Order 2011-8-15

Served: August 10, 2011 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 10th day of August, 2011

Applications of

 CARLSBAD-PALOMAR AIRLINES, INC. 

 d/b/a CALIFORNIA PACIFIC AIRLINES

for certificates of public convenience and necessity under 

49 U.S.C. 41102 to engage in interstate and foreign 

scheduled air transportation of persons, property, and 

mail

 Dockets DOT-OST-2010-0125

 and 

 DOT-OST-2010-0126

ORDER TO SHOW CAUSE

PROPOSING ISSUANCE OF INTERSTATE CERTIFICATE AUTHORITY

AND DISMISSING APPLICATION FOR FOREIGN CERTIFICATE AUTHORITY

Summary

By this order, we tentatively find that (1) Carlsbad-Palomar Airlines, Inc. d/b/a California Pacific 

Airlines (“CP Air”), is a citizen of the United States, is fit, willing, and able to provide interstate 

air transportation of persons, property, and mail, and should be issued a certificate of public 

convenience and necessity authorizing such operations, subject to conditions;

1 and (2) its 

application for foreign scheduled authority should be dismissed.

Background

Section 41102 of Title 49 of the United States Transportation Code (“the Transportation Code”)

directs us to determine whether applicants for certificate authority to provide interstate scheduled 

air transportation are “fit, willing, and able” to perform such transportation, and to comply with 

the Transportation Code and the regulations of the Department. In making fitness findings, the 

Department uses a three-part test that reconciles the Airline Deregulation Act's liberal entry 

policy with Congress' concern for operational safety and consumer protection. The three areas of 

inquiry that must be addressed in order to determine a company's fitness are whether the 

applicant (1) will have the managerial skills and technical ability to conduct the proposed 

operations, (2) will have access to resources sufficient to commence operations without posing 

an undue risk to consumers, and (3) will comply with the Transportation Code and regulations 

imposed by Federal and State agencies. We must also determine that the applicant is a U.S. 

citizen.

 

1 Specifically, we are proposing to limit CP Air’s authority to the use of three aircraft.
2

On May 11, 2010, CP Air filed an application in Docket DOT-OST-2010-0125 requesting a 

certificate to provide foreign scheduled air transportation of persons, property, and mail pursuant 

to § 41102 of the Transportation Code between Carlsbad, California, and Cabo San Lucas, 

Mexico. On May 18, 2010, CP Air filed an application in Docket DOT-OST-2010-0126

requesting a companion certificate to provide interstate scheduled air transportation of persons, 

property, and mail. Subsequently, the applicant stated that it no longer intended to provide 

foreign scheduled passenger operations during its first year of operations. CP Air accompanied 

its application with the fitness information required by section 204.3 of our regulations (14 CFR 

204.3).2

No answers opposing CP Air’s applications were filed and no special issues regarding the 

applicant have come to our attention. Under these circumstances, we propose to decide the issue 

of the applicant’s fitness on the basis of the written record, and we tentatively conclude that CP 

Air is a U.S. citizen and is fit, willing, and able to operate its proposed air service, subject to 

conditions as set forth in this order. However, we will give interested persons an opportunity to 

show cause why we should not adopt as final these tentative findings and conclusions.

FITNESS

The Company

CP Air, a non-operating company incorporated in the State of California on April 19, 2010, is 

wholly-owned by Mr. Theodore L. Vallas, a U.S. citizen. CP Air’s corporate offices are located 

in Carlsbad, California, and its main base of operations will be based at McClellan-Palomar 

Airport in Carlsbad, California. If granted the interstate certificate it seeks, CP Air plans to 

provide scheduled passenger service between Carlsbad, California, and Phoenix, Arizona; Las 

Vegas, Nevada; and Oakland, San Jose, and Sacramento, California. The applicant plans to 

initially commence operations using one Embraer 170 aircraft and increase its fleet size to three 

Embraer 170 aircraft within its first year of revenue operations..

