Order 2014

- 3

- 2

Served: March 4, 2014

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 4 th day of March , 20 14

Fitness Determination of

HARRIS AIRCRAFT SERVICES

, INC

.

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

- OST

- 2013

- 0089

ORDER TO SHOW CAUSE

P ROPOSING ISSUANCE OF COMMUTER AIR CARRIER AUTHORITY

Summary

By this order, we tentatively find that Harris Aircraft Services , Inc. (“Harris Air ” )

, is a citizen of the United States and is fit, willing, and able to conduct scheduled passenger operations as a commuter air carrier, subject to conditions.

Background

Section 41738 of Title 49 of the United States Code (“ Transportation Code”) and section 298.21(d) of the Department’s Aviation Economic Regulations (14 CFR 298.21(d)) 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 finding s, the Department 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 consum ers or their funds, and (3) will comply with the Transportation Code and regulations imposed by

F ederal and state agencies. We must also determine that the applicant is a U.S. citizen.

On April 16 , 2013, Harris Air, an on

- de mand air taxi serving the Southeastern Alaska area and operating under 14 CFR Part 298 of the Department’s regulations and Part 135 of the Federal Aviation Regulation s (“FAR”) , filed an ap plica tion in Docket DOT

- OST

- 2013

- 0089 for authority to conduct scheduled passenge r operations as a commuter air carrier. The air carrier accompanied its application with fitness information required by section 204.3 of our regulations2

and supplemented its application with additional i nformat ion on August 9

, December 19, and

December 2 3, 2013.

On October 28, 2013

, an answer was filed by Pacific Airways, Inc. (“Pacific”), a U.S. certificated air carrier operating scheduled and on

- demand air service in S out heastern Alaska.

P acific states that Harris Air lacks the required compliance dis position for failing to adhere to the application requirements of 14 CFR §302. Specifically, Pacific states that Harris Air did not include the 14 CFR § 302.202(b) notice on the cover sheet of its application

, nor did the applicant provide the required no tice of its application by serving the airport authority of each airport it proposes to serve. In addition, Pacific claims that Harris Air failed to submit a signed counterpart of Agreement 18900 (OST Form 4523) 1 in its application , a form listed in 14 CFR

204.3 . Lastly , Pacific asserts that further proof of Harris Air ’s unsatisfactory compliance disposition is the company’s failure to collect appropriate Federal Excise Taxes.

Pacific also questions Harris Air’s financial fitness

. Pacific maintains that the financial forecasts provided by Harris Air are inconsistent with Harris Air’s statement of proposed services in that

Harris Air did not address the issue of startup expenses in its response to the Department’s request for additio nal information. Additionally, Pacific states that because the financial

statements were not prepared according to Generally Accepted Accounting Principles, Harris Air does not pass the Department’s financial fitness requirements

, and has less working cap ital than the applicant claims to have

. Pacific also asserts that Sitka Aircraft and Support Service s , LLC

, an aircraft holding company under common ownership with Harris Air, is the “ alter ego of Harris

Air a nd its operations and finances must be conside red as a single unit. ” 2 Specifically

, Pacific argues that Sitka Aircraft and Support Services ’ negative working capital balance should be

deducted from Harris Air’ s working capi tal balance

. Pacific also expresses a general concern over the future of Harris A ir’s contract with Southeast Alaska Regional Health Consortium

, wherein Harris Air provides general transportation services for the consortium’s medical staff and general patient travel.

On December 18, 2013, Harris Air filed an amended applicat ion supplementing the record and addressing the issues raised by Pacific in its answer. Concerning the allegations raised by Pacific

about Harris Air’s compliance , Harris Air states that they provided the required notice to the

State of Alaska as it is th e airport authority of each of the airports and seaplane bases they serve. The Certificate of Service was submitted to the Office of Statewide Aviation in Juneau, Alaska listing each of the airports Harris Air serves. Additionally, the company sta tes tha t they unintentionally omitted OST Form 4523 in its original application and therefore were submitting the completed c opy in its amended application. In regards to the IRS Excise T ax Audit Loan,

Harris Air states that an IRS audit conducted in May of 2011 concluded that the company owed excise taxes for trips made to certain destinations where Harris Air failed to collect taxes. The company explained that they had previously been told by the IRS that these taxes were not required to be collected. However , the air carrier agreed to pay the taxes in full with a loan from

Alaska Pacific Bank.

1 OST Form 4523

, also known a s the “Montreal Agreement,” increases the Warsaw Convention liability limit to $75,000 per passenger.

