Order 2010-2-7

Served: February 12, 2010 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 12th day of February, 2010

Fitness Determination of

RUGBY AVIATION, LLC

d/b/a NORTHWEST SKY FERRY 

as a commuter air carrier under section 49 U.S.C. § 41738

 Docket DOT-OST-2009-0188

 

ORDER TO SHOW CAUSE

PROPOSING ISSUANCE OF COMMUTER AIR CARRIER AUTHORITY

Summary

By this order, we tentatively find that Rugby Aviation, LLC d/b/a Northwest Sky Ferry 

(“Rugby”), 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 Transportation Code”) and section 

298.21(d) of the Department’s Aviation Economic Regulations (14 CFR 298.21(d)) direct us to 

determine whether companies proposing to provide scheduled passenger service as commuter air 

carriers are “fit, willing, and able to perform the service,” and to ensure 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 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 an 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 Transportation Code and regulations imposed by 

federal and state agencies. We must also determine that the applicant is a U.S. citizen. 

On August 12, 2009, Rugby, an on-demand air taxi operator holding a Part 135 Federal Aviation 

Regulation (“FAR”) operating certificate from the FAA and serving the Pacific Northwest, filed 

an application in Docket DOT-OST-2009-0188 for authority to conduct scheduled passenger 

operations as a commuter air carrier. The air carrier accompanied its application with fitness 

information required by section 204.3 of our regulations and supplemented its application with 

additional information on November 25 and December 9, 2009 and January 14, 2010.
2

No answers opposing Rugby’s application 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 

Rugby 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

The Company

Rugby was formed as a limited liability company under the laws of the State of Washington in 

January 1999. Initially based on Orcas Island, Washington, the company provided air carrier 

transportation on an on-demand basis to communities in the San Juan Islands. It was purchased 

in 2007 from its original owner and the air carrier’s base of operations was moved to 

Bellingham, Washington. In April 2009, Rugby was purchased by SAS Aviation LLC (“SAS”), 

a Washington limited liability company. Ownership of SAS is held equally by Mr. Louis A.

Jansen and Mrs. Kathryn J. Jansen,1 both of whom are U.S. citizens. The applicant now seeks to 

become a commuter air carrier and operate scheduled service to points in Washington State. 

Managerial Competence

Rugby management and key technical personnel consist of the following individuals. Each have 

certified they hold U.S. citizenship. 

Mr. Louis A. Jansen - General Manager

Mrs. Kathryn J. Jansen - Manager

Mr. Mark W. Schoening - Director of Operations

Mr. Hidenori Sunahara - Chief Pilot

Mr. John A. Ring - Director of Maintenance 

Mr. Louis A. Jansen, Rugby’s General Manager since acquiring the applicant in 2009, is also the 

Owner and Managing Member of SAS (2009-present) and Baycrest Investments LLC, a property 

development company in Washington state (2002-present). Mr. Jansen currently spends 

seventy-five percent of his time handling Rugby’s operations. Additionally, Mr. Jansen owns JIJ 

Corporation, a construction company (1990-present). Prior positions at JIJ Corporation include 

President (1985-1990) and On-Site Construction Manager (1978-1984). 

Mrs. Kathryn J. Jansen, Rugby’s Manager, is co-owner of SAS (April 2009-present) and

Baycrest Investments LLC (2002-present), and Vice President of JIJ Corporation 

(1990-present). Prior to her current positions, she was a School Teacher (1978-1989), and a 

Bank Teller for Northwestern Commercial Bank (1968-1978). Mrs. Jansen is a graduate of 

Western Washington University. 

Mr. Mark W. Schoening, Director of Operations for Rugby, has over 25 years of experience in 

airline operations. He co-founded, planned, and produced all aspects of Great Arctic Air 

 

1 Mrs. Kathryn Jansen is the wife of Mr. Louis Jansen.
3

Adventure Inc. (March 2008-present), a documentary film about flying two vintage float planes 

to the Magnetic North Pole, which was filmed in 2008 and is currently being edited. He is also

Managing Member of Park 144 LLC, a real estate development and holding company (January 

2002-present), and was the Founder and President of Sound Flight, Inc., a Part 135 air carrier 

specializing in seaplane operations, where he also served as its Director of Operations and Chief 

Pilot (1987-2004). Mr. Schoening holds a Commercial Pilot’s License and a Certified Flight 

Instructor certificate.

Rugby’s Chief Pilot, Mr. Hidenori Sunahara, has held this position since March 2009. 

Previously, he was a Pilot for Alaska Airlines, Inc. (2007-2009), SkyWest Airlines, Inc.

(1999-2007), Ameriflight LLC (1998-1999), and Aviation Northwest (1994-1997). He also was 

employed as a Flight and Ground Instructor for Chuckanut Aviation Center, a flight school and 

small aircraft maintenance facility (1997-1998). Mr. Sunahara holds an Air Transport License 

and has flown over 9,200 flight hours.

