Order 2013-8-5

 Served: August 19, 2013

Issued by the Department of Transportation

on the 19th day of August, 2013

Application of 

SCOTT AIR, LLC

 d/b/a ISLAND AIR EXPRESS

 d/b/a DESERT SPLASH ADVENTURES

for a certificate of public convenience and necessity 

under 49 U.S.C. § 41102 to engage in interstate 

scheduled air transportation of persons, property, 

and mail

 Docket DOT-OST-2012-0178

FINAL ORDER

SUMMARY

By this order, we find that Scott Air, LLC d/b/a Island Air Express (“Scott Air”) is fit, willing, 

and able to engage in interstate scheduled air transportation of persons, property, and mail using 

small aircraft,1and issue to it a certificate of public convenience and necessity subject to the 

Terms, Conditions, and Limitations attached.

BACKGROUND

By Order 2013-1-12, issued on January 18, 2013, we tentatively found Scott Air fit to engage in 

interstate scheduled passenger air transportation using small aircraft. In that order, we also 

directed interested persons to file objections to the order within 14 days (i.e., by February 1, 

2013). 

On February 1, 2013, Pacific Airways, Inc., and PM Air, LLC (collectively, the “Ketchikan 

Carriers”), filed a Petition for Reconsideration and Answer in Docket DOT-OST-2012-0178

opposing the Department’s tentative findings. The Ketchikan Carriers maintain that Scott Air 

has continued to violate Federal law and Department regulations by engaging in illegal interstate 

scheduled air transportation since the company’s inception and after the Department issued a 

consent order finding that Scott Air was holding out interstate air transportation without 

 

1

“Small aircraft” is defined as any aircraft originally designed to have a maximum passenger capacity of 60 seats 

or less or a maximum payload capacity of 18,000 pounds or less.

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C. UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION
2

Departmental economic authority. In addition, the Ketchikan Carriers state that the 

Department’s tentative findings in Order 2013-1-12 were based “on unproven statements as well 

as misleading and fraudulent statements made in the application”

2

that call into question Scott 

Air’s managerial competence, compliance disposition, and financial condition. Moreover, the 

Ketchikan Carriers assert that should the Department eventually determine that Scott Air is fit, 

Scott Air should be issued a commuter authorization instead of a certificate of public 

convenience and necessity for persons, property, and mail since that Scott Air “neither requested 

authority to transport mail, nor did it include any mail traffic or review in its proposed 

operations.”3 The Ketchikan Carriers also note that Scott Air did not acknowledge a pending 

enforcement action in its application for certificate authority, as required by Department rules.

Further, the Ketchikan Carriers request that the Department refrain from any further action 

regarding the fitness of Scott Air until their formal complaint filed in Docket DOT-OST-2013-

0031 is adjudicated.4

On February 12, 2013, Scott Air filed a Reply, stating that the Ketchikan Carriers’ objection 

should be dismissed. The applicant claims that the Ketchikan Carriers’ submission was filed 

late, was procedurally deficient, and lacked material facts supporting the position that Scott Air 

is unfit to hold certificate authority. Scott Air also notes that the Ketchikan Carriers compete in 

the single city-pair market operated by Scott Air (Klawock-Ketchikan).

Further, Scott Air argues that the Ketchikan Carrier’s Answer was “replete with deliberate 

distortions of fact as well as outright misstatements of fact.”5 For instance, the applicant rebuts 

the Ketchikan Carriers’ assertion that the air carrier has no intention of operating interstate air 

commerce or transporting mail, stating its “certificate application... indicates the nature of the 

certificate authority applied for”6and that its “application is clearly one seeking authority to 

engage in scheduled air transportation of persons, property and mail.”7 With respect to the 

allegation raised by the Ketchikan Carriers on the applicant’s failure to acknowledge the 

enforcement action with the Department, Scott Air states that its application discusses receiving 

a letter of investigation in July 2012 from the Department and its response to the Department’s 

letter in August 2012, and notes that the Department addresses the investigation, settlement, and 

Consent Order 2012-12-16 in the Compliance Disposition section of its Show Cause Order. 

Regarding the financial issues that were raised by the Ketchikan Carriers, Scott Air provided a 

detailed response by its Certified Public Accountant, Mr. Roy A. Dwaileebe, disproving each of 

the allegations raised. 

On February 22, 2013, the Ketchikan Carriers filed a Response reiterating their position that 

Scott Air has not proven its fitness to operate interstate air transportation of persons, property, 

and mail, and providing new information concerning Scott Air’s lack of compliance with the 

 

2

See Answer of the Ketchikan Carriers, dated February 1, 2013, at 3.

