OST-95-965 / Air 4000 / Certificate of Public Convenience / Waiver / February 19, 1998

Application of

for issuance of a certificate of public convenience and necessity to provide scheduled interstate and overseas air transportation pursuant to 49 U.S.C.§41102.

Air 4000, Inc. (AIR 4000) hereby requests a waiver from the one-year start-up requirements of Section 204. 7(a) of the DOT's Economic Regulations, in order to extend the duration of Air 4000's not-yet-effective certificate of public convenience and necessity for a period of six months, through August 26,1998, to enable Air 4000 to have sufficient time to complete the preconditions necessary for issuance of its effective certificate.

In support of this Application, Air 4000 states as follows:

1. By Order 96-8-24, the Department made final its tentative decision concluding that Air 4000 was fit, willing and able to engage in interstate scheduled air transportation of persons, property and mail, and issued Air 4000 a certificate of public

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3. At the time that Air 4000 filed its first request for an extension from the start-up requirements in August 1997, Air 4000 had recently undergone a substantial change in its ownership. On or about August 13, 1997, Han Airways international, Ltd., (Han Airways Ltd.), a U.S. citizen, acquired all of the stock of Air 4000. At that time, Air 4000 had developed an innovative operating plan to initially operate worldwide charters carrying Asian-originating passengers to points in the United States, operating one Boeing 747-200 aircraft with up to 464 seats.

4. Unfortunately, since that time, the Asian economic downturn has resulted in a marked reduction in Asian-originating traffic, and has caused Air 4000 to completely revise its initial operating plan. Air 4000 recognized that its initial traffic and revenue projections were no longer reliable in light of the Asian economic situation. Moreover, at the time that the new owners acquired the stock of Air 4000, they had received assurances from potential investors who had expressed strong interest in investing in Air 4000. However, the interest from these potential investors diminished in light of the instability of the Asian economy and the downturn in Asian-originating traffic.

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5. These unforeseen circumstances have caused Air 4000 to substantially revise its initial operating plan. Air 4000 conducted a detailed market analysis, and as a result, has decided to focus initially on operating domestic charters in leisure markets and providing subservice for scheduled domestic airlines, which will provide the airline with a source of guaranteed revenue. Air 4000 plans to use MD-83 aircraft for these operations, which can accommodate up to 165 passengers. Air 4000's initial objective will be to establish itself as a leading charter airline in the U.S. To immediately establish itself in the market, Air 4000 plans to work in conjunction with prominent, well-established tour/travel organizations. Air 4000 has already explored arrangements with a number of tour operators, and has received assurances that the demand exists, particularly for operations with the MD-83 aircraft. This aircraft is known for its long-range capabilities (up to 2,800 miles fully loaded), strong passenger appeal, reliability and high efficiency. Air 4000 has received strong feedback from potential tour operators, with plans to target key areas within the United States and well-known leisure destinations in the Caribbean, Mexico and Latin America. If in the future, the Asian economy improves and demand for Asian-originating charters rebounds, Air 4000 will consider whether to revive its original operating plan.

6. Importantly, Air 4000 has now secured sufficient financing to cover its pre-operating start-up costs, along with commitments to cover the Department's 90-day test.

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7. Air 4000 has secured a $4 million loan from LeCalorie, Inc. to cover Air 4000's remaining start-up costs and expenses, with an unconditional personal guarantee by Fir. DiNapoli, Chairman of Han Airways and 69% stockholder of Air 4000. (See Exhibit 1). Air 4000 currently projects that its remaining start-up costs will be approximately $3.6 million.

8. In addition, Air 4000 has developed detailed financial forecasts for the first full year of operations based on its projected operation of one MD-83 aircraft during the first year, with a conservative estimate of operating 275 monthly flight hours. /1 Air 4000 forecasts that its total operating costs for the first full-year of operations will be approximately $ 15 million. Thus, Air 4000 would require approximately $3.75 million in -working capital reserves to cover the Department's three-month test. Air 4000 plans to submit more detailed financial information satisfactory to the Department to demonstrate that its preliminary forecasts are reasonable. Air 4000 has received a working capital commitment in the amount of $3.75 million from LeCalorie, Inc. to be made available for at least one year after Air 4000 commences operation, which is also personally guaranteed by Mr. DiNapoli. (See Exhibit 2). Further, attached as Exhibit 3 are two separate verifications confirming that these funds would be available to Mr. DiNapoli for this purpose.

1/ Air 4000 is advised that these are very achievable numbers. Other forecasts with MD-80 type aircraft estimate as high as 325-340 monthly flight hours. Based on the anticipated demand expressed by the tour operators and subservice opportunities, Air 4000 forecasts a guaranteed revenue stream of approximately $ 15 million during the first year of operations with one aircraft during the first year of operations.

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9. Air 4000 has identified that suitable MD-83 aircraft are available. and expects to be in a position to sign a letter of intent within the next 30-45 days. Air 4()00 has been working on its FAA certification, many of its manuals and documents are well underway. Air 4000 expects to file its FAA application for issuance of a Part 121 certificate within 45-60 days. Air 4000 has been working closely with the FAA, and anticipates that the FAA certification process should take between 90-120 days. Therefore, Air 4000 believes that it would be in a position to commence operations in the summer of 1998. /2

10. There have been no substantial changes in the ownership or key management personnel of Air 4000 since its last filing. The Department has previously made fitness determinations regarding the majority of key management personnel, most of whom have continued to work with the company since the Department made its initial fitness determinations. Air 4000 will be in a position to file updated fitness information with the Department, including detailed compliance information and resumes for all of the new owners, directors and management personnel. Air 4000 will demonstrate that the new owners, directors, managing officers and other key personnel are exceptionally well qualified and "fit" to serve in their respective positions with the company.

11. As demonstrated herein, Air 4000 has made substantial progress towards its goal of commencing actual operations. Air 4000 has the necessary financing in place. Air 4000 has a strong operating plan, coupled with a qualified management team that has

2/ If Air 4000 meets each of its milestones as projected, it should be in a position to commence operations on or before August 26, 1998.

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previously been found fit by the Department. Air 4000 will shortly be in a position to file the remaining documents with the Department to further demonstrate its "fitness". Given the substantial progress, coupled with the unique and unforeseen changed circumstances in the Asian economy which required a major revision to Air 4000's operating plan. Air 4000 submits that grant of its request for a six-month extension of time to complete its pre-operating preparations for issuance of an effective certificate is in the public interest. Moreover, grant of the requested extension of time is fully consistent with the Department's policy to encourage new entrant carriers in the air transportation industry, and will benefit the traveling public and enhance competition in the airline industry.

WHEREFORE, Air 4000 respectfully requests that the Department waive the one-year start-up requirements of 14 C.F.R. §204.7(a) for a period of six-months, through August 26, 1998, in order for Air 4000 to complete it pre-operating preparations for issuance of an effective certificate.

Respectfully submitted,

J.E. Murdock III

Sheryl R. Israel

SHAW, PITTMAN, POTTS & TROWBRIDGE

2300 N Street, N.W.

Washington, D.C. 20037

(202) 663-8312

Attorneys for Air 4000, Inc.