BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFIG:E OF THE SECRETARY

WASHINGTON, D.C. iDilj DEC 30 pi!: I!S

Application of )

)

Menagerie Enterprises, Inc. d/b/a )

Monarch Air )

)

For 'authority to conduct scheduled )

Passenger operations as a commuter air )

Carrier under 49 U.S.C. 41738 )

)

DOCKET DOT -OST -2014-0192

APPLICATION OF

MENAGERIE ENTERPRISES, INC.

D/B/A MONARCH AIR

Response to Information Request

Communications with respect to this document should be sent to:

Rebecca B. MacPherson

Jones Day

51 Louisiana Ave., NW

Washington, DC 20001

Telephone: 202-879-3939

Fax: 202-626-1700

Email: rmacpherson@jonesday.com

December 23,2014
BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Application of

Menagerie Enterprises, Inc. d/b/a

Monarch Air

For authority to conduct scheduled

Passenger operations as a commuter air

Carrier under 49 U.S.C. 41738

)

)

)

)

)

)

)

)

)

DOCKET DOT-OST-2014-0192

APPLICA nON OF

MENAGERIE ENTERPRISES, INC.

D/B/A MONARCH AIR

Response to Information Request

General Information

i. in its application, Monarch states that it has various related companies, including Trey

Aviation, LLC, Trey Aviation, inc., and Menagerie Aircraft Management LLC. is there a parent

company that manages and oversees the activities of all these companies? lfso, please provide

an organizational chart illustrating the relationships.

There is no parent company that oversees the various related companies described by

Monarch Air in its application. Rather, the companies are a related group of companies owned

and operated by the same family. As the application noted in section (g) of the appendix, all of

the companies are wholly-owned by the same individual, Raymond Sawtelle. In addition, Mr.

Sawtelle's son, Trey and wife, Sheila, serve as directors for the various companies.

Operations and Financial Information

1. Please provide a detailed description of Rise's business. The description should include

the answers to the following questions:

a. Does Rise engage in activities other than providing air transportation for its

members?

b. How many members does Rise have and how many does it anticipate will

participate in the air transportation portion of its business?
c. What is the total cost of membership; are there initial sign-up costs, annual

membership dues, and monthly fees?

d Does Monarch receive any portion or percentage of the membership fees

collected? Ifso, what is the percentage of the total cost of membership received?

Rise Alpha LLC.(Rise) is a membership organization that arranges air

transportation services on behalf of its members. Rise expects to also arrange other

services, such as surface travel, for its members.

Rise's analysis shows strong demand for air service in high-volume short-haul

business markets like Dallas-Houston, Dallas-Midland, and Dallas-Austin. Today, the car is

the best way to get from Dallas to Austin, for example. Transportation by car in that

market can take nearly four hours. Rise expects that the overwhelming majority of

members will be businesspeople, with the knowledge and experience to evaluate the costs

and benefits of membership.

The program allows members to buy a convenient high-quality air service in bulk.

Over time, the membership may add more markets. From time to time, Rise members may

also wish to arrange non-scheduled charters.

Rise plans to charter air transportation from Monarch Air on behalf of its members.

Initially, Rise will arrange for Monarch Air to provide high-frequency daily flights for Rise

members between Dallas and Houston, and between Dallas and Austin.

Rise's membership fee will entitle a member to travel on any Monarch flight

operated on behalf of Rise's membership where space is available with no additional fees

or other costs. Members will be able to reserve space on Rise-arranged flights, but a

member's membership level will dictate the number of advanced reservations a member

can make. Additionally, a member will have the option of purchasing companion passes on

Rise-arranged flights.

Rise will be acting solely as an agent for its members when arranging air

transportation. All contracts of carriage for such transportation will be directly between

the members and the direct air carrier.

Rise will collect all membership dues, maintain such dues, and pay the direct air

carrier for the air transportation that Rise procures. .