Managerial Competence

CP Air’s Board of Directors, officers, and other key management personnel, all of whom are 

U.S. citizens, consist of the following individuals:

Theodore L. (“Ted”) Vallas – President, Chief Executive Officer (“CEO”), and Chairman

Theodore G. (“T.G.”) Vallas – Corporate Secretary and Board Member

 

2 CP Air filed additional information supplementing its application on August 26, September 22, October 12, and 

October 29, 2010; January 20, March 10, and May 18, 2011. The applicant accompanied its application and its August 

26, 2010, supplemental filings with a request that certain information be withheld from public disclosure. By letters dated 

July 12 and October 26, 2010, the Department notified the applicant of our intended ruling on its confidentiality requests, 

granting, in-part, the applicant’s requests and informing CP Air that certain information for which it requested 

confidentiality did not warrant such treatment. The applicant subsequently filed this information in the public docket on 

July 13 and October 28, 2010.
3

Victor Ramirez – General Counsel and Board Member

John Pennant-Jones – Board Member

John Polchin – Board Member

Andrew Smith – Board Member

Chuck Hansen - Board Member

Fernando Woodside - Board Member

Jim Buntz – Vice President of Finance and Business Development and Board Member

Tom Morrow – Director of Communications and Board Member

John G. Ross – Director of Operations

Dean Sinerius – Director of Maintenance

Patrick Randall – Chief Inspector

Bret Ebaugh – Chief Pilot

Dave Love, Jr. – Director of Safety

The Department reviewed Mr. Theodore L. Vallas’ employment background in connection with 

the certification of Flight Trails d/b/a/ Air Resorts Airlines (“Air Resorts”).

3 At that time he was 

the majority owner of Air Resort and its Chief Executive Officer. Mr. Vallas has been the 

owner/president of numerous companies during his 40 year career as an entrepreneur, including 

El Camino Country Club (1958-2008), Olympic Resort Hotel and Spa (1982-2007), Instruments 

at Palomar, Inc. (1983-1997), Golf Course Inns of America (1965-1997), Olympic Golf Resorts 

(1983-1995), Super 580 Aircraft Company (1979-1994), Whispering Palms Country Club (1970-

1997) Barbara Worth Country Club (1971-1975), El Camino Playhouse (1967-1970), and 

General Design Instruments Company (1953-1960). 

Mr. Theodore G. Vallas has more than 36 years of management experience, having served as 

General Manager of Olympic Resort Hotel and Spa for more than 11 years (1996-2007), El 

Camino Country Club for more than 23 years (1973-1976), and Whisper Palms Country Club for 

approximately 2 years (1971-1973). Mr. Vallas is also a Partner at U.S. International 

Consultants, a business consulting firm specializing in corporate restructuring (2007-present),

and he previously served in the U.S. Air Force as an F-4 Captain (1966-1971).

Mr. Victor Ramirez is a retired Judge from the Superior Court of San Diego (1979-2002) and he 

is currently self–employed as an attorney in private practice focusing on civil and business law 

(2002-present). Mr. Ramirez has also served on the Board at Hidden Valley National Bank as its 

Chairman (1982-1983) and as an attorney in civil and business law (1973-1979).

Mr. John Pennant-Jones has more than 34 years of executive management experience. Since 

1990, he has been an investor and owner/manger of several enterprises in the food service 

industry, including Donovan’s Steak and Chop House (1990-Present), a TGIF Franchise (1999-

present), and Amaregal, Inc. (1996-present). Prior to this, Mr. Pennant-Jones held executive 

sales positions with TRW LSI Product (1989-1993) and Semtech Corp (1986-1989).

Mr. John Polchin has more than 30 years of executive management experience. Prior to joining 

CP Air, he served as Vice President and Chief Financial Officer of several companies, including 

 

3 See Order 89-2-19, issued February 7, 1989.
4

The Aes Corporation (2007-2008), Goldleaf Financial Solutions, Inc. (2007), Convera 

Corporation (2004-2006), Intelidata Technologies (2002-2004), Orblynk Incorporated (2000-

2002), E.Spire Communications (1996-2000), and UNC Incorporated (1988-1994). Mr. Polchin 

has also previously been employed by Appworx Corporation as Vice President and Corporate 

Controller (1994-1996) and by NCNB Corporation as an Associate (1986-1988).

