Order 2013

- 11

- 21

Served: November 25, 2013

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 25 day of November, 2013

Fitness Determination of

CORPORATE FLIGHT MANAGEMENT , INC.

as a commuter air carrier under 49 U.S.C. § 41738 Docket DOT

- OST

- 2013

- 0061

ORDER TO SHOW CAUSE

PROPOSING ISSUANCE OF COMMUTER AIR CARRIER AUTHORITY

Summary

By this order, we tentatively find that Corporate Flight Management , Inc. ( “ CFM ” )

, is a citizen of the United States and is fit, willing, and able to conduct scheduled passenger operations as a

commuter air carrier.

Background

Section 41738 of Title 49 of the United States Code (“the Statute”) and section 298.21(d) of the Department’s Aviation Economic Regulations direct us to determine whether companies proposing to provide scheduled passenger service as commuter air carriers are “fit, willing, and able to perform the service,” and to ensure that all operations relating to this service conform to the safety standards established by the Federal Aviation Administration ( “ FAA ” ). In making fitness findings, the Depar tment uses a three

- part test that reconciles the Airline Deregulation Act’s liberal entry policy with Congress’ concern for operational safety and consumer protection. The three areas of inquiry that must be addressed in order to determine a n air carrier’ s fitness are whether the applicant: (1) will have the managerial skills and technical ability to conduct the proposed operations, (2) has sufficient financial resources to commence the operations proposed without posing an undue risk to consumers or their funds, and (3) will comply with the Statute and regulations imposed by federal and state agencies. We must also determine that the applicant is a U.S. citizen.2

On March 22, 2013

, CFM filed an application in Docket DOT

- OST

- 2013

- 0061 for authority to provide scheduled passenger operations as a commuter air carrier pursuant to section 41738 of

the Statute. CFM accompanied its application with the fitness information required by section 204.3 of our regulations. 1

No answers were file d to the application and no other issues regarding the applicant have come to our attention. Under these circumstances, we propose to decide the issue of the applicant's

fitness on the basis of the written record. U pon review of the information in the app lication and the safety and compliance information on the air carrier received from the FAA, we tentatively

conclude that CFM is a U.S. citizen and has met the fitness test to conduct commuter operations. We will, however, give interested parties an oppor tunity to show cause why we should not adopt

as final our tentative determination that CFM is fit, willing, and able to provide commuter

service.

FITNESS The Company

B ased in Smyrna, Tennessee

, CFM was incorporated on July 26, 1982 , under the laws of the

State of Tennessee

. 2 The applicant currently operates as an air taxi under Part 298 of the Department’s rules and holds a Part 135 certificate from the FAA using a fleet of 24 small aircraft ranging from 5

- seat Embraer Phenom 100s to 30

- Seat Jetstream 4101s. 3 In addition to its air taxi operations, CFM provides aircraft management services, fixed based operations, aircraft maintenance services under 14 CFR Part 145, and aircraft sales and related services. CFM also provides four round trips per week between Manistee, Michigan

, and Chicago Midway Airport pursuant to a public charter agreement with Public Charters, Inc. CFM is owned by CFM Holdings, Inc. (79.4 percent), Executive Group Holdings, Inc. (2.56 percent), and 15

ind ividuals (17.97 percent), all of whom are U.S. citizens

. 4

Managerial Competence

The following individuals serve on CFM’s Board of Directors:

Mr. James Allen Howell

Mr. Charles H owell IV Mr. David Augustin

1 CFM filed information supplementing its application on June 12 and 26, 2013 , and July 23 and 30, 2013.

2 From 1982 to 1986, CFM provided contract flight department and aircraft management services to owners of aircraft operated under 14 CFR Part 91. In 1984, CFM began operating as a fixed based operator (FBO) and also

became certificated under 1 4 CFR Part 145 as a repair station. In 1986, CFM commenced operation s as an air taxi

under 14 CFR Part 298. In 1995, DOT found CFM fit as a commuter air carrier and the company received Operations Specifications

under 14 CFR Part 121 to conduct scheduled passenger operations from the FAA

. F rom 1996 to 2001, the company

held certificates under Part 135 and Part 121. In 2001, CFM formed Corporate Airlines, Inc. (Corporate Airlines)

, as a wholly

- owned subsidiary and transferred to it the Part 121 commuter operations. C FM subsequently divested Corporate Airlines and retained its air taxi operations and Part 135 certificate.