2 See Answer of Pacific Airways, Inc., and petition to dismiss application for failure to comply with 14 CFR and 14 CFR 302, dated October 28, 2013.3

With respect to its financial fitne ss, Harris Air states that the corporation and Sitka Air craft and Support Services, LLC are separate entities and that the air carr ier does not receive any financial aid or funds of any kind fr om the aircraft holding company

. Harris Air states that its financial

information was prepared by its Vice President, Laura Lynn Kronsperger, as indicated in the application, but admits it was not prepared in accordance with Generally Accepted Accounting

P rinciples

. Harris Air states that Pacific’s concerns regarding the future of the contract with the

c onsortium are purely speculative and that no one can predict changes to policy or the futur e of

the organization. Additionally, Harris Air stat es that they provide superior service because the

air carrier is certified to provide Instrument Flight Rules (IFR) flights

, an explicit service requirement in the contract, whereas other air carriers a re limited to providing service in Visual Flight Rules (VFR) weather conditions.

After careful review of the answers and additional information submitted by Pacific and the applicant, the Department finds that Harris Air has submitted the nec essary info rmation and documentation in its application and amendment for us to determine that the applicant should be tentatively found fit to operate as a commuter air carrier. In addition, we find that Harris Air’s responsive pleading adequately addresses the var ious issues raised by Pacific. For instance, concerning Harris Air’s compliance disposition, namely its failure to submit OST Form 4523 in its initial application and to collect Federal Excise Taxes, the company subsequently submitted an amended applicati on correcting the deficiency and obtained a loan from Alaska Pacific Bank to pay the taxes.

We also find that Pacific’s allegations about Harris Air’s financial fitness are without merit. Pacific did not submit evidence supporting its claims that Harris Air’s financial condition is less

than what the applicant submitted for our review.

Under these circumstances, we propose to decide the issue of the applicant’s fitness on the basis

of the written record and we tentativel y conclude th at Harris Air is a U.S. citizen and is fit, willing, and able to provide scheduled passenger operations as a commuter air carrier. However, we will give interested persons an opportunity to show cause why we should not adopt as final these tentative findings and concl usions.

FITNESS

The Company

Harris Air was formed as a corporation under the laws of the State of Alaska on September

22

, 1998

. The company began as an aircraft maintenance facility and then bought its first aircraft, a Cessna floatplane, in 1999 to pr ovide on

- dema nd air taxi operations under Part 135. Ownership of Harris Air is held equally by Robert S. Harris and Laura L. Kronsperger, 3 both of whom are U.S. citizens. There is no other controlling interest in the company. The owners of Harris Air also share ownership of Sitka Aircraft and Support Services, LLC, an asset leasing

business and the company t hat owns two of the aircraft in use by Harris Air.

3 Robert S. Harris and Laura L. Kronsperger are husband and wife.4

Managerial Competence

Harris Air ’s management and key personnel co nsist of the following individuals , each of whom

is a U.S. citizen.

Mr. Robert Scott H arris

- President Ms. Laura Lynn Kronsperger

- Vice President

Mr. Mark W. Hackett

- Director of Operations Mr. Christopher Hickmann

- Chief Pilot

Mr. Greg Fradette

- Director of Maintenance

Mr. Robert S. Harris has served as President of Harris Air since the company wa s formed in 1998. Before that, Mr. Harris was an Aircraft Mechanic for Mountain Aviation, Inc. and

mai ntained company aircraft i n support of air taxi o perations (1990

- 1998)

. From 1982 until 1990, Mr. Harris served as an Aircra ft Mechanic in the U.S. Coast Guard stationed in Oregon and Alaska. He completed aviation electrician technical training during his Coast Guard service

.

Ms. Laura Kronsperger has served as Vic e P resident of Harris Air since the company was

formed in 1998. She is also the Manager of Accounting and Information Services for Arrowhead Transfer, Inc., a local trucking and propane company also located in Sitka, Alaska (1993 to present) . Ms. Kronsperger has worked as a Visiting Professor for the University of Alaska

Southeast te aching business related classes (1990

- 1994) and as a Bookkeeper for Shaffer & Harrington CPAs (199 8

- 1991)

, providing bookkeeping services for individuals and bus iness

owners. Ms. Kronsperger earned a M.Ed. in Information Technology from University of Alaska Southeast and a B.S. degree in Music Education from Bowling Green State University.

