Order 2010-10-9 

 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

On the 18th day of October, 2010

926724 Ontario Limited, d/b/a President Air 

Charter Docket OST 2010-0005

Violations of 49 U.S.C. §§ 41703 and 41712 and 

14 CFR Parts 205 and 294

Served October 18, 2010

CONSENT ORDER

This consent order concerns unauthorized passenger air service between points in the 

United States by 926724 Ontario Limited, d/b/a President Air Charter (President Air), a 

Canadian air taxi operator registered with the Department pursuant to 14 CFR Part 294. 

This consent order also concerns President Air’s failure to file with the Department an 

up-to-date certificate of insurance, as required by 14 CFR Parts 205 and 294. This order 

directs President Air to cease and desist from such further violations and assesses 

President Air a compromise civil penalty of $20,000. 

The carriage of local traffic for compensation or hire by foreign carriers, including 

Canadian air taxi operators, between two points in the United States, a practice 

commonly referred to as cabotage, is a violation of 49 U.S.C. § 41703,1

 

1 The pertinent language of 49 U.S.C. § 41703 states that foreign aircraft may “take on for 

compensation, at a place in the United States, passengers or cargo destined for another place in the United 

States only if – (1) specifically authorized under section 40109(g) of this title... .” See also 14 CFR 375.1 

defining “foreign civil aircraft.” 

which prohibits 

cabotage except under very limited circumstances that do not apply here. Registered 

Canadian charter air taxi operators that engage in cabotage without Departmental 

authorization also violate 14 CFR 294.81, which applies the general statutory prohibition 

in section 41703 specifically to them as a class of foreign air carrier. Violations of 

section 41703 and Part 294 also constitute unfair and deceptive practices and unfair 

methods of competition in violation of 49 U.S.C. § 41712. 

 
2

The cabotage violations that are the subject of this order occurred on August 13 and 

August 15, 2010, when a Beechcraft BE 30 aircraft (C-FDTP) operated by President Air

transported two passengers for compensation or hire between Bradley International 

Airport, Winsor Locks, Connecticut, (BDL) and Boston, Massachusetts, (BOS). 

On August 13, 2010, the chartered aircraft entered the United States at BDL from 

Hamilton, Ontario, Canada (YHM) carrying four passengers. At BDL, it dropped off one 

YHM-originating passenger and picked up two passengers and then continued to BOS 

with five passengers onboard. On August 15, 2010, the aircraft flew back from BOS to 

BDL with the same five passengers onboard, i.e., the remaining three YHM-originating 

passengers and the two BDL-originating passengers. At BDL, the two BDL-originating 

passengers deplaned and terminated their journeys. The aircraft then picked up the 

YHM-originating passenger who left the aircraft on August 13, 2010, and flew back to 

Toronto, Canada (YKZ) with all four YHM-originating passengers onboard. The flights 

were performed pursuant to a single-entity charter2 agreement. All of the passengers 

were employees of the charterer and their family members. 

It is a violation of 49 U.S.C. § 41703 for a foreign civil aircraft to transport passengers or 

cargo solely between two points in the United States for compensation or hire, even if the 

aircraft is being operated pursuant to a single entity charter that, in other respects, begins 

or ends outside the United States.3 Thus, for purpose of 49 U.S.C. § 41703, where a 

single-entity charter involves the operation of a foreign aircraft in U.S. airspace, as in this 

case, the journey of each passenger carried on the chartered aircraft, rather than the entire 

itinerary paid for by the charterer, is considered a separate act of providing air 

transportation for compensation or hire. If the journey of any individual on such a charter 

is entirely between U.S. points, then the carriage of that passenger constitutes cabotage. 

In this instance, the charterer contracted in Canada for air transportation for its employees 

and their family members. The resulting movements involved six passengers to, from, or 

between points in the United States. We will look at each in turn: 

1. The carriage of the three YHM-originating passengers who remained with the 

aircraft did not constitute cabotage. Rather, their movements (YHM-BDL-BOSBDL-YKZ) constituted a single (as to each individual) continuous international 

journey originating and terminating in Canada with three stopovers in the United 

States (two in BDL and one in BOS). Since President Air flew these passengers 

into the U.S. from Canada, it could lawfully transport them to other U.S. points, 

 

2

A single-entity charter is a charter in which the cost is borne directly by the charterer and not 

directly or indirectly by the individual passengers. 

3

Our focus on the itinerary of each individual passenger, rather than the chartering entity as a 

whole, is not merely required by a strict reading of the statute. If the movements of individual passengers 

were ignored in favor of the single continuous international journey of the single-entity charterer, then 

foreign air carriers could routinely circumvent our restrictions on cabotage by designating the points 

between which it provided transportation within the United States as mere “stopovers” by the charterer. 

Such a result would eviscerate the statutory prohibition against cabotage and permit the diversion of 

domestic traffic to foreign air carriers. 
3

provided that there was no break in each passenger’s journey at any point prior to 

the terminal point.4 

2. The carriage of the one YHM-originating passenger who was not on the BDLBOS-BDL legs did not constitute cabotage. Rather, his movement (YHM-BDLYKZ) was conducted pursuant to the carrier’s lawful exercise of its Third and 

Fourth Freedom rights.5

3. The carriage of the two passengers who boarded the aircraft in BDL on August 

13, 2010, and who terminated their journeys in BDL on August 15, 2010, 

constituted cabotage. Their movements (BDL-BOS-BDL) were solely between 

U.S. points aboard a foreign civil aircraft, for which the operator was 

compensated.6

For purpose of its future operations, President Air should take note that any passenger it 

enplanes at a point in the United States, regardless of the reason for the passenger’s 

journey (e.g., business or leisure), his or her country of citizenship, whether the passenger 

or another party (e.g., the employer of the passenger’s family member) paid for the 

transportation, or whether the transportation was arranged or paid for outside the United 

States, must be transported by President Air to Canada7 as part of a single continuous 

international journey. 

