BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, DC 20590

Transcription

1 BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, DC ) Application of Delux Public Charter, LLC ) For Authority to Conduct Passenger ) Operations as a Commuter Air Carrier ) DOT-OST Pursuant to 49 USC ) ) REQUEST FOR ENTRY OF FINAL ORDER AND ISSUANCE OF EFFECTIVE AUTHORITY Communications with respect to this document should be addressed to: J. Parker Erkmann Cooley LLP 1299 Pennsylvania Ave., NW Suite 700 Washington, D.C (202) perkmann@cooley.com Counsel for Delux Public Charter, LLC April 25, 2016

2 BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, DC DOT-OST Delux Public Charter, LLC Page 1 of 5 ) Application of Delux Public Charter, LLC ) For Authority to Conduct Passenger ) DOT-OST Operations as a Commuter Air Carrier ) Pursuant to 49 USC ) ) REQUEST FOR ENTRY OF FINAL ORDER AND ISSUANCE OF EFFECTIVE AUTHORITY On April 15, 2016, the Department of Transportation issued an Order to Show Cause Proposing Issuance of Commuter Air Carrier Authority 1 (the Order to Show Cause ) tentatively finding that Delux Public Charter, LLC ( Delux ) is a citizen of the United States and is fit, willing and able to conduct scheduled passenger operations as a commuter air carrier. The Order to Show Cause also granted Delux s request to shorten the time to file objections to 5 business days. That time has passed without any objections having been filed in opposition to the Order to Show Cause. Delux respectfully requests that the Department confirm its tentative conclusion and issue a final order confirming that Delux is fit, willing, and able under 49 U.S.C to provide scheduled passenger service as a commuter air carrier using small aircraft pursuant to Part 135 of the Federal Aviation Regulations. 2 Further, upon issuance of the Final Order, Delux respectfully requests that the Department make its commuter authority effective as soon as possible so that Delux can begin offering its new, innovative air service product as contemplated by its application. Accordingly, 1 Order (issued Apr. 15, 2016). 2 Id. at 8.

3 DOT-OST Delux Public Charter, LLC Page 2 of 5 Delux hereby submits the information requested in the Department s standard Terms, Conditions and Limitations confirming Delux s fitness. (a) A copy of the holder's Air Carrier Certificate and Operations Specifications authorizing such operations from the Federal Aviation Administration (FAA). Attached as Exhibit A. (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. Attached as Exhibit B. (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. Since the issuance of the Show Cause Order on April 15, 2016, Delux has not undergone any change in its ownership, key personnel, operating plans or compliance history. There also has been no material change in Delux s financial posture. An update on the payment of Delux s pre-operating expenses and third-party confirmation of the funds available is being provided in response to (d) below. (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. Delux is submitting a revised list of pre-operating expenses. While Delux projected that it would incur $917,781 in pre-operating expenses, it actually incurred $1,391,897 as depicted in the chart below. The majority of the cost overage is due to certification and commuter authority taking two months longer than planned. All of these additional pre-operating expenses have been paid.

4 DOT-OST Delux Public Charter, LLC Page 3 of 5 Delux Pre-Operating Expenses DoT Application Planned Expenses versus Actual Plan Actual Variance Aircraft Lease Expense $87,500 $75,833 $11,667 Fuel & other flight operations expenses 278, ,638 (244,904.91) Marketing, Sales and IT 224, ,348 (54,348.25) Overhead 144, ,474 (43,426.56) Professional and other fees/expenses 64, ,354 (143,103.67) Professional and other fees/expenses (already paid) 78,250 78,250 0 Miscellaneous prepaid expenses 41,000 41,000 0 Total $917,781 $1,391,897 ($474,117) Despite the overage in the pre-operating costs, Delux has more than adequate cash on hand to satisfy the Department s fitness test. In the Order to Show Cause, the Department found that Delux would require $3.44 million to satisfy the fitness test, which was comprised of $917,781 in pre-operating expenses minus $119,250 in pre-operating expenses already paid, $72,500 in aircraft deposits, and $2.57 million, which is one quarter of Delux s first-year projected expenses of $10.27 million. 3 Delux has now paid its pre-operating expenses, and it believes that the $2.57 million remains an accurate estimate of three-months of operating expenses during its firstyear. Moreover, while Delux has not prepared a balance sheet since Delux submitted one to the Department dated April 6, 2016, Delux can confirm that there have been no material changes to Delux s current liabilities. Indeed, Delux has maintained a substantial working capital surplus. As confirmed by the third-party bank statements submitted as Exhibit C, Delux has more than adequate working capital and cash to satisfy the Department s fitness test. Delux has over $5 3 Id. at 5 n.6.

