Order 2015

- 3

- 18

Served: March 27, 2015

Issued by the Department of Transportation

on the 27 th day of 2015

Fitness Determination of

JET AVIATION FLIGHT SERVICES, INC.

for certificate s of public convenience and necessity

under 49 U.S.C. § 41102 to engage in interstate and foreign charter air transportation of persons,

property

, and mail Docket s DOT

- OST

- 2014

- 0097 and

DOT

- OST

- 2014

- 0098

ORDER TO SHOW CAUSE Summary

By this order, we tentatively conclude that Jet Aviat ion Flight Services, Inc. (“ JAFS ”)

, is a citizen of the United States and is fit, willing, and able to provide interstate and foreign charter air transportation of persons, property, and mail

, using one large aircraft

, 1 and should be issued certificate s of public convenience and necessity authorizing such operations, subject to conditions.

Background

Section 41102 of Title 49 of the United States Code (the “ Transportation Code”) directs us to determine that applicants for certificate authority to provide interstate and foreign charter air transportation of

persons, property

, and mail are “fit, willing, and able” to perform such transportation and to ensure that all operations relating to this authority conform to the provisions of the Transportation Code and the regulations and requirements of the Department. In making fitness findings, the Department uses a

three

- part test that reconciles the Airline Deregulation Act’s liberal entry policy with Congres s’ concern for operational safety and consumer protection. The three areas of inquiry that must be addressed in order to determine a company’s fitness are whether the applicant (1) will have the managerial skills and technical ability to conduct the propo sed operations ; (2) will have access to resources sufficient to commence operations without posing an undue risk to consumers or their funds ; and (3) will comply with the Transportation Code and regulations imposed by Federal and State agencies. We must a lso find that the applicant is a U.S. citizen.

1 A “large” aircraft is defined as any aircraft with an original design capacity of more than 60 passenger seats or 18,000 pounds payload. UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

U N I T E D S

T A T E S O F A

M E R I C A D E P A R T M E N T O F T R A N S P O R T A T

I O N2

On June 6, 2014

, JAFS filed applications in Dockets DOT

- OST

- 201 4

- 0097 and DOT

- OST

- 20 14

- 0098

, requesting certificates issued under 49 U.S.C. § 41102 authorizing it to engage in interstate and foreign charter air transportation of persons, property

, and mail using one large aircraft

. JAFS accompanied its applications with information required by s ection 204.3 of our regulations for an examination of its fitness to hold such authority. JAFS filed additional information supplementing its applications on August 29, 2014

.

We have received no answers to the applications and no special issues regarding the applicant have come to our attention. Under these circumstances, we propose to decide the issue of JAFS ’ fitness on the basis of the written record. As discussed below, we tentatively conclude that JAFS is a U.S. citizen and is fit, willing, and abl e to operate its proposed air service, subject to conditions. However, we will give interested persons an opportunity to show cause why we should not adopt as final these tentative findings and conclusions.

FITNESS

The Applicant

JAFS was organized as a corporation on September 18, 1985

, under th e laws of the State of Maryland.

JAFS is an aircraft management company and currently operates a fleet of 33 small aircraft 2 for private individuals and corporate personnel under Part 135 of the Federal Aviation Regulations ( 14 CFR

Part 135) and Part 298 of the Department’s economic regulations (14 CFR Part 298)

. Headquartered in Teterboro, New Jersey, JAFS also has offices in Palm Beach, Florida, Chicago, Illinois, and Van Nuys,

California.

Managerial Competenc e

JAFS is a wholly

- owned subsidiary of Jet Aviation Holdings USA (“Jet Holdings”), and Jet Holdings is a wholly

- owned subsidiary of Jet Aviation International, Inc. (“Jet International”). Jet International, in turn, is wholly

- owned by General Dynamics Corporation (“General Dynamics ”)

. The following

individuals serve as the officers and board members for JAFS as well as other companies owned by

General Dynamics

. 3

Name Position Citizenship

Donald Paddock President U.S.

William Bueka Vice President U.S.

Julie Aslaksen Secretary U.S. David Fogg Treasurer U.S.

Bernard Carlisle , Jr. Vice President and Assistant Treasurer Non

- U.S.

Jason Wright Aiken Member of the Board of Directors U.S.

2 “ Small aircraft ” is defined as any aircraft originally designed to have a maximum passenger capacity of 60 seats or less or a payload capacity of no more than 18,000 pounds.

3 According to General Dynamics ’ 2013 Annual Report, the company has four business groups: A erospace, Combat Systems, Marine Systems, and Informa t ion Systems and Technology . JAFS falls within the Aerospace Group along with other aviation and aerospace related companies. None of J AFS’ officers or board members are employed directly by JAFS ;
rath er, they are employed either directly by General Dynamics or by one of the companies with in the General Dynamics ’ Aerospace Group

.3

Gre g ory Gallopoulos Member of the Board of Directors U.S. Joseph Lombardo Member of the Board of Directors U.S.

Robert Smith Member of the Board of Directors U.S.

