September 10, 1996

AIR TRANSPORT AGREEMENT BETWEEN THE GOVERNMENTOF THEUNITED STATES OF AMERICA AND THE GOVERNMENTOFTHE CZECH REPUBLIC

The Government of the United States of America and the Government of the Czech Republic (hereinafter "the Parties") ;

Desiring to promote an international aviation system based on competition among airlines in the marketplace with minimum government interference and regulation;

Desiring to facilitate the expansion of international air transport opportunities ;

Desiring to make it possible for airlines to offer the travelling and shipping public a variety of service options at prices that are not discriminatory and do not represent abuse of a dominant position, and wishing to encourage individual airlines to develop and implement innovative and competitive prices;

Desiring to ensure the highest degree of safety and security in international air transport and reaffirming their grave concern about acts or threats against the security of aircraft, which jeopardize the safety of persons or property, adversely affect the operation of air transportation, and undermine public confidence in the safety of civil aviation ;

Being Parties to the Convention on International Civil Aviation, opened for signature at Chicago
on December 7, 1944;

and Desiring to conclude an agreement for the purpose of establishing air services between and beyond their respective territories ;

Have agreed as follows:

Article I

Definitions

For the purposes of this Agreement, unless otherwise stated, the term :

1 . "Aeronautical authorities" means, in the case of the United States, the Department of Transportation, or its successor, and in the case of the Czech Republic; the Ministry of Transport, or its successor, and any person or agency authorized to perform the functions exercised at the present time by those authorities ;

2. "Agreement" means this Agreement, its Annexes, and any amendments thereto;

3. "Air transportation" means any operation performed by aircraft for the public carriage of traffic in passengers, baggage, cargo, and mail, separately or in combination, for remuneration or hire;

4. "Convention" means the Convention on International Civil Aviation, opened for signature at Chicago on December 7, 1944, and includes :

(a) any amendment that has entered into force under Article 94(a) of the Convention and has been ratified by both Parties, and

(b) any Annex or any amendment thereto adopted under Article 90 of the Convention ; insofar as such Annex or amendment is at any given time effective for both Parties;

5. "Designated airline" means an airline designated and authorized in accordance with Article 3 of this Agreement ;

6. "Full cost" means the cost of providing service plus a reasonable charge for administrative overhead and reasonable return on assets after depreciation ;

7. "International air transportation" means air transportation that passes through the airspace over the territory of more than one State ;

8. "Price" means any fare, rate or charge for the carriage of passengers (and their baggage) and/or cargo (excluding mail) in air transportation charged by airlines, including their agents, and the conditions governing the availability of such fare, rate or charge ;

9. "Stop for non-traffic purposes" means a landing for any purpose other than taking on or discharging passengers, baggage, cargo, and/or mail in air transportation ;

10, "Territory" means the land areas under the sovereignty, jurisdiction, protection, or trusteeship of a Party, and the territorial waters adjacent thereto ; and

11 . "User charge" means a charge imposed on airlines for the provision of airport, air navigation, aviation security facilities or services, including related services and facilities .

Article 2

Grant of Rights

I . Each Party grants to the other Party the following rights for the conduct of international air transportation by the airlines of the other Party :

(a) the right to fly across its territory without landing ;

(b) the right to make stops in its territory for non-traffic purposes; and (c) the rights otherwise specified in this Agreement .

2. Nothing in this Article shall be deemed to confer on the airline or airlines of one Party the rights to take on board, in the territory of the other Party, passengers, their baggage, cargo or mail carried for compensation and destined for another point in the territory of that other Party .

Article 3

Designation and Authorization

I . Each Party shall have the right to designate as many airlines as it wishes to conduct international air transportation in accordance with this Agreement and to withdraw or alter such designations. Such designations shall be transmitted to the other Party in writing through diplomatic channels, and shall identify whether the airline is authorized to conduct the type of air transportation specified in Annex I or Annex II or both.