3 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 tha n 18,000 pounds.

4 CFM ’s ownership is further discussed under the CITIZENSHIP section of this order.3

Mr. Tom Chappell

Mr. John Couri

Mr. Leon Custer s

Mr. James Allen Howell co

- founded CFM in July 1982 , along with Mr. Charles Howell IV and

Mr. David Augustin . He initially served as the company’s Secretary, Treasurer, and Director of Marketing and Sales. From September 1996 to December 1998, he served as the General Manager of Corporate Airlines. 5 Then, in January 1998, he became CFM’s President, Chief Executive Officer (“ CEO ”) , Secretary, and Treasurer. He also serves on CFM’s Board of

Directors.

Mr. Charles Howell IV is a member of CFM’s Boa rd of Directors. In 1985, Mr. Howell became the General Manager of CFM and later became President of the company in 1986. He served as President until 1996 when he co

- founded Corporate Airlines, Inc., and became the President and CEO of that company. Mr . Howell left Corporate Airlines, Inc., in 2002 to join Great Lakes Airlines, Inc. , where he currently serves as the CEO.

Mr. David Augustin serves as Chairman of CFM’s Board of Directors. He has worked with the Corporate Flight family of companies since 1983. Over the years, he has held various positions within the company, including FBO Manager, Parts Manager, and Maintenance Manager. From

1997

- 2012, he served as President of CFM. Mr. Augustin holds a Commercial Pilot certificate,

as well as an Airfra me and Powerplant mechanic certificate.

Mr. Tom Chappell , a CFM Board member, has been Chairman and CEO of Chappell, Smith & Associates, the parent company of CS&A Insurance, since 1981. CS&A Insurance provides aviation insurance, aviation risk managemen t, aviation safety management, and FBO business development services.

Mr. John Couri is also a CFM Board member. He is President of the Couri Foundation, Inc., Founders Hall Foundation, Inc., the Hammon Street Senior Center Foundation, Inc., and serves

o n several other corporate advisory and local non

- profit Boards. Mr. Couri was a co

- founder of Duty Free International, Inc., in 1983, and serve d as its President and CEO until October 1993, Board Chairman until December 1994, and company Consultant until December 1999. In May 2004, Mr. Couri became Chairman of the Board of Trustees at Syracuse University. He served in that capacity until May 2008 and continues as a Life Board Member.

Mr. Leon Custers is CFM’s Chief Operating Officer ( “ COO ” ) and also ser ves on the Board of Directors. Before becoming the COO in October 2010, he served as the Vice President of Maintenance from April 2002 to October 2010. Prior to that, he was the Chief Pilot from August 1997 to April 2002. Before coming to CFM, Mr. Custe rs held several Flight Instructor positions at various companies, including Howell Enterprises, Inc. (1997

- 1999), Falcon h ead FBO (1995

- 1997), and Metropolitan Helicopters, Inc. (1996). Mr. Custers is a certificated Airline Transport

Pilot.

5 See Fn. 2 for more about the relationship between CFM and Corporate Flight, Inc.4

Additionally, the following individuals serve as CFM’s key management and technical personnel.

Mr. James Allen Howell

– President, CEO, Secretary, and Treasurer

Mr. Leon Custers

– Chief Operating Officer Mr. Douglas Cate

– Chief Financial Officer Mr. Ry an Donahue

– Vice President of Maintenance

Mr. Mark Stear

– Vice President of Sales and Marketing Mr. Dwayne McMurry

– Director of Operations

Mr. Allen Peralta

– Director of Maintenance

Mr. Ronald Barnum

– Director of Safety Mr. Stanley White

– Chief Inspe ctor/Director of Quality Assurance

Mr. Jack Hart

– Chief Pilot

All of the individuals listed above are U.S. citizens.

