Order 2013-4-4

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the Tenth day of April, 2013

Third Party Complaint of Docket OST 2013-0031

Pacific Airways, Inc., and PM Air, LLC

Against Scott Air, LLC

d/b/a Island Air Express Served April 10, 2013

ORDER OF DISMISSAL

On February 1, 2013, Pacific Airways, Inc., and PM Air, LLC (Petitioners) filed a third 

party complaint against Scott Air, LLC, d/b/a Island Air Express (Scott Air) alleging that 

Scott Air is continuing to engage in scheduled interstate air transportation without proper 

economic authority from the Department despite the issuance of a consent order on 

December 28, 2012, against Scott Air for such conduct.

1

 Petitioners request that the 

Department find that Scott Air is continuing to engage in unauthorized air transportation

in violation of Order 2012-12-16, compel payment of the entire penalty assessed by the 

order, and institute a formal enforcement proceeding in front of a Departmental

administrative law judge. Although not specifically requested in Petitioners’ pleading, 

we are treating Petitioners’ filing as a formal complaint under 14 CFR 302.404.

Background and Applicable Law

Section 41101 of Title 49 of the U.S. Code prohibits the holding out or the provision of 

interstate air transportation unless a carrier has economic authority from the Department 

in the form of a certificate of public convenience and necessity or an exemption from the 

certificate requirement. In addition to being a violation of 49 U.S.C. § 41101, holding out 

or providing air service without economic authority is in violation of 49 U.S.C. § 41712,

which prohibits unfair and deceptive trade practices and unfair methods of competition. 

On December 28, 2012, the Department issued Order 2012-12-16 against Scott Air. The 

order found that Scott Air was holding out interstate air transportation without 

Departmental economic authority. Specifically the Department found that Scott Air 

 1 See Scott Air LLC d/b/a Island Air Express, Violations of 49 U.S.C. §§ 41101 and 41712, Order 2012-12-

16 (Dec. 28, 2012).
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advertised scheduled service between Ketchickan International Airport in Alaska and the 

Klawock Airport which serves Craig and Klawock, Alaska, and Scott Air’s website 

allowed reservations from passengers outside the State of Alaska. These passengers 

could also book flights using a toll-free number. Scott Air’s website also allowed 

passenger to enter information regarding Alaska Airlines flights carrying passengers from 

outside Alaska connecting at Ketchikan International Airport. As a result, Scott carried 

more than a de minimis number of passengers moving as part of a continuous journey

from outside the State of Alaska to and from Craig and Klawock. 

Order 2012-12-16 directs Scott Air to cease and desist from future violations of 49 

U.S.C. §§ 41101 and 41712 and assesses a civil penalty of $20,000. If Scott Air fails to 

cease and desist from further violations, it may be subject to additional penalties and

further enforcement action. 

Prior to the issuance of Order 2012-12-16, Scott Air amended its website to note that it 

only operates intrastate air transportation. On October 22, 2013, Scott Air also filed an

application for a certificate of public convenience and necessity which would allow it to 

engage in interstate scheduled air transportation. In Order 2012-12-16, the Department 

stated that “in light of the steps taken by Scott and the mitigation factors mentioned 

above, the [Aviation] Enforcement Office [of the Department] will not oppose Scott 

being found fit and as a matter of prosecutorial discretion will not take enforcement 

action against Scott while it conducts its present operations until its certificate has been 

granted.” On January 18, 2013, the Assistant Secretary for Aviation and International 

Affairs made a tentative finding that Scott Air is fit for interstate air transportation in an 

Order to Show Cause which was issued. The order directs all interested persons to show 

cause why the office should not finalize its findings. That matter is pending before the 

Department.2

Complaint filed by Petitioners

On February 1, 2013, the Petitioners filed a “complaint against Scott Aviation, LLC, for 

anti-competitive, deceptive, and unfair business practices while engaging in interstate air 

commerce without authority.” In that complaint, the Petitioners allege that Scott Air’s 

website is still “universally available” and that its disclaimer is not sufficient to notify 

consumers that it lacks interstate authority from the Department. Additionally the 

Petitioners claim that Scott Air continues to accept reservations from passengers who 

indicate that they (the passengers) are engaged in interstate transportation. Petitioners 

attach “reservation confirmations” to their complaint, which they claim show that Scott 

Air is accepting reservations from persons that also have Alaska Airlines connections in 

Ketchikan, Alaska. Additionally, Petitioners seem to indicate that Scott Air’s utilization 

of a toll-free reservations number also violates the consent order’s cease and desist 

provision. 

