Order 2012

- 10

- 20

UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY WASHINGTON, D. C.

Issued by the Department of Transportation

O n the Nineteenth day of October, 2012

I

- Jet Aviation
, LLC
, Docket OST 20 1 2

- 000 2

Violations of 49 U.S.C. §§ 41101 and 41712 and
14 CFR Part 399 Served October 19 , 201 2

CONSENT ORDER

This consent order concerns unauthorized air transportation by I

- Jet Aviation, LLC

, ( I

Jet ) in violation of 49 U.S.C . § 41101 and 49 U.S.C. § 41712. For a period of time in 2011, I

- Jet engaged in the provision of air transportation without holding requisite economic authority from the Department of Transportation

. This order also concerns I

Jet ’ s violation s of 14 CFR 399.80, which prohibits certain practices by ticket agents that constitute unfair and deceptive practices and unfair methods of competition. This order
directs I

- Jet to cease and desist from such further violations and assesses a compromise civil penalty of $ 50 ,000

.

Applicable Law

In order to engage directly or indirectly in air transportation, c itizens of the United
States 1 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 form of an exemption from the certificate requirement, such as those applicable

1 A “citizen 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. § 40102(a)(15).2

to direct air car riers 2 operating as air taxis under 14 CFR Part 298

, or indirect air carriers 3 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 common carrier between two state s in the United States or between a place in the United States and a place outside of the United States or the

tra nsportation of mail by air. 4 In the context of aviation, a “common carrier” is a person or other entity that, for compensation or hire, holds out and/or provides to the public transportation by air between two points. 5

E ntit ies or persons, such as air charter brokers, that do not have economic authority 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
constitutes “engaging” in air transportation and violat e s 49 U.S.C. § 41101. 6 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. 7

Moreover

, as ticket agents pursuant to 49 U.S.C. § 40102(a)( 45), air charter brokers may not create the false impression that they are direct air carriers when they are not. Such
conduct violates 14 CFR 399.80(a). Further, pursuant to 14 CFR 399.80(c), a ir charter brokers are prohibited from misrepresenting the q uality or kind of air transportation
service they arrange

. Violations 14 CFR 399.80 , like violation s of section 41101, are also considered by the Department to violate 49 U.S.C. § 41712. 8

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

3 An “in direct 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.

4 49 U.S.C. §§ 40102(a)(5), (a)(23), and (a)(25).

5 Woolsey v. National Trans. Safety Bd., 993 F.2d 516, 522

- 23 (5 th Cir. 1993).

6 From the standpoint of the requirements of section 41101, the holding out of air service, as well as the actual operation of air service, constitutes “engaging” in air transpo rtation. 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 t hat what is prohibited is “providing” air transportation without authority, Congress made clear when it 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. 74 5, 1378.

7 E .g., V1 Jets, Inc. , Violations of 49 U.S.C. § 41101 and 41712 and 14 CFR Part 399, Order 200 9

- 10

- 1 1 ( Oct. 21 , 200 9 ).

8 E.g., Luxury Air Jets, Inc., Violations of 49 U.S.C. § 41101 and 41712 and 14 CFR Part 399,
Order 2010

- 2

- 17 (February 19, 2010).3

Background

I

- Jet is a Texas limited liability company that specializes in arranging single

- entity
charter 9 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 Enforce ment and Proceedi ngs (Enforcement Office)
revealed that for a period of time in 201 1

, I

- Jet engaged in una uthor ized air transportation
as an indirect air carrier. Specifically, I

- Jet 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

. After winning a bid, I

- Jet entered into an agreement with the charterer

- university and became contractually bound

a s a principal to provide charter air transportation to that university

. Then, i n order to
fulfill that contractual obligation

, I

- Jet enter ed into a separate agreement with a direct air
carrier

, which then beca me contractually responsible to I

- Jet

, as the charterer, rather than to the university, for operating the charter flights. On all occasions relevant herein, I

- Jet
was not authorized to act as an agent of the universities or of the direct air carriers that operated the service

. Under th e se c ircumstances, I

- Jet unlawfully engaged in air transportation as an indirect air carrier

.

