Order 2011-7-15

Served: July 29, 2011

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 29th day of July, 2011

Applications of

 NATIONAL AIR CARGO GROUP, INC.

 d/b/a NATIONAL AIRLINES

for amended certificates 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

Dockets DOT-OST-2010-0181

 and

 DOT-OST-2010-0215

ORDER CONFIRMING ORAL ACTION 

AND ISSUING EFFECTIVE CERTIFICATES

Summary

By this order we (1) confirm our oral action of June 6, 2011, making the interstate and foreign

charter passenger authority issued to National Air Cargo Group, Inc. d/b/a National Airlines 

(“National Airlines”) effective on that date, and (2) reissue the air carrier’s interstate and 

foreign certificates to reflect the effectiveness of its charter passenger authority.

Background

By Order 2010-11-05, issued November 5, 2010, we directed all interested parties to show 

cause why we should not make final our tentative findings and conclusions that National 

Airlines is fit, willing, and able to provide interstate and foreign charter air transportation of 

persons, property, and mail.1

 1 National Airlines holds effective authority to engage in interstate and foreign charter air transportation of 

property and mail. See Order 2006-12-20, issued December 21, 2006.

 Interested persons were given 14 days to file objections. 

Furthermore, we stated that if no objections were received to the show cause order we would 

proceed with an order making final our tentative findings. No objections were received. 

Therefore, by Order 2010-11-25, issued November 22, 2010, the Department made final its 

tentative findings and issued National Airlines an amended certificate authorizing it to engage 

in interstate charter passenger operations. By Order 2011-1-26, served February 2, 2011, we
2

issued to National Airlines an amended certificate authorizing it to engage in foreign charter 

passenger operations. 

The authority to operate under these passenger certificates was to become effective on the sixth 

(business) day after the Department had received (1) a copy of National Airlines’ Air Carrier 

Certificate and Operations Specifications issued by the Federal Aviation Administration 

(“FAA”) authorizing such operations, (2) a certificate of insurance evidencing passenger 

liability insurance coverage meeting the requirements of Part 205 of our rules, and (3) updated 

fitness information, including evidence that the air carrier continued to have funding sufficient 

to meet our financial fitness criteria.

Subsequent to the issuance of our final order granting National Airlines’ certificate authority to 

engage in charter passenger operations, on November 22 and November 23, 2010, respectively, 

Air Transport International, LLC (“ATI”) filed a motion for leave to file an objection and an 

objection to the show cause order. We reviewed ATI’s pleading and found no new arguments 

or evidence that have not been considered or addressed in this proceeding or that would lead us 

to conclude that National Airlines is not fit to engage in charter passenger operations. 

Therefore, we will dismiss ATI’s motion and objection. 

FITNESS UPDATE

On May 26, 2011, National Airlines filed a copy of its updated FAA operating authority 

authorizing passenger operations, financial and other updated fitness information, and a copy 

of its certificate of insurance evidencing that it had acquired appropriate insurance to conduct 

passenger operations.

By letter dated May 31, 2011, we informed National Airlines that its filing was deficient. 

Specifically, National Airlines neglected to provided notes to the financial statements and other

information required by section 204.3(k)(3) of our rules (14 CFR 204.3), updated compliance 

information required by section 204.3(l), (m), (o), and (p) of our rules, or the citizenship of key 

personnel that had joined the air carrier since the Department issued its show cause order in 

this case.2

 

On June 3, National Airlines filed updated information in support of its fitness, including 

updated financial information demonstrating that it continued to have available resources 

sufficient to meet the Department’s financial fitness requirement. In addition, National 

Airlines states that there have been several changes in its key management personnel since the 

issuance of Order 2010-11-05. The air carrier has appointed a new President, Mr. Steven B. 

Harrison, a new Vice President of Technical Services, Mr. Jack Fauth, and a new Director of 

Maintenance, Mr. Michael Martin. In addition, Mr. Steven A. Rossum was elected to serve on 

National Airlines’ Board of Directors and was also appointed to serve as the Chief Financial 

Officer (“CFO”), Executive Vice President, and General Counsel. All of the aforementioned 

individuals are citizens of the United States. 

 2 See Order 2010-11-5, issued November 5, 2010.
3

Mr. Steven B. Harrison joined National Airlines in September 2010 as its President. Prior to 

joining National Airlines, he served in the United States Air Force (“U.S. Air Force”) for more 

than 22 years retiring with the rank of Colonel in 2010. During his career with the 

U.S. Air Force, Mr. Harrison held a number of senior positions including, among others,

Deputy Director for Operational Logistics, Joint Staff J-4 (2010) and Commander of the 89th

Airlift Wing at Andrews Air Force Base Maryland (2009-2010). 

