BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

WASHINGTON, D.C. 

Application of 

HARRIS AIRCRAFT SERVICES, INC. 

) 

) 

) 

) Docket DOT-OST-2014-0145 

) 

For a certificate of public convenience and ) 

necessity pursuant to 49 U.S.C. § 41102 to ) 

engage in interstate scheduled air transportation ) 

_o_f~p_er_s_o_ns~·~P_ro~p_e_rt~y~,a_n_d_m __ ai_l ______________ ) 

ANSWER OF AIR EXCURSIONS LLC 

IN OPPOSITION TO APPLICATION OF HARRIS AIRCRAFT SERVICES, INC. 

FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY 

Communications with respect to this document should be addressed to: 

Kent Graford 

AIR EXCURSIONS LLC 

1873 Shell Simmons Dr. 

Suite 110 

Juneau, AK 99801 

September 15, 2014 

\\DC- 042333/000001- 5802239 v4 

Robert E. Cohn 

Patrick R. Rizzi 

HOGAN LOVELLS US LLP 

Columbia Square 

555 Thirteenth Street, NW 

Washington, DC 20004 

+1 202 637 4999/5659 

robert.cohn@hoganlovells.com 

patrick. rizzi@hoganlovells.com 

Counsel for Air Excursions LLC 
Application of 

BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

WASHINGTON, D.C. 

) 

) 

) 

HARRIS AIRCRAFT SERVICES, INC. ) Docket DOT-OST-2014-0145 

) 

For a certificate of public convenience and ) 

necessity pursuant to 49 U.S.C. § 41102 to ) 

engage in interstate scheduled air transportation ) September 15, 2014 

_o_f~p_e_rs_o_n_s~,p~r_o~p_e_rt~y,~a_n_d_m __ a_il _______________ ) 

ANSWER OF AIR EXCURSIONS LLC 

IN OPPOSITION TO APPLICATION OF HARRIS AIRCRAFT SERVICES, INC. 

FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY 

Air Excursions LLC files this answer in opposition to the application of 

Harris Aircraft Services, Inc. ("Harris Air") for a Certificate of Public Convenience 

and Necessity ("PCN Certificate"), dated August 25, 2014 ("Application"). 

Having withdrawn its application for commuter authority earlier this year in 

the face of strong objections by Air Excursions and Pacific Airways, 1 Harris Air is 

now back, seeking a PCN Certificate. Harris Air's latest Application is just as 

flawed as its previous one. Indeed, in certain respects, it is even more flawed. 

As explained below, Harris Air has failed to demonstrate that it meets the 

Department's rigorous fitness standards. Its Application should be denied. 

I. The Department's Determination In The Show Cause Order On Harris 

Air's Request For Commuter Authority Has No Bearing On This 

Application. 

In a failed attempt to avoid close scrutiny of this Application, Harris Air 

asserts that there "have been no significant changes in status or operations of 

Harris Air since it was previously tentatively found fit by Show Cause Order" in 

The Department subsequently dismissed that application. See DOT Order 2014-5-2. 

1\DC 042333/000001 - 5802239 v4 
Opposition of Air Excursions 

Page 2 

Docket DOT-OST-2013-0089. See Application at 1 & n.2. This assertion is 

patently inaccurate. The differences are manifold. Among other things, 

• the financial fitness requirement threshold proposed by Harris Air in 

its current Application is significantly different (and inexplicably 

lower) than its prior application, despite proposing similar service; 

• the more recent financial statements reveal material gaps and 

weaknesses; 

• the financial institution providing "the funds available" is different, as 

is the amount/type of funds available, and the amount of available 

funds is not sufficient to meet the proper and realistic financial 

fitness test requirement; and 

• the contracts Harris Air previously had with the Southeast Alaska 

Regional Health Consortium for airlift services have either been 

terminated or materially revised. 

Moreover, the Department never had an opportunity to rule on the earlier 

objections of Air Excursions and Pacific Airways to the Show Cause Order 

because Harris Air withdrew its application before the Department ruled on it. 

Accordingly, the Department's findings in the Show Cause Order are out of date 

and no longer relevant to the new request. 

II. Harris Air Has Not Satisfied The Department's Financial Fitness 

Standard. 