2. On receipt of such a designation, and of applications from the designated airline, in the form and manner prescribed for operating authorizations and technical permissions, the other Party shall grant appropriate authorizations and permissions with minimum procedural delay, provided: (a) substantial ownership and effective control of that airline are vested in the Party designating the airline, nationals of that Party, or both ; 5 (b) the designated airline is qualified to meet the conditions prescribed under the laws and regulations normally applied to the operation of international air transportation by the Party considering the application or applications ; and (c) the Party designating the airline is maintaining and administering the standards set forth in Article 6 (Safety) and Article 7 (Aviation Security) .

Article 4

Revocation of Authorization

1 . Either Party may revoke, suspend or limit the operating authorizations or technical permissions of an airline designated by the other Party where :

(a) substantial ownership and effective control of that airline are not vested in the other Party, the other Party's nationals, or both ;

(b) that airline has failed to comply with the laws and regulations referred to in Article 5 (Application of Laws) of this Agreement; or

(c) the other Party is not maintaining and administering the standards as set forth in Article 6 (Safety). Unless immediate action is essential to prevent further noncompliance with subparagraphs I (b) or I (c) of this Article, the rights established by this Article shall be exercised only after consultation with the other Party.

3 . This Article does not limit the rights of either Party to withhold, revoke, limit or impose conditions on the operating authorization or technical permissions of an airline or airlines of the other Party in accordance with the provisions of Article 7 (Aviation Security) .

Article 5

Application of Laws

I . While entering, within, or leaving the territory of one Party, its laws and regulations relating to the operation and navigation of aircraft shall be complied with by the other Party's airlines.

2. While entering, within, or leaving the territory of one Party, its laws and regulations relating to the admission to or departure from its territory of passengers, crew or cargo on aircraft (including regulations relating to entry, clearance, aviation security, immigration, passports, customs and quarantine or, in the case of mail, postal regulations) shall be complied with by, or on behalf of, such passengers, crew or cargo of the other Party's airlines .

Article 6

Safety

1 . Each Party shall recognize as valid, for the purpose of operating the air transportation provided for in this Agreement, certificates of airworthiness, certificates of competency, and licenses issued or validated by the other Party and still in force, provided that the requirements for such certificates or licenses at least equal the minimum standards that may be established pursuant to the Convention. Each Party may, however, refuse to recognize as valid for the purpose of flight above its own territory, certificates of competency and licenses granted to or validated for its own nationals by the other Party .

2 . Either Party may request consultations concerning the safety standards maintained by the other Party relating to aeronautical facilities, aircrews, aircraft and operation of the designated airlines. If, following such consultations, one Party finds that the other Party does not effectively maintain and administer safety standards and requirements in these areas that at least equal the minimum standards that may be established pursuant to the Convention, the other Party shall be notified of such findings and the steps considered necessary to conform with these minimum standards, and the other Party shall take appropriate corrective action . Each Party reserves the right to withhold, revoke, or limit the operating authorization or technical permissions of an airline or airlines designated by the other Party in the event the other Party does not take such appropriate corrective action within a reasonable time .

Article 7

Aviation Security

1 . In accordance with their rights and obligations under international law, the Parties reaffirm that their obligation to each other to protect the security of civil aviation against acts of unlawful interference forms an integral part of this Agreement. Without limiting the generality of their rights and obligations under international law, the Parties shall in particular act in conformity with the provisions of the Convention on Offenses and Certain Other Acts Committed on Board Aircraft, signed at Tokyo on September 14, 1963, the Convention for the Suppression of Unlawful Seizure of Aircraft, signed at The Hague on December 16, 1970, the Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation, signed at Montreal on September 23, 1971 and the Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation, signed at Montreal on February 24, 1988 .

2. The Parties shall provide upon request all necessary assistance to each other to prevent acts of unlawful seizure of civil aircraft and other unlawful acts against the safety of such aircraft, of their passengers and crew, and of airports and air navigation facilities, and to address any other threat to the security of civil aviation .

3. The Parties shall, in their mutual relations, act in conformity with the aviation security standards and appropriate recommended practices established by the International Civil Aviation
Organization; they shall require that operators of aircraft of their registry, operators of aircraft who have their principal place of business or permanent residence in their territory, and the operators of airports in their territory act in conformity with such aviation security provisions .