Mr. Andrew Smith has more than 23 years of experience in insurance and risk management. In 

2006, he founded AvPac Insurance, an insurance brokerage that he continues to own and 

manage. Prior to this, he was employed by William A. Tassio Insurance Service as a Manager 

(2002-2006), and by Arnel and Affiliates as a Risk Manager (1987-1999). Mr. Smith is also 

currently employed by Stargazer Aviation as a Risk Manager (1999-present).

Mr. Chuck Hansen has more than 23 years of executive experience and he is an active member 

of the San Diego community having served on the board of directors of numerous local nonprofit organizations. Currently, Mr. Hansen serves as Vice President of Community Relations at 

Viejas Enterprises, Executive Director at America’s Cup Services, and Vice President of 

Marketing at Atlas Hotels, positions he has held since 1993. Mr. Hansen has also previously 

served as Vice President of Marketing at Pacific Southwest Airlines (1976-1983). 

Mr. Fernando Woodside has more than 27 years of executive experience and he is also a 

helicopter and fixed wing pilot. In addition to serving as a Board member for CP Air, 

Mr. Woodside also serves as the CEO of SUI Generis Entertainment Group (1983-present) and 

AS Plus, Inc. (2009-present). Mr. Woodside is also a Board member at Grupo Formula (1990-

present).

Mr. Jim Buntz joined CP Air in August 2009 as its Vice President of Finance and Business 

Development. Prior to this, he was employed for over 40 years in the Telecommunications

industry where he held executive positions in operations, sales, and marketing with various 

telecommunications companies, including Northwest Bell, Pacific Bell, Telcos, Time Warner 

telcom, XO Communications, ISG, and Telepacific. Mr. Buntz has a B.A. degree from the 

University of Nebraska in Economics and an MBA degree from Creighton University.

Mr. Tom Morrow joined CP Air in July 2009 as its Director of Communications and as a Board 

member. In addition to his duties and responsibilities at CP Air, Mr. Morrow is also employed 

by KOCT-TV as a Board member and as Host-Producer (1994-present), by the San Diego 

County Cable TV Commission as Chairman (2005-present), and as a self-employed Author, 

Biographer, and Publicist (2007-present). Prior to this, he was employed by MiraCosta College 

as a Faculty Instructor (1997-2002); by North County Times as a Columnist, Feature Writer, and 

Business Editor (1991-2007); by Daily Vista Press as a Feature and Entertainment Editor (1988-

1991); by Cotton-Morrow Communications as Partner (1985-1988); and by Hotel del CoronadoRacquet Club of Palm Springs as Director of Communications (1983-1985).

Mr. John Ross, an Airline Transport Pilot with more than 12,000 total flight hours, joined CP Air 

in August 2010 as the applicant’s Director of Operations. Prior to joining CP Air, he was the 

founder and CEO of OK3 Group, a corporation that developed risk management processes and 

integrated training systems to enhance safety (February 2010 - August 2010). Before this, 
5

Mr. Ross was employed by Twin Star Airways as Vice President of Flight Operations and 

Director of Operations (2009-2010); by Volant Systems, LLC, as Vice President and Chief 

Networking Officer (January 2009 – November 2009); by JetBlue Airways in various capacities 

during his tenure with the company, the last of which being Director of Operations (2005-2009);

by DJ Air Group as Vice President of Flight Operations (2002-2005); by U.S. Airways in various 

positions of increasing responsibility, including 737-300/400 Fleet Captain; F100 Fleet Captain;

Manager of Flight Training; Check Airman; and Captain (1982-2005); and by Continental 

Airlines as a B-727 Captain and Flight Engineer (1978-1982).

Mr. Dean Sinerius, an Airframe and Powerplant Mechanic, joined CP Air in January 2011, as its 

Director of Maintenance. Before joining CP Air, he was employed by Mesa Air Group as 

Director of Programs, Planning, Engineering, Powerplant Management, and MRO Services 

(2006-2011). Prior to this, he was employed by Frontier Airlines as Senior Manager of 

Maintenance Control and Technical Services (2006); by America West Airlines as Manager of 

Maintenance Control (2003-2006); by GE Inspection Technologies as Director of Aircraft 

Programs (2001-2002); by Champion Airlines as Director of Technical Programs and Planning 

(1999-2001); by Northwest Airlines in various positions of increasing responsibility the last of 

which being Maintenance Program Manager for the Boeing 727 (1982-1999); and by the Garret 

Corporation as Development Engineering Test Technician (1980-1982). Mr. Sinerius has also 

served in the U.S. Navy as a P-3 Flight Engineer (1976-1980).