5 DOT-OST Delux Public Charter, LLC Page 4 of 5 million available in its two accounts, exceeding by over $1 million the amount that the Department has found will be necessary for Delux to satisfy the financial fitness test. 4 In consideration of the foregoing and in the absence of any objection to the Order to Show Cause, Delux Public Charter requests that the Department: (a) Confirm its tentative findings in the Order to Show Cause through the issuance of a Final Order; (b) Make the commuter authority effective as soon as possible thereafter; and (c) Grant such other relief as the Department finds is in the public interest. April 25, 2016 Respectfully Submitted, J. Parker Erkmann Cooley LLP 1299 Pennsylvania Ave., NW Suite 700 Washington, D.C (202) perkmann@cooley.com Counsel for Delux Public Charter, LLC 4 Specifically, Delux s Wells Fargo account has a balance of $4,776,392 and its First Foundation Bank account has $250,000 available for a total of $5,026,392, see Exhibit C, while its reported current liabilities were $566,749 as of April 6. The working capital surplus exceeds by more than $1 million the amount Department tentatively found would be necessary to satisfy the financial fitness test, $3.44 million. In fact, the amount required is less than $3.44 million because Delux already has paid almost all, if not all, of its pre-operating expenses.

6 DOT-OST Delux Public Charter, LLC Page 5 of 5 CERTIFICATE OF SERVICE I hereby certify that I have on this 25th day of April 2016, I served the foregoing Request for Entry of Final Order and Issuance of Effective Authority via upon the persons shown in the following service list. Rapid City FSDO Attn: Barry I. Dunmire Aviation Safety Inspector RAP FSDO th St. Rapid City, SD Barry.I.Dunmire@faa.gov Santa Barbara Airport Attn: Hazel Johns Airport Director 601 Firestone Road Santa Barbara, CA hjohns@santabarbaraca.gov Clark County Dept. of Aviation Attn: Chris Jones Public Affairs & Marketing Manager P.O. Box Las Vegas, Nevada chrisjo@mccarran.com Norman Y. Mineta San José International Airport Attn: John Aitken Assistant Director Of Aviation 1701 Airport Boulevard, Suite B-1130 San Jose, CA Jaitken@sjc.org John Wayne Airport Attn: Mr. Barry A. Rondinella Director 3160 Airway Avenue Costa Mesa, CA brondinella@ocair.com _/s/ Gary Johnson_ Gary Johnson

7 Exhibit A

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9 U.S. Department of Transportation Federal Aviation Administration Operations Specifications D085. Aircraft Listing HQ Control: 02/06/1998 HQ Revision: 02a a. The certificate holder is authorized to conduct operations under 14 CFR Part 135 using the aircraft identified on this operations specification. Registration No. Serial No. Aircraft M/M/S N711PH EMB-135-LR N716AE EMB-135-LR 1. Issued by the Federal Aviation Administration. 2. These Operations Specifications are approved by direction of the Administrator. Digitally signed by William J Howell, Principal Maintenance Inspector (GL27) [1] EFFECTIVE DATE: 4/14/2016, [2] AMENDMENT #: 1 DATE: :26:19-05:00 3. I hereby accept and receive the Operations Specifications in this paragraph. Digitally signed by John E Morrison on behalf of Morrison, Jonathan, Dir. of Maintenance, Part 135 DATE: :58:44-05:00 DELUX PUBLIC CHARTER LLC D085-1 Amdt. No: 1 Certificate No.: 4DPA097O

