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s BayAPPENDIX

Section-by-Section Analysis of the Affinity Group (Pro Rata) Charter Rules, 14 CFR § 212.5

The program of charter flights proposed by Baker’s Bay Associates conforms in many respects with the charter rules establis hed for affinity group (pro -rata) charters. In certain respects, however, some relief fr om the rules is required to enable these services to be made available to Club me mbers. The following analyzes how the proposed operation will conform to these provisions.

Section 212.5(a)

Section 212.5(a) requires that the aircraft be charte red by an organization, no part of whose business is the formation of groups for transportation or solicitation or sale of transportation services, for the purpo se of providing air transportation to its members and their immediate families. Ba ker’s Bay was specifically formed as, and remains, a resort community, and as required by the first part of Section 212.5(a) is not engaged in the business of forming groups for transportation or the sale of transportation services. The proposed charte rs are simply an ancillary service the Club wishes to make available for t he convenience of its members.

Additionally, as mandated by the sec ond part of Section 212.5(a), Baker’s Bay intends specifically to provi de transportation to its members and their families. Baker’s Bay, however, would like to extend these flights to guests of its members, which necessitates the Department’s waiver of the member/family lim itation of Section 212.5(a). Examples of guests would in clude household employees of members, relatives of members other than spouses, ch ildren and parents, and personal and family friends of members. Mem bers who are managers of Bake r’s Bay may also invite prospective members interested in viewing t he properties as their guests. No purchase, trade or other form of compensat ion from a guest will be permitted.

In short, there will be no relevant di stinction between a member’s immediate family and his or her guests, such that this waiver request is in accordance with the intent behind Section 212(a) – th at the charter transportation be limited to members and those closely a ligned with them.

Section 212.5(b)

Section 212.5(b) provides that the c harter must be organized by the organization itself or by an agent (not a principal) for the organizati on or the carrier. This requirement is met, since Baker’s Bay Associates will be directly organizing the charters itself.2 Section 212.5(c)

Section 212.5(c) mandates t hat no solicitation, sales, or participation may take place beyond the bona fide members of the organization and their immediate families (spouse, children and parents). It also requires that the pe rmitted solicitation materials include a specified disclosure. These require ments are satisfied, except that under the requested waiver, passengers on the flight s would include guests of Club members traveling at no charge to the guests.

As explained above, guests would be cl osely aligned with, and invited by, members. Further, no purc hase, trade or other form of compensation from any guest will be permitted, so that as with the Section 215.5(a) waiv er request, there will be no relevant distinction between a member’s immedi ate family and his or her guests. To the extent information materials may be provided to members regardi ng the flights, the materials will include the notice s pecified in Section 212.5(c).

Section 212.5(d)

Section 212.5(d) defines bona fide mem bers of the organization as those who have not joined the organization merely to travel on a charter flight and who have been members of the organization for at least a minimum of six months prior to the commencement of a particular f light. These requirements ar e satisfied, except that Baker’s Bay requests that all of its members be allowed to participate in the flights, regardless of the member’s length of initial me mbership. Individuals join Baker’s Bay at a substantial price in order to purchase ei ther land or homes within the Baker’s Bay community, or, in the case of the limited number of “nat ional” members, to take advantage of the Club’s unriva lled recreational opportunities. They clearly have not joined the Club simply to procure travel on the proposed charter flights, which is presumably the purpose behind the minimum si x-month membership requirement of Section 212.5(d). Baker’s Bay accordingl y requests that the Department waive the requirement under Section 212.5(d) that it s charterers’ members be Baker’s Bay members for at least six months prior to bei ng able to participate in the charter flights.

Section 212.5(e)

Section 212.5(d) requires that the charter price due the direct air carrier be prorated equally among the c harter passengers, excluding children under twelve years of age. This requirement is satisfied in t hat the charter price wil l be prorated equally among Club members parti cipating in the flight, except that the number of family members and guests of a particular Baker’s Bay member traveling on the flight will be factored into the charter pric e for that particular member. Accordingly, a waiver is necessary from Section 212.5(e) in order to employ this pricing formula. In addition, Baker’s Bay accepts to bear, on occasion, a s ubstantial portion of the charter price. This will not require any waiver relief, but will simply result in the flights constituting3 mixed charters as defined in Section 212.2, ra ther than affinity (p ro rata) charters. Further, the Club expects to calculate its costs, for pur poses of allocation amongst participants, on a periodic or seasonal basis, rat her than flight-by-flig ht. Since loads on any given flight may vary considerabl y, and many of the same members will be participating in multiple flight s, it would be unwie ldy, and unfair, to charge different amounts for different flights. Thus, adjustment s may be made going fo rward, after it is ascertained what the actual costs were per-participant.

Section 212.5(f)

Section 212.5(f) requires that an air carrier make r easonable efforts to assure that the charter passengers meet the eligibility requirement s of Section 212.5, and that the carrier obtain and keep on file for two years a certificatio n from the organization that all passengers are eligible for transportation under Section 212.5. In terms of the first mandate, the eligibility requi rements of Section 212.5 will be satisfied as modified through this requested waiver . Regarding the second requi rement, Baker’s Bay will maintain records of all its members who us e the charter services, and will be happy to provide certification of their eligib ility if the Departm ent so requires.

Section 212.8

Section 212.8 contains various provisi ons for protecting charter passengers’ payments. The cost of the c harter flights will be paid by the members of Baker’s Bay on a “per flight basis” to the Club, and any am ounts needed to cover the cost of the flights not provided by passengers will be paid by the Cl ub itself. The direct carrier will receive one payment from Baker’s Bay for each flight which will be placed in its DOT approved escrow account. Baker’s Bay therefore requests that the Department waive the customer payment protection requirements contained in Sect ion 212.8 for these flights beyond the requirement that all funds be place in the carrier’s escrow account as is normal for single entity/ affinity charters.

As Baker’s Bay is a close-knit mem bership organization, whose members pay very substantial initial fees and dues, there is no risk to passenger payments as there might be with public charters or bookings of loosely affiliated organizations. It is accordingly in the public interest to waive the customer payment protection requirements of 14 CFR Section 212.8 and avoid the associated expenses imposed therein.