BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, DC

________________________________

)

Complaint of )

)

PACIFIC AIRWAYS, INC. ) Docket DOT-OST-2013-0031

PM AIR, LLC )

)

Against Scott Aviation, LLC )

d/b/a Island Air Express )

________________________________)

REPLY OF THE KETCHIKAN CARRIERS

TO THE ANSWER OF SCOTT AIR, LLC

AND PETITION FOR LEAVE TO FILE

AN OTHERWISE UNAUTHORIZED DOCUMENT

Communications with respect to this document should be addressed to:

Hank Myers

PO Box 7142

Bellevue, WA 98008

(425) 830-4265

February 25, 2013
1

BEFORE THE

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, DC

________________________________

)

Complaint of )

)

PACIFIC AIRWAYS, INC. ) Docket DOT-OST-2013-0031

PM AIR, LLC )

)

Against Scott Aviation, LLC )

d/b/a Island Air Express )

________________________________)

REPLY OF THE KETCHIKAN CARRIERS

TO THE ANSWER OF SCOTT AIR, LLC

AND PETITION FOR LEAVE TO FILE

AN OTHERWISE UNAUTHORIZED DOCUMENT

Pacific Airways, Inc. and PM Air, LLC (Ketchikan Carriers) hereby respond to the Answer 

of Scott Air, LLC (Scott) and request leave to file an otherwise unauthorized document. 

The pleading of Scott is filled with misstatements of law and fact, and is deceptive in its 

presentation. Scott’s Answer was received on Friday, February 22, and this Reply was 

filed before the beginning of the business day on Monday, February 25, the next work 

day. This filing will not delay handling of the Formal Complaint, and is needed to correct 

material misstatements of Scott.

Given the amount of contact between the Office of Aviation Enforcement and Scott, it is 

remarkable that Scott still does not accept the nature of its violations, the difference 

between safety and economic authority, the difference between interstate commerce 
2

and intrastate commerce, and its affirmative responsibility to reject requests for 

interstate transportation. We can no longer assume that Scott simply does not 

understand the nature of its violations, but rather that Scott does not intend to 

understand the nature of its violations. Its willful behavior is clear evidence that it is 

unfit to hold a certificate of public convenience and necessity, and in this docket, has 

willfully abrogated the terms of its Consent Agreement.

SAFETY vs ECONOMIC AUTHORTY

Clearly Scott refuses to recognize that its FAA Air Carrier certificate is not the only 

authority it needs to operate. The Airline Deregulation Act of 1978 and subsequent 

legislation specifically preempts State control over interstate air commerce, but also 

specifically exempts intrastate commerce from Federal regulation. None-the-less, even 

air carriers engaged in truly intrastate are still required to comply with State regulations 

on commercial service. Within the State of Alaska a carrier is required to register with 

the office of the Alaska State Troopers, and provide proof of compliant liability 

insurance. This is a requirement separate from operating authority, but no Alaskan 

carrier can operate without meeting its terms. Even for intra-Alaskan operations, there 

is both safety and economic authority involved.

Even if Scott held FAA safety authority to engage in interstate air operations, it could not 

engage in interstate air commerce unless it had registered as an air taxi under 
3

14CFR298, been found fit as a commuter air carrier, or obtained a certificate of public 

convenience and necessity. At the time of the filing of the informal complaint, Scott had 

not registered under Part 298, been found fit as a commuter air carrier, or been issued a 

certificate of public convenience and necessity. Even today Scott has no economic

authority to engage in scheduled interstate air commerce, or even to hold itself self out 

for such transportation.

