Sovereign Air, Inc.

105 Main St., PO Box 240

Belcourt, ND 58316

u.s. Department of transportation

Office of the Secretary of Transportation

1200 New Jersey Ave., S.E.

Washington, D.C. 20590

Re: Response to DOT Letter dated 3/3/10 by Damon Walker regarding Docket DOT-OST-2008-0285,

Application of Sovereign Air, Inc., for Commuter Air Carrier Authority

Date: April 2, 2010

Dear Mr. Walker:

Please find the responses of Sovereign Air to the subject letter in the same format.

1. Sovereign Air (SAI) leases one aircraft, a Cessna 172, that is currently subleased to Easy Air, Inc.

of Minnesota. In the past, SAI has utilized the aircraft minimally under its Part 135 On Demand

certificate. SAI is in negotiations with USACAviation, LLCof New Jersey, to purchase an air

carrier, Southtrac Air Charter, LLCof Florida. The purchase of Southtrac will occur shortly after

the funding process is completed. Southtrac has minimal operations using a Beech Baron,

N60291, under its Part 135 multi-engine air carrier certificate.

2. SAI has operated under a Part 135 On Demand single pilot certificate. Sovereign's local FSDOis

in Fargo, ND, POI Richard Kabinuck. Sovereign Air is purchasing 100% of Southtrac, which is in

the process of upgradingto 10 or more passenger authoritv. Southrac's FSDOoffice is Tampa,

POI David Bear. Further FAA authority for SAI to conduct the proposed operations will be

processed through the Tampa FSDO.

3. SAlleases a Cessna 172. SAI will not purchase any aircraft in the near future, but will lease any

aircraft needed. However, Native American loan guarantees may be available to Sovereign that

would make the purchase of aircraft easier. SAI plans to lease the Beech Baron for scheduled

service between St. Cloud, MN and MSP for the initial scheduled service route, two times daily,

five days per week. Starting with a smaller plane will facilitate the set-up of interline

agreements, reservation system, security, safety audits and general operations. SAI will add a

King Air within three months of operation to service this route and plan to later provide service

to Grand Rapids, MN. Should SAI be awarded an EAScontract requiring a different aircraft, the

aircraft(s) will be leased at that time as needed. Financing will be through loans and/or sale of

SAI equity. Sovereign Air-previously posted a general letter of intent-by Nvisionandwas hopeful

that the funding would be in place by now. We now have serious concerns over the legitimacy

of the proposed Nvision funding. Sovereign Air has, however, made significant progress toward

securing a Letter of Intent from another unrelated source, the- details of which are- not finalized
at this time. We expect to provide the Department more information regarding this potential

source of funding within the next two weeks.

4. The Director of Operations will be Stacey Schwab. The Chief Pilot will be John Beck. The

Director of Maintenance will be Wendell Stephens. Their resumes are attached. None ofthese

gentlemen have anything to report regarding section 204.3 (I), (m), (0), (p) or (q). All are U.S.

citizens.

5. Sovereign Air posted this information to this docket earlier this year. There is nothing new to

report on this.

6. See attached.

7. See attached. SAI projects 2036 revenue block hours during the first year, carrying 30910

passengers (half from St. Cloud and half from MSP). This based on previous passenger records

as communicated by the local community, reduced slightly. Estimated revenues are $1,648,374,

with $8721 ofthat being counter-to-counter letters and light parcel. These figures are

determined on a cash basis. Load factors are estimated at approximately 57%.

8. At this time, SAI cannot provide evidence of any significant cash holdings or lines-of-credit. We

hope to provide something substantial concerning another Letter of Intent for adequate funding

within the next couple weeks.

9. We should have this early next week and will upload it to the docket by the end of next week.

10. Jon Payne has prepared the financial statements for Sovereign Air. He has a Masters degree in

ProfessionalAccountancy from Indiana University, but does not holdaCPA license. He has

served in an accounting role for about four years with two small start-up companies and worked

under minimal supervision by a CPA, external to one company, for more than two years.