Mr. Jack Fauth, an Airframe and Powerplant Mechanic with more than 30 years of aircraft 

maintenance experience, joined National Airlines in November 2010. Prior to this, he held 

various positions of increasing responsibility, the last of which being Director of Line 

Maintenance at Northwest Airlines where he was responsible for overseeing line maintenance 

of Northwest Airlines’ Detroit operations.

Mr. Michael Martin joined National Airlines in January 2011. Prior to joining National 

Airlines, Mr. Martin served in the U.S. Air Force where he held a number of management

positions in logistics and aviation maintenance during his career. He retired from the U.S. Air 

Force in February 2011, where he last served as Chief of Maintenance for Air Force One with 

the Presidential Airlift Group. 

Mr. Steven Rossum was elected to National Airlines’ Board of Directors in February 2011. In 

addition to serving as Executive Vice President, Chief Financial Officer, and General Counsel 

of National Airlines, Mr. Rossum also serves in this capacity with National Airlines’ affiliated 

companies. Mr. Rossum is also Managing Director of Volusia, LLC, an aviation consulting 

company and he has previously held executive positions with AirTran Airways, Astar Air 

Cargo, and US Airways. Prior to joining National Airlines, Mr. Rosssum served as Executive 

Vice President, General Counsel, and Secretary at Air Tran Airways, Inc. (2008-2011).

National Airlines provided updated financial information, indicating that the air carrier 

continues to have access to sufficient funds to meet the Department’s financial fitness test. For 

the twelve months ending March 31, 2011, the air carrier reported a net loss of $24.1 million 

on revenues of $45.6 million. National Airlines attributes its losses to one-time expenses 

associated with purchasing and readying additional cargo aircraft for use in its operations. 

National Airlines March 31, 2011, balance sheet shows that the air carrier has current assets of 

$43.3 million and current liabilities of $10.9 million, giving it positive working capital of 

$32.4 million and a current ratio of 3.97:1. In addition, this same balance sheet shows a

retained deficit of $29.3 million and negative total shareholder equity of $19.9 million.

We have previously determined that in order to meet our financial fitness test, the applicant 

would need access to approximately $4.25 million.

3

 3 See Order 2010-11-05 at 9.

This amount consisted of one-quarter of 

the air carrier’s proposed first–year operating expenses associated with its passenger operations 

or $3.4 million and $845,000 in remaining unpaid pre-operating expenses. The air carrier now 
4

indicates that all but $350,000 in pre-operating expenses remains to be paid. Therefore, 

National Airlines would need access to $3.75 million to meet our financial fitness 

requirements for receipt of effective charter passenger authority. 

While National Airlines initially intended to meet our financial fitness requirements using 

financial support provided by its ultimate parent company, National Air Cargo Holdings, Inc., 

or its affiliate National Air Cargo, Inc., it appears that the air carrier now has sufficient

working capital on its own to meet our financial fitness requirements for receipt of effective 

charter passenger authority. However, as discussed in Order 2010-11-5, we note that our 

finding of fitness may no longer apply should the air carrier propose to operate additional 

aircraft in either cargo or passenger operations. Therefore, in that order we proposed to limit 

National Airlines operations to no more than four total large4 aircraft and/or more than one 

passenger aircraft without the air carrier first providing the Department with at least 45 days 

prior notice and demonstrating its fitness prior to conducting operations with any additional 

aircraft.5

 This condition was made final by Order 2010-11-25. We continue to find this 

restriction is appropriate and that it will permit us the ability to closely monitor the air carrier’s

fitness and its safe and prudent induction of additional air service. Therefore, should National 

Airlines seek to operate any additional aircraft, it must first comply with this condition and 

have its fitness redetermined.6

National Airlines also stated that that other than the above noted there have been no material 

changes in its management personnel, compliance disposition, or financial posture and that its 

operating plans remain as described in its application. 