Does Rise engage in activities other than providing air transportation for its

members?

Rise does not propose to provide air transportation, nor does it hold out to do so.

Rise is an organization that arranges air transportation as agent on behalf of its

membership with direct air carriers, like Monarch Air. Rise is not an air carrier, direct or

indirect, and all advertising and promotion will so state. Rise does not hold out to offer,

sell, or provide air transportation.

Rise may also arrange or provide ground transportation, aircraft catering, member

parking at airports, airport facilities for members, and concierge services for members.
How many members does Rise have and how many does it anticipate

will participate in the air transportation portion of its business?

Rise does not provide air transportation, nor will it offer to sell or provide air

transportation. Rise does not currently have any members, as it is awaiting the outcome of

this proceeding. As noted above, a strong interest exists for air service in the proposed

markets. Rise currently has over 100 memberships reserved. Rise anticipates that it will

have 150 members when it opens.

What is the total cost of membership; are there initial sign-up costs,

annual membership dues, and monthly fees?

Each membership is subject to a monthly price that is different for each of the three

membership levels and a one-time initiation fee of $750. Members may also book

transportation for a companion non-member on a flight chartered by Rise for $750. No

other dues or fees apply; prices are subject to change.

The following table identifies the current pricing for each membership level. A

membership is subject to an initial 90-day minimum, payable on a monthly basis. After the

first 90 days, a member may cancel a membership on 30 days' notice. Under this

arrangement, Rise will never hold more than 30 days' worth of consumer funds.

Below is the total cost for each membership level based on the minimum 90-day

initial membership period.

Membership Monthly Price Initiation Minimum term Total Cost

Level Fee

Express $1,650 $750 90 days $5,700

Executive $2,150 $750 90 days $7,200

Chairman $2,650 $750 90 days $8,700 .

Does Monarch receive any portion or percentage of the membership fees collected?

If so, what is the percentage of the total cost of membership received?

No. Rise will pay Monarch a contractually agreed amount for its services. Although

the membership fees are the source of funds, Monarch Air is not compensated based on a

proportion of the membership fee, nor does its compensation vary by the number of

members. The economic risk of operations is born by Rise.

2. Please provide the Department with a copy of the agreement between Monarch and

Rise.

The parties have entered into a binding commitment letter, which is in Exhibit A to

this submission. The parties intend to enter into a definitive contract later, but before Rise

opens for business.
3. Please provide a description of the proposedform and source of capital to support the

acquisition of the three King Air 350 aircraft Monarch proposes to use in its commuter

operations. If the resources of an individual(s) or other organization(s) will be made available

to Monarch to support its operations, provide a statement from such individual(s) or

organization(s) of the amount of such available resources and terms and conditions under which

such funds will be provided If borrowed capital or a line-ofcredit is to be employed, the total

amount, current balance, source, security, payment schedule, provisions to convert the debt to

equity and terms of repayment to the lender should be stated IdentifY the participants in each

arrangement and supply their commitments, citizenship, and any relationship with any acquiring

shareholders or affiliates. In addition, copies of the funding agreements should be submitted

Monarch intends to purchase three King Air 350 aircraft to support its first year of

operations. A purchase and sale agreement has already been signed for the first aircraft.

Funding for the aircraft is being provided by Texas Legacy Bank and a letter detailing the intent

to provide funding as well as the terms of such funding is provided as Exhibit B to this

submission. Texas Legacy Bank has also agreed to provide a line of credit to support Rise

operations, as noted and provided in the initial application; however, Monarch does not intend to

utilize this line of credit in the normal course of business. Rather, Monarch intends to support

the Rise operations by drawing on a line of credit provided by Rise. Funds are to be made

available as detailed in the agreement between Rise and Monarch provided in response to

information request 2 as Exhibit A to this submission. As noted in Exhibits B, C and D to this

submission, both Texas Legacy Bank and Rise are U.S. citizens. Texas Legacy Bank is

completely separate and umelated to Monarch Air or its affiliates, as is Rise, LLC; Menagerie

Enterprises, Inc. (Monarch) will possess a 10% interest in Rise Alpha, LLC.

