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OST-2010-0181 - National Air Cargo d/b/a National Airlines - Amended Certificate - Interstate and Foreign Charter Passenger

http://www.nationalaircargo.com/
http://www.nationalairlines.aero/


National Air Cargo Group, Inc. d/b/a National Airlines

OST-2010-0181 - Amended Certificate of Public Conveneince and Necessity - Interstate and Foreign Charter Air Transportation of Persons, Property and Mail

July 9, 2010

Application for an Amended Certificate of Public Convenience and Necessity - Bookmarked

National Airlines has been very successful in its current scope of operations and wishes to expand its business to include a Boeing 757-200ER for passenger charter operations. National Airlines intends to operate the aircraft for charter brokers, public charter operators, private corporations and sports team conducting various types of charters. Since the aircraft will allow for the transportation of passengers as well as cargo, National Airlines seeks to amend its DOT certificate to authorize transport of passengers, property and mail in interstate and foreign commerce.

National Airlines' profitable existing cargo operation will primarily underwrite the aircraft lease and essentially all of the start-up and operating costs of the service. To the extent any additional infusion of capital is required, this will be provided by National Airlines' ultimate parent company, National Air Cargo Holdings, Inc., and its largest subsidiary, National Air Cargo, Inc., as attested to in the funds verification and provision letters respectively provided at Exhibits NA-12 and NA-13. Thus, National Airlines will have virtually no financial exposure in its amended certificated operations.

National Airlines' addition of the Boeing 757 -200ER to its fleet and the amendment of its certificate to include both passenger and cargo transport is the first step in the company's plan to substantially expand its aircraft fleet and operations over the next two years. In addition to the Boeing 757-200ER passenger aircraft, the company is currently in the process of acquiring four Boeing 757-200s that will be modified into "combi" aircraft for the transport of U.S. military personnel and cargo under future Civil Air Reserve Fleet military contracts

Counsel: Sher & Blackwell, Mark Atwood, 202-463-2513


July 12, 2010

Motion for Confidential Treatment

The material for which confidential treatment is requested are the redacted portions of pages 3 through 31 of Exhibit NA-7 to the Application, which contain "Combined Financial Statements and Other Financial Information" prepared by PriceWaterhouseCoopers for National Air Cargo Holdings, Inc. and its subsidiaries, including National Airlines' parent company, NAC Acquisitions, for the years ended December 31, 2008 and 2007. The enclosed unredacted PWC 2007/2008 Combined Statement gives consolidated financial information, including the auditors' report and notes, for NAC Holdings and each of its subsidiaries, as well individual balance sheet and statement of operations information for each company individually. The redacted version submitted with the Application eliminates specific information for the companies except for National Air Cargo Acquisitions, Inc., the parent of National Airlines.

Counsel: Sher & Blackwell, Mark Atwood, 202-463-2513



August 13, 2010

Application for Foreign Charter Passenger Authority

By application dated July 9, 2010, National requested an amendment to its certificate of public convenience and necessity to permit it to operate passenger/combination charter service in interstate air transportation. By this application, the carrier requests equivalent authority in foreign air transportation.

National requires the foreign passenger charter authority to enable it to respond to demand for transportation of passengers between the United States and various foreign destinations. For example, the carrier has been requested by an industrial client to transport passengers, as well as cargo, from the United States to facilities in Europe. National anticipates an increasing amount of such ad hoc and program charter work, including flights on behalf of the Department of Defense.

Counsel: Sher & Blackwell, Mark Atwood, 202-463-2513



August 18, 2010

Motion to Shorten Public Comment Period

National Airlines requests that the public comment period be shortened from fourteen days days to five days on the basis that it must commence passenger operations utilizing its Boeing 757-200ER aircraft no later than October 1, 2010, in order to ensure by October 2011 that it has the one year of passenger experience necessary to operate Boeing 757 "combi" aircraft under the Civil Reserve Air Fleet passenger/combination program. Unless the answer period for the above application is reduced, National Airlines likely will be unable to meet the one-year experience requirement for programs beginning next Fall.

Counsel: Sher & Blackwell, Mark Atwood, 202-463-2513



August 19, 2010

Answer of Air Transport International in Opposition to the Motion to Shorten Public Comment Period

National's aspiration to participate in the CRAF program notwithstanding, the shortening of the answer period of a Show Cause Order by nine days that has not yet been issued is decidedly not in the public interest. The public has a right to file responses to the Show Cause Order. Until that order is issued and the public can review the document and study its findings and conclusions, the DOT should not limit the normal amount of time to respond to the Show Cause Order given by the Department in certification show cause proceedings.