Further, the Petitioners allege that Scott Air intentionally times its flights to connect 

“conveniently” to or from Alaska Airlines’ flights to Ketchikan. In support of this 

 2 See Docket DOT-OST-2012-0178 and DOT-OST-2012-0179.
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assertion, Petitioners provide a timetable, which they generated, of Alaska flights from 

Seattle to Ketchikan and Scott Air flights from Ketchikan to Klawock. Petitioners also 

attach several newspaper advertisements from the Ketchikan Daily News that purport to 

advertise Scott Air’s connecting service to Alaska Airlines. Petitioners claim that the 

Ketchikan Daily News is a “regional newspaper” and then lists the localities within the 

State of Alaska where the newspaper can be purchased. The advertisement in question 

appeared in December 2012. Petitioners also attached two advertisements from the 

Southeast Island News, one from November 21, 2011, and one from November 21, 2012, 

both before the Department issued the consent order. In those newspaper advertisements, 

Scott Air highlights that it schedules its flights to coincide with Alaska Airlines flights.

Petitioners then list a series of seemingly rhetorical questions as to why a carrier would 

choose to fly into and out of Ketchikan International Airport and why a passenger would 

choose to fly into the airport. Petitioners argue that the only way to get between the 

airport and the City of Ketchikan is via a ferry, which Petitioners argue operates in 

accordance with Alaska Airlines schedule. Petitioners state that the airport is “strictly [a]

connecting market” because of its location, and passengers would only choose to use that 

airport to connect to an Alaska Airlines flight. 

Finally, Petitioners attach as appendices various third-party websites for fishing lodges 

and the Prince of Wales Island’s chamber of commerce which list Scott Air as providing 

service between Ketchikan and the fishing lodges. Petitioners maintain that Scott Air has 

made no attempt to correct the third party websites with a disclaimer of its intrastate 

authority. Petitioners argue that there is a relationship between Scott Air, Desert Splash 

Adventures (Scott Air’s winter season Arizona operation), and El Capitan Lodge, located 

in Craig, Alaska. Petitioners state that Desert Splash’s website lists El Capitan as a 

“partner.” Petitioners claim that if a person calls Scott Air’s toll-free number and 

inquires about reservations for El Capitan, callers are directed to a Bremerton, 

Washington, phone number to make reservations directly with El Capitan. Petitioners 

also claim that their representative called several local hotels and inquired as to how to 

reach the hotels. According to the Petitioners’ complaint, each hotel stated that the 

visitors should use Scott Air. Petitioners argue that this is evidence that Scott Air has 

attempted to generate interstate traffic. 

Answer of Scott Air

On February 20, 2013, through counsel, Scott Air replied to the complaint filed by 

Petitioners stating that the complaint should be dismissed on factual and procedural 

grounds. Scott Air states that Petitioners’ complaint does not comply with the 

Department’s requirements for filings under 14 CFR 302.4, and Petitioners’

representative failed to provide an 18 U.S.C. § 1001 certification. Scott Air states that the 

complaint should be dismissed due to these procedural deficiencies.

Scott Air replies that the complaint should be dismissed on substantive grounds as well. 

Specifically, Scott Air argues that the fact that it operates out of an “International 

Airport” does not mean it conducts interstate transportation. Scott Air notes that its 
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wheeled Cessna Caravan aircraft can only land in the area at the Ketchikan International 

Airport. Regarding its website, Scott Air asserts that its disclaimer is adequate3, and that 

its maintenance of a website is common practice for all other intrastate and interstate 

carriers. Scott Air also argues that it is not required under Department regulations to list

the types of economic authority it does not have. Scott Air states that it does not accept 

interstate reservations on its website. 

