BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

February 23, 2012

Application of

SUN AIR EXPRESS, LLC d/b/a SUN AIR

INTERNATIONAL

For authority to conduct scheduled passenger operations as a commuter air carrier under 49 U.S.C.

41738 Docket OST

- 2011

- 0169

MOTION OF SEAPORT AIRLINES, INC FOR

LEAVE TO FILE AN OTHERWISE UNAUTHORIZED DOCUMENT

SeaPort Airlines , Inc. (hereafter “SeaPort”) motions for leave to file an otherwise

un authorized document in the fitness proceeding of Sun Air Express, LLC d/b/a Sun Air International (hereafter “Sun Air”) f or authority to conduct scheduled passenger operations as a commuter air carrier . We believe that Sun Air’s application does not accurately refle ct its operating plans and, as a result, it should amend the application including demonstration of adequate funding that meets the Department’s financial fitness criteria.

SeaPort did not file during the regular comment period because at that time we believed that Sun Air intended to operate the l imited services as described in its application . Since then, however, Sun Air filed a proposal w i th the Department to provide Essential Air Service (“EAS”)

at communities in Alabama and Mississippi and with an operating plan that require s gr e ater funding l evels to satisfy the Department ’ s financial fitness criteria

.

For this reason, SeaPort respectfully requests that the Department grant this motion, place the attached comments in the Sun Air application docket, and give careful consideration

to the merit s of th ose comments.

Communication with respect to this document should be sent to:

Timothy F Sieber

Vice President

– Strategy & Corporate Development SeaPort Airlines, Inc. 7505 NE Airport Way Portland International Airport Portland, Oregon 97218 (971) 340

- 1716 Email: tsieber@seaportair.comBEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

February 23, 2012

Application of

SUN AIR EXPRESS, LLC d/b/a SUN AIR

INTERNATIONAL

For authority to conduct scheduled passenger operations as a commuter air carrier under 49 U.S.C.

41738 Docket OST

- 2011

- 0169

COMMENTS OF SEAPORT AIRLINES, INC.

SeaPort Airlines, Inc. (hereafter “SeaPort”) believes that the Department should suspend

further review of the application of Sun Air Express, LLC d/b/a Sun Air International (hereafter

“Sun Air”) for authority to conduct scheduled passenger operations as a commuter air carrier

(hereafter “Application”) because it appears that Sun Air ’s operating plans and, therefore,

required level of funding necessary to meet the De partment ’ s financial fitness criteria , is

significantly different from that outlined to the D epartment in its application. 1

In support of its position, SeaPort states the following:

Sun Air filed for authority to conduct scheduled passenger operations as a commuter air

carrier on September 12, 2011 with amendments f iled on September 23 , 2011 and January 10,

2012. The operating plan outlined by Sun Air in the A pplication and subsequent amendments

consists of a single roundtrip between West Palm Beach, Florida and Freeport, Bahamas. On

January 18, 201 2, however, Sun Air submitted a proposal to provide Essential Air Service

1 SeaPort has read the objections of VPAA Co. relating to a non

- compete agreement and how litigation costs could impact pre

- operating expenses and, therefore, Sun Air’s financial fitness. While on the surface these arguments appear to have merit, SeaPort does not have a “dog in that fight” nor do we have all the material facts. Therefore, we

will limit our comments herein to the change in operating plan of Sun Air and resultant impact on funding levels

needed to meet the Department’s financial fitness criteria.Comments of SeaPort Airlines, Inc.

OST

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(hereafter “Proposal”) between Memphis and three communities in the southeastern United

States. 2

T he operating plan in Sun Air’s A pplication is materially different from th at described in

Sun Air’s Proposal and, as a direct result, the funding required of Sun Air to meet the

Department ’ s financial fitness criteria is significantly greater than is currently reflected in its

Application.

In the Department ’ s “Information Packet on How to Become A Commuter Air C arrier,”

the Department p rovides detailed information on determining financial fitness which, in

summary, requires the applicant to verify that it has sufficient resources (e.g., cash, l ines

- of

credit, or bank loans) to cover all of its pre

- operating costs plus the operating expen ses that are

reasonably projected to be incurred by th e applicant during three months of “normal” commuter

operations. More specifically, the Department notes:

“ Because projected expenses during the first several months of operations do not

include all co sts that will be incurred during a “normal” or average period of

operations, the thre e

- month standard is calculated by dividing the applicant’s

estimated total first y

ear operating expenses by four. In addition, if the applicant’s

most recent balance sheet shows a negative working capital balance for any

ongoing operations (e.g., air taxi, aircraft leasing, or fixed base operation), the

amount of that working capital deficit will be considered a pre

- operating expense

in calculating the amount of funds that the applicant must have available to meet

the financial fitness criteria for the proposed operations

. ” 3

2 G reenville, MS (Docket OST

- 2008

- 0209), Muscle Shoals, AL (Docket OST

- 2000

- 7856), and Tupelo, MS (Docket

OST

- 2009

- 0305).