Even if the DOT were to grant the National motion, there is no evidence that National will be able to commence passenger operations on or before its stated deadline of October 1, 2010. There are other government approvals required prior to commencement of first time mainline passenger operations by National including Federal Aviation Administration and Transportation Security Administration permissions and authorities. National has not stated in its motion whether or not these permissions will be forthcoming in time to meet its self-imposed deadline. Depriving the public the right to fully participate in this Docket on the basis of mere speculation is neither appropriate nor warranted.

If CRAF determines that it is in its interest to shorten the one year experience requirement should National apply to participate in the 2011 "buy" it will exercise its judgment accordingly. The DOT should not preempt the process by which CRAF determines carrier eligibility.

Counsel: ATI, George Golder, 407-517-0290



August 26, 2010

Answer of North American Airlines

North American Airlines, Inc. hereby files this Answer to (i) the application of National Air Cargo Group, Inc. for a certificate of public convenience and necessity to engage in foreign charter air transportation and (ii) NAC's motion to shorten the answer period to any Show Cause Order issued in this docket. Certain representations made by NAC suggest that its application for foreign charter authority is based more on fantasy than on fact. The Department should not grant NAC the operating authority it requests without clearing up fundamental questions raised by its application.

Counsel: Zuckert Scoutt, Malcolm Benge, 202-298-8660



OST-2010-0181 - Amended Certificate of Public Convenience and Necessity - Interstate and Foreign Charter Air Transportation of Persons, Property and Mail
OST-2010-0215 - Foreign Charter Passenger Authority (Assigned New Docket Number)


August 30, 2010

DOT Request for Additional Information

  1. Personnel
  2. Accident Plan
  3. Passenger Manifest Information Plan
  4. Application Fees
  5. Certification

By: Damon Walker


August 30, 2010

DOT Denying Motion for Confidential Treatment

National Airlines' motion, filed August 18, 2010, requests that the following material be considered for confidential treatment:

Exhibit NA-7 - Combined Financial Statements and other financial information for National Air Cargo Holdings, Inc., the ultimate parent company of National Airlines.

Absent a clear and justifiable reason for doing so, it is not the Department's practice to withhold from public disclosure information regarding the applicant's current or historical financial information, or the financial condition of its parent company except when the applicant has shown that substantial harm to its competitive position would result from public disclosure of the given information and such information is not the type that is normally released to the public. No such showing has been made.

By: Lauralyn Remo



September 1, 2010

Reply of National Airlines to Answer of North American Airlines - Bookmarked

North American has failed to provide a valid basis for denying either the application or the motion. National Airlines accordingly requests that the Department issue a Show Cause Order as expeditiously as possible approving its applications for amended interstate and foreign charter authority, and that the Department shorten the public comment period for the order from fourteen to five business days as requested by National Airlines in its motion.

North American claims that National Airlines has "grossly underestimated" the projected costs of its proposed services, citing as example National's "preposterous" Boeing 757 lease rate. In fact, as things have worked out, National overestimated the full lease cost of its aircraft.

Contrary to North American's assumption that National Airlines must be including in its calculation hours from military contracts that it has not yet secured, National Airlines' hours estimate does not include any such flying. As specifically stated in its application, the proposed passenger operations and consequently the estimated charter hours include flights five days each week on behalf of heavy industrial corporations from the United States to Germany, and then on to points in Europe and back to the United States. National Airlines further factored in leisure market charters from the United States to South America, also on a five-day-per-week basis, for the purpose of transporting ocean cruise line passengers to and from various points along the cruise route. National has decades of experience conducting passenger air taxi and shuttle operations for large corporations using small aircraft, and also operating its reliable and successful large aircraft cargo charters. Given its solid reputation and years of experience, it is hardly "pie in the sky" for National Airlines to achieve its projection of 100 monthly charter hours.

North American finally argues that National Airlines' "questionable" financial assumptions will be further negatively impacted by the carrier's acquisition of additional Boeing 757-200 aircraft to conduct "combi" flights under future CRAF military contracts. National Airlines' acquisition of these additional aircraft, however, is not at issue in this application. Expansion of the fleet to include those aircraft will be subject to further showings of the carrier's financial ability to acquire and operate the aircraft. Consequently, it is irrelevant to this proceeding how National Airlines plans to address the financing of those aircraft.

