Order 2010-2-25

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 25th day of February, 2010

Served: February 25, 2010

Application of

AVIATION MATTERS, INC. d/b/a PACIFICFLIER Docket DOT-OST-2009-0319

 

for an exemption under 49 U.S.C. §40109 and a foreign 

air carrier permit under 49 U.S.C. §41301 

ORDER GRANTING EXEMPTION AND TO SHOW CAUSE

Summary

By this order we (1) grant the application of the referenced foreign air carrier for an exemption 

under 49 U.S.C. §40109, subject to conditions;1 and (2) tentatively find that it is in the public 

interest to grant the applicant the foreign air carrier permit attached as Appendix B to this order.

Background

On August 23, 2005, the Department issued a Notice, in Docket DOT-OST-2005-22228,

announcing several steps designed to streamline our regulatory procedures for licensing U.S. and 

foreign air carriers. Among other things, the Notice stated that:

Assuming, based on the record and on the public interest/public convenience and 

necessity elements germane to our licensing decisions, that we were in a position to act 

favorably, we would proceed to issue a single order (1) granting the exemption request 

for whatever duration we would normally have imposed, or until certificate/permit 

authority becomes effective, whichever is shorter, and (2) tentatively deciding (i.e., 

show-cause) to award a corresponding certificate (or permit), again for the standard 

duration we would normally have imposed (such as, in the case of certificates, five 

years for limited-entry markets, indefinite for open-entry markets, and in the case of 

permits, five years for comity and reciprocity regimes, indefinite for agreement 

regimes).

 1 The conditions are attached as Appendix A.
Our action in this Order serves to implement these streamlined regulatory procedures for the 

application involved in this proceeding.

Application

By application filed December 2, 2009, as supplemented on December 10, 2009, and clarified on 

January 28, 2010, Aviation Matters, Inc. d/b/a PacificFlier (PacificFlier), a foreign air carrier of 

the Republic of Palau, requests an exemption under 49 U.S.C. §40109, and a foreign air carrier 

permit under 49 U.S.C. §41301, to engage in:

a. charter foreign air transportation of persons, property, and mail between the Republic of 

Palau and Guam;

b. charter foreign air transportation of persons, property, and mail between Brisbane,

Australia and Guam; and

c. other charter operations pursuant to Part 212 of the Department’s economic regulations.2

PacificFlier proposes to conduct these operations using aircraft wet leased from Hi Fly –

Transportes Aereos, S.A., a foreign air carrier of Portugal.

The applicant provided evidentiary materials required by 14 CFR Part 211 of our regulations to 

support its requests for authority. The applicant also requested a waiver of the Department’s 

ownership and control standard.

Responsive Pleadings

On December 17, 2009, Continental Micronesia, Inc. (Continental Micronesia) filed an answer to 

PacificFlier’s application. Continental Micronesia questioned the intent of PacificFlier’s initial 

request for non-scheduled services and argued that PacificFlier appeared to be seeking openended seventh-freedom authority for services between Guam and any point in the world via 

Brisbane. Continental Micronesia further noted that PacificFlier’s ownership and management 

structure, completely comprised of citizens of Australia and New Zealand, presented

extraordinary circumstances, and Continental Micronesia urged the Department to carefully 

consider PacificFlier’s request for a waiver of the Department’s ownership and control standard.

On December 22, 2009, PacificFlier filed a reply. PacificFlier stated that its proposed flights 

were to be operated to align with unscheduled cargo shipments between two foreign points. 

 2 We note that in its initial application, PacificFlier requested authority to provide non-scheduled foreign air 

transportation of persons, property, and mail from any point or points behind the Republic of Palau and Brisbane, 

Australia, via the Republic of Palau and Brisbane, Australia, via intermediate points to Guam and beyond, and to 

operate charters under 14 CFR Part 212. By letter dated January 28, 2010, we asked PacificFlier to supplement its 

application to clarify whether it sought scheduled or charter authority, as it is the Department’s policy to no longer 

grant “non-scheduled” authority to foreign air carriers. On January 28, 2010, PacificFlier filed a response to our 

letter, clarifying that it requests authority to engage in charter services between the Republic of Palau and Guam, 

and between Brisbane and Guam.
PacificFlier also clarified at that time that the requested authority was limited to flights between: 

(1) the Republic of Palau and Guam; and (2) Brisbane, Australia and Guam. With respect to its 

ownership and control, PacificFlier cited multiple instances where the Department has granted 

exemption authority to carriers not substantially owned and effectively controlled by homeland 

nationals, and further stated that there is no evidence to suggest that the ownership of PacificFlier 

would be inimical to U.S. aviation policy or interests.

