Order 2012

- 7

- 22 Served: July 17, 2012

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 17 th day of July, 2012

Fitness Determination of

CITY WINGS , INC. d/b/a SEAFLIGHT

as a commuter ai r carrier under section 49 U.S.C. 41738 Docket DOT

- OST

- 20 10

- 0263

ORDER TO SHOW CAUSE

PROPOSING ISSUANCE OF COMMUTER AIR CARRIER AUTHORITY

Summary

By this order, we tentatively find that City Wings, Inc. d/b/a Seaflight (“City Wings”) is a citizen of the United States and is fit, willing, and able to conduct scheduled passenger operations as a commuter air carrier, subject to conditions.

Background

Section 41738 of Title 49 of the United States Code (“the Statute ”) and section 298. 32 of the Depart ment’s Aviation Economic Regulations (14 CFR 298. 32 ) direct us to determine whether companies proposing to provide scheduled passenger service as commuter air carriers are “fit, willing, and able to operate the proposed commuter service.” We must also ens ure that all operations relating to this service conform to the safety standards established by the Federal Aviation Administration (“FAA”). In making fitness findings, the Department uses a three

- part test that reconciles the Airline Deregulation Act’s l iberal 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 n air carrier’s fitness are whether the applicant: (1) will have the managerial

skills and technical ability to conduct the proposed operations, (2) has sufficient financial resources to commence the operations proposed without posing an undue risk to consumers or their funds, and (3) will comply with the Statute and regulations imposed by feder al and state agencies. We must also determine that the applicant is a U.S. citizen.

On October 20, 2010

, City Wings , an operating air taxi, filed an application in Docket

DOT

- OST

- 2010

- 0263 requesting authority to conduct scheduled passenger operations as a commuter air carrier pursuant to section 41738 of the Statute. City Wings accompanied its application with the fitness information required by section 204.3 of our regulations (14 CFR
204.3). 1

1 City Wings filed additional information supplementing its application on March 28, April 18, October 19, November 8, and December 2011.2

No answers opposing City Wings’ application were filed an d 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 City Wings is a U.S. citizen and is fit, willing, and able to provide scheduled passenger operations as a commuter air carrier. However, we will give interested persons an opportunity to show cause why we should not adopt as final these tentative findings and conclusions.

FITNESS

T he Company

C ity Wi ngs , a corporation organized under the laws of Puerto Rico is wholly owned by Mr. Don

Lewis . He purchased the company on August 25 , 2007, and resumed its once dormant operations. T he company currently provides on

- demand air transportat ion under Part 135 of the

Federal Av i ation Regulations and Part 298 of our rules (14 CFR 298). If granted commuter

authorization , City Wings intends to initiate 4 daily roundtrip scheduled flights between

St. Croix, Virgin Islands, and St. Thomas, Virgin Islands, using Cessna 208 amphibious aircraft configured for 9 passenger seats.

Managerial Competence

City Wings management and key technical personnel consist of the following individuals:

Mr. Don Lewis

– President and Board Member

Ms. Yilong Xiang

- Manager of Non

- flight Personnel and Board Member

Mr. William Weist

- Director of Operations

Mr. Edward Lucia Director of Maintenance

Mr. David Peltier

- Chief Pilot

Mr. Don Lewis is an experienced aviation executive and a resident of St. Thomas

. He p reviously held an ownership interest in Lewis Airlines, Inc. d/b/ a Sea Jet (1985

- 1987), a seaplane leasing company based in St. Croix , and he has wholly

- owned or held a majority ownership interest in

several on

- demand air carriers, including Virgin Island Seaplane Shuttle (1984

- 1985), Shuttle Transit (1978

- 1980), and Seaplane Shuttle Transit (1975

- 1977). In addition to serving as President of City Wings, Mr. Lewis is also p resident and minority owner of Aguadilla Air Service, Inc., a n on

- demand air carrie r based in Puerto Rico and he wholly

- owns and manages Riverside Tower Hotel, LLC, a hotel located in New York City, as well as its holding company, Cosmopolitan Broadcasting Corp.

Ms. Yilong Xiang has served in her current position since February 2007. Prior to this, she was employed by Riverside Tower Hotel as a marketing and reservations manager (2000

- 2007).