Mr. John A. Ring, is the Director of Maintenance for Rugby (2002-present) and is a licensed 

Airframe and Powerplant Mechanic. Additionally, he is the owner/operator of Whatcom 

Territory Aero Services, Inc. (2002-present). Prior to joining Rugby, he was Director of 

Maintenance for West Isle Air Inc. (1996-2002), and Lead Mechanic for Chuckanut Aviation 

Center (1989-1996). 

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

conclude that Rugby has demonstrated that its key management and technical personnel have the 

managerial skills and technical ability to support its proposed operations. Moreover, the FAA 

has advised us that all of the applicant’s key personnel have been found qualified to hold their 

respective positions. 

Operating Proposal and Financial Plan

Rugby is currently operating as an on-demand air taxi2 and has now requested commuter 

authority to conduct scheduled operations between Bellingham, Washington, to other points, 

including Friday Harbor, Lopez Island, and Orcas Island, Washington. The air carrier submitted

a plan for its first year of scheduled operations, forecasting on average 18 flights per day to the 

aforementioned points. Future destinations include Seattle’s Boeing Field Airport, Skagit 

Regional Airport, and Anacortes Airport. If granted the commuter authority it seeks, Rugby 

intends to perform its schedule with its existing fleet of three aircraft – two 3-seat Cessna 172s 

and one 5-seat Cessna 206. The aircraft are dry-leased from Aircraft Adventures, LLC, a 

wholly-owned subsidiary of Rugby’s parent company, SAS. 

In establishing financial fitness, the Department typically asks an applicant to demonstrate that it 

has access to financial resources sufficient to cover its pre-operating expenses and any negative 

working capital balance, plus a working capital reserve equal to the operating costs that are 

reasonably projected to be incurred during three months of “normal” operations. Because 

projected expenses during the first several months of air service frequently do not include all 

costs that will be incurred during a “normal” period of operations, it is our practice to base our 

 

2 Rugby also holds Canada Transport License 050058, dated July 29, 2008, granting the air carrier authority to 

conduct non-scheduled international charter flights into Canada.
4

three-month test on one-quarter of the first year’s operating costs. Further, in calculating 

available resources, projected revenues may not be used. 

Rugby provided a forecast of first year revenues and expenses associated with its proposed 

commuter operations. The air carrier states that because it plans to operate the same aircraft to 

the same locations as it does in its current air taxi operations, any pre-operating costs have been 

minimal, and absorbed in its normal operating budget. Rugby projects its first year expenses will 

total approximately $446,142. Based on this forecast, we estimate that it will require about

$111,535 to meet our financial fitness criteria.

3

In support of its ability to fund its proposed operations, Rugby submitted a balance sheet for 

September 30, 2009, that shows that the company has current assets and current liabilities of 

$140,386 and $22,182 respectively, indicating positive working capital of $118,204. 

Additionally, the air carrier provided third-party verification that as of November 25, 2009, it has 

$120,000 on deposit in its name. 

We have reviewed the forecast and financial statements provided by Rugby and find them to be 

reasonable. In light of the above, we tentatively conclude that Rugby will have access to 

sufficient financial resources to enable it to commence the proposed operations without posing 

an undue risk to consumers or their funds.

Compliance Disposition

The applicant states that there are no actions or outstanding judgments against it, persons holding 

a substantial interest in it, or its key personnel, and that none of these parties have been the 

subject of any charges of unfair, deceptive or anti-competitive business practices, or of fraud, 

felony or antitrust violations, or other legal action during the past ten years. The air carrier also 

stated that there are not any pending investigations, enforcement actions, or formal complaints 

involving the applicant, persons holding a substantial interest in it, or its key personnel with 

respect to compliance with the Statute or the Department’s regulations. 

The FAA advises us that it is working with Rugby in connection with the applicant's efforts to 

obtain commuter operating authority from that agency, and it knows of no reason why we should 

act unfavorably on the company’s commuter application. 

Rugby disclosed that the air carrier was involved in a non-fatal accident in January 2009 and 

noted that the accident occurred under previous ownership.

4 The air carrier also noted that the 

aircraft was repaired and placed back into service, and the pilot of the accident aircraft was 

subsequently dismissed. Other than this accident, our review of FAA records indicates that 

Rugby has not been involved in any accidents or incidents since it initially commenced 

operations. 

 

3 The $111,535 noted here is one-quarter of the applicant’s forecast of approximately $446,142 in first year 

expenses. 

