AirlineInfo



[pic] |UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

| |Issued by the Department of Transportation

on the 30th day of March, 2007

|Application of | |

| | |

|VISION AIRLINES, INC. |Docket OST-2004-19518 |

| | |

|for a certificate of public convenience and necessity under 49 U.S.C. 41102 to engage in | |

|interstate scheduled air transportation of persons, property, and mail | |

ORDER TO SHOW CAUSE

PROPOSING ISSUANCE OF CERTIFICATE AUTHORITY

Summary

By this order, we tentatively find that Vision Airlines, Inc. (“Vision”) is fit, willing, and able to provide interstate scheduled air transportation of persons, property, and mail, and should be issued a certificate of public convenience and necessity authorizing such operations, subject to conditions.

Background

Section 41102 of Title 49 of the United States Transportation Code (the “Transportation Code”) directs us to determine whether applicants for certificate authority to provide interstate scheduled air transportation are “fit, willing, and able” to perform such transportation, and to comply with the Statute and the regulations of the Department. 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 a company's fitness are whether the applicant (1) will have the managerial skills and technical ability to conduct the proposed operations, (2) will have access to resources sufficient to commence operations without posing an undue risk to consumers, and (3) will comply with the Statute and regulations imposed by Federal and State agencies. We must also find that the applicant is a U.S. citizen.

On October 28, 2004, Vision, an operating air taxi based in Las Vegas, Nevada, filed an application in Docket OST-2004-19518 for a certificate to provide interstate scheduled air transportation of persons, property, and mail pursuant to § 41102 of the Statute.[1]

On November 5, 2004, Vision filed a Motion for Confidential Treatment under 14 CFR 302.12 (“Rule 12) to withhold from public disclosure the company’s financial statements. On November 16, 2004, Scenic Airlines, Inc. (“Scenic”), an operating U.S. certificated air carrier,[2] filed an answer opposing Vision’s motion, arguing that the request was overly broad, lacked sufficient justification to support Vision’s view that such disclosure would result in substantial competitive harm, and that a more limited request would have addressed sufficiently Vision’s concerns in these matters.

By letter dated December 1, 2004, the Department denied Vision’s November 5, 2004, request for confidential treatment because the Department determined that Vision failed to show that substantial harm to its competitive position would result from public disclosure of the information or that such information is normally not released to the public. Subsequently, on December 27, 2004, Vision filed this material in the public record.

On January 18, 2005, Scenic filed an additional pleading in opposition to Vision’s application. Scenic questions Vision’s compliance disposition; it contends that Vision has not provided to the Department a service proposal indicative of its proposed operations; and it maintains that Vision has artificially reduced the amount of working capital reserve it needs to meet the Department’s financial fitness requirements.

On February 2, 2005, Vision filed a response to Scenic’s additional pleading. Vision argues that Scenic’s contentions are without merit and “motivated not to vindicate the public interest, but rather to protect Scenic’s diminishing share of the air tour market in southern Nevada;”[3] and that contrary to Scenic’s assertion, it has working capital reserves sufficient to satisfy the Department’s financial fitness requirements.

On November 29, 2005, Scenic filed a further pleading in opposition to Vision’s application. It maintains that Vision has not provided adequate information in the record of this case about its proposed operations. Specifically, Scenic insists that Vision should provide the record with a revised list of pre-operating expenses and information relating to its plans for obtaining and financing the aircraft that it intends to use in its proposed certificated operations.

On February 15, 2006, Vision supplemented its application, providing, among other things, a revised list of pre-operating expenses and aircraft lease agreements.

In a March 7, 2006, filing, Scenic reiterated its view that Vision had not adequately supplied the record with information relative to its fitness. Scenic maintains that (1) Vision’s pre-operating expense forecast does not address all of the expenses normally associated with receiving Part 121 authority, and (2) the Dornier 328 lease agreements previously provided by Vision do not disclose the beneficial owner of the aircraft or provide the relative terms of the lease. Scenic is also of the view that Federal Aviation Regulations (FAR) Part 139 prohibits Vision from conducting its proposed operations with Dornier 328 aircraft, since neither North Las Vegas Airport, a Class III airport[4], nor Grand Canyon National Park Airport, a Class II airport[5], are certified to support scheduled large aircraft.[6]