Mr. William Weist, an Airline Transport Pilot with more than 11,500 flight hour, became City Wings’ Director of Operations in September 2011

. Prior to this, he was employed by City Wings as a line pilot (January 2011

- August 2011). Before joining City Wings, Mr. Weist served as a pilot for various air carriers, having begun his career in av iation in 1988 as a line pilot for

Taku Glacier Air

.3

Mr . David Peltier, a comm ercial pilot with more than 3,900 total flight hours, joined City Wings

as its Chief Pilot in December 2011 . Prior to this, he was employed by Aguadilla Air Service as Chief Pilot (2009

- 2011). Mr. Peltier has also previously been e mployed a s a pilot for multiple

on

- deman d air carriers, including Ace Flight Center (1997

- 2004 and 2006

- 2011), Bevin’s Air Service (2000

- 2004), and Central Air Southwest (2005

- 2006).

Mr. Edward Lucia , an airframe and powerplant mechanic, has more than 29 years of experience in aviation maintenance. He joined City Wings as its Director of Maintenance in February 2009. Prior to this, he served as Director of Maintenance at several companies, including Ace Flight Center (2008

- 2010) ; Jet Set (2007

- 2008) ; FX Aviation (2002

- 2010); Your Aircraft Source (2002

- 2003;, Elite Air Center (1990

- 1996); and Flying Machines (1975

- 1986). In addition to his experience in aviation maintenance, Mr. Lucia has also previously served as president of Lucia

Aircraft Sales and Se rvice (1996

- 2012).

In view of the experience of the applicant’s key personnel, we tentatively conclude that City Wings ’ management team possesses the managerial skills and technical ability to conduct the proposed operations. 2

Operating Proposal and Fina ncial Plan

If granted the commuter authorization it seeks, City Wings intends to operate scheduled service 4 times daily between Cyril E. King Airport, St. Thomas, and Henry E. Rohlson Airport , St. Croix using two Cessna 208 amphibious aircraft configured for 9 passenger seats.

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 commuter operations

. 3 City Wings states that since it is already providing operations as an existing on

- demand air carrier, it does not expect to incur pre

operating expenses associated with the operations it proposes. The applicant projects total operating expe nses of about $ 881,907 for its first year of scheduled service. Based on our evaluation, we find these expense projections reasonable and estimate that the company will need approximately $ 220,000 to meet our financial fitness test. 4

2 Before authorizing a n 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 pos itions 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 City Wings ’ key tec hnical personnel are acceptable to that agency in their respective positions.

3 I t has been our practice to base our three

- month standard on one quarter of the first year’s operating cost

forecast because projected operations during one or more of the fir st 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. In calculating available resources, projected revenues may not be used.

4 We have generally asked that new entrant applicants have resources sufficient to cover all pre

- operating costs, plus a working capital reser ve equal to the operating costs that would be incurred in three months of normal

commuter operations. However, becaus e 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.4

In support of abil ity to meet our financial fitness requirements , City Wings submitted current and

h istorical financial statements demonstrating the company’s most recent results from operations. The historical profit and loss statements provided by the applicant show that f or calendar year

2009

, the company reported a net income of $41,483 on $ 825,892 in operating revenues ; f or calendar year 20 10, the company reported a net income of $ 102,117 on $ 688,971 in operating

revenues ; and for the 9

- months ending September 30, 201 1 , the company reported a net loss of $ 22,936 on $ 744,388 in operating revenues

. The company’s September 30, 2012, balance sheet shows that the company has no long term

- debt, a cash balance of more than $120,000, and a positive working capital balance. In addition, City Wings provided third party verification from Merchant Commercial bank demonstrating that it had more than $ 3 00,000 on deposit and available to support its proposed operations.

In light of the above , we tentatively conclude that City Wing s will have access to sufficient financial resources to enable it to commence its proposed operations without posing an undue

risk to consumers or their funds. 5

Compliance Disposition

The applicant states that there are no pending actions or outstandi ng judgments against it, its owners, its key personnel , or any relevant corporation 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 partie s 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, any relevant corporation, or persons having a substantial interes t in it with respect to compliance with the Statute or the Department’s regulations. 6

Our review of FAA records indicate that City Wings has been subject to six enforcement actions

since initiating operations under its new ownership all of which are now c losed

. All but one of

the FAA enforcement action s were closed with an administrative warning notice. The only FAA

enforcement action to occur which warranted the issuance of a civil penalty involved violations of FAA flight operation regulations for oper ating aircraft without appropriate economic or safety authority. City Wings was assessed a civil penalty of $50,000 for the violation, which the FAA has informed us has been fully paid.

5 As is our practice, prior to making any authority awarded to City Wings effective, we wi ll require the company to provide third

- party verification evidencing that it has actually obtained the financial resources needed to meet our

financial test.

