Order 2011-6-3 

i^^k\ UNITED STATES OF AMERICA 

Vf^Sj DEPARTMENT OF TRANSPORTATION 

'H^ ^ OFFICE OF THE SECRETARY 

WASfflNGTON, D.C. 

Issued by the Department of Transportation 

on the 2nd day of June, 2011 

Global Airline Services, Inc., and 

Harold J. Pareti, Individually 

Violations of 49 U.S.C. §§ 41101 and 41712 

Docket OST 2011-0003 

Served June 2, 2011 

CONSENT ORDER 

This consent order concerns unauthorized air transportation by Global Airline Services, 

hic, (Global) and Harold J. Pareti (Mr. Pareti and Global are collectively referred to as 

"Respondents"). Since at least 2009, Mr. Pareti and Global, a business entity over which 

he exercises absolute ownership, direction, and control, have engaged in the provision of 

air transportation as an indirect air carrier without holding requisite economic authority 

from the Department of Transportation. This consent order also concerns separate and 

distinct violations of the Department's prohibition against unfair and deceptive practices 

and unfair methods of competition, 49 U.S.C. § 41712, arising from Respondents' 

marketing and sale of air transportation services ultimately operated by a company that 

did not hold proper authority from the Department. This order directs Respondents to 

cease and desist from such further violations and assesses a compromise civil penalty of 

$120,000. 

Applicable Law 

In order to engage directly or indirectly in air transportation, citizens of the United States' 

are required to hold economic authority from the Department pursuant to 49 U.S.C, 

§ 41101, either in the form of a "certificate of public convenience and necessity" or in the 

A "citiien of the United States" includes a corporation or association organized in the United 

States that 1) meets certain specified standards regarding the citizenship of its president, officers and 

directors, and holders of its voting interest and 2) is under the actual control of citizens of the United States. 

49 U.S.C. §40l02(a)(l5). 
form of an exemption from the certificate requirement, such as those applicable to direct 

air carriers^ operating as air taxis under 14 CFR Part 298, or indirect air carriers'* 

functioning as public charter operators pursuant to 14 CFR Part 380. This economic 

authority is separate and distinct from any safety authority required by the Federal 

Aviation Administration (FAA). "Air transportation" includes the transportation of 

passengers or property by air as a conmion carrier between two states in the United States 

or between a place in the United States and a place outside of the United States or the 

transportation of mail by air.^ In the context of aviation, a "common carrier" is a person 

or other entity that, for compensation or hire, holds out to and/or provides the public with 

transportation by air between two points.^ 

Entities or persons, such as air charter brokers, that do not have economic audiority from 

the Department may not, as principals, enter into contracts with direct air carriers for air 

transportation and then re-sell that air transportation pursuant to separate contracts with 

charter customers. Selling or re-selling air transportation without economic authority 

constimtes "engaging" in air transportation and violates 49 U.S.C. §41101.^ Under 

Department enforcement case precedent, violations of section 41101 also constitute an 

unfair and deceptive practice and unfair method of competition in violation of 49 U.S.C. 

§41712.^ 

As a separate matter, a person or other entity that does not hold authority to engage in 

common carriage may not perform common carriage operations that result from the 

holding out of air services by a third party, such as another air carrier or an air charter 

o 

broker, agent, or affiliated company. The Department has found entities, such as air 

^ An entity or person who is directly engaged in the operation of aircraft that are used to provide air 

transportation is a "direct air carrier." 

^ An entity or person who is not a direct air carrier, but who, in his or her own right, solicits 

members of the public to purchase air transportation is an "indirect air carrier." 

" 49 U.S.C. §§ 40102(a)(5). (a)(23), and (a)(25). 

' Woolsey v. National Trans. Safety Bd.. 993 F.2d 516, 522-23 (5*^ Cir. 1993). 

*• From the standpoint of the requirements of section 41101, theholdingout of air service, as well as 

the actual operation of air service, constitutes "engaging" in air transportation. Prior to 1994, when Title 49 

of the United States Code was recodified and simplified, 49 U.S.C. § 41101 stated that no carrier could 

"engage" in air transportation without appropriate authority. Although the wording of section 41101 now 

states that what is prohibited is "providing" air transportation without authority. Congress made clear when 

il recodified Title 49 that in doing so it did not intend any substantive change to the statute. Act of July 5, 

1994, Pub. L. 103-272, § 6(a), 108 Stat. 745, 1378. 

' See, e.g., VI Jets, Inc., Violations of 49 U.S.C. § 41101 and 41712 and 14 CFR Part 399, Order 

2009-10-1! (Oct. 21,2009). 

