Order 2010-4-7

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C. 

Issued by the Department of Transportation

on the 14th day of April, 2010

 

Served: April 14, 2010

FINAL ORDER 

Summary

By this Order, we make final our tentative findings set forth in Order 2010-3-21 (“show-cause 

order”) and grant an exemption from 49 U.S.C. § 41101 and applicable Department regulations 

to air charter broker CSI Aviation Services, Inc., (CSI) to the extent necessary for CSI to engage 

in domestic and foreign indirect air transportation of persons, property, and mail pursuant to 

contracts with Federal government agencies arranged under the General Services Administration 

(GSA) Schedule Special Item Number (SIN) 599-5, Air Charter Services-Brokers. We also

finalize our tentative decision to exempt to the same extent all other air charter brokers currently 

listed on GSA Schedule SIN 599-5, and all those that may be so listed during the term of this 

exemption authority.

1

Background

On November 25, 2009, CSI filed an application for an exemption to continue performing under 

GSA SIN 599-5 and acting as a principal in contracts for air transportation between Federal

 1 Currently, the following air charter brokers are listed on GSA Schedule SIN 599-5: Air Charter Team; Air Partner, 

Inc.; Air Planning, LLC; Capital Aviation, Inc.; CSI Aviation Services, Inc.; Private Jet Services Group Inc.; 

Sundowner Oklahoma City, LLC; and Zephyr Aviation, LLC.

Application of 

 CSI Aviation Services, Inc.

for an emergency exemption pursuant to 

49 U.S.C. § 40109 to continue to act as an 

indirect air carrier charter broker under 

contract to the General Services 

Administration 

 

Docket DOT-OST-2009-0311

 
2

government agencies, such as GSA, and direct air carriers.

2

 A number of parties, including 

GSA, filed either in support of or in opposition to CSI’s application.3

The Department subsequently requested from GSA’s General Counsel a clear and definitive 

formal statement of GSA’s position on CSI’s application.

4

 By letter dated March 1, 2010, GSA

stated that it would support action, via exemption or otherwise, that would permit air charter 

brokers to continue to perform their GSA Multiple Award Schedule (MAS) contracts, as well as 

any contracts these brokers might have with other Federal agencies. 

By Order 2010-3-21, we tentatively granted CSI’s request for an exemption from 49 U.S.C. 

41101 and applicable Department regulations to the extent necessary for CSI to engage in 

domestic and foreign indirect air transportation of persons, property and mail pursuant to 

contracts with Federal government agencies arranged under GSA Schedule SIN 599-5, Air 

Charter Services-Brokers. We also tentatively granted this authority to all other air charter 

brokers listed on GSA Schedule SIN 599-5, and to all those that may be so listed in the future 

during the term of this exemption. We noted that this exemption authority would apply only to 

air charter brokers listed on GSA Schedule SIN 599-5 and would be limited to services pursuant 

to contracts with the Federal government. We found that our tentative grant of exemption 

authority would be consistent with the October 2004 Notice issued by the Department’s Office of 

Aviation Enforcement and Proceedings. We also found that our proposed action would provide 

GSA with the ability to continue using the air charter brokers listed on Schedule SIN 599-5 and 

would be in the public interest. Finally, we stated that authorized brokers could not enter into 

agreements with operators conducting services under 14 CFR Part 125 (“Part 125 operators”), as 

those operators may not engage in common carriage operations in air transportation, either 

directly or indirectly through third parties, such as air charter brokers.

Objections to the Department’s tentative decision were due on March 19, 2010. Capital 

Aviation, Inc. and Capital Airways, LLC (hereinafter collectively referred to as “Capital”), 

Miami Air International, Inc. (Miami Air), and the National Air Carrier Association (NACA) 

each filed responsive pleadings.

5

Summary of Responsive Pleadings

Capital objects to the Department’s tentative decision insofar as it would prohibit the affected

brokers from using the services of Part 125 operators. Capital argues that U.S. government 

agencies have a demonstrated need for Part 125 air services to fulfill important missions of the 

types specifically recited in SIN 599-5, such as prisoner and detainee operations. Capital further 

argues that GSA’s March 1 letter made it clear that U.S. government agencies should not be 

restricted as to the types of air services that may be procured indirectly through air charter 

brokers under SIN 599-5. Capital states that the Department has offered no reasoned 

justification for its decision to exclude Part 125 operators from among those entities with which 

 2

 A direct air carrier is an entity that provides or offers to provide air transportation and who has control over the 

operational functions performed in providing that transportation.