Financial fitness is one of the four critical pillars upon which the 

Department reviews PCN Certificate applications (financial fitness, compliance 

IIDC- 042333/000001 5802239 v4 
Opposition of Air Excursions 

Page 3 

disposition, management, and citizenship). As part of the financial fitness 

standard, Harris Air must demonstrate that it has financial resources sufficient to 

meet the Department's financial fitness requirement, based on its start-up 

expenses (including any negative working capital balance) plus projected 

operating expenses for three months of normalized operations (without 

corresponding revenue from those operations). See, ~, DOT Information 

Packet on How to Become a Certificated Air Carrier, at 17 (September 2012); 

Rhoades Aviation d/b/a Transair, DOT Order 2013-1-13, at 5 & n.3. 2 Here, 

Harris Air has failed to make the requisite demonstration. As explained below, it 

has inexplicably underestimated the financial fitness requirement amount by not 

including any start-up expenses and by underestimating its forecast operating 

expenses. In reality, it will likely incur higher expenses and will need to meet a 

higher financial fitness threshold than it now forecasts. Correspondingly, Harris 

Air has failed to demonstrate that it has access to sufficient funds to meet the 

higher, more realistic financial fitness requirement. 

As was the case with its prior application, Harris Air claims that its 

operations under the requested certificate would merely be a continuation of its 

current services. See Application at 9. Yet, Harris Air claims that the amount of 

funds necessary to meet the financial fitness requirement is 44% lower than the 

fitness threshold it claimed in its previous application, under the same basic 

operating proposal. This fundamental inconsistency has not been, nor can it be, 

explained. With Harris Air's previous certification effort proposing virtually the 

2 Pre-operating/startup expenses + X of estimated first-year expenses. This standard is a 

"zero revenue" test; projected revenues derived from the proposed operations are not taken into 

account when the applicant-carrier's financial fitness is evaluated. 

\\DC- 042333/000001 - 5802239 v4 
Opposition of Air Excursions 

Page 4 

same service, the Department found the financial fitness requirement would be 

slightly over $999,000, based on a forecast of $2.58 million in operating 

expenses for Year 1 plus pre-operating expenses of more than $353,000. See 

DOT Order 2014-3-2, at 6. The current Application now forecasts only $2.23 

million in operating expenses for Year 1 and zero pre-operating expenses, 

resulting in a financial fitness requirement of only $557,800-a difference of 

$441,200. See Application at 9-10 and Exhibits HAS-15 and HAS-16. The net 

result is that the Department tentatively found the financial requirement last time 

to be about $999,000 based on Harris Air's own data, but this time Harris Air is 

claiming the financial requirement to be only $557,800--44.2% lower. 

There is no explanation for the significant reduction in the Year 1 

operating expenses forecast ($2.58 million v. $2.23 million). The only 

explanation for zero pre-operating expenses is the conclusory (and flawed) 

assertion that "[s]ince Harris Air already holds all of the FAA authority it requires, 

there are no certification, pre-operating or start-up expenses and all such 

expenses have already been incurred and paid for." Application at 9. That 

explanation, however, does not withstand scrutiny and is completely at odds with 

its prior application for commuter authority. Its prior commuter application was, 

like the current one, premised on the service it was already operating. At that 

time, it claimed $353,000 in pre-operating expenses. In fact, Harris Air detailedin response to a specific request from the Department in the context of its prior 

application - that it would incur a variety of pre-operating/start-up expenses 

related to certain outstations, training employees, and operating aircraft. See 

Harris Air Information Response, August 2013 (Docket DOT-OST-2013-0089). 

\\DC- 042333/000001-5802239 v4 
Opposition of Air Excursions 

Page 5 

Although Harris Air claims that these expenses "have already been incurred and 

paid for", if that were the case, the carrier's financial statements would reflect 

those expenditures. Yet, search high and low and there is no indication that 

those expenses were "incurred and paid for." Rather than claim a realistic 

financial fitness requirement amount, it seems clear that Harris Air has 

disingenuously tailored the financial fitness test amount to the level of financial 

support it received from the bank. That is the opposite of what needs to be done 

to meet the Department's financial fitness standard. 

In short, Harris Air's claimed financial fitness threshold of $557,000 simply 

cannot be justified. The number should be at least, if not more than, the amount 

which the Department determined in the prior application- $999,000. In fact, the 

pre-operating expenses should be even higher than the amount Harris Air 

claimed in the prior application- and are certainly not zero. For example, Harris 

Air will incur costs associated with setting up DOT reporting systems and 

advertising and marketing the new scheduled services, as well as costs 

associated with carrying U.S. mail (which it cannot do under its existing 

authority). Since Harris Air's financial resource document covers only $600,000 

(Application at 1 0), it falls far short (by several hundred thousand dollars) of the 

amount of funds necessary to meet the DOT's financial fitness test. 

