Order 2011-3-21

Served: March 17, 2011 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 17th day of March, 2011 

Fitness Determination of

 AIR CHARTER, INC.

 d/b/a AIR FLAMENCO

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

 Docket DOT-OST-2010-0260

ORDER TO SHOW CAUSE

PROPOSING ISSUANCE OF COMMUTER AIR CARRIER AUTHORIZATION

Summary

By this order, we tentatively find that Air Charter, Inc. d/b/a Air Flamenco (“Air Flamenco”) 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 (“the Statute”) and section 298.32 of the 

Department’s Aviation Economic Regulations (14 CFR 298.32) direct us to determine whether 

companies proposing to provide scheduled passenger service as commuter air carriers are “fit, 

willing, and able to operate the proposed commuter service.” We must also 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 Statute and regulations imposed by federal and state 

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

On October 15, 2010, Air Flamenco filed an application in Docket DOT-OST-2010-0260 for 

authority to provide scheduled passenger operations as a commuter air carrier pursuant to section
2

41738 of the Statute. Air Flamenco accompanied its application with the fitness information 

required by section 204.3 of our regulations (14 CFR 204.3).

1

No answers opposing Air Flamenco’s application were filed and no special issues regarding the 

applicant have come to our attention. Under these circumstances, we propose to decide the issue 

of the applicant’s fitness on the basis of the written record, and we tentatively conclude that Air 

Flamenco 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 conclusions.

FITNESS

The Company

Air Flamenco is a corporation that was organized under the laws of the commonwealth of Puerto 

Rico on June 1, 1987, by Mr. Edwin Tabales and Ms. Noemi Gonzalez. On August 25, 1993, 

Air Flamenco was certified as an air carrier under Part 135 of the Federal Aviation Regulations

to conduct on-demand passenger and cargo operations using six small aircraft.2 On 

May 19, 1998, Ms. Gonzalez acquired the sum of Mr. Tabales’ shares of the company and 

simultaneously donated the total outstanding shares of the company to her two sons, Messrs. 

Ruben and Francisco Torres. The shares were split equally between the two brothers. Francisco 

assumed the positions of President, Treasurer, Pilot in Command, and Director of Operations; 

and Ruben assumed the positions of Vice President and Chief Pilot. Currently, the applicant 

holds a 14 CFR Part 298 exemption and operates 10 small aircraft. 

Managerial Competence

The following table identifies Air Flamenco’s officers and other key management and technical 

personnel, each of whom is a U.S. citizen. 

Name Position

Mr. Fransico Torres President, Treasurer, Pilot in Command, and

Director of Operations

Mr. Ruben Torres Vice President, Chief Pilot

Mr. Cayetano Rodriguez Director of Maintenance

Mr. Francisco Torres, an Airline Transport Pilot with over 2,500 total flight hours logged,

assumed his current positions in 1998. Before that, he served as a Loader Supervisor for 

Flamenco Airways, Inc. (1996 – 1998) and a Station Manager for West Atlantic Air 

(1995 - 1996). He holds a Bachelor’s degree in Business Administration from Universidad 

Metropolitan. 

 

1 Air Flamenco filed additional information supplementing its application on December 2, 2010.

2 A small aircraft is defined as aircraft originally designed to have a maximum passenger capacity of 60 seats or less 

and a maximum payload capacity of 18,000 pound or less.
3

Mr. Ruben Torres, an Airline Transport Pilot with over 4,500 total flight hours logged, assumed 

the position of Air Flamenco’s Chief Pilot in 2004 and has served as its Vice President since 

1998. Before that, he served as a Pilot for the applicant (1998-2004). From September 1994 to 

February 1997, Ruben took a leave of absence for medical reasons. He briefly served as a Pilot 

for Aerial Imagine (October 1997) and Aerial Architectural Photography, Inc. (February 1997). 

Before that, he served as a Loader for Flamenco Airways, Inc. (1994).

Mr. Cayetano Rodriguez Diaz, an Airframe and Powerplant Mechanic, joined the applicant in 

2001 and served as a Mechanic. He assumed his current position as Director of Maintenance in 

2002. Before that, he served as a Mechanic for Isla Nena Air Service, Inc. (1998 – 2002), Tol 

Air Services, Inc. (1992 - 1998), and Flamenco Airways, Inc. (1987 – 1992). 

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

conclude that Air Flamenco’s management team possesses the managerial skills and technical 

ability to conduct the proposed operations.3

Operating Proposal and Financial Plan

If granted the commuter authorization it seeks, Air Flamenco intends to operate scheduled 

service four times daily between Isla Grande and Culebra and between Ceiba and Culebra, 

Puerto Rico, using its fleet of 10 Britten-Norman Islander aircraft configured for 9 passenger 

seats. 