4. Each Party agrees to observe the security provisions required by the other Party for entry into, departure from and while within the territory of that other Party and to take adequate measures to protect aircraft and to inspect passengers, crew, their carry on items, baggage, as well as cargo and aircraft stores, prior to and during boarding or loading. Each Party shall also give positive consideration to any request from the other Party for special security measures to meet a particular threat.

5. When an incident or threat of an incident of unlawful seizure of aircraft or other unlawful acts against the safety of passengers. crew, aircraft. airports or air navigation facilities occurs, the Parties shall assist each other by facilitating communications and other appropriate measures intended to terminate rapidly and safely such incident or threat .

6. When a Party has reasonable grounds to believe that the other Party has departed from the aviation security provisions of this Article, the aeronautical authorities of that Party may request immediate consultations with the aeronautical authorities of the other Party. Failure to reach a satisfactory agreement within 15 days from the date of such request will constitute grounds to withhold, revoke, limit or impose conditions on the operating authorization and technical permissions of an airline or airlines of that Party. When required by an emergency, a Party may take interim action prior to the expiry of 15 days .

Article 8

Commercial Opportunities

The designated airlines of each Party shall have the right to establish offices inn the territory of the other Party for the promotion and sale of air transportation .

2. The designated airlines of each Party shall have the right, in accordance with the laws and regulations of the other Party relating to entry, residence, and employment to bring in and maintain in the territory of the other Party managerial, sales, technical, operational and other specialist staff required for the provision of air transportation . Each Party shall, to the extent consistent with its laws and regulations, grant with minimum delay the necessary employment authorization, visas or other similar documents to such staff

3. Each designated airline shall have the right to perform its own ground-handling in the territory of the other Party ("self handling"), provided its personnel comply with the licensing requirements normally applied to such personnel, or, at its option, select among competing agents, authorized by competent authorities, for such services in whole or in part. The rights shall be subject only to physical constraints resulting from considerations of airport safety and security . Where such considerations preclude self-handling (as may be the case with ramp handling), ground services shall be available on an equal basis to all airlines, charges shall be based on the full cost of services provided ; and such services shall be comparable to the kind and quality of services as if self-handling were possible .

4. Any designated airline of each Party shall have the right to engage in the sale of air transportation in the territory of the other Party directly and, at the airline's discretion, through its agents, except as may be specifically provided by the charter regulations of the country in which the charter originates that relate to the protection of passenger funds and passenger cancellation and refund rights . Each designated airline shall have the right to sell such transportation, and any person shall be free to purchase such transportation, in the currency of that territory or in freely convertible currencies authorized by foreign exchange regulations in force in that territory .

5. Each designated airline shall have the right to convert and remit to its country, on demand, local revenues in excess of sums locally disbursed . Conversion and remittance shall be permitted without restrictions or delay, and without taxation in respect thereof, at the prevailing rate of exchange for current transactions on the current or future date that the airline requests as the date for remittance .

6. The airlines of each Party shall be permitted to pay for local expenses, including purchases of fuel, in the territory of the other Party in local currency . At their discretion, the airlines of each Party may pay for such expenses in the territory of the other Party in freely convertible currencies according to local currency regulation .

7. (a) In operating or holding out the authorized services on the agreed routes, any designated airline of one Party may enter into cooperative marketing arrangements such as blocked-space, code-sharing or leasing arrangements, with (i) an airline or airlines of either Party, provided that all airlines in such arrangements 1) hold the appropriate authority from both Parties and 2) meet the requirements normally applied to such arrangement's by each Party; (ii) an airline or airlines of a third country, provided that such third country authorizes or allows comparable arrangements between the airlines of the other. Party and other airlines on services to, from and via such third country, provided further that all airlines in such arrangements I) hold the appropriate authority from both Parties and 2) meet the requirements normally applied to such arrangements by each Party. (b) Notwithstanding subsection 7 (a) of this section, until November 1, 1999, the designated airlines of each Party may operate or hold out scheduled, combination code-sharing services between points in the territory of that Party and points in the territory of the other Party over an intermediate point or points, as specified in Annex 1, Section I, A or B of the Scheduled Air Transportation, pursuant to code-sharing arrangements between an airline of that Party and an airline of a third country, only as follows : (i) Except as provided in paragraph 7 (b)(ii) below, from September 1, 1997, through October 31, 1999, no more than three airlines of each Party may exercise the rights in paragraph 7 (a)(ii) above, providing no more than a total of 35 weekly frequencies, no more than 14 of which may be provided by any one airline of that Party . (ii) If any airline of one Party :