In January 2015, Mr. Donald Paddock became Senior Vice President and Gene r al Manager of U.S. Aircraft Services and Head of Group Business Developmen t & Strategic Planning for Jet Holdings. At that time, he was also appointed to serve as President of JAFS. Before assuming these positions with Jet Holding and JAFS, he served as Senior Vice President of Business Development & Strategic Planning

for Jet International since January 2007. Prior to that, he worked for SH&E IC F as a Director, Vice President, and Managing Officer from May 2006 to December 2006.

Mr. William Beuka, a certificated public accountant, has been the Chief Financial Officer for Jet Holdings since January 2006. He also serves as Vice President for JAFS. Before assuming his current responsibilities, he was Controller for Jet Holding s from March 2002 to December 2005. Prior to coming to Jet Holdings, Mr. Beuka was the Director of Corporate Accounting for KPMG from May

200 0 to October 2001 ; Director of Finance for Sefar America, Inc., from June 1993 to September 1999 ; and Audit Manager for Deloitte & Touche from June 1985 to June 1992.

Ms. Julie Palmer Aslaksen became Staff Vice President, Associate General Counsel, and Assistant Secretary for General Dynamics in February 2009. She also serves as Secretary for JAFS. Before

a ssuming these responsibilities, she was Assistant General Counsel and As sistant Secretary (December

2006

– January 2009) and Senior Counsel (June 2003

– November 2006) for General Dynamics . Before that, she was an A ssociate with Dickstein, Shapiro, Morin & Oshinsky, LLP from September 1999 to

June 2003.

Mr. David Fogg became Vice President and Treasurer for General Dynamics in March 1998. He initially joined the company in November 1991 as the Director of Risk Management, and in January 1994, he became the company’s Finance Director and Assistant Treasurer. He held that pos ition until May 1994 when he became Staff Vice President and Treasurer, a position he held until assuming his current position in March 1998. Mr . Fogg also briefly served on the Board of Directors for Sandy Springs Bank from June 2009 to December 2009.

M r. Bernard Carlisle, Jr. has been Vice President and Assistant Treasurer for Jet Holdings since February 2007. He also serves as Vice President and Assistant Treasurer for JAFS. Before coming to Jet Holdings, he was a Senior Accountant for Strategic Outp atient Services from August 2005 to February 2007. Prior to that, he was an A ccountant and O ffice M anager for Africa Imports from February 2000 to July 2005.

Mr. Jason Wright Aiken , a certified public accountant, became Senior Vice President and Chief

Fi nancial Officer of General Dynamics in January 2014. He also serves as a member of JAF S’ Board of

Directors. He initially joined the company in April 2002 and has held various positions of increasing responsibility, including Vice President, Senior Vice President, and C hief Financial Officer

– Gulfstream (September 2011

– December 2013), Vice President and Controller (April 2010

– August 2011), Staff Vice President, Accounting (July 2006

– March 2010) , and Director of Consolidation Accounting (April 2002

– July 2006).4

Mr. Gregory Gallopoul o s has served as Senior Vice President, General Counsel, and Corporate Secretary for General Dynamics since January 2010. He also serves as a member of JAF S’ Board of Directors. He initially joined the General Dynamics in July 2008 as Vice President and Deputy General

Counsel. Before this , Mr. Gallopoulos worked as a lawyer at Jenner & Block, LLP since May 1984.

Mr. Joseph Lombardo has been Executive Vice President with General Dynamics Corporation since April 2007. In April 2007, he also became the President of Gulfstream Aerospace Corpo r ation and served in that capacity until September 2011. Prior to that, Mr. Lombardo held various positions of increasing responsibility with Gulfstream Aerospace Corporation, includ ing Vice President and Chief Operating Officer (May 2002

- April 2007), Vice President of Operations December 1998

– May 2002),

and Vice President of Co

- Production (June 1996

- December 1998). Before that, Mr. Lombardo worked

for McDonnell Douglas Corpora tion from August 1979 to June 1996, holding various positions.

Mr. Lombardo currently serves on JAF S’ Board.

Mr. Robert Smith became President of Jet Aviation Group in January 2014 after having served as the company’s Chief Financial Officer since July 2 012. Before coming to Jet Aviation Group, Mr. Smith was the Vice President and Chief Financial Officer for NASSCO, a General Dynamics company, from January 2006 to July 2012. Mr. Smith spent his previous years with Electric Boat, holding various positi ons of increasing responsibility from February 1989 to December 2005. Mr. Smith serves as a

member of JFAS’ Board.

T he following individuals serve as JAFS ’ key management and technical personnel

. 4

Name Position Citizenship

Donald Haloburdo Vice President, General Manager, and Agent U.S. Jon Winthrop Vice President, Managing Director U.S.

William Beversluis Vice President of Aircraft Management & Sales U.S. David Dalpaiz Vice President of Operations U.S.

Matt Feinstein Vice President of Process Management and Director of Safety and Security U.S.

William Thomas Director of Operations U.S. Daniel Von Bargen Director of Flight Standards U.S. Ralph Bonadies Director of Maintenance U.S.

Darrell Hunter Director of Quality Assurance U.S.

Nicholas Guiffre Chief Pilot U.S.