Sovereign Air's financial statements have not been audited. The latest financial statements are

attached.
Stacy Schwab

Permanent Address

2 Quincy ct.

Bedminster, NJ 07921

Ratings:

Telephone Contacts

Home (908) 326 - 3181

Cell (908) 468 - 9059

Airline Transport Pilot: Airplane Multiengine Land

Type Ratings: A320 SIC onIY,HS-125, CE-500, BE 1900

Commercial Pilot: Airplane Single Engine Land

FAA Medical Certificate: Class I

Flight Time: Total

Multiengine

Actual Instrument

Night

E_mployment History:

8/08 - Present Southtrac Air

2802 Constitution Way

Wall, NJ 07727

4/07 - Present Jetblue Airways

Forrest Hills, NY

5/04-4/07 Short Hills Aviation

1 Airport Rd

Morristown, NJ 07052

3/02 -4/04 Morristown Aviation

9 Airport Rd.

Morristown, NJ 07052

3/00 - 2102 Trans World Airlines

114SSNatural Bridge Rd.

Bridgeton, MO 63044

2/97 - 3/00 CommutAir/US Air Express

518 Rugar St.

Plattsburgh, NY 12901

10,265

7,579

603

1,445

Turboprop

Jet

Jet PIC

PIC

2,542

4,822

1,772

5,321

Director of Operations: FAR 135

Oversee operational control of flights,

records and training of pilots.

First Qfficer: FAR 121 passenger air

transport throughout North America

and the Caribbean.

Captain: FAR 91 and 135 passenger

air transport throughout North America.

Management Duties: Scheduling initial

and recurrent training; tracking and

scheduling check rides, ground school

and medicals; scheduling crews and

aircraft for flights; assuring compliance

with flight and duty time and rest

requirements; keeping 135 pilot

records; coordinating with the DOM;

exercising operational control;

maintaining current operational flight

data; keeping crewmember files and

records; establishing policies.

Captain: FAR 91 and 135- passenger

air transport throughout North America,

Caribbean and Latin America.

Pilot: FAR 121- passenger air

transport throughout North

America and Caribbean.

Captain, BE1900: FAR 121- passenger

air transport throughout Eastern United

States.
Formal Education:

8/90 - 5/91 Central Missouri State U. M.S. Aviation Safety

Warrensburg, MO 64093

9/85 - 8/90 Thomas Edison State College B.S. Aeronautical Science

Trenton, NJ 08608
John W. Beck

2802 Constitution Way

Wall, NJ 07719

US Citizen

January 2010

908-512-9039

Email:john@usac.com

Current Expertise

• President and Chief Pilot • Certification, Manuals, Software

• Pilot - Hawker, Citation, Flacon • Excellent FAA Relationship

• Company Instructor • Local to NY & NJ Metro Area

Ratings and Certificates

(Certificate Number 2715888)

o Airline Transport Pilot Certificate 0 Flight Instructor

o Airplane Multi-Engine Land 0 Airplane Single and Multi-Engine

o Commercial Single-Engine 0 Instrument Airplane

o Airplane Single Engine Land 0 Advanced Ground Instructor

o Commercial Helicopter 0 Type Ratings - CE500, HS123, DA50

Flight Experience (Flight Hours)

7,132 Actual Instrument Time:

5,847 Simulated Instrument Time:

1,535 Single-Engine Time:

589 Multi-Engine Time:

Education

Total Time:

Cross Country:

Night Flight Time:

Turbine:

766

290

1,931

5,740

1976 BS Nuclear Engineering - North Carolina State University

1980 MS Nuclear Engineering - North Carolina State University

1982 Ph.D. Electrical Engineering & Computer Science - Duke University

1986 Program Management - Defense System Management College

1992 IS09000 Lead Assessor - Intemational Standards Organization

Technical Expertise

o Program Management 0 Software Development

o System Engineering 0 Business Management

o Custom Aviation Software 0 IS09000, Sarbanes Oxley

o Aviation Manuals and Part 135 Certification

Work Experience

Date Role

2006-2008

1997-2004

1982-1997

1976-1982

Southtrac Air Charter - President and Chief Pilot, BE58 Captain

USAC Airways 691 - President and Chief Pilot, C414A Captain

USAC Aviation, President - Airline Transport Pilot

~ Director of Operations, Chief Pilot, Company Instructor

Meregrass, Director of Operations, Falcon 900B Pilot, Instructor

AT&T Laboratories - Engineering Manager

AT&T Bell Laboratories - Research and Development Engineer

Duke University Medical Center - Research Associate, Radiology

2007 -Present

2007 -Present

1994-Present

Z:\Pilots\asp\dataIUSAC Airways 691 llc\PilotRecordslJohn Beck\Ol.2 - Resume· Aviation - 201O.doc
Wendell Kye Stephens

1003 Ballinger Road

Lutz, FL 33548

813-294-7777

Title: Director of Maintenance at American Aviation, Inc.