Mr. Patrick Randall, and Airframe and Powerplant Mechanic, with over 34 years of aviation 

maintenance experience, joined CP Air in May 2011 as its Chief Inspector. Prior to joining CP 

Air, he was employed by US Airways where he held various positions during his tenure there,

including Line Maintenance Supervisor (1993-1997 and 2008-2010), Maintenance Control 

Supervisor (1997-2008), Aircraft Mechanic (1988-1989), and Aircraft Electrician (1986-1988). 

Before this, he was employed with Continental Airlines as an Avionics Technician (1985-1986) 

and at Imperial Airlines as Lead Mechanic (1982-1985). In addition to his aviation maintenance 

experience in the commercial sector, Mr. Randall also served in the United States Air Force as an 

Aircraft Technician (1976-1980).

Mr. Bret Ebaugh, and Airline Transport Pilot with more than 12,000 total flight hours, joined CP 

Air as its Chief Pilot in November 2009. Before this, he was employed by Pluna Airlines as a 

Certified Training Instructor and Training Examiner (2008-2009), by EOS Airlines as a B-757 

First Officer and by PSA Airlines, Inc., where he held various positions, including as a CRJ-200 

and CRJ-700 Captain, as a Designated Examiner, and as a Manager of Flight Standards.

Mr. David Love, an Airline Transport Pilot with more than 13,000 total flight hours, joined CP 

Air in January 2011 as the applicant’s Director of Safety. Before joining CP Air, Mr. Love was 

employed by ConAm Management as a C-550 pilot (2007-2011) and by US Airways in various 

positions, including B-737 and A-320 Simulator and Line Check Airman (1980-2007). Mr. Love 

has also served in the U.S. Air Force and U.S. Air Force Reserve as an F-4 and KC-10 pilot 

(1970-1984).
6

In view of the experience and background of the applicant’s key personnel, we tentatively 

conclude that CP Air’s management team possesses the managerial skills and technical ability to 

conduct its proposed service.4 

Operating Proposal and Financial Plan

If granted the interstate certificate it seeks, CP Air plans to provide scheduled passenger service 

between Carlsbad, California, and Phoenix, Arizona, Las Vegas, Nevada, and Oakland, San Jose, 

and Sacramento, California. CP Air intends to initiate its operations using one Embraer 170 

aircraft with a second and third Embraer 170 aircraft added to the company’s operations in the 

second and third quarters following commencement of operations. CP Air is currently seeking 

certification from the Federal Aviation Administration (“FAA”) under Part 121 to conduct the 

proposed operations.

CP Air expects to incur $7.4 million in pre-operating expenses prior to the commencement of 

revenue operations, of which approximately $4.9 million remains to be paid, and that operating 

expenses during its first year of operations will total approximately $28.0 million.5 We find CP

Air’s expense projections to be reasonable and estimate that CP Air will need approximately 

$11.9 million to meet our financial fitness test.6 

In support of its ability to meet our fitness requirements for its proposed operations, CP Air 

states that its initial shareholder, Ted Vallas, has assigned title and interest in property valued at 

$400,000 to the company, as well as rights and title to a Fixed Payment Agreement which 

provides for payments to the company of $25,000 per month for a duration of 30 years. It has 

also retained the services of the law firm of Procopio, Cory, Hargreaves and Savitch, LLP, to 

prepare and file a Private Placement Memorandum with the Securities and Exchange 

Commission. CP Air expects to issue between 10,000 and 3,200,000 shares through its private 

offering to raise the capital necessary to meet our financial fitness requirements. CP Air’s 

balance sheet at December 11, 2010, shows that the company had current assets of $400,000 and 

current liabilities of $48,947, giving the company positive working capital of $351,053 and a 

current assets to current liabilities ratio of 8.17:1. In addition, the company’s balance sheet 

showed positive shareholder equity of $15.3 million as of December 11, 2010.