4. Please provide third-party verification from a recognizedfinancial institution for all

funds currently (within 3 months of the date of the application filed) on deposit in Monarch's

name.

Monarch Air uses a single bank, Texas Legacy Bank for all its day-to-day banking.

While Monarch Air has a line of credit with BB&T (as noted in the appendix to the original

application), it does not maintain an account there. Exhibit E verifies the funds currently on

deposit in Monarch Air's name.

5. Please provide a consolidated forecast balance sheet and profit and loss statement

(broken down by month) for the first twelve full months for the entire business as well as

separate forecast statements for each operating segment, including the proposed commuter

operations. These documents should include ample notes explaining the basis of computation of

the amounts shown. The expense data should show:

a. Detail of expense category (direct and indirect), indicating how the amounts were

computed If proposing to operate more than one aircraft type or model, the forecast should

include separate estimates of expenses for training, maintenance, preparation of manuals, etc.,

for each aircraft type or model.
b. For indirect expenses, since Monarch is engaged in other aviation-related

operations (aircraft leasing, repair stations, etc.) expenses should be allocated on a rational

basis between proposed commuter operations and other operation, with appropriate

explanations.

c. If aircraft or other facilities are to be required to conduct proposed services, a

description of the plans for obtaining and financing those items should be provided.

Please see Exhibits F and G to this submission for responses to subparagraphs a and b.

please see response to question 3 for response to subparagraph c.

6. Please provide an estimate of the amount of capital Monarch will need to commence

operations. Please include the basis of the estimate (e.g., the amountsfor pre-operalingcosts,

including aircraft deposits, or leases, office and hangar space, insurance, salaries, training, FAA

and Department certifications, working capital, etc.).

Monarch has determined that approximately $422,349 in capital will be required to

commence the contemplated commuter operations. These costs consist of the costs associated

with filing the application and securing any needed changes to Monarch air's existing operating

certificate and operations specifications (professional services and application fee)

(approximately $60,000), additional hangar space for one aircraft (approximately $1,500.00),

salaries for a two-man crew and additional maintenance and administrative staff to support the

commuter operations (approximately $53,283), a one-time training cost for the new flight crew

(approximately $70,000.00), and aircraft insurance (approximately $3,000.00), as well as other

operating costs such as fuel, maintenance costs and trip and crew expenses (approximately

$234,566). The agreement between Monarch Air and Rise provides initial start-up funding that

will be use to cover much of these costs; the rest will be covered by a draw on the Rise line of

credit.

Because Monarch Air will only be providing service to Rise members, Rise will be

responsible for all marketing expenses. Additionally, there will be no need for additional office

space or revisions to the existing manuals as Monarch Air already operates the King Air 350 in

commercial operations under 14 C.F.R. part 135. There will be no closing costs associated with

purchasing the aircraft, which is and no loan payments are due within the first 30 days.

Accordingly, the first month's interest payment is not reflected here. Should DOT approval take

longer than anticipated, the interest payment associated with the aircraft will be approximately

$14,000.
APPLICATION OF

MENAGERIE ENTERPRISES, INC.

D/B/A MONARCH AIR

DOCKET DOT-OST-2014-0192

Response to Information Request

Exhibit A

Confidential Treatment has been Requested
APPLICATION OF

MENAGERIE ENTERPRISES, INC.

D/B/A MONARCH AIR

DOCKET DOT-OST-20l4-0l92

Response to Information Request

Exhibit B

Confidential Treatment has been Requested
To: Ms. Lauralyn J. Remo

Chief, Air Carrier Fitness Division

Office of Aviation Analysis

U.S. Department of Transportation

1200 New Jersey Avenue SE

Washington, DC 20590

Re: DOT-OST-2014-0192; Citizenship of Rise, LLC.