Mr. Donald Ha l oburdo , an Airline Transport Pilot, serves as Vice President, General Manager, and Agent for JAFS . He assumed the position in January 2011 after previously serving as Chi e f Pilot and Vice President of Flight Operations from April 2005 to December 2010. He initially joined JAFS in July 2000 as a pilot and left the company in April 2003 to serve as Interim Director for New World Jet Corp. until March 2004. Mr. Haloburdo served as a naval aviator with the U.S. Navy from May 1998 to

October 2005.

4 All of the individuals listed are employed directly by JAFS. Mr. Haloburdo reports directly to Mr. Paddock.

Mr. Paddock, in turn, reports to Mr. Smith

, who is the President of the Jet Aviation Group.5

Mr. Jon Winthrop became JAFS’ Vic e President and Managing Director for the Western Pacific Region in April 2011. Before coming to JAFS, he was a Senior Advisor with Kerlin Capital Corporation from December 2009 to April 2011. Prior to that, he was Chairman and CEO of The Air Group from November 1980 to December 2009. From January 1978 to August 1980, he was the Vice President of Marketing for Avjet Corporation. Mr. William Beversluis became JAFS ’ Vice President of Aircraft Management & Sales in April 2005. Before that, he worked as the co m pany’s Regional Sales Director since July 2004. Prior to joining JAFS , Mr. Beversluis held a number of positions in the aviation industry, including Aircraft Sales Specialist for Atlas Pilatus (December 2002

– July 2004), Regional Sales Manager for Gu lfstream Aerospace (April 2000

– December 2002), Vice President and Aviation Director for First Union Corporation (October 1998

– February 2000) , and Aviation Director (August

1978

– September 1998).

Mr. David Dalp a i z became Vice President of Operations i n June 2014. He initially joined the company in August 2005 as Vice President of Ground Operations. Previously, Mr. Dalpa i z worked for Jet Aviation Business Jets as Director of Maintenance (June 2004

– August 2005), Senior Maintenance Coordinator (Decemb er 2002

– June 2004), and Maintenance Coordinator (May 1998

– December 2002). Before that, he held various aviation maintenance positions, including Flight Technician with EarthStar Aviation (September 1995

– May 1998), Maintenance Technician for American Cyanamid Corporation (May 1992

– March 1995), and Ai rcraft Maintenance Technician f or Trump Air (May 1989

– Febr u ary 1992). Mr. Dalpiaz holds an Airframe and Powerplant license.

Mr. Matthew Feinstein has been JAFS ’ Vice President of Process Management a nd Director of Safety and Security since February 2012. Mr. Feinstein initially came to JAFS in April 2001 and has held various positions of increasing responsibility, including Vice President of Flight Logistics (November 2006

– March 2010), Director of Charter Sales (October 2006

– August 2005), Director of Fleet Relations (September 2004

– July 2005), Charter Sales Flight Op erations Supervisor (July 2003

– January 2004), Charter Sales Flight Manager (February 2004

– August 2004), Charter Sales Represent ative (February 2003

– June 2003), and Flight Management Representative (April 2001

– January 2003). Mr. Feinstein also worked as a pilot for Primac Air Courier from June 2001 to February 2003.

Mr. William Thomas , an Airline Transport Pilot, serves as JA FS’ Director of Operations. He initially joined the company in January 2012 as the Chief Pilot and served in that position u n til assuming his current position in June 2012. Before coming to JAFS , Mr. Thomas was a program manager for the

Federal Aviat ion Administration (“FAA”) (September 2010

– January 201 2) and Director of Operations for Rectrix Aviation (February 2009

– September 2010). From May 2008 to August 2008, Mr. Thomas was the Manager of Training and Coordination for Sentient Flight Group. Mr. Thomas also worke d for Dayjet Corporation as Director of Operations (April 2005

– July 2006), Chief Pilot (Au g ust 2007

– May 2008) and Director of Flight Standards (July 2006

– May 2008). Additionally, Mr. Thomas has several years of pilot experience having ser ved in that capacity for Beach C apital Management (August 2008

– December 2008), Novell (October 2002

– November 2003), General Electric Company (March 2002

– October 2002), and FlexJet (June 1997

– March 2002).

Mr. Daniel von Bargen, an Air line Transport Pilot, has served as JAFS ’ Director of Flight Standards since June 2011. Before coming to the company, Mr. von Bargen was Director of Compliance for6

FlightSafety International from June 2006 to June 2001. Prior to that, he was a pilot for Pola r Air Cargo (April 2005

– June 2006) and US Airways (June 1987

– April 2005).

Mr. Ralph Bonadies became JAFS ’ Director of Maintenance in March 2009. Previously, he was the Director of Quality Assurance for Airbo r ne Inc.

, from January 2009 to March 2009. Before that, Mr. Bonadies worked for New World Jet Corp ., as Director of Quality Assurance (February 2006

– January 2009) and Quality Assurance Inspector (July 1997

– February 2006). Mr. Bonadies also worked for Executive Air Fleet, Inc. , as Director of Maintenance ( May 1994

– July 1997) and Assistant Director of Maintenance (November 1992

– May 1994). Additionally, Mr. Bonadies worked as Maintenance Coordinator for Jet Aviation Business Jets (June 1989

– November 1992) and Line Maintenance Supervisor fo r PHH Executive Air Fleet (December 1986

– June 1989). He holds an Airframe and Powerplant license.

