Order 201 5

- 1

- 21

Served: January 26 , 201 5

UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

o n the 26 th day of January , 201 5

Application of

NATIONAL AIR CARGO GROUP , INC

.

d/b/a NATIONAL AIRLINES

for issuance of an amended certificate of public convenience and necessity under 49 U.S.C. § 41102 to engage in forei gn scheduled air transportation of persons, property, and mail Docket DOT

- OST

- 20 12

- 0204

ORDER CONFIRMING ORAL ACTION

AND ISSUING EFFECTIVE CERTIFICATE

Summary

By t his order, the Department (1) confirm s its oral action of November 10, 2014

, making

effective the authority of National Air Cargo Group Inc.

, d/b/a National Airlines (“ National ”)

, to
operate foreign scheduled air transportati on of persons, property, and mail ; and (2) reissue s the

air carrier’s foreign certificate to reflect its effectiveness.

Background

By Order 2013

- 7

- 12 , issued July 12 , 2013, the Department found National fit to engage in foreign scheduled passenger operations between a point or points in the United States, a point or point in the United Arab Emirates and beyond to a point or points in Afghanistan and issued to it a certificate for such operations

. The authority granted under thi s certificate was not to become effective until six (business) days after the Department had received (1) a copy of National’s Air Carrier Certificate and Operations Specifications authorizing such operations from the Federal Aviation Administration (“FAA” ), (2) 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, (3) a statement of changes it may have undergone since its fitness was examined, and (4) evidence that the air carrier continued to have sufficient funding to meet our financial fitness

test

. In that order, the Department also directed that should National wish to operate its own

aircraft between the United States and the United Arab Emirates , 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 prior to commencement.

U N I T E D S

T A T E S O F A

M E R I C A D E P A R T M E N T O F T R A N S P O R T A T

I O N2

On March 24, 2014, National provided updated fitness informatio n to make its foreign scheduled

certificate effective . However, the air carrier did not submit adequate material supporting its

fitness , including Operations Specifications issued by the FAA authorizing the air carrier to engage in foreign scheduled opera tions in Afghanistan. As National was seeking to operate solely in a market that was not authorized by its Operations Specifications and provided incomplete information regarding its fitness, we were not able to make effective National’s

certificate for f oreign scheduled air transportation of persons, property, and mail. In light of the above, the Department stayed the effectiveness of National’s foreign scheduled passenger

certificate. 1

On June 10, 2014, Natio nal amended its application to (1) remove its request for beyond

- authority to Afghanistan , and (2) change i ts service proposal whereby the air carrier

would now provide scheduled passenger operations between the United States and United Arab

Emirates

, using National’s own airc raft. 2 The air carri er now proposes to operate bi

- monthly flights between Sanford International Airport and Dubai International Airport using one of its existing B

- 757 aircraft. 3 National expects to incur approximately $5.39 million in first

- year

expenses and states that it has no unpaid pre

- operating expenses

. Thus, based on its forecast, we estimate that National will require approximately $1.34 million to meet ou r financial fitness requirement

. 4

National submitted updated financial statements represen ting its financial position

. For the four months ended April 30, 2014, t he air carrier incurred a net loss of approximately $12.85 mill ion on $9.78 million in revenues. Despite the loss, the air carrier’s balance sheet at April 30, 2014,

showed National as having current assets of $25.35 million an d current liabilities of $20.80 million, giving the air carrier positive working capital of $4.56 million. In addition, National provided third

- party verification from Wells Fargo Bank dated June 3, 2014, show ing that it has access to $4.2 0 million on deposit in its name

.

The air carrier also identified three changes to its key management personnel , all of whom are
U.S. citizens, and provided their resumes

. 5 S pecifically, Mr. Joseph R. Batten replace d

Mr. Jeffrey Miller as Director of Operations; Mr. Steven N. Smith replaced Mr. James VanZino

as Chief Pilot; and Mr. Matthew S. McKnight replaced Mr. William E. Phillips as Director of Quality.