We note that by Order 2010-12-22, issued December 12, 2010, the Department’s issued a 

consent order against National Airlines for violations of 49 U.S.C. §§ 41101 and 41712 and 14 

CFR Part 201.5(a). The Department’s Office of Aviation Enforcement and Proceedings (the 

“Enforcement Office”) found that during the pendency of National Airlines’ application for 

charter passenger authority, the air carrier advertised its ability to provide passenger air 

transportation. By advertising passenger air transportation before it received effective 

economic authority for that service, National Airlines violated 49 U.S.C. § 41101 and section 

201.5. Violations of section 41101 and section 201.5 also constitute “unfair or deceptive 

practices” in violation of 49 U.S.C. § 41712. The Enforcement Office and National Airlines

reached a settlement of this matter in order to avoid litigation. Without admitting or denying 

the violations described above, National Airlines agreed to the issuance of the consent order 

directing it to cease and desist from future violations of 49 U.S.C. §§ 41101 and 41712 and 

 4 A “large” aircraft is any aircraft originally designed to have a maximum passenger capacity of more than 60 

seats or a payload of more than 18,000 pounds. 

5 The Department adopted its policy of imposing fleet restrictions pursuant to the recommendations of the FAA 

90-day safety review, issued September 16, 1996, to facilitate appropriate monitoring of individual air carriers’ 

growth. See, e.g., Orders 98-1-3, 97-10-22, 97-11-34, and 97-12-18. 6 We note that by letter dated January 18, 2011, National Airlines notified us of its intent to operate three

additional aircraft, all Boeing 747 aircraft, in cargo operations. By letter dated February 22, 2011, the 

Department requested additional information concerning National Airlines’ fitness to operate additional cargo 

aircraft. This review remains ongoing.
5

Part 201, and to the assessment of $20,000 in compromise of potential civil penalties otherwise 

due and payable pursuant to 49 U.S.C. § 46301.

We do not believe the alleged violations discussed above warrant unfavorable action on 

National Airlines’ application to engage in charter passenger operations or that such allegation, 

when considered in conjunction with National Airlines’ compliance history, is indicative of a 

poor disposition to comply with the laws and regulations governing its services. As discussed

in Order 2010-11-5, the Department previously imposed a number of reporting requirements 

on National Airlines that would permit us to closely monitor the air carrier’s compliance 

disposition.

7

 We believe these reporting requirements are adequate and that they will permit 

us the ability to take timely action against the air carrier’s certificate should we find any future 

action would warrant such treatment.

In light of the above, we determined that National Airlines continued to be fit to provide 

interstate and foreign charter air transportation of persons, property, and mail. Therefore, on 

June 6, 2011, we orally advised the air carrier that we were making its certificate authority for 

passenger operations effective on that date. By this order, we confirm our oral action of 

June 6, 2011, and reissue the air carrier’s certificates to reflect their effective date.

ACCORDINGLY: Acting under the authority assigned by the Department in its Regulations, 

14 CFR 385.12:

1. We confirm our oral action of June 6, 2011, making the section 41102 interstate and 

foreign charter passenger certificate authority issued to National Air Cargo Group, Inc., 

effective on that date.

2. We reissue to National Air Cargo Group, Inc., the section 41102 interstate and foreign 

charter passenger certificates issued to it by Orders 2010-11-25 and 2011-1-26, respectively, in 

the attached form to reflect their effective date.

3. We direct National Air Cargo Group, Inc., to submit to the Air Carrier Fitness Division a 

first-year progress report within 45 days following the end of its first year of passenger

operations.8

4. We direct that should the National Air Cargo Group, Inc., want to operate more than four 

total large9

 7 See Order 2010-11-5 at 12.

aircraft and/or more than one passenger aircraft, it must first notify the Department 

8 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 from its current operations during its 

second year, current financial statements (including a balance sheet at the end of its first year of flight operations 

and a 12-month income statement ending that same date), and a listing of current senior management and key 

technical personnel. 9 There are no restrictions on the number of small aircraft National Airlines may operate.
6

in writing at least 45 days prior to the proposed change in operations and demonstrate its 

fitness to conduct such operations before their commencement.

5. We dismiss as moot the motion for leave filed by Air Transport International, Inc.

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

Persons entitled to petition the Department for review of this order, under 14 CFR 385.30, may 

file their petitions within 10 days of the service date of this order.

The action confirmed in this Order was effective when taken and the filing of a petition for 

review shall not alter its effectiveness.

By:

TODD M. HOMAN

Director

Office of Aviation Analysis

An electronic version of this document is available on the World Wide Web at

http://www.regulations.gov
 

 

Certificate of Public Convenience and Necessity for

Interstate Charter Air Transportation

(as reissued) 

This Certifies That

NATIONAL AIR CARGO GROUP, INC.

d/b/a NATIONAL AIRLINES

is authorized, subject to the provisions of Subtitle VII of Title 49 of United 

States Code, the orders, rules, and regulations issued thereunder, and the 

attached Terms, Conditions, and Limitations, to engage in interstate 

charter air transportation of persons, property, and mail.