Mr. Darrell Hunter has been Director of Quality Assurance for JAFS since September 2004. Before coming to JAFS , he was an Operations Manager at UPS from April 2003 to May 2004. Prior to that,

Mr. Hunter worked for United Air l ines as a supervisor, inspector, instructor and technician from January

1990 to March 2003. Mr. Hunter was also a maintenance lead and inspector for General Dynamics

from February 1 987 to December 1989.

Mr. Nic holas Guiffre, an Airline Transport Pilot, has been with JAFS since April 2 00 0. He initially joined the company as a pilot and became Chief Pilot in August 2012. Before coming to JAFS , Mr. Guiffre worked as a pilot for Landi s

- Shaheen Aviation (June 1998

– April 2002) and Northeast Aviation (March 1998

– May 1998). He was also a f light instructor for Amcorps/Sk yline Aviation from April

1996 to June 1998.

In light of these facts, we tentatively conclude that JAFS has the management skills and technical ability to conduct its proposed interstate and foreign charter air t ransportation operations

. 5

Operating P lan and Financial P osition

If granted the certificate authorit y it seeks, JAFS intends to begin passenger charter large aircraft operations using one leased Airbus ACJ 318 aircraft in an executive configuration

. According to JAFS

, this aircraft will be used to serve the global market

, and at least initially, its operations will be primarily

based outside of t he United States. The applicant further notes that it also intends to continue its

small aircraft operations

. 6

In evaluating a n applicant’ s financial fitness, the Department generally ask s that the applicant have

available to it resources sufficient to cover all pre

- operating costs and any negative working capital

5 Before authorizing an air carrier to conduct air transportation operations, the FAA also evaluates the applicant’s key personnel with respect to the minimum qualifications for those positions as prescribed in the Federal Aviation Regulations.

The FAA’s ev aluation of these key personnel provides an added practical and in

- person test of the skills and technical ability

of these individuals. The FAA has advised us that JAFS ’ key technical personnel are acceptable to that agency in their respective positions.

6 As an air taxi operator

, JAFS ’ operations are limited to the use of small aircraft ( i.e., aircraft originally designed to have a maximum passenger capacity of 60 seats or less and a maximum payload capacity of 18,000 pounds or less).7

balance, plus a working capital reserve equal to the operating costs that would be incurred in three months of normal operations. 7

I t has been the Department’s practice to require applicants to demonstrate their financial fitness. 8 Thus, in support of its application for authority, JAFS provided projected first

- year expenses associated with

its small and large aircraft operations at $13.0 million and $4.2 million , respectively. JAFS also provided its pre

- operating expenses total ing approximately $779,850

. 9 We have reviewed the applicant’s projected expenses and believe them to be reasonable. Therefore, under the requirements of

our financial fitness test, we estimate that JAFS would need access to approximately $ 5.0 million. 10

JAFS provided its balance sheet a s of March 31, 201 4

, showing it had current assets of $ 51.2 million and current liabilities of $ 46.9 million , giving the company a posit ive working capital balance of $4.3 million. Further

, JAFS provided financial statements of its parent company, General Dynamics Corporation (“General Dynamics”) , showing the company having approximately $3.6 billion in working capital. 11 Considering that the vast majority of costs associated with the proposed large aircraft operations will be paid b y the aircraft owner and that both JAFS and its parent company have more than

sufficient working capital to meet the Department’s financial f itness requirements, we tentatively

conclude that JAFS has access to financial resources sufficient to commence its proposed operations without posing an undue risk to consumers or their funds

. 12

Compliance Disposition

The applicant states that there are no actions or outstanding judgments against it, its owners, or its key personnel nor have there been any charges of unfair, deceptive or anti

- competitive business practices, or of fraud, felony or antitrust violations brought against any of these parti es in the past ten years. The applicant also states that there are no pending investigations, enforcement actions, or formal complaints filed by the Department against it or its key personnel

. JAFS notes that there is a pending enforcement

7 Because pro jected expenses during the first several months of operations frequently do not include all of the costs that will be incurred during a “normal” period of operations, it is our practice to base our three

- month standard on one quarter of the first year’s op erating cost forecast. In calculating available resources, projected revenues may not be used.

8 See Order 2011

- 9

- 8 , Jet

- A, LLC.

9 JAFS’ pre

- operating costs include office and hangar expenses, insurance, salaries, training, and fuel and maintenance

reserves.
10 The $ 5 .0 million noted here is one

- quarter of the applicant’s forecast of approximately $17.2 million in first

- year expenses equalin g $ 4.3 million, plus $ 779,850 in pre

- operating expenses

. 11 Gene ral Dynamics is a publically

- tr a d ed company and most recent financial filings with the Securities and Exchange Commission show $2.53 billion in net earnings and $30.85 billion in operating revenues.
JAFS notes that it part icipates in General Dynamic s ’s cash pool and all of JAFS ’ cash , except that which is required by
law, is transferred to General Dynamics on a daily basis. Also, all of JAFS ’ cash disbursements are covered daily from

Gener al Dynamics’s accounts.