4 National Transportation Safety Board (“NTSB”) Report WPR09CA084 indicates that on January 14, 2009, a 

Rugby Cessna 206 slid on a grass runway upon landing at Crane Island, Washington. To avoid a drop off at the end 

of the runway, the pilot turned the plane and in doing so, the aircraft was substantially damaged but no one was 

injured. According to the NTSB, probable cause of the accident is attributed to pilot’s failure to maintain directional 

control during landing
5

In light of these circumstances, we tentatively conclude that Rugby 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

Section 41102 of 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). That 

section 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 voting stock be owned by U.S. citizens, 

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

As noted earlier, Rugby was formed as a limited liability company under the laws of the State of 

Washington in January 1999 and was purchased in April 2009, by SAS, a Washington limited 

liability company. SAS is owned equally by Mr. Louis Hansen and Mrs. Kathryn Hansen, both 

of whom are U.S. citizens. Additionally, Rugby’s key personnel are U.S. citizens and the 

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

meaning of the Statute. Our review of the applicant’s citizenship has uncovered no reason to 

suggest that control of Rugby rests with non-U.S. citizens.

In light of the foregoing, we tentatively find that Rugby 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 the 

proposed interstate scheduled 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 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 Rugby’s fitness and 

certification.
6

EFFECTIVE COMMUTER CONDITIONS & LIMITATIONS

If Rugby is found fit and issued the commuter authority 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 commuter authorization. Among other things, this includes 

our receipt of evidence that Rugby has been certified by the FAA to engage in the subject 

operations, a fully executed OST Form 6410 evidencing liability insurance coverage that meets 

the requirements of section 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. In addition, consistent with the 

applicant’s proposed operations, we propose to limit any authority issued to Rugby to operations 

using aircraft that can be operated under FAR Part 135 (that is, aircraft with no more than 9 seats 

in scheduled passenger operations). Should Rugby desire to acquire and operate larger aircraft 

that would require certification from the FAA under 14 CFR Part 121, our fitness findings might 

no longer apply. Therefore, should Rugby 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 Rugby 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 Rugby is issued an 

effective commuter authorization and should it subsequently propose substantial changes in its 

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

204.5 of our rules.5 The compliance of the company with this requirement is essential if we are 

to carry out our responsibilities under section 41110(e).

6

Additionally, if the air carrier is granted effective authority, it would be required to submit a 

detailed progress report, within 45 days following the end of its first year of commuter flight 

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

conditioned upon all newly authorized 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 

Rugby’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 

 

5 Rugby 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 Rugby 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.

6 We also remind Rugby 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 one year of its cessation, its authority shall be revoked for dormancy.
7

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

current financial statements,7 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 Rugby Aviation, LLC d/b/a Northwest Sky Ferry is fit, willing, and able under 

49 U.S.C. § 41738 to provide scheduled passenger service as a commuter air carrier. 

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 them 

with Department of Transportation Dockets, 1200 New Jersey Avenue, SE, Washington, D.C. 

20590, in Docket DOT-OST-2009-0188 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.

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.8

4. 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.

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

6. 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

 

7 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 same date.

8 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

RUGBY AVIATION, LLC 

d/b/a Northwest Sky Ferry

is authorized to engage in scheduled 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 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 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 Transportation 

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.

(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 
2

would require Part 121 certification from the FAA, it must first be determined fit for such 

operations.

(5) The holder may not operate aircraft 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 

operations are also authorized by the Federal Aviation Administration (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 holder shall maintain in effect liability insurance 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 Title 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 Competition Act of 1979, as amended by 

section 337 of the Department of Transportation and Related Agencies 

Appropriations Act, 1998. 

(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.

(11) 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 for dormancy. Further, in the event that the 

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 

 

 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.
3

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.
Attachment A

SERVICE LIST FOR

RUGBY AVIATION LLC 

d/b/a NORTHWEST SKY FERRY

MR MARK W. SCHOENING

RUGBY AVIATION LLC

4165 MITCHELL WAY

BELLINGHAM WA 98226

MR BERNARD STANKUS, RTS-42

OFFICE OF AIRLINE INFORMATION

DOT/RSPA/BTS E-36

1200 NEW JERSEY AVE SE

WASHINGTON DC 20590

 

 MR CLIFF PETERSON

 POI FOR RUGBY AVIATION LLC

 1601 LIND AVENUE SW

 SUITE 260 

 RENTON WA 98057

MR LOUIS A. JANSEN

RUGBY AVIATION LLC

4165 MITCHELL WAY

 BELLINGHAM WA 98226

MR CLAY MORITZ, RTS-42

OFFICE OF AIRLINE INFORMATION

DOT/RSPA/BTS E-36

1200 NEW JERSEY AVE SE

WASHINGTON DC 20590

 

 MR WILLIAM J WEBER

 CERTIFICATION SECTION 

 MANAGER

 FAA AFS-900

 45005 AVIATION DRIVE SUITE 131

 DULLES VA 20166

MR PETER LYNCH AGC-300

FAA ASST CHIEF COUNSEL

FOR ENFORCEMENT

800 INDEPENDENCE AVE SW 

WASHINGTON DC 20591

 REGIONAL COUNSEL

 FAA 

 NORTHWEST MOUNTAIN REGION

 1601 LIND AVENUE SOUTHWEST

 RENTON, WA 98057