In addition, Harris Air's most recent Balance Sheet, dated August 15, 

2014, shows sizable negative retained earnings of nearly $90,000, as well as 

large loans from Alaska Pacific Bank totaling $402,000 or nearly 72% of Harris 

Air's total equity. See Exhibit HAS-8. The Application also provides no detailed 

financial data about the affiliated company that leases the aircraft to Harris Air, as 

\\DC 042333/000001 - 5802239 v4 
Opposition of Air Excursions 

Page 6 

was provided with the last application, including all affiliated company 

transactions. These weaknesses and gaps with the financial statements militate 

strongly against, and make it impossible for the Department to conclude that 

Harris Air has, the requisite financial fitness. 

Ill. Harris Air Lacks The Appropriate Compliance Disposition To Hold A 

PCN Certificate Or Commuter Authority. 

Harris Air has long been flouting the Department's regulations by 

operating as a scheduled commuter air carrier, without the requisite Department 

authority. The Department should not reward Harris Air's willful non-compliance 

by granting it a PCN Certificate. 

Under Part 298, a commuter air carrier is "an air carrier as established by 

§ 298.3(b) that carries passengers on at least five round trips per week on at 

least one route between two or more points according to its published flight 

schedules that specify the times, days of the week, and places between which 

those flights are performed." 14 C.F.R. § 298.2. Or, as the Department's 

Information Packet on How to Become a Commuter Air Carrier states, "commuter 

air carrier is defined under section 298.2(e) of the Department's Regulations as 

an air carrier which (1) operates "small aircraft," i.e., those with an original design 

capacity of 60 or fewer seats, and (2) carries passengers on at least five roundtrip flights per week on at least one route between two or more points according 

to published flight schedules which specify the times, days of the week, and 

places between which they are performed."3 

3 DOT Information Packet on How to Become a Commuter Air Carrier, at 2 (September 

2012). 

1\DC 042333/000001-5802239 v4 
Opposition of Air Excursions 

Page 7 

As Air Excursions previously demonstrated, Harris Air's website, 

www.harrisair.com, earlier this year showed that it was already advertising and 

operating scheduled commuter service. See Opposition of Air Excursions, dated 

March 18, 2014 (Docket DOT-OST-2014-0089). The Harris Air schedule then 

published definitively showed that Harris Air was clearly holding out and 

operating service using small aircraft on a route five times or more per week 

according to a schedule with published flight times. See attached Winter 

Schedule (which was an Exhibit to Air Excursions' Objections to the Show Cause 

Order). For example, Harris Air's posted Winter Schedule revealed daily service 

between Sitka and Klawock, Sitka and Petersburg, Sitka and Hoonah, Sitka and 

Gustavus, Sitka and Juneau, and Sitka and Wrangell, in each case with 

scheduled departure and arrival times. This constitutes a commuter operation 

according to the regulations, yet Harris Air had not been issued that authority. 

Moreover, that schedule is very similar (and, for certain routes, is identical) to the 

so-called "Illustrative Service Proposal" provided with its current Application as 

Exhibit HAS-13. 

The compliance issue discussed here goes to the very core of Harris Air's 

Application for a PCN Certificate and warrants denial of the carrier's Application. 

This is not a mere "foot-fault" or a technical compliance issue unrelated to the 

Application itself (e.g., a returned check for $25). It is a critical compliance issue 

going to the very heart of Harris Air's Application - bearing on the applicantcarrier's respect for the Department's regulations and requirements. Indeed, the 

Department emphasizes this point in the DOT Information Packet on How to 

Become a Commuter Air Carrier, at 7: 

\\DC· 042333/000001 - 5802239 v4 
Opposition of Air Excursions 

Page 8 

"Under the Department's Regulations, an applicant may not (1) 

advertise, list schedules, or accept reservations for its proposed 

scheduled passenger service until the Department issues its final 

decision on the applicant's commuter application, or (2) accept 

payment or issue tickets for such service until the commuter authority 

has been made effective by the Department."4 

These prohibitions are set forth in 14 C.F.R. §201.5. When Harris Air's holding 

out violations are layered on top of Harris Air's multi-year failures to collect and 

remit excise taxes (discussed in detail in connection with Harris Air's prior 

application), Harris Air's lack of compliance disposition is self-evident. 