12 In its application, JAFS provided a copy of the Aircraft Dry Lease and Commercial Operations Agreement between JAFS and the beneficial owner of the ACJ 318. The applicant also submitted a copy of the Aircraft Services Agreement between JAFS and the beneficial owner of the ACJ 318. The applicant requested that these documents be withheld from public disclosure pursuant to section 302.12 of the Department’s rules. By letter dated July 7, 2014, the Department granted the applican t’s request for confidential treatment of these documents.8

action before the FAA associated with a related entity pertaining to that company’s maintenance

manual

. 13

A review of our records and other information available to us has uncovered no information which would reflect negatively on JAFS or any of its key personnel. In a ddition, according to the FAA, the applicant has conducted its operations satisfactorily and th e agency knows of no reason why the air carrier should not be granted the authority it is seeking. Moreover, JAFS notes that neither it nor any of its key perso nnel have been involved in an accident or incident in the year preceding its application or at any time in the past which remains under investigation by the FAA, the National Transportation Safety

Board

, or the company itself.

In light of these circumstan ces, we tentatively find that JAFS has the proper regard for the laws and regulations governing its services to ensure that its aircraft and personnel conform to applicable safety standards and that acceptable consumer relations practices will be followed.

CITIZENSHIP

Section 41102 of the Transportation Code requires that certificate authority to engage in air transportation be held only by citizens of the United States as defined in 49 U.S.C. § 40102(a)(15). The

Statute also requires that the president and two

- thirds of the Board of Directors and other managing

officers be U.S. citizens

, that at least 75 percent of the outstanding voting interest be owned by U.S.

citizens , and that the air carrier must be under the actual con trol of U.S. citizens.

As mentioned previously, JAFS is a wholly

- owned subsidiary of Jet Aviation Holdings USA (“Jet Holdings”), and Jet Holdings is a wholly

- owned subsidiary of Jet Aviation International, Inc

. (“Jet International”). Jet International, in turn, is wholly

- owned by General Dynamics. The Department has reviewed the citizenship of General Dynamics and finds it to be owned and controlled by U.S.

citizens. 14 In addition, t he applicant has submitted an affidavit attesting that it is a citizen of the United States within the meaning of the Statute , that all managers and key technical personnel are U.S. citizens, and that it is owned and controlled by U.S. citizens. Finally, JAFS is managed independen tly from

13 JAFS states that on March 17, 2014, the FAA issued a Notice of Proposed Civil Penalty to Jet Aviation Teterboro, LP , a
subsidiar y of JAFS’ parent company, alleging the company had failed to follow the JAFS maintenance manual.

14 General Dynamics is a publically

- traded company. The applicant states that according to General Dynamics’ proxy statement, there are only four beneficial owners holding more than 5 percent in the company: Capital Re search Global

Investors (10 percent) , Longview Asset Management, LLC (9.7 percent) , Evercore Trust Company , N.A. (7.6 percent) , and The Vanguard Group (5.5 percent)

. The applicant claims that each of these entities is a U.S citizen. Organized under the laws of Delaware and headquartered in California, Capital Research Global Investors is an investment advisor and a division of Capital Research and Management Company (“CRMC”). CMRC is part of The Capital Group Companies, Inc., which is also headquarted i n California. Longview Asset Management, LLC , was organized under the laws of the State of Delaware and is headquarted in Chicago, Illinois. The company manages the common stock held by a number of persons and entities. Mr. James Star is the president of the company and Ms. H. Debra Levin is the managing member. Both individuals reside in Chicago, Illinois. Evercore Trust Company , N.A. is a national bank located and chartered in New York. It is a subsidiary of Evercore Partners, Inc., which is a publ ically

- traded company. The applicant notes that no one holds a 10 percent or more beneficial interest in the company. Further, JAFS notes that the company is the beneficial owner of the General Dynamics shares solely in its capacity as independent fiducia ry and investment manager for the assets of the General Dynamics stock fund under the General Dynamics 401(k) plan master trust. The Vanguard Group is an investment advisor located in and organized under the laws of Pennsylvania.9

General Dynamics, having its own president, officers, and board of directors, which we have reviewed,

and there is no other information before us that would lead us to conclude that JAFS is not controlled by

U.S. c itizens

.

I n view of the foregoing, we tentatively conclude that JAFS is a U.S. c itizen and that it is fit, willing, and able to provide air transportation services as a U.S. certificated air carrier, subject to conditions.

PUBLIC CONVENIENCE AND NECESSITY

No finding of consistency with the public convenience and necessity is required for the award of authority for interstate charter air transportation of persons, property

, and mail under section 41102, although such a finding is required for authority to en gage in foreign charter air transportation.