6 Mr. Lewis notes that although he was identified as the owner and president of Kingfisher Air S erivce d/b/a Sea Jet (“Kingfisher”) in a National Transportaiton Safety Board (“NTSB”) hearing regarding a proposed revocation of the operating authority issued to Kingfisher, he was never an owner, officer, or director of Kingfisher. Instead,

Mr. Lewis s tates that Lewis Airlines, Inc. d/b/a Sea Jet,, a seaplane leasing company, licensed the “Sea Jet” trade name to Kingfisher and leased the air carrier an aircraft and that this close business relationship may have resulted in the Administrative Law Judge ( “ALJ”) misstating Mr. Lewis’s association with Kingfisher. In any event, Mr. Lewis notes that the proposed revocation of Kingfisher ’s operating authority was not upheld by the ALJ.5

City Wings has been involved in no accident s since initiating its P art 135 on

- demand air taxi operations and it has only been involved in only one incident. 7 Further more , the FAA has

advised us that the applicant has begun the progress of obtaining the required safety authority for the operations proposed and that it has no objection to the Department’s approval of City Wings ’ application for commuter authority.

In light of these circumstances, we tentatively conclude that City Wings has the proper regard for the laws and regulations governing its services to ensure tha t its aircraft and personnel conform to applicable safety standards and that acceptable consumer relations practices will be followed.

CITIZENSHIP

The Statute 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 Statute 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 t he air

carrier must be under the actual control of U.S. citizens.

As noted earlier, City Wings is a corporation formed under the laws of Puerto Rico . All of the applicant’s key personnel are citizens of the United States, as well a s the applicant’s sole owner.

Mr. Don Lewis. Moreover, t he applicant has provided an affidavit attesting that it is a citizen of the United States within the meaning of the Statute and that it is owned and controlled by U.S.

citizens. O ur review of the applicant has uncovered no reason to suggest that control of City Wings rests with non

- U.S. citizens.

In light of the foregoing, we tentatively find that City Wings is owned and actually controlled by U.S. citizens, consistent with 49 U.S.C. § 40102(a)(15 ) and is fit, willing, and able to provide

commuter operations, subject to conditions.

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 s hould 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 o ral 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 3 02, Rules 19 and 20); if not, the reasons why not should be explained. We will not entertain general, vague, or unsupported objections.

7 On April 28, 2009, Cessna 208 amphibious aircraft operated by City Wing s touched down at Henry E. Rohlson Airport prior to the landing gear fully extending. No injuries or fatalities resulted from the incident.6

EFFECTIVE COMMUTER AUTHORIZATION

CONDITIONS AND LIMITATIONS

In the event that we find City Wings fit, willing, and able to conduct the proposed scheduled service, we will issue to it a Commuter Air Carrier Authorization. However, that authorization will not become effective until the company has fulfilled all of the requirements for effectiveness

as set forth in the Terms, Conditions, and Limitations attached to it. Among other things, this

includes (1) our receipt of evidence of City Wings’ authority from the FAA authorizing Part 135 commuter operations , (2) evidence of liability insurance coverage that meets the re quirements of section 205.5(b) of our rules

, (3) a statement of changes it may have undergone since its fitness was examined, and (4) evidence that City Wings continues to have the financial resources necessary to meet our financial fitness requirements

.

Moreover, given the limited scope of City Wings’ proposed operations, we will impose certain limitations on its authorization to provide scheduled air transportation as a commuter air carrier. Our finding of fitness for City Wings is based on the operatin g plans described in its application, namely, utilizing aircraft that can be operated under Part 135. Should City Wings desire to acquire and operate larger aircraft that would require certification from the FAA under Part 121, our fitness findings, parti cularly involving the adequacy of City Wings management and financial resources, might no longer apply. Therefore, we propose to limit any authority issued to City Wings to operations conducted under Part 135. Should City Wings desire to operate

aircraft that would require certification from the FAA under Part 121, it must first provide the Department with at least 45

- days advance notice of such plans and provide updated information establishing its fitness for such expansion.

Furthermore, we remind City Wings 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 commuter 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 City Wings is issued an effective Commuter Air Carrier Authoriza tion and should it subsequently propose substantial changes in its ownership, management, or o perations, it must first comply

w ith the requirements of section 204.5 of our rules. 8 The compliance of the company with this requirement is essential if we are to carry out our responsibilities under section 41110(e). 9

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

opera tions, 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 chan ge, 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.

9 We also remind City Wings about the requirements of section 204.7 of our rules. This section provides, among other things, that (1) the commuter 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 commuter operations unless its fitness has been redetermined; and (3) if the company does not resume operations within o ne year of its cessation, its authority shall be revoked for dormancy.7

Additionally, if City Wings 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 commuter flight operatio ns, to the Air Carrier Fitness Division. The submission of a first year progress report 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 ope rations (number and type of aircraft, principal 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 yea r, current financial statements, 10 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 direct all interested persons to show cause why we should not issue an order finding that City Wings, Inc. d/b/a Seaflight is fit, wi lling, and able under 49 U.S.C. § 41738 to provide scheduled passenger service as a commuter air carrier using sma ll aircraft pursuant to Part 135 of the Federal Aviation Regulations.