Education:

1983-1988

1981-1983

Employment:

1998-Present

1992-1998

1990-1993

1989-1990

1989

1985-1988

1984

Flight Time:

Embry-Riddle Aeronautical Universiry-Daytona Beach, FL

Bachelor of Science in Aviation Technology flight and maintenance option

FAA commercial, multi, and instrument pilots license obtained

Associate in Aviation Maintenance Technology

FAA airframe and powerplant license obtained

Grade point average: 3.58 of a possible 4.00. Class ranking top 5%

Hillsborouql: Hiql: School-Tampa, FL

Three years training as an auto mechanic

American Aviation, Inc. -Brooksville, FL

Director of Maintenance and Chief Inspector, including returning aircraft to service (Fall 1998)

Maintaining, Repairing, and Overseeing the operation of a Class III Repair Station TZ4R562M

Supervising 15 maintenance personnel, 4 avionics personnel, 3 parts personnel, and 1 records

inspector.

American Aviation, Inc.-Brooksville, FL

Aircraft mechanics, commercial pilot, aircraft sales

Repairing, inspecting, and flying aircraft 12,500 Ibs and under

Performing annual inspections, time life item replacement, and routine maintenance requirements

on small aircraft 12,500 Ibs and under

Daytona Beach Aviation, Inc.-Daytona Beach, FL

Shift supervisor and maintenance inspector

Maintained the following aircraft for Embry-Riddle Aeronautical University: Mooney M20],

Cessna 172, and Cessna T303 Crusader

Line qualified for Continental, Delta, and American Airlines

Completed aircraft and records familiarization courses for the following: 737, 727, Saab 360 and

MD80 aircraft

B &..5 Aircr# Leasin8-Tampa, FL

Chief Pilot in charge of operations, scheduling, and maintenance

Embry-Riddle Aeronautical Universiry-Daytona Beach, FL

Worked part-time, while attending school, as a lab instructor

Instructed students on engine troubleshooting and installation

Self Employed-Daytona Beach, FL

Part-time aircraft maintenance and repair

General Electric Company, Inc.-Daytona Beach, FL

Work full-time, while attending class, using an automated storage and retrieval line.

Responsible for inventory, storage, and retrieval of parts for their aircraft and tank simulators
Total Time 5330 hours

PIC 4636 hours

Multi-Engine 3658 hours

Instrument 1318 hours

Personal:

AWARDS

FAA Pilot Proficiency Award, 1990

National Deans List 1983-1989 Embry-Riddle Aeronautical University

Deans List 1981-1983 Hillsborough High School

INTERESTS

Sport Flying, Snow and Water Skiing, Scuba Diving, Racquetball

References: Furnished on request
Sovereign Air, IDe 4/2/2010

Remaining General Start-up Expenses

Personnel

lATA Codes

Insurance Update

Airline Tariff Publishing Co. (ATPC)

Official Airline Guide (OAG)

Computers - two Laptops

Travel

Landing fee deposit - MSP

5000

5500

5000

200

350

1600

500

3000

Total Start-up Expenses

Acquire Air Carrier Certificate

Working Capital and Financial Strenght Requirement

$21,150

$180,000

a

Pre-Operational Expenses $201,150

Advertising, signage, and station expenses will be handled by the local community for the first year.

Sovereign Air will use its own reservation system initially by the owners, including security and the passenger no-fly list.

Sovereign Air owners will supervise the local community station initially.

Trained part-time employees will work the stations.

Development and handling of interline passenger and baggage agreements will be done by the company owners.

Owners will do the flight following initially.

The company safety audits wil be developed through the first 3 months by the CEO, DO and Chief Pilot.

The safety audit for Maintenance will be done by the CEOand the Director of Maintenance.
Sovereign Air, Inc.

