Order 2014-10-25

Served: October 29, 2014

Issued by the Department of Transportation

 on the 29th day of October, 2014

Fitness Determination of

GEM AIR, LLC

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

 Docket DOT-OST-2014-0020

 

ORDER TO SHOW CAUSE

PROPOSING ISSUANCE OF COMMUTER AIR CARRIER AUTHORITY

Summary

By this order, we tentatively find that Gem Air, LLC (“Gem 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 findings, 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 an 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 consumers or 

their funds, and (3) will comply with the Transportation Code and regulations imposed by 

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

On January 20, 2014, Gem Air, an on-demand air taxi serving the state of Idaho and operating 

under 14 CFR Part 298 of the Department’s regulations and Part 135 of the Federal Aviation 

Regulations (“FARs”), filed an application in Docket DOT-OST-2014-0020 for authority to 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C. UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION
2

conduct scheduled passenger operations as a commuter air carrier. The air carrier accompanied 

its application with fitness information required by section 204.3 of our regulations.1

FITNESS

The Company

Gem Air was formed as a limited liability company under the laws of the State of Idaho on 

December 21, 2007. Ownership of Gem Air is held equally by Ms. JoAnn Wolters and 

Mr. Daniel Schroeder,2 both of whom are U.S. citizens. Gem Air initially began in 2000 as 

Mountain Bird Inc. d/b/a Salmon Air, an air taxi that later received commuter authorization from 

the Department in 2002. Ms. Wolters and Mr. Schroeder sold the company in 2005 and in 2007, 

they repurchased the company and changed its name to Gem Air.3 

Managerial Competence

Gem Air’s management and key personnel consist of the following individuals, each of whom is 

a U.S. citizen. 

Ms. JoAnn Wolters – Chief Executive Officer (“CEO”) and General Manager

Mr. Daniel Schroeder – Director of Operations and Chief Pilot

Mr. Russell Linn - Director of Maintenance

Ms. JoAnn Wolters has served as CEO and General Manager of Gem Air since the company was 

formed in 2007. She is also Co-owner and President of Spirit Air, Inc., a Chapter S Idaho 

corporation which leases aircraft to Gem Air (2000-present). Previously, Ms. Wolters was 

Co-owner and Manager of Mountain Bird, Inc. d/b/a Salmon Air and served as its President from 

1981 to 2005. She was an Instructor at Emery School of Aviation (1979-1980) and Owner and 

Manager of Sportsland of Laramie, Wyoming (1972-1978). Ms. Wolters attended the University 

of Wyoming and the Embry School of Aviation and holds Commercial Pilot and Certified Flight 

Instructor (“CFI”) certificates.

Mr. Daniel Schroeder has served as Director of Operations and Chief Pilot of Gem Air since 

2007. He is also Co-owner of Spirit Air, Inc. (2000-Present). Before that, Mr. Schroeder was a 

Pilot, Check Airman, and Training Captain for McCall Aviation (2009-2013) and Co-owner, 

Pilot, Director of Operations, and Check Airman for Mountain Bird, Inc. d/b/a Salmon Air 

(1981-2006). Mr. Schroeder was also an Instructor at Emery School of Aviation (1978-1980), 

was employed at Angel Fire Corp (1973-1977) and Central Office Equipment (1971-1973), and 

served in the United States Army (1969-1971). Mr. Schroeder holds an Airline Transport Pilot 

(“ATP”) certificate and a Certified Flight Instructor, Instrument (“CFI-I”) certificate with over 

21,000 hours of total time.

 

1 Gem Air supplemented its application with additional information, most recently on August 26, 2014.

2 JoAnn Wolters and Dan Schroeder are wife and husband.

3 In 2009, all service operations conducted under the Salmon Air trade name were sold to McCall Aviation, Inc.,

a former U.S. commuter air carrier.
3

Mr. Russell Linn has served as Director of Maintenance for Gem Air since 2010. Before that, he 

was the Director of Maintenance (1996-2007) and later a Pilot for Salmon Air (2008-2009). 