Mr. Douglas Cate has served as CFM’s Chief Financial Officer since 2006. Before coming to CFM, he held several positions within the b anking industry, including Senior Vice President

Commercial Lending at Regions Bank (2003

- 2006), Vice President

– Commercial Lending at
NBC Bank (2002

- 2003) , Regional Manager at Calvary Bank (1996

- 2003), Assistant Vice President at SunTrust Bank (1989

- 1996 ), and Loan Officer at Heritage Federal Savings and Loan

1987

- 1989).

Mr. Ryan Donahue became CFM’s Vice President of Maintenance in April 2012. Previously, he served as the company’s Aviation Service Manager from March 2007 to April 2012. He has

been si multaneously serving as the Director of Maintenance for Harmony Air, LLC since February 2008. Before joining CFM, he served as a Lead Technician and Manager of Stores for Leading Edge Aviation Services from June 2002 to March 2007. Mr. Donahue is a n Airf rame and Powerplant mechanic.

Mr. Mark Stear joined CFM as the Vice President of Sales and Marketing in 2009. Before coming to CFM, he served as Sales Manager for Embraer Executive Jets (2005

- 2009), Citation Shares (2003

- 2005), and Cessna Aircraft Compan y (1999

- 2003). Prior to that, he was a Sales Administrator for Bombardier Learjet (1995

- 1999) and a Marketing Manager for Grimes Aerospace (1994

- 1995).

Mr. Dwayne McMurry became CFM’s Director of Operations in February 1988. He initially joined CFM in 1983 and worked there for a year before taking a position as a pilot for D.A.C.S. Aviation Services (1986

- 1988). He also worked as a pilot for Silverline, LTD (1985

- 1986) and Tennessee Airways (1984

- 1985). Mr. McMurry is a n Airline Transport Pilot.

Mr. Allen Peralta has been CFM’s Director of Maintenance since 2001. He initially joined the company as a Shop Supervisor in 1988. In 1997, he became an Inspector in addition to working as Shop Supervisor. In 1999, Mr. Peralta became C FM’s General Manager until 2000. In 2000, he became Chief Inspector until accepting his current position in 2001. Before coming to CFM, Mr. Peralta worked as an Aircraft Technician for Nashville Jet Center (1980

- 1988), Galaxy5

Corporation ( 1978

- 1990), Cli nical Laboratory (1977

- 1978), and Big Brother Aircraft (1972

- 1977).

Mr. Ronald B a rnum has been the Director of Safety at CFM since 2007. He initially joined CFM in 1991 as a pilot and Line Service Manager. He worked for the CFM until 1998 when he

beca me a Computer Operator for Laboratory Corporation of America ( 1998

- 1999 ) . From 1999

to 2007 , he was the company’s Line Service Training Manager. Mr. Barnum is a pilot.

Mr. Stanley White became CFM’s Chief Inspector/Director of Quality Assurance in 2007. Before that, he had been an Inspection Supervisor Trainee since 2006. Before joining CFM,

Mr. White was a Maintenance Manager and the Director of Maintenance for RegionsAir (formerly Corporate Airlines) from 1996

- 2006. Prior to that, Mr. White worked i n aircraft maintenance for American Airlines (1996) and American Eagle (1989

- 1996). Mr. White is a n Airframe and Powerplant mechanic.

Mr. Jack Hart , a n Airline Transport Pilot with more than 9,000 hours logged, has served as

CFM’s Chief Pilot since 2007. Before coming to CFM

, he worked as a pilot for Capital Cargo International (2006

- 2007), ExpressNet (2004

- 2006), TransMeridian Airlines (2003

- 2004), Southeast Airlines (2003

- 2003), and Express One International, Inc. (1997

- 2002).