12 Month Cash Flow

STC-MSP

YEAR1 12 month

Pre Startup Jun-10 Jul-10 Aug-10 Sep-10 Oct-lO Nov-10 Dec-10 Jan-ll Feb-ll Mar-ll Apr-11 May-ll Totals

Initial Cash on Hand

Funding 500,000

Sales - Passengers 9,369 9,369 14,414 157,500 157,500 157,500 189,000 189,000 189,000 189,000 189,000 189,000 1,639,653

Sales - Cargo 43 86 86 945 945 945 945 945 945 945 945 945 8,721

Cash Receipts 500,000 9,412 9,456 14,501 158,445 158,445 158,445 189,945 189,945 189,945 189,945 189,945 189,945 1,648,374

CASH EXPENSES

DIRECT

Crew Salaries 2,312 2,312 2,312 12,190 12,190 12,190 12,190 12,190 12,190 12,190 12,190 12,190 116,643

Flight Following 31 31 31 163 163 163 163 163 163 163 163 163 1,555

Maintenance Parts & Labor 1,282 1,282 1,282 7,818 7,818 7,818 7,818 7,818 7,818 7,818 7,818 7,818 74,205

Fuel 2,805 2,805 2,805 48,352 48,352 48,352 48,352 48,352 48,352 48,352 48,352 48,352 443,586

Huilinsurnace 667 667 667 1,617 1,617 1,617 1,617 1,617 1,617 1,617 1,617 1,617 16,550

Liability Insurnace 167 167 167 167 167 167 167 167 167 167 167 167 2,000

Aircraft Lease 2,500 2,500 2,500 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 115,500

Total Direct Costs 770,039

INDIRECT

Ground Handling 2,102 2,102 2,102 12,190 12,190 12,190 12,190 12,190 12,190 12,190 12,190 12,190 116,012

Hub Landing Fees 2,102 2,102 2,102 12,190 12,190 12,190 12,190 12,190 12,190 12,190 12,190 12,190 116,012

Station Salaries/Operations 2,000 2,000 2,000 7,917 7,917 7,917 7,917 7,917 7,917 7,917 7,917 7,917 77,250

Other Landing Fees 841 841 841 4,876 4,876 4,876 4,876 4,876 4,876 4,876 4,876 4,876 46,405

Station Rent 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 18,000

Hangar

Res. fees, de-ice, lost bags, etc.

Crew Training 42 42 42 208 208 208 208 208 208 208 208 208 2,000

Marketing/Promotion 167 167 167 500

General & Admin Overhead 417 417 417 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 14,583 132,500

Capital Purchases - Plane

Start-up Costs 201,150

Total Indirect Costs 508,679

TOTALCASHEXPENSES 201,150 17,432 17,432 17,432 136,269 136,269 136,269 136,269 136,269 136,269 136,269 136,269 136,269 1,479,868

Depreciation

Interest Expense 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 3,333 40,000

Estimated Taxes 43,403 43,403

Reserve Accounts 7,818 7,818 7,818 7,818 7,818 7,818 7,818 7,818 7,818 7,818 7,818 7,818 93,812

Cash Position ,(End of Month) 298,850 279,679 260,552 246,470 257,495 268,520 279,545 322,070 364,595 407,120 449,645 492,170 491,292 491,292

Est Pre-Tax Profit 128,506

Pre-Tax Profit % of REV 7.8%

Est After-Tax Profit 85,104

After-Tax Profit % of REV 5.2%

(Includes start-up costs)
2009 Income Statement

Sovereign Air, Inc.

105 Main St., BOX 240

Belcourt, NO 58316

Revenues

Consulting

Travel Agency

$80.00

$6,666.15

$6,746.15

Cost of Goods Sold

Travel Agency

Cessna 172 Operations

$6,414.15

$408.57

Expenses

Insurances

Rent

Travel Expenses

Phone/Mobile

Bank Fees and Charges

Contractor Expenses

Office Supplies

Postage

Website

Company Car

$2,569.22

$1,500.00

$1,439.51

$1,366.67

$1,184.54

$840.00

$1,921.00

$324.00

$260.00

$32.50

Net Income -$11,514.01
Balance Sheet as of December 31, 2009

Sovereign Air, Inc.

