-

For an exemption from )49 U.S.C. § 41301, et seq. )(U.S. – Nigeria) ) )

APPLICATION OF VIRGIN NIGERIA AIRWAYS LIMITEDFOR AN EXEMPTION

Communications with respect to this document should be sent to:

Dr Yemi Osindero David E. SchafferHead, Corporate Development David E. Schaffer Associates LLC

Funke Adeyemi 9205 Hambletonian PlaceLegal Officer & Company Sec Vienna, VA 22182

Virgin Nigeria Airways Ltd (703) 938-30623rd Floor 17 Ligali Ayorinde Street (703) 938-3063 (fax)Victoria Island [email protected] [email protected] Counsel for Virgin Nigeria Airways [email protected]

Dated: December 22, 2005

NOTE: ANY PARTY MAY FILE AN ANSWER TO THIS APPLICATION. ANSWERS TO THIS APPLICATION ARE DUE TO BE FILED AT DOT ON OR BEFORE JANUARY 6, 2006.

BEFORE THEDEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

)

Application of ))

Virgin Nigeria Airways Limited )) Docket OST-2005-

For an exemption from )49 U.S.C. § 41301, et seq. )(U.S. – Nigeria) ) )

APPLICATION OF VIRGIN NIGERIA AIRWAYS LIMITEDFOR AN EXEMPTION

Pursuant to 49 U.S.C. § 40109, 14 CFR Part 211, and 14 CFR Part 302, Subpart

C of the Department’s Procedural Regulations, Virgin Nigeria Airways Limited (“Virgin

Nigeria”), a foreign air carrier incorporated in and with a principal place of business in

Nigeria, hereby requests an exemption from 49 U.S.C. § 41301, et seq., so that it may

engage in scheduled foreign air transportation of persons, property, and mail between

Nigeria and the United States.

Simultaneously with this application for an exemption, Virgin Nigeria is filing an

application for a foreign air carrier permit. Virgin Nigeria hereby incorporates by

reference information contained in the aforementioned permit application.

Virgin Nigeria Application for an Exemption

As the Department knows, the aviation sector in Africa, and particularly in

Nigeria, has been in turmoil. When Nigerian Airways ceased operations in 2002, it left

Nigeria without a flag carrier. With the demise of its National state-owned carrier, and

the lack of a robust aviation infrastructure within Nigeria, the Nigerian Government

faced significant challenges with respect to catering to the needs of its 130 million

inhabitants and burgeoning work force and the consequences of a growing economy

whilst providing safe and secure transportation. This is especially important for Nigeria

and other developing countries who seek greater foreign direct investment, international

trade and global interaction. Aviation is also crucial to supporting Nigeria’s leading role

in Africa and increasingly, globally.

Faced with a critical need for safe and dependable air transport services, the

Federal Government of Nigeria resolved to turn to the private sector for help in

establishing a new national flag carrier. As a result of an international tender process,

and following months of audits and due diligence, Virgin Atlantic Airways was selected

to be a technical partner to the new national flag carrier, which was formed as Nigerian

Eagle, and is now called Virgin Nigeria. The fact that Virgin Nigeria has Virgin Atlantic

as its technical partner and 49% shareholder helps to ensure safety and security is

maintained in Virgin Nigeria’s services.

The creation of Virgin Nigeria is a crucial step in the continuing economic

development of Nigeria and Africa, increasing trade links not just externally but

throughout Africa, enhancing the development of the African continent. Options for

travelers to or from Africa have been limited, and the availability of safe and secure air

transportation that meets international standards has been sporadic. The entry of Virgin

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Nigeria into the market has been a welcome development in meeting this demand. Due

to its domestic, regional and international services, Virgin Nigeria is already helping to

provide safe and secure air transportation services within the African continent.