1 The Department stayed the effectiveness of National’s authority on three occasions. See Order 2014

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- 20, issued March 31, 2014; Order 2014

- 4

- 33, issued April 30, 2014; and Order 2014

- 5

- 14, issued May 29, 2014.

2 National’s application for foreign scheduled air transportation initially stated that the air carrier intended to operate a daily flight between the United Arab Emirates and points in Afghanistan and planned to operate the U.S. to UAE portion of the flight with a codeshare partner. In the event National determines it may offer flights under a codeshare arrangement, we again remind it that prior to commencing any codeshare operations with a foreign air carrier, that air carrier will need a codeshare statement of authorization, and that a cod eshare safety assessment compliance statement will be required pursuant to the FAA’s IASA program.

3 National states that the proposed twice

- monthly flights will operate from Sanford to Dubai via technical stops in Bangor

, Maine, and Shannon, Ireland

. 4 The $1.34 million noted here is one quarter of the applicant’s forecast of approximately $5.39 million in first

year expenses. 5 National supplemented its filing with additional information on August 19, 2014.3

Mr. Joseph R. Batten was named National’s Director of Operation s effective October 31, 2013. Prior to that, he was National’s Director of Training and Standards (June 2013

- October 2013). He also held the positions of Director of Operations with Sky King (August 2012

- May 2013), B767 Captain and Check Airman with Dyna mic Airways (January 2012

- July 2012), and Director of Training and Standards (June 2010

- October 2010) and Chief Pilot (August 2008

- June 2010) with Capital Cargo International Airlines . Mr. Batten held various p ilot positions with ATA Airlines (March 19 9 2

- April 2008) and Pan American World Airways (December 1988

- December 1991)

. Mr. Batten is both a licensed Airline Transport Pilot and an Airframe and Powerplant Mechanic.

Mr. Steven N. Smith was promoted to National’s Chief Pilot in June 2013 after previ ously serving as the company’s B757 Fleet Manager (April 2012

- June 2013) and Captain and Check Airman (January 2012

- April 2012)

. A licensed Airline Transport Pilot, Mr. Smith held Captain and First Officer positions with Kalitta Charter II (August 2009

- Ja nuary 2012), UPS Airlines (Ma y 1994

- March 2009), ACT Group ( March 1993

- May 1994), Air Wisconsin (January 1991

- March 1993), and Air Midwest (July 1989

- January 1991).

Mr. Ma t thew S. McKnight was promot ed to National’s Director of Quality Control in Sept embe r 2013 from his previous position as National’s Manager of Quality Control (July 2010

- September 2013). A licensed Airframe and Powerplant Mechanic, Mr. McKnight previously worked as a

H e avy Maintenance Representative with Astar Air Cargo (December 2004

- July 2010), Quality Control Inspector and Heavy Maintenance Representative with Express.net Airlines (April 2000

- December 2004), and h eld Aircraft Mechanic positions with Kitty Hawk International (March 1997

- January 1 998 and July 1998

- April 2000 ), Connie Kalitta Enterprise s (June 1996

- March 1997), and American International Airways (August 1993

- June 1996) . Mr. McKnight also served as a Petty Officer in the United States Navy (1989

- 1992).

National also provided information that states that there are no actions, outstanding judgments, charges of unfair, deceptive, or anticompetitive business practices, or of fraud, felony or antitrust violations against Messrs. Batten, Smith or McK night

, nor are there any pending investigations,

enforce ment actions, or formal complaints , except as noted below, filed by the Department against them with respect to compliance with the Department’s regulations . The air carrier noted that there are two pending FAA investigations: EIR 2014SO670015 concerning National’s website advertising “scheduled public charters,” which has since been removed from National’s website, and EIR 2013GL230041, alleging improper loading of vehicles in a B747 aircraft. As a

result of th e latter investigation, National states it is working closely with the FAA on this issue. Both investigations remain open and carry recommended civil penalties of $17,500 and $122,500