INTERSTATE vs INTRASTATE COMMERCE

The Department and the Civil Aeronautics Board has established clear definitions 

bolstered by extensive case law defining the difference between interstate and 

intrastate transportation. Simply put, it is the true origin and destination of the traffic, 

and not the online origin and destination of a particular carrier, which determines the 

nature of the commerce. For a passenger, the true origin and destination is the origin 

and destination of the continuous journey without an intermediate break. An 

intermediate break is defined as an intentional break in a journey to engage in a 

different activity other than travelling from the origin to the destination. For example, if 

a Klawock resident traveled from Seattle to Ketchikan and remained in Ketchikan to visit 

friends or relatives, or to engage in shopping, or to obtain medical or professional 

services, and then traveled to Klawock, then there would be a break in the journey. The 

travel between Ketchikan and Klawock would be intrastate in nature. 
4

On the other hand, if the Klawock bound passenger traveled from Seattle to Ketchikan 

and then took the next convenient flight on Scott Air, even if the passenger remained in 

Ketchikan overnight, the nature of the journey would be interstate. For example, the El 

Capitan lodge offers a fishing package which assumes an evening arrival on Alaska 

Airlines into Ketchikan that is after the last Scott departure to Klawock. The passenger 

spends the night in Ketchikan as part of the package, and then takes the next 

convenient flight from Ketchikan International Airport to Klawock on Scott Air. Because 

the overnight stay was part of a continuous journey, the travel between Ketchikan and 

Klawock in interstate in nature.

As noted in Order 2012-12-16, it is not only a violation of law to transport passengers in 

interstate commerce without necessary economic authority, it is a violation to hold out 

an offer to transport passengers in interstate transportation. While Scott neither 

admitted nor denied its violations in its Consent Order, the Department clearly stated:

ACCORDINGLY, 

1. Based on the above information, we approve this settlement and the provisions of this 

order as being in the public interest; 

2. We find that Scott Air LLC d/b/a Island Air Express violated 49 U.S.C. § 41101 by

offering for sale and operating interstate air service between the Ketchikan International 

and the Klawock Airports in Alaska without certificate authority under 49 U.S.C. § 

41101 or registration as an air taxi under 14 CFR Part 298; 
5

3. We find that Scott Air LLC d/b/a Island Air Express violated 49 U.S.C. § 41712 by

holding out and providing air service between Ketchikan International Airport and the 

Klawock Airport, as described above; 

4. We order Scott Air LLC d/b/a Island Air Express and all other entities owned and 

controlled by, or under common ownership and control with Scott Air LLC d/b/a Island 

Air Express, and their successors and assignees, to cease and desist from future violations 

of 49 U.S.C. §§ 41101 and 41712. Failure to comply with this cease and desist provision 

shall subject the company to further enforcement action;

By offering for sale and holding out interstate air service via its website and interstate 

toll free telephone numbers, Scott violated Federal law.

Scott is clearly incorrect when it asserts that in order for transportation to involve 

interline, interstate service that a single ticket or at least an interline ticketing and 

baggage agreement must be used. As was found specifically in the Simmons case, there 

did not need to be a single ticket or even interline ticketing and baggage agreement. 

Indeed, the fact that Simmons operated only from Baltimore-Washington International 

Airport was proof enough to show that it was engaged in interstate commerce. The 

same logic applies to Ketchikan International Airport. There are no residents on Gravina 

Island where Ketchikan International Airport is located, or at least none who have 

convenient road access to the airport. The City of Ketchikan is located on Revillagigedo 

Island, and can only be reached from the airport by ferry, private boat, or air service. 
6

Half a dozen federally licensed air carriers, scheduled and on-demand, operate bases 

along the City of Ketchikan waterfront, only Scott does not. 

Scott argues that Ketchikan International Airport is the only place where its wheeled 

Cessna Caravans can land. First of all, as with Simmons, the choice of the aircraft and 

airport is Scott’s alone. Second, it does operate and advertise amphibious Cessna 

Caravan aircraft fully capable of operating to the City of Ketchikan waterfront if it 

chooses. The Caravan on wheels could also be converted to amphibious floats and be 

able to operate between the Klawock airport runway and the Ketchikan waterfront, but 

Scott chooses to keep it on wheels. Scott could operate in true intrastate commerce, 

but chooses not to. Nobody is forcing Scott to violate Federal law.

