Order 2014

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Served: November 4, 2014

U N I T E D S

T A T E S O F A

M E R I C A D E P A R T M E N T O F T R A N S P O R T A T

I O N 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 November

, 2014

Notice of

AJET HOLDINGS

, LLC

of intent to resume operations under 14 CFR 2 04.7 Docket DOT

- OST

- 20 14

- 000 6

In the matter of the revocation of the certificate authority issued to

RYAN INTERNATIONAL AIRLINES , INC.

pursuant to the provisions of 14 CFR 204.7

ORDER ON REVIEW

Summary

By this order, the Depart ment is granting a petition for re view filed by American West Jet, LLC (“AWJ”), of Order 2014

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- 8

. Upon review of the record, we find that the action taken by Order

2014

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- 8 is appropriate and, therefore, we will deny AWJ’s request for a stay of enforceme nt of

such order

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Background

By Order 2014

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- 8, the Department denied and dismissed the waiver from dormancy and notice to resume operations , respectively, filed by Ajet Holdings, LLC (“Ajet”)

, 2 on behalf of Ryan International Airlines, Inc. (“Ryan Air” ) ; and revoked the interstate certificate authority issued to Ryan Air for reason of dormancy

. 3

1 A WJ also filed an application for a waiver and extension of revocation for dormancy pursuant to section 204.7 of our rules, which we are also denying by this order.

2 On March 6, 2012, Ryan Air filed for Chapter 11 bankruptcy. Subsequent to its bankruptcy filing, Ryan Air was purchased by Ajet in February 2013. On October 21, 2013, one of Ajet’s primary creditors initiated an involuntary Chapter 7 bankruptcy proceeding against Ajet. When Ajet’s principles failed to respond or object to the involuntary ba nkruptcy proceeding

, a Chapter 7 trustee was appointed.

3 Ryan Air also holds foreign certificate authority from the Department. Revocation of Ryan Air’s foreign certificate is subject to Presidential review under 49 U.S.C. §41307.2

On February 21, 2014, AWJ filed a p etition for r eview of Order 2014

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, 4 and a request for waiver and extension of the dormancy provisions under section 204 .7. AWJ states that shortly after the Department issued and served its order revoking Ryan Air’s certificates for dormancy,

the b ankruptcy c ourt selected A WJ as the purchaser of Ryan Air. 5 AWJ accompanied its petition with some information required by se ction 204.5, which requires an air carrier undergoing or proposing to undergo, among other things, a change in ownership, to submit information supporting its continued fitness to operate under its existing authority in light of the substantial change.

In support of its petition, AWJ contends that the Department’s order contained erroneous findings of fact, because it failed to take into account the pending sale of Ryan Air to a viable buyer

. Further, AWJ claims that a “ prejudicial procedural error occ urred ,” 6 since information demonstrating Ryan Air’s fitness under AWJ’s ownership could have been submitted prior to the

issuance of Order 20 14

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- 8. AWJ claims that its failure to file the necessary fitness information was a direct result of the Departmen t’s advice that information pertaining to Ryan Air’s fitness under its new ownership should be provided only after a bidder was nominated and approved by

the b ankruptcy c ourt

. In addition

, AWJ asserts that since Ryan Air has been involved in two bankruptc y proceedings

, the Department ’s dormancy provision should have been tolled and that the Department was prohibited under S ection 362 of Title 11 of the U.S. Bankruptcy Code (the automatic stay) from taking action to revoke Ryan Air’s certificate authority.

On May 27, 2014, in a separate action, the FAA revoked Ryan Air’s Air Carrier Certificate after finding, among other things, that the air carrier failed to maintain the required facilities, personnel, and assets necessary to conduct safe operations

.

De cision

After reviewing all of the information AWJ submitted, w e have decided to grant AWJ’s petition

for review , and upon review , affirm our decision in Order 2014

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- 8.