3

Id., at 8.

4 On April 10, 2013, the Department’s Office of Aviation Enforcement and Proceedings dismissed the complaint 

filed by the Ketchikan Carriers, citing insufficient evidence that Scott Air violated the terms of Consent 

Order 2012-12-16. (See Order 2013-4-4)

5

See Reply of Scott Air, at 5.

6

Id., at 6.

7

Id., at 7.
3

State of Alaska.

8

 The Ketchikan Carriers now request the Department to either assign the 

application to an Administrative Law Judge, deny the application on the grounds of continued 

lack of compliance and uncertainty about the company’s financial position, or dismiss the 

application without prejudice until the current complaint of continuing transportation of 

interstate traffic is resolved and Scott Air files a complete application with all the necessary 

information as required by Department regulations.

On June 4, 2013, the Ketchikan Carriers filed a Motion to Dismiss the application of Scott Air

for lack of prosecution and material deficiencies in the information provided. On June 17, 2013, 

Scott Air filed an Answer to the Ketchikan Carriers’ Motion, arguing that no new information 

was presented and thus, the Department should reject the Ketchikan Carriers’ latest filing and 

finalize its tentative findings. On June 24, 2013, the Ketchikan Carriers filed a response to 

Scott’s Answer, requesting that the Department dismiss Scott Air’s application. On July 26 

2013, Scott Air submitted a Notice of Filing requesting that the latest Ketchikan filing not be 

accepted by the Department. 

DECISION

We have reviewed the pleadings in this case and find that Scott Air is fit, willing, and able to 

engage in interstate scheduled air transportation of persons, property, and mail. Despite the 

allegations raised by the Ketchikan Carriers regarding Scott Air’s lack of fitness, we find that the 

material provided by Scott Air in its application was sufficient for us to make a determination of

the company’s managerial competency, compliance disposition, and financial condition. The 

Department reviewed the information submitted by Scott Air in its application and finds that the 

information was sufficient for us to determine the company’s fitness. 

Furthermore, in reviewing an applicant’s financial fitness, our primary focus is on evidence that 

the applicant fully understands and has reasonably estimated the costs involved in providing the 

proposed operations, and that it has available to it resources sufficient to meet our financial 

fitness requirements to cover those expenses. Scott Air’s forecast that it included in its 

application is for operations it currently provides. The forecast included revenue assumptions 

and more importantly, cost assumptions that indicate to the Department that the air carrier had 

taken into account the major financial cost drivers required to operate as a certificated air carrier. 

Additionally, as is our practice, prior to making any authority awarded to Scott Air effective, we 

will require the company to demonstrate that it continues to have access to the financial 

resources needed to meet our financial fitness test.

Other than the arguments mentioned above, we find no found no new arguments or evidence that 

have not been considered or addressed in this proceeding that would require a hearing by an 

Administrative Law Judge or lead us to conclude that Scott Air is not fit to engage in interstate 

scheduled air transportation of persons, property, and mail. Therefore, by this order, we confirm 

 

8

See Response of the Ketchikan Carriers, dated February 22, 2013, at 13. The Ketchikan Carriers submitted as 

Appendix A, a copy of Scott Air’s current corporate status report filed with the Alaska Department of Commerce, 

Community, and Economic Development which shows Scott Air’s corporate status as “non-compliant.” In this 

particular instance, “non-compliance” means that Scott Air did not file a biennial report with the Alaska Department 

of Commerce.
4

out tentative findings in Order 2013-1-12, and find Scott Air fit to engage in interstate scheduled 

passenger air transportation.

ACCORDINGLY,

1. We find that Scott Air, LLC is fit, willing, and able under 49 U.S.C. § 41102 to provide 

interstate scheduled air transportation of persons, property, and mail using small aircraft pursuant 

to Part 135 of the Federal Aviation Regulations.

2. We issue a Certificate of Public Convenience and Necessity to Scott Air, LLC, subject to 

the Terms, Conditions, and Limitations attached. 

3. We direct Scott Air, LLC, to submit to the Air Carrier Fitness Division a first year 

progress report9 within 45 days following the end of its first year of actual certificated flight 

operations using small aircraft.

4. We dismiss the Motion filed by Pacific Airways, Inc., and PM Air, LLC, on June 4, 

2013, requesting the Department to dismiss Scott Air, LLC’s application.

