Orde r 2012

- 3

- 18

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

O n the Twenty

- Ninth day of March, 2012

International Jet Management GmbH

Docket OST 2012

- 0002

V iolations of 49 U.S.C. § § 41301,

41703, and 41712 Served March 29 , 2012

CON SE NT O RD E R

This o r d e r c on cer ns un a utho r i z e d p a ss e n g e r a ir s er vi c e b e t w ee n points in the Unit e d

S t a t e s b y International Jet Management GmbH

, (IJM) an Austrian a ir ca r r i e r

a utho r i z e d b y the D e p a r tm e nt to e n g a ge in f o re i gn a ir t r a nspo r t a tio n 1 pu r su a nt to a n

e x e mptio n 2 fr om the p er mit r e qui r e m e nt in 49 U. S

. C

. § 41301. The carriage of local

traffic for c omp e ns a tion or hi r e b y f o re i g n a ir c arr i e r s b e t w ee n two points in the U n it e d

S t a t e s, a p r a c ti c e c ommon l y r ef e rre d to a s ca bot a g e

, viol a t e s 49 U

. S

. C

. § 41703, whi c h

p r o hibits ca bot a ge e x ce pt und e r v e r y limit e d c i rc u mst a n ce s th a t do not a pp l y h e r e

. 3

I n a ddition, a f o re i g n a ir c a rr i e r th a t holds out to the pub l ic without a utho r i z a tion,

e i th e r e x p re ss l y or b y c o u r se of c ondu c t, th a t it p r ovid e s ca bot a ge s er vi c e viol a t e s 49

U. S

. C

. § 4 1301. Viol a tions of s ec tions 41301 a nd 41703 a lso c onstitute a n un fa i r a nd

d e ce ptive t r a de p rac ti c e a nd un f a ir m e t h od of c omp e tition in viol a tion of 49 U. S

. C

. § 41712. This c ons e nt o r d e r di rec ts IJM to cea se a nd d e sist fr om su c h f u r th e r

viol a tions a n d a ss e ss e s the c arr i e r a c omp r omise c ivil p e n a l t y of $ 25 ,000.

1 Foreign air transportation is “the t ransportation of passengers or property by aircraft as a common carrier

for compensation

... between a place in the United States and a place o utside the United States... . ” 49

U.S.C. § 40102(a)(23).

2 S ee D o c k et DO T

- OS T

- 2010

- 0037 r e International Jet Manage ment GmbH

.

3 T h e p e r t i n e n t l a n g u a g e o f 4 9 U

. S

. C

. § 4170 3 s tates t h a t for ei g n ai r c r a f t m a y “ t a k e o n fo r c o m p e ns ati o n

,

at a p lace in t h e U n ited State s

, p a ss e n g e r s o r ca r g o d e s t i n ed f o r a n o t h er p lace i n t h e U n ited S tates o n l y i f

– (1 ) s p eci f ic a l l y a u t h or ized u n d er s ecti o n 40109( g ) o f t h is t i tle...

. ”2

B a c k g r o und

The viol a tions that are the subj ec t of this order o cc u r r e d on October 18, 2011

, wh e n

IJM t ra nspo r t e d passengers f or c om p e ns a tion or hi r e b e tw e e n two points in the United

States, w ithout h a ving c a rr i e d the p a ss e n g e rs b e tw e e n t h e Unit e d S t a t e s a nd a f o re i g n

point. The flight was performed pursuant to a single

- entity 4 charter contract betwe en

IJM and the charterer.

F or pu rpo s e s of d e t e r mining wh e t h e r a viol a tion of 49 U. S

. C

. § 41703 o cc u rr e d, the

r e l e v a nt a n a l y t i ca l p er sp e c tive is not th a t of the charterer

, i. e

., the e nti t y th a t c ont rac t e d

a nd p a id f or the a ir t ra nspo r t a tion p r ovid e d b y I JM

, but th a t of eac h individu a l

p a ss e ng e r a nd his or h e r p ar ti c ul a r jo u r n e y

. I f

, f or the pu rpos e s of su c h a n a l y sis, the

mov e m e nts of individu a l p a ss e n g e r s w e r e d ee m e d a s c oll ec tiv e l y c omp r isi n g a si n g le

c o ntinuous int er n a tion a l jou r n e y of the c h a r t e r er

, t h e n f o r e i g n a ir ca r r i er s c ould

t ra nspo r t po t e nti a l l y l a r ge numb er s of p a ss e n g er s on jou r n e y s sol e l y b e t w ee n Unit e d

S t a t e s points pu r su a nt to “ stopov er s” b y the c h ar t e re r a t those points, so long a s the

a i r craf t b e ing u s e d w er e op e r a t e d pu r su a nt to a sin g l e

- e nti t y c h ar t e r a g r e e m e nts f or

op e r a tions th a t b e g a n a nd/or e nd e d outside t h e Unit e d S t a t e s. As a c ons e qu e n c e

, f

o re i g n a ir ca r r i er s c ould c i r c umv e nt the ca bot a ge p r ohibit i on simp l y b y s t y ling th e ir

c h ar t e r c ont r ac ts a s b e ing int e r n a tion a l in c h arac t e r w h e n, in f a c t, the ac tu a l mov e m e nt

of most or a ll of the p a ss e n g e r s re sulti n g fr om those c ont rac ts o c c u rr e d e nti r e l y within

the Unit e d S t a t e s. S u c h a re sult w o uld e vis ce r a te the st a tut or y p r ohibition a g a inst

ca bot a ge a nd p er mit the div er sion of dom e stic t r a f f ic to f o r e i g n a ir c arr i e r s

.