In view of the experience and background of the applicant’s key personnel, and the fact that they are currently conducting operations similar to those proposed, we tentatively conclude that CFM has demonstrated that it has the management skills and technic al ability to conduct its proposed scheduled service operations using small equipment

. 6

Operating Proposal and Financial Condition

I n its application for commuter authority, CFM states that in October 2012, it entered into an

aircraft charter contract wi th Public Charters, Inc. (“PCI”), to provide four round trip flights per week between Manistee, Michigan (MBL) and Chicago Midway Airport (MDW). 7 CFM states that it currently operates these flights on Thursday, Friday, Saturday, and Sunday of each week. CFM adds that these flights are conducted as public charter flights under 14 CF R Part 380 with

CFM as the direct air carrier and PCI as the indirect air carrier. 8 According to CFM, PCI receives funding for the operation from the Manistee Blacker Airport A uthority (MBAA), which receives funding from DOT under an Alternate Essential Air Service (EAS) grant. 9

6 Before authorizing an air carrier to conduct air transportation operations, the FAA also evaluates certain of the air carrier’s key personnel with respect to the minimum qualifications for those positions as prescribed in the Federal Aviation Regulations. The FAA’s evaluation 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 CFM ’s management personnel are qualified and acceptable for their positions.

7 The October agreement ended on February 15, 2013. Therefore, on February 16, 2013, CFM entered into another agreement with PCI for the same services, replacing the October 2012 agreement.

8 PCI has filed a public charter prospectus in connection with this application.

9 In April 2012, PCI was selected by MBAA and the community of Manistee/Ludington, Michigan, to provide Alternate EAS on the proposed route. See Docket DOT

- OST

- 1996

- 1711. Under the Alternate EAS grant, MBAA receives program funds and controls their disbursement to PCI. PCI is responsible for contracting with and making payments to the direct air carrier providing the air transportation.6

CFM states that its current arrangement does not meet market demands and that MBAA would like CFM to perform daily flights. However, under CFM’s existing economic authority as an air taxi, the air carrier is limited to four weekly roundtrip flights in a market. Thus, CFM is requesting commuter air carrier authority to allow the air carrier to conduct 7 round trip flights per week in this market. CFM notes that all of the proposed flights will be marketed by PCI and operated as public charter flights.

In light of its service proposal, CFM contends that it will incur no material start

- up costs for the proposed increase in service. CFM states that MBAA has already paid CFM $5,000 to base its aircraft at MBL. CFM also argues that PCI bears the cost of establishing and maintaining the base of operations. CFM states that the air carrier is able to accommodate the increased number of flights without a dding aircraft, operations and maintenance personnel, or infrastructure. Thus, CFM contends that the only expenses the air carrier will incur are direct ly related to the number

hours of increased aircraft utilization. CFM estimates that it operates appro ximately 383 flight hours per year in its existing MBL

- M D W operations. The air carrier expects the proposed three

additional round trip flights to add nearly 289 flight hours, bringing total aircraft utilization to 672 flight hours.

CFM provided a foreca st of its first

- year expenses for the proposed commuter operations . The

air carrier divided its projected costs into two categories: those to be paid by PCI and those to be paid by CFM. CFM expects the first year of commuter operation expenses to total $680,550, of which, $154,044 are to be paid by CFM and $526,505 are to be paid by PCI. We have reviewed these expense projections and find them to be reasonable.

Although the applicant notes that $526,505 of the projected first

- year expenses will be paid by PCI, for the purposes of determining the air carrier’s financial fitness to conduct its proposed scheduled service, the Department will base its financial fitness test on the total operating expenses associated with the proposed commuter operations. Thus, we estimate that CFM will need approximately $ 170,138 to meet the Department’s financial fitness criteria

. 10

In support of its ability to fund its proposed commuter operations, CFM submitted current and historical financial statements. Specifically, the air carrier provided its current income statement

for the 8

- month period ending April 30, 2013, which showed CFM reporting a net loss of $149,911, on operating revenues of $21.1 million. For the 12

- months ended August 31, 2012, 2011, and 2010

, CFM reported net income (loss) of $398,570, ($8,057), and ($420,046), respectively, on operating revenues $34.9, million, $30.3 million, and $22.9 million, respectively. Additionally, the air carrier provided a balance sheet as of April 30, 20 13 , that reflected working capital of $ 4.4 million and total equity of $2.6 million

.

