Order 2010-3-21

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

Issued by the Department of Transportation 

on the 16th day of March, 2010 

Served: March 16, 2010 

 

 

Application of 

 CSI Aviation Services, Inc. Docket DOT-OST-2009-0311

 

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 

 

ORDER TO SHOW CAUSE 

Summary 

By this order, we tentatively grant the request of the aviation broker CSI Aviation Services, Inc. 

(CSI) for exemption authority to engage in domestic and foreign indirect air transportation of 

persons, property and mail pursuant to contracts arranged under the General Services 

Administration (GSA) Schedule Special Item Number (SIN) 599-5, Air Charter ServicesBrokers. We are also tentatively granting this authority to other aviation brokers listed on GSA 

Schedule SIN 599-5, and those that may be so listed in the future.1

Background 

Aviation brokers listed on GSA Schedule SIN 599-5 operate by working with air carriers looking 

to sell their air services to the U.S. government, as represented by GSA.2 Brokers are responsible 

only for facilitating the arrangement of air charter services, but do not own or operate aircraft. A 

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

 

1

 Currently, the following aviation 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. 

2

 GSA maintains a separate schedule for direct air carriers -- GSA Schedule SIN 599-4, Air Charter Services–Owner 

Operated. The following direct air carriers are listed on GSA Schedule SIN 599-4: Evergreen International 

Aviation; Executive Fliteways, Inc.; Flightworks, Inc.; Miami Air International, Inc., Southeastern Ohio Air Service, 

Inc.; and Vision Airlines, Inc. 
2 

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. 

In October 2004, the Department’s Enforcement Office (C-70) issued a Notice providing 

guidance on the lawful role of air charter brokers in the provision of air transportation.3

 The 

Notice stated that air charter brokers without appropriate economic authority may not hold out 

air transportation in their own right or enter as principals into contracts with customers to 

provide air transportation. The Notice specifically suggested that brokers needing authority 

could seek exemptions that would permit them to offer services directly to the public in their 

own right, subject to necessary consumer safeguards. In 2009, C-70 investigated the matter of 

aviation brokers in greater detail and concluded that a number of brokers were operating 

unlawfully. In October 2009, C-70 warned these brokers, including CSI, that their operations as 

principals in selling air transportation were unlawful and that they must cease any further such 

operations by April 2010 or face enforcement action. 

Application 

On November 25, 2009, CSI, an aviation broker currently on the GSA SIN 599-5 schedule, filed 

an application for an emergency exemption to continue to perform under GSA SIN 599-5 and act 

as a principal in contracts with the GSA and other U.S. government agencies. CSI states that it 

has held a GSA schedule contract to arrange commercial air services since December 19, 2003. 

CSI further states that its request is consistent with the terms and conditions of SIN 599-5, and 

that all air transportation will be performed by GSA-approved direct air carriers with the 

requisite FAA safety certifications and DOT economic authority in accordance with the GSA 

Schedule or the relevant U.S. government agency task order. 

A number of parties have filed both in support and opposition of CSI’s application.4

 The 

following parties filed submissions in support of CSI’s application for exemption authority: TEM 

Enterprises, d/b/a Xtra Airways (Xtra); Falcon Air Express (Falcon); and Capital Aviation, Inc. 

(CAI). The following parties filed submissions opposing CSI’s application: Global Aviation 

Holdings, Inc. (Global Aviation)5

; Miami Air International, Inc. (Miami Air); the National Air 

Carrier Association (NACA); Omni Air International (Omni); Ryan International Airlines, Inc. 

(Ryan); MN Airlines, LLC dba Sun Country Airlines, Inc. (Sun Country); Sundowner Oklahoma 

City, LLC (Sundowner), and USA 3000 Airlines (USA 3000). Responses neither in support nor 

in opposition to CSI’s application were filed by the Air Charter Association of North America 

(ACANA) and the National Business Aviation Association (NBAA).

 

 

3

 Notice: The Role of Air Charter Brokers in Arranging Air Transportation, U.S. Department of Transportation, 

October 8, 2004. 

