c,:,. L.iFO!<i'II A PACII71C \,

August 7, 2012
Re:Docket DOT-OST-2010-0126 Carlsbad-Palomar Airlines Inc dba California Pacific Airlines Certificate of public convenience and necessity DOT,
Carlsbad Palomar Airlines' grant of authority expires on August 25, 201 2. This letter is requesting extending that authority to allow us to complete our 121 certification with the FAA We continue to move forward in our 121 application

. Below are events and milestones that will give you a clear idea of where we are in the process and the approximate additional time we require

. On September 9. 2011 we successfully completed our formal application meeting with the local FSDO and our application was accepted. One of the requ irements to move to Gate 2, design assessment, was the purchase or lease of an aircraft. The lease for our first aircraft was signed on Oct 15, 2011 and we entered into Gate 2, design assessment. On November 28, 2012 we received a letter from our FSDO raising questions about the EM8170's ability to perform safely at Carlsbad Palomar airport. Our 121 application was put on hold until this matter was resolved. Following a presentation by our management team to the Western Region the aircraft was deemed able to perform. This delayed our application by nearly 3 months and prevented us from local stock sales and or 

### moving forward with the institutional· raise during this period On Feb 7,2012 our manuals sets were delivered to the FSDO. On May 4, 2012 we received our first pass back from the FSDO with initial comments on our manuals. • We will be sending Rev 8 or our updated manuals to the FSDO by August 4, 2012

. We expect them to take up to 90 days for their next review

. On July 6, 2012 our first aircraft was delivered to Palomar airport with press and well wishers present. There is great anticipation by this community for our airline, both for the jobs it creates and for the traveling options it presents. The aircraft presence at the airport will benefit the sale of stock both locally and with our $30-50 million fund raising efforts with institutional investors

. We expect to move to Gate 3, performance assessment, before the end of the year
. Other relevant issues: We have had some changes in personnel, but continued to have the critical 119 positions filled. We will be sending updated information on the people in place in a separate document. Nearly $1Om dollars have been invested in the airline to this point. We continue our fund raising and have sufficient funds to complete the certification process with a 2 aircraft operation

. We respectfully request that the grant of authority be extended to allow us to finish the 121 certification process.We are requesting confidential treatment for the items listed below. They contain relevant facts about our business plan and financial condition. For competitive reasons we do not want details about our business plan to be made public. For privacy reasons we do not want bank records, lease negotiations and other financial information to be released to the general public. Below are the exhibits to be considered for confidential treatment under 302.12: 1

. First year operating forecast 2. Operating expenses paid to date and forecasted to first dayof service. 3. Audited financials through 2011 and year-to-date P&L for 2012. 4. Third partyvalidation of cash balances. 

### 5. Status of fund raising efforts. 

### 6. Verification of aircraft leases 7. Negotiations for aircraft #2 8. Negotiations for aircraft #3&4 

### 9. Statement and supplement of financial information 10. Approval from Torrey Pines Bank for $1,000,000 line of credit. 11. Updated private placement memorandum and subscription booklet The above exhibits are contained in the binder requesting confidential treatment. The contents of this application and the attached exhibit (s) are true and correct to the best of my knowledge and belief. Pursuant 

### to Title 18 United States Code Section 1001, I [the individual signing the application, who shall be a principal owner, senior officer, or internal counsel of the applicant]. 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 U.S.C section 1001 shall be fined or imprisoned not more than five years, or both.

Theodore 

### L. Vallas CEO 

# ..