Mr. Linn was also a Truck Driver for Swift Transportation (2007-2008), an Electro Mechanic for 

Trans World Airlines (1988-1996), and an Avionics Mechanic for Continental Airlines 

(1987-1988). Mr. Linn has completed a number of maintenance training courses including, 

PT6A, Quest Kodiak, Cessna Caravan, MD-80, and B-767 and B-747 maintenance and avionics 

courses.

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

conclude that Gem 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 on the 

company’s commuter application.4

Operating Proposal and Financial Plan

The applicant currently provides seasonal on-demand air taxi operations from Salmon, Idaho.5 

All aircraft used by Gem are owned by Spirit Air Inc. (“Spirit”), a Chapter S, Idaho Corporation 

formed in 1999 to act as an aircraft holding company. As previously stated, Spirit is co-owned 

by Ms. Wolters and Mr. Schroeder.

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

Number of Aircraft Make/Model Number of Passenger Seats

1 Quest Kodiak-100 9 Pax

1 PA-31-350 9 Pax

1 PA-34-200T (Seneca) 6 Pax

The company is requesting commuter authority to conduct scheduled operations of 5 round trips 

a week throughout the year between Salmon and Boise, Idaho. Air service will initially be 

provided using the 9-passenger Quest Kodiak aircraft. Gem Air does not anticipate any other 

aircraft acquisitions at this time, though the Seneca will be considered for possible scheduled 

operations if necessary.

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” operations. Because 

projected expenses during the first several months of air service frequently do not include all 

 

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. 

5 The applicant’s owners previously operated Part 135 air service between Salmon and Boise, Idaho, as Mountain 

Bird, Inc. d/b/a Salmon Air and also operated an Essential Air Service contract in Moab, Vernal, and Salt Lake City, 

Utah. They sold Mountain Bird Inc. d/b/a Salmon Air in 2005.
4

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 year’s operating costs. Further, in calculating 

available resources, projected revenues may not be used.

Gem Air provided forecasts of its pre-operating costs and its first-year operating expenses 

associated with its current and proposed commuter operations. Gem Air states that its 

pre-operating costs, included those expenses associated with obtaining new Operations 

Specifications, training of pilots, establishing terminals and airport parking expenses, marketing 

expenses, and insurance, totaling approximately $28,000, have already been paid in anticipation 

of receiving commuter authority. The applicant states that its pre-operating expense forecast is 

based upon its owners’ experience gained while operating the same Salmon-Boise-Salmon route 

in previous years. Additionally, the hanger and office space used by Gem Air in Salmon are 

owned by the applicant. Gem Air does not anticipate incurring any further pre-operating 

expenses. Gem Air also provided a forecast of its first-year operating expenses. The air carrier 

projects its first-year expenses will total approximately $358,456. We have reviewed the 

applicant’s forecasts and find them to be reasonable. Therefore, we estimate that Gem Air will 

require approximately $89,614 to meet our financial fitness criteria.6 

In support of its ability to fund its proposed commuter operations, Gem Air submitted historical 

and current financial statements showing the company’s financial posture. For calendar years 

2012 and 2013, Gem Air reported net losses of $57,651 and $43,575, respectively, on operating 

revenues of $12,385 and $5,612, respectively. For the first six months ending June 30, 2014, the 

company reported a net loss of $55,241 on operating revenues of $15,567. Gem Air’s balance 

sheet at June 30, 2014, shows the company has current assets of $99,081 and current liabilities of 

$55.00, indicating positive working capital of $99,026. Gem Air also submitted third-party 

verification, dated August 4, 2014, that shows that Gem Air has $164,228 on deposit in its name.

In light of the above, we tentatively conclude that Gem 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.7

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. Gem Air also states 

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 with the Statute or the Department’s regulations.