In light of its positive working capital, i t appears that CFM has available funds adequate to cover the financial requirements for its commuter operations. Therefore, we tentatively conclude that

10 To meet the Department’s financial fitness criteria, an applicant should have access to fina ncial resources sufficient to cover its pre

- operating expenses and the expenses that are reasonably projected to be incurred during three months of operations. In calculating available resources, projected revenues may not be used.7

CFM will have access to resources sufficient to allow it to commence the proposed commuter operations without posing an u ndue risk to consumers or their funds. However, we will require that the company provide updated financial information showing that CFM continues to have funds sufficient to meet our financial fitness criteria available to it prior to making its commuter

authorization effective.

Compliance Disposition

CFM appears to have a favorable compliance disposition. Our search of the Department’s enforcement files found no record or problems involving this company, its owners, or its key personnel. There are no FAA enforcement actions pending against the air carrier and it has not had any accidents or incidents since its inception . Further, t he FAA reports that CFM is overall a safe operating air carrier with an extremely cooperative management team, and the agency has

no concerns about CFM ’ s proposed expanded operations

.

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

- competitive busine ss practices, or of fraud, felony or antitrust violations been brought against any of these parties in the past ten years. There have been no formal complaints filed in the past five years or orders issued in the past ten years finding CFM , its key person nel, or persons having a substantial interest in it to be in violation of the Statute or of the Federal Aviation Regulations.

Based on the above, we tentatively conclude that CFM has the proper regard for the laws, rules and regulations governing its services to ensure that its aircraft and operations will conform to applicable safety standards and that acceptable consumer relations practices will be followed.

CITIZENSHIP

49 U.S.C. § 41102 requires that authority to engage in air transportation be hel d only by citizens

of the United States as defined in 49 U.S.C. § 40102(a)(15). That section 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 voti ng interest be owned by U.S. citizens , and that the

air carrier is under the actual control of U.S. citizens.

As noted earlier, CFM is owned by CFM Holdings, Inc. (“CFMH”) (79.4 percent)

, Executive Group Holdings, Inc. (“EGH”) (2.56 percent), and 15 indiv iduals ( 17.97 percent), all of whom

are U.S. citizens. CFMH is owned by Mr. James Allen Howell (38 percent), Mr. David Augustin (38 percent), and Mr. Charles Howell IV (24 percent), all U.S. citizens. EGH is wholly

- owned by Couri and Company, LLC, which in turn, is owned by Mr. John Couri and Mr. Christopher Couri, both U.S. citizens. 11 Further, all of CFM ’s key management and technical personnel are

U.S. citizens

. Moreover, CFM has provided an affidavit attesting that it is a citizen of the United

State s within the meaning of the Statute and that it is actually controlled by U.S. citizens. Our review of the applicant has uncovered no reason to suggest that control of CFM rests with non

U.S. citizens.

11 Mr. John Couri is a member of CFM’s Board of Directors.8

Based on the above, we tentatively conclude that CFM is a citizen of the United States and is fit, willing, and able to provide the limited scheduled passenger service it proposes as a commuter

air carrier.

OBJECTIONS

We will give interested persons 14 days following the service 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 application 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, and what material issues of decisi onal 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 f

act. 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 objections are filed, we will issu e an order that will make final our tentative findings and conclusions with respect to CFM ’s fitness and commuter

air carrier authorization.