 

4 Before authorizing an air carrier to conduct air transportation operations, the FAA also evaluates certain of the 

applicant’s key personnel with respect to the minimum qualifications for those positions as prescribed in the Federal 

Aviation Regulations. The FAA’s evaluation of these key personnel provides an added practical and in-person test 

of the skills and technical ability of these individuals. The FAA has advised us that CP Air’s key technical 

personnel are acceptable to that agency in their respective positions.

5 CP Air no longer intends to pursue its foreign certificate authority at this time. Thus, the first-year expenses 

noted above omit the cost associated with its proposed foreign operations.

6 We have generally asked that new entrant applicants have resources sufficient to cover all pre-operating costs, 

plus a working capital reserve equal to the operating costs that would be incurred in three months of normal 

certificated operations. However, because projected operations during one or more of the first three months of 

anticipated actual air transportation services frequently do not include all costs of operations that will be incurred 

during a normal period of operations, it has been our practice to base our three-month standard on one quarter of the 

first year’s operating cost forecast. In calculating available resources, projected revenues may not be used. 
7

In light of the above, we tentatively conclude that CP Air has developed a funding plan which, if 

successful, will provide the applicant with sufficient financial resources to commence its 

proposed operations without posing an undue risk to consumers or their funds. As is our 

practice, prior to making any authority awarded to CP Air effective, we will require the company 

to provide updated information on its operating plans, as well as third-party verification 

demonstrating that the proceeds raised from its private offering are sufficient to meet our 

financial fitness test or that it otherwise has obtained the financial resources necessary to meet 

our financial test. However, if CP Air is unsuccessful in raising the capital required to meet our 

financial fitness test for the operations it proposes, the applicant will have to submit an amended 

service proposal with supporting evidence of its fitness.

Compliance Disposition

CP Air states that there are no actions or outstanding judgments against it, its owners, or its key 

personnel, nor have there been any charges of unfair, deceptive or anti-competitive business 

practices, or of fraud, felony or antitrust violations brought against any of these parties in the past 

ten years. The applicant also states that there are no pending investigations, enforcement actions, 

or formal complaints filed by the Department against it, its key personnel, or persons having a 

substantial interest in it with respect to compliance with the Transportation Code or the 

Department’s regulations. 

A review of our records and other information available to us has uncovered no information 

which would reflect negatively on the applicant or any of its key personnel. In addition, 

according to the FAA, CP Air is continuing to work with the agency in obtaining its 

FAA certification under Part 121 and the agency knows of no reason why the applicant should 

not be granted the authority it is seeking.

In light of these circumstances, we tentatively conclude that CP Air has the proper regard for the 

laws and regulations governing its services to ensure that its aircraft and personnel conform to 

applicable safety standards and that acceptable consumer relations practices will be followed.

CITIZENSHIP

The Transportation Code requires that authority to engage in air transportation be held only by 

citizens of the United States as defined in 49 U.S.C. § 40102(a)(15). The Transportation Code

also requires that the president and two-thirds of the Board of Directors and other managing 

officers be U.S. citizens, that at least 75 percent of the outstanding voting interest be owned by 

U.S. citizens, and that the air carrier must be under the actual control of U.S. citizens. 

As noted earlier, Mr. Ted Vallas, the President and sole shareholder of CP Air, is a U.S. citizen. 

Moreover, all of CP Air’s board members and key personnel are U.S. citizens and the applicant 

has provided an affidavit attesting that it is a citizen of the United States within the meaning of 

the Transportation Code and that it is owned and controlled by U.S. citizens. Our review of the 

applicant has uncovered no reason to suggest that control of CP Air rests with non-U.S. citizens.