As the Department has recognized on several occasions, air service is a driver of

economic development. DOT’s open skies policies are geared toward facilitating the

movement of passengers and goods, with air service being the bridge enabling

meaningful trade development between two points. If air service is a measure of the

potential air service, the current situation in Africa is not encouraging. There are 2,468

direct flights to the Caribbean, 2,105 to Mexico, 855 to Asia, 600 to Central America and

548 to South America from the U.S., but only 23 direct flights between the United States

and Africa, and, indeed, no direct flights between the United States and Nigeria. The

services to be offered by Virgin Nigeria will fill a large service gulf, and will be of major

economic and political significance, connecting one of the largest economies in Africa to

the world’s largest economy. Nigeria is a strategically important oil producing ally of the

United States. The introduction of direct service to the United States by Virgin Nigeria

will permit the development of trade links and enhance the effectiveness of strategic

initiatives such as the United States African Growth and Opportunity Act (AGOA). 1

While understanding that having a capable technical partner would be absolutely

critical to the safety, security and success of the new airline, the Nigerian Government

was also mindful of its continuing need to develop its own aviation infrastructure. To

that end, the Government is continuing to upgrade its regulatory oversight and facilities.

Following recent air crashes in Nigeria, the President has directed the Minister of

1 Title I of the Trade and Development Act of 2000, Public Law 106-200, 19 U.S.C. 3721 et seq.

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Aviation to report directly to him, on a monthly basis, the progress being made with

standardizing the aviation infrastructure in the country. The President has also set up a

special task force including the Managing Director of Virgin Nigeria, which is to carry out

urgent supplies, repairs and maintenance of all aviation infrastructure in the country to

meet international standards. It is the Government’s intention that Nigeria becomes a

safe skies country in the very near future and Virgin Nigeria would welcome the

assistance of the FAA in this effort.

As will be shown below, an award of authority to Virgin Nigeria would be

consistent with the U.S.-Nigeria Open Skies Agreement, settled U.S. aviation policy,

and the broader public interest. By approving this Application, the Department will not

only give Nigeria the economic lifeline it needs, but it will also send a signal to the larger

African aviation community that the United States stands squarely behind private sector

solutions to Africa’s aviation challenges.

In support of this Application, Virgin Nigeria states as follows:

1. The registered address of Virgin Nigeria Airways Limited is 188, Awolowo

Road, Ikoyi Lagos, Nigeria and its operational address is Murtala Mohammed

International Airport, Ikeja, Lagos and Ark Towers, 3rd Floor, 17, Ligali Ayorinde Street,

Victoria Island Lagos. Virgin Nigeria is a Private Limited Liability Company. It is based

in Nigeria and organized under the laws of the Federal Republic of Nigeria, specifically

the Federal Republic of Nigeria Companies and Allied Matters Act, 1990.

2. As explained more fully in Virgin Nigeria’s Application for a Foreign Air

Carrier Permit, Virgin Nigeria meets the ownership and control requirements set forth in

the US-Nigeria Open Skies Agreement. A majority share (51%) of Virgin Nigeria’s

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stock is owned by major Nigerian investors. These investors represent many of

Nigeria’s largest companies. These investors meet frequently and have appointed their

own shareholder representative, in Chief S. Adegbite (a well-respected Nigerian

businessman) to monitor day-to-day issues at the company. More than half of Virgin

Nigeria’s Board of Directors are Nigerian citizens, including the Board’s Chairman. As

noted in Virgin Nigeria’s Application for a Foreign Air Carrier Permit, Virgin Nigeria is

planning to sell its shares in an IPO on the Nigerian Stock Exchange in the next few

years. This share flotation will further increase the percentage of Nigerian ownership in

the company.

More than half of Virgin Nigeria’s officers and key management personnel are

Nigerians including its chief pilot, controller, and heads of planning, corporate

development, legal, information technology, security and public affairs. As was

explained in Virgin Nigeria’s Permit Application, the Company is undertaking a

concerted effort to train and recruit qualified Nigerian staff for key positions, so that over

time, Nigerians can cover all the key roles in the company.

Virgin Atlantic Airways holds the remaining 49% interest in Virgin Nigeria.

Virgin Atlantic holds this interest because it was selected by the Government of Nigeria

to be the technical partner for the new flag carrier. When it established its framework

for creating a new flag carrier, the Government of Nigeria determined that the technical

partner needed to have an ownership stake in the new carrier in order to ensure that

the partner would have a financial stake and hence give its fullest assistance in the

creation of the new entity.