In the Simmons case, the Department found that by merely serving BaltimoreWashington International Airport instead of other airports in the area, Simmons was 

engaged in interstate air transportation. The same principle applies at Ketchikan. There 

are numerous landing facilities on the Ketchikan waterfront which could be used by 

aircraft in Scott’s fleet. By choosing to serve only Ketchikan International Airport 

instead of the City of Ketchikan waterfront, Scott chooses to engage in interstate 

commerce. Service to Ketchikan International Airport is prima facie evidence of 

engaging in interstate air transportation.
7

SCOTT HAS AN AFFIRMATIVE RESPONSIBILITY TO AVOID INTERSTATE COMMERCE

Scott’s argument that it is not now nor never has been engaged in interstate commerce 

is fatuous. Order 2012-12-16 is clear in its finding. Claiming that interline, interstate 

transportation requires a single ticket and bag check is equally fatuous. The 

Department has consistently ruled that a carrier has an affirmative responsibility to 

abide by all applicable regulations, and cannot claim ignorance as a defense. The 

remarkable thing is that Scott does know that passengers are interstate in nature 

because it openly solicits information about connections at Ketchikan International 

Airport.

Scott argues that its disclaimer concerning its FAA safety authority meets the 

requirements of its mitigation statement. Again, it ignores that it has no economic 

authority, and it is the Department of Transportation and not the F.A.A. that has found 

it in violation.

Scott now argues that to list all of the authority is does not have would encompass 

hundreds of pages, thus being unwieldy and burdensome. A simple statement such as, 

“Scott Air, LLC is not authorized to transport passengers or freight whose entire journey 

begins or ends outside the State of Alaska, but is only authorized to transport 

passengers and freight whose entire journey is between two points in the State of 
8

Alaska” seems concise, clear and unambiguous. When it agreed to make the required 

changes in its website, was it acting it good faith?

USE OF ISLAND’S SERVICES BY KETCHIKAN CARRIERS

As noted in the original complaint. Scott has been operating under a business name that 

is nearly identical to that of a properly certificated air carrier in Kodiak, Redemption, Inc. 

d/b/a Island Air (Redemption). Until June, 2012, the Ketchikan Carriers were under the 

impression that Scott was an extension of the legally operated services of Redemption. 

It was not until BTS T-100 data for the KTN-KLW data were analyzed that it was 

discovered there were no entries for Redemption in the records. Further investigation 

uncovered that Scott and Redemption are not related in any way, and Scott was illegally 

engaged in interstate commerce. The Ketchikan Carriers used Scott assuming it was 

properly certificated. The fact that Scott accepted the business is further proof of its 

engagement in interstate commerce.

RESERVATIONS RECORDS

The reservations records appended to the February 1, 2013 Formal Complaint were 

reproduced exactly as received from the passengers. In the case of the two Lucas 

reservations, there is a notation within the body of the Scott reservation Comments 

section that there was a connection to Flight 60. The Alaska reservation record clearly 
9

shows a reservation to Flight 60. We will determine if the Alaska Airlines record was 

part of the original Scott record or simply additional proof of the interstate commerce. 

In the Erickson record, there is a clear notation that the passenger is connecting from 

Flight 65. Both Flight 60 and Flight 65 are operated by Alaska Airlines directly to or from 

Seattle, WA, and are the closest connecting flight to the Scott service for which the 

reservation was accepted. Travel on these Alaska Airlines flights is clearly interstate in 

nature. The important issue, which cannot be avoided, is that Scott knows full well that 

some of its passengers are engaged in interstate transportation because it solicits 

information about passengers’ connecting itineraries. By accepting reservations from 

passengers it knows are engaged in interstate transportation, they are continuing to 

offer and hold out interstate air transportation.