In addition to operating unlawfully, Harris Air has submitted an Illustrative 

Service proposal that is both unrealistic and deceptive. As proposed, Harris Air's 

proposed schedule for its wheel plane markets (Sitka, Kake, Klawock, Juneau, 

Hoonah, and Gustavus - SIT, KAE, KLW, JNU, HNH & GST, respectively) is 

logistically impossible to execute with only two wheeled aircraft operating on an 

IFR platform. Harris Air's schedule has the same aircraft operating virtually 

simultaneously from different points - an impossibility. For example, one 

aircraft (Aircraft A) flying South to Klawock at 7:30a.m., with the same aircraft 

returning to Sitka by 9:30 a.m. A presumably second aircraft (Aircraft B) departs 

Sitka at 7:30 a.m., arriving Juneau at 8:00 a.m. The schedule then shows a 

departure from JNU at 8:10 a.m., arriving SIT at 9:30 a.m. Simultaneously, 

flights are listed for: GST to JNU (8:25 a.m. departure, 8:40 a.m. arrival); HNH to 

JNU (8:35 a.m. departure, 8:50 a.m. arrival); HNH to GST (8:35 a.m. departure, 

8:50 a.m. arrival); and GST to HNH (9:00 a.m. departure, 9:15 a.m. arrival). To 

actually operate all of these near-simultaneous wheel plane flights with only two 

4 See also DOT Information Packet on How to Become a Certificated Air Carrier, at 7 

(September 2012). 

\\DC- 042333/000001 5802239 v4 
Opposition of Air Excursions 

Page 9 

aircraft would require either flouting the posted departure and arrival timeswhich would be a premeditated deceptive business practice-or require a third 

and possibly fourth aircraft, which Harris Air's Application states plainly that it has 

no intention of acquiring. And, if Harris Air were to acquire the additional aircraft 

necessary to fulfill its schedule, it would need to include the additional preoperating and operating costs associated with the additional aircraft in its 

calculations to meet the Department's financial fitness test. 

It is clear to any knowledgeable observer that Harris Air is attempting to 

make its current "Gypsy Cab" scheme, with flights offered to the traveling public 

as essentially shared-charters, operating on a round-robin circuit to multiple 

destinations, to look like a traditional airline schedule. Attempting to force this 

square peg into a round hole has resulted in a tortured and logistically impossible 

flight schedule to which it cannot adhere given its limited fleet of only two 

wheeled aircraft. This violates the fundamental premise of offering scheduled 

service, not to mention the legal prohibition against "unrealistic or deceptive 

scheduling" set forth in 14 C.F.R. §399.81. 

Harris Air has not established that it has the necessary financial fitness, 

proper compliance disposition, and operational know-how to support the grant of 

a PCN Certificate. 

IV. A Key Element Of Harris Air's Proposed Service Is In Question. 

In describing its first year operational forecast, Harris Air relies 

substantially on the "sufficient historic data to show that our involvement with 

Southeast Alaska Regional Health Consortium ("the Consortium") for routine 

\\DC- 042333/000001 -5802239 v4 
Opposition of Air Excursions 

Page 10 

patient and staff travel has resulted in a customer base of hundreds of 

employees and patients requiring routine transportation services to the 

Consortium's main hospital in Sitka, Alaska," and on its dedicated medevac and 

passenger airlift contracts with the Consortium. See Exhibits HAS-14, HAS-7. In 

its prior application for commuter authority, Harris Air likewise heavily relied on 

the then-recent contract between Harris Air and the Consortium, similarly 

claiming that the contract provided Harris Air with a customer base of hundreds 

of employees and an equal number of patients requiring routine service at the 

Consortium's main hospital in Sitka. 

The problem with the proposal is that it ignores the fact that earlier this 

year the Consortium had cancelled the air ambulance service contract with Harris 

Air which resulted in litigation between Harris and the Consortium. See 

Attachment to the Opposition of Air Excursions, dated March 18, 2014 (Docket 

DOT-OST-2014-0089). The current Application is deafeningly silent about that 

situation. And, as Harris Air's income statement shows, the revenue from 

"emergency flight services" has declined precipitously, by about 33% for CY 2013 

as compared to CY 2012 and by about 52% for January - May 2014 as 

compared to the same period in CY 2013. See Exhibit HAS-7. This implicitly 

shows that the relationship (if any still exists) with the Consortium is no longer the 

same. Furthermore, the aircraft that had been used for the Consortium flights 

are owned by a third party, are currently not being used, and have been offered 

for sale. The Department should therefore discount any reliance on the 

Consortium arrangement. Once again, it appears that Harris Air is playing fast 

and loose with the facts, replacing clarity with doubt about its operating proposal. 