We tentatively find that the foreign charter air transportation proposed by JAFS is consistent with the public convenience and necessity. By Order 78

- 7

- 106, which instituted the Former Large Irregular Air

Servi ce Investigation , the Civil Aeronautics Board found that there was a continuing demand and need for additional charter air carriers. These findings remain valid and apply to the authority sought by

JAFS . Therefore, if JAFS meets the fitness requirements of the Transportation Code, it will receive certificates authorizing it to engage in interstate and foreign charter air transportation of persons, property

, and mail under section 41102. 15

OBJECTIONS We will give interested persons 14 days following the se rvice date of this order to show cause why the tentative findings and conclusions set forth here should not be made final; answers to objections will be due within 7 days thereafter. We expect such persons to direct their objections, if any, to the applic ation and points at issue and to support such objections with detailed economic analyses. If an oral evidentiary hearing or discovery procedures are requested, the objector should state in detail why such a hearing or discovery is considered necessary, an d what material issues of decisional fact the objector would expect to establish through a hearing or discovery that cannot be established in written pleadings. The objector should consider whether discovery procedures alone would be sufficient to resolve material issues of decisional fact. If so, the type of procedure should be specified ( See Part 302, Rules 19 and 20); if not, the reasons why not should be explained. We will not entertain general, vague, or unsupported objections. If no substantive ob jections are filed, we will issue order s that will make final our tentative findings and conclusions with respect to JAFS ’ fitness and certificate authority.

CERTIFICATE CONDITIONS AND LIMITATIONS

If JAFS is found fit and issued the certificate s it seeks, its authority will not become effective until the air carrier has fulfilled all of the requirements for effectiveness as set forth in the terms and conditions

attached to its certificate s

. Among other things, this includes (1) our receipt of ev idence of JAFS authority from the FAA authorizing such operations; (2) evidence of liability insurance coverage that meets the requirements of section 205.5(b) of our rules; (3) a statement of changes it may have undergone since its fitness was examined; a nd (4) evidence that JAFS continues to have adequate

financial resources available to it.

15 Pursuant to 49 U.S.C. § 41307, issuance of foreign certificate authority to the applicant is subject to Presidential review.10

We also wish to remind JAFS of the requirements of 49 U.S.C. § 41110(e). Specifically, that section requires that, once an air carrier is found fit initially, it must remain fit in order to hold its authority. To be assured that certificated air carriers continue to be fit after effective authority has been issued t o them, we require that they supply information describing any subsequent substantial changes they may undergo in areas affecting fitness. Therefore, if JAFS is issued effective certificate authority and subsequently proposes substantial c hanges in its o w nership, management, or operations, it must first comply with the requirements of section 204.5 of our rules. 16

Moreover, as discussed in the FITNESS section of this order, our finding of fitness for JAFS is based on the operating plans described in its application, namely, performing passenger charter air transportation using one large aircraft. 17 Were the applicant to propose to expand its operations to include additional large aircraft, our fitness findings, particularly involving the adequacy of JAFS ’ management and financial resources, might no longer apply. Therefore, should JAFS desire to operate additional large aircraft, it must first provide the Department with at least 45

- days advance notice of such plans and provide updated information establi shing it s fitness for such expansion. The compliance of the company with this requirement is essential if we are to carry out our responsibilities under section 41110(e). 18

Finally, if JAFS is granted effective authority, it would be required to submit a detailed progress report,

within 45 days following the end of its first year of certificated flight operations, to the Air Carrier Fitness Division. The submission of a first year progress rep ort is conditioned upon all newly certificated air carriers and was adopted as policy by the Department to aid in monitoring the fitness of new air carriers. The report should include a description of the air carrier’s current operations (number and type of aircraft, principle markets served, total number of full

- time employees), a summary of how its operations have changed during the year, a discussion of any changes it anticipates from its current operations during its second year, current financial stat ements, 19 and a listing of current senior management and key technical personnel. The air carrier should also be prepared to meet with staff members of the Fitness Division to discuss its current and future operations.

16 The air carrier should contact our Air Carrier Fitness Division to report proposed substantial changes in its operations, ownership, or management, and to determine what additional information, if any, will be required under section 204.5. In addition, by notice dated July 21, 1998, the Department requested air carriers to provide a 30

- day advance notification of any proposed change in ownership, res tructuring, or recapitalization. If the air carrier fails to file this updated information or if the information fails to demonstrate that the air carrier will continue to be fit upon implementation of the substantial chan ge, the Department may take such action as is appropriate, including enforcement action or steps to modify, suspend, or revoke the air carrier's certificate authority.

17 This limitation does not apply to the number of small aircraft JAFS can operate

. 18 We also remind JAFS about the requirements of section 204.7 of our rules. This section provides, among other things, that (1) the certificate authority granted to a company shall be revoked if the company does not commence actual fl ight operations under that authority within one year of the date of the Department's determination of its fitness; (2) if the company commences operations for which it was found fit and subsequently ceases such operations, it may not resume certificated operations unless its fitness has been redetermined ; an d (3) if the company does not resume operations within one year of its cessation, its authority shall be revoked for dormancy.

19 These financial statements should include a balance sheet as of the end of the company’s first full year of actual

certificate d flight operations and a 12

- month income statement ending that same date.11

ACCORDINGLY,

1. We direct all interested persons to show cause why we should not issue order s making final our tentative findings and conclusions stated above and award certificate s to Jet Aviation Financial Services,

Inc.