Decision

We have decided, under assigned authority and consistent with our August 23, 2005 Notice 

referenced above, to grant in part the applicant’s request for exemption authority, subject to 

conditions, and tentatively to grant in part, subject to show-cause procedures, its request for a 

foreign air carrier permit, also subject to conditions.

Specifically, we grant PacificFlier exemption authority to permit it to engage in charter foreign 

air transportation of persons, property, and mail between the Republic of Palau and Guam. We 

also grant the applicant authority to engage in other charter operations in accordance with the 

prior approval requirements set forth in 14 CFR Part 212.3

 We will tentatively grant PacificFlier 

a foreign air carrier permit for these services.4

With respect to the applicant’s request for exemption authority, we find that grant of this 

authority is consistent with the public interest. In particular, while the U.S.-Palau Compact of 

Free Association, which formerly governed aviation relations between the United States and 

Palau, has expired, we find that reciprocity and the overall state of our aviation relationship with 

Palau warrant grant of the specified exemption authority, for a two-year term, or until the 

requested permit authority becomes effective, whichever occurs earlier.

We also find that the applicant has demonstrated, based on the record, that it is financially and 

operationally qualified to perform the services authorized. With respect to the ownership and 

control of PacificFlier, the applicant states that it is owned in equal shares by two citizens of 

Australia and one citizen of New Zealand. In addition, PacificFlier states that its directors, 

officers, and key management personnel consist of four citizens of Australia and one citizen of 

New Zealand. In the circumstances presented, and in light of the fact that we have open-skies 

aviation agreements with Australia and New Zealand, we find that a waiver of our ownership and 

control polity is warranted, as there is nothing in the ownership of the carrier which would be 

inimical to U.S. aviation policy or interests.

We also note that the applicant is properly licensed by its homeland to perform the proposed 

services. We have verified the applicant’s compliance with 14 CFR Parts 203 (Warsaw liability 

waiver), and 205 (insurance requirements).

 3 This latter charter authority will mean, among other things, that any PacificFlier Brisbane-Guam charter services 

will be subject to the prior approval requirements of 14 CFR §212.9. We are not granting PacificFlier’s specific 

request here for Brisbane-Guam exemption authority. 4 Consistent with PacificFlier’s application, in the conduct of the operations authorized the applicant may only use 

aircraft wet leased from a duly authorized and properly supervised U.S. or foreign air carrier.
With respect to the concerns raised by Continental Micronesia, we note that PacificFlier’s 

subsequent clarifications indicate a narrower request than that set forth in its original application. 

Moreover, in light of the authority we are actually granting, all operations by PacificFlier in 

seventh freedom markets would be subject to prior Department approval under 14 CFR Part 212, 

giving other interested parties the opportunity for comment and giving us the opportunity to 

evaluate the public interest merits of such operations on a case-by-case basis. Finally, as 

discussed above, we have carefully examined the ownership and control of PacificFlier, and, as 

noted, have determined that a waiver of our ownership and control policy is warranted.

Tentative Findings and Conclusions--Foreign Air Carrier Permit Application

We tentatively find and conclude that the public interest warrants granting the applicant a foreign 

air carrier permit, in the form attached as Appendix B and subject to the conditions attached.5

 In 

particular, we tentatively find and conclude that the factors which support our grant in part of 

exemption authority to the applicant also warrant granting in part the foreign air carrier permit 

that the applicant has requested.