In light of the foregoing, we tentatively find that CP Air is owned and actually controlled by U.S. 

citizens, consistent with 49 U.S.C. § 40102(a)(15).
8

OBJECTIONS

We will give interested persons 14 days following the service date of this order to show cause 

why the tentative findings and conclusions set forth here should not be made final; answers to 

objections will be due within 7 days thereafter. We expect such persons to direct their 

objections, if any, to the application and points at issue and to support such objections with 

detailed economic analyses. If an oral evidentiary hearing or discovery procedures are 

requested, the objector should state in detail why such a hearing or discovery is considered 

necessary, and what material issues of decisional fact the objector would expect to establish 

through a hearing or discovery that cannot be established in written pleadings. The objector 

should consider whether discovery procedures alone would be sufficient to resolve material 

issues of decisional fact. If so, the type of procedure should be specified (See Part 302, Rules 19 

and 20); if not, the reasons why not should be explained. We will not entertain general, vague, 

or unsupported objections. If no substantive objections are filed, we will issue an order that will 

make final our tentative findings and conclusions with respect to CP Air’s fitness and 

certification.

CERTIFICATE CONDITIONS & LIMITATIONS

Under our rules (14 CFR 204.3(t)), an applicant for interstate and/or foreign certificate authority 

is expected to include with its application an expense forecast based on the services it proposes 

to conduct during its initial year of actual flight operations. The Department bases the capital 

requirement necessary to demonstrate a new entrant air carrier’s fitness upon these expense 

projections. Since CP Air has not presented a foreign service proposal including, among other 

things, an expense projection for foreign operations, we are unable to determine CP Air’s capital 

requirements to conduct foreign operations. Therefore, we will dismiss CP Air’s application for 

foreign certificate authority. However, this action is taken without prejudice to the company 

refiling an application for foreign certificate authority at any time in the future. 

Moreover, our tentative finding of fitness is based on the operations proposed in this application. 

Were CP Air to propose a substantial expansion in its plans, including the operation of more than 

the three aircraft discussed here, this finding may not continue to apply. Therefore, if our 

tentative finding regarding CP Air’s fitness is made final, and CP Air is issued certificate 

authority, we will require that, should the company want to expand its fleet beyond three aircraft, 

it must first provide the Department with at least 45-days’ notice of such plans and provide 

updated information demonstrating its fitness to operate additional aircraft. 

If CP Air is found fit and issued the certificate it seeks, its authority will not become effective 

until the company has fulfilled all requirements for effectiveness as set forth in the terms and 

conditions attached to its certificate. Among other things, this includes our receipt of evidence 

that CP Air has been certificated by the FAA to engage in the subject operations, a fully executed 

OST Form 6410 evidencing liability insurance coverage that meets the requirements of 14 CFR 

205.5(b) of our rules for all of its aircraft, third-party verification of available funding necessary 

to meet the Department’s fitness requirements, and a statement of changes it may have 

undergone since its fitness was examined.
9

We also wish to remind CP Air of the requirements of 49 U.S.C. 41110(e). Specifically, that 

section requires that, once an air carrier is found fit initially, it must remain fit in order to hold its 

authority. To be assured that certificated air carriers continue to be fit after effective authority 

has been issued to them, we require that they supply information describing any subsequent 

substantial changes they may undergo in areas affecting fitness. Therefore, if CP Air is issued 

effective certificate authority and subsequently proposes substantial changes in its ownership, 

management, or operations, it must first comply with the requirements of section 204.5 of our 

rules.7 The compliance of the company with this requirement is essential if we are to carry out 

our responsibilities under the Transportation Code.8

Finally, if CP Air is granted effective authority, it would be required to submit a detailed 

progress report, within 45 days following the end of the first year of certificated flight 

operations, to the Air Carrier Fitness Division. The submission of a first year progress report is 

conditioned upon all newly certificated air carriers and was adopted as policy by the Department 

to aid in monitoring the fitness of new air carriers. The report should include a description of the 

air carrier’s current operations (number and type of aircraft, principle markets served, total 

number of full-time employees), a summary of how its operations have changed during the year, 

a discussion of any changes it anticipates from its current operations during its second year, 

current financial statements,9 and a listing of current senior management and key technical 

personnel. The air carrier should also be prepared to meet with staff members of the Fitness 

Division to discuss its current and future operations.

ACCORDINGLY,

1. We dismiss, without prejudice, the application filed by Carlsbad-Palomar Airlines, Inc. d/b/a 

California Pacific Airlines, in Docket DOT-OST-2010-0125 for a certificate of public 

convenience and necessity to engage in foreign scheduled air transportation of persons, property, 

and mail.