, authorizing it to engage in interstate and foreign charter air transportation of persons, property and mail, using one large aircraft, subject to the attached specimen Terms, Conditions, and Limitations.

2. We direct any interested persons having objections to the issuance of order s making final any of th e proposed findings, conclusions, or award of authority set forth here to file them with Department of Transportation Dockets, 12 00 New Jersey Avenue, S E

, Room W12

- 140

, Washington, D.C. 20590, in

Dockets DOT

- OST

- 201 4

- 0097 and DOT

- OST

- 20 14

- 0098 and serve th em upon all persons listed in Attachment A no later than 14 days after the service date of this order; answers to objections shall be

filed no later than 7 business days thereafter.

3. We direct that should Jet Aviation Financial Services, Inc., want to operate more than one large aircraft, it must first provide the Department with at least 45 days’ notice and demonstrate its fitness for such operations.

4

. If timely and properly supported objections are filed, we will accord full consideration to the matters or issues raised by the objections before we take further action. 20

5

. In the event that no objections are filed, we will consider all further procedural steps to be waived and we will enter an order making final our tentative findings and conclus ions.

6

. We will serve a copy of this order on the persons listed in Attachment A.

7

. We will publish a summary of this order in the Federal Register.

By:

SUSAN L . KURLAND Assistant Secretary

for Aviation and International Affairs

An electronic version of this document is available on the World Wide Web at: http://w ww.regulations.gov

20 Since we have provided for the filing of objections to this order, we will not entertain petitions for reconsideration.

### Attachment


### SPECIMEN Terms, Conditions, and Limitations

JET AVIATION FLIGHT SERVICES, INC.

is authorized to engage in interstate charter air transportation of persons, property and mail between any point in any State, territory, or possession of the United States or the District of Columbia, and any other point in any of those entities.

This authority is subject to the following provisions:

(1) The authority to operate under this certificate will not become effective until six (bu siness) days after the Department has received the following documents; provided

, however

, that the Department may stay the effectiveness of this authority at any time prior to that date:

(a) A copy of the holder's Air Carrier Certificate and Operations Specifications authorizing such operations from the Federal Aviation Administration (FAA).

(b) A certificate of insurance on OST Form 6410 evidencing liability insurance coverage meeting the requirements of 14 CFR 205.5(b) for all of its aircraft.

(c) A statement of any changes the holder has undergone in its ownership, key personnel, operating plans, financial posture, or compliance history, since the date of the

Show Cause Order in this case.

(d) A revised list of pre

- operating expenses already paid an d those remaining to be paid, as well as independent verification that the holder has available to it funds sufficient to cover any remaining pre

- operating expenses and to provide a working capital reserve equal to the operating costs that would be incurre d in three months of operations.

(2) Pending receipt of effective authority, the holder may not accept payment of any kind (i.e., cash, check, or credit card), issue tickets for the operations proposed under this certificate,

or enter into contracts with charter operators, and any advertisement by the holder must prominently state: "This service is subject to receipt of government operating authority."

(3) The holder shall at all times conduct its operations in accordance with the regulations prescribed by the Department of Transportation for the services authorized by this certificate, and with such other reasonable terms, conditions, and limitations as the Department of Transportation may prescribe in the public interest.

(4) The holder's authority und er this certificate is effective only to the extent that such operations are also authorized by the Federal Aviation Administration (FAA), and comply with2

all U.S. Government requirements concerning security , including, but not limited to 49 CFR Part

1544

. ∗

(5) The holder shall at all times remain a "Citizen of the United States" as required by 49 U.S.C. 40102(a)(15).

(6) The holder shall maintain in effect liability insurance coverage as required under 14

CFR Part 205. Failure to maintain such insuranc e coverage will render a certificate ineffective, and this or other failure to comply with the provisions of Subtitle VII of Title 49 of the United States Code or the Department's regulations shall be sufficient grounds to revoke this certificate.

(7) The holder is not authorized to engage in air transportation operations between points within the State of Alaska.

(8) Should the holder propose any substantial chang e in its ownership, management, or operations (as defined in 14 CFR 204.2(l)), it must first comply with the requirements of 14 CFR

204.5.

(9) In the event that the holder does not commence actual flying operations under this certificate within one year of the date of the Department's determination of its fitness, its authority shall be revoked for dormancy, unless the holder is conducting operations under another type of certificate authority. Further, in the event that the holder commences operations for which it was found "fit, willing, and able" and subsequently ceases all such operations, i ts authority under all certificates held shall be suspended under the terms of 14 CFR 204.7 and the holder may neither recommence nor advertise such operations unless its fitness to do so has been redetermined by the Department. Moreover, if the holder do es not resume operations within one year of its cessation, its authority shall be revoked for dormancy.

∗ To assure compliance with all applicable U.S. Government requirements concerning security, the holder shall, before commencing any new service (including charter flights) to or from a foreign airport, contact its Principal Security Inspector (PSI) to advi se the PSI of its plans and to find out whether the Transportation Security Administration has determined that security is adequate to allow such airport(s) to be served.

