Order 2012- 3-18

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

On the Twenty-Ninth day of March, 2012

International Jet Management GmbH

Docket OST 2012-0002

Violations of 49 U.S.C. §§ 41301, 

41703, and 41712 Served March 29, 2012

CONSENT ORDER

This order concerns unauthorized passenger air service between points in the United

States by International Jet Management GmbH, (IJM) an Austrian air carrier 

authorized by the Department to engage in foreign air transportation

1

pursuant to an

exemption

2 from the permit requirement in 49 U.S.C. § 41301. The carriage of local 

traffic for compensation or hire by foreign air carriers between two points in the United

States, a practice commonly referred to as cabotage, violates 49 U.S.C. § 41703, which

prohibits cabotage except under very limited circumstances that do not apply here.

3 

In addition, a foreign air carrier that holds out to the public without authorization,

either expressly or by course of conduct, that it provides cabotage service violates 49

U.S.C. § 41301. Violations of sections 41301 and 41703 also constitute an unfair and

deceptive trade practice and unfair method of competition in violation of 49 U.S.C. 

§ 41712. This consent order directs IJM to cease and desist from such further

violations and assesses the carrier a compromise civil penalty of $25,000.

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

for compensation... between a place in the United States and a place outside the United States... .” 49 

U.S.C. § 40102(a)(23).

2 See Docket DOT-OST-2010-0037 re International Jet Management GmbH.

3 The pertinent language of 49 U.S.C. § 41703 states that foreign aircraft may “take on for compensation,

at a place in the United States, passengers or cargo destined for another place in the United States only if

– (1) specifically authorized under section 40109(g) of this title... .”
2

Background

The violations that are the subject of this order occurred on October 18, 2011, when

IJM transported passengers for compensation or hire between two points in the United 

States, without having carried the passengers between the United States and a foreign

point. The flight was performed pursuant to a single-entity4 charter contract between 

IJM and the charterer. 

For purposes of determining whether a violation of 49 U.S.C. § 41703 occurred, the

relevant analytical perspective is not that of the charterer, i.e., the entity that contracted

and paid for the air transportation provided by IJM, but that of each individual

passenger and his or her particular journey. If, for the purposes of such analysis, the

movements of individual passengers were deemed as collectively comprising a single

continuous international journey of the charterer, then foreign air carriers could

transport potentially large numbers of passengers on journeys solely between United

States points pursuant to “stopovers” by the charterer at those points, so long as the

aircraft being used were operated pursuant to a single-entity charter agreements for

operations that began and/or ended outside the United States. As a consequence,

foreign air carriers could circumvent the cabotage prohibition simply by styling their

charter contracts as being international in character when, in fact, the actual movement

of most or all of the passengers resulting from those contracts occurred entirely within

the United States. Such a result would eviscerate the statutory prohibition against

cabotage and permit the diversion of domestic traffic to foreign air carriers.

In the instant case, 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 cabotage. 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 cabotage because they 

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

compensation.5

 

For purposes of its future operations, IJM should take care to ensure that any passenger

it enplanes at a point in the United States, regardless of the reason for the passenger’s

journey, e.g., business or pleasure, his or her country of citizenship, whether the

passenger or another party, e.g., the passenger’s host or employer, paid for the 

transportation, or whether the transportation was arranged or paid for in Austria, is

 4 A single-entity charter is a charter in which the cost is borne by the charterer and not directly or

indirectly by the individual passengers. See 14 C.F.R. § 212.2

5 Other foreign air carriers have been found to have engaged in cabotage under circumstances similar to

those of the instant case, i.e., the carrier moved a number of passengers on journeys entirely between

United States points pursuant to single-entity charters that began or ended in foreign countries. See,

e.g., Cameron Air Services, Inc., Violations of 49 U.S.C. §§ 41703 and 41712 and 14 C.F.R. Part

294, Order 2011-6-19 (June 17, 2011); The Craig Evan Corporation d/b/a Flightexec, Violations of 49

U.S.C. §§ 41301, 41703, and 41712, Order 2011-8-22 (Aug. 25, 2011).
3

transported by IJM to Austria or another country

6 as part of a single continuous 

international journey.

In mitigation, 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 government. 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. At the time, a new IJM dispatcher believed it was acceptable for additional 

passengers to be transported 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 pilots and dispatchers and 

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

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

demonstrates its commitment to compliance with all applicable rules and regulations.

 

Decision

The Office of Aviation Enforcement and Proceedings (Enforcement Office) has

carefully considered all of the information provided by IJM, but continues to believe

that enforcement action is warranted. In this connection and in order to avoid litigation,

the Enforcement Office and IJM have reached a settlement of this matter. Without

admitting or denying the violations described above, IJM agrees to the issuance of this 

order to cease and desist from future violations of 49 U.S.C. §§ 41301, 41703, and

41712 and to the assessment of $25,000 in compromise of potential civil penalties

otherwise assessable. The Enforcement Office believes this compromise is appropriate

in view of the nature and extent of the violations in question, serves the public interest,

and creates an incentive for all foreign air carriers to comply fully with the requirements 

of sections 41301, 41703, and 41712.

This order is issued under the authority contained in 49 C.F.R. § 1.57a and 14

C.F.R. § 385.15. 

ACCORDINGLY,

1. Based on the above discussion, we approve this settlement and the

provisions of this order as being in the public interest.

2. We find that International Jet Management GmbH violated 49 U.S.C.

§§ 41301 and 41703 by holding out and performing air transportation for

 6 Transportation from the United States to a third country may be provided to the extent that

transportation is permissible under the aviation agreement between the United States and Austria then in

effect.
4

compensation or hire on journeys between points entirely within the United 

States.

3. We find that, by engaging in the conduct and violations described in

paragraph 2, above, International Jet Management GmbH engaged in an unfair

and deceptive practice and unfair method of competition in violation of 49 

U.S.C. § 41712.

4. We order that International Jet Management GmbH and all other entities 

owned and controlled by, or under common ownership and control with, 

International Jet Management GmbH and its successors and assignees cease

and desist from future violations of 49 U.S.C. §§ 41301, 41703, and 41712.

5. We assess International Jet Management GmbH a civil penalty of $25,000 in 

lieu of civil penalties that might otherwise be assessed for the violations found

in paragraphs 2 and 3, above. Of this total amount, $12,500 is due and 

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

$12,500 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 become due and payable 

immediately. Failure to pay as ordered shall subject International Jet

Management GmbH to the assessment of interest, penalty, and collection 

charges under the Debt Collection Act and to possible enforcement action for 

failure to comply with this order.

6. We order International Jet Management GmbH to pay the compromise civil 

penalty by wire transfer through the Federal Reserve Communications System,

commonly known as “Fed Wire,” to the account of the United States Treasury. 

The wire transfer shall be executed in accordance with the instructions 

contained in the Attachment to this order.

This order will become a final order of the Department ten days after its service unless

a timely petition for review is filed or the Department takes review on its own initiative.

BY:

ROSALIND A. KNAPP

Deputy General Counsel

(SEAL)

An electronic version of this document is available at

http://www.regulations.gov