On May 2, 2006, Vision updated its pre-operating expenses and its first-year expense forecast. It also filed additional documents supplementing its Dornier 328 aircraft lease agreements. On May 9, 2006, Vision filed a motion to withhold from public disclosure information relating to the terms of its aircraft lease agreements.[7]

On May 23, 2006, Scenic responded to Vision’s latest filing, arguing that Vision has not disclosed adequately information regarding changes in its operations. It contends that Vision began operating public charter flights under Part 380 of the Department’s Public Charter Rules (14 CFR Part 380) on April 6, 2006, providing four weekly round-trip flights between North Las Vegas Airport and Williams Gateway Airport. Scenic also restated its view that FAR Part 139 prohibits Vision from operating the Dornier 328 aircraft at North Las Vegas Airport or Grand Canyon Airport on a scheduled basis. In light of this, Scenic notified the Department that it had filed a complaint with the Federal Aviation Administration (“FAA”), requesting a determination by the FAA on the “legality” of Dornier 328 operations at North Las Vegas Airport.[8] Scenic also restated its concerns that the beneficial ownership of the Dornier 328 aircraft that Vision intends to use in its proposed scheduled operations may well reside with foreign interests. Scenic urges the Department to explore further the beneficial ownership of the aircraft, since Scenic is of the view that this information may be relevant to the Department in its determinations on whether Vision is a U.S. citizen.

On June 12, 2006, Vision filed a Motion to withhold from public disclosure financial information relating to the terms of the Dornier 328 lease agreements[9] and on January 27, 29, and 30, 2007, and February 16, 2007, Vision provided additional documentation pertaining to its aircraft fleet, as well as a revised list of pre-operating expenses, a revised first-year operating expense forecast, current financial statements, updated compliance information, and a list of relevant corporations.

On February 20, 2007, Scenic filed a response to Vision’s filings, restating its belief that Vision’s modest service proposal was an attempt to deflate the Department’s working capital reserve requirements and Vision’s leasing of aircraft from Vision Asset Co., LLC (“VAC”), a Nevada limited liability company equally owned by Vision’s President, Mr. William Acor and Vision’s minority investor, Mr. Lee Kim Yew, indicated that the air carrier was under the control of a non-U.S. citizen. Scenic also contends that the revised pre-operating expense forecast, current financial statement, and list of relevant corporations, are insufficiently detailed and questions the compliance disposition of Vision.

On February 23, 2007, Vision filed a reply to Scenic’s response. Vision states that with the exception of Vision Holidays, Inc., a Nevada corporation commonly owned by the principals of Vision and registered as a public charter operator under Part 380 of the Department’s regulations and of whom the Department is well aware, it has provided disclosure of all relevant corporations. Vision further states that Scenic has provided no precedent to support its contention that Vision is not under the control of U.S. citizens and concludes that Scenic’s arguments are without merit.

We have reviewed thoroughly the application, Scenic’s claims, and the responsive pleadings in this case and no special issues regarding the applicant have come to our attention requiring a hearing. Scenic has provided no convincing evidence to support its contentions that the applicant 1) lacks the proper compliance disposition, 2) fails to qualify as a U.S. citizen, 3) does not have access to sufficient financial resources, and/or 4) lacks the proper regulatory authority to realize its service proposal. Based on this review, our tentative findings, as more fully discussed in the FITNESS section below, are that Vision is a U.S. citizen and has established its fitness to provide, subject to conditions, interstate air transportation of persons, property, and mail, and that Vision should be issued a certificate authorizing it to engage in interstate air transportation of persons, property, and mail. 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

Vision was organized as a corporation under the laws of the state of Nevada on April 21, 1994. Messrs. William Acor and Steven Acor, in addition to being Vision’s President and Vice President of Operations, respectively, also serve as directors on Vision’s two-member board. Vision is wholly owned by Vision Aviation Holdings, Inc. (“VAH”), also formed as a corporation under the laws of the state of Nevada. VAH’s Board of Directors consists of Messrs. Steven Acor, William Acor, and Lee Kim Yew. Ownership of VAH is divided between two Nevada corporations, AVI Investment Group, LLC (“AVI”) and Club Excellence, Inc. (“Club Excellence”). AVI holds 2,100,000 of the 2,800,000 outstanding voting shares of VAH (75%), while Club Excellence owns the remaining 700,000 voting shares (25%) and it holds additionally all of the 200,000 outstanding non-voting shares, giving it a 30 percent total equity interest in the applicant. Messrs. Steven Acor, William Acor, and Jeff Carstens, all of whom are U.S. citizens, each hold an equal equity interest in AVI. Club Excellence is a wholly owned by Beautiful Gold International, Ltd. (BGI), a British Virgin Island corporation solely owned by Mr. Lee Kim Yew.