### Attachment


### SPECIMEN Terms, Conditions, and Limitations

JET AVIATION FLIGHT SERVICES, INC.

is authorized to engage in foreign charter air transportation of persons, property

, and mail:

Between any place in the United States and any place outside thereof.

This authority is subject to the following provisions:

(1) The authority to operate under this certificate will not become effective until six (business) days after the Department has received the following documents; provided

, however

, that the Department may stay the effectiveness of this authority at any time p rior to that date:

(a) A copy of the holder's Air Carrier Certificate and Operations Specifications authorizing such operations from the Federal Aviation Administration (FAA).

(b) A certificate of insurance on OST Form 6410 evidencing liability insurance coverage meeting the requirements of 14 CFR 205.5(b) for all of its aircraft.

(c) A statement of any changes the holder has undergone in its ownership, key personnel, operating plans, financial posture, or compliance history, since the date of the

Show C ause Order in this case.

(d) A revised list of pre

- operating expenses already paid and those remaining to be paid, as well as independent verification that the holder has available to it funds sufficient to cover any remaining pre

- operating expenses and t o provide a working capital reserve equal to the operating costs that would be incurred in three months of operations.

(2) Pending receipt of effective authority, the holder may not accept payment of any kind (i.e., cash, check, or credit card), or enter into contracts for the operations proposed under this certificate, and any advertisement by the holder must prominently state: "This service is subject to receipt of government operating authority."

(3) The holder shall at all times conduct its operation s in accordance with the regulations prescribed by the Department of Transportation for the services authorized by this certificate, and with such other reasonable terms, conditions, and limitations as the Department of Transportation may prescribe in the public interest.

( 4 ) The holder shall at all times conduct its operations in accordance with all treaties and agreements between the United States and other countries, and the exercise of the privileges granted by this certificate is subject to compliance with such treaties and agreements and with any orders of the Department of Transportation issued under them or for the purpose of requiring compliance with them.2

(5 ) The exercise of the authority granted here is subject to the holder's first obtaining fr om the appropriate foreign governments such operating rights as may be necessary.

( 6 ) The holder's authority under this certificate is effective only to the extent that such operations are also authorized by the Federal Aviation Administration (FAA), and comply with all U.S. Government requirements concerning security , including, but not li mited to 49 CFR Part

1544

. ∗

( 7

) The holder shall at all times remain a "Citizen of the United States" as required by 49 U.S.C. 40102(a)(15).

( 8 ) The holder shall maintain in effect liability insurance coverage as required under 14

CFR Part 205. Failure to maintain such insurance coverage will render a certificate ineffective, and this or other failure to comply with the provisions of Subtitle VII of Title 49 of the United States Code or the Department's regulations shall be sufficient grounds to revoke t his certificate.

( 9 ) Should the holder propose any substantial change in its ownership, management, or operations (as defined in 14 CFR 204.2(l)), it must first comply with the requirements of 14 CFR

204.5.

(1 0 ) In the event that the holder does not comm ence actual flying operations under this certificate within one year of the date of the Department's determination of its fitness, its authority shall be revoked for dormancy, unless the holder is conducting operations under another type of certificate aut hority. Further, in the event that the holder commences operations for which it was found "fit, willing, and able" and subsequently ceases all such operations, its authority under all certificates held shall be suspended under the terms of 14 CFR 204.7 an d the holder may neither recommence nor advertise such operations unless its fitness to do so has been redetermined by the Department. Moreover, if the holder does not resume operations within one year of its cessation, its authority shall be revoked for dormancy.

∗ To assure compliance with all applicable U.S. Government requirements concerning se curity, the holder shall, before commencing any new service (including charter flights) to or from a foreign airport, contact its Principal Security Inspector (PSI) to advise the PSI of its plans and to find out whether the Transportation Security

Administ ration has determined that security is adequate to allow such airport(s) to be served.Attachment A

SERVICE LIST FOR JET AVIATION FLIGHT SERVICES, INC.

MS VALERI FATTOROSS

SALES CONTRACT ADMINISTRATOR

JET AVIATION FLIGHT SERVICES INC

112 CHARLES LINDBERGH DRIVE

TETERBORO NJ 07608 MR MARK MAZOR

CERTIFICATION SECTION MANAGER

FAA AFS

- 900

45005 AVIATION DRIVE SUITE 131

DULLES VA 20166

MR CHIP NOTTINGHAM

PRINCIPAL

CHARLES D NOTTINGHAM PLLC

1701 PENNSYLVANIA AVENUE NW

SUITE 300

WASHINGTON DC 20006 MR PETER LYNCH AGC

- 300

ASST CHIEF COUNSEL FOR ENFORCEMENT

FEDERAL AVIATION ADMINISTRATION

800 INDEPENDENCE AVE SW

WASHINGTON DC 20591

MR DAVID C AGEE

MS AMANDA E TUMMONS

HUSCH BLACKWELL LLP

901 ST LOUIS STREET

SUITE 1800

SPRINGFIELD MO 65806 OFFICE OF AIRLINE INFORMATION

DOT/R ITA/BTS

1200 NEW JERSEY AVE SE

WASHINGTON DC 20590