A separate matter concerns I

- Jet ’s violations of 49 U.S.C. §§ 41101 and 41712 and 14
CFR 399.80 (a)

. Specifically, I

- Jet’s Internet website contain ed language and photos that
could have led a consumer to reasonably conclude that I

- Jet is a direct air carrier, which it is not. For example, I

- Jet’s website made numer ous references to “our aircraft ” and “our
737/200 aircraft ,” which

, along with pictures depicting the exterior and interior of aircraft, can reasonably be read to indicate that I

- Jet is a direct air carrier. Mo reover, in a
written charter service proposal submitted by I

- Jet to a university, I

- Jet identified itself as an “airline” that operates “737

- 200” aircraft and holds a “121/125” FAA Certificate. 10 Through statements such as these, I

- Jet unlawfully held out air transportation as if it were
a direct air carrier when it did not have proper economic authority

.

Furthermore, in October 2011, after winning a bid from a university, I

- Jet provided the university with the operating certificate and insurance certificate of Clementine Aviation
Services , LLC, ( Clementine ) the direct air carrier that I

- Jet proposed to operate these flights. At all times relevant to this matter, Clementine was a large aircraft operator licensed by the FAA under 14 CFR Part 125

. Authority under this FAA regulation is limited to private carr iage operations. 11 Notwithstanding the fact that it knew that
Clementine did not have the authority to engage in common carriage and that Clementine specifically declined I

- Jet’s proposal to engage in any charter service, I

- Jet

9 A single

- entity charter is a charter 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.

10 I

- Jet ultimately did not w in that bid.

11 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 to the public to furnish transportation.”4

misrepresented to the univer sity Clementine’s willingness and availability for such
service. Such conduct by I

- Jet violates 14 CFR 399.80(c) and constitutes a separate and
distinct violation 49 U.S.C. § 41712.

Decision

The Enforcement Office has carefully considered all of the information available to it,
and continues to believe that enforcement action is warranted. In order to avoid litigation, the Enforcement Office and I

- Jet have reached a settlement of this matter. Without admitting or denying the violations described above, I

- Jet agree s 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 $ 50 ,000 in compromise of potential civil penaltie s otherwise assessable against it . 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 I

- Jet and other si milarly situated entities.

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 the order as being in the public interest ;

2. We find that I

- Jet Aviation, LLC

, violated 49 U.S.C. § 41101, as described above, by engaging in air transportation without appropriate economic authority ;

3

. We find that I

- Jet Aviation, LLC, violated 14 CFR 399.80(a), as described above, by misrepresenting itself as a direct air carrier ;

4. We find that I

- jet Aviation, LLC, violated 14 CFR 399.80(c), as described above, by misrepresenting the quality or kind of service it arrang ed;

5

. We find that, by enga ging in the conduct described in paragraph s 2, 3, and 4 , above,
I

- Jet Aviation, LLC, engaged in unfair and deceptive practice s and unfair method s of competition in violation of 49 U.S.C. § 41712 ;

6

. We order I

- Jet Aviation, LLC

, and all other entities own ed and controlled by or under common ownership with I

- Jet Aviation, LLC

, and its successors and assignees to cease and desist from further violations of 49 U.S.C. §§ 41101 and 41712 and 14 CFR
399.80 ;

7. We assess I

- Jet Aviation, LLC

, a compromise civil penalty of $ 50 ,000 in lieu of civil penalties that might otherwise be assessed for the violations desc ribed in ordering paragraphs 2 , 3, 4, and 5

, above. Of this total penalty amount, $ 25 ,000 shall be due and payable in ten (10) equal installments of $ 2

, 5 00 each, with the first installment due and payable within 30 days of the issuance date of this order, and the remaining nine (9)5

installments due and payable within 30 days of the previous payment’s due date. The remaining $ 25 ,000 sha ll become due and payable if, within one year of the issuance date of this order, I

- Jet Aviation, LLC, violates the cease and desist provision in ordering paragraph 6 , above, or fails to comply with the payment provisions in this ordering paragraph, in whi ch case

, the entire unpaid portion of the civil penalty shall become due and payable immediately; and

8. We order I

- Jet Aviation, LLC, to pay the penalty through Pay.gov to the account of the U.S. Treasury. Payments shall be made in accordance with the instructions contained in the Attachment to this order. Failure to pay the penalty as ordered shall subject I

- Jet Aviation, 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:

SAMUEL PODBERESKY
Assistant General Counsel for

Aviation Enforcement and Proceedings

An electronic version of this document is available at www.regulations.gov