4

 Certain pleadings were accompanied by motions to late-file and for leave to file. In the interest of ensuring a 

complete record, we will grant the various motions. 

5

 Global Aviation is the parent company of World Airways, Inc. and North American Airlines, Inc. 
3 

Responsive Pleadings to Application 

CSI states that the granting of CSI’s exemption is in the public interest as there is an inadequate 

availability of current services from SIN 599-4 direct air carriers and that allowing brokers to 

continue to perform under SIN 599-5 will increase competition. GSA states 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 contracts the brokers 

may have with other Federal agencies. The supporting parties, in general, note that CSI’s request 

for exemption authority should be granted as it is narrowly limited to a specific GSA contract 

and that CSI has a proven history of reliable operations. CAI requests that the exemption sought 

by CSI be broadened by the Department to include all air charter brokers now or hereafter listed 

by GSA on Schedule SIN 599-5 (or any successor schedule). 

The opposing parties, including Omni and Sun Country, argue that CSI is a broker and not a 

direct air carrier under the Department’s rules. In general, the opposing parties argue that CSI 

has not presented the Department with any compelling reasons for extending to charter brokers 

the right to sell air transportation. Some of the opposing parties, including NACA, USA 3000, 

and Sundowner, suggest that the issues raised by CSI and other brokers should be considered as 

part of a rulemaking proceeding. In response to CSI’s argument that there is an inadequate 

availability of SIN 599-4 air carriers, the opposing parties, most notably NACA and Miami Air, 

maintain that ample air transport capacity exists to meet the foreseeable needs of all U.S. 

government agencies. 

CSI, in its reply, asserts that the opposing parties’ arguments lack merit and should be 

disregarded. CSI states that Miami Air’s and NACA’s assertion that ample lift is available to 

support the U.S. government’s needs is incorrect; otherwise GSA would not have requested 

solicitations from brokers. CSI notes that none of the opposing parties or NACA members, with 

the exception of Miami Air, are listed on SIN 599-4.6

 CSI argues that this is an illustration of the 

opposing parties trying to eliminate competition (among other air carriers). CSI further argues 

that brokers listed under SIN 599-5 increase competition among the industry and air carriers, 

which reduces prices paid by U.S. government agencies. 

GSA’s Position and Responses 

On December 17, 2009, GSA filed a responsive pleading expressing its support for the general 

principles upon which CSI premises its application for an exemption. 

By letter dated February 12, 2010 to GSA’s General Counsel (placed in this Docket and served 

on the parties), the Department requested additional information seeking a clear and definitive 

formal statement of GSA’s position on CSI’s application. The Department requested that GSA 

address the broader question of whether broker services are essential to GSA’s mission or 

whether GSA has other means to secure the services it needs. 

On March 1, 2010, GSA responded to the Department’s letter. GSA states that it would support 

action, via exemption or otherwise, that would permit air charter brokers to continue to perform 

 

6

 Consolidated Reply of CSI at 3. 
4 

their GSA Multiple Award Schedule (MAS) contracts as well as contracts the brokers may have 

with other Federal agencies. GSA states that acquisition by the Federal Government is distinct in 

several ways from acquisitions in the private sector and does not present the consumer protection 

related concerns typically at issue in the private sector. GSA points out that there are a number 

of ways in which Federal agencies that purchase air charter broker services via SIN 599-5 are 

protected from unscrupulous contractors. In response to the question whether air charter broker 

services are essential to GSA’s mission of acquiring airlift for the Federal Government, GSA 

cites the Department’s Order Granting Emergency Exemption on January 14, 2010, and the 

Order Extending Emergency Exemption on February 12, 2010, to support the relief effort in 

Haiti. GSA states this example demonstrates how a critical need is sometimes met only via air 

charter broker services. 

 

On March 3, 2010, the Department issued a Notice providing an opportunity for interested 

parties to submit comments to GSA’s submission. 