Counsel: Cozen O'Connor, Mark Atwood, 202-463-2513




OST-2010-0181 - Amended Certificate of Public Convenience and Necessity - Interstate and Foreign Charter Air Transportation of Persons, Property and Mail

September 2, 2010

Verification of Family Assistance Plan and Passenger Manifest Plan

Counsel: Cozen O'Connor, Mark Atwood, 202-463-2513


OST-2010-0215 - Foreign Charter Passenger Authority (Assigned New Docket Number)
OST-2010-0181 - Amended Certificate of Public Convenience and Necessity - Interstate and Foreign Charter Air Transportation

September 7, 2010

Additional Information Response

  1. Management Information
  2. Antitrust Violations Clarification
  3. Accident Plan
  4. Receipts for Filing Fee Payment

Counsel: Cozen O'Connor, Mark Atwood, 202-463-2513



OST-2010-0181 - Amended Certificate of Public Convenience and Necessity - Interstate and Foreign Charter Air Transportation of Persons, Property and Mail
OST-2010-0215 - Foreign Charter Passenger Authority (Assigned New Docket Number)

September 17, 2010

Additional Information Response

As required by the Department's ruling in its letter dated August 30, 2010, denying National Airline's motion for confidential treatment for certain financial information under 14 CFR Section 302.12 the following documents are enclosed for inclusion in National Airlines' previously filed Applications for Amended Interstate and Foreign Certificate Authority:

  • Cover page for Exhibit NA-7 A; and
  • Financial information for National Air Cargo Holdings, Inc. and its related affiliates for 2007, 2008, 2009 and the first seven months of 2010.

Counsel: Cozen O'Connor, Elizabeth Wadsworth, 202-463-2537



OST-2010-0181 - Amended Certificate of Public Convenience and Necessity - Interstate and Foreign Charter Air Transportation of Persons, Property and Mail
OST-2010-0215 - Foreign Charter Passenger Authority (Assigned New Docket Number)

October 1, 2010

Answer of Air Transport International and Motion for Leave to File

ATI wishes to comment upon a lingering financial issue that was raised by North American Airlines in its Answer to the National Application but not satisfactorily answered by National in its Reply to North American. The issue involves the discrepancy between National's May 2010 balance sheet reflecting $796,000 in cash and cash equivalents on hand and the National supplied letter from JP Morgan Chase that states that as of July 8, 2010 that National Air Cargo had $7.2 on account at the bank. National responded in its Reply to North American that the bank letter "was not a statement of its balance but was instead a third party verification of available funds issued by Chase Bank on behalf of National Air Cargo." National's answer implies that bank letter was making reference to some sort of facility, such as a letter of credit, although the text of the bank letter is more than clear in describing the fact that National has $7.2 million with the bank in an account in the name of the applicant. While National's reply would at least potentially explain the discrepancy in its cash account, assuming National's reply is found to be accurate, it is far from clear why National is going so far out of its way to reinterpret the bank's letter, that is, in fact, clear on its face. The bank's letter and the May 2010 cash position shown in the financials simply do not jibe. Because the bank's letter is unambiguous, the DOT should be cautious in accepting National's reply to North American and take whatever additional steps are necessary to seek to resolve an important issue about National's ability to meet the Department's financial fitness test based on both the previous and newly filed financial information.

National and Holdings have presented a confusing picture of their financial positions. It is obvious that the DOT must make additional inquiries in an attempt to sort out the facts about National's financial posture and the ability of Holdings to make good on its pledge to the Department to fully support all of National's operations. ATI urges that the DOT do so as part of the nonnal due diligence the DOT engages in when considering an applicant for new authority.

Counsel: ATI, George Golder, 407-517-0290



OST-2010-0181 - Amended Certificate of Public Convenience and Necessity - Interstate and Foreign Charter Air Transportation of Persons, Property and Mail
OST-2010-0215 - Foreign Charter Passenger Authority (Assigned New Docket Number)

October 8, 2010

Comments of Air Transport International

I am writing to you on a matter of great significance. It has come to the attention of Air Transport International Limited Liability Company that even as National Air Cargo Group, Inc. d/b/a National Airlines is pursuing an application for first time passenger authority in the Dockets noted above, the applicant, ignoring DOT rules and conventions has taken the extraordinary step of advertising its passenger services on the internet (and perhaps elsewhere), even going so far as to prompt prospective customers to obtain a quote for passenger service. This prohibited conduct goes directly to the heart of the question of whether the applicant has the proper compliance disposition to support a favorable determination on National's pending applications.