Section 41110(e) of Title 49 of the United States Code requires that once an air ca rrier is found fit initially, it must remain fit in order to hold its authority

. At the time Order 2014

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- 8 was issued, despite repeated attempts b y the Department to obtain the necessary fitness information from Ryan Air

, the Department had not received any information that would demonstrate Ryan

Air ’s continued fitness to operate as a U.S. certificated air carrier. 7 Thus, without any

4 On March 26, 2014, AWJ supplemented its filing with one additional piece of information and on April 17, 2014, AWJ filed a revised copy of its petition for review.

5 The bankruptcy court also selected a backup bidder , 13C Aviation, LLC ( “ 13 C Aviation”), to purchase Ryan

A ir in the event that AWJ could not complete its acquisition. Although we received notification from the Chapter 7 trustee on April 22, 2014, that AWJ failed to close on the purchase of Ryan, 13C Aviation has not formally requested a waiver from dormancy o r sought a review of Order 2014

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6 See Petition of Ajet Holdings, LLC for review of staff action and application for waiver and extension of revocation for dormancy pursuant to 14 CFR 204.7, received February 21, 2014, at 6.

7 By letter dated Janua ry 16, 2013, we advised Ryan Air that its authority was suspended pursuant to section 204.7 and that it could not resume air transportation operations until the Department had redetermined its fitness to

do so . W e also reminded the air carrier that pursua nt to section 204.7, its authority would be revoked if they air

carrier had not demonstrated its fitness to resume operations within o ne year of the date that it ceased oper a tions. By letter dated December 20, 2013, we again reminded Ryan Air of the pendi ng revocation of its authority and3

information on Ryan Air’s operations, ownership, or management, the Department, in carrying out its responsibilities unde r s ection 41110(e)

, moved to revoke Ryan Air’s certificate authority pursuant to section 204.7

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Regarding AWJ’s assertion that its failure to provide fitness information supporting its ability to operate Ryan Air prior to the issuance of Order 2014

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- 8 was due to the Department’s erroneous guidance, we disagree. A t the time of AWJ’s January 15, 2014, inquiry to the Department, the

company was one of several potential bidders for Ryan Air’s assets and it was unclear whether AWJ or a competing bidder wou ld ultimately be selected by the bankruptcy court as the

successful bidder. It is administratively impractical for the Department to conduct fitness reviews of every potential buyer from among a group of competing potential bidders. Thus, the Department’ s advice to AWJ in response to its January 15, 2014, inquiry was valid.

We do not agree with AWJ ’s conten tion that a finding of material fact is now erroneous due to AWJ’s prospective ownership of Ryan Air and its perceived ability to operate Ryan Air

. T he

information AWJ provided is incomplete and insufficient in demonstrating Ryan Air’s fitness to resume operations under AWJ’s ownership. 9 Among other things, AWJ’ s failed to provide a first

- year operating forecast covering its first full year of operati ons or a forecast Balance Sheet for the first normal year ending after the initially proposed operations have been incorporated ; a

pre

- operating expense forecast detailing the remaining expenditures prior to the resumption of operations; or current and his torical B alance S heets and Income Statements for each relevant corporation. 10 The se documents are critical in de termining the fitness of Ryan Air under AWJ’s ownership and its abil i ty to resume operations. Without such information we are unable to make

an informed decision regarding Ryan Air ’s fitness under AWJ ’s ownership or its fitness to resume operations. What is clear from the filing is that Ryan Air under AWJ’s ownership would

bear little, if any, resemblance to the Ryan Air that we last found fit

. The Department’s policy require s that an air carrier that proposes a substantial change in ownership and management be subject to the same standards and procedures for receiving air carrier authority as any other new applicant , particularly when there has been a lapse in continuity of operations for one year or

more

. Under these circumstances, where the air carrier has not conducted operations for an extended period and its management and operations have substantially change d since our last

further advised the air carrier that we intended to revoke its authority if it had not provided information demonstrating its fitness to resume operations or otherwise request ed and demonstrated “good cause” for a waiver

from section 204.7 prior to January 16, 2014 . Moreover, we noted that any waiver request would have to include updated information demonstrating the air carrier’s fitness and evidencing that the air carrier has completed nearly all the steps necessary to resume operations.