EFFECTIVE COMMUTER AUTHORIZATION

CONDITIONS AND LIMITATIONS

In the event that we find CFM fit, willing, and able to conduct the proposed commuter service, we will issue to it a Commuter Air Carrier Authorization. However, that authorization will not

become effective until the air carrier has fulfilled all requirements for effectiveness as set forth in the Terms, Conditions, and Limitations attached to its authorization. 12 Among other things, this includes our receipt of evidence that the air carrier has been issued Operations Specifications by the FAA authorizing scheduled passenger service und er Part 135 of the Federal Aviation Regulations, evidence of liability insurance coverage that meets the requirements of Part 205 of our rules for commuter air carriers, and evidence that CFM continues to have adequate financial

resources available to it t o meet our financial fitness criteria.

Given the relatively limited scope of CFM ’s proposed operations

, we propose to limit any authority issued to the applicant to operations conducted under Part 135. Should CFM subsequently desire to acquire and oper ate larger aircraft that would require certification from

the FAA under Part 121 or certificate authority from the Department under 49 U.S.C. §41102 , it must first be determined fit for such operations. 13

Further, we remind CFM of the requirements of 49 U. S.C. § 41110(e). Specifically, that section requires that, once a n air carrier is found fit initially, it must remain fit in order to hold its

12 We also reserve the right to stay the effectiveness of CFM ’s authority if any new information becomes available

to us that warrants such action.

13 We note that the operation of larger aircraft could require the air carrier to have access to additional funds and hire additional management personnel.9

authority. To be assured that commuter air carriers continue to be fit after effective authority has

been issued to them, we require that they supply information describing any subsequent substantial changes they may undergo in areas affecting fitness. In this regard, should CFM propose any substantial changes in its ownership, management, or operations, it must fi rst comply with the requirements of section 204.5 of our rules. 14 The compliance of the company with this requirement is essential if we are to carry out our responsibilities under the Statute. 15

Moreover, to aid the Department in monitoring the fitness of new air carriers, we have adopted a requirement that all start

- up air carriers must submit a detailed progress report to the Air Carrier Fitness Division within 45 days following the end of the first year of actual flight operations

under the commuter a uthority. The report should include a description of the air carrier’s current operations (number and type of aircraft, principal markets served, total number of full

- time and

part

- time employees), a summary of how these operations have changed during the year, a discussion of any changes it anticipates in its current operations during its second year, current financial statements, 16 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.

ACCORDINGLY:

1. We direct all interested persons to show cause why we should not issue an order finding that Corporate Flight Management , Inc., is fit, willing, and ab le under 49 U.S.C. § 41738 to provide scheduled passenger service as a commuter air carrier using small aircraft pursuant to Part 135 of the Federal Aviation Regulations.

2. We direct any interested persons having objections to the issuance of an order making final any of the proposed findings, conclusions, or the award of authority set forth here to file them

with the U.S. Department of Transportation Dockets, 1200 New Jersey Avenue, S.E., West Building Ground Floor, Rm. W12

- 140, Washington, D.C. 20590, in Docket DOT

- OST

- 2013

- 0061 and serve them 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 days thereafter.

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

- day

advance notification of any proposed change in ownership, restructuring, or recapita lization. If the air carrier fails to file the information or if the information fails to demonstrate that the air carrier will continue to be fit upon implementation of the substantial change, the Department may take such action as is appropriate, includ ing enforcement action or steps to modify, suspend, or revoke the air carrier's commuter authority.

15 We also remind CFM about the requirements of section 204.7 of our rules. This section provides, among other things, that (1) the commuter authority gra nted to a company shall be revoked if the company does not commence actual flying 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 f it and subsequently ceases such operations, it may not resume scheduled passenger operations unless its fitness has been redetermined; and (3) if the company does not resume such operations within one year of its cessation, its authority shall be revoked f or dormancy.

16 These financial statements should include a balance sheet as of the end of the company’s first full year of actual flight operations and a 12

- month income statement ending that same date.10

3. If timely and properly supported objec tions are filed, we will accord full consideration to the matters or issues raised by the objections before we take further action. 17

4. In the event that no objections are filed, we will consider all further procedural steps to be waived, and we will ente r an order making final our tentative findings and conclusions set out here and awarding Corporate Flight Management , Inc., a Commuter Air Carrier Authorization, subject to the attached specimen Terms, Conditions, and Limitations.