The company currently provides air transportation as an air taxi operator under Part 298 of our rules (14 CFR 298) and under Part 135 of the Federal Aviation Regulations, primarily providing air tour operations from North Las Vegas airport to Grand Canyon National Park. Also, as previously noted, Vision operates four roundtrip flights per week between North Las Vegas Airport and Williams Gateway Airport, serving as the direct air carrier for Vision Holidays, Inc.

Vision’s fleet currently consist of 10 aircraft, five 30-seat Dornier 328 aircraft and five 19-seat Dornier 228 aircraft. The air carrier states that it anticipates expanding its fleet to 14 aircraft, seven Dornier 328 aircraft and seven Dornier 228 aircraft, by years-end. Six of the 10 aircraft Vision currently operates are leased from VAC, while the remaining four aircraft are leased from companies either wholly owned or majority owned by Messrs. Bill Acor and/or Steve Acor.

If granted the authority it seeks, Vision intends to operate one 30-seat Dornier 328 aircraft in scheduled passenger service under Part 121, offering one roundtrip flight daily between North Las Vegas Airport and Grand Canyon Airport.

Managerial Competence

Vision’s management and key technical personnel consist of the following individuals:

Mr. William Acor – President and Chief Executive Officer (CEO)

Mr. Gary Acquavella – Chief Financial Officer (CFO)

Mr. Steven Acor – Vice President of Operations/Director of Operations

Mr. Michael Smith – Director of Maintenance

Mr. Jason Walden – Director of Safety

Mr. John Jones – Chief Inspector

Mr. Aaron Godwin – Chief Pilot

Mr. William Acor, an Airframe and Powerplant Mechanic, founded Vision in April 1994, and has served as the company’s President and CEO since its inception. He has approximately 20 years of aviation experience, having begun his career in 1984 with Lang Airlines. He held a variety of maintenance positions over an eight-year period with the company, including Director of Maintenance. Mr. Acor then joined Eagle Aviation where he served as Board member and Vice President of Maintenance from1992 to 1994.

Mr. Gary Acquavella has served as Vision’s CFO since 1995. Prior to this, he was employed as CFO at Aon Risk Services from 1990 to 1994, as CFO at Buyout Partners, Inc. from 1985 to 1990, as Tax Manager at Sharpe and Davis from 1982 to 1985, and as Senior Accountant at Ledwith Houghton and Company from 1976 to 1982.

Mr. Steven Acor, an Airframe and Powerplant Mechanic and Airline Transport Pilot, has served as Vision’s Director of Operations, Chief Pilot, and Line Pilot, and he recently reassumed the position of Director of Operations in April 2006. Mr. Acor has been employed in the aviation industry for over 27 years using both his Airframe and Power Plant Mechanic and Airline Transport Pilot certificates in positions held with various companies including Imperial Air, Eagle Airlines, Lang Airlines, A & S Aircraft Repair, and Sea Airmotive. Mr. Acor has additionally received type ratings on the Dornier 228 and the BA Jetstream-3201 and logged over 4100 hours of flight time.

Mr. Mike Smith is Vision’s Director of Maintenance. He is an Airframe and Powerplant Mechanic. He joined Vision in 2000 as a Swing Shift Supervisor and served in this capacity for four years until his appointment to Director of Maintenance in January 2004. Prior to beginning his career with Vision, Mr. Smith served for 12 years in the U.S. Air Force as an aircraft mechanic.

Mr. John Jones serves as Vision’s Chief Inspector. He is an Airframe and Powerplant Mechanic with an Inspection Authorization. He joined Vision in 1994, as a mechanic. He was promoted to the position of Director of Maintenance in 1997 and to Chief Inspector in 2000. Prior to joining Vision, he was employed as Director of Maintenance at Premier Aircraft Management, Inc., from 1998 to 2005, as Lead Mechanic at Eagle Airlines from 1990 to 1993, and Lead Mechanic at National Executive Airlines from 1983 to 1989.