(I) has served the territory of the other Party, using its own aircraft or aircraft leased to it in their entirety, for any twelve-month period beginning no earlier than the effective date of this Agreement ; and

(2) then suspends such service entirely, that airline may, effective September I, 1997 and in addition to the services authorized under paragraph 7 (b)(i) above, exercise the rights provided in paragraph 7 (a)(ii) above, up to the average number of weekly frequencies it had operated with its own aircraft during such twelve-month period . (iii) For purposes of this subsection 7 (b), a frequency is defined for an airline of a Party as one round-trip aircraft operation, pursuant to a code-share arrangement with an airline of a . third country, to and from the first point of arrival in the territory of the other Party . 8. Notwithstanding any other provision of this Agreement, airlines and indirect providers of cargo transportation of both Parties shall be permitted, without restriction, to employ in connection with international air transportation any surface transportation for cargo to or from any points in the territories of the Parties or in third countries, including transport to and from all airports with customs facilities, and including, where applicable, the right to transport cargo in bond under applicable laws and regulations. Such cargo, whether moving by surface or by air, shall have access to airport customs processing and facilities . Airlines may elect to perform their own surface transportation or to provide it through arrangements with other surface carriers, including surface transportation operated by other airlines and indirect providers of cargo air transportation. Such intermodal cargo services may be offered at a single, through price for the air and surface transportation combined, provided that shippers are not misled as to the facts concerning such transportation .

Article 9

Customs Provisions

1 . On arriving in the territory of one Party, aircraft operated in international air transportation by the designated airlines of the other Party, their regular equipment, ground equipment, fuel, lubricants, consumable technical supplies, spare parts (including engines), aircraft stores (including but not limited to such items of food, beverages and liquor, tobacco and other products destined for sale to or use by passengers in limited quantities during flight), and other items intended for or used solely in connection with the operation or servicing of aircraft engaged in international air transportation shall be exempt, on the basis of reciprocity, from all import restrictions, property taxes and capital levies, customs duties, excise taxes, and similar fees and charges that are (1) imposed by the national authorities, and (2) not based on the cost of service provided, provided that such equipment and supplies remain on board the aircraft .

2. There shall also be exempt, on the basis of reciprocity, from the taxes, levies, duties, fees and charges referred to in paragraph I of this Article, with the exception of charges based on the cost of the service provided :

(a) aircraft stores introduced into or supplied in the territory of a Party and taken on board, within reasonable limits, for use on outbound aircraft of an airline of the other Party engaged in international air transportation, even when these stores are to be used on a part of the journey performed over the territory of the Party in which they are taken on board ;

(b) aircraft ground-handling equipment and spare parts (including engines) introduced into the territory of a Party for the servicing, maintenance, or repair of aircraft of an airline of the other Party used in international air transportation ;

(c) fuel, lubricants and consumable technical supplies introduced into or supplied in the territory of a Party, for use in an aircraft of an airline of the other Party engaged in international air transportation, even when these supplies are to be used on a part of the journey performed over the territory of the Party in which they are taken on board ; and all

(d) promotional and advertising materials introduced into or supplied in the territory of one Party and taken on board, within reasonable limits, for use on outbound aircraft of an airline of the other Party engaged in international air transportation, even when these stores are to be used on a part of the journey performed over the territory of the Party in which they are taken on board.

3 . Equipment and supplies referred to in paragraphs_ I and 2 of this Article may be required to be kept under the supervision or control of the appropriate authorities .

4. The exemptions provided by this Article shall also be available where the designated airlines of one Party have contracted 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 specified in paragraphs I and 2 of this Article.

Article 10

User Charges

1 . User charges that may be imposed by the competent charging authorities or bodies of each Party on the airlines of the other Party shall be just, reasonable, non-discriminatory, and equitably apportioned among categories of users . In any event, any such user charges shall be assessed on the airlines of the other Party on terms not less favorable than the most favorable terms available to any other airline operating similar air services at the time the charges are assessed .

