Order 2010-8-4

Served: August 5, 2010

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 5

th day of August, 2010

Fitness Determination of

GULF COAST AIRWAYS, INC.

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

 Docket DOT-OST-2009-0249

 

ORDER TO SHOW CAUSE

PROPOSING ISSUANCE OF COMMUTER AIR CARRIER AUTHORITY

Summary

By this order, we tentatively find that Gulf Coast Airways, Inc. (“GCA”), 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 “Transportation Code”) and section 

298.21(d) of the Department’s Aviation Economic Regulations (14 CFR 298.21(d)) direct us to 

determine whether companies proposing to provide scheduled passenger service as commuter air 

carriers are “fit, willing, and able to perform the service,” and to 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 Transportation Code and regulations imposed by 

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

On October 20, 2009, GCA, an on-demand air taxi operator serving the State of Florida and 

holding a Part 135 Federal Aviation Regulation (“FAR”) operating certificate from the FAA and 

operating under Part 298 of the Department’s regulations (14 CFR 298), filed an application in 

Docket DOT-OST-2009-0249 for authority to conduct scheduled passenger operations as a 

commuter air carrier. The air carrier accompanied its application with fitness information 

UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION
2

required by section 204.3 of our regulations and supplemented its application with additional 

information on January 7, February 18, April 22, and April 27, 2010.1

No answers opposing GCA’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 GCA 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

GCA was incorporated under the laws of the State of Florida in August 1998 by Mr. Bahram 

Owliaei. Initially operated as a flight school, GCA evolved its air charter business and in 

September 2000, the FAA certificated the air carrier to provide on-demand air transportation. 

The company was sold to eight partners in 2000, one of which was GCA’s current owner, Mr. 

Joel T. Johnson, Jr., a U.S. citizen. Mr. Johnson bought out the other seven partners in 2002 and 

now wholly owns GCA. GCA now seeks to become a commuter air carrier and operate 

scheduled service between Naples and Key West, Florida. The air carrier’s future destinations 

include Miami and Sarasota, Florida.

Managerial Competence

GCA management and key technical personnel consist of the following individuals. Each have 

certified they are U.S. citizens. 

Mr. Joel T. Johnson, Jr. – President, Director of Operations, and Manager

Mr. John E. Fuller – Chief Pilot 

Mr. David M. Montgomery - Director of Maintenance 

Mr. Joel T. Johnson, Jr. is President, Director of Operations, and Manager of GCA

(1998-present) and is also the owner and President of Gulf Coast Aircraft, Inc., an aircraft 

maintenance provider (1998-present). He was previously the President and owner of J&S 

Aircraft Inc., (1985-2009) and President of Gulf Aircraft Leasing, Inc., an aircraft leasing firm 

(1988-1998). Mr. Johnston also worked as a Sales Manager for Connair, Inc. (1980-1984), and 

as a Field Manager for A.C. Nielsen Company (1972-1980).

Mr. John E. Fuller, an Airline Transport Pilot, has been GCA’s Chief Pilot since 2005 and has

over 25 years of flight experience and has logged over 18,500 hours of flight time. He is also a 

 

1 On April 27, 2010, GCA filed a motion requesting confidential treatment under 14 CFR 302.12 (Rule 12) of 

our Procedural Regulations for personal financial statements that the air carrier had provided with its fitness 

application. By letter dated May 20, 2010, the Department partially granted confidential treatment to GCA with 

instructions that certain information be redacted and filed in the public docket, which the applicant complied with on 

May 26, 2010.
3

certificated Ground Instructor and Flight Engineer. Mr. Fuller previously was employed as a line 

pilot for Continental Airlines, Inc. (1985-2005), and was also President of Fuller Seed Co., Inc.

(1975-1984), co-owner of Lincoln Aviation, Inc. (1973-1978), and a Captain in the Illinois 

National Guard’s 170th Tactical Fighter Squadron (1971-1977).

Mr. David M. Montgomery, Director of Maintenance for GCA, has over 29 years of experience 

in airline maintenance as a certified Airframe and Powerplant Mechanic. He is also employed by 

RexAir Sales and Leasing (2007-present) as its Director of Maintenance. Mr. Montgomery most 

recently was a self-employed maintenance inspector (2005-2007), and has also held Aircraft 

Mechanic and Inspector positions at various Part 135/121 aircraft maintenance service providers

including Prime Planes Inc. (2004-2005), GCA (2003-2004), Naples Air Center (2001-2003), 

Aerojet Service Center (1998-2001), Doug Bagley Co.(1997-1998 and 1994-1996), Commodor

Aviation Inc. (1996-1997), Peninsula Avionics (1991-1994), Tamiami Jet Center Flight School 

(1989-1991), Ameriflight (1988-1989), and Barken International (1988-1988). Mr. Montgomery 

also served in the United States Air Force as a Turboprop Propulsion Mechanic (1981-1987).