Regarding the local newspaper advertisements, Scott Air points out that the 

advertisement from December 2012 does not make any reference to connections with any 

other air carrier. Scott Air also notes that the advertisements are in local newspapers 

directed to the local community. 

Regarding the third party websites, Scott Air states that the websites speak for 

themselves. Scott Air points out that nowhere on the websites mentioned by Petitioners

is it stated that there is any connection with Scott Air and Alaska Airlines. Scott Air 

addresses the allegations regarding the relationship between Scott Air and El Capitan 

Lodge by stating that the Bremerton, Washington, phone number that Petitioners list as 

El Capitan’s phone number is not a phone number for El Capitan. Scott Air notes that 

neither it nor El Capitan has an office in Washington state. 

Petitioner’s Reply to Scott Air’s Answer

On February 25, 2013, Petitioners filed an unauthorized reply to Scott Air’s Answer. 

Under 14 CFR §302.6(b) a reply to an answer is not authorized. The Department will 

only accept otherwise unauthorized documents for filing only if leave has been obtained 

from the DOT decision maker on written motion and on good cause shown. Such 

motions must contain a concise statement of the matters relied upon as good cause and 

shall be attached to the pleading or other document for which leave to file is sought. In 

this case, Petitioners incorporated the written motion into the otherwise unauthorized 

document. We have reviewed the motion and have not found good cause to accept the 

motion to file the unauthorized document. Therefore, we are not considering subsequent 

pleadings in this matter. 

Disposition and Analysis

We have carefully considered the complaint in Docket 2013-0031, and have decided to 

dismiss the complaint. The Petitioners have not demonstrated that Scott Air has failed to 

comply with the terms of Order 2012-12-16. The Petitioners do not take into account the 

steps taken by Scott Air to operate within its intrastate authority during the pendency of 

their application for authority. Additionally, none of the assertions provided by the 

Petitioners show evidence that to the extent that Scott Air may still be carrying more than 

de minimis interstate traffic.

 3 “Island Air Express operates its scheduled services within the State of Alaska. We have been granted full 

FAA authorization as an intra-state FAA certificate holder to operate our Caravans IFR (in or above the 

clouds), day or night using the advanced Synthetic Flight Vision navigation system making our modern 

aircraft the safest, most reliable fleet in Alaska.”
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As an initial matter, a carrier having a website, which by definition is accessible worldwide via the Internet, and a toll-free number, is not evidence per se that a carrier is 

operating interstate air transportation. In today’s modern marketplace, having a website is 

important for small businesses, and it is not feasible for a company to limit its Internet 

advertisements only to people within a state. There must be other evidence of holding out 

interstate transportation in addition to having a website. A toll-free number is a 

convenient way to allow passengers to contact a carrier, and, in and of itself, it also is not 

evidence of holding out interstate transportation. 

Scott Air amended its website to indicate that its authority is limited to operating

scheduled service within the State of Alaska. This disclaimer is on Scott Air’s 

homepage. There is no Departmental requirement that Scott Air put such a disclaimer on 

its website at all, or, if it chooses to put a disclaimer on its website, list the authority that 

it does not have. We believe the disclaimer is adequate to inform consumers booking 

transportation on Scott Air’s website that its authority is currently limited to intrastate 

operations. Similarly, in the absence of collusion, the Department cannot hold Scott 

responsible for third-party websites that it cannot control or third-party recommendations 

to use Scott’s services between Ketchikan and Klawock. The Department reviewed

Desert Splash Adventure’s website (www.desertsplashadventures.com). The website 

mentions that Desert Splash Adventures are “operated by Island Air Express,” but there is 

no indication that Scott Air is operating interstate air transportation through Desert Splash 

Adventures. Desert Splash Adventures does list a partner as El Capitan Lodge, but the 

link takes you to El Capitan’s website, not Scott Air’s. We are not convinced that the 

link on Desert Splash Adventure’s website to El Capitan Lodge is evidence of Scott Air 

holding out interstate air transportation. 