This Certificate is not transferable without the approval of the Department 

of Transportation.

By Direction of the Secretary

Issued by Order 2011-7-15 Todd M. Homan

On July 29, 2011 Director

Effective on June 6, 2011 Office of Aviation Analysis
Attachment

*As reissued by Order 2011-7-15

Terms, Conditions, and Limitations

NATIONAL AIR CARGO GROUP, INC.

d/b/a NATIONAL AIRLINES

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 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. 

(2) 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 limited to 49 CFR Part 

1544. ∗∗

(3) The holder shall at all times remain a "Citizen of the United States" as required by 49 

U.S.C. 40102(a)(15).

(4) 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 this 

certificate.

(5) The holder is not authorized to engage in air transportation operations between points 

within the State of Alaska.

 ∗ This certificate is being reissued to reflect its effective date.

∗∗ 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 advise 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.
2

(6) 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.

(7) 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 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 does not resume operations within one year of its cessation, its authority 

shall be revoked for dormancy.
 

 

Certificate of Public Convenience and Necessity

for Foreign Charter Air Transportation

(as reissued) 

This Certifies That

NATIONAL AIR CARGO GROUP, INC.

d/b/a NATIONAL AIRLINES

is authorized, subject to the provisions of Subtitle VII of Title 49 of the United 

States Code, the orders, rules, and regulations issued thereunder, and the attached 

Terms, Conditions, and Limitations, to engage in foreign charter air 

transportation of persons, property, and mail.

This Certificate is not transferable without the approval of the Department of 

Transportation.

By Direction of the Secretary

Issued by Order 2011-7-15 Todd M. Homan

On July 29, 2011 Director

Effective on June 6, 2011 Office of Aviation Analysis
Attachment ∗As reissued by Order2011-7-15

Terms, Conditions, and Limitations

NATIONAL AIR CARGO GROUP, INC.

d/b/a NATIONAL AIRLINES

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 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.

(2) 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.

(3) The exercise of the authority granted here is subject to the holder's first obtaining from 

the appropriate foreign governments such operating rights as may be necessary.

(4) 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 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).

 ∗ This certificate is being reissued to reflect its effective date

∗∗ 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 advise 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.
2

(6) 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 this 

certificate.

(7) 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.

(8) In the event that the holder commences but subsequently ceases all operations for which 

it was found "fit, willing, and able," its authority under this certificate 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 does not resume operations within one year of its cessation, its authority shall be revoked 

for dormancy.
Attachment A

SERVICE LIST FOR NATIONAL AIR CARGO GROUP, INC.

JAMES L HOBSON JR

PRESIDENT AND CEO

AIR TRANSPORT INTERNATIONAL LLC

2800 CANTRELL ROAD

LITTLE ROCK ARKANSAS 72202

GEORGE A GOLDER ESQ

GENERAL COUNSEL

AIR TRANSPORT INTERNATIONAL LLC

7100 TPC DRIVE SUITE 100

ORLANDO FLORIDA 32822

MARK W ATWOOD

ELIZEBETH J WADSWORTH

COZEN O’ CONNER

1627 EYE STREET NW SUITE 1100

WASHINGTON DC 20006

BERNARD STANKUS RTS-42

OFFICE OF AIRLINE INFORMATION

DOT/RSPA/BTS E-36

1200 NEW JERSEY AVE SE

WASHINGTON DC 20590

WILLIAM J WEBER

CERTIFICATION SECTION MANAGER

FAA AFS-900

45005 AVIATION DRIVE, SUITE 131

DULLES VA 20166

CLAY MORITZ, RTS-42

OFFICE OF AIRLINE INFORMATION

DOT/RSPA/BTS E-36

1200 NEW JERSEY AVE SE

WASHINGTON DC 20590

PETER LYNCH AGC-300

ASST CHIEF COUNSEL FOR 

ENFORCEMENT

FEDERAL AVIATION ADMINISTRATION

800 INDEPENDENCE AVE SW

WASHINGTON DC 20591

MALCOLM L BENGE

ZUCKERT, SCOUTT & RASENBERGER LLP

888 7TH STREET NW SUITE 700

WASHINGTON DC 20006-3939

TIM WAHLBERG

PRESIDENT

EVERGREEN INTERNATIONAL AIRLINES INC

3850 THREE MILE LANE

MCMINNVILLE OREGON 97128

EDWARD W SAUER

SQUIRE SANDERS & DEMPSEY LLP

1201 PENNSYLVANIA AVE NW 

SUITE 500

WASHINGTON DC 20004