Mr. Mark Hackett has served as Director of Operations and Pilot for Harri s Air since May 2001

. He has previous experience as a Director of Operations for Mountain Aviation, Inc. , an air taxi operator in Southeast Alaska (1993

- 1998) and as a Part 121 Pilot and Flight Engineer for Atlas Air Cargo an d Northern Air Cargo (1991

- 2001 ) . He holds an Airline Transport Pilot license

with DC

- 6, DC

- 7 and B

- 747 type ratings and a Flight Engineer license. Mr. Hackett served as a Flight Cre w member in the U.S. Coast Guard from 1975 until 1979. Mr. Hacket has approximately 15,000 total hours of flight time. He received aviation and technical training at

the Universit y of Alaska and the U.S. Coast G uard.

Mr. Christopher Hickman has served as Harris Air’s Chief Pilot since 2008 and a Line Pilot for the company since 2006. His previous experience includes service as Chief Pilot for L.A.B. Flying Service, Inc.

, in Juneau, Alaska (2004

- 2006 )

, and as a Pilot for Blue Skies Skydiving

Center in She lton, Washington (June 2000

- October 2000) . Mr. Hickman was employed as a Quality Control T echnician for K2, Inc. (1993

- 2001 ) , and served as a Boatswain’s Mate in the

U.S. N avy ( 199 1 to 1993 ) . Mr. Hickman is an A irline T ransport Pilot with over 8,000 tota l

hours of flight time.

Mr. Greg Fradette has served as Harris Air’s Director of Maintenance since September 2 011

. He

has worked with a number of companies performing aircraft inspections and maintenance including Heritage Aero, STS Aviation Group, and Commuter Air Technology (1994

- 2011)

.5

Mr. Fradette holds an A irframe and P owerplant Mechanic licens e and FAA Approved Inspection

Authorization.

In view of the experience and background of the applicant’s key personnel, we tentatively

conclude that Harris Air has demonstrated that it has both senior management and key technical personnel who have the managerial skills and technical ability to support its proposed operations

. Moreover

, the FAA has advised us that they know of no reason to act unfavorably o n the company’s commuter application

. 4

Operating Proposal and Financial Plan

The applicant currently provides on

- dema nd air taxi operations from Sitka Airport. I n addition to charter operations, the company holds Operations Specifications from the FAA that authorizes

the air carrier to conduct scheduled service between Sitka and Juneau, Haines, Hoonah, Angoon, Pelican, Teenekee, Kate, Peter sburg, Wrangell, Skagway and Klawock, Alaska. H arris Air has been providing Essential Air Service be tween Sitka and Port Alexander with two non

- stop,
round

- trip flights per week since 1999.

Harris Air is currently operating the following aircraft under Part 135:

Number of Aircraft Make/Model Number of Pax Seats

1 CE

- 185

- A185F (float plane) 3 Pax

1 DHC

- 2

- MKI (float plane) 5 Pax

3 PA

- 31

- 350 (Chieftain) 9 Pax

On December 12, 2012

, the company contracted with Southeast Alaska Regional Health Consortium to provide air medical service and routine patient and staff travel throughout

Southeast Alaska. The company has now requested commuter authority to conduct expanded scheduled passenger operations as a result of th e air medical services contract and to provide

additional Essential Air Service destinations and U.S. mail transportation service as they are put

out for bid.

In establishing financial fitness, the Department typically asks an applicant to demonstrate that it

has access to financial resources sufficient to cover its pre

- operating expenses and any negative working capital balance, plus a working capital reserve equal to the operating costs that are reasonably projected to be incurred during three months of “normal” operat ions. Because projected expenses during the first several months of air service frequently do not include all costs that will be incurred during a “normal” period of operations, it is our practice to base our

three

- month test on one

- quarter of the first y ear’s operating costs. Further, in calculating available resources, projected revenues may not be used.

4 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 FARs.

The FAA’s evaluation of these key personnel provides an added practical and in

- person test of their skills and technical ability.6

Harris Air provided forecasts of its pre

- operating costs and its first

- year operating expenses associated with its current and proposed commuter opera tions. The company stated it w ill incur approximately $353,397 in pre

- operating costs . More specifically, Harris Air estimates that its

pre

- ope rating costs will include those ex penses associated with obtaining new operation specifications, training and s alaries for an additional pilot and mechanic, aircraft lease, terminal and airport parking expenses

, fuel and insurance. Harris Air also provided a forecast of its first year operating expenses. The air carrier projects its first year expenses will total approximately $2.58 million. Based on this forecast, we estimate that it will require approximately $999,294 to

meet our financial fitness criteria. 5

In support of its ability to fund its proposed commuter operations, Harris Air submitted hist orical

a nd current financial sta tements show ing the company’s financial posture. For calendar year s 2010, 2011, and 2012, Harris Air earned net income of $362,296 , $91,937 and $142,798 on

oper ating revenues of $2.23 million, $2.24 million and $2.44 million respec tively. Harris Air submitted a balance sheet on March 31, 2013, that shows the company has current assets of $694,346 and current liabilities of $164,213 , indicating positive working capital of $530,133 and a current ratio of 4.22:1. In this same report, the company reported total equity of $176,535. In support of its application, the air carrier provided third

- party verification of funds available to

Harris Air.