Mr. Aaron Godwin joined Vision as a line pilot in April 1994. He is an Airframe and Powerplant Mechanic and Airline Transport Pilot. He was promoted to Chief Pilot in March 2003. Prior to joining Vision, he served as a pilot for Lake Mead Air in 1999 and Merlin Express from 1998 to 1999. Mr. Godwin worked as a mechanic for Wright Aviation in 1998, Ormond Aviation in 1997, Rams Aviation in 1996, and Parker Aircraft Service form 1994-1995. In addition to holding an Airline Transport Pilot license, Mr. Godwin is type rated on both the Dornier 228 and the BA Jetstream-3201.

Mr. Jason Walden joined Vision in November 2003, as a line pilot. He is a commercial pilot and licensed flight instructor. In June 2004, he became Vision’s Director of Safety and Security. Prior to joining Vision, he was a Flight Instructor for First Flight Aviation from May 2002 to November 2003. In addition to his aviation experience, he has over 9 years of management and supervisory experience in the hospitality and entertainment industries.

In view of the experience and background of the applicant’s key personnel, we tentatively conclude that Vision has demonstrated that it has both senior management and key technical supervisors who have the managerial skills and technical ability to support its proposed operations.[10]

Operating Proposal and Financial Plan

As previously discussed, if granted the authority it seeks, Vision intends to operate one daily roundtrip flight between North Las Vegas Airport and Grand Canyon National Park Airport, using a 30-seat Dornier 328 aircraft. This aircraft is currently being used by Vision to provide on-demand operations under Part 135 of the FARs in the Las Vegas-Grand Canyon market. The company is currently seeking Part 121 authority from the FAA to conduct its proposed scheduled operations and intends to continue its non-scheduled operations under Part 135.

In establishing financial fitness, the Department typically asks that new entrant applicants have resources sufficient to cover all pre-operating costs and any negative working capital balance, plus a working capital reserve equal to the operating costs that would be incurred in three months of normal certificated operations.[11]

Vision provided the Department with a financial forecast for its first year of scheduled operations and a list of pre-operating expenses. Vision projects its pre-operating expenses will total approximately $1.53 million, and states it has already expensed approximately $1.29 million of this amount, leaving $240,000 in unpaid pre-operating expenses. Vision projects its total expenses associated with its first year of certificated operations will be approximately $25.1 million.[12] Our evaluation indicates that Vision will need access to approximately $6.5 million to meet our financial fitness criteria.

Historical financial statements submitted in support of Vision’s fitness show that for the 12-month period ending April 30, 2006, Vision experienced net income of $1,917,467 on approximately $36 million in operating revenues. For the period April 30, 2006, through December 31, 2006, the applicant earned net income of $4,884,218 on approximately $41.4 million in operating revenues. Vision’s most recent balance sheet indicates that, as of October 31, 2006, it had current assets of $11,136,841 and current liabilities of $8,636,780, giving the air carrier working capital of approximately $2.5 million. Additionally, the October 31, 2006, balance sheet provided by the applicant reports the company has retained earnings of approximately $7.35 million and net stockholders’ equity of $7.62 million. In addition to the working capital available to Vision to support the proposed operations, AVI has extended an open-ended line of credit of $1.5 million to Vision. Furthermore, Vision’s positive shareholders’ equity position should enable it to borrow additional funds if needed to support its operations.

In light of the above, we tentatively conclude that Vision will have access to sufficient financial resources to enable it to commence the proposed operations without posing an undue risk to consumers or their funds.[13]

Compliance Disposition

Vision identified four pending cases against it: (1) U.S. District Court of Nevada case No. 2:05-CV-01451, Platinum Air Charter v. Aviation Ventures, Inc.; (2) Clark County District Court case No. A437714, Joan Morris, Inc. d/b/a Las Vegas tourist Bureau v. Aviation Ventures, Inc.; (3) Clark County District Court case No. A518710, Leland Ozawa v. Vision Airlines, Inc., and (4) United States District Court case No. 6:06-cv-1777, Aviation Adventures, Inc. v. Jet Lift International and J.P. Aero Solutions.[14]