Separate from the cabotage issue as stated above, 14 CFR Part 294 requires that all 

Canadian air taxi operators must maintain in effect aircraft accident liability insurance 

coverage. In addition, evidence of such insurance, in the form of a certificate of 

insurance, must be maintained on file with the Department at all times, as required by 14 

CFR Part 205. Pursuant to 14 CFR 205.4, each carrier shall ensure that the evidence of 

aircraft accident liability coverage filed with the Department is correct at all times. 

 

4 We note that had a second foreign air carrier operated any of the U.S. legs of the operation, the 

second carrier would have engaged in unlawful cabotage service. We also note that these passengers could 

lawfully have terminated their journey at any of the points at which they stopped, rather than returning to 

Canada. 

5 We note that President Air could permissibly have picked this passenger up at any other U.S. point 

prior to the second stop at BDL, so long as the passenger was ultimately transported to a terminal point in 

Canada. 

6 Other Canadian air carriers have been found to have engaged in cabotage under circumstances 

similar to those of the instance case, i.e., the carrier moved a number of passengers on journeys entirely 

between U.S. points pursuant to single-entity charters that began and/or ended in Canada. London Air 

Services Limited, violations of 49 U.S.C. §§ 41301 and 41712, Order 2003-1-9 (Jan. 6, 2003) and I.M.P. 

Group Limited d/b/a Execaire, Violations of 49 U.S.C. §§ 41703 and 41712 and 14 CFR Part 294, Order 

2006-1-17 (Jan.23, 2006). 

7 The passengers may also be transported to a third country, to the extent that such transportation is 

permissible under the United States-Canada bilateral aviation agreement then in effect. 
4

According to the Department’s records, on May 27, 2005, President Air filed with the 

Department an updated certificate of insurance, which lists an insurance policy issued by

Canadian Aviation Insurance Managers Ltd., with an effective date of May 6, 2005. 

However, on at least two instances thereafter, President Air changed its insurance 

company, but failed to file an updated certificate of insurance with the Department, in 

violation of 14 CFR Parts 205 and 294. 

The Enforcement Office has carefully considered all of the information available to it and 

believes that enforcement action is warranted. In order to avoid litigation, the 

Enforcement Office and 926724 Ontario Limited, d/b/a President Air Charter have 

reached a settlement of this matter. Without admitting or denying the violations 

described above, 926724 Ontario Limited, d/b/a President Air Charter agrees to the 

issuance of this order to cease and desist from future violations of 49 U.S.C. §§ 41703

and 41712 and 14 CFR Parts 205 and 294, and to the assessment of $20,000 in 

compromise of potential civil penalties 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 926724 Ontario Limited, d/b/a President Air Charter and other foreign carriers to fully 

comply with the requirements of sections 41703 and 41712 and, as applicable, Parts 205 

and 294.

This order is issued under the authority contained in 49 CFR 1.57a and 14 CFR 385.15.

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 926724 Ontario Limited, d/b/a President Air Charter violated 49 

U.S.C. § 41703 and 14 CFR 294.81 by holding out and performing air transportation for 

compensation or hire between points within the United States;

3. We find that, by engaging in the conduct described in paragraph 2, above, 926724 

Ontario Limited, d/b/a President Air Charter engaged in an unfair and deceptive practice 

and an unfair method of competition in violation of 49 U.S.C. § 41712;

4. We find that 926724 Ontario Limited, d/b/a President Air Charter violated 14 CFR 

205.4 and 14 CFR 294.40 by failing to file an up-to-date certificate of insurance with the 

Department;

5. We order 926724 Ontario Limited, d/b/a President Air Charter and all other 

entities owned and controlled by or under common ownership with 926724 Ontario 

Limited, d/b/a President Air Charter and its successors and assignees, to cease and desist 

from further violations of 49 U.S.C. §§ 41703 and 41712 and 14 CFR Parts 205 and 294;
5

6. We assess 926724 Ontario Limited, d/b/a President Air Charter a compromise civil 

penalty of $20,000 in lieu of civil penalties that might otherwise be assessed for the 

violations described in ordering paragraphs 2, 3, and 4, above. Of this total amount, 

$10,000 will become due and payable within 15 days of the issuance of this order. The 

remaining $10,000 will become due and payable if 926724 Ontario Limited, d/b/a 

President Air Charter violates this order’s cease and desist provisions or the payment 

provision within one year following the date of the issuance of this order, in which case 

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

Failure to pay the penalty as prescribed in ordering paragraph 7, below, shall subject 

926724 Ontario Limited, d/b/a President Air Charter to the assessment of interest, 

penalties, and collection charges under the Debt Collection Act and to possible 

enforcement action for failure to comply with this order; and

7. Payment shall be made by wire transfer through the Federal Reserve 

Communications System, commonly known as "Fed Wire," to the account of the U.S. 

Treasury. The wire transfer shall be executed in accordance with the instructions 

contained in the Attachment to 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 

initiative.

BY:

ROSALIND A. KNAPP

Deputy General Counsel

(SEAL) 

An electronic version of this document is available at

www.regulations.gov