2. User charges imposed on the airlines of the other Party may reflect, but shall not exceed, the full cost to the competent charging authorities or bodies of providing the appropriate airport, airport environmental, air navigation, and aviation security facilities and services at the airport or within the airport system. Such full cost may include a reasonable return on assets, after depreciation. Facilities and services for which charges are made shall be provided on an efficient and economic basis.

3. Each Party shall encourage consultations between the competent charging authorities or bodies in its territory and the airlines using the services and facilities, and shall encourage the competent charging authorities or bodies and the airlines to exchange such information as may be necessary to permit an accurate review of the reasonableness of the charges in accordance with the principles of paragraphs I and 2 of this Article . Each Party shall encourage the competent charging authorities or bodies to provide users with reasonable notice of any proposal for changes in user charges to enable users to express their views before changes are made .

4. Neither Party shall be held, in dispute resolution procedures pursuant to Article 14, to be in breach of a provision of this Article, 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 amount of 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 Article .

Article I I

Fair Competition

1 . Each Party shall allow a fair and equal opportunity for the designated airlines of both Parties to compete in providing the international air transportation governed by this Agreement .

2. Each Party shall take all appropriate action within its jurisdiction to eliminate all forms of unjust discrimination or unfair competitive practices adversely affecting the competitive position of the airlines of the other Party .

3 . Each Party shall allow each designated airline to determine the frequency and capacity of the international air. transportation it offers based upon commercial considerations in the marketplace. Consistent with this right, neither Party shall unilaterally limit the volume of traffic, frequency or regularity of service, or the aircraft type or types operated by the designated airlines of the other Party, except as may be required for customs, technical, operational, or environmental reasons under uniform conditions consistent with Article 15 of the Convention .

4. Neither Party shall impose on the other Party's designated airlines a first-refusal requirement, uplift ratio, no-objection fee, or any other requirement with respect to capacity, frequency or traffic that would be inconsistent with the purposes of this Agreement .

5 . Neither Party shall require the filing of schedules, programs for charter flights, or operational plans by airlines of the other Party for approval, except as may be required on a nondiscriminatory
basis to enforce the uniform conditions foreseen by paragraph 3 of this Article or as may be specifically authorized in an Annex to this Agreement . If a Party requires filings for information purposes, it shall minimize the administrative burdens of filing requirements and procedures on air transportation intermediaries and on designated airlines of the other Party .

Article 12

Pricing

1 . Each Party shall allow prices for air transportation to be established by each designated airline based upon commercial considerations in the marketplace. Intervention by the Parties shall be limited to:

(a) prevention of unreasonably discriminatory prices or practices ;

(b) protection of consumers from prices that are unreasonably high or restrictive due to the abuse of a dominant position ; and

(c) protection of airlines from prices that are artificially low due to direct or indirect governmental subsidy or support.

2. Each Party may require notification to or filing with its aeronautical authorities of prices to be charged to or from its territory by designated airlines of the other Party . Notification or filing by the designated airlines of both Parties may be required no more than 30 days before the proposed date of effectiveness. In individual cases, notification of filing may be permitted on shorter notice than normally required . Neither Party shall require the notification or filing by airlines of the other Party of prices charged by charterers to the public, except as may he required on a non-discriminatory basis for information purposes.

3. Neither Party shall take unilateral action tQ prevent the inauguration or continuation of a price proposed to be charged or charged by:

(a) a designated airline of either Party for international air transportation between the territories of the Parties, or

(b) a designated airline of one Party for international aii° transportation between the territory of the other Party and any other country' including in both cases transportation on an interline or intraline basis . If either Party believes that any such price is inconsistent with the considerations set forth in paragraph I of this Article, it shall request consultations and notify the other Party of the reasons for its dissatisfaction as soon as possible. These consultations shall be held not later than 30 days after receipt of the request, and the Parties shall cooperate in securing information necessary for reasoned resolution of the issue. If the Parties reach agreement with respect to a price for which a notice of dissatisfaction has been given, each Party shall use its best efforts to put that agreement into effect. Without such mutual agreement, the price shall go into effect or continue in effect . ' Notwithstanding subparagraph :3 (b) of this Article. through October 31 . 1999. a Party may take unilateral action to prevent, price leadership (but not price-matching), except with respect to scheduled cargo services. by an airline of the other Party in a market between the territory of the first Party and ra third country.