4. 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.gov

 

9 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 and part-time employees), a summary of how these operations 

have changed during the year, a discussion of any changes it anticipates from its current operations during its second 

year, current financial statement, 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.
Certificate of Public Convenience and Necessity for

Interstate Air Transportation

 

This Certifies That

SCOTT AIR, LLC

is authorized, subject to the provisions of Subtitle VII of Title 49 of United 

States Code, the orders, rules, and regulations issued thereunder, and the 

attached Terms, Conditions, and Limitations, to engage in interstate air 

transportation of persons, property, and mail.

This Certificate is not transferable without the approval of the Department of 

Transportation. 

 

 

By Direction of the Secretary

Issued by Order 2013-8-5 Susan L. Kurland

On August 19, 2013 Assistant Secretary for 

Effective (See Attached) Aviation and International Affairs

 
Attachment

Terms, Conditions, and Limitations

SCOTT AIR, LLC

is authorized to engage in interstate air transportation of persons, property, and mail between any 

point in any State, territory, or possession of the United States or the District of Columbia, and any 

other point in any of those entities. 

This authority is subject to the following provisions:

(1) The authority to operate under this certificate 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), issue tickets for the operations proposed under this certificate, or enter 

into contracts with charter operators, and any advertisement by the holder must prominently state: 

"This service is subject to receipt of government operating authority." 

(3) The holder’s authority is limited to operations 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 may not operate aircraft originally designed to have a maximum passenger 

capacity of more than 60 seats or a maximum payload capacity of more than 18,000 pounds.

(5) The holder shall at all times conduct its operations in accordance with the regulations 

prescribed by the Department of Transportation for the services authorized by this certificate, and with 

such other reasonable terms, conditions, and limitations as the Department of Transportation may 

prescribe in the public interest.
2

(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.*

(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 a certificate 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 certificate.

(9) The holder is authorized to conduct charter flights in interstate and/or foreign air 

transportation in accordance with the provisions of 14 CFR 212. 

(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 under this certificate 

within one year of the date of the Department's determination of its fitness, its authority shall be 

revoked for dormancy, unless the holder is conducting operations under another type of certificate 

authority. Further, in the event that the holder commences operations for which it was found "fit, 

willing, and able" and subsequently ceases all such operations, its authority under all certificates held 

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 operations within one year of its cessation, its authority shall 

be revoked for dormancy.

 

*

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.
Appendix A

SERVICE LIST FOR 

SCOTT AIR, LLC.

MR PIERRE MURPHY 

ATTORNEY FOR SCOTT AIR LLC

1200 NEW HAMPSHIRE AVE NW

SUITE 800

WASHINGTON DC 200036

MARK MAZOR

FEDERAL AVIATION ADMINISTRATION

45005 AVIATION DRIVE AFS-900

SUITE 131

DULLES VA 20166

MR SCOTT VAN VALIN

SCOTT AIR LLC

PO BOX 1174

CRAIG ALASKA 99921

MR PETER J LYNCH

ASSISTANT CHIEF COUNSELFOR 

ENFORCEMENT AGC-300

FEDERAL AVIATION ADMINISTRATION 

800 INDEPENDENCE AVENUE SW

WASHINGTON DC 20591

MR TROY MCCLANAHAN

PRINCIPAL OPERATIONS INSPECTOR

FEDERAL AVIATION ADMINISTRATION

3032 VINTAGE PARK BOULEVARD

SUITE 106

JUNEAU ALASKA 99801

MARK ATWOOD

HAWAII ISLAND AIR INC

THE ARMY AND NAVY BUILDING

1627 I STREET NW

SUITE 1100

WASHINGTON DC 20006

GARY GAROFALO

ISLAND AIRLINES LLC

GAROFALO GOERLICH & HAINBACH

1200 NEW HAMPSHIRE AVE NW

SUITE 800

WASHINGTON DC 20036

MICHAEL CARNEY

KETCHIKAN INTL AIRPORT

1000 AIRPORT TERMINAL WAY

KETCHIKAN AK 99901

REGIONAL COUNSEL, AAL-7

FEDERAL AVIATION ADMINISTRATION

ALASKAN REGION HEADQUARTERS

222 WEST 7TH AVENUE SUITE 14

ANCHORAGE ALASKA 99513

OFFICE OF AIRLINE INFO

DOT/RITA/BTS E-36 - RTS-42

1200 NEW JERSEY AVENUE SE

WASHINGTON DC 20590

ROBERT SANFORD

PRESIDENT

REDEMPTION INC

D/B/A ISLAND AIR SERVICE

PO BOX 125 

KODIAK AK 99615

TIM LACOUR

AIRPORT MANAGER 

KLAWOCK AIRPORT

PO BOX 91

CRAIG AK 99921