\\DC- 042333/00000 I - 5802239 v4 
Opposition of Air Excursions 

Page 11 

In conclusion, Harris Air has failed to meet two of the four critical fitness 

pillars -financial fitness and compliance disposition. Therefore, for the reasons 

detailed above, Harris Air's Application should be denied. 

\\DC- 042333/000001 - 5802239 v4 

Respectfully submitted, 

{)it~ a~ 

Robert E. Cohn 

Patrick R. Rizzi 

HOGAN LOVELLS US LLP 

555 Thirteenth Street, NW 

Washington, DC 20004 

+1 202 637 4999/5659 

Counsel for 

Air Excursions LLC 
WINTER SCHEDULE 

*Effective Feb 1st- April 30th 2014 

Check-in for ALL flights is 30 minutes prior to scheduled departure times 

Check-in Closes 15 Minutes prior to departure 

Reservations: 

DEPART 

Sitka 

7:30am 

2 30pm 

to 

Sitka to 

I O:OOam 

2 30pm ,, 

Sitka to 

!O:OOam 

* 

Sitka to 

I 2:30pm ,, 

Sitka to 

!2:30pm 

* 

Sitka to 

I 2:30pm 

* 

Sitka to 

I O:OOam 

Sitka to 

*Call for availibity 

Sitka to 

9:00am 

907-966-3050 

ARRIVE 

Klawock 

8:15am 

3 15pm 

Kake 

10:2Sam 

4:15pm 

Petersburg 

FREQUENCY 

M,T, W, Th 

M,T, W, TH, F, S, Su 

M, T, W, TH, F, S, Su 

M,T, W, TH, F 

lO:SSam M, T, W, TH, F, S, Su 

Hoonah 

100pm 

Gustavus 

1:00pm 

Juneau 

1:00pm 

Wrangell 

10:3Sam 

Haines 

Angoon 

9 2Sam 

M, T, W, TH, F, S, Su 

M, T, W, TH, F, S, Su 

M, T, W, TH, F, S, Su 

M, T, W, TH, F, S, Su 

M, TW, TH F 

*Call for availibity in the afternoons & on weekends 

Sitka to 

9:00am 

Tenakee 

9:45am M, T W, TH, F 

*Call for availibity in the afternoons & on weekends 

Sitka to Port Alexander 

11:30am 12:15pm T & F 

Sitka to Pelican 

*Call for availibity 

*Fights may have stops 

DEPART 

Klawock 

8:30am 

3:30pm 

Kake 

I 0:30am 

4:30pm 

Petersburg 

11:00am 

Hoonah 

1:15pm 

Wrangell 

1:15pm 

Juenau 

1:15pm 

Wrangell 

10:45am 

Haines 

Angoon 

9:30am 

Tenakee 

9:50am 

ARRIVE 

to Sitka 

9:30am 

5:00pm 

to Sitka 

11 OOan 

5:00pm 

to Sitka 

FREQUENCY 

M,T, W, Th 

M,T, W, TH, F, 5, 5u 

M, T, W, TH, F, S, Su 

M,T, W, TH, F 

12:00pm M, T, W, TH, F, S, Su 

to Sitka 

2:00pm M, T, W, TH, F, S, Su 

to Sitka 

2:00pm M, T, W, TH, F, S, Su 

to Sitka 

2:00pm M, T, W, TH, F, S, Su 

to Sitka 

12 OOpm M, T, W, TH, F, S, Su 

to Sitka 

to Sitka 

10:00am M,T,W,TH,F 

to Sitka 

10:30am M,T,W,TH,F 

Port Alexander to 

12:30pm 

Sitka 

1:15pm T & F 

Pelican to Sitka 

Southeast AK charters are available. Call for Pricing. 

www. harri sai r.co m 
CERTIFICATE OF SERVICE 

I hereby certify that a copy of the foregoing Answer of Air Excursions has been 

served this 151

h day of September 2014, upon each of the following: 

pmurphy@lopmurphy.com 

scott@harrisair.com 

hank@MTCWorld.com 

info@flypacificairways.com 

\\DC- 042333/000001 5802239 v4 

Patrick R. Rizzi