In the Platinum Air Charter case and the Jet Lift International and J.P. Aero Solution case, the plaintiffs allege breach of contract and seek $75,000 and $400,000 in damages, respectively. Vision has filed a counterclaim in the Platinum Air Charter case alleging wrongful termination and seeks damages for lost revenues of approximately $100,000. In the Morris case, the District Court granted summary judgment to the plaintiff for unjust enrichment and breach of a promissory note. However, upon appeal to the Supreme Court of Nevada, the order was reversed and remanded for further proceedings. In the Leland Ozawa case, the plaintiff, a former Vision employee, alleges he was wrongfully terminated from his position as a part-time captain. The case was ordered to arbitration by the District Court.

In addition, Vision also identified one pending case against AVI, the applicant’s majority owner.[15] This action was brought against AVI and Dornier One Leasing, an affiliated company, in Clark County District Court.[16] WDLA, LLC, the plaintiff, sought to recover $500,000 to capitalize a Joint Venture agreement entered into between the parties. Vision has filed a counterclaim alleging that it incurred $471,524.82 in expenses in furtherance of the joint venture.

Vision also identified two consent orders against it by the Department: (1) Order 2002-7-30, issued on July 24, 2002; and (2) Order 2006-11-20, issued on November 30, 2006.[17] In the first case, the Department found that Vision was in violation of 49 U.S.C. § 41101 and 14 CFR Part 298 (conducting daily scheduled air transportation as a commuter air carrier) and 49 U.S.C. § 41712 and 14 CFR 201.5(a) (advertising scheduled air transportation without appropriate economic authority). In the second case, the Department found that Vision was in violation of 49 U.S.C. §§ 41101 and 41712 and 14 CFR Part 380 (advertising charter service before applying for or receiving the appropriate Public Charter authority). As part of the settlement, Vision agreed to cease and desist from future violations and agreed to an assessment of $25,000 and $20,000, respectively, in compromise of potential civil penalties.

The applicant states that, except as noted above, there are no other actions or outstanding judgments against it, its owners, or its key personnel. It notes that there are no charges of unfair, deceptive or anticompetitive business practices, or of fraud, felony or antitrust violations to report. Vision also states that there are no pending investigations, enforcement actions, or formal complaints filed by the Department against it, its key personnel, or persons having a substantial interest in it with respect to compliance with the Statute or the Department’s regulations.

Our review of the applicant’s compliance disposition has produced no evidence of any compliance issues other than those discussed above. Moreover, this review has uncovered no other information regarding Vision, its owners, or its key personnel that would reflect negatively on its fitness. We note that while Vision has several actions pending against it, we find that these actions are being appropriately adjudicated, and therefore do not reflect negatively on the company’s disposition to comply with the law or its diligence in maintaining safe operations.

Our review of FAA records indicate that Vision has received only four violations, none of which warranted the issuance of civil penalties, and it has been involved in only one accident since commencement of operations in 1994.[18] In addition, according to the FAA, Vision is making satisfactory progress in working toward obtaining its FAA certification under 14 CFR Part 121 and the FAA knows of no reason why the air carrier should not be granted the authority it seeks here and likewise, the Department’s Office of Aviation Enforcement and Proceedings has advised us that it has no objections to the approval of Vision’s application. Furthermore, the FAA has informed us that the Dornier 328 aircraft Vision intends to operate is considered a “small aircraft” for the purposes of FAR Part 139, and therefore both North Las Vegas Airport and Grand Canyon National Park Airport are certified to support the scheduled operations Vision proposes.

In light of these circumstances, we tentatively conclude that Vision has the proper regard for the laws and regulations governing its operations 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 certificates 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 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 outstanding voting stock be owned by U.S. citizens. The air carrier must, as a factual matter, actually be controlled by U.S. citizens.