^ See, e.g., IDM Corporate Aviation Services, LLC. Violations of 49 U.S.C. §§ 41101 and 41712, 

Order 2007-2-6 (February 5, 2007). 
charter brokers, that have facilitated the unlawful common carriage operations of thirdparties to have themselves engaged in an unfair and deceptive practice and an unfair 

method of competition in violation of 49 U.S.C. § 41712 when they knew or should have 

known that the unlicensed entities lacked economic authority.^ 

Background 

Mr. Pareti is a United States citizen. He is the sole shareholder of Global and serves as 

the president of the company.'^ At all times relevant to this matter, Mr. Pareti has been 

the only person with authority over the day-by-day marketing, management, and 

operations of Global. Internal to Global, Mr. Pareti makes all significant decisions 

affecting the company. In Hght of the foregoing, Mr. Pareti is the animating force behind 

Global's conduct, as described below." In such instances, the Department has found 

individuals personally liable for the unlawful conduct of those entities. 

Global is a Delaware corporation that specializes in arranging single-entity charter air 

transportation. It does not hold economic authority from the Department to engage 

directly or indirectly in air transportation. However, an investigation by the 

Department's Office of Aviation Enforcement and Proceedings (Enforcement Office) 

revealed that during 2010, Global engaged in unauthorized air transportation as an 

indirect air carrier. Specifically, Global obtained a large portion of its business by 

bidding as a principal, acting in its own right, on solicitations from various charter 

customers, all of which were university athletic departments. When Global won a bid, it 

would then sign what was usually styled as a "purchase order," provided by the 

university. Upon signing the order. Global then became contractually bound as a 

principal to provide charter air transportation to the university.''^ Then, in order to fulfill 

•^ See, e.g.. Platinum Jet Management, LLC. et al. Violations of 49 U.S.C. §§ 41301. 41703, and 

41712, Order 2006-6-14 (June \2, 20^ ) ixnd Darby Aviation. Inc., d/b/a AlphaJet International. Violations 

of 49 U.S.C.§ 41712. Order 2005-]2-\ (Dec. 1,2005). 

"* Mr. Pareti's wife is Global's secretary and treasurer, and Global's only other full-time employee. 

" Personal responsibility for corporate conduct may attach when an individual's conduct amounts to 

an "animating force" that causes the violation of a statute and accompanying regulations. CitronelleMobile Gathering, Inc., v. Herringion. 826 F.2d 16 (Temp. Emer. Ct. App 1987), cert, denied, 484 U.S. 

943(1987). 

See, e.g.. Principal Air Services. LLC and David Bernstein, Violations of 49 U.S.C. §§ 41101 and 

41712. Order 2006-7^13 (Jul.l I, 2006); Roni Herskovitz, Individiiallv, and Ultimate Fares. Inc.. Violations 

of 49 U.SC.§§ 41712md 14 CFR257.5(d). 399.80(f)and399,84. Order 2009-11-8 (Nov. 9, 2009). 

'^ A single-entity charter is a charier for the entire capacity of the aircraft, the cost of which is borne 

by the charterer and not directly or indirectly by the individual passengers. 

In addition to the air charter services. Global was sometimes also responsible for ground handling, 

catering, and other related services. 
its contractual obligation, Global would enter into separate agreements with direct air 

carriers, who would then become contractually responsible to Global, rather than to the 

university, for operating the charter flights. On all occasions relevant herein. Global was 

not authorized to act as an agent of the universities or the direct air carriers that provided 

the contracted service. Under these circumstances, Global unlawfully engaged in air 

transportation. 

A separate matter concerns Global's marketing and selling of air transportation provided 

by Capital Airways, LLC, (Capital Airways) a large aircraft operator licensed by the 

FAA under 14 CFR Part 125. Authority under this FAA regulation is limited to private 

carriage operations.'^ Notwithstanding this condition, in the fall of 2010, Global 

contracted with Capital Airways to provide single entity charter air service to certain 

college sports teams. At the time Global entered into contracts with Capital Airways, 

Respondents knew that Capital Airways was licensed under Part 125 and did not have 

economic authority from the Department to engage in common carriage. On January 5, 

2011, Capital Airways entered into a consent order with the Department in settlement of 

its violations of 49 U.S.C. §§41101 and 41712 arising out of this arrangement.'^ Global 

facilitated Capital Airways* unlawful conduct and has, therefore, engaged in an unfair 

and deceptive practice and unfair method of competition in violation of 49 U.S.C. 

§41712. 