ACANA, CAI, and CSI filed comments concurring with GSA’s March 1 submission. Global 

Aviation filed comments opposing GSA’s March 1 submission. 

CSI requests that the Department grant CSI’s exemption without further delay. CAI urges the 

Department to honor the GSA’s request to refrain from asserting consumer protection authority 

to limit the actions or the options of the air charter brokers to select commercial operators that 

are consistent with the contracting agency’s stated scope of work. ACANA supports GSA’s 

position that the Federal Government, when procuring air transportation, knows full well the 

difference between obtaining air transportation directly from aircraft operators and utilizing the 

services provided by charter brokers. ACANA also agrees with GSA that consumer protection 

concerns are largely absent in this case. 

Global Aviation objects to GSA’s view that the Department should permit “charter brokers to 

continue to perform their GSA MAS contracts as well as contracts the brokers may have with 

other Federal agencies.” Global Aviation states that any relief granted by the Department in 

connection with CSI’s exemption application should be expressly limited to contracts awarded 

under GSA’s MAS, as the record in this proceeding does not support action with respect to the 

airlift procurement practices of any other Federal Government agency. 

Decision 

We tentatively find that it is consistent with the public interest to grant CSI exemption authority 

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

pursuant to contracts arranged under the General Services Administration (GSA) Schedule 

Special Item Number (SIN) 599-5, Air Charter Services-Brokers. We note that the authority is 

narrowly limited to brokers listed on GSA Schedule SIN 599-5 and limited to services pursuant 

to contracts with the Federal Government.7

 We are tentatively according the same authority to 

similarly situated brokers now listed, or that may be listed in the future, on GSA Schedule SIN 

599-5. We will tentatively grant this exemption authority for a period of one year. 

 

7

 Consistent with concerns raised by Global Aviation, we are limiting the exemption authority we are tentatively 

granting here to GSA-administered procurement service. 
5 

As an initial matter, we note that the tentative grant of exemption authority is consistent with 

C-70’s October 2004 Notice. That Notice recognized that air charter brokers can provide 

important public benefits in connection with air transportation, and, importantly, noted that 

brokers could seek exemption authority that could permit them to offer services directly to the 

public in their own right, subject to their implementation of necessary consumer safeguards. 

We further note that our tentative action here would provide GSA with the ability to continue 

using brokers listed on its Schedule SIN 599-5. We have carefully weighed the arguments 

submitted in opposition to the request, in particular those questioning the need for the services of 

air charter brokers. We do not find those arguments to be compelling here. In particular, we 

note the strong support evidenced by GSA, in its March 1 letter, for Department action that 

would permit air charter brokers to continue to perform their activities for that agency. We give 

great weight to the views of GSA in this matter, and find that those views support our tentative 

action that will facilitate its ability to meet its transportation procurement needs. In short, based 

on the totality of the record, we tentatively find that the GSA-administered procurement service 

provides important benefits and we are not persuaded to withhold authority from CSI and 

brokers listed on GSA Schedule SIN 599-5. 

We find that our tentative action here is consistent with other Department actions involving our 

licensing of other indirect air carriers. Specifically, we have previously authorized indirect air 

carriers of both passengers and cargo to conduct operations in air transportation.8

 In those 

instances, we have imposed consumer protection safeguards where appropriate. Under the 

circumstances presented in this proceeding, we do not regard such safeguards as necessary. GSA 

has emphasized that acquisition by the Federal Government is distinct from acquisition in the 

private sector and does not present the consumer-protection-related concerns typically at issue in 

the private sector. Specifically, GSA’s March 1 submission fully discusses the rules and 

protections that govern GSA’s procurement of air services. We are satisfied, given the narrow 

scope of the authority that we are tentatively issuing, to rely on those safeguards here. 

While we will not impose consumer protection conditions, we tentatively find it is in the public 

interest to impose the following conditions on the exemption authority that we are tentatively 

granting to CSI and the other eligible brokers: 

 The brokers may only enter into agreements with air carriers that hold the requisite 

authority to engage in air transportation;9

 All air services arranged by the broker must be authorized in accordance with the Fly 

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

 Before beginning any services under this authority, a new broker must file a notification 

in this docket of its placement on the GSA Schedule SIN 599-5, and a broker must file a 

notification in this docket of its removal from the GSA Schedule SIN 599-5. 