Vision is a corporation organized under the laws of the State of Nevada. The applicant has provided an affidavit attesting that it is a citizen of the United States within the meaning of the Statute and that it is owned and controlled by U.S. citizens. The record indicates that 75 percent of Vision’s voting stock is owned by U.S. citizens. Mr. Lee Kim Yew, a Malaysian citizen, indirectly owns the remaining 25 percent of Vision’s voting stock and 100 percent of the non-voting stock through his ownership interest in BGI, a British Virgin Isles corporation. As noted, Mr. Yew’s total equity stake in Vision is 30 percent.[19] While Mr. Yew’s total equity interest in Vision exceeds 25 percent, generally speaking, foreign equity interests over 25 percent have been permitted where the foreign investors have been nationals of countries, such as Malaysia, with which we have open-skies aviation bilaterals.[20] The British Virgin Isles corporation is only a passive pass-through for its 100% owner from an open-skies country.

Though Scenic contends that the aircraft leasing agreements entered into between Vision and VAC indicate that the applicant is not under the control of U.S. citizens, we have found nothing in these agreements that would indicate that control does not reside with U.S. citizens. Our review of the record indicates that actual control resides with U.S. citizens. Under the current corporate structure, we see no potential for the foreign interest to have substantial ability to influence the air carrier’s activities.[21] The record shows that two-thirds of VAH’s directors, all of the directors of Vision, and all other key personnel of the applicant are U.S. citizens. Moreover, Mr. Lee Kim Yew, while a director of VAH, is not involved in the day-to-day operations of Vision. While we recognize that the foreign equity interest is held through a British Virgin Isles corporation, a Malaysian citizen is the sole owner and economic beneficiary of BGI.

In light of the foregoing, we find that Vision is owned and actually controlled by U.S. citizens. Our decision is based on our current open-skies aviation relationship with Malaysia and the current corporate ownership. Should the current ownership structure or any other aspect of the corporate ownership change, our determination of fitness may not apply. Therefore, as discussed in the CERTIFICATE CONDITIONS AND LIMITATIONS section of this order, we are proposing a reporting requirement of any ownership change from that presented in the record.

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 Vision’s fitness and certification.

CERTIFICATE CONDITIONS & LIMITATIONS

If Vision is found fit and issued the certificate 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 certificate. Among other things, this includes our receipt of (1) evidence of Vision’s authority from the FAA to conduct scheduled passenger operations, (2) evidence of liability insurance coverage that meets the requirements of section 205.5(b) of our rules for all of its aircraft, (3) a statement of changes it may have undergone since the issuance of this order, and (4) evidence that Vision continues to have adequate financial resources available to it.

We also wish to remind Vision 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 certificated 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. We note that, our tentative findings here are predicated on the ownership structure described in the record of this case. Any change in these circumstances could well result in a different outcome. For this reason, we would consider any change in ownership to be a “substantial change” as defined in section 204.2(l) of our rules. Therefore, if Vision is issued an effective scheduled passenger certificate 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.[22]

Additionally, given the limited scope of Vision’s proposed operations, were the applicant to propose to expand its scheduled operations to include large aircraft (i.e., aircraft having an original design capacity of more than 60 passenger seats or a maximum payload of more than 18,000 pounds), our fitness findings, particularly involving the adequacy of Vision’s management and financial resources, might no longer apply. Therefore, we propose to limit any authority issued to Vision to operations with aircraft having no more than 60 passenger seats and a maximum payload capacity of no more than 18,000 pounds. The compliance of the company with this requirement is essential if we are to administer our responsibilities, consistent with § 41110(e).[23]

Finally, if Vision is granted effective authority, it would be required to submit a detailed progress report, within 45 days following the end of the first year of certificated flight operations, to the Air Carrier Fitness Division. The submission of a first year progress report is conditioned upon all newly certificated 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 the air carrier’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,[24] 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 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 making final the tentative findings and conclusions stated above and award a certificate to Vision Airlines, Inc. authorizing it to engage in interstate scheduled air transportation of persons, property, and mail, subject to the attached specimen Terms, Conditions, and Limitations.

2. We direct any interested persons having objections to the issuance of an order making final any of the proposed findings, conclusions, or the certificate award set forth here to file them with Department of Transportation Dockets (M-30, Room PL-401), 400 Seventh Street, SW, Washington, D.C. 20590, in Docket OST-2004-19518, and serve them upon all persons listed in Attachment A no later than fourteen (14) calendar days after the service date of this order; answers to objections shall be filed no later than seven (7) business 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.[25]

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:

ANDREW B STEINBERG

Assistant Secretary

for Aviation and International Affairs

An electronic version of this document is available on the World Wide Web at:



Attachment

|[pic] |SPECIMEN |

| |Terms, Conditions, and Limitations |

| | |

| |VISION AIRLINES, INC. |

| | |

is authorized to engage in interstate air transportation of persons, property, and mail between any point in any State, territory, or possession of the United States or the District of Columbia, and any other point in any of those entities.