EL CAPITAN RESERVATIONS OPERATION

The point of the interstate relationship between Scott, Desert Splash and El Capitan is 

that there is a common ownership relationship between operations that span three 

states and are carefully interrelated. Desert Splash advertises its link to El Capitan, its 

Alaska fishing lodge, to its clients in Arizona. Appendix A is the “Contact Us” page for El 

Capitan (the home page of El Capitan was included in the Formal Complaint). Like Scott, 

El Capitan advertises an interstate toll free telephone reservations line, but it also 

clearly lists a phone number in area code 360 (western Washington state). A reverse 

lookup search was performed on Whitepages.com, and the result is a VOIP account in 
10

Bremerton, WA. We contacted the City of Bremerton to see if there was a business 

license for the 360-850-0036 number, and that explains the mixup on the number. It is 

one thing for Scott to point out a clerical error on the phone number, it is entirely 

different to deny the existence of a Bremerton, WA phone line linked to a Bremerton, 

WA location. Again, this is more proof that Scott and El Capitan are engaged in a 

deceptive and willful attempt to engage in interstate commerce under the guise of 

separate, intrastate services. The Ketchikan Carriers have met their burden of showing 

probable cause that violations are continuing. If Scott is unwilling to admit the actual 

operation, then a formal investigation must be undertaken.

THE ACTIONS OF THE COMPLAINANTS ARE ABOVE REPROACH

Scott continuously refers to “...repeated use of the regulatory process to engage in a 

veritable campaign of harassment directed at Applicant, involving substantial and 

repeated misrepresentations of fact which Applicant has at each stage been obliged to 

address and rebut.” (Answer, page 2) As far as Enforcement matters are concerned,

the Ketchikan Carriers filed one informal complaint against Scott alleging violations of 

Federal law and regulation. That filing was addressed in Docket 2012-0002, and was the 

only filing by the Ketchikan Carriers in that docket. As a complainant, the Ketchikan 

Carriers had a burden of proof to show probable cause to believe a violation of law and 

regulation had occurred. Complainants clearly met this burden by demonstrating that 

Scott was holding out and offering to transport passengers in interstate commerce. The 
11

Department found that each of the Complainants’ allegations was true and found that 

Scott was in violation.

Three weeks after Order 2012-12-16 was issued, Complainants sought to confirm 

whether or not Scott was in compliance with its mitigation statement that it would only 

carry local traffic. The first test was to see if Scott would accept a reservation from the 

very same person who had previously made a reservation that became the basis of the 

informal complaint, and who was the known agent of the Ketchikan carriers. It would 

have been an egregious violation if in fact the reservation had been accepted. Actually, 

the reservation was accepted, only to be cancelled two hours later when the 

passenger’s name was recognized. Scott calls this harassment.

The next test was to see if Scott would accept online reservations from passengers 

clearly engaged in interstate transportation but who were not named Hank Myers. 

Three attempts were made, and all three succeeded. Scott made two statements to the 

Department as mitigation of its offenses. First, it said it had altered its website to state 

that it was only authorized to engage in intrastate commerce. Its statement only 

addressed safety authority and did not mention economic authority. Second, it pledged 

to carry only local traffic until its certificate of public convenience and necessity had 

been awarded and activated. Once again Scott has been shown to be holding out and 

offering service in interstate commerce.
12

The Complainants have met their burden of proof to show probable cause of continued 

violations, and have done so in a very open and transparent manner. 

SUMMARY

For several years now, Scott Air, LLC has engaged in scheduled interstate air commerce. 

It adopted a business name of an existing certificated air carrier in Kodiak. It hired key 

personnel from other certificated carriers who should have been aware of DOT 

requirements having gone through the vetting process themselves. It assisted 

passengers in physically transferring themselves and their belongings to and from 

interstate fights of Alaska Airlines. It holds out scheduled service using an interstate toll 

free reservations number. It maintains an unrestricted web site offering scheduled 

services without listing any restriction on its economic authority, and accepting 

reservations from outside the State of Alaska and even encouraging passengers to list 

their interline connecting flights on the interstate services of Alaska Airlines. It 

schedules its flights to connect to the interstate flights of Alaska Airlines, varying its 

service to coordinate with Alaska Airlines schedule changes, and not to the needs of the 

local Ketchikan to Klawock passenger market. It operates only to Ketchikan 

International Airport and not the City of Ketchikan located on a separate island, even 

though it has aircraft capable of landing at the Ketchikan waterfront, and has other 

aircraft which could be converted to serve Ketchikan itself. It now admits it has even 
13

accepted charters from properly certificated air carriers and transported interstate 

passengers on their behalf.

