Order 2014-3-5

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

On the Eleventh day of March, 2014

Charter by the Seat LLC Served: March 11, 2014

Violations of 49 U.S.C. § 41712 and 

 14 CFR Part 380 Docket OST-2014-0001

CONSENT ORDER

This consent order concerns violations by Charter by the Seat LLC of certain consumer 

protection provisions of the Department’s public charter regulations during 2013. 

Charter by the Seat was a public charter operator that sold public charter flights directly 

to the public. Charter by the Seat failed to properly maintain an escrow account and 

improperly used and handled charter participant funds in violation of 14 CFR Part 380. 

These activities also constituted an unfair and deceptive practice in violation of 49 U.S.C. 

§ 41712. This order directs Charter by the Seat to cease and desist from future similar 

violations and assesses the operator $30,000 in civil penalties.

Applicable Law

Public charter operators must comply with the requirements of 14 CFR Part 380. Among 

the most important requirements of Part 380 are the rules designed to prevent economic 

harm to charter participants. These rules include the requirement that charter 

participants’ funds be deposited into an escrow account at a designated depository bank 

that will maintain a separate accounting for each charter group. 14 CFR 380.34. One 

purpose of this requirement is to ensure that there are sufficient funds in a particular 

depository account for that account’s particular flight and, if there is not, that passenger 

funds paid toward other flights are not used for flights for which there are insufficient 
2

funds.1 A public charter operator’s failure to comply with 14 CFR Part 380 also 

constitutes an unfair and deceptive practice within the meaning of 49 U.S.C. § 41712. 

Facts and Conclusions

Charter by the Seat filed a public charter prospectus on December 11, 2012, and received 

approval to conduct public charter operations on December 17, 2012. That prospectus, 

PC No. 12-218, authorized flights between Florida and the Bahamas with Pioneer Air 

Service LLC listed as the direct air carrier. These flights were scheduled to operate from 

December 2012 to December 2013.

During a review of Charter by the Seat’s program, the Office of Aviation Enforcement 

and Proceedings (Enforcement Office) discovered a number of irregularities in Charter 

by the Seat’s escrowing activities. Specifically, although Charter by the Seat signed a 

Public Charter Depository Agreement stating that it had established a depository account 

meeting the requirements of 14 CFR 380.34, which was submitted to the Department, the 

account was never utilized for passenger funds. Charter by the Seat did not present its 

depository bank with a flight-by-flight accounting in order for it to properly segregate 

charter participant funds nor did Charter by the Seat submit the required certifications of 

flight completions to the bank as required by section 380.34 in order to receive payment 

after the completion of each flight. Instead, charter participant funds were deposited 

directly into an operating account maintained by Pioneer Air Service, the direct air 

carrier. On August 12, 2013, Charter by the Seat’s escrow account was closed due to 

inactivity. 

Charter by the Seat’s failure to adhere to the escrow requirements of 14 CFR 380.34 had 

the potential to cause significant consumer harm. By engaging in the conduct described 

above, Charter by the Seat violated section 380.34 and engaged in an unfair and 

deceptive practice in violation of 49 U.S.C. § 41712.

Mitigation

In mitigation, Charter by Seat states that it did not intend to violate the Department’s 

public charter regulations and has not conducted any public charter operations since 

receiving the Department’s initial investigation letter. Charter by the Seat states that in 

response to the Department’s investigation, it has implemented several internal 

mechanisms designed to avoid any future violations of the Department’s public charter 

regulations. Specifically, Charter by the Seat states that it has designated an individual as

the company’s “quality assurance manager” who will obtain specialized training in the 

rules pertaining to public charters and who will review the handling of all monies related 

to public charter operations. In addition, Charter by the Seat states that it will conduct 

 1 See Liberty Bank v. BankAmerica National Trust Co., 1996 WL 343048 (S.D.N.Y.), and Valley National 

Bank, Violations of 14 CFR Part 380 and 49 U.S.C. § 41712, Order 2013-9-2 (Sept. 4, 2013).
3

quarterly audits of its public charter finances in order to ensure continued compliance 

with 14 CFR Part 380.

Decision

We view seriously Charter by the Seat’s violations of 49 U.S.C. § 41712 and 14 CFR 

Part 380. Accordingly, after carefully considering all the facts in this case, including 

those set forth above, the Enforcement Office believes that enforcement action is 

warranted. By this order, the Department finds that Charter by the Seat failed to adhere 

to the Department’s public charter regulations and the statutory prohibition on unfair and 

deceptive practices.

In order to avoid litigation, Charter by the Seat has agreed to settle this matter with the 

Enforcement Office and enter into this consent order directing Charter by the Seat to 

cease and desist from future similar violations of 49 U.S.C. § 41712 and 14 CFR Part 

380, and assessing $30,000 in compromise of potential civil penalties otherwise due and 

payable. The compromise assessment is appropriate considering the nature and extent of 

the violations described herein and serves the public interest. It represents a strong 

deterrent to future similar unlawful practices by Charter by the Seat and other public 

charter operators.

This order is issued under the authority contained in 49 CFR Part 1.

ACCORDINGLY,

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

this order as being in the public interest;

2. We find that Charter by the Seat LLC violated 14 CFR 380.34 by failing to properly 

maintain a public charter escrow account and by improperly using and handling 

charter participant funds;

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

Charter by the Seat LLC engaged in an unfair and deceptive practice and an unfair 

method of competition in violation of 49 U.S.C. § 41712;
4

4. We order Charter by the Seat LLC and all other entities owned or controlled by, or 

under common ownership and control with Charter by the Seat LLC, its successors, 

affiliates, and assigns, to cease and desist from further violations of 49 U.S.C. 

§ 41712 and 14 CFR Part 380; 

5. We assess Charter by the Seat LLC $30,000 in civil penalties in compromise of 

civil penalties that might otherwise be assessed for the violations found in ordering 

paragraphs 2 and 3, above. Of this total penalty amount, $5,000 shall be due and 

payable within thirty (30) days of the date of issuance of this order; $5,000 shall be 

due and payable within sixty (60) days of the date of issuance of this order; and 

$5,000 shall be due and payable within ninety (90) days of the date of issuance of 

this order. The remaining portion of the civil penalty amount, $15,000, shall 

become due and payable immediately if, within one year of the date of issuance of 

this order, Charter by the Seat LLC violates this order’s cease and desist provisions 

or fails to comply with this order’s payment provisions, in which case Charter by 

the Seat LLC may be subject to additional enforcement action for violation of this 

order; and

6. We order Charter by the Seat LLC to remit the payment assessed in paragraph 5, 

above, within 30 days of the issuance of this order. Payment shall be made through 

Pay.gov to the account of the U.S. Treasury in accordance with the instructions 

contained in the Attachment to this order. Failure to pay the penalty as ordered 

shall subject Charter by the Seat LLC to the assessment of interest, penalty, and 

collection charges under the Debt Collection Act and to further enforcement action 

for failing to comply with 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 

motion.

BY:

BLANE A. WORKIE 

Acting Assistant General Counsel for 

Aviation Enforcement and Proceedings

An electronic version of this document is available at

www.regulatons.gov