2. We direct all interested persons to show cause why we should not issue an order making final 

the tentative findings and conclusions stated above and award a certificate to Carlsbad-Palomar 

 

7 The air carrier may contact our Air Carrier Fitness Division to report proposed substantial changes in its 

operations, ownership, or management, and to determine what additional information, if any, will be required under 

section 204.5. In addition, by notice dated July 21, 1998, the Department requested air carriers to provide a 30-day 

advance notification of any proposed change in ownership, restructuring, or recapitalization. If the air carrier fails to 

file this updated information or if the information fails to demonstrate that the air carrier will continue to be fit upon 

implementation of the substantial change, the Department may take such action as is appropriate, including 

enforcement action or steps to modify, suspend, or revoke the air carrier's certificate authority.

8 We also remind CP Air about the requirements of section 204.7 of our rules. This section provides, among 

other things, that (1) the certificate authority granted to a company shall be revoked if the company does not 

commence actual flying operations under that authority within one year of the date of the Department's 

determination of its fitness; (2) if the company commences operations for which it was found fit and subsequently 

ceases such operations, it may not resume certificated operations unless its fitness has been redetermined; and (3) if 

the company does not resume operations within one year of its cessation, its authority shall be revoked for 

dormancy.

9 These financial statements should include a balance sheet as of the end of the company’s first full year of 

certificated flight operations and a 12-month income statement ending that same date.
10

Airlines, Inc. d/b/a California Pacific Airlines authorizing it to engage in interstate scheduled air 

transportation of persons, property, and mail, subject to the attached specimen Terms, 

Conditions, and Limitations.

3. We direct any interested persons having objections to the issuance of an order making final 

any of the proposed findings, conclusions, or the certificate award set forth here to file them with 

Department of Transportation Dockets, 1200 New Jersey Avenue, S.E., West Building Ground 

Floor, Rm. W12-140, Washington, D.C. 20590, in Docket DOT-OST-2010-0126 and serve them 

upon all persons listed in Attachment A no later than 14 days after the service date of this order; 

answers to objections shall be filed no later than 7 days thereafter.

4. If timely and properly supported objections are filed, we will accord full consideration to the 

matters or issues raised by the objections before we take further action.10

5. In the event that no objections are filed, we will consider all further procedural steps to be 

waived and we will enter an order making final our tentative findings and conclusions.

6. We will serve a copy of this order on the persons listed in Attachment A.

7. We will publish a summary of this order in the Federal Register.

By:

SUSAN L. KURLAND

Assistant Secretary

for Aviation and International Affairs

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

http://www.regulations.gov

 

10 Since we have provided for the filing of objections to this order, we will not entertain petitions for 

reconsideration.
Attachment

SPECIMEN

Terms, Conditions, and Limitations

CARLSBAD-PALOMAR AIRLINES, INC. 

d/b/a CALIFORNIA PACIFIC AIRLINES

is authorized to engage in interstate air transportation of persons, property, and mail between 

any point in any State, territory, or possession of the United States or the District of Columbia, 

and any other point in any of those entities.

This authority is subject to the following provisions:

(1) The authority to operate under this certificate will not become effective until six (business) 

days after the Department has received the following documents; provided, however, that the 

Department may stay the effectiveness of this authority at any time prior to that date:

(a) A copy of the holder's Air Carrier Certificate and Operations Specifications 

authorizing such operations from the Federal Aviation Administration (FAA).

(b) A certificate of insurance on OST Form 6410 evidencing liability insurance 

coverage meeting the requirements of 14 CFR 205.5(b) for all of its aircraft.

(c) A statement of any changes the holder has undergone in its ownership, key 

personnel, operating plans, financial posture, or compliance history, since the date of the 

Show Cause Order in this case.

(d) A revised list of pre-operating expenses already paid and those remaining to be 

paid, as well as independent verification that the holder has available to it funds 

sufficient to cover any remaining pre-operating expenses and to provide a working 

capital reserve equal to the operating costs that would be incurred in three months of 

operations.