I n the inst a nt c a s e

, the charterer was traveling into and out of the United States and was

onboard for all segments of the flight. IJM’s movement of the charterer did not

constitute cab o tage. However, during a flight segment between two points within the

United States, IJM transported passengers who were not on the inbound or outbound

segments. IJM’s movement of these passengers constituted cab o tage because they

were carried only between points in the United States on a flig ht operated by IJM for

compensation. 5

F or pu rpos e s of its f utu r e op era tions, IJM should t a ke car e to e nsu r e th a t a n y p a ss e n g e r

it e npl a n e s a t a point in the Unit e d S t a t e s, r e g a r dl e ss of the r e a son f o r the p a s s e ng er’ s

jou r n e y

, e

. g ., busin e ss or pl ea su re

, his or h e r c ount r y of c iti z e nship, wh e th e r the

p a ss e ng e r or a noth e r p a r t y

, e

. g

., the p a ss e n g e r’ s ho s t or e mpl o y e r

, p a id f or the

t ra nspo r t a tion, or wh e th e r the t ra nspo r t a tion w a s arr a n g e d or p a id f or in Austria

, is

4 A s i n g l e

- e n t it y c h a r ter is a c h a r ter in w h i c h t h e c o s t is bor n e b y t h e c h a r te r er a n d n o t d i r ect l y o r

i n d i r ect l y b y t h e i n d i v i d u al p a ss e n g e r s

. See 14 C.F.R. § 212.2

5 Ot h er f or ei g n air ca rr ie r s h a v e b een f ou n d t o h a v e e n g a g ed in ca bo ta g e un d er ci r c u ms t a n ces s i milar to

t h o s e o f t h e i n s t a n t ca s e, i

. e

. , t h e ca rr ier m o v ed a n u m b er o f p a ss e n g e r s o n j o u r n e y s e n ti r e l y b e t w e e n

U n ited States po i n t s p u r su a n t to s i n g l e

- e n ti t y c h a r te r s t h at b e g an o r e n d ed in for ei g n c ou n t r ie s

. S ee,

e .g.

, Cameron Air Services, Inc.

, Vi o l a ti o n s o f 4 9 U

. S

. C

. § § 4 17 0 3 a n d 4 1 71 2 a n d 1 4 C. F.R. P a r t

29 4

, O r d e r 201 1

- 6

- 1 9 ( June 17, 2 0 1 1 ) ; The Craig Evan Corporation d/b/a Flightexec

, Vi o lati o n s o f 4 9

U

. S

. C

. § § 41 3 01

, 41703, and 4 1 71 2, O r d er 2011

- 8

- 22 ( Aug. 25

, 2011)

.3

t ra nspo r t e d b y IJM to Austria or a noth e r c oun t r y 6 a s p ar t of a si n g le c ontinuous

int er n a tion a l jou r n e y

.

I n mitig a tion, IJM states this was a first

- time violation, it is unaware of any prior

penalties imposed on it by the United States, and it has not received any penalties from

the Austrian gov ernment. IJM states that it did not intentionally violate any law or

regulation of the Department, and it deeply regrets that any violation may have

occurred. A t the time, a new IJM dispatcher believed it was acceptable for additional

passengers to be tr ansported on a domestic U.S. sector as long as the “lead passenger,”

the passenger paying for the flight, was onboard. IJM further states that it now

understands that this is not the case under the U.S. cabotage law. IJM took immediate

action to educate and reinforce U.S. cabotage rules with its pi lots and dispatchers and

set up internal procedures to ensure future compliance. Further, IJM notes that it

approached DOT on its own initia tive to disclose its violation, which IJM believes

demon strate s its co mmitment to compliance with all applicable rules and regulations.