In light of the above

, we tentatively conclude that Harris Air will have access to sufficient

financial resources to enable it to commence the proposed operations without posing an undue

risk to consumers or their funds

. 6

Compliance Disposition

The applicant states that there are no actions or outstanding judgments against it, persons holding a substantial interest in it, or its key personnel, and that none of these parties have been the subject of any charges of unfair , deceptive or anti

- competitive business practices, or of fraud, felony or antitrust violations, or other legal action during the past ten years. Harris Air also

state s that there are no pending investigations, enforcement actions, or formal complaints involving the applicant, persons holding a substantial interest in it, or its key personnel with respect to compliance wi th the Statute or the Department’s regulations.

Our search of the Department’s records found no compliance problems with Harris Air and our

review of FAA records indicates that Harris Air has not been involved in any incidents or

accidents in a 5

- year period from October 2008 through October 2013

. Additionally, t he FAA’s Principal Operations Inspector for Harris Air stated th at the FAA has no concerns over the safety

of its operations.

5 The $999,294 noted above consists of the applicant’s pre

- operating expense forecast of $ 353,397 plus $ 645,897

which is one

- quarter of Harris Ai r’s estimated first

- year expenses.
6 As is our practice, prior to making any authority awarded to Harris Air effec tive , we will require the company to
demonstrate that it continues to h ave the financial resources needed to meet our financial criteria.7

In light of these circumstances, we tent atively conclude tha t Harris Air has the proper regard for the laws and regulations governing its services to ensure that its aircraft and personnel conform to applicable safety standards

, and that acceptable consumer relations practices will be followed.

CITIZENSHIP

Section 41102 of the Transportation Code requires that an applicant for commuter authority to engage in air transportation be held only by citizens of the Unite d States as defined in 49 U.S.C.§ 40102(a)(15). That section requires that the president and tw o

- thirds of the Board of Directors and other managing officers be U.S. citizens

, that at least 75 perce nt of the outstanding voting

interest be owned by U.S. citizens

, and that the air carrier must be under the actual control of

U.S. citizens.

As previously stated, Harris Air is organized as an “S” corporation in the State of Alaska and is in good standing. The company is equally owned by Robert Scott Harris and Laura Lynn Kronsperger

, husband and wife

, both of whom are U.S. citizens

. There are n o other ownership

interests in the company and the company has no subsidiaries. Harris Air ’s key personnel are U.S. citizens and the company has provided an affidavit attesting that it is a citizen of the United

States with in the meaning of the Statute. Our review of the applicant’s citizenship has uncovered

no reason to suggest that control of Harris Air rests with non

- U.S. citizens.

I n light of the foregoing, we tentatively find that Harris Air is owned and actually controlled by U.S. citizens, consist ent with 49 U.S.C. § 40102(a)(15) and is fit, willing, and able to provide the proposed scheduled passenger operations, subject to conditions

.

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 su ch 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 decisional fact t he 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 fact. 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 issue an order that will make final our tentative findings and conclusions with respect to Harris Air ’s fitness and

Commuter Air Carrier Authorization

.

EFFECTIVE COMMUTER CONDITIONS & LIMITATIONS

If Harris Air is foun d fit and issued the Commuter Air Carrier Authorization it seeks, its authority will not become effective until the company has fulfilled all requirements for

effectiveness as set forth in the terms and conditions attached to its authorization . A mong other8

things, this includes our receipt of evi dence that Harris Air has been cert ified by the FAA to engage in the subject operations, a fully executed OST Form 6410 evidencing liability insurance coverage that meets the requirements of section 205.5(b) of our rules for all of its aircraft, third

part y verification of available funding necessary to meet the Department’s fitness requirements, and a statement of changes it may have undergone since its fitness was examined.