In view of the foregoing and all facts of record, we tentatively find and conclude that:

1. It is in the public interest to issue the applicant a foreign air carrier permit in the form 

attached;

2. The applicant is fit, willing and able properly to perform the foreign air transportation 

described in the attached permit and to conform to the provisions of Title 49 of the U.S. Code, 

and to our rules, regulations, and requirements;

3. A waiver of our ownership and control policy is warranted in the circumstances presented; 

4. The public interest requires that the exercise of the privileges granted by the permit should be 

subject to the terms, conditions, and limitations contained in the attached permit, and to such 

other reasonable terms, conditions, and limitations required by the public interest as we may 

prescribe;

5. The issuance of this foreign air carrier permit will not constitute a major regulatory action 

under the Energy Policy and Conservation Act of 1975, as defined in 14 CFR §313.4(a)(1) of our 

regulations;6

6. The public interest does not require an oral evidentiary hearing on the application; and

 5 The applicant’s request for a foreign air carrier permit was summarized in the Department’s published weekly list 

of applications filed. This notice described the authority sought and gave interested persons an opportunity to 

submit evidence and objections to the award of this foreign air carrier permit authority. 6

 This finding is based on the fact that the grant of this permit will not result in a near-term net annual change in 

aircraft fuel consumption of 10 million gallons or more.
7. Our action with respect to this foreign air carrier permit should, unless disapproved by the 

President of the United States under §41307 of Title 49 of the U.S. Code, become effective on 

the 61st day after its submission for §41307 review, or upon the date of receipt of advice from 

the President or his designee under Executive Order 12597 and implementing regulations that he 

or she does not intend to disapprove this portion of the Department’s decision under that section, 

whichever occurs earlier.

In view of the above, and acting under authority assigned by the Department in its regulations, 

14 CFR Part 385, we find that (1) our actions are consistent with Department policy; and (2) with 

respect to the exemption authority we are conferring on the applicant, the applicant is qualified to 

perform those operations; and that grant of the exemption authority is consistent with the public 

interest and would not constitute a major regulatory action under the Energy Policy and 

Conservation Act of 1975. 

ACCORDINGLY,

1. We grant the request of Aviation Matters, Inc. d/b/a PacificFlier for an exemption under 49 

U.S.C. §40109 to permit it to engage in: 1) charter foreign air transportation of persons, property, 

and mail between the Republic of Palau and Guam; and 2) other charters pursuant to the prior 

approval requirements set forth in the Department’s regulations governing charters;

2. The exercise of the privileges granted above is subject to compliance by Aviation Matters, 

Inc. d/b/a PacificFlier with the conditions listed in Appendix A;

3. In the conduct of the operations authorized, Aviation Matters, Inc. d/b/a PacificFlier may only 

use aircraft wet leased from a duly authorized and properly supervised U.S. or foreign air carrier;

4. Our action granting the exemption authority described herein is effective immediately, for a 

period of two years from the issue date of this order, or until the attached permit becomes 

effective, whichever is earlier;

5. We may amend, modify, or revoke the exemption authority set forth herein at our discretion 

at any time and without hearing;

6. To the extent not acted upon above, we dismiss the applicant’s request for exemption 

authority in this Docket (DOT-OST-2009-0319);

7. With respect to the applicant’s request for a foreign air carrier permit in this proceeding, we 

direct all interested persons to show cause why our tentative decision on that application, set 

forth above, should not be made final;

8. Any interested person objecting to the issuance of an order making final our tentative findings 

and conclusions with respect to the applicant’s request for a foreign air carrier permit shall, no 

later than twenty-one (21) calendar days after the date of service of this order, file with the 

Department and serve on the parties to this proceeding, a statement of objections specifying the 

part or parts of the tentative findings and conclusions objected to, together with a summary of 
testimony, statistical data, and concrete evidence to be relied upon in support of the objections; if 

objections are filed, answers to objections are due no later than seven (7) calendar days 

thereafter;

9. If timely and properly supported objections are filed, we will give further consideration to the 

matters and issues raised by the objections before we take further action;

10. In the event no objections are filed, all further procedural steps shall be deemed waived, and 

the Department will enter an order which will (subject to Presidential review under §41307 of 

Title 49 of the U.S. Code) make final our tentative findings and conclusions set forth in this 

order; and

11. We will serve a copy of this order on Aviation Matters, Inc. d/b/a PacificFlier, Continental 

Micronesia, Inc., the Ambassador of the Republic of Palau in Washington, D.C., the Federal 

Aviation Administration, and the U.S. Department of State.

Persons entitled to petition the Department for review of this order under the Department’s 

regulations, 14 CFR §385.30, may file their petitions within seven (7) days after the date of 

issuance of this order. Our action with respect to the applicant’s request for exemption authority 

under 49 U.S.C. §40109 is effective immediately, and the filing of a petition for review will not 

alter such effectiveness.