D ec ision

The O ff i c e of Avi a tion En f o rce m e nt a nd P r o c ee di n g s ( En f o r ce m e nt O ff i c e ) h a s

c ar e f ul l y c onsid ere d a ll of the i n f o r m a tion p r ovid e d b y IJM

, but c ont i nu e s to b e li e ve

th a t e n f o r c e m e nt a c tion is w arr a nt e d. I n this c o n n ec tion a nd in o r d e r to a void liti g a tion,

the En f o rce m e nt O ff i c e a nd IJM h a v e r e ac h e d a s e ttl e m e nt of this m a t t er

. W ithout

a dmi t ting or d e n y i n g t h e viol a tions d e s cr i b e d a bo v e

, IJM a g r e e s to the issu a n c e of this

o r d e r t o cea s e a nd d e sist fr om f utu r e v i ol a tions of 49 U. S

. C

. §§ 41301, 41703, a nd

41712 a nd to the a ss e ssm e nt of $ 25 ,000 in c omp r omise of pot e nti a l c ivil p e n a lti e s

oth er wise a ss e ss a bl e

. The En f o r ce m e nt O ff i c e b e li e v e s this c o m p r omise is a pp r o p r i a te

in vi e w of th e n a tu r e a nd e x t e nt of the viol a tions in qu e stion, s er v e s the public int ere st,

a nd c re a t e s a n in ce ntive f or a ll f o re i g n a ir ca r r i er s to c omp l y f ul l y with the r e q ui re m e nts

of s ec tions 4 1 301, 41703, a nd 41712.

This o r d e r is issu e d und e r the a utho r i t y c ont a i n e d in 49 C. F. R. § 1.57a a nd 14

C. F. R. § 385.15.

A CC O R D I NG L Y,

1. B a s e d on the a bo v e di s c ussion, we a p p r ove th i s s e ttl e m e nt a nd the

p r o visions of this o r d e r a s b e ing in the public int ere st.

2. W e f ind th a t International Jet Management GmbH viol a t e d 49 U

. S

. C

. §§ 41301 a nd 41703 b y holdi n g o ut a nd p e r f o r mi n g a ir t r a nspo r t a tion f or

6 T r a ns por tati o n f r o m t h e U n ited St a tes to a t h i r d c ou n t r y m a y b e pro v i d ed to t h e e x t e n t t h at

t r a ns por tati o n is p e r m i ss i b le un d er t h e a v iati o n a g r e e m e n t b e t w een t h e U n it e d States a n d Austria t h e n in

e f

f ect.4

c omp e n s a tion or hi r e on jou r n e y s b e tw e e n points e nti re l y within the Unit e d

S t a t e s.

3. W e f ind th a t, b y e n g a g i n g in the c ondu c t a nd vio l a tions d e s cr ib e d in

p ar a g ra ph 2, a bov e

, Inter national Jet Management GmbH engaged in an unfair

and deceptive p rac ti c e a nd un f a ir m e t h od of c omp e tition in vio l a tion of 49

U. S

. C . § 41712.

4. W e o r d e r t h a t International Jet Management GmbH a nd a ll oth e r e ntiti e s

ow n e d a nd c ont r oll e d b y , or und e r c ommon own er ship a nd c ont r ol with,

International Jet Management GmbH a nd its su cce sso r s a nd a ss i g n e e s cea se

a nd d e sist fr om f utu r e viol a tions of 49 U. S

. C

. §§ 4130 1 , 41703, a nd 41712.

5. W e a ss e ss International Jet Management GmbH a c ivil p e n a l t y o f $ 25 ,000 in

li e u of c ivil p e n a lti e s t h a t mi g ht oth er wise be a ss e ss e d f or the viol a tions f ound

i n p ar a g r a phs 2 a nd 3

, a bov e

. Of this total amount, $ 12

, 5 00 is due and

payable within 30 days after the service date of this order. The remaining

$1 2

, 5 00 shall become due and payable if International Jet Management GmbH

violates this order’s cease and desist provisions or the payment provisions

within one year following the date of the issuance of this order, in which case

the entire unpaid portion of this civil penalty shall b ecome due and payable

immediately. Fa ilu r e to p a y a s o r d ere d s h a ll subj ec t International Jet

M anagement GmbH to the a s s e ssm e nt of int ere st, p e n a l t y

, a nd c oll ec tion

c h a r g e s un d e r the D e bt C oll ec tion A c t a nd to possible e n f o rce m e nt ac ti o n f or

fa ilu r e to c om p l y with this o r d er

.

6. W e o r d e r International Jet Management GmbH to pay the compromise civil

penalty b y wi r e t r a ns fe r th r o u g h the Fe d era l R e s er ve C ommuni ca tions S y st e m

,

c ommon l y known a s “ Fe d W i re ,” to the a cc ou n t of the Unit e d S t a t e s T rea su r y

. The wi r e t ra ns f e r sh a ll be e x ec ut e d in acc o r d a n c e with the inst r u c tions

c ont a in e d in the Att ac h m e nt to this o r d er

.

This o r d e r will b e c ome a f in a l o r d e r of the D e p a r t m e nt t e n d a y s a f t e r its s e r vi c e unl e ss

a tim e l y p e tition f or re vi e w is f il e d or the D e p a r tm e nt t a k e s re vi e w on its own initi a tiv e

.

B Y:

RO S A L IND A. K N A PP

D e pu t y G e ne r al Co un s e l

( SE A L)

An electronic version of this document is available at

http://www.regulations.gov