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

conclude that GCA has demonstrated that it has both key management and technical personnel 

who have the managerial skills and technical ability to support its proposed operations. 

Moreover, the FAA has advised us that all of the applicant’s key personnel have been found 

qualified to hold their respective positions.2

Operating Proposal and Financial Condition

GCA is currently operating as an on-demand air taxi and has now requested commuter authority 

to conduct scheduled passenger operations between Key West and Naples, Florida. The air 

carrier submitted a plan for its first year of scheduled operations that stated it would initiate one 

additional flight per week to supplement the 4 weekly flights currently being operated. GCA

intends to perform its schedule with its existing aircraft – a five-seat Piper Aztec, with no plans 

to add a second aircraft to its fleet.

In establishing financial fitness, the Department typically asks an applicant to demonstrate that it 

has access to financial resources sufficient to cover its pre-operating expenses and any negative 

working capital balance, plus a working capital reserve equal to the operating costs that are 

reasonably projected to be incurred during three months of “normal” operations. Because 

projected expenses during the first several months of air service frequently do not include all 

costs that will be incurred during a “normal” period of operations, it is our practice to base our 

three-month test on one-quarter of the first year’s operating costs. Further, in calculating 

available resources, projected revenues may not be used. 

Financial statements submitted in support of GCA’s fitness show that for calendar year 2009, 

GCA lost $10,727 on approximately $143,819 in operating revenues. The applicant’s balance 

 

2 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 all of the individuals holding 

key technical positions with CSA are qualified and have been approved for those positions.
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sheet at December 31, 2009, shows that the company has current assets and current liabilities of 

$1,147 and $162,697, respectively, indicating negative working capital of $161,550. 

The company’s historic financial statements show a $7,970 profit and a $41,632 loss for calendar 

years 2007 and 2008, respectively.

The air carrier also provided forecasts of expenses associated with its proposed scheduled 

operations. GCA states that it has no pre-operating costs or startup costs as the company initially 

began operations in 2000 and has the existing infrastructure required to operate as a scheduled 

commuter airline. It projects its first year expenses will total approximately $154,600. Based on 

this forecast, we estimate that GCA will require about $200,200 to meet our financial fitness 

criteria.3 

To support any funding requirements, GCA’s owner, Mr. Joel T. Johnson, provided a statement 

indicating that he would provide any funding for the airline on as “as needed” basis from a stock 

account. In support of this statement, the air carrier submitted verification from its accounting 

firm on February 18, 2010, stating that $70,000 in liquid assets and approximately $6.5 million 

in unrestricted stocks and bonds were in Mr. Johnson’s personal accounts. GCA also provided a 

letter dated April 26, 2010, from Mr. Johnson’s stockbroker verifying the availability of funds.

We have reviewed the forecasts provided by GCA and find them to be reasonable. Moreover, 

we have reviewed GCA’s financial statements. Because the applicant provided additional 

evidence that other assets will be available to support the proposed operations, we tentatively 

conclude that GCA 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.

4

Compliance Disposition

The applicant states that there are no actions or outstanding judgments against it, persons holding 

a substantial interest in it, or its key personnel, and that none of these parties have been the 

subject of any charges of unfair, deceptive or anti-competitive business practices, or of fraud, 

felony or antitrust violations, or other legal action during the past ten years. The air carrier also 

states that there are no pending investigations, enforcement actions, or formal complaints 

involving the applicant, persons holding a substantial interest in it, or its key personnel with 

respect to compliance with the Statute or the Department’s regulations. 

The FAA advises us that it is working with GCA in connection with the applicant's efforts to 

obtain commuter operating authority from that agency, and it knows of no reason why we should 

not find GCA fit. Additionally, our review of FAA records indicates that GCA has not been 

involved in any accidents or incidents since it initially commenced operations. 

 

3 The $200,200 noted here is one-quarter of the applicant’s forecast of approximately $154,600 in first year 

expenses equaling $38,650, plus $161,550 in negative working capital. 

4 As is our practice, prior to making any authority awarded to GCA effective, we will require the company to

demonstrate that it continues to have the financial resources needed to meet our financial fitness criteria.
5

In light of these circumstances, we tentatively conclude that GCA 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

Section 41102 of the Transportation Code 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). That 

section also requires that the president and two-thirds of the Board of Directors and other 

managing officers be U.S. citizens and that at least 75 percent of the voting stock be owned by 

U.S. citizens. The air carrier must actually be controlled by U.S. citizens.