10 Exhibit B

11 AGENCY DISPLAY OF ESTIMATED BURDEN The public reporting burden for this collection of information is estimated to average 30 minutes per response. If you wish to comment on the accuracy of the estimate or make suggestions for reducing this burden, please direct your comments to: U.S. Department of Transportation, Office of Aviation Analysis, X-56, th St., SW, Washington, D.C According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB control number. Office of the Secretary of Transportation NOTE: For information on where to file completed copies of this form, see FILING INSTRUCTIONS below. OMB No Expires U.S. AIR CARRIERS - CERTIFICATE OF INSURANCE POLICIES OF INSURANCE FOR AIRCRAFT ACCIDENT BODILY INJURY AND PROPERTY DAMAGE LIABILITY FILING INSTRUCTIONS: File a signed original of this form with the Federal Aviation Administration, AFS-260, 800 Independence Ave., S.W., Washington, D.C (See EXCEPTIONS 1 and 2 below.) EXCEPTION 1: If Block 2B on the reverse is filled in because the insured is a commuter air carrier, file a signed original of this form with the Department of Transportation, Air Carrier Fitness Division, X-56, th St., SW, Washington, DC EXCEPTION 2: For any Insured that is located in the State of Alaska (regardless as to whether Block 2A, 2B, or 2C is filled in), file a signed original of this form with the Federal Aviation Administration, Alaskan Region Hq., AAL-230, 222 W. 7 th Ave., #14, Anchorage, Alaska (Please type information, except signatures.) THIS CERTIFIES THAT: The Several Participating Companies of the United States Aircraft Insurance Group c/o United States Aviation Underwriters, Incorporated (Name of Insurer) has issued a policy or policies of Aircraft Liability Insurance to Delux Public Charter, LLC 550 North 5 th Street, Suite 101, Rapid City, South Dakota FAA Certificate Number 4DPA0970 (Name, address and FAA Certificate number of Insured U.S. Air Carrier) effective from October 31, 2015 until ten (10) days after written notice from the insurer or carrier of the intent to terminate coverage is received by the Department of Transportation. NOTE: Part 205 of the Department's Regulations does not allow for a predetermined termination date, and a certificate showing such a date is unacceptable. 1. The Insurer (Check One): is licensed to issue aircraft insurance policies in the United States; is licensed or approved by the government of is an approved surplus line insurer in the State(s) of to issue aircraft insurance policies; or 2. The insurer assumes, under the policy or policies listed below, aircraft accident liability insured to minimums at least equal to the following during operation, maintenance, or use of aircraft in air transportation as that term is defined in 49 U.S.C (Complete applicable section(s) A, B, or C below): A. U.S. AIR TAXI OPERATORS (EXCLUDING U.S. COMMUTER AIR CARRIERS) WITH PART 298 AUTHORITY ONLY The aircraft covered by this policy are SMALL AIRCRAFT (i.e., with 60 or fewer passenger seats or with a maximum payload capacity of 18,000 pounds or less). (Complete separate or combined coverage as appropriate): Separate Coverages: Minimum Limit Policy No. Type of Liability Each Person Each Occurrence Bodily Injury Liability (Excluding Passengers) $ 75,000 $300,000 Passenger Bodily Injury $ 75,000 $75,000 x 75% of total number of passenger seats installed in aircraft Property Damage $100,000 Combined Coverage: The amount of coverage set forth below is a single limit of liability for each occurrence at least equal to the required minimums stated above for bodily injury (excluding passengers), property damage, and passenger bodily injury. Policy No. SIHL1-416Z Amount of Coverage $300,000,000 This policy covers CARGO operations only and excludes passenger liability insurance. OST Form 6410

12 B. U.S. COMMUTER AIR CARRIERS OR CERTIFICATED AIR CARRIERS OPERATING SMALL AIRCRAFT The aircraft covered by this policy are SMALL AIRCRAFT (i.e., with 60 or fewer passenger seats or with a maximum payload capacity of 18,000 pounds or less). (Complete separate or combined coverage as appropriate): Separate Coverages: Minimum Limit Policy No. Type of Liability Each Person Each Occurrence Combined Bodily Injury (Excluding Passengers other than cargo attendants) and Property Damage Liability $300,000 $2,000,000 Passenger Bodily Injury $300,000 $300,000 x 75% of total number of passenger seats installed in aircraft Combined Coverage: The amount of coverage set forth below is a single limit of liability for each occurrence at least equal to the required minimums stated above for bodily injury (excluding passengers), property damage, and passenger bodily injury. Policy No. Amount of Coverage This policy covers CARGO operations only and excludes passenger liability insurance. C. U.S. CERTIFICATED AIR CARRIERS OPERATING LARGE AIRCRAFT The aircraft covered by this policy are LARGE AIRCRAFT (i.e., with more than 60 passenger seats or with a maximum payload capacity of more than 18,000 pounds). (Complete separate or combined coverage as appropriate): Separate Coverages: Minimum Limit Policy No. Type of Liability Each Person Each Occurrence Combined Bodily Injury (Excluding Passengers other than cargo attendants) and Property Damage Liability $300,000 $20,000,000 Passenger Bodily Injury $300,000 $300,000 x 75% of total number of passenger seats installed in aircraft Combined Coverage: The amount of coverage set forth below is a single limit of liability for each occurrence at least equal to the required minimums stated above for bodily injury (excluding passengers), property damage, and passenger bodily injury. Policy No. Amount of Coverage This policy covers CARGO operations only and excludes passenger liability insurance. 3. The policy or policies listed in this certificate insure(s) (Check One): Make and Model FAA or Foreign Flag Registration No. Operations conducted with all aircraft operated by the insured Operations conducted with the following types of aircraft: Embraer EMB-135LR N716AE Operations with the following aircraft: (Use additional page if necessary) Embraer EMB-135LR N711PH 4. Each policy listed in this certificate meets or exceeds the requirements in 14 CFR Part 205. United States Aircraft Insurance Group c/o United States Aviation Underwriters, Incorporated Lockton Insurance Companies of Colorado (Name of Insurer) (Name of Broker, if applicable) 70 South Lake Avenue, Suite East Union Avenue, Suite 700 (Address) (Address) Pasadena, California Denver, Colorado (City, State, Zip Code) (City, State, Zip Code) Anthony Farano Jim Manville Contact (person who can verify the effectiveness of the coverage) (Officer or authorized representative) / / (Area Code, Phone Number) (Area Code, Fax Number) (Area Code, Phone Number) (Area Code, Fax Number) (Signature, if applicable) April 8, 2016 (Date) (Signature, if applicable) (Date)

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