Article 13

Consultations

Either Party may, at any time, request consultations relating to this Agreement . Such consultations shall begin at the earliest possible date, but not later than 60 days from the date the other Party receives the request unless otherwise agreed .

Article 14

Settlement of Disputes

1 . Any dispute arising under this Agreement, except those that may arise under paragraph 3 of Article 12 (Pricing), that is not resolved by a first round of formal consultations may be referred by agreement of the Parties for decision to some person or body . If the Parties do not so agree, the dispute shall, at the request of either Party, be submitted to arbitration in accordance with the procedures set forth below.

2. Arbitration shall be by a tribunal of three arbitrators to be constituted as follows :

a) Within 30 days after the receipt of a request for arbitration, each Party shall name one arbitrator . Within 60 days after these two arbitrators have been named, they shall by agreement appoint a third arbitrator, who shall act as President of the arbitral tribunal ;

b) If either Party fails to name an arbitrator, or if the third arbitrator is not appointed in accordance with subparagraph a) of this paragraph, either Party may request the President of the Council of the International Civil Aviation Organization to appoint the necessary arbitrator or arbitrators within 30 days . If the President of the Council is of the same nationality as one of the Parties, the most senior Vice President who is not disqualified on that ground shall make the appointment.

3. Except as otherwise agreed, the arbitral tribunal shall determine the limits of its jurisdiction in accordance with this Agreement and shall establish its own procedural rules . The tribunal, once formed, may recommend interim relief measures pending its final determination. At the direction of the tribunal or at the request of either of the Parties, a conference to determine the precise issues to be arbitrated and the specific procedures to be followed shall be held not later than 15 days after the tribunal is fully constituted .

4. Except as otherwise agreed or as directed by the tribunal, each Party shall submit a memorandum within 45 days of the time the tribunal is fully constituted . Replies shall be due 60 days later. The tribunal shall hold a hearing at the request of either Party or on its own initiative within 15 days after replies are due .

5 . The tribunal shall attempt to render a written decision within 30 days after completion of the hearing or, if no hearing is held, after the date both replies are submitted . The, decision of the majority of the tribunal shall prevail .

6. The Parties may submit requests for clarification of the decision within 15 days after it is rendered and any clarification given shall be issued within 15 days of such request .

7. Each Party shall, to the degree consistent with its national law, give full effect to any decision or award of the arbitral tribunal . 3. The expenses of the arbitral tribunal, including the fees and expenses of the arbitrators, shall be shared equally by the Parties. Any expenses incurred by the President of the Council of the International Civil Aviation Organization in connection with the procedures of paragraph 2 (b) of this Article shall be considered to be part of the expenses of the arbitral tribunal .

Article 15

Termination

Either Party may, at any time, give notice in writing to the other Party of its decision to terminate this Agreement. Such notice shall be sent simultaneously to the International Civil Aviation Organization. This Agreement shall terminate at midnight (at the place of receipt of the notice to the other Party) immediately before the first anniversary of the date of receipt of the notice by the other Party, unless the notice is withdrawn by agreement of the Parties before the end of this period.

Article 16 Registration with ICAO

This Agreement and all amendments thereto shall be registered with ..the International Civil Aviation Organization .

Article 17

Previous Agreement

As soon as this Agreement enters into force, the Air Transport Agreement between the Government of the United States of America and the Government of the Czechoslovak Socialist Republic, signed on 29 June 1987, as amended, shall be superseded with respect to the United States of America and the Czech Republic .

Article 18

Entry into Force

This Agreement and its Annexes shall enter into force on the date of signature .

IN WITNESS WHEREOF the undersigned, being duly authorized by their respective Governments, have signed this Agreement . DONE at Prague, this 10 day of September, 1996, in two originals, in the English and Czech languages, each text being equally authentic .