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3. Virgin Atlantic Airways Limited, which is 51% owned by a British citizen

and 49% by Singapore Airlines, has been invited to become involved in Virgin Nigeria in

order to provide quality assurance and ensure safety standards in line with international

best practices. The current state of development of aviation infrastructure in Nigeria

means it must look to other countries for managerial and technical support of Nigeria’s

new flag airline. This is not harmful to the interests of the United States and is in fact

fully consistent with the U.S.’s “Safe Skies for Africa” initiative. The “Safe Skies for

Africa” initiative states that African nations must assume ownership of the initiative:

by recognizing the importance of aviation safety and security to their economic

development; and

by marshalling the political will to turn these civil aviation goals into realities.

The initiative recognizes the role that assistance from the private sector can play

and encourages the countries in question to utilize foreign technical expertise where

necessary. The approach adopted by the Nigerian Government to its flag carrier project

is closely in line with this US policy.

4. In similar circumstances, the Department has found that “developing

countries … may need to seek outside technical and managerial support for their

aviation enterprises because of the lack of such resources in their countries.” This

situation should not require a finding that such a carrier is subject to foreign control.2

However, to the extent that a question exists regarding the ownership and control of

Virgin Nigeria, it would not be inimical to U.S. aviation policy or interests to waive the

ownership and control standards in this case and grant the requested authority. As was

explained above, the Government of Nigeria is in the midst of rebuilding its aviation

2 See, Antigua and Barbuda Airways International, Ltd., d/b/a/ Grand Atlantic Airways, 91-4-26 (April 18, 1991).

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infrastructure, and has sought the services of a technical partner for its flag carrier as it

needs to ensure that the new carrier is operated safely and in accordance with

international standards. Moreover, the fact that Nigeria is not rated Category 1 under

the International Aviation Safety Assessments (IASA) by definition requires that Virgin

Nigeria seek a non-Nigerian partner to provide the services at issue in this application.

While every effort is being made to develop the necessary skills within Virgin Nigeria’s

own workforce, the fact is that Virgin Nigeria for the time being will require significant

foreign assistance in order to be in a position to exercise its rights under the U.S.-

Nigeria Open Skies Agreement.

5. In Virgin Nigeria’s view, the Government of Nigeria should be commended

for the fact that it sought assistance from the private sector when it sought to rebuild its

flag carrier. The decision to seek to have a new, privately owned flag carrier (as

opposed to attempting to rebuild the previous state-owned carrier), and to have a

private company assist in the operations of that carrier, is squarely consistent with the

Department’s 1995 International Aviation Policy. For that reason alone, the Department

should, to the extent necessary, waive its ownership and control rules in this instance.

6. Although the U.S.’s own Safe Skies for Africa Policy alone should justify a

waiver here, there is other precedent which would support such an action. 3 The

Department has waived those standards in other cases where there was less than the

51% homeland ownership that exists here.4 It has even issued a waiver where there

3 See, e.g., Lan Dominicana, Notice of Action Taken, Docket OST-2003-14701 (April 1, 2003) waiving ownership and control requirement when Chilean interests held 49% of Dominican carrier. See also, Oasis International Airways, Order 93-7-28 (waiving ownership and control requirement when British company held 42% of Spanish carrier, despite fact that neither Britain nor Spain had an open skies arrangement with the United States).

4 See, for example, Application of Air Plus Argentina (Docket OST-99-6400) where there was only 27% homeland ownership and Application of Cielos del Peru, S.A. (Export Air) in Docket OST-95-617 where there was only 30% homeland ownership.

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were problems in the aviation relationship5 and where the non-homeland owner was a

British corporation despite the lack of an open skies agreement with the United

Kingdom.6 Indeed, the Department has waived this requirement even with regard to

another company which had Virgin Group Investments as a 46% shareholder, finding

that the investment was not inimical to the aviation interests of the United States, and

citing various public policy reasons for its approval.7 The considerations favoring such a

waiver are particularly compelling here given the open skies agreement between the

U.S. and Nigeria, and the overall U.S. interest in promoting economic development in

Africa and ensuring a safe and secure air transportation system there.

