MEMORANDUM OF UNDERSTANDING ON AIR SERVICES

BETWEEN

THE GOVERNMENT OF THE ARAB REPUBLIC OF EGYPTAND

THE GOVERNMENT OF THE REPUBLIC OF CYPRUS

Delegations representing the Government of the Arab Republic of Egypt andthe Government of the Republic of Cyprus (hereinafter referred to as"Egyptian Delegation" and «Cyprus Delegation» singularly, or the "ContractingParties" Collectively) met in Cairo on the 2nd of February 2010 to discussissues related to the Bilateral Air Services Agreement between their tworespective countries.

Discussions were held in a cordial and constructive atmosphere of mutualunderstanding and goodwill. They were characterized on both sides by theintention to negotiate constructively, in the interest of a positive developmentof the bilateral aviation relations. The two sides noted that Egypt is in thenegotiation process with the European Union regarding the HorizontalAgreement.

The list of the two delegations appears as Attachment A.

The following understanding was reached by the two Delegations:

I. Air Service Agreement (ASA)

Both Contracting Parties agreed on the pending Articles (Article 4-Designationof Airlines and Article 5-Revocation or Suspension of Operating Authorization)from the initially signed ASA between both sides on the 4™ of April 2008attached as Attachment B.

Both Contracting Parties agreed a new Tariff Article which will substituteArticle 17 of the initially signed ASA. The new Article is attached asAttachment C.

Both sides will endeavor to expedite their internal procedures so as to sign thenew ASA the soonest.

C~L

"• FREQUENCY AND CAPACITY

Both Contracting Parties agreed to increase the capacity entitlement to be 7weekly frequencies for each side.

It was also agreed that the designated airline of each party will be entitled tocombine two points in the other party's territory up to six weekly frequencieswithout the right to carry traffic between these two points.

III. Commercial Arrangements

Both Contracting Parties encouraged their designated airlines to enter intocommercial arrangements which can include Special Prorate Agreementand/or Code Share Agreement in order to facilitate traffic between both sides,.

This Memorandum of Understanding shall come into effect upon its signature.

ndDone in Cairo, on 2na February 2010

Mr. Michael ConstantinidesPermanent Secretary of Ministry of

Communication and WorksRepublic of Cyprus

Wv

Mr. Nagy SalehUnder Secretary of state for Air

TransportArab Republic of Egypt

Attachment A

CYPRUS DELEGATION

Mr Michael Constantinides

Mr. Leonidas Leonidou

Mr lacovos Demetriou

Mrs. Sophia Sawides

Mr. Stavros D. Kyprianou

EGYPT DELEGATION

Mr. Nagy Saleh

Mr. Samir Eldesoky

Mr. Magdy galal

Mr. Khaled Antar

Mrs. Abeer Ebaid Askalany

Mr. Mohamed Soliman

Mrs. Rania Eid

Mr. Mahmoud Sakr

Miss Sara Nessim

Mr. Mohamed Abd El Mohsen

Permanent SecretaryMinistry of Communications and WorksHead of DelegationDirectorCivil Aviation DepartmentChief Air Transport OfficerCivil Aviation DepartmentSenior Administrative OfficerMinistry of Communications and WorksHead of Middle East & Eastern EuropeCyprus Airways

Under Secretary of State For AirTransportHead of DelegationECAAGeneral Manager AgreementsECAAGeneral Manager of Technical BureauECAAManager Bilateral AgreementsECAADirector of Charter & Tourism FlightsECAAGeneral Manager International RelationsEGYPTAIR Holding Co.Manager Aeropolitics & RegulatoryAffairsEGYPTAIR Holding Co.Bilateral Agreements ExecutiveEGYPTAIR Holding Co.Bilateral Agreement SpecialistEGYPTAIR Holding Co.Regional Manager CyprusEGYPTAIR Airlines -

US

Attachment B

ARTICLE 4DESIGNATION OF AIRLINES

1. Each Contracting Party shall have the right to designate in writing tothe other Contracting Party one airline for the purpose of operating theagreed services on the specified routes. These designations are madethrough diplomatic channel.