 

8 See 14 CFR Parts 296, 297, and 380. 9

 Brokers may not enter into agreements with carriers operating under 14 CFR Part 125, as these carriers may not 

engage in common carriage operations in air transportation, either directly or indirectly through air charter brokers. 
6 

Several parties suggested that this matter should be handled by rulemaking. The Department 

anticipates initiating a rulemaking that will cover the broader area of aviation brokers generally. 

We tentatively do not find that it is in the public interest to withhold action on CSI’s narrowlyfocused exemption application or on the award of like exemption authority to other similarly 

situated brokers pending completion of a broader rulemaking proceeding, as such action would 

withhold the valuable public benefits that the services of CSI and other brokers provide to the 

U.S. Government. Nor will the action here be considered in any rulemaking developed on this 

matter. 

ACCORDINGLY, 

1. We tentatively grant the request of CSI Aviation Services, Inc. for exemption authority to 

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

to contracts arranged under the General Services Administration (GSA) Schedule Special Item 

Number (SIN) 599-5, Air Charter Services-Brokers;10 

2. We tentatively grant exemption authority to the aviation brokers currently listed on GSA 

Schedule SIN 599-5, and which may be so listed during the term of this exemption authority, to 

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

to contracts arranged under GSA Schedule SIN 599-5, Air Charter Services-Brokers;11 

3. The exemption authority tentatively granted in ordering paragraphs 1 and 2 is subject to 

the conditions set forth in this order; 

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

effective upon issuance of the final order and will terminate one year from the issue date of this 

order, or upon the issuance of a final rule encompassing this authority;12

5. We grant all motions for leave to file otherwise unauthorized documents, as referenced in 

this order; 

6. We direct any interested parties having objections to our tentative findings and 

conclusions set forth in this order and ordering paragraphs 1 through 2, above, to file their 

objections, in the above-captioned docket, with the Department’s Docket section, U.S. 

Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room 

W12-140, 1200 New Jersey Avenue, SE, Washington, D.C., 20590, no later than Friday, 

March 19, 2010;13

 

10 CSI and any broker listed on GSA Schedule SIN 599-5 may only enter into agreements with air carriers that hold 

the requisite authority to engage in air transportation (see footnote 9 above). 11 Id. 12 Sixty days before the expiration of the exemption authority tentatively granted in ordering paragraphs 1 and 2, we 

will favorably consider a one-year extension of this exemption authority if a rulemaking on this subject is underway 

but not yet final, and GSA advises DOT that such a one-year extension of the exemption authority is essential to 

GSA’s mission of acquiring airlift for the Federal Government. 

13 The original filing should be on 81⁄2" x 11" white paper using dark ink (not green) and be unbound without tabs, 

which will expedite use of our docket imaging system. In the alternative, parties are encouraged to use the 

electronic submission capability available through the Federal eRulemaking Portal (http://www.regulations.gov) and 

follow the online instructions for filing submissions. Additionally, service by facsimile or electronic mail is 
7 

7. If timely and properly supported objections are filed, we will afford full consideration to 

the matters or issues raised by the objections before we take further action;14 if no objections are 

filed, we will deem all further procedural steps to be waived and will proceed to enter a final 

order awarding the authority proposed in this order; and 

8. We will serve this order on the parties to the captioned docket of the 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 on the World Wide Web at: 

http://www.regulations.gov

 

authorized. Parties should include their fax numbers and email addresses on their submissions and should indicate 

the method(s) of service used on their certificates of service. Parties should also provide courtesy e-mail copies of 

their submissions to the U.S. Carrier Licensing Division at: Thuy.Cooper@dot.gov. 14 As we are providing for the filing of objections to the tentative decision, we will not entertain petitions for 

reconsideration of this show-cause order.