7. Virgin Nigeria seeks authority to conduct scheduled foreign air

transportation of persons, property, and mail in accordance with the Air Transport

Agreement between the Government of the United States of America and the

Government of the Federal Republic of Nigeria on the following routing:

From points behind Nigeria via Nigeria and intermediate points to a point or points in the United States and beyond.

For all cargo-services, between the United States and any point or points.

Virgin Nigeria also requests authority to provide charter air transportation in accordance

with the rights granted in Annex 2, Section 1 of the U.S.-Nigeria Open Skies Agreement,

and Part 212 of the Department’s Economic Regulations. Virgin Nigeria would exercise

5 See Application of Aerolane, Lineas Aerea Nacionales del Ecuador S.A. d/b/a Lan Ecuador, Order 2003-3-9, March 12, 2003 where an exemption was granted despite the lack of an open skies agreement with Ecuador and the problems two US. airlines were experiencing in getting a code-share approved there.

6 Application of Premiair (Docket OST-97-2167), February 28, 1997. See also the case of Air Aruba (Order 99-3-21) where an exemption was granted to Aruba’s flag carrier in the light of the open skies agreement between the U.S. and Aruba even though there was no open skies agreement between the U.S. and Venezuela, the country of the non-homeland owner of Air Aruba.

7 See e.g. Virgin Blue Airlines PTY Limited, Notice of Action Taken Dated July 25, 2002, Docket OST-2002-12470.

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all rights in accordance with the terms of the U.S.-Nigeria Open Skies Agreement,

including, without limitation, Annex 1, Section 2.

8. Initially, Virgin Nigeria will operate non-stop scheduled service between

Lagos and New York or Newark four times per week, eventually increasing to a daily

service. It is proposed that this service would be provided by an Airbus 340-311 aircraft

under an Aircraft, Crew, Maintenance, and Insurance (ACMI) agreement with Virgin

Atlantic Airways.

9. Nigeria and the United States have an open skies agreement. Virgin

Nigeria has been formally designated by the Federal Government of Nigeria in

accordance with that agreement to provide air transportation to the United States.

Grant of the requested authority to Virgin Nigeria is clearly consistent with the open

skies bilateral between the U.S. and Nigeria. This agreement also permits the operation

of such services pursuant to wet lease arrangements. See U.S.-Nigeria Open Skies

Agreement, Article 8, paragraph 7.8 Although Virgin Nigeria is aware that U.S. airlines

seeking entry into Nigeria have experienced difficulties in the past, the Government of

Nigeria has assured Virgin Nigeria that it would promptly approve air service proposed

by any U.S. air carrier, a view which has been expressed by Nigerian Government

officials on visits to the United States Department of Transportation.

10. Virgin Nigeria is fit, willing, and able to provide the air transportation for

which authority is sought. As explained at length in the accompanying Foreign Air

Carrier Permit Application, Virgin Nigeria is well financed and has a strong management

team. Given the fact that Nigeria currently is not Category 1 under the International

8 Virgin Nigeria understands that the operator of its wet lease service must apply for a Statement of Authorization to provide the services described herein., and anticipates that this request will be filed in the next few weeks.

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Aviation Safety Assessment (IASA) Program, the flight operations described herein will

be performed by pursuant to a wet lease arrangement with a carrier from a country

which is rated as Category 1 under the IASA program.

11. Virgin Nigeria has been licensed by its homeland government to provide

the services at issue here. A copy of Virgin Nigeria’s Nigerian license is attached.

12. Virgin Nigeria has obtained insurance which exceeds the Department’s

requirements. A copy of Virgin Nigeria’s Certificate of Insurance will be provided to the

Department.

13. Virgin Nigeria will ensure that its Aviation Disaster Family Assistance and

Passenger Manifest plans are filed with the Department.

14. A completed form OST-4523 will be provided to the Department.

15. Virgin Nigeria asks that it be granted authority to provide this service no

later than March 2006 so that it can make the necessary arrangements and begin

service in May 2006. It further asks that the exemption remain in effect for a two year

period, or until 90 days after favorable action is taken on its application for a foreign air

carrier permit.

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WHEREFORE, Virgin Nigeria respectfully requests that the Department grant the

exemption described herein, and grant such further relief as it deems necessary.