As noted earlier, GCA was incorporated under the laws of the State of Florida in August 1998 by 

Mr. Bahram Owliaei, and was then sold to eight partners in 2000, one of which was GCA’s 

current owner, Mr. Joel T. Johnson, Jr. Mr. Johnson bought out the other seven partners in 2002. 

The record shows that as GCA’s sole owner and president, Mr. Joel T. Johnson, Jr., and all other 

key personnel of GCA are U.S. citizens. The applicant has also provided an affidavit attesting 

that it is a citizen of the United States within the meaning of the Statute. Additionally, our 

review of the applicant’s citizenship has uncovered no reason to suggest that control of GCA

rests with non-U.S. citizens.

In light of the foregoing, we tentatively find that GCA 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 the 

proposed interstate 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 GCA’s fitness and certification.

EFFECTIVE COMMUTER AUTHORIZATION & LIMITATIONS

If GCA is found fit and issued the commuter authority it seeks, its authority will not become 

effective until the company has fulfilled all requirements for effectiveness as set forth in the 

terms and conditions attached to its commuter authorization. Among other things, this includes 

our receipt of evidence that GCA has been certificated by the FAA to engage in the proposed
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operations, a fully executed OST Form 6410 evidencing liability insurance coverage that meets 

the requirements of section 205.5(b) of our rules for all of its aircraft, third-party verification of 

available funding necessary to meet the Department’s fitness requirements, and a statement of 

changes it may have undergone since its fitness was examined. In addition, consistent with the 

applicant’s proposed operations, we propose to limit any authority issued to GCA to operations 

using aircraft that can be operated under FAR Part 135 (that is, aircraft with no more than 9 seats 

in scheduled passenger operations). Should GCA desire to acquire and operate larger aircraft 

that would require certification from the FAA under 14 CFR Part 121, our fitness findings might 

no longer apply. Therefore, should GCA 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 GCA 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 GCA is issued an 

effective commuter 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.5 The compliance of the company with this requirement is essential if we are 

to carry out our responsibilities under section 41110(e).

6

Additionally, if the air carrier is granted effective authority, it would be required to submit a 

detailed progress report, within 45 days following the end of its first year of commuter flight 

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

conditioned upon all newly authorized commuter air carriers and was adopted as policy by the 

Department to aid in monitoring the fitness of new air carriers. The report should include a 

description of GCA’s current operations (number and type of aircraft, principle 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,7 and a listing of current senior management and key technical 

 

5 GCA 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 GCA 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 commuter authority.

6 We also remind GCA 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 These financial statements should include a balance sheet as of the end of the company’s first full year of actual

flight operations and a 12-month income statement ending that same date.
7

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 Gulf Coast Airways, Inc., is fit, willing, and able under 49 U.S.C. § 41738 to provide 

scheduled passenger service as a commuter air carrier. 

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, Washington, D.C. 

20590, in Docket DOT-OST-2009-0249 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 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.8

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.

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

 

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

reconsideration.
Attachment

SPECIMEN 

Terms, Conditions, and Limitations

Gulf Coast Airways, Inc.

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 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.

(5) 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 certifcation from the FAA, it must first be determined fit for such 

operations. 

(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, 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 by 

section 337 of the Department of Transportation and Related Agencies 

Appropriations Act, 1998. 

(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 

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 

 

 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

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

GULF COAST AIRWAYS, INC.

MR JOEL T JOHNSON

CEO

GULF COAST AIRWAYS INC

526 TERMINAL.DRIVE

NAPLES MUNICIPAL AIRPORT

NAPLES FL 34104

MS MARIANNE SEGUIN RTS-42

OFFICE OF AIRLINE 

INFORMATION

DOT/RSPA/BTS E-36

1200 NEW JERSEY AVENUE SE

WASHINGTON DC 20590

MR WILLIAM WEBER

CERTIFICATION SECTION 

MANAGER

FAA AFS-900

45005 AVIATION DRIVE 

SUITE 131

DULLES VA 20166

MR FELIX MOLINA

SOUTH FLORIDA FSDO - 19

FAA

2895 SW 145TH AVENUE

MIRAMAR FL 33027

MR CLAY MORITZ RTS-42

OFFICE OF AIRLINE 

INFORMATION

DOT/RSPA/BTS E-36

1200 NEW JERSEY AVENUE SE

WASHINGTON DC 20590

MR PETER LYNCH 

AGC-300

FAA ASST CHIEF COUNSEL FOR 

ENFORCEMENT

800 INDEPENDENCE AVE SW

WASHINGTON DC 20591

MR BERNARD STANKUS 

OFFICE OF AIRLINE 

INFORMATION

DOT/RSPA/BTS E-36

1200 NEW JERSEY AVENUE SE

WASHINGTON DC 20590