In support of its application, Air Flamenco submitted current and historical financial statements 

demonstrating the company’s results from operations. The historical profit and loss statements 

provided by the applicant show that for calendar year 2007, the company reported net income of 

$33,665 on approximately $3.00 million in operating revenues. For calendar year 2008, the 

company reported net income of $32,550 on approximately $2.59 million in operating 

revenues, and for calendar year 2009, the company reported a net loss of $95,159 on 

approximately $2.72 million in operating revenues. For the eight months ending 

August 31, 2010, the company reported a net loss of $15,349 on approximately $2.30 million in

operating revenues. In addition, the company’s August 31, 2010, balance sheet shows that it has 

current assets of $229,276 and current liabilities of $195,275, giving the company a positive 

working capital balance of $34,001. 

Air Flamenco also provided the Department with a financial forecast for its first year of 

scheduled operations. The applicant states that it expects to incur no significant pre-operating 

expenses since it already provides on-demand air service in the markets it proposes to operate 

scheduled service. Air Flamenco provided first-year expense forecasts of approximately 

$1.97 million. We have reviewed the applicant’s forecast and find it to be reasonable. 

 

3 Before authorizing an air carrier to conduct air transportation operations, the FAA also evaluates certain of the 

applicant’s key personnel with respect to the minimum qualifications for those positions as prescribed in the Federal 

Aviation Regulations. The FAA’s evaluation of these key personnel provides an added practical and in-person test 

of the skills and technical ability of these individuals. The FAA has advised us that Air Flamenco’s key technical 

personnel are acceptable to that agency in their respective positions.
4

Therefore, to meet our fitness test,

4 we estimate that the company will need access to 

approximately $458,821.

5 By letter dated December 1, 2010, Banco Santander of Puerto Rico 

provided third-party verification of funds on deposit in the applicant’s name which totals 

$464,534.28. 

In light of the above, we tentatively conclude that Air Flamenco will have access to sufficient 

financial resources to enable it to commence its 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, its owners, or 

its key personnel nor have there been any charges of unfair, deceptive or anti-competitive 

business practice, or of fraud, felony or antitrust violations brought against any of these parties in 

the past ten years. 

In its application, Air Flamenco stated that the FAA issued a letter of investigation dated 

August 23, 2010, alleging that the applicant may have conducted scheduled operations that 

extended beyond the scope of its air carrier certificate and therefore potentially violated 14 CFR 

135.3 (a)(1), 135.243 (a), 119.3, 119.5 (g), (i), (k), and (l). This investigation remains under 

review by that Agency.

Additonally, the Department’s Office of Aviation Enforcement and Proceedings (“Enforcement 

Office”) is investigating allegations that Air Flemenco engaged in unauthorized commuter air 

carrier operations. That matter is pending and the Enforcement Office has advised us that it has 

no objections to the approval of Air Flamenco’s application. 

Air Flamenco states that, except for the above on-going enforcement actions, there are no other 

pending investigations, enforcement actions, or formal complaints filed by the Department 

against it, its key personnel, or persons having a substantial interest in it with respect to 

compliance with the Statute or the Department’s regulations. Moreover, our review of the 

applicant’s compliance disposition has produced no evidence of any compliance issues other 

than the matters stated above. While we note that there are pending investigations of the 

applicant for alleged violations of federal regulations, it does not appear at this time that any 

adverse finding in these cases would warrant a negative fitness finding. We will, however, 

reconsider our decision in this regard at the conclusion of those matters, if necessary. 

 

4 We have generally asked that new entrant applicants have resources sufficient to cover all pre-operating costs, 

plus a working capital reserve equal to the operating costs that would be incurred in three months of normal 

commuter operations. However, because projected operations during one or more of the first three months of 

anticipated actual air transportation services frequently do not include all costs of operations that will be incurred 

during a normal period of operations, it has been our practice to base our three-month standard on one quarter of the 

first year’s operating cost forecast. In calculating available resources, projected revenues may not be used. 

5 The $458,821 noted here is one-quarter of the applicant’s first-year expense forecast of approximately 

$492,000, less the company’s positive working capital balance of $34,001.

6 As is our practice, prior to making any authority awarded to Air Flamenco effective, we will require the 

company to demonstrate that it continues to have access to the financial resources needed to meet our financial test.