3 “INFORMATION PACKET ON HOW TO BECOME A COMMUTER AIR CARRIER” prepared by US Department of Transportation, Air Carrier Fitness Division, May 2005, Footnote #15, page 17Comments of SeaPort Airlines, Inc.

OST

- 2011

- 0169 Page 3

In Sun Air’s most recent amendment to its Application, the company states that as of

November 14, 2011, it had $52,277.21 in its checking account and access to a $100,000 line of

credit for a total of $152,277.21 in available capital. This amount may be sufficient to meet the

Department ’ s financial fitness criteria based on the operating plan that Sun Air described in its

Application.

The operating plan provided in Sun Air’s Application , however, is materially different

from the operating plan in Sun Air’s EAS Proposal and, therefore, the amount of funds required

for Sun Air to meet the Department ’ s financial fitness criteria are significantly greater

. 4

More specifically

, Sun Air filed a P roposal to provide Essential Air Service at Greenville

and Tupelo, Mississippi and Muscle Shoals, Ala bama on January 18, 2012

. The v arious

schedule options in th at P roposal bear no resemblance to the operat ing plan that Sun Air

outlined in its A pplication for commuter air carrier a uthority . More importantly, however, the

greater scope of the EAS operations outlined in the Proposal means that for Sun Air to meet the

Department’s financial fitness criteria it will require higher levels of funding than it has

demonstrated in its Application

.

Table 1 (next page) compares the level of funding needed to meet the Department’s

financial fitness criteria for both the operat ing plan outlined in Sun Air’s A pplication and the

schedule options in Sun Air’s EAS Proposal. The projec t ions of annualized operating expenses

were taken directly from Sun Air ’s Applic ation and Proposal as filed with the Department, and

the n divide by four in accordance with the Department’s ow n normal practices to determine the

financial fitness requirement.

4 For p urposes of these comments we have assumed that Sun Air still intends to operate the Bahamas service described in its Application, but acknowledge that only Sun Air can provide the Department with its true operating plan

.Comments of SeaPort Airlines, Inc.

OST

- 2011

- 0169 Page 4

Table 1

Capital Required to Meet DOT Financial Fitness Criteria Sun Air Application for Scheduled Authority v Sun Air EAS Proposal

As described in its Application and the additional information provided at the

Department’s request, the $152,277.21 that Sun Air current ly has access to provides just a

fraction of the amount needed to meet the Department’s financial fitness criteria if it were to be

awarded some or all of the EAS markets in its Proposal.

Based on the above calculations

, the lowest amount of funds that Sun Air will need to

meet the Department ’ s financial fitness criteria is $ 706,998 . This assumes that Sun Air isComments of SeaPort Airlines, Inc.

OST

- 2011

- 0169 Page 5

awarded the lowest cost option in only one market ( assumed to be Tupelo because it represents

t he lowest cost market on stand

- alone basis ) and the planned Florida

– Bahamas service as

described in its Application. The highest amount of funding t hat Sun Air may need for financial

fitness is $ 2, 179,660 . This assumes Sun Air is awarded EAS contract s in all three of the

commu nities with the highest possible level of frequency as outlined in its Proposal and the

planned Florida

– Bah amas service in its Application

. Regardless of the actual amount of funds

needed , Sun Air does not demonstr ate in its Application that it has access to a level that meets

the Department’s financial fitness criteria when projected operating expenses related to its EAS

Proposal are included in the calculations

.

Further , it is the view of SeaPort that the Departm ent is unable to calculate the precise

level of funds needed for financial fitness until such time as a replacement carrier and specific

service options are awarded in each of the EAS communities by the Department . If Sun Air

were awarded any of the EAS communities , only then w ould the Department be able to

reasonably estimate Sun Air’s first year operating expenses and determine the funding level

needed to meet financial fitness criteria. T he Department , however, cannot award Sun Air an

EAS contract unti l such time as it has the requisite authority to op erate as a commuter air

carrier. Sun Air has put the Department in an classic “chicken or the egg” quandary and, in our

view, the only way reasonable solution is for Sun Air to amend its application and de monstrate

adequate funding that accurately reflects a first year operating plan that includes the EAS

markets in its Proposal.