2. We direct any interested persons having objections to the issuance of an order making final any of the proposed findings, conclusions, or award of authority set forth here to file t hem with Department of Transportation Dockets, 12 00 New Jersey Avenue, S E

, Room W12

- 140, Washington, D.C. 20590, in Docket DOT

- OST

- 2010

- 0006 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 business days thereafter.

3. 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. 11

4

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

5

. 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 These financial statements should include a balance sheet as of the end of the company’s first full year of commuter flight operations and a 12

- month income statement ending that sam e date.

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

reconsideration.Order 2012

- 7

- 22 Served: July 17, 2012



### Attachment 

### Specimen



### Terms, Conditions, and Limitations

CITY WINGS, INC.

d/b/a SEA FLIGHT

is authorized to engage in schedule d passenger air transportation operations as a commuter air

carrier.

This authority is subject to the following provisions:

(1) The authority to conduct scheduled passenger operations will not become effective until six (business) days after the Departme nt 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 hol der 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 scheduled passenger operations, 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 requirements of 14 CFR Part 298 and any other regulations prescribed by the Department of Trans portation for the services authorized here, and with such other reasonable terms, conditions, and limitations as the Department of Transportation may prescribe in the public interest.2

(4) The holder’s authority is limited to operations conducted pursuant to Part 135 of the Federal Aviation Regulations. In the event that the holder wishes to institute operations that would require Part 121 certification from the FAA, it must first be determined fit for such operations.

(5) The holder may not operate airc raft designed to have a maximum passenger capacity of more than 60 seats or a maximum payload capacity of more than 18,000 pounds.

( 6) The holder's authority under this certificate is effective only to the extent that such operati ons are also authorized b y the FAA, and comply with all U.S. Government requirements concerning security, including, but not limited to 49 CFR Part 1544. 

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

49 U.S.C. § 40102(a)(15).

( 8 ) The h older shall maintain in effect liability insuran ce coverage as required under

14 CFR Part 205. Failure to maintain such insurance coverage will render this authority ineffective, and this or other failure to comply with the provisions of Subtitle VII of T itle 49 of the United States Code or the Department's regulations shall be sufficient grounds to revoke this authority.

( 9 ) 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 Compet ition Act of 1979, as amended or as modified by any future legisla tion addressing access restrictions to or from Love

Field.

.

( 10 ) Should the holder propose any substantial changes in its ownership, management, or operations (as that term is defined in 14 CFR 204.2(l)), it must first comply with the requirements of 14 CFR 204.5.

(1 1 ) In the event that the holder does not commence actual flying operations as a commuter air carrier under this authority within one year of the date of the Department's determination of its fitness, its commuter authority shall be revoked fo r dormancy. Further, in the event that the

 To assure compliance with all applicable U.S. Government requirements concerning security, the holder shall, before commenc ing 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 a dequate to allow such airport(s) to be served.3

holder commences but subsequently ceases all scheduled passenger operations, the authority granted here 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 such operations within one year of its cessation, its commuter authority shall be revoked for dormancy.Order 2012

- 7

- 22 Served: July 17, 2012

Attachment A

SERVICE LIST FOR CITY WINGS, INC.

D/B/A SEA FLIGHT

JASON E. MADDUX

GAROFALO GEORLICH HAINBACK PC

1200 NEW HAMPSHIRE AVE NW

SUITE 800

WASHINGTON DC 20036 PETER LYNCH AGC

- 300

ASST CHIEF COUNSEL FOR ENFORCEMENT

FEDERAL AVIATION ADMINISTRATION

800 INDEPENDENCE AVE SW

W ASHINGTON DC 20591

WILLIAM J WEBER

CERTIFICATION SECTION MANAGER

FAA AFS

- 900

45005 AVIATION DRIVE SUITE 131

DULLES VA 20166 SERGIO LOPEZ

FSDO MANAGER

SOUTH FLORIDA FSDO 19

2895 SW 145 AVE SUITE 120

MIRAMAR FL 33027

OFFICE OF AIRLINE INFORMATION

DOT/R ITA/BTS E

- 34

1200 NEW JERSEY AVE SE

WASHINGTON DC 20590 EUGEN JUSTICE

AVIAITON SAFETY INSPECTOR

SOUTH FLORIDA FSDO 19

2895 SW 145 AVE SUITE 120

MIRAMAR FL 33027