8 Section 204.7 provides that, if an air carrier ceases conducting the operations for which it was found fit, willing, and able, its authority to conduct those operations is automatically suspended as of the date that those operations

c eased. It further provides that, once this authority has been suspended, the air carrier may not recommence scheduled passenger operations nor advertise such service until its fitness to do so has been re

- established by the Department. If an air carrier wishes to resume such operations, it must file a notice of its intent to do so, accompanied by data supporting the air carrier’s continuing fitness as set forth in section 204.3 of our rules. However, after one year of dormancy, the air carrier is deemed no longer fit to provide the air transportation for which it was found fit and its authority to provide such air transportation shall be revoked.

9 S ection 204.7 requires applicants proposing to resume operations provide the fitness information enumerate d in

section 204.3. Our review of the information AWJ provided reveals that the applicant ’s responses were insufficient in addressing paragraphs (e), (f), (g), (j), (l), (m), (n), (t) and (u) of section 204.3 of the Department’s regulations

. 10 See 14 C .F.R. § 204.2(k).4

fitness findin g , we can no longer rely on our prior findings of fitness . Furthermore, AWJ has provided no evidence of harm that it will suffer as a result of the revocation, since as noted in

Order 2014

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- 8, Ryan Air is free to file a new application at such time as it is able to
demonstrate its fitness

.

Likewise, we find AWJ’s claim regarding the Bankruptcy Code’ s automatic stay to be without merit. Contrary to AWJ’s contention, Ryan Air’ s bankruptcies do not toll the Department’s one

year dormancy provision. T he Department’s revocation action falls squarely within the automatic stay’s police and regulatory power exception. Under these circumstances, we find no reason to overturn the staff action revoking Ryan Air’s certificate s, denying its request for a

waiver f rom dormancy, and denying the air carrier’s notice to resume operations.

F inally

, we note that following AWJ’s filing of the subject application, t he Federal Aviation

Administration (“FAA”) revoked Ryan Air’s Air Carrier Certificate on May 27, 2014.

The refore, it appears that AWJ’s application is now moot considering that the Department’s approval of any application to resume operations is predicated on the air carrier applicant having the necessary FAA issued safety authority to permit the immediate res umption of operations.

ACCORDINGLY

,

1. We affirm the staff action taken in Order 20 14

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- 8 revoking the certificate authority issued to Ryan International Airlines, Inc., deny ing the application for a waiver from section 204.7 , and dismissing the Notice of Intent to Resume Operations filed by AJet Holdings, LLC, on behalf of Ryan International Airlines, Inc.

, in Docket DOT

- OST

- 20 14

- 000 6.

2

. We grant the petition for review filed by American West Jet, LLC, of Order 2014

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- 8 and on review deny the relief requested.

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

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.govATTACHMENT A

SERVICE LIST FOR

RYAN INTERNATIONAL AIRLINES , INC.

PETER LYNCH AGC

- 300

ASST CHIEF COUNSEL FOR

ENFORCEMENT

FEDERAL AVIATION ADMINISTRATION

800 INDEPENDENCE AVE SW

WASHIN GTON DC 20591 MARIANNE SEGUIN

JENNIFER RODES

OFFICE OF AIRLINE INFORMATION

DOT/ OST/ R IT A/BTS RTS

- 42

1200 NEW JERSEY AVE SE

WASHINGTON DC 20590

LENARD E SCHWARTZER

JASON A IMES

SCHWARTZER & MCPHERSON LAW FIRM

COUNSEL FOR YVETTE WEINSTEIN

TRUSTEE FOR AJET HOLDINGS LLC

2850 SOUTH JONES BLVD SUITE 1

LAS VEGAS NEVADA 89146 MARK MAZOR

MANAGER

CERTIFICATION & EVALUATION PROGRAM

OFFICE

FAA AFS

- 900

45005 AVIATION DRIVE

DULLES VA 20166

GERARDO MARTINEZ

FEDERAL AVIATION ADMINISTRATION