ATI is now compelled to raise another issue that warrants the Department's close attention. National, without even waiting for the issuance of the show cause order, much less a final DOT order granting National's request for passenger charter authority (assuming it is granted), is soliciting customers for its passenger charter services. Screen shots of National's website are attached as Exhibit A and clearly show that National is actively promoting the sale of passenger charter flights. This National conduct is clearly contrary to Section 201.5 of the DOT's regulations.

Most likely National will respond to this charge and state that no harm resulted from its holding out because it did not respond to any quote request. But that is not the point, assuming National did not in fact provide a quote for passenger service or take a reservation. Section 201.5 precludes all advertising efforts for services for which carriers lack authority, and not just the acceptance of a reservation for service. National's premature marketing efforts must be taken into account by the DOT in passing on National's pending applications

Counsel: ATI, George Golder



OST-2010-0181 - Amended Certificate of Public Convenience and Necessity - Interstate and Foreign Charter Air Transportation of Persons, Property and Mail
OST-2010-0215 - Foreign Charter Passenger Authority (Assigned New Docket Number)

October 14, 2010

Reply of National Airlines to Answer of Air Transport International

National Airlines has more than adequately demonstrated its fitness for the modest level of fleet expansion and service proposed in its application. While competitors have sought to bog down the licensing process in delays, National is missing valuable opportunities for passenger charter services that are in the public interest. National urges the Department to move forthwith to issue the Show Cause Order and enable the carrier to obtain its passenger charter authority without further unnecessary delay.

Counsel: Cozen O'Connor, Mark Atwood



Order 2010-11-5
OST-2010-0181 - Amended Certificate of Public Convenience and Necessity - Interstate and Foreign Charter Air Transportation of Persons, Property and Mail
OST-2010-0215 - Foreign Charter Passenger Authority (Assigned New Docket Number)

Issued and Served November 5, 2010

Order to Show Cause Proposing Issuance and Certificates - Bookmarked

By this order, we tentatively conclude that National Air Cargo Group, Inc. d/b/a National Airlines is a citizen of the United States and is fit, willing, and able to provide interstate and foreign charter air transportation of persons, property and mail, and should be issued certificates of public convenience and necessity authorizing such operations. If granted the certificates it seeks, National Airlines intends to add one Boeing 757-200ER passenger aircraft to its fleet for use in interstate and foreign passenger charter operations.

The opposing parties have provided no convincing evidence to support their contention that the applicant does not have access to sufficient financial resources or that its financial projections are unreasonable or erroneous. The record shows that NAC Holdings and its subsidiaries have extended an offer to provide National Airlines with the capital necessary to meet the capital requirements for its proposed passenger charter operations. In addition, the applicant provided evidence demonstrating the availability of the funds necessary to honor this commitment, as well as third-party verification of these funds. In light of the foregoing, we tentatively conclude that National Airlines will have access to sufficient financial resources to commence the operations it proposes without posing an undue risk to consumers or their funds.

By: Susan Kurland



Order 2010-11-25
OST-2010-0181 - Amended Certificate of Public Convenience and Necessity - Interstate and Foreign Charter Air Transportation of Persons, Property and Mail
OST-2010-0215 - Foreign Charter Passenger Authority (Assigned New Docket Number)

Issued and Served November 22, 2010

Final Order

By Order 2010-11-5, issued November 5, 2010, we directed all interested persons to show cause why we should not make final our tentative findings and conclusions stated in it and award certificates of public convenience and necessity to National Air Cargo Group, Inc. d/b/a National Airlines authorizing it to engage in interstate and foreign charter air transportation of persons, property and mail.

Interested persons were given 10 days to file objections to the order.

No objections to the show-cause order were received.

By: Susan Kurland



OST-2010-0181 - Amended Certificate of Public Convenience and Necessity - Interstate and Foreign Charter Air Transportation of Persons, Property and Mail
OST-2010-0215 - Foreign Charter Passenger Authority (Assigned New Docket Number)

November 23, 2010

Motion for Leave to File Late-Filed Objections of Air Transport International

On November 22, 2010 Air Transport International, Limited Liability Company filed Objections to Show Cause Order 2010-11-5. Due to a calculation error, ATI incorrectly determined that the deadline for the filing of ATI's Objections was Monday, November 22, 2010. However, the deadline for filing responses to the Show Cause Order was Friday, November 19th. ATI regrets the error and hereby seeks leave of the Department to accept the late-filed Objections of ATI.