The Department has treated Scott in a very trusting and lenient manner. The 

Department accepted Scott at its word that it was unaware that its operations required 

interstate authority. It then waited three months for Scott to apply for certificate of 

public convenience and necessity, thereby allowing them to operate unfettered during 

the entire lucrative summer season. It accepted Scott’s promise in a mitigation 

statement that it had altered its web site to clearly state the limits on its economic 

authority, and would only transport local passengers between Klawock and Ketchikan 

until its certificate had been awarded.

Scott has repaid this lenience and trust by changing none of its operations, and 

abrogating the terms of its mitigation statement. As shown in the February 1 Formal 

Complaint, Scott has not changed its web site to notify passengers of the limitations of 

its economic authority. It publishes several schedules on its website, each timed to 

connect conveniently to and from interstate flights of Alaska Airlines. It continues to 

solicit interstate connecting flight information, and accepted three separate 

reservations from passengers who listed connections to interstate flights on their 

reservations requests. Indeed, Scott has made it clear in its certificate application that it 

does not accept that it has engaged in interstate commerce, and the nature of its 

operation would not change even if certificated.
14

In its defense, Scott asserts that the Complainants have engaged in a continuous effort 

of harassment obliging Scott to respond at every step, or, on the other hand, not filing 

objections at a time when Scott asserts Complainants should have. To date, Scott has 

simply engaged in a pattern of denying actions and blaming others. Scott has the 

affirmative requirement to abide by Federal regulation, and it continues to play the 

ignorance card long after the credibility has worn off. Scott has not only abrogated the 

terms of its Consent Agreement, but it continues to engage in new violations. It has 

played a game of catch me if you can, and been caught.

CERTIFICATION

The contents of this application and the attached exhibits are true and correct to the 

best of my knowledge and belief. Pursuant to title 18, United States Code section 1001, 

I, in my individual capacity and as the authorized representative of the applicant, have 

not in any manner knowingly and willfully falsified, concealed or failed to disclose any 

material fact or made any false, fictitious, or fraudulent statement or knowingly used 

any documents which contain such statements in connection with the preparation, filing 

or prosecution of the application. I understand that an individual who is found to have 

violated the provisions of 18 U.S.C. section 1001 shall be fined not more than $10,000 or 

imprisoned not more than five years, or both.
15

WHEREFORE; the Ketchikan Carriers respectfully renew the request to find that Scott Air, LLC 

has abrogated its mitigation statement and reinstate the full fine specified in Order 2012-12-16. 

Furthermore, the Department should investigate Scott not only for its violations subsequent to 

abrogating its mitigation statement, but prior to the Consent Order to assure the veracity of its 

statements. If nothing else, Scott has clearly covered up the its true operation through 

misleading statements in its several filings.

Respectfully submitted,

Pacific Airways, Inc.

PM Air, LLC

_____________________________

By Hank Myers, its authorized agent

February 25, 2013

CERTIFICATE OF SERVICE

I hereby certify that I have this day served a copy of the foregoing Reply of the Ketchikan 

Carriers upon Scott Air, LLC and its attorney of record, Pierre Murphy by Certified Priority US 

Mail, return receipt requested.

Respectfully submitted,

_____________________________

Hank Myers

February 25, 2013
16

Appendix A

Page 1 of 2

“CONTACT US” PAGE FOR EL CAPITAN LODGE
17

Appendix A

Page 2 of 2

REVERSE PHONE LISTING FOR 360-850-0036