, respectively. Information available to the Department indicates that National also has two other pending FAA enforcement investigations, involving proposed civil penalties totaling $121,000. 6

6 See EIR 2014SO670048 and 2014SO670050, both related to an alleged violation of FAA

- approved cargo loading procedures.4

C ONCLUSION

In light of the information presented above, the Department concluded that National remain ed fit to conduct its proposed foreign scheduled passenger operations. Therefore, on November 10

, 2014, we orally advised National that we were making its authority to conduct foreign scheduled air transportation effective. By this or der, we confirm our or al action of November 10, 2014

, and

reissue National ’s air carrier certificate to reflect the date that its authority to operate foreign scheduled air transportation between a point or points in the United States, a point or point in the

United Arab Emirat es and beyond to a point or points in Afghanistan became effective.
However, we note that National’s authority to conduct scheduled foreign air transportation of persons, property, and mail to/from a point or points in Afghanistan under this certificate shall become effective at such time as the Department has received updated fitness information from

the holder and has determined that the holder remains a citizen of the United States and is fit to

conduct such scheduled services.

Additionally, we remi nd National that should it wish to operate more than six cargo aircraft and/or more than two passenger aircraft, it must first provide the Department with 45 days advance notice and provide updated information establishing its fitness for such expansion pr ior

to commencement.

ACCORDINGLY

,

1. We c onfi rm our oral action of November 10, 2014, making the amended foreign certificate issued to National Air Cargo Group, Inc. d/b/a National Airlines by Order 2013

- 7

- 12 , effective

on that same date.

2. We reissue to National Air Cargo Group, Inc. d/b/a National Airlines the amended foreign certificate issued to it by Order 2013

- 7

- 12 in the attached form to reflect the effective date of its authority.

3. We direct that, should National Air Cargo Group, Inc. d/b/a National Airlines propose to increase its fleet to more than 6 cargo aircraft and 2 passenger aircraft, it must first notify the Department in writing 45 days prior to the proposed operation and demonstrate its fitness to conduct such operations be fore their commencement.

4

. We direct National Air Cargo Group, Inc. d/b/a National Airlines to subm it to the Air Carrier

Fitness Division a first year progress report within 45 days following the end of its first year of

actual scheduled flight operation s

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5

. We will serve a copy of this order on the persons listed in Attachment A.

7 The report should include a description of the air carrier’s current operations (number and type of aircraft, principal markets served, to tal 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 statements, 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 Di vision to discuss its current and future operations.5

Persons entitled to petition the Department for review of this order, under 14 CFR 385.30, may file their petitions within 10 days of the service date of this order.

The action confirmed in this order was effective when taken and the filing of a petition for

review shall not alter its effectiveness.

By:

TODD M. HOMAN

Director Office of Aviation Analysis

An electronic version of this document is available on the World Wide Web at: http://www.regulations.gov

# Certificate of Public Convenience and Necessity for Interstate Air Transportation

(as reissued)

This Certifies That



## NATIONAL AIR CARGO GROUP, INC.

d/b/a NATIONAL AIRLINES

is authorized, subject to the pro visions of Subtitle VII of Title 49 of United States Code, the orders, rules, and regulations issued thereunder, and the attached Terms, Conditions, and Limi tations, to engage in foreign scheduled 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 2015

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- 21 Todd M. Homan

On January 26 , 201 5 Director Effective November 10, 2014 Office of Aviation AnalysisAttachment



### ∗

As reissued by Order 20 15

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### Terms, Conditions, and Limitations

NATIONAL AIR CARGO GROUP

, INC.

d/b/a NATIONAL AIRLINES

Is authorized to engage in foreign scheduled air transportation of persons, property, and mail:

Between a point or points in the United States, a point or points in the United Arab Emirates and beyond to a point or points in Afghanistan

This authority is subject to the following pro vision s:

(1) ( a) The holder’s authority to conduct scheduled foreign air transportation of persons, property,

and mail b etween a point or points in the United States and a point or points in the United Arab

Emirates under this certificate became effective on November 10, 2014.