Respectfully submitted,

Counsel for Virgin Nigeria Airways Limited

Dated: December 22, 2005

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CERTIFICATE OF SERVICE

I hereby certify that on this 22nd day of December 2005, a copy of the foregoing application was served in accordance with the Department’s Rules of Practice on the parties named below.

Carl Nelson, Jr.Associate General CounselAMERICAN AIRLINES1101 17th Street, N.W.#600Washington, D.C. [email protected]

Stephen LachterASTAR AIR CARGOLachter & Clements1150 Connecticut Avenue, N.W.Suite 900Washington, D.C. [email protected]

Gary GarofaloAIR TRANSPORT INTLGarofalo, Goerlich Hainbach1200 New Hampshire Avenue, N.WSuite 800Washington, D.C. [email protected]

Hershel KamenCONTINENTAL AIRLINESDept. HQSGVP.O. Box 4607Ilouston, TX 772 [email protected]

Charlene KennedyDELTA AIR LINES1275 K Street, N.W.Suite 1200Washington, D.C. [email protected]

Tom LydonEVERGREEN INTERNATIONAL140 1 New York Avenue, NWSuite 530Washington, DC 20005-2 [email protected]

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mailto:[email protected]







Angela GarbuzinskiFEDERAL EXPRESS3620 Hacks Cross RoadBuilding B, 3rd FloorMemphis, TN 3 8 [email protected]

Marshall SinickFLORIDA WEST INTERNATIONALSquire Sanders & Dempsey1201 Pennsylvania Avenue, N.W., #400Washington, D.C. [email protected]

Mark AtwoodKALITTA AIRSher & Blackwell1850 M Street, NWSuite 900Washington, DC [email protected]

Megan Rae RosiaNORTHWEST AIRLINES901 15th Street, N.W.#500Washington, D.C. [email protected]

Kevin MontgomeryPOLAR AIR1747 Pennsylvania Avenue, NWSuite 875Washington, DC [email protected]

Jeffrey ManleyUNITED AIRLINESWilmer Cutler Pickering Hale and Dorr LLP2445 M St., N.W.Washington, D.C. [email protected]

David VaughanUPSKelley, Drye & Warren1200 19th Street, N.W.Suite 500Washington, D.C. [email protected]

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Howard KassUS AIRWAYS2345 Crystal DriveAlexandria, VA [email protected]

Mark McMillinWORLD AIRWAYS, INC.HLH BuildingI 0 1 World DrivePeachtree City, GA [email protected]

James BalloughFlight Standards ServiceFederal Aviation Administration800 Independence Avenue, S.W.Room 821Washington, DC [email protected]

John RichardsonAMERIJET INTERNATIONALJohn L. Richardson555 13th Street, N.W.Suite 420 WestWashington, D.C. [email protected]

Moffett B. RollerCounsel for Gemini Air CargoRoller & Bauer, PLLC1020 Nineteenth Street, N.W., Suite 400Washington, DC [email protected]

Russell E. PommerAssociate General Counsel and Director ofRegulatory AffairsAtlas Air, Inc.1747 Pennsylvania Ave., N.W., Suite 875Washington, DC [email protected]

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R. Bruce Keiner, Jr.Lorraine B. HallowayCounsel for Continental AirlinesCrowell & Moring LLP1001 Pennsylvania Avenue, N.W.Washington, DC [email protected]@crowell.com

Robert E. CohnCounsel for Delta Air LinesHogan & Hartson LLP555 13th Street, N.W.Washington, DC [email protected]

John ByerlyDeputy Assistant Secretary of Transportation AffairsDepartment of State2201 C Street, NWWashington, D.C. [email protected]

John A. Morganti, ManagerNew York International Field Office, EA29Federal Aviation AdministrationAMB Cargo Building #75, Room 238JFK International AirportJamaica, NY 11430

Nancy S. SparksManaging DirectorRegulatory and Industry AffairsFederal Express Corporation1101 Pennsylvania Avenue, N.W.Suite 600Washington, D.C. [email protected]

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William DeCotaDirectorBradley RubinsteinManager, Industry and Regulatory RelationsAviation DepartmentPort Authority of New York and New Jersey225 Park Avenue South, 9th FloorNew York, NY [email protected]

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