By:

PAUL L. GRETCH

Director

Office of International Aviation

(SEAL)

Appendices

An electronic version of this document is available on the World Wide Web at:

http://www.regulations.gov
Appendix A 

Foreign Carrier Exemption Conditions

In the conduct of the operations authorized, the foreign carrier applicant(s) shall:

(1) Not conduct any operations unless it holds a currently effective authorization from its homeland for such 

operations, and it has filed a copy of such authorization with the Department;

(2) Comply with all applicable requirements of the Federal Aviation Administration, the Transportation Security 

Administration, and with all applicable U.S. Government requirements concerning security, including, but not 

limited to, 14 CFR Parts 129, 91, and 36 and 49 CFR Part 1546 or 1550, as applicable. To assure compliance 

with all applicable U.S. Government requirements concerning security, the holder shall, before commencing any 

new service (including charter flights) from a foreign airport that would be the holder’s last point of departure 

for the United States, contact its International Industry Representative (IIR) (formerly referred to as 

International Principal Security Inspector) to advise the IIR of its plans and to find out whether the 

Transportation Security Administration has determined that security is adequate to allow such airport(s) to be 

served;

(3) Comply with the requirements for minimum insurance coverage contained in 14 CFR Part 205, and, prior to 

the commencement of any operations under this authority, file evidence of such coverage, in the form of a 

completed OST Form 6411, with the Federal Aviation Administration’s Program Management Branch (AFS260), Flight Standards Service (any changes to, or termination of, insurance also shall be filed with that office);

(4) Not operate aircraft under this authority unless it complies with operational safety requirements at least 

equivalent to Annex 6 of the Chicago Convention;

(5) Conform to the airworthiness and airman competency requirements of its Government for international air 

services;

(6) Except as specifically exempted or otherwise provided for in a Department Order, comply with the 

requirements of 14 CFR Part 203, concerning waiver of Warsaw Convention liability limits and defenses;

(7) Agree that operations under this authority constitute a waiver of sovereign immunity, for the purposes of 28 

U.S.C. 1605(a), but only with respect to those actions or proceedings instituted against it in any court or other 

tribunal in the United States that are: (a) based on its operations in international air transportation that, according 

to the contract of carriage, include a point in the United States as a point of origin, point of destination, or agreed 

stopping place, or for which the contract of carriage was purchased in the United States; or (b) based on a claim 

under any international agreement or treaty cognizable in any court or other tribunal of the United States. In this 

condition, the term "international air transportation" means "international transportation" as defined by the 

Warsaw Convention, except that all States shall be considered to be High Contracting Parties for the purpose of 

this definition;

(8) Except as specifically authorized by the Department, originate or terminate all flights to/from the United 

States in its homeland;

(9) Comply with the requirements of 14 CFR Part 217, concerning the reporting of scheduled, nonscheduled, 

and charter data;

(10) If charter operations are authorized, except as otherwise provided in the applicable aviation agreement, 

comply with the Department's rules governing charters (including 14 CFR Parts 212 and 380); and

(11) Comply with such other reasonable terms, conditions, and limitations required by the public interest as may 

be prescribed by the Department, with all applicable orders or regulations of other U.S. agencies and courts, and 

with all applicable laws of the United States.

This authority shall not be effective during any period when the holder is not in compliance with the conditions 

imposed above. Moreover, this authority cannot be sold or otherwise transferred without explicit Department 

approval under Title 49 of the U.S. Code.

12/2007
Appendix B

Issued by

Order 2010-__-__

 UNITED STATES OF AMERICA 

 DEPARTMENT OF TRANSPORTATION 

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

--------------------------------------------------------

PERMIT TO FOREIGN AIR CARRIER

---------------------------------------------------------

Aviation Matters, Inc. d/b/a PacificFlier

A Foreign Air Carrier of the Republic of Palau

is authorized, subject to the following provisions, the provisions of Title 49 of the U.S. Code, 

and the orders, rules, and regulations of the Department of Transportation, to engage in:

Charter foreign air transportation of persons, property, and mail between the Republic 

of Palau and Guam; and

The holder shall also be authorized to engage in other charter trips in foreign air transportation, 

subject to the terms, conditions, and limitations of the Department’s regulations governing 

charters.