Date: December 19, 2014

Re: Statement in Support of Citizenship of a Limited Liability Company

Dear Ms. Remo:

Rise, LLC (the "LLC") is submitting this statement to assist the Department in

its analysis of the commuter fitness of Monarch Air. Rise is the parent and holding

company of Rise Alpha, LLC. Neither Rise nor Rise Alpha is required to be a citizen of

the United States, although each meet the statutory criteria.

This statement certifies that the LLC is a citizen of the United States as defined in 49

U.S.C. S40102(al(15). In this regard, we make the following representations:

I. The state in which the LLC is lawfully organized: Texas

II. The effective date of the LLC: March 11, 2014

III.

Name

Nick Kennedy

Clynt Taylor

Type of Entity

Individual

Individual

US Citizenship

Verification

Yes

Yes

Percentage

. Interest

51%

49%

IV. This LLC is managed by _X_ Manager(s) __ Member(s) __ Managing

Member(s) __ Officer(s)

V. The manager(s), member(s), managing member(s), or officer(s) referred to in

Section IV above, may act independently: Yes _X_ No __

VI. The name of each of the persons or entities in a management position with the

LLC, as referred to above in Sections IV and V (Le., managers, members,

managing members, or officers), and the type of entity of each such person: (i.e.,

individual, corporation, partnership, etc.)
Name

Nick Kennedy

Title

Manager

Entity Type U.S. Citizenship Verification

Individual Y_X_ N__

If additional space is required, please attach another page.

49 U.S.C. Section 40102(a)(15): 'citizen ofthe United States' means (A) an

individual who is a citizen of the United States (8) a partnership each of whose partners

is an individual who is a citizen of the United States; or (C) a corporation or association

organized under the laws of the United States or a State, the District of Columbia, or a

territory or possession of the United States, of which the president and at least twothirds of the board of directors and other managing officers are citizens of the United

States, which is under the actual control of citizens of the United States and in which at

least 75 percent of the voting interest is owned or controlled by persons that are citizens

of the United States.

If any entity referred to in Sections IV and VI above are anything other than

an individual citizen of the United States (e.g., a corporation, limited liability company,

trust, or partnership), please attach a certificate to support the position that such entities

qualify as a citizen of the United States as defined in 49 U.S.C. Section 40102(a)(15). If

any such entity is a limited liability company, please provide a Statement in Support of

Registration (this form) with respect to each such limited liability company.

Additionally, if any member of the LLC is not a citizen of the United States as

defined in 49 U.S.C. Section 40102(a)(15), please attach an explanation to support the

certification that the LLC is a citizen of the United States as defined by 49 U.S.C.

Section 401 02(a)(15)(C).

Name of LLC: Rise, LLC

By: _

Nick Kennedy, its sole Manager
xhibit ~.l

To: Ms. Lauralyn J. Remo

Chief, Air Carrier Fitness Division

Office of Aviation Analysis

U.S. Department of Transportation

1200 New Jersey Avenue SE

Washington, DC 20590

Re: DOT-OST-2014-0192; Citizenship of Rise Alpha, LLC.

Date: December 16, 2014

Re: Statement in Support of Citizenship of a Limited Liability Company

Rise Alpha, LLC (the "LLC") is submitting this statement to assist the

Department in its analysis of the commuter fitness of Monarch Air. Rise Alpha is partly

owned by Rise LLC, but is controlled entirely by Rise, LLC. As a ticket agent under 49

USC 40102, Rise Alpha is not required to be a citizen of the United States, although it

meets the statutory criteria ..