Additionally, we note that a letter dated December 29, 2011 to counsel for Sun Air from

the Air Carrier Fitness Division remind ed Sun Air that it “should promptly provide the

Department with any information regarding changes it may undergo in areas affecting its fitness

(i.e., management, operating plans or financial condition, compliance disposition, or ownership)

while its application is under review by the Department.” 5 To our knowledge, Sun Air has yet to

5 Letter from Laurelyn J. Remo, Chief of Air Carrier Fitness Division to Lonnie A. Pera, counsel fo r Sun Air Express, LCC (Zuckert, Scoutt & Rasenberger, LLP) on December 29, 2011.Comments of SeaPort Airlines, Inc.

OST

- 2011

- 0169 Page 6

update with the information presented in its Application despite having filed its Proposal with the

Department over 30 days ago.

Finally

, and despite comments that we expect the Department will receive in response,

SeaPort is not making this filing in an attempt to suppress potential competition from Sun Air

. To

the contrary, we believe a robust competitive environment is necessary to ensure t hat

consumers have choice (including communities selecting an EAS carrier ) and that competition

forces all airlines to continually strive for service improve ment and operational efficiency . In this

c ontext, we look forward to challenging Sun Air in the market place. That being said, our

concern is for the potential impact on EAS communities should Sun Air be granted commuter air

carrier authority at the insufficient funding level currently in its App li cation and then

subsequently suspends flights for financial reasons before a replacement carrier can initiate

service. This would be a great inconvenience to travelers, negatively impact the economies of

affected communities, and place a burden on the re placement carrier to have to rebuild the

market’s traffic after a period of dormancy

. An extended service interruption could result in traffic

rebuilding very slowly and put the affected communities at risk of permanently losing their EAS

eligibility.

For the foregoing reasons, SeaPort respectfully urges the Department to suspend further

review of Sun Air’s Application and that Sun Air be required to amend its Application to reflect

the different operating plan described in its EAS Proposal, including demo nstrating that it has

the funds needed to satisfy the Department’s financial fitness criteria. In the alternative , SeaPort

urges the Department to exercise its ability to impose conditions on the operating authority of

Sun Air, thus limiting the company to an operating plan that is appropriate to the level of funding

described in its Application. 6

6 “INFORMATION PACKET ON HOW TO BECOME A COMMUTER AIR CARRIER” prepared by US Department of Transportation, Air Carrier Fitness Division, May 2005, page 25. “ In order to ensure that a company remains fit after it is given effective authority, the Department may impose conditions on the company’s operations

- such as a limit on the duration of the authority (e.g., for one year), or on the number, type, or size of aircraft ( e.g., those that can be operated under Part 135 of the Federal Aviation Regulations) that the applicant may operate. If, at a later date, the company wishes to expand its operations beyond those limits, it would need to notify the Department and establish its fitness to do so. These conditions are intended to enable the Department to monitor the carrier’s operations more closely, particularly during its first several years .”Comments of SeaPort Airl ines, Inc.

OST

- 2011

- 0169 Page 7

Respectfully submitted,

Timothy F Sieber

Vice President

– Strategy & Corporate Development SEAPORT AIRLINES, INC.

7505 NE Airport Way Portland International Airport Portland, Oregon 97218 (971) 340

- 1716

Email: tsieber@seaportair.com

February 23, 2012CERTIFICATE OF SERVICE

SeaP ort Airlines , Inc. certifies that a copy of the foregoing MOTION FOR LEAVE TO FILE AN

OTHERWISE UN AUTHORIZED DOCUMENT and CO MMENTS OF SEAPORT AIRLINES, INC.

has been served on the parties named below via electronic mail and then US Postal Service.

Ms. Laura Remo Chief, Air Carrier Fitness Division, X

- 56 Office of Aviation Analysis U.S. Department of Transportation 1200 New Jersey Avenue S.E., 8 th Floor Washington, DC 20590 laura.remo@dot.gov

Mr. Dennis DeV any Chief, Essential Air Service Division Office of Aviation Analysis U.S. Department o f Transportation 1200 New Jersey Avenue S.E., 8 th Floor Washington, DC 20590 dennis.devany@dot.gov

Mr. Edward Da silva Flight Standards District Office

– 17

Federal Aviation Administration
2895 S.W. 145 th Avenue
Suite 120 Miramar, FL 33207 edward.m.dasilva@faa.gov

Mr. Thomas L. Cooper

Chief Executive Officer & President Sun Air Express, LLC d/b/a Sun Air International 3201 Griffin Road, 4 th Floor Fort Lauderdale, FL 33312 tlcooper@gosunair.com

Lonnie Anne Pera (Counsel for Sun Air Express LLC d/b/a Sun Air International) 888 Seventh Street, N.W.

Suite 700 Washington, DC 20006 lapera@zsrlaw.com

Mr. David M. Hernandez (Attorney for Silver Airways Corp. f/k/a VPAA Co.)

Vedder Price P.C. 14011 I Street NW, Suite 1100 Washington, DC 200 0 5 dhernandez@vedderprice.com