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OST-1999-5670

Southern Air, Inc. and Southern Air Transport, Inc.

http://www.southernair.com/

Southern Air Inc. has acquired the route authority and certain other assets of Southern Air Transport, Inc., which is no longer operating, and the asset purchase has been approved by the federal bankruptcy court with jurisdiction over the transaction. Southern plans to commence interstate, overseas and international operations as a certificated air carrier on or about September 1, 1999. To that end, Southern and SAT ask the Department, pursuant to 49 U.S.C. § 41105 and Subpart Q of the Department's Rules of Practice, to approve the transfer to Southern of the SAT certificates of public convenience and necessity and exemptions listed in Exhibit SAT-1. The Joint Applicants ask that this application be processed using expedited non-hearing procedures.

Counsels:  Crowell & Moring LLP, R. Bruce Keiner rbkeiner@cromor.com, Lorraine Halloway lhalloway@cromor.com, and Thomas Newton Bolling tbolling@cromor.com for Southern Air, 202.624.2500 and Pierre Murphy pmurphy@lopmurphy.com and Elizabeth Collins ecollins@lopmurphy.com for Southern Air Transport, 202.872.1679

Southern Air, Inc. and Southern Air Transport, Inc.

Counsel:  Polar and Kirkland Ellis, Jeffrey Manley, 202-879-5161

Southern Air, Inc. and Southern Air Transport, Inc.

Counsel:  Bagileo Silverberg, Robert Silverberg for Kitty Hawk

Southern Air, Inc. and Southern Air Transport, Inc.

Kitty Hawk's procedural arguments have no merit and cannot disguise Kitty Hawk's real objective of restricting all-cargo competition. Kitty Hawk is shedding crocodile tears over procedural defects only it sees in the Joint Application. Contrary to Kitty Hawk's claim, Southern and SAT are not attempting to circumvent the Department's regulations and precedents for securing operating authority or a fitness determination from the Department. Southern is asking the Department to transfer SAT's authority to Southern as soon as the Department decides Southern's fitness, not before.  Polar's answer is merely a retread of its arguments to secure a U.S.-Colombia designation and adds nothing new about the issues involved in SAT's transfer of its authority to Southern. Polar's answer seems aimed more at influencing the outcome to the U.S.-Colombia All-Cargo Services Proceeding than considering the merits of the Joint Application, and the Department should consider Polar's position in that route case, where it can be more properly addressed.

Counsel:  Pierre Murphy, Elizabeth Collins, 202-872-1679 for SAT / Crowell Moring, Lorraine Halloway, 202-624-2500 for Southern Air

Southern Air, Inc. and Southern Air Transport, Inc.

The burden is on SAI to demonstrate its fitness to hold DOT issued route authority. Based on the material submitted by SAI, it has not met its burden. The purchase of a few airline assets and the formation of an under-capitalized corporation without a fully developed operating plan are not sufficient to support either an initial certification or the wholesale transfer of valuable route authority. Kitty Hawk urges the Department to scrutinize the joint application of SAI and SAT to ensure that proper procedure is observed and that, on the merits, the relief requested by SAI and SAT, can lawfully be granted.

Counsel:  Silverberg Goldman, Robert Silverberg

Southern Air, Inc.

Letter of Southern Air Inc. confirming that the Department will allow until July 23, 1999, to submit its petition for reconsideration on disclosure of confidential information. 

Counsel:  Lorraine B. Halloway for Southern Air

Southern Air Inc. and Southern Air Transport, Inc

By:  John Coleman

Southern Air, Inc. and Southern Air Transport, Inc.

Counsel:  Crowell Moring, Lorraine Halloway

Southern Air, Inc. and Southern Air Transport, Inc.

Counsel:  Crowell Koring, Lorraine Halloway, 202-624-2500

Southern Air, Inc. and Southern Air Transport, Inc.

• Randall Fiorenza - 50%
• Carmit Neff - 25%
• James Neff - 25%

Counsel:  Crowell Moring, Lorraine Halloway, 202-624-2500

Southern Air Inc. and Southern Air Transport, Inc.

Response to the joint applicants latest submission

Counsel:  Silverberg Goldman, Robert Silverberg

Southern Air, Inc. and Southern Air Transport, Inc.

Counsel:  Crowell Moring, Lorraine Halloway, 202-624-2500

Southern Air Inc. and Southern Air Transport, Inc.

Counsel:  Crowell Moring, Bruce Keiner, 202.624.2500

Southern Air Inc. and Southern Air Transport, Inc.

We have reviewed the instant application, the answers of Kitty Hawk and Polar, and the responses of the applicants, as well as other information available to us. Based on that review, we tentatively conclude that Southern is fit to conduct the limited all-cargo charter operations that it proposes in its application. However, we tentatively conclude that we are not prepared to transfer to Southern the various additional authorities held by SAT, including its passenger authority and its scheduled all-cargo route authority. Southern has not presented any plans to conduct any passenger operations, nor has it hired the necessary personnel for such service. It also does not have firm plans to use the scheduled all-cargo authority at issue. In addition, as more fully discussed in the "FITNESS" section below, it is uncertain as to whether Southern would have the financial resources available to it to conduct passenger service or more extensive scheduled cargo operations and we tentatively find no basis on the record to conclude that Southern is fit to conduct operations under the authority for which it seeks transfer from SAT.

Moreover, we note that the scheduled cargo authorities at issue include authority in certain limited-entry markets. Limited-entry authorities are valuable rights that were obtained by the United States in exchange for foreign carriers' rights to serve the United States. Southern has stated that it has no plans to start any scheduled service until September 2000 at the earliest. It is not our policy to allow such limited-entry routes to be wasted, particularly where another carrier has firm long-term plans to use them. In these circumstances, with respect to the foreign route authority at issue, we have tentatively concluded that we are not persuaded that transfer of the authority would be consistent with our international aviation policy objectives.

We are similarly unpersuaded as to the merits of Southern's proposal for a temporary allocation of certain SAT authority. In these circumstances and given our findings relating to Southern's fitness and plans for operations and the need to provide U.S. flag service with more certainty, we are not persuaded that Southern's proposal best serves the public interest. As discussed below, Southern has proposed a very limited cargo charter operation. Should Southern subsequently decide to expand its operations, it could file for such limited-entry authorizations, if available, and be subject to a Department finding that it is fit to provide such operations.

Counsel:  Bradley Mims

Southern Air Transport, Inc

We find that Southern Air, Inc., is fit, willing, and able to engage in interstate and foreign charter air transportation of property and mail. We issue a certificate of public convenience and necessity to Southern Air, Inc., authorizing it to engage in interstate charter air transportation of property and mail in the form and subject to the Terms, Conditions, and Limitations attached. We deny the joint application filed by Southern Air Transport, Inc., and Southern Air, Inc, for transfer of certificate and exemption authority. We cancel the section 41103 and 41102 certificates issued to Southern Air Transport, Inc., by Orders 78-5-120 (Docket 32342) and 84-1-59 (Docket 41187) and all exemption authority. We direct that, should Southern Air, Inc., propose to operate more than two aircraft, it must notify the Department in writing at least 45 days in advance and demonstrate its fitness for such operations prior to placing additional aircraft into service.

By:  Bradley Mims

Southern Air, Inc. and Southern Air Transport, Inc.

By:  Randall Bennett

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