This statement certifies that the LLC is a citizen of the United States as defined in 49

U.S.C. S 40102(a)(15). In this regard, we make the following representations:

I. The state in which the LLC is lawfully organized: Texas

II. The effective date of the LLC: March 11, 2014

III. The names of the members who, together, hold 75% of the voting membership

interest in the LLC and the type of entity of each such member (i.e.: individual,

corporation, partnership, etc). For confidentiality and privacy reasons, Rise is not

providing information concerning all the members, but would be prepared to do

so under an assurance of confidential treatment. To the best of our knowledge

and belief, all other members are individual U.S. citizens:

Name Type of Entity U.S. Citizenship Verification

Rise, LLC (65%) Texas LLC Y _X_ N

Y N

Menagerie Texas Corp. Y _X_ N

Enterprises, Inc. Y N

(Monarch) (10%) Y N

If additional space is required, please attach another page.

IV. This LLC is managed by _X_ Manager(s) __ Member(s) __ Managing

Member(s) __ Officer(s)

V. The manager(s), member(s), managing member(s), or officer(s) referred to in

Section IV above, may act independently: Yes _X_ No __
VI. The name of each of the persons or entities in a management position with the

LLC, as referred to above in Sections IV and V (i.e., managers, members,

managing members, or officers), and the type of entity of each such person: (i.e.,

individual, corporation, partnership, etc.)

Manager

Entity Type U.S. Citizenship

Verification

Y__ N__

Y N__

Texas LLC Y_X_ N__

Y__ N__

Y__ N__

If additional space is required, please attach another page.

Name

Rise, LLC

49 U.S.C. Section 40102(a)(15): 'citizen ofthe United States' means (A) an

individual who is a citizen of the United States (B) a partnership each of whose partners

is an individual who is a citizen of the United States; or (C) a corporation or association

organized under the laws of the United States or a State, the District of Columbia, or a

territory or possession of the United States, of which the president and at least twothirds of the board of directors and other managing officers are citizens of the United

States, which is under the actual control of citizens of the United States and in which at

least 75 percent of the voting interest is owned or controlled by persons that are citizens

of the United States.

If any entity referred to in Sections IV and VI above are anything other than

an individual citizen of the United States (e.g., a corporation, limited liability company,

trust, or partnership), please attach a certificate to support the position that such entities

qualify as a citizen of the United States as defined in 49 U.S.C. Section 40102(a)(15). If

any such entity is a limited liability company, please provide a Statement in Support of

Registration (this form) with respect to each such limited liability company.

Additionally, if any member of the LLC is not a citizen of the United States as

defined in 49 U.S.C. Section 40102(a)(15), please attach an explanation to support the

certification that the LLC is a citizen of the United States as defined by 49 U.S.C.

Section 401 02(a)(15)(C).

Name of LLC: Rise Alpha, LLC

By its Manager: Rise, LLC

By: _

Nick Kennedy, its sole Manager
:BtI

LEGACvTEXAS

BAN K

December 18, 2014

To Whom It May Concern:

Menagerie Enterprises, Inc. dba Monarch Air has requested that we verify the

existing available balances in their accounts maintained at LegacyTexas Bank as of

December 18, 2014.

The purpose of this letter is to provide the reader verification of these deposits.

Menagerie Enterprises Operating ACcount $214,511.16

Menagerie Enterprises - Dallas Executive Account $ 456.39

Menagerie Enterprises - McKinney Account $ 1,026.83

Menagerie Enterprises - Money Market #1 $113,491.82

Menagerie Enterprises - Money Market #2 $ 42,080.50

TOTAL AVAILABLE BALANCEAS OF 12/18/14 $371,566.70

Exhibit E i

Should you need any further information regarding the above information, please

feel free to contact the undersigned directly at (972)-461-4806 or by email at

steve. you ng@legacytexas.com

4U6~

Steve Young7Y

Executive Vice President

.fl'1,;"d, 1'<,,"2 /14"1' 17//,"'hH/i/.U:i'4';,

PO Box 869111 Plano. Tx 75086-9111 972.461.1300 Metro 972.562.5600 www.legacyTexas.com

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