ATI hereby files these objections to DOT Order 2010-11-5 that tentatively concluded National Air Cargo Group, Inc. d/b/a National Airlines is fit, willing and able to provide interstate and foreign charter air transportation of persons, property and mail. The DOT's Order to Show Cause summarily dismisses the valid and compelling issues raised by ATI and others commenting on the National applications for interstate and foreign passenger charter authority-issues that cannot and should not be dismissed without a proper critical analysis by the Department. On consideration of these objections, ATI urges the Department to substantively address the financial fitness of National, and its parent company National Air Cargo, Inc. to undertake passenger operations and the compliance disposition of National. Doing so should cause the Department to more seriously question, (i) the financial viability of the applicant and NAC, its parent and financial guarantor, and (ii) the willingness of National to comply with the regulations of the DOT and those of other relevant agencies and departments. Lastly, ATI will address the need for an additional condition on National's passenger authority (assuming it is granted) to preclude it from serially requesting permission to operate additional large aircraft.

Counsel: ATI, George Golder, 407-517-0290



Order 2011-7-15
OST-2010-0215
- Foreign Charter Passenger Authority
OST-2010-0181 - Amended Certificate of Public Convenience and Necessity - Interstate and Foreign Charter Air Transportation of Persons, Property and Mail

Issued and Served July 29, 2011

Order Confirming Oral Action and Issuing Effective Certificates

By this order we (1) confirm our oral action of June 6, 2011, making the interstate and foreign charter passenger authority issued to National Air Cargo Group, Inc. d/b/a National Airlines effective on that date, and (2) reissue the air carrier’s interstate and foreign certificates to reflect the effectiveness of its charter passenger authority.

We do not believe the alleged violations warrant unfavorable action on National Airlines’ application to engage in charter passenger operations or that such allegation, when considered in conjunction with National Airlines’ compliance history, is indicative of a poor disposition to comply with the laws and regulations governing its services. As discussed in Order 2010-11-5, the Department previously imposed a number of reporting requirements on National Airlines that would permit us to closely monitor the air carrier’s compliance disposition. We believe these reporting requirements are adequate and that they will permit us the ability to take timely action against the air carrier’s certificate should we find any future action would warrant such treatment.

In light of the above, we determined that National Airlines continued to be fit to provide interstate and foreign charter air transportation of persons, property, and mail. Therefore, on June 6, 2011, we orally advised the air carrier that we were making its certificate authority for passenger operations effective on that date. By this order, we confirm our oral action of June 6, 2011, and reissue the air carrier’s certificates to reflect their effective date.

By: Todd Homan



Order 2011-7-15
OST-2010-0215
- Foreign Charter Passenger Authority
OST-2010-0181 - Amended Certificate of Public Convenience and Necessity - Interstate and Foreign Charter Air Transportation of Persons, Property and Mail

Issued and Served July 29, 2011

Order Confirming Oral Action and Issuing Effective Certificates

By this order we (1) confirm our oral action of June 6, 2011, making the interstate and foreign charter passenger authority issued to National Air Cargo Group, Inc. d/b/a National Airlines effective on that date, and (2) reissue the air carrier’s interstate and foreign certificates to reflect the effectiveness of its charter passenger authority.

We do not believe the alleged violations warrant unfavorable action on National Airlines’ application to engage in charter passenger operations or that such allegation, when considered in conjunction with National Airlines’ compliance history, is indicative of a poor disposition to comply with the laws and regulations governing its services. As discussed in Order 2010-11-5, the Department previously imposed a number of reporting requirements on National Airlines that would permit us to closely monitor the air carrier’s compliance disposition. We believe these reporting requirements are adequate and that they will permit us the ability to take timely action against the air carrier’s certificate should we find any future action would warrant such treatment.

In light of the above, we determined that National Airlines continued to be fit to provide interstate and foreign charter air transportation of persons, property, and mail. Therefore, on June 6, 2011, we orally advised the air carrier that we were making its certificate authority for passenger operations effective on that date. By this order, we confirm our oral action of June 6, 2011, and reissue the air carrier’s certificates to reflect their effective date.

By: Todd Homan


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