GOVERNMENT OF THE STATES OF AMERICA:

FOR THE GOVERNMENT THE CZECH REPUBLIC:

ANNEX I

Scheduled Air Transportation

Section l Routes

Airlines of each Party designated under this Annex shall, in accordance with the terms of their designation, be entitled to perform scheduled international air transportation between points on the following routes: A. Routes for the airline or airlines designated by the Government of the United States: From points behind the United States via the United States and intermediate points to a point or points in the Czech Republic and beyond. B. Routes for the airline or airlines desienated by the Government of the Czech Republic: From points behind the Czech Republic via the Czech Republic and.iiiiermediate points to a point or points in the United States' and beyond .

Section 2

Through October 31 . 1999. airlines designated by the Czech Republic may serve only three points in (he United States . These three point.s shall initially be New York. Chicago and Houston: however. any of these three points may be changed by the Government of the Czech Republic. following 30 days' notice to the Government of the United States . In addition. however. subject. to paragraph 7 of Article 8. airlines desienal.ed by the Czech Republic may:,so serve the following points in the I:niled States. on a code-share basis only: I) From April I. 1996. through August 31 . 1997. 13 points: and . ) From Septerber I . 1997. Ihrough October 1 . 1999. 30 point.s . Any of I here points may he cli oeectl be Lhe Governmentt of the Czech Republic . following 30 days' nol.ice to the Governmenl. of Lhe I riilesl ;fates.

2 Operational Flexibility

Each designated airline may, on any or all flights and at its option :

I . Operate flights in either or both directions; Combine different flight numbers within one aircraft operation ;

3. Serve behind, intermediate, and beyond points and points in the territories of the Parties on the routes in any combination and in any order ;

4. Omit stops at any point or points ;

5 . Transfer traffic from any of its aircraft to any of its other aircraft at any point on the routes; and

6. Serve points behind any points in its territory with or without change of aircraft or flight number and hold out and advertise such services to the public as through services ; without directional or geographic limitation and without loss of any right to carry traffic otherwise permissible under this Agreement; provided that the service serves a point in the territory of the Party designating the airline.

Section 3

Change of Gauge

On any segment or segments of the routes above, any designated airline may perform international air transportation without any limitation as to change, at any point on the route, in type or number of aircraft operated; provided that, in the outbound direction, the transportation beyond such points is a continuation of the transportation from the territory of the Party that has designated the airline and, in the inbound direction, the transportation to the territory of the Party that has designated the airline is a continuation of the transportation from beyond such points.

ANNEX II

Charter air transportation

Section I

Airlines of each Party designated under this Annex shall, in accordance with the terms of their designation, have the right to carry international charter traffic of passengers (and their accompanying baggage) and/or cargo (including, but not limited to, freight forwarder, split, and combination (passengers/cargo) charters) : Between any point or points in the territory of the Party that has designated the airline and any point or points in the territory of the other Party ; and Between any point or points in the territory of the other Party and any point or points in a third country or countries, provided that such service constitutes part of a continuous operation, with or without a change of aircraft, that includes service to the homeland for the purpose of carrying local traffic between the homeland and the territory of the other Party . In the performance of services covered by this Annex, airlines of each Party designated under this Annex shall also have the right :

1 . to make stopovers at any points whether within or outside of the territory of either Party ; to carry transit traffic through the other Party's territory ; and 3 to combine on the same aircraft traffic originating in one Party s territory, traffic originating in the other Party's territory, and traffic originating in third countries . Each Party shall extend favorable consideration to applications by airlines of the other Party to carry traffic not covered by this Annex on the basis of comity and reciprocity .

Section 2
Any airline designated by either Party performing international charter air transportation originating in the territory of either Party, whether on a one-way or round-trip basis, shall have the option of complying with the charter laws, regulations, and rules either of its homeland or of the other Party. If a Party applies different rules, regulations, terms, conditions, or limitations to one or more of its airlines, or to airlines of different countries, each designated airline shall be subject to the least restrictive of such criteria . However, nothing contained in the above paragraph shall limit the rights of either Party to require airlines designated under this Annex by either Party to adhere to requirements relating to the protection of passenger funds and passenger cancellation and refund rights .