In addition, consistent with the applicant’s proposed operations, we propose to limit any authority issued to Harris Air to operations using aircraft that can be operated under FAR Part 135 (that is, aircraft with no more than 9 seats in scheduled passeng er operations). Should Harris Air desire to operate aircraft that would require certification from the FAA under Part 121, it must first provide the Department with at least 45 days advance notice of such plans and provide updated information establishing its fitness for such expansion. 7

Furthermore, we remind Harris Air of the requi rements 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 authority. To be assured that air carriers continue to be fit after effective authority has

bee n issued to them, we require that they supply information describing any subsequent substantial changes they may undergo in areas affecting fitness. Therefore, if Harris Air is

issued an effective commuter authorization and should it subsequently propose substantial changes in its ownership, management, or operations, it must first comply with the requirements

of section 204.5 of our rules. 8 The compliance of the company with this requirement is essential if we are to carry out our responsibilities under section 41110(e)

. 9

Additionally, if Harris Air is granted effective authority, it would be required to submit a detailed

progress report, within 45 days foll owing the end of the first year of actual flight operations, to the Air Carrier Fitness Division. The submission of a first year progress report is conditioned upon all newly authorized air carriers and was adopted as policy by the Department to aid in monitoring the fitness of new air carriers. The report should include a description of the air carrier’s current operations (number and type of aircraft, principle markets served, total number

of full

- time employees), a summary of how its operations have changed during the year, a discussion of any changes it anticipates from its current operations during its second year,

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

8 The air carrier may contact our Air Carrier Fitness Division to report proposed substantial changes in its operations, ownership, or management, and to determine what additional information, if any, will be required under section 204.5. In addition, 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 recapitalization. If the air carrier fails to file this updated information or if the informa tion 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, including enforcement action or steps to modify, suspend, or revoke the air carrier 's commuter authority.

9 We also remind Harris Air about the requirements of section 204.7 of our rules. This section provides, among other things, that (1) the commuter authority granted to a company shall be revoked if the company does not

commence act ual 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 fit and subsequently ceases such operations, it may not resume commuter operations unless its fitness has been redetermined; and (3) if the company does not resume operations within one year of its cessation, its authority shall be revoked for dormancy.9

current financial statements, 10 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 Fi tness Division to discuss its current and future operations.

ACCORDINGLY,

1. W e direct all interested persons to show cause why we should not issue an ord er finding that

Harris Aircraft Services is fit, willing, and able 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 award of authority set forth here to file them with Department of Tra nsportation Dockets, 1200 New Jersey Ave. SE

, Room W12

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

- OST

- 2013

- 0089 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.

3. If tim ely and properly supported objections are filed, we will accord full consideration to the matters or issues raised by the objections before we take further action. 11

4. In the event that no objections are filed, we will consider all further procedural steps to be waived and we will enter an order making final our tentative findings and conclusions.

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

10 These financial statements should include a balance sheet as of the end of the company’s first full year of

commuter flight operations and a 12

- month income statement ending that same date.

11 Since we have provided for the filing of objections to this order, we will not entertain petitions for

reconsideration.

### Attachment 

### SPECIMEN

Terms, Conditions, and Limitations

HARRIS AIRCRAFT SERVICES , 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 an y 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

i nsurance 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 th e 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 expens es and to provide a working capital reserve equal to the operating costs that would be incurred in three months of operations.

(2) Pending 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 holde r authority is limited to opera tions conducted pursuant to Part 135 of the Federal Aviation Regulation. In the event that the holder wishes to institute operations that would require Part 121 certification from the FAA , it must first be determined fit for such operations.

(4) 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 Transportation for2

the services authorized here, and with such other reasonable terms, condit ions, and limitations as the Department of Transportation may prescribe in the public interest.

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

(6 ) 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

. 

(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 grou nds 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, subjec t 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), Texa s, 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.

( 10 ) Should the holder propo se 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 a s 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 subsequently ceases all s cheduled 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

 To assure co mpliance 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.3

the Department. Moreover, if the holder does not resume such operations within one year of its cessation, its commuter authority shall be revoked for dormancy.Attachment A

SERVICE LIST FOR

HARRIS AIR CRAFT

SERVICES , INC.

SCOTT HARRIS

PRESIDENT

HARRIS AIR CRAFT

SERVICES INC

400 AIRPORT ROAD

SITKA AK 99835 PETER LYNCH

ASST. CHIEF COUNCEL FOR ENFORCEMENT, AGC

- 300

FEDERAL AVIATION

ADMINISTRATION

800 INDEPENDENCE AVE SW

WASHINGTON DC 20591

TROY MCCLANAHAN

PRINCIPAL OPERATIONS

INSPECTOR

JUNEAU FSDO

- 05

3032 VINTAGE PARK BLVD

SUITE 106

JUNEAU AK 99801

MARK MAZOR

MANAGER

CERTIFICATION &

EVALUATION PROGRAM

OFFICE

FAA AFS

- 900

45005 AVIATION DRIVE

SUITE 131

DULLES VA 20166 OFFICE OF AIRLINE

INFORMATION

DOT/RITA/BTS E

- 34

1200 NEW JERSEY AVE SE

WASHINGTON DC 20590