3 See Order 2010-3-21 at 2 for the list of supporting and opposing parties. 4 See letter dated February 12, 2010 in the instant docket. 5 NACA’s pleading, filed March 23, was accompanied by a motion file an otherwise unauthorized document. In the 

interest of ensuring a complete record, we will grant the motion. 
3

air charter brokers may contract to provide services pursuant to SIN 599-5. Capital asserts that 

there is no legal or rational basis for regarding the U.S. government or any agency thereof as the 

“general public” to support the determination barring brokers from contracting with Part 125 

operators. Capital states that the U.S. government is not the general public, and that the offer or 

provision of air transportation to the U.S. government should not be considered holding out to 

the general public. Capital maintains that the Department, whose authority is limited to entities 

engaged in the provision of air transportation, i.e., common carriage, has no jurisdiction to assert 

restrictions on either broker activities or Part 125 commercial operators serving the U.S. 

government.

In their objections, Miami Air and NACA renew their previous opposition to the CSI application. 

However, both concentrate on challenging Capital’s position. They both support the 

Department’s tentative decision that would prohibit authorized air charter brokers from 

contracting with Part 125 operators. They assert that the law is very clear with respect to Part 125 

operators, and that 14 CFR Part 125 is only applicable to operations when common carriage is 

not involved. Specifically, NACA notes that Part 125 operators are restricted to “non-common 

carriage”, which is defined as an aircraft operation for compensation that does not involve a 

holding out to others. NACA notes that Part 125 operators may not advertise or solicit from 

anyone, public or private, and that providing air operations through a broker is “holding out” as 

the broker is clearly soliciting a government contract in this case. Miami Air states that, as is the 

case with civilian-operated flights conducted on behalf of the Department of Defense, only 

certificated air carriers should be allowed to operate flights carrying government personnel.

Decision

For the reasons cited in the show-cause order, we have decided to make final our tentative 

decision to grant CSI an exemption, subject to conditions, from 49 U.S.C. § 41101 to the extent 

necessary for CSI to engage in domestic and foreign indirect air transportation of persons, 

property, and mail pursuant to contracts with Federal government agencies arranged under GSA

Schedule SIN 599-5, Air Charter Services-Brokers. We also make final our tentative decision to 

grant this exemption, subject to the same conditions, to all other air charter brokers listed on 

GSA Schedule SIN 599-5, and to all those that may be so listed during the term of this 

exemption authority.

We have reviewed each of the submissions filed in response to our show-cause order. In again 

opposing CSI’s exemption request, Miami Air and NACA relied essentially on arguments 

previously submitted. We fully considered those arguments in rendering our tentative decision 

and find no persuasive basis to reach a different result here. 

With respect to the concerns raised by Capital, the authority we are granting to CSI and other 

similarly-situated air charter brokers is to act as indirect air carriers of persons and property in 

their dealings with GSA and other U.S. Government agencies. These entities thus are authorized 

by this order to engage in air transportation as common carriers. While Capital believes that the 

services arranged by CSI do not constitute common carriage (and therefore air transportation) 

because of the limited scope of holding out done by the broker (i.e., soliciting only from U.S. 

Government agencies), we disagree. 
4

In Order 2010-3-21 we stated:

A broker does not need economic authority from the Department of Transportation as long as 

it properly limits its role to that of a strict go-between between direct air carriers and the U.S. 

government, serving as no more than an agent for one of the parties. However, if the broker 

acts in a manner that gives it the attributes of an actual provider of air transportation, that is as 

a principal rather than an agent, the broker must hold appropriate DOT authority to act as an 

indirect air carrier.6

We remain of the view that, given the factual circumstances here, and in particular the 

contracting arrangements set up by GSA, the provision of air services for U.S. Government 

agencies through the GSA contracting system constitutes an engagement in air transportation, 

necessitating that brokers conducting such business hold economic authority from the 

Department to act as indirect air carriers.