(b) The holder’s authority to conduct scheduled foreign air transportation of persons, property, and mail to/from a point or points in Afghanistan under this certificate shall become effective at such time as the Department has received updated fitness information from the holder and has determined that the holder remains a citizen of the United States and is fit to conduct such

scheduled services.

(2) The holder shall at all times conduct its operations in accordance with all treaties and agreements

between the United States and othe r countries, and the exercise of the privileges granted by this certificate is subject to compliance with such treaties and agreements and with any order of the Department of Transportation issued under them. To the extent that the holder has authority to serve more than one country or points in more than one country on the same route segment, that authority does not confer upon the holder any additional rights (including fifth

- freedom intermediate and/or beyond rights) in limited entry markets unless the Department has completed any necessary carrier selection procedures to determine which carrier(s) should be authorized to exercise such rights and has notified the foreign country(ies) involved that any such selected carrier(s) has the required authority. In such cases, the fact that the carrier may hold authority to serve the countries (points) at issue on the same segment will not be considered as providing any preference to the holder in a carrier selection proceeding.

(3) The exercise of the authority gra nted here is subject to the holder's first obtaining from the appropriate foreign governments such operating rights as may be necessary.

(4) 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

∗ This certificate is being reissued to reflect its effective date.2

U.S. Government requirements concerning security, including, but not limited to 49 CFR Part

1544. ∗ ∗

(5) The holder shall at all times remain a "Citizen of the United States " as required by

49 U.S.C. 40102(a)(15).

(6) The holder shall maintain in effect liability insurance coverag e 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 pr o vision s of Subtitle VII of Title 49 of the United States Code or the Department's regulations shall be sufficient grounds to revoke this certificate.

(7) The holder is authorized to conduct charter flights in interstate and/or foreign air transportation in accordance with the pro vision s of 14 CFR 212

.

(8) Should the holder propose any substantial change in its ownership, management, or operations (as defined in 14 CFR 204.2(l)), it must first comply with the requirements of 14 CFR 204.5.

(9) In the event that the holder commences but subsequently ceases all operations for which it was found “fit, willing and able,” its authority under this certificate shall be suspended under the terms of 14 CFR 204.7 and the holder may neither recommence nor advertise such operat ions 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.Attachment A

SERVICE LIST FOR

NATIONAL AIR CARGO GROUP, INC.

d/b/a NATIONAL AIRLINES

MR PIERRE MURPHY

LAW OFFICES OF PIERRE MURPHY

1200 NEW HAMPSHIRE AVE NW

SUITE 590

WASHINGTON DC 20036 MR MARK MAZOR

MANAGER CSET

FAA SUITE 203B

45005 AVIATION DRIVE

DULLES VA 20166

- 7537 LUTHER HIPPS

CHARLEY BEERS

ORLANDO FSDO

FEDERAL AVIATION

ADMINISTRATION

MR GLEN G JOERGER

PRESIDENT

NATIONAL AIRLINES

5955 TG LEE BOULEVARD

SUITE 500

ORLANDO FL 32822 MS KATHERINE TATUM

TECHNICAL PROGRAMS BRANCH

AFS 260

FEDERAL AVIATION

ADMINISTRATION

800 INDEPENDENCE AVE SW

WASHINGTON DC 20591

MR PETER LYNCH AGC

- 300

FAA ASST CHIEF COUNSEL

FOR ENFORCEMENT

800 INDEPENDENCE AVE SW

WASHINGTON DC 20591 MR WILLIAM CHADWICK

OFFICE OF AIRLINE INFORMATION

DOT/RSPA/BTS E

- 36

1200 NEW JERSEY AVE SE

WASHINGTON DC 20590