Regarding the scheduling issue Petitioners raise, stating that Scott Air’s flights are 

“conveniently” timed to Alaska Airlines flights, this matter was raised and considered by 

the Department before the issuance of Order 2012-12-16. There is no interline agreement 

between Alaska Airlines and Scott Air. Scott Air has amended its advertisement to 

remove its highlighting of the “convenient” connection. Scott Air is allowed to make a 

business decision about when to schedule its flights as long as it does not hold out 

interstate air transportation or carry more than de minimis interstate air transportation. 

Scott Air amended its website and its print advertisements to correct the information that 

could be perceived as holding out interstate service. Scott Air’s decision to fly into and 

out of Ketchikan International Airport is likewise not a determining factor. 

The newspaper advertisements cited by Petitioner as evidence are not compelling, and, in 

fact, support the fact that Scott Air amended its advertisements to stop holding out 

interstate service. First, both the Ketchikan Daily News and the Southeast Island News

are regional newspapers located within the State of Alaska, and do not reach a broad outof-state audience. Secondly, the advertisement from the Ketchikan Daily News, from 

“December 2012” does not mention connecting service to Alaska Airlines, unlike the two 

advertisements in the Southeast Island News, both of which predate the consent order. 

To the extent that any advertisements printed before the issuance of the consent order 

advertised “convenient” connecting service to Alaska Airlines flights, those 
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advertisements are covered under Order 2012-12-16. Moreover, the advertisements show 

that Scott Air changed its advertising practices to comport with Departmental regulations.

Regarding the reservations made on Scott Air, all the reservations proffered by 

Petitioners as evidence that Scott Air is flying passengers that connected from an Alaska 

Airlines flight were all made by residents with mailing addresses within Alaska. Also, in 

one of the reservations submitted, the Alaska Airlines confirmation pages are merged 

with the Scott Air confirmation pages to make it appear to the reader that Scott Air is 

providing confirmation for Alaska Airlines flights, which is not the case. Finally, if a 

passenger voluntarily decides to schedule his or her intrastate trip to coincide with 

interstate air transportation, as Scott Air stated in its Reply, Scott Air is not responsible 

for that connection. 

Scott Air does not accept reservations made by out-of-state residents, as Petitioners 

discovered when they attempted to make purchases out-of-state. While Scott Air 

requests “Alaska Airlines Connecting Flight Info,” it does so in order to know if a 

passenger will make its flight on Scott if the Alaska flight is delayed or cancelled. While 

the Department understands why Scott Air asks for this information, requesting the 

connecting flight information can be construed to be holding out interstate service. Scott 

Air points out that it is not operating “connecting” service with Alaska Airlines. Scott 

Air does not have an interline agreement with Alaska. Passengers on Scott Air must 

check in for their Scott and Alaska flights separately and must check their bags 

separately. This issue was addressed in the consent order issued by the Department. 

Because Scott Air made changes to its website and reservations process, and it changed 

its advertisements to eliminate the references to connecting service, we find that any 

interstate traffic Scott Air may have carried as a result of asking for a customer’s 

connecting flight information subsequent to the issuance of Order 2012-12-16 was de 

minimis in nature. 

After a thorough review of the information presented by Petitioners, we find that there is 

insufficient evidence that Scott Air violated the terms of consent order 2012-12-16 and 

that the intent of the order is being fulfilled.

ACCORDINGLY, pursuant to the authority delegated under 14 CFR 302.406, I dismiss 

the complaint of Pacific Airways, Inc. and PM Air, LLC, against Scott Air, LLC, d/b/a 

Island Air Express in Docket OST 2013 -0031. This order shall become effective as a 

final order of the Department 30 days after its service date.

By:

SAMUEL PODBERESKY

Assistant General Counsel for

 Aviation Enforcement and Proceedings

An electronic version of this document is available at

www.regulations.gov