This authority is subject to the following provisions:

(1) The authority to operate under this certificate 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 the operations proposed under this certificate, 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 regulations prescribed by the Department of Transportation for the services authorized by this certificate, and with such other reasonable terms, conditions, and limitations as the Department of Transportation may prescribe in the public interest.

(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 In the event that the holder wishes to institute operations with aircraft having a larger capacity, it must first be determined fit for such operations.

(5) 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.(

(6) The holder shall at all times remain a "Citizen of the United States" as required by 49 U.S.C. 40102(a)(15).

(7) The holder shall maintain in effect liability insurance coverage 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 provisions of Subtitle VII of Title 49 of the United States Code or the Department's regulations shall be sufficient grounds to revoke this certificate.

(8) The holder is authorized to conduct charter flights in interstate and/or foreign air transportation in accordance with the provisions of 14 CFR 212.

(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 or as modified by any future legislation addressing access restrictions to or from Love Field.

(10) 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.

(11) In the event that the holder does not commence actual flying operations under this certificate within one year of the date of the Department's determination of its fitness, its authority shall be revoked for dormancy, unless the holder is conducting operations under another type of certificate authority. Further, in the event that the holder commences operations for which it was found "fit, willing, and able" and subsequently ceases all such operations, its authority under all certificates held shall be suspended under the terms of 14 CFR 204.7 and the holder may neither recommence nor advertise such operations 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.

| | |Attachment A |

| | | |

| |SERVICE LIST FOR | |

| |VISION AIRLINES, INC. | |

| |MR AARON A GOERLICH | MR RICHARD WRIGHT |

|MR ERIC ZUBEL |COUNSEL FOR SCENIC AIRLINES INC |POI FOR VISION AIR |

|COUNSEL FOR AVIATION VENTURES INC |GAROFALO GOERLICH HAINBACH PC |D/B/A AVIATION VENTURES INC |

|D/B/A VISION AIR |1200 NEW HAMPSHIRE AVENUE NW |LAS VEGAS FSDO |

|CITY CENTER – SUITE 2200 |WASHINGTON DC 20036-06802 |7181 AMIGO ST SUITE 180 |

|1420 FIFTH AVENUE | |LAS VEGAS NV 89119 |

|SEATTLE WA 98108 | | |

| MR DOUG MCNEELY, MANAGER |MR DON BRIGHT K-25 | MS LORI AQUILINO |

|NORTH LAS VEGAS AIRPORT |OFFICE OF AIRLINE INFO |CSET ASST MGR |

|2 730 AIRPORT DRIVE SUITE 101 |DEPT OF TRANSPORTATION |FAA SFO-IFO |

|NORTH LAS VEGAS NV 89030 |400 SEVENTH ST SW |831 MITTEN ROAD STE 105 |

| |WASHINGTON DC 20590 |BURLINGAME CA 94010 |

| | | |

|MR PETER LYNCH AGC-300 |MS EILEEN GLEIMER | |

|FAA ASST CHIEF COUNSEL |MR GERALD MURPHY | |

|FOR ENFORCEMENT |CROWELL & MORING LLP | |

|800 INDEPENDENCE AVE SW WASHINGTON DC 20591 |COUNSEL FOR VISION AIRLINES INC | |

| |1001 PENNSYLVANIA AVE NW | |

| |WASHINGTON DC 20004-2595 | |

-----------------------

[1] Vision supplemented its application with additional information, most recently on February 16, 2007. Vision also filed several motions for confidential treatment of certain documents. Previously, on July 12, 1999, Vision had filed an application for economic authority concurrent with an investigation that our Office of the Assistant General Counsel for Aviation Enforcement and Proceedings (Enforcement Office) was conducting concerning certain apparent unauthorized scheduled passenger operations by Vision (See COMPLIANCE DISPOSITION section of this order). However, by letter dated March 7, 2003, Vision notified the Department that it was withdrawing its application. Subsequently, by Order 2003-5-1, issued May 1, 2003, the Department dismissed the request (Docket OST-99-5949).