2. On receipt of a designation by one Contracting Party made inaccordance with the provisions of paragraph 1 of the present Article,and if so requested by the Designated Airline, in the form of mannerprescribed, the Aeronautical Authorities of the other Contracting Partyshall grant, with minimum delay, the appropriate operatingauthorizations, provided:

a- in case of an airline designated by the Government of the Republic ofCyprus :

i. it is established in the territory of the Republic of Cyprus under theTreaty establishing the European Community and has a validOperating License in accordance with European Community law;and

ii. effective regulatory control of the airline is exercised andmaintained by the European Community Member State responsiblefor issuing its Air Operator's Certificate and the relevantAeronautical Authority is clearly identified in the designation; and

iii. the airline is owned directly or through majority ownership, and it iseffectively controlled by Member States of the EuropeanCommunity or the European Free Trade Association and/or bynationals of such states.

b- in the case of an airline designated by the Arab Republic of Egypt:

i. it is established in the territory of the Arab Republic of Egypt orunder any community which the Arab Republic of Egypt is amember of and has a valid Operating License in accordance withsuch Community or Arab Republic of Egypt law; and

ii. effective regulatory control of the airline is exercised andmaintained by the Arab Republic of Egypt or the Community towhich it is a member responsible for issuing its Air Operator'sCertificate and the relevant Aeronautical Authority is clearlyidentified in the designation; and

c- the designated airline is qualified to meet the conditions prescribedunder the laws and regulations normally and reasonably applied to theoperation of international air transportation by the Contracting Party

Attachment B

considering the application or applications in conformity with theprovisions of the Convention; and

d- the standards set forth in Article 7 [Customs Duties] are beingmaintained and administered;

3. When an Airline has been so designated and authorized it may beginat any time to operate the agreed services, subject to the provisions ofthis Agreement.

ARTICLE 5

REVOCATION OR SUSPENSIONOF OPERATING AUTHORIZATION

(1) Either Contracting Party may revoke, suspend or limit the operatingauthorisation or technical permissions of an airline designated by the otherContracting Party:

a- In the case of an airline designated by the Government of the Republicof Cyprus:

i. the airline is not established in the territory of the Republic ofCyprus under the Treaty establishing the European Community orhas not a valid Operating License in accordance with EuropeanCommunity law; or

ii. effective regulatory control of the airline is not exercised or notmaintained by the European Community Member State responsiblefor issuing its Air Operator's Certificate, or the relevant AeronauticalAuthority is not clearly identified in the designation.

iii. the airline is not owned directly or through majority ownership, andit is not effectively controlled by Member States of the EuropeanCommunity or the European Free Trade Association and/or bynationals of such states.

b- In the case of an airline designated by the Arab Republic of Egypt:

i. the airline is not established in the territory of the Arab Republic ofEgypt or under any community which the Arab Republic of Egypt isa member of or has not a valid Operating License in accordancewith such Community or Arab Republic of Egypt law; or

ii. effective regulatory control of the airline is not exercised or notmaintained by the Arab Republic of Egypt or the Community towhich it is a member responsible for issuing its Air Operator'sCertificate, or the relevant Aeronautical Authority is not clearlyidentified in.

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Attachment B

c- In the case of failure by that airline to comply with the laws orregulations normally and reasonably applied by the Contracting Partygranting those rights; or

d- If the airline otherwise fails to operate in accordance with the conditionsprescribed under this Agreement; or

e- in the case of failure by the other Contracting Party to take appropriateaction to improve safety in accordance with paragraph (2) of Article 16,Safety; or

(2) Unless immediate revocation, suspension or imposition of theconditions mentioned in paragraph (1) of this Article is essential toprevent further infringements of laws or regulations, such right shall beexercised only after consultation with the other Contracting Party.

Attachment C

ARTICLE 17

TARIFFS

Each Contracting Party shall allow Prices for air transport to beestablished by each Designated Airline for carriage to or from theterritory of the other Contracting Party at reasonable levels based uponcommercial considerations in the marketplace and all relevant factorsincluding operational cost and reasonable profit.

2. The tariffs shall be submitted for the approval of the AeronauticalAuthorities of both Contracting Parties at least forty five (45) days beforethe proposed date of their introduction. In special cases, this period maybe reduced, subject to the agreement of the said Authorities.

This approval may be given in writing. If neither of the AeronauticalAuthorities has expressed disapproval within thirty (30) days of the dateof submission, in accordance with paragraph (2) of this Article, this tariffshall be considered as approved. In the event of the period forsubmission being reduced, as provided for in paragraph (2), theAeronautical Authorities may agree that the period within which anydisapproval must be notified shall be less than thirty (30) days.

3. Intervention by the Contracting Parties shall be limited to:

A) prevention of unreasonably discriminatory prices or practices;

B) protection of consumers from prices that are unreasonably high orrestrictive due to the abuse of a dominant position;

C) protection of airlines from prices that are artificially low due to director indirect governmental subsidy or support.