(2) Pending receipt of effective authority, the holder may not accept payment of any kind (i.e., 

cash, check, or credit card) or issue tickets for the operations proposed under this certificate, and 

any advertisement or listing of flights by the holder must prominently state: "This service is 

subject to receipt of government operating authority." 

(3) The holder shall at all times conduct its operations in accordance with the regulations 

prescribed by the Department of Transportation for the services authorized by this certificate, 

and with such other reasonable terms, conditions, and limitations as the Department of 

Transportation may prescribe in the public interest.

(4) The holder's authority under this certificate is effective only to the extent that such 

operations are also authorized by the Federal Aviation Administration (FAA), and comply with 
2

all U.S. Government requirements concerning security, including, but not limited to 49 CFR Part 

1544.

(5) The holder shall at all times remain a "Citizen of the United States" as required by 49 

U.S.C. 40102(a)(15).

(6) The holder shall maintain in effect liability insurance coverage as required under 14 CFR 

Part 205. Failure to maintain such insurance coverage will render a certificate ineffective, and 

this or other failure to comply with the provisions of Subtitle VII of Title 49 of the United States 

Code or the Department's regulations shall be sufficient grounds to revoke this certificate.

(7) The holder is authorized to conduct charter flights in interstate and/or foreign air 

transportation in accordance with the provisions of 14 CFR 212. 

(8) In the event that the holder receives effective scheduled passenger authority, the following 

additional conditions will apply:

(a) The holder may reduce or terminate service at any point or between any two 

points, subject to compliance with the provisions of 49 U.S.C. 41734 and all orders and 

regulations issued by the Department of Transportation under that section.

(b) The holder may not provide scheduled passenger air transportation to or from 

Dallas (Love Field), Texas, except within the limits set forth in section 29 of the 

International Air Transportation Competition Act of 1979, as amended or as modified by 

any future legislation addressing access restrictions to or from Love Field. 

(9) Should the holder propose any substantial change in its ownership, management, or 

operations (as defined in 14 CFR 204.2(l)), it must first comply with the requirements of 14 CFR 

204.5.

(10) In the event that the holder does not commence actual flying operations under this 

certificate within one year of the date of the Department's determination of its fitness, its 

authority shall be revoked for dormancy, unless the holder is conducting operations under 

another type of certificate authority. Further, in the event that the holder commences operations 

for which it was found "fit, willing, and able" and subsequently ceases all such operations, its 

authority under all certificates held shall be suspended under the terms of 14 CFR 204.7 and the 

holder may neither recommence nor advertise such operations unless its fitness to do so has been 

redetermined by the Department. Moreover, if the holder does not resume operations within one 

year of its cessation, its authority shall be revoked for dormancy.

 

 To assure compliance with all applicable U.S. Government requirements concerning security, the holder shall, 

before commencing any new service (including charter flights) to or from a foreign airport, contact its Principal 

Security Inspector (PSI) to advise the PSI 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.
Attachment A

SERVICE LIST FOR

CARLSBAD-PALOMAR AIRLINES, INC.

TED VALLAS

PRESIDENT AND CEO

CALIFORNIA-PALOMAR AIRLINES INC

 D/B/A CALIFORNIA PACIFIC AIRLINES

5670 EL CAMINO REAL 

SUITE D

CARLSBAD CA 92008

PETER LYNCH AGC-300

FAA ASST CHIEF COUNSEL

FOR ENFORCEMENT

800 INDEPENDENCE AVE SW 

WASHINGTON DC 20591

WILLIAM J WEBER

CERTIFICATION SECTION MANAGER

FAA AFS-900

45005 AVIATION DRIVE SUITE 131

DULLES VA 20166

BERNARD STANKUS 

OFFICE OF AIRLINE INFORMATION

DOT/RITA/BTS RTS-42

1200 NEW JERSEY AVE SE

WASHINGTON DC 20590

ANNE SUISSA RTS-42

OFFICE OF AIRLINE INFORMATION

DOT/RITA/BTS E-34

1200 NEW JERSEY AVE SE

WASHINGTON DC 20590

JEROME PENDZICK

FAA FSDO MANAGER

8524 GIBBS DRIVE

SUITE 120

SAN DEIGO CA 92123