In the conduct of the operations authorized, the holder may only use aircraft wet leased from a 

duly authorized and properly supervised U.S. or foreign air carrier.

This permit and the exercise of the privileges granted in it shall be subject to the terms, 

conditions and limitations in both the order issuing this permit and the attachment to this order, 

and 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 this permit remains 

in effect, to which the United States and the holder’s homeland are or shall become parties.

This permit shall be effective on , 2010, and shall terminate five years thereafter; 

provided, that if during said period the operation of the foreign air transportation authorized 

becomes the subject of any treaty, convention or agreement to which the United States and the 

applicant’s homeland are or shall become parties, then this permit is continued in effect during 

the period provided in such treaty, convention, or agreement. 
The Department of Transportation has executed this permit and affixed its seal on 

 , 2010.

By:

PAUL L. GRETCH

Director

Office of International Aviation

(SEAL)
Foreign Air Carrier Permit Conditions

In the conduct of the operations authorized, the foreign carrier applicant(s) shall:

(1) Not conduct any operations unless it holds a currently effective authorization from its homeland for such 

operations, and it has filed a copy of such authorization with the Department;

(2) Comply with all applicable requirements of the Federal Aviation Administration, the Transportation Security 

Administration, and with all applicable U.S. Government requirements concerning security, including, but not 

limited to, 14 CFR Parts 129, 91, and 36 and 49 CFR Part 1546 or 1550, as applicable. To assure compliance with 

all applicable U.S. Government requirements concerning security, the holder shall, before commencing any new 

service (including charter flights) from a foreign airport that would be the holder’s last point of departure for the 

United States, contact its International Industry Representative (IIR) (formerly referred to as International Principal 

Security Inspector) to advise the IIR of its plans and to find out whether the Transportation Security Administration 

has determined that security is adequate to allow such airport(s) to be served;

(3) Comply with the requirements for minimum insurance coverage contained in 14 CFR Part 205, and, prior to the 

commencement of any operations under this authority, file evidence of such coverage, in the form of a completed 

OST Form 6411, with the Federal Aviation Administration’s Program Management Branch (AFS-260), Flight 

Standards Service (any changes to, or termination of, insurance also shall be filed with that office);

(4) Not operate aircraft under this authority unless it complies with operational safety requirements at least equivalent 

to Annex 6 of the Chicago Convention;

(5) Conform to the airworthiness and airman competency requirements of its Government for international air 

services;

(6) Except as specifically exempted or otherwise provided for in a Department Order, comply with the requirements 

of 14 CFR Part 203, concerning waiver of Warsaw Convention liability limits and defenses;

(7) Agree that operations under this authority constitute a waiver of sovereign immunity, for the purposes of 28

U.S.C. 1605(a), but only with respect to those actions or proceedings instituted against it in any court or other 

tribunal in the United States that are: (a) based on its operations in international air transportation that, according to 

the contract of carriage, include a point in the United States as a point of origin, point of destination, or agreed 

stopping place, or for which the contract of carriage was purchased in the United States; or (b) based on a claim 

under any international agreement or treaty cognizable in any court or other tribunal of the United States. In this 

condition, the term "international air transportation" means "international transportation" as defined by the Warsaw 

Convention, except that all States shall be considered to be High Contracting Parties for the purpose of this 

definition;

(8) Except as specifically authorized by the Department, originate or terminate all flights to/from the United States in 

its homeland;

(9) Comply with the requirements of 14 CFR Part 217, concerning the reporting of scheduled, nonscheduled, and 

charter data;

(10) If charter operations are authorized, except as otherwise provided in the applicable aviation agreement, comply 

with the Department's rules governing charters (including 14 CFR Parts 212 and 380); and

(11) Comply with such other reasonable terms, conditions, and limitations required by the public interest as may be 

prescribed by the Department, with all applicable orders or regulations of other U.S. agencies and courts, and with all 

applicable laws of the United States.

This authority shall not be effective during any period when the holder is not in compliance with the conditions 

imposed above. Moreover, this authority cannot be sold or otherwise transferred without explicit Department 

approval under Title 49 of the U.S. Code.

12/2007