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

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

 

6 The $89,614 is one-quarter of Gem Air’s estimated first-year expenses. 

7 As is our practice, prior to making any authority awarded to Gem Air effective, we will require the company to 

demonstrate that it continues to have the financial resources needed to meet our financial criteria.
5

accidents in a 5-year period from July 2009 through July 2014. Additionally, the FAA has 

informed us that it has no concerns over the safety of Gem Air’s operations.

In light of these circumstances, we tentatively conclude that Gem 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 United States as defined in 

49 U.S.C. § 40102(a)(15). That section requires that the president and two-thirds of the Board of 

Directors and other managing officers be U.S. citizens, that at least 75 percent 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, Gem Air is organized as a limited liability company in the State of Idaho 

and is in good standing. The company is equally owned by Ms. JoAnn Wolters and Mr. Daniel 

Schroeder, wife and husband, both of whom are U.S. citizens. There are no other ownership 

interests in the company and the company has no subsidiaries. Gem 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 within the meaning of the Statute. Our review of the applicant’s citizenship has uncovered 

no reason to suggest that control of Gem Air rests with non-U.S. citizens.

In light of the foregoing, we tentatively find that Gem Air is owned and actually controlled by 

U.S. citizens, consistent 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 such 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 the 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 Gem Air’s fitness and 

Commuter Air Carrier Authorization.
6

EFFECTIVE COMMUTER CONDITIONS & LIMITATIONS

If Gem Air is found 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. Among other things, this includes 

our receipt of evidence that Gem Air has been certified 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-party 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 Gem Air to operations using aircraft that can be operated under FAR Part 

135. Should Gem 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.8

Furthermore, we remind Gem Air of the requirements of 49 U.S.C. § 41110(e). Specifically, that 

section requires that, once an 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 been 

issued to them, we require that they supply information describing any subsequent substantial 

changes they may undergo in areas affecting fitness. Therefore, if Gem 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.9 The compliance of the company with this requirement is essential if we are to carry out 

our responsibilities under section 41110(e).10

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

progress report, within 45 days following 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 

 

8 We note that the operation of larger aircraft could require the air carrier to have access to additional funds and 

hire additional management personnel.

9 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 information 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.

10 We also remind Gem 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 actual 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.
7

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, 

current financial statements,11 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 Fitness 

Division to discuss its current and future operations.

ACCORDINGLY,

1. We direct all interested persons to show cause why we should not issue an order finding that 

Gem Air, LLC 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 Transportation Dockets, 1200 New Jersey Ave. SE, Room W12-140, Washington, 

D.C. 20590, in Docket DOT-OST-2014-0020 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 timely 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.12

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

 

11 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.

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

reconsideration.
Order 2014-10-25

Served: October 29, 2014

Attachment

SPECIMEN 

Terms, Conditions, and Limitations

GEM AIR, LLC

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 any 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 

insurance 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 the 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 expenses 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 holder authority is limited to operations 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.
2

(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 for 

the services authorized here, and with such other reasonable terms, conditions, 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 pounds.

(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 grounds 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, subject 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), Texas, 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 propose 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.

(11) In the event that the holder does not commence actual flying operations as 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 

 

 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.
3

holder commences but subsequently ceases all scheduled 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 

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.
4

Attachment A

SERVICE LIST FOR

GEM AIR, LLC

JOANNE WOLTERS

GEM AIR LLC

31 HAMNER DRIVE

SALMON ID 83467

PETER LYNCH

ASST CHIEF COUNCEL FOR

 ENFORCEMENT AGC-300

FEDERAL AVIATION

ADMINISTRATION

800 INDEPENDENCE AVE SW

WASHINGTON DC 20591

PATRICK DARLING

PRINCIPAL OPERATIONS

INSPECTOR

BOISE FSDO

3295 ELDER ST

SUITE 350

BOISE ID 83705

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