[2] See Order 2005-1-10, issued January 12, 2005.

[3] See Reply dated February 2, 2005, at 2.

[4] FAR Part 139.5 defines a Class III airport as an airport certificated to serve scheduled operations of small air carrier aircraft. A Class III airport cannot serve scheduled or unscheduled operations of large air carrier aircraft.

[5] FAR Part 139.5 defines a Class II airport as an airport certificated to serve scheduled operations of small air carrier aircraft and the unscheduled passenger operations of large air carrier aircraft. A Class II airport cannot serve scheduled large air carrier aircraft.

[6] For the purposes of airport certification, FAR Part 139.5 defines an air carrier aircraft as large aircraft if designed for more than 31 passenger seats and defines air carrier aircraft as small aircraft if designed for more than 9 passenger seats but less than 31 passenger seats. The rule further provides that aircraft type certificates issued by a competent civil aviation authority determines the design seating capacity.

[7] By letter dated June 6, 2006, we granted Vision’s request for confidential treatment. (See Docket OST 2004-19518).

[8] Subsequently, the FAA informed Scenic that FAA Western-Pacific Region Flight Standards Division would review Scenic’s complaint and investigate, if appropriate.

[9] By letter dated December 15, 2006, we granted Vision’s request for confidential treatment. (See Docket OST 2004-19518).

[10] 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 Vision’s key technical personnel are acceptable to that agency in their respective positions.

[11] Because projected operations during one or more of the first three months of anticipated actual air transportation services frequently do not include all costs of operations that will be incurred during a normal period of operations, it has been our practice to base our three-month standard on one quarter of the first year’s operating cost forecast. In calculating available resources, projected revenues may not be used.

[12] This $25.1 million expense figure represents the entire operations of the company under its certificated status, if finalized, since the company indicated it would be expanding its operations after become certificated.

[13] As is our practice, prior to making any authority awarded to Vision effective, we will require the company to demonstrate that it continues to have the financial resources needed to meet our financial fitness criteria.

[14] Vision also identified one outstanding judgment for $125,937.26. This judgment was awarded to the plaintiff by Regional Court No. 1 of Munich, Republic of Germany (See case No. 32693-04, Dr. Eberhard Braun, as Insolvency Trustee for Fairchild Dornier v. Vision Air/Vegas Jet Charter and Sales). Vision states that due to the expense involved in litigating the case in the Republic of Germany, it let the court enter a default judgment against it, and intends to continue to defend its case should litigation be brought against it in the United States.

[15] Vision also identified several pending actions against affiliated companies. However, nothing in the record indicates that these actions are other than typical doing-business type litigations. A list of these pending actions is enumerated in the air carrier’s February 16, 2007, submission.

[16] See case No. A 508468, WDLA, LLC v. Dornier One Leasing, AVI Investment Group, LLC.

[17] Vision also identified Order 2004-5-11, issued May 13, 2004, by the Department against Premier Aircraft Management, Inc., a now defunct company which at the time shared common ownership and management with Vision, for violations of 49 U.S.C. §§ 41301, 41703, 41712 and 14 CFR Part 375. As part of the settlement, Premier Aircraft Management agreed to cease and desist from future violations and agreed to an assessment of $175,000 in compromise of potential civil penalties.

[18] On June 4, 2001, Vision Flight 12, a Piper PA-31, sustained substantial damage when the right main landing gear collapsed during landing at North Las Vegas Airport. Neither the pilot nor any of the nine passengers were injured.

[19] See p 4, supra.

[20] See In the matter of the acquisition of Northwest Airlines, Inc. by Wings Holdings, Inc. Order 91-1-41.

[21] See Order 91-1-41. See also In the matter of Intera Arctic Services, Inc. Order 87-8-43.

[22] The air carrier 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 the air carrier 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 certificate authority.

[23] We also remind Vision about the requirements of section 204.7 of our rules. This section provides, among other things, that (1) the certificate 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 certificated 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.

[24] These financial statements should include a balance sheet as of the end of the company’s first full year of certificated flight operations and a 12-month income statement ending that same date.

[25] Since we have provided for the filing of objections to this order, we will not entertain petitions for reconsideration.

( 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.

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