 
5

In light of these circumstances, we tentatively conclude that Air Flamenco 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

The Statute requires that 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). The Statute also 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 noted earlier, Messrs. Ruben and Francisco Torres, both of whom are U.S. citizens, are the 

sole shareholders of Air Flamenco, and Francisco serves as the air carrier’s President. Moreover, 

all of Air Flamenco’s other key personnel are U.S. citizens and the applicant has provided an 

affidavit attesting that it is a citizen of the United States within the meaning of the Statute and 

that it is owned and controlled by U.S. citizens. Our review of the applicant has uncovered no 

reason to suggest that control of Air Flamenco rests with non-U.S. citizens.

In light of the foregoing, we tentatively find that Air Flamenco 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

commuter 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 Air Flamenco’s fitness and 

Commuter Air Carrier Authorization.
6

EFFECTIVE COMMUTER AUTHORIZATION

CONDITIONS AND LIMITATIONS

In the event that we find Air Flamenco fit, willing, and able to conduct the proposed scheduled 

service, we will issue to it a Commuter Air Carrier Authorization. However, that authorization 

will not become effective until the company has fulfilled all of the requirements for effectiveness 

as set forth in the Terms, Conditions, and Limitations attached to it. Among other things, this 

includes (1) our receipt of evidence of Air Flamenco’s authority from the FAA authorizing such 

operations, (2) evidence of liability insurance coverage that meets the requirements of section 

205.5(b) of our rules, (3) a statement of changes it may have undergone since its fitness was 

examined, and (4) evidence that Air Flamenco has adequate financial resources available to it.

Moreover, given the limited scope of Air Flamenco’s proposed operations, we will impose 

certain limitations on its authorization to provide scheduled air transportation as a commuter air 

carrier. Our finding of fitness for Air Flamenco is based on the operating plans described in its 

application, namely, utilizing aircraft that can be operated under Part 135. Should Air Flamenco

desire to acquire and operate aircraft that would require certification from the FAA under 

Part 121, our fitness findings, particularly involving the adequacy of Air Flamenco’s 

management and financial resources, might no longer apply. Therefore, we propose to limit any 

authority issued to Air Flamenco to operations conducted under Part 135. Should Air Flamenco

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.

Furthermore, we remind Air Flamenco 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 commuter 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 Air 

Flamenco is issued an effective Commuter Air Carrier 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.7 The compliance of the company with this 

requirement is essential if we are to carry out our responsibilities under section 41110(e).8

 

7 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 certificate authority.

8 We also remind Air Flamenco 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

Additionally, if Air Flamenco 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 commuter flight 

operations, to the Air Carrier Fitness Division. The submission of a first year progress report 

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, principal 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,9 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 

Air Charter, Inc. d/b/a Air Flamenco 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 Avenue, SE, Room W12-140, 

Washington, D.C. 20590, in Docket DOT-OST-2010-0260 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 business 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.10 

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.

 

9 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.

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

reconsideration.
8

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
Attachment

Specimen

Terms, Conditions, and Limitations

AIR CHARTER, INC.

D/B/A AIR FLAMENCO

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 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.
2

(4) The holder’s authority is limited to operations conducted pursuant to Part 135 of the 

Federal Aviation Regulations. 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.

(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 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 or as 

modified by any future legislation addressing access restrictions to or from Love 

Field.. 

(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.
Attachment A

SERVICE LIST FOR

AIR CHARTER, INC.

D/B/A AIR FLAMENCO

FRANCISCO TORRES

PRESIDENT

AIR CHARTER INC

PO BOX 810352

CAROLINA PR 00981

PETER LYNCH AGC-300

ASST CHIEF COUNSEL FOR ENFORCEMENT

FEDERAL AVIATION ADMINISTRATION

800 INDEPENDENCE AVE SW

WASHINGTON DC 20591

WILLIAM J WEBER

CERTIFICATION SECTION MANAGER

FAA AFS-900

45005 AVIATION DRIVE SUITE 131

DULLES VA 20166

JOAQUIN PUNTONET

PRINCIPLE OPERATIONS INSPECTOR

FEDERAL AVIATION ADMINISTRATION

SAN JUAN FSDO

525 FD ROOSEVELT AVENUE

SAN JUAN PR 00918

ANNE SUISSA RTS-42

OFFICE OF AIRLINE INFORMATION

DOT/RITA/BTS E-34

1200 NEW JERSEY AVE SE

WASHINGTON DC 20590

BERNARD STANKUS 

OFFICE OF AIRLINE INFORMATION

DOT/RITA/BTS RTS-42

1200 NEW JERSEY AVE SE

WASHINGTON DC 20590