2012

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UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

O n the Thirteenth day of April

, 2012

Private Air, Inc. Docket OST 20 1 2

- 000 2

Violations of 49 U.S. C. § § 41301 and 41712 Served April 13 , 2012

CONSENT ORDER

This consent order concerns unlawful conduct by Private Air

, Inc., (Private Air) in which

the company held itself out as a direct air carrier

, 1 when it was not

, and engag ed in foreign air transportation as an indirect air carrier 2 without the economic authority to do so, in

contravention of 49 U.S.C. § 41 3 01

. These violations also constituted unfair and deceptive trade practices and unfair methods of competition in violation of 49 U.S.C. § 41712. This

order directs Private Air to cease and desist from further violations of these statutory provisions and it assesses a compromise civil penalty of $ 25 ,000.

As background, i n addition to applicable Federal Aviation Administration (FAA) safety

r equirements, in order to engage in fore ign air transportation 3 as a direct or an indirect air carrier, a foreign air carrier 4 must hold economic authority from the Department . This authority can either be in the form of a foreign air carrier permit issued pursuant to

1 A “direct air carrier” is a person or other entity that provides air transportation and that has control over the operational functions involved in providing that transportation.

2 An “indirect air carrier” is a person or other entity that engages indirectly in air transportation operations and who uses for such transportation the services of a direct air carrier.

3 “F oreign air transportation” means the transportation of passengers or property by aircraft as a common carrier for compensation, or the transportation of mail by aircraft, between a place in the United States and a
place outside the United States when an y part of the transportation is by aircraft. 49 U.S.C. § 40102(a)(23).

4 A “ foreign air carrier'' means a person, not a citizen of the United States, undertaking by any means, directly or indirectly, to provide foreign air transportation. 49 U.S.C. § 40 102(a)( 21 ).2 49 U.S.C. § 41 3 01 or an exemption from section 41 3 01

, such as that available to direct air

carriers under 14 CFR Part 294 5 or to public charter operators functioning as in direct air carriers pursuant to 14 CFR Part 380

.

Private Air was incorporated in Canada in 2008 to provide m arketing, aircraft management, and other support services to Pilatus PC

- 12 Centre of Canada, Inc., (PCC) (formerly known as V . Kelner Pilatus Center )

. PCC is a foreign air carrier within the meaning of 49 U.S.C. § 40102(a)(21) that holds FAA

- issued Part 129 operations specifications and economic authority from the Department pursuant to 14 CFR Part 294 to engage in trans

- border charter air transportation with small aircraft

. According to Private

Air

, it was to function as an agent of PCC to market and arrange for charter flights operated by PCC until such time as Private Air would be financially able to operate as a

direct air carrier and obtain its own licenses from U.S. and Canadian aviation authorities

. At no time relevant to this matter did Private Air h o ld the economic authority from the Department to engage in direct or indirect foreign air transportation

.

T he Office of Aviation Enforcement and Proceedings (Enforcement Office) initia ted an investigation of Private Air in response to information fro m the FAA indicating that

Private Air had operated charter flights into the U.S. from Canada on aircraft registered to

PCC

. The FAA ’s records showed that neither PCC ’s operati ons specifications nor its Part 294 registration listed “ Private Air ” as a “doing

- business

- as” (d/b/a) name. A lthough PCC apparently was the actual aircraft operator on these occasions, the Enforcement Office subsequently learned that from January 2009 until March 2010

, Private Air had entered as a principal into contracts with charterers for a significant number of trans

- border flights

between Canada and the U.S. In addition, t he Enforcement Office found statements on Private Air’s printed brochures and on its web site

, such as “Private Air operates the

Pilatus PC

- 12 aircraft,” that could have misled readers into believ ing that Private Air was a direct air carrier operating aircraft when, in fact, it did not

. By holding itself out as a direct air carrier when it was not and by engaging in foreign air transportation without economic authority, Private Air violated 49 U.S.C. §§ 41301 and 41712

.

In mitigation, Private Air asserts that any alleged violation was completely inadvertent and

states that s ince its formation, it has been the sales and marketing arm of its sister

company, PCC . Indeed, the two companies’ relationship was so close in its view, that Private Air believed it needed no U.S. authority of its own to conduct its sales and marketing activities as PCC was, and remai ns, a fully licensed air carrier in both Canada and the United States. Private Air also notes that it cooperated fully with the Department’s investigation and took quick action to remedy the Department’s concerns. Specifically,

Private Air states that it immediately revised its website and formalized its relationship

with PCC with a written Marketing Agency Agreement. Private Air also undertook to

5 Part 294 provides an exemption for “Canadian charter air taxi operators ” from the permit requirements of 49 U.S.C. § 41301, provided that such carriers register with the Department and have the requisite level of liability insurance. The ex emption authority conferred under Part 294 is available only to carriers that operate "small aircraft, ” which is defined in section 29 4 .2(i) as "any aircraft designed to have a maximum passenger capacity of not more than 30 seats and a maximum payload capa city of 7,500 pounds, and/or a maximum authorized takeoff weight on wheels not greater than 35,000 pounds.”3 obtain its Canadian air carrier licenses, which it recently received, and anticipates applying

for its forei gn air carrier authority from the Department and FAA in the near future.

The Enforcement Office has carefully considered all of the information available to it, including that provided by Private Air

, but continues to believe that enforcement action is

warranted

. I n order to avoid litigation, the Enforcement Office and Private Air have reached a settlement of this matter. Without admitting or denying the violations described above, Private Air agree s to the issuance of this order to cease and desist fr om future violations of 49 U.S.C. § § 413 01 and 41712

. Private Air further agrees to the assessment of $ 25 ,000 in compromise of potential civil penalties otherwise assessable against it

. T his 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 Private Air and other indirect air carriers

.

This order is issued under the authority contained in 49 CFR 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 Private Air, Inc.

, violated 49 U.S.C. § 41 3 01, as described above, by holding itself out as a direct air carrier when it was not and by engaging in foreign air transportation without economic authority

.

3

. We find that by engaging in the conduct described in paragraph 2 above, Private Air,

Inc.

, engaged in an unfair and deceptive practice and an unfair method of competition in violation of 49 U.S.C. § 41712.

4

. We order Private Air, Inc.

, and all other entities owned and controlled by or under common ownership with Private Air, Inc.

, and its successors and assignees, to cease and desist from further violations of 49 U.S.C. §§ 41 3 01 and 41712.

5

. We assess Private Air, Inc.

, a compromise civil penalty of $ 25 ,000 in lieu of civil penalties that might otherwise be assessed for the violations described in ordering paragraphs 2 and 3, above

. Of this total amount, $ 12,5 00 shall become due and payable 30 days after the issuance date of this order

. The remaining $ 12

, 5 00 shall become due and payable if Private Air

, Inc., violates the payment or the cease and desist provisions of this

ord er within one year following the i ssuance date of this order , in which case the entire unpaid portion of the civil penalty shall become due and payable immediately, and Private

Air

, Inc., may be subject to additional enforcement action for failure to co mply with this

order. I f Private Air, Inc.

, fails to comply with the payment provision of this order, Private Air, Inc.

, shall be subject to the assessment of interest, penalty, and collection charges

under the Debt Collection Act

.4 6

. P ayment shall be made within 15 days of the issuance date of th is order b y wire transfer through the Federal Reserve Communications System, commonly known as "Fed Wire," to the account of the U.S. Treasury as described in the attached instructions

.

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