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

.

6. 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:// www.regulations.gov

17 Since we have provided for the filing of object ions to this order, we will not entertain petitions for

reconsideration.Attachment Specimen 

### Terms, Conditions, and Limitations

CORPORTATE FLIGHT MANAGEMENT , INC.

is authorized to engage in scheduled passenger air transportation operations as a commuter air carrier.

This authority is subject to the following provisions:

(1) The authority to conduct scheduled passenger operations 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 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 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 to provide a working capital reserve equal to the operating costs that would be incurred in three months of operations.

(2) Pe nding receipt of effective authority, the holder may not accept payment of any kind (i.e., cash, check, or credit card) or issue tickets for scheduled passenger operations, and any advertisement or listing of flights 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 requirements of 14 CFR Part 298 and any other regulations prescribed by the Department of Transportatio n for the services authorized here, 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 is limited to operations conducted pursuant to Part 135 of the Federal Aviation Regulations. In the event that the holder wishes to institute operations that would require

Part 121 certificate from the FAA it must first be determined fit for such operations.2

(5) The holder may not operate aircraft desig ned to have a maximum passenger capacity of more than 60 seats or a maximum payload capacity of more than 18,000 pounds.



### (6 ) The holder's authority is effective only to the extent that such operations are also authorized by the FAA, and comply with all De partment of Transportation requirements concerning security.

(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 this authority 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 authority.

( 9 ) In the event that the holder receives effective scheduled passenger authority, the following additional conditions will apply:

(a) The holder may reduce or terminate service at any point or between any two points, subject to compliance with the provisions of 49 U.S.C. 41734 and all orders and regulations issued by the Department of Transportation under that section.

(b) The holder may not provide scheduled passenger air transportation to or from

Dallas (Love Field), Texas, except within the limits set forth in section 29 of the International Air Transportation Competition Act of 1979, as amended by section 337 of the Department of Transportation and Related Agencies Appropriations Act, 1998.

(1 0 ) Shou ld the holder propose any substantial changes in its ownership, management, or operations (as that term is defined in 14 CFR 204.2(l)), it must first comply with the requirements of

14 CFR 204.5.

(1 1 ) In the event that the holder does not commence actual flying operations as a commuter air carrier under this authority within one year of the date of the Department's determination of its fitness, its commuter authority shall be revoked for dormancy. Further, in the event that the holder commences but subseq uently ceases all scheduled passenger operations, the authority granted here 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 Dep artment. Moreover, if the holder does not resume such operations within one year of its cessation, its commuter authority shall be revoked for dormancy.A ttachment A

SERVICE LIST FOR CORPORTATE FLIGHT MANAGEMENT , INC.

ALLEN HOWELL
PRESIDENT
CORPORATE FLIGHT MAN AGEMENT INC
276 DOUG WARPOOLE RO AD
SMYRNA TN 37167 SUSAN B JOLLIE
COUNSEL FOR CORPORATE FLIGHT
MANAGEMENT INC
7503 WALTON LANE

ANNANDALE VA 22003 PETER LYNCH AGC

- 300
ASST CHIEF COUNSEL F OR
ENFORCEMENT
FEDERAL AVIATION ADMINISTRATION
800 INDEPENDENCE AVE SW
WASHINGTON DC 20591

OFFICE OF AIRLINE IN FORMATION
DOT/RITA/BTS RTS

- 42
1200 NEW JERSEY AVE SE
WASHINGTON DC 20590 MARK MAZOR
CERTIFI CFM ION SECTION
MANAGER
FAA AFS

- 900
45005 AVIATION DRIVE SUITE 131
DULLES VA 20166 SAMUEL PODBERESKY
DOT
ASSISTANT GENERAL CO UNSEL
FOR AVIATION AND PRO CEEDINGS
1200 NEW JERSEY AVE SE
WASHINGTON DC 20590