It is a well-established Department standard that indirect air carriers may only use the services of 

authorized direct air carriers in conducting their operations. See 14 CFR §2 96.3, § 297.12(a), 

and § 380.10(d). As we stated in Order 2010-3-21, CSI and the other brokers, acting as 

principals in arranging air services for GSA, are acting as indirect air carriers, and we are 

licensing them in this order to do business in that manner. Under these circumstances, we see no 

persuasive public interest reason to treat CSI and the other brokers differently from the way we 

treat other indirect air carriers in contracting for air services, i.e., that they may only contract 

with direct air carriers holding appropriate OST and FAA authority. Indeed, we note that GSA’s 

Schedule SIN 599-5 statement of work specifies that flight operations conducted under that 

Schedule must be performed by an air carrier holding authority under 14 CFR Parts 121 or 135 

(i.e., authority to act as a direct air carrier), and does not provide for operations by Part 125 

operators. 

In view of the above, we find that our tentative decision in Order 2010-3-21 barring authorized 

brokers from entering into agreements with Part 125 operators is consistent with GSA’s 

procurement process and is otherwise warranted in the public interest, and should be finalized.

ACCORDINGLY,

1. We grant an exemption from 49 U.S.C. § 41101 to CSI Aviation Services, Inc., to the 

extent necessary for it to engage in domestic and foreign indirect air transportation of persons, 

property, and mail pursuant to contracts with Federal government agencies arranged under the 

General Services Administration (GSA) Schedule Special Item Number (SIN) 599-5, Air Charter 

Services-Brokers;

2. We grant an exemption from 49 U.S.C. § 41101 to all other air charter brokers listed on 

GSA Schedule SIN 599-5, and all those that are so listed in the future to the extent necessary for 

them to engage in domestic and foreign indirect air transportation of persons, property, and mail 

pursuant to contracts with Federal government agencies arranged under the GSA Schedule 

SIN 599-5, Air Charter Services-Brokers; 

 6 Order 2010-3-21 at 1-2.
5

3. The authority granted in ordering paragraphs 1 and 2 is subject to the following 

conditions: 

• Air charter brokers shall contract only with direct air carriers that hold the requisite 

Departmental authority to engage in air transportation;7

• All air services arranged by the air charter brokers shall be authorized in accordance with 

the Fly America Act (49 U.S.C. § 40118) by the contracting agency;

• Before engaging in indirect air transportation to the extent permitted by this exemption, 

an air charter broker not currently listed on GSA Schedule SIN 599-5, Air Charter 

Services-Brokers shall file a notice in this docket of its listing on GSA Schedule SIN 

599-5; and

• An air charter broker currently listed on GSA Schedule SIN 599-5, Air Charter ServicesBrokers, or that is listed subsequent to the issuance of this order, shall file a notice in this 

docket within 30 days after its removal from the GSA Schedule SIN 599-5 Air Charter 

Services-Brokers;

4. The exemption authority granted in ordering paragraphs 1 and 2 shall be effective 

immediately and will terminate one year from the issue date of this order, or upon the issuance of 

a final rule encompassing this authority, whichever is sooner;

8

5. We grant the motion of the National Air Carrier Association for leave to file an otherwise 

unauthorized document; 

6. To the extent not granted above, we deny all requests for relief in this docket; 

7. We shall not entertain petitions for reconsideration of this order; and 

 7 Brokers shall not, for example, enter into agreements with companies operating pursuant to 14 CFR Part 125, as 

these entities are prohibited from engaging in common carriage operations in air transportation, either directly or 

indirectly through air charter brokers. 

8 Sixty days before the expiration of the exemption authority granted in ordering paragraphs 1 and 2, we will 

favorably consider an extension of this exemption authority if a rulemaking on this subject is underway, but not yet 

final, and GSA advises the Department that such an extension of the exemption authority is necessary for the 

acquisition of airlift for the Federal government agencies.
6

8. We shall serve this order on the parties to the captioned docket of this order, the U.S. 

Department of State (Office of Aviation Negotiations), the Federal Aviation Administration 

(AFS-200), and the General Services Administration.

By:

Susan L. Kurland

 Assistant Secretary for Aviation

and International Affairs

(SEAL)

An electronic version of this document is available at

www.regulations.gov