Section 3

Except with respect to the consumer protection rules referred to in .the'preceding paragraph above, neither Party shall require an airline designated under this Annex by the other Party, in respect of the carriage of traffic from the territory of that other Party or of a third country on a one-way or round-trip basis, to submit more than a declaration of conformity with the applicable laws, regulations and rules referred to under Section 2 of this Annex or of a waiver of these laws, regulations. or rules granted by the applicable aeronautical authorities .

ANNEX III

Principles of Non-Discrimination Within and Competition among Computer Reservations Systems

Recognizing that Article 1 I (Fair Competition) of the U.S.-Czech Republic Agreement guarantees the airlines of both Parties "a fair and equal opportunity to compete," Considering that one of the most important aspects of the ability of an airline to compete is its ability to inform the public of its services in a fair and impartial manner, and that, therefore, the. quality of information about airline services available to travel agents who directly distribute such information to the traveling public and the ability of an airline to offer those agents competitive computer reservations systems (CRSs) represent the foundation for an airline's competitive opportunities, and . Considering that it is equally necessary to ensure that the interests of the consumers of air transport products are protected from any misuse of such informatiort`and its misleading presentation and that airlines and travel agents have access to effectively competitive computer reservations systems :

l . The Parties agree that CRSs will have integrated primary displays for which:

(a) Information regarding international air services, including the construction of connections on those services, shall be edited and displayed based on non-discriminatory and objective criteria that are not influenced, directly or indirectly, by airline or market identity. Such criteria shall apply uniformly to all participating airlines.

(b) CRS data bases shall be as comprehensive as possible .

(c) CRS vendors shall. not delete information submitted by the participating airlines ; such information shall be accurate and transparent; for example, code-shared and change-of-gauge flights and flights with stops should be clearly identified as having those characteristics.

(d) All CRSs that are available to travel agents who directly distribute information about airline services to the traveling public in either Party's territory shall not only be obligated to, but shall also be entitled to, operate in conformance with the CRS rules that apply in the territory where the CRS is being operated .

(e) Travel agents shall be allowed to use any of the secondary displays available through the CRS so long as the travel agent makes a specific request for that display .

2. ' A Party shall require that each CRS vendor operating in its territory allow all airlines willing to pay any applicable non-discriminatory fee to participate in its CRS . A Party shall require that all distribution facilities that a system vendor provides shall be offered on a nondiscriminatory
basis to participating airlines . A Party shall require that CRS vendors display, on a non-discriminatory, objective, carrier-neutral and market-neutral basis, the international air services of participating airlines in all markets in which they wish to sell those services . Upon request, a CRS vendor shall disclose details of its data base update and storage procedures, its criteria for editing and ranking information . the weight given to such criteria, and the criteria used for selection of connect points and inclusion of connecting flights .

3 . CRS vendors operating in the territory of one Party shall be entitled to bring in, maintain. and make freely available their CRSs to travel agencies or travel companies whose principal business is the distribution of travel-related products in the territory of the other Party if the CRS complies with these principles .

4. Neither Party shall, in its territory, impose or permit to be imposed on the CRS vendors of the other Party more stringent requirements with respect to access to and use of communication facilities, selection and use of technical CRS hardware and software, and the technical installation of CRS hardware, than those imposed on its own CRS vendors .

5. Neither Party shall, in its territory, impose or permit to be imposed on the CRS vendors of the other Party more restrictive requirements with respect to CRS displays (including edit and
3 display parameters), operation, or sale than those imposed on its own CRS vendors .

6. CRSs in use in the territory of one Party that comply with these principles and other relevant non-discriminatory regulatory, technical, and security standards shall be entitled to effective and unimpaired access in the territory of the other Party . One aspect of this is that a designated airline shall participate in such a system as fully in its homeland territory as it does in any system offered to travel agents in the territory of the other Party. Owners/operators of CRSs of one Party shall have the same opportunity to own/operate CRSs that conform to these principles within the territory of the other Party as do owners/operators of that Party . Each Party shall ensure that its airlines and its CRS vendors do not discriminate against travel agents in their homeland territory because of their use or possession of a CRS also operated in the territory of the other Party.