[Title] U.S.- Japan Air Transport Agreement of December 14, 2009

Record Of Discussions

Delegations representing Japan and the United States met in Washington, D.C., on December 7-11, 2009, to discuss matters relating to further development of aviation relations between the two countries. The delegation lists are shown in Attachment A. The consultations were conducted in the most friendly and constructive atmosphere.

The delegations initialed the text of a Memorandum of Understanding ("the 2009 MOU") (Attachment B) implementing the Civil Air Transport Agreement of August 11, 1952, between the United States of America and Japan ("the 1952 Agreement"). The delegations stated that they will inform each other at such time as each is prepared to sign the 2009 MOU, expressing their hope and expectation that signature, after necessary domestic procedures are completed, would take place not later than October 2010.

The delegations wish to record the following:

Rights of Airlines

The delegations noted that the 1952 Agreement and the 2009 MOU implementing the 1952 Agreement allow for unlimited designations by both Parties of airlines to operate pursuant to the Annex of the 2009 MOU.

Commercial Opportunities

With respect to Part VI of the 2009 MOU, the U.S. delegation affirmed its understanding that no issues have arisen with respect to the ability of airlines to engage in the activities set forth in paragraphs 1, 4, 5 and 6. Should laws or regulations be implemented in the future that raise concerns with respect to the aforementioned paragraphs, the delegations expressed their intent to consult with a view to reaching a prompt and amicable resolution. With respect to the second sentence of paragraph 5 of Part VI, the delegations confirmed that it is not envisioned that any amendment is needed to either Party's laws and regulations.

Cooperative Marketing Arrangements

The delegations noted that the reference to "leasing" in paragraph 1 of Part VII includes the provision of aircraft with crew.

With respect to paragraph 1 of Part VII, the delegations indicated their understanding that a non-operating airline of one Party, holding out service to an intermediate point or a point beyond the territory of the other Party, must also hold out service between that point and the homeland of the airline.

User Charges

The delegations understand that neither Party shall be held, in dispute resolution procedures pursuant to Article 15 of the 1952 Agreement, to be in breach of a provision of this Part, unless (a) it fails to undertake a review of the charge or practice that is the subject of complaint by the other Party within a reasonable time; or (b) following such a review it fails to take all steps within its power to remedy any charge or practice that is inconsistent with this Part.

Settlement of Disputes

The delegations understand that the obligation of a Party under paragraph (B) of Article 15 of the 1952 Agreement to use its best efforts to put into effect an opinion expressed in an advisory report issued pursuant to that article shall not require a Party to take action inconsistent with its laws and regulations. Nor shall it require a Party to change those laws and regulations.

Customs Duties and Charges

The delegations noted their understanding that, for purposes of Article 6 of the 1952 Agreement, the term "regular equipment" includes ground equipment used by airlines of one Party to service aircraft while in the territory of the other Party. The delegations also noted that the exemptions provided in Article 6 include instances where an airline of one Party contracts with another airline, which similarly enjoys such exemptions from the other Party, for the loan or transfer in the territory of the other Party of the items referred to in Article 6. The delegations also noted that the term "aircraft stores," as found in Article 6, includes, among other items, products destined for sale to or use by passengers in limited quantities during flight. The delegations confirmed that it is not envisioned that any amendment is needed to either Party's laws and regulations. The delegations noted that should further questions arise concerning Article 6, the two Parties intend to consult.

U.S. Government Procured Transportation

In response to a concern raised by the Japanese delegation, the U.S. delegation explained that, under the current and longstanding interpretation of U.S. law, carriage of U.S. Government financed air transportation (Fly America traffic) by a U.S. carrier includes transportation sold under the code of a U.S. carrier pursuant to a code-share arrangement, but carried on an aircraft operated by a foreign air carrier.

In response to a request from the Japanese delegation, the U.S. delegation indicated that it would be willing to discuss giving Japanese airlines access to additional Fly America traffic should the U.S. legal and policy limitations in this area be relaxed.

Narita International Airport

The Japanese delegation explained that Narita International Airport Corporation has already initiated a study to seek the possibility of further increasing the capacity of Narita International Airport, which is expected to increase to up to 300,000 slots per year, if associated technical and environmental issues can be settled and local residents agree to it. The U.S. delegation welcomed such efforts by the relevant bodies in Japan.

The delegations affirmed the principle, expressed in the past, that "the administration of the international airports will be conducted fairly, in accordance with IATA guidelines and existing administrative guidelines" and, in this connection, the understanding that any additional slots for international services at Narita International Airport will be allocated in accordance with this principle. The Japanese delegation stated that, consistent with this principle, it anticipates that expected capacity increases at Narita International Airport will be used primarily to accommodate long-standing unmet demand, to allow new entry, to take account of competitive requirements, and to promote a mixture of operations to satisfy the demands of the travelling and shipping public.

Taking into account the anticipated desire of U.S. airlines to participate in the expected future growth of air transportation at Narita International Airport, the maturity of the international air transportation market between Japan and the United States, and the expected slot holdings of U.S. airlines as of the IATA summer season 2010, the delegations expect that, for each increase of slots at Narita International Airport, the number of additional slots to be made available to U.S. airlines would be determined by the ratio 2,190/20,000, provided that U.S. airlines make timely requests for such slots. If U.S. airlines do not request all slots available to them for any given increase, the number of such slots that were not requested by U.S. airlines would be available to U.S. airlines at the time of the next or any subsequent increase in slots at Narita International Airport, in addition to the number of slots to be made available at the ratio above.

The delegations confirmed their understanding that, if the level of 300,000 slots is reached at Narita International Airport, or if the level of 300,000 is not reached by March 2015, the provisions of the immediately preceding paragraph would not apply and the provisions of the paragraph before that paragraph would apply. In this event, the U.S. delegation would not expect that U.S. carriers will be allocated a percentage of the new slots greater than the percentage of slots allocated at that time to U.S. carriers at the airport.

The delegations affirmed their understanding that the special regime in the two paragraphs above relating to slots at Narita International Airport would only come into effect upon the signing of the 2009 MOU.

The delegations confirmed that, until such time as Japan no longer implements the existing administrative guidelines, it is: (a) the intention of the Japanese aeronautical authorities to continue to permit the arrangement described in paragraph 5 of the letter dated March 16, 1998, sent from Mr. Jiro Hanyu to Mr. Charles Hunnicutt; and (b) the intention of the United States Department of Transportation to continue to use its authority as described in paragraph 2 of the letter dated March 16, 1998, sent from Mr. Charles Hunnicutt to Mr. Jiro Hanyu.

Haneda International Airport

The delegations affirmed that the provisions of Section 3 of the Annex of the 2009 MOU may be amended by agreement of the Parties in accordance with paragraph (A) of Article 16 of the 1952 Agreement, and the delegations expressed their willingness to consider amendments on an expedited basis if operational or commercial considerations so justify.

Other Issues

In response to a question by the Japanese delegation, the U.S. delegation confirmed that nothing in the 2009 MOU implementing the 1952 Agreement, including the provisions in Parts III, VII and the Annex, is intended to authorize seventh-freedom operations, i.e., carriage of traffic between a third country and the territory of the other Party by an airline of the first Party without a traffic stop in the homeland of the first Party.

Signed in Washington, D.C. on December 11, 2009.