105 Main St., BOX 240

Belcourt, NO 58316

Assets

Current Assets

Cash in bank

Accounts receivable

Inventory

Prepaid expenses

Tax Asset

Other current assets

Total CurrentAssets

Fixed Assets

Machinery & equipment

Furniture & fixtures

Leasehold improvements

Land & buildings

Other fixed assets

(LESS accurn. Depr. on all fixed assets)

Total Fixed Assets (net of depreciation)

Other Assets

Intangible - Air Carrier Certificate

Deposits

Goodwill

Other

Total Other Assets

TOTAL Assets

Liabilities and Equity

Current Liabilities

Accounts payable

Interest payable

Taxes payable

Notes, short-term (due within 12 months)

Current part, long-term debt

Other current liabilities

Total Current Liabilities

Long-term DebtBank loans payable

Notes payable to stockholders

LESS: Short-term portion

Loans from shareholders

Accrued Rent

Accrued Aircraft Lease Payments

Accrued Wages

Accrual for Taxes on Accrued Wages

Other long term debt

Total Long-term Debt

Total liabilities

Owners' Equity

Capital Stock (1M shares issue and

outstanding, par value $0.001 per share)

Retained earnings

Additional Accumulated Deficit

Total Owners' Equity

Total Liabilities & Equity

Year Ending

12/31/2008

Year Ending

12/31/2009

$100.00 $100.00

$0.00 $100.00

$0.00 $0.00

$0.00 $0.00

$25,834.34 $29,864.25

$0.00 $0.00

$25,934.34 $30,064.25.

$0.00 $0.00

$1,400.00 $1,400.00

$0.00 $0.00

$0.00 $0.00

$0.00 $0.00

$0.00 $0.00

$1,400.00 $1,400.00

$250,000.00 $0.00

$0.00 $0.00

$0.00 $0.00

$0.00 $0.00

$250,000.00 $0.00

$277,334.34 $31,464.25

$2,300.00

$0.00

$0.00

$6,000.00

$0.00

$3,220.00

$6,479.26

$0.00

$0.00

$6,000.00

$0.00

:$0.00

$11,520.00 $12,479.26

$0.00

$9,684.00

-$6,000.00

$101,122.66

$6,000.00

$2,800.00

$439,341.41

$87,983.00

$0.00

$0.00

$8,184.00

-$6,000.00

$114,426.76

$6,000.00

$7,600.00

$333,641.89

$83,410.47

$0.00

$640,931.07 $547,263.12

$652,451.07 $559,742.38

-$73,812.41

-$301,304.32

$1,000.00

-$62,298.40

-$466,979.73

-$375,116.73 -$528,278.13

$277,334.34 $31,464.25
AFFIDAVIT OF SAFETY COMPLIANCE

STATE OF ------~~~------------

COUNTY OF

----~-=~------------

Jon Payne, being first duly sworn, deposes and says:

1. That he/she is duly elected, qualified, and serving as CFO

of Sovereign Air Inc. and that he is authorized to and

does make this affidavit for it.

2. That all aircraft owned and leased by Sovereign Air, Inc.

have been certified by the Federal Aviation Administration and currently

comply with all applicable Federal Aviation Administration safety

standards under Parts 135, as well as the noise standards of Part

36, of the Federal Aviation

Regulations.

Subscribed and sworn to before me this ~·dayof ~f1\( ,2010.

(Seal) $',~\:;.¥y~;:~,,, DAVID H. ZAMARRIPA

f~X{<'% Notary Public. State of Texas

;,.:;;...~l My Commission Expires

~..,;.!,f,~I~~~~""March 311 2013

c~_.•.._-- ---.....

---~

[signature of Notary Public] .
The contents of this application and the attached exhibits are true and correct to the best of my

knowledge and belief. Pursuant to Title 18 United States Code Section 1001, I, in my individual capacity

and as the authorized representative of the applicant, have not in any manner knowingly and willfully

falsified, concealed or failed to disclose any material fact or made any false, fictitious, or fraudulent

statement or knowingly used any documents which contain such statements in connection with the

preparation, filing or prosecution of the application. I understand that an individual who is found to

have violated the provisions of 18 USCSection 1001 shall be fined or imprisoned not more than five

years, or both.

Sovereign Air, Inc.