Mitigation 

In mitigation and explanation. Respondents assert that the alleged noncompliance was 

unintentional and inadvertent, and that they are committed to full compliance with the 

Department's regulations and all applicable laws. Respondents further state that they 

always viewed themselves as the agent of the air carriers and never intended to act as a 

principal with the charter customers. With respect to Respondents' interaction with 

Capital Airways, Respondents maintain that they believed that use of Capital Airways 

was permissible based on Capital Airways' representations to Respondents. Furthermore, 

Respondents state that upon notification of their noncompliance, they cooperated fully 

with the Department, initiating prompt remedial action to address the allegations and 

bring their operations into compliance. In addition, Respondents also points out that this 

is the only consent order issued against them in over 14 years. 

Decision 

The Enforcement Office has carefully considered all of the information available to it, but 

continues to believe that enforcement action is warranted. In order to avoid litigation, the 

Enforcement Office and Respondents have reached a settlement of this matter. Without 

14 CFR 125.11(b) provides that "[n]o certificate holder may conduct any operation which results 

directly or indirectly from any person's holding out lo the public to furnish transportation." 

'^ See. Capital Airways. LLC, Violations of 49 U.S.C. §§ 41101 and 41712. Order 2011-1-2 (Jan. 5, 

2011). 
admitting or denying the violations described above. Respondents agree to the issuance 

of this order to cease and desist from future violations of 49 U.S.C. §§ 41101 and 41712, 

and to the assessment of $120,000 in compromise of potential civil penalties otherwise 

assessable against them. This compromise assessment is appropriate in view of the 

nature and extent of the violations in question, serves the public interest, and establishes a 

deterrent to future similar unlawful practices by Respondents and other similarly situated 

persons and entities. 

This order is issued under the authority contained in 49 CFK 1.57a and 14 CFR 385.15. 

ACCORDINGLY, 

1. Based on the above discussion, we approve this settlement and the provisions of the 

order as being in the public interest; 

2. We find that Global Airline Services, Inc., and Harold J. Pareti, in his personal 

capacity, violated 49 U.S.C. §41101, as described above, by engaging in air 

transportation without appropriate economic authority; 

3. We find that, by engaging in the conduct described in paragraph 2, above. Global 

Airline Services, Inc., and Harold J. Pareti, in his personal capacity, engaged in an unfair 

and deceptive practice and an unfair method of competition in violation of 49 U.S.C. 

§41712; 

4. We find that by facilitating unauthorized common carriage by Capital Airways, 

LLC, as described above. Global Airline Services, Inc., and Harold J. Pareti, in his 

personal capacity, engaged in an unfair and deceptive practice and an unfair method of 

competition in violation of 49 U.S.C. § 41712; 

5. We find that Global Airline Services, Inc., was at all times relevant herem under the 

leadership, dkection, and control of Harold J. Pareti and that Harold J. Pareti made all 

significant decisions with respect to the conduct described in ordering paragraphs 2, 3, 

and 4, above, and is therefore personally responsible for the violations found in ordering 

paragraphs 2, 3, and 4, above; 

6. We order Global Airline Services, Inc., and all other entities owned and controlled 

by or under common ownership with Global Airline Service, Inc., and its successors and 

assignees and Harold J. Pareti, personally, to cease and desist from further violations of 

49 U.S.C. §§41101 and 41712; 

7. We assess jointly and severally Global Airline Services, Inc., and Harold J. Pareti, 

in his personal capacity, $120,000 in compromise of civil penalties that might otherwise 

be assessed for the violations described in ordering paragraphs 2, 3, and 4, above. Of this 

total penalty amount, $60,000 shall be due and payable in installments of $2,000 on the 

15th day of each calendar month following the issuance of this order, with the first 

payment due on July 15, 2011. The remaining $60,000 shall become due and payable if 

either Global Airline Services, Inc., or Harold J. Pareti violates the cease and desist 
provision in ordering paragraph 6, above, or fails to comply with the payment provisions 

in this ordering paragraph before the last $2,000 penalty payment is made; and 

8. Failure to pay the penalty as prescribed shall subject Global Airline Services, Inc., 

and Harold J. Pareti, jointly and severally, to the assessment of interest, penally, and 

collection charges under the Debt Collection Act and to possible enforcement action for 

failure to comply with this order. Payments shall be made by wire transfer through the 

Federal Reserve Communications System, commonly known as "Fed Wire," to the 

account of the U.S. Treasury. The wire transfers shall be executed in accordance with the 

instructions contained in the Attachment to this order. 

This order will become a final order of the Department 10 days after its service date 

unless a timely petition for review is filed or the Department takes review on its own 

initiative. 

BY: 

ROSALIND A. KNAPP 

Deputy General Counsel 

(SEAL) 

An electronic version of this document is available at 

www, regulations, gov