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OST-2000-7668

http://www.bmairways.com/

Boston-Maine Airways Corp.

Counsel:  Shaw Pittman, Nathaniel Breed, 202.663.8078

BMAC plans to operate a fleet of ten (10) Jetstream 3100 19-seat passenger aircraft and two (2) CASA-212 freighter aircraft by the end of its first year of certificated operations. Six (6) Jetstream aircraft will be used primarily in scheduled service (three aircraft dedicated to each city-pair market), including two Jetstreams which will serve as spares to back up the primary four-aircraft scheduled service fleet. The two Jetstream spares may be used for occasional charter flights, when such use is not incompatible with their back-up spare availability. The remaining four (4) Jetstreams will be used for ad hoc and contract passenger charter service.

Counsel:  Shaw Pittman, Nathaniel Breed, 202.663.8078

By:  Janet Davis 

Counsel:  Shaw Pittman, Nathaniel Breed, 202.663.8078

Boston-Maine commenced operations as an air taxi in June 1999. Initially, the company operated CASA 212s providing all-cargo charter service. In May 2000, the company added passenger charter services utilizing three 19-seat British Aerospace Jetstream 3100 aircraft. If its application is approved, Boston-Maine intends to add scheduled passenger service using Jetstream 3100s. These scheduled passenger operations will be designed to act primarily as a commuter supplement to Pan Am's large aircraft operations, and the initial markets will be Portsmouth, New Hampshire-Bangor, Maine, and Sanford-Ft. Myers, Florida. However, the applicant has indicated that it may also conduct separate stand-alone scheduled passenger operations. In addition, Boston-Maine intends to maintain its existing all-cargo service using the CASA 212s and passenger charter service using additional Jetstream.

Boston-Maine's balance sheet as of June 30, 2000, reflects current assets of $889,200 and current liabilities of $131,000, giving the company positive working capital of $758,200 and a current assets to current liabilities ratio of 6.79:1. In addition, the company has other assets totaling $798,000, no long-term liabilities, and its current air taxi operations have resulted in small net profits, giving Boston-Maine positive retained earnings of $56,200 and net stockholder's equity of $1.56 million at June 30. In addition to these internal resources, Boston-Maine has obtained a $500,000 revolving line-of-credit from PAA upon which it may draw as needed.

By:  Francisco Sanchez 

By:  Francisco Sanchez 

The sole purpose of this Amendment No. 1 is to request that the Certificate of Public Convenience and Necessity to be issued to BMAC be issued in the name "Boston-Maine Airways Corp. d/b/a Pan Am Clipper Connection", rather than in the name "Boston-Maine Airways Corp. d/b/a "Pan Am Services", as stated in BMAC's initial application and as stated in the Certificate attached to Order 2000-10-1, served October 2, 2000 in this proceeding.

Counsel:  Boston-Maine and Shaw Pittman, Nathaniel Breed, 202-663-8078

BMAir, which currently operates only charter services carrying passengers and cargo, was found by the Department to be fit to engage in interstate scheduled air transportation of persons, property and mail using small aircraft by Order 2000-10-1, served October 2, 2000. Since October 2, 2000 (and before that date), BMAir has been diligently prosecuting an application to the Federal Aviation Administration for issuance of an Air Carrier Certificate and Operations Specifications authorizing BMAir to conduct scheduled operations under Part 121 of the Federal Aviation Regulations. For reasons beyond the control of BMAir, that Part 121 certification process is not yet complete, and appears unlikely to be completed in time to enable BMAir to commence scheduled operations on or before October 2, 2001.

As discussed above, the unexpectedly slow processing of BMAir's Part 121 application under the FAA's new CSET procedures has made it impossible for BMAir to comply with the one-year start-up requirement of Section 204.7(a). Accordingly, BMAir is compelled to request a waiver of that provision to avoid the automatic revocation of its existing fitness determination. In order to allow adequate time for BMAir's completion of the Part 121 process, followed by the preparatory steps (advertising, schedule publication, etc.) necessary prior to BMAir's commencement of scheduled service, BMAir requests a waiver of the Section 204.7(a) revocation provision until December 31, 2001. BMAir is at an advanced stage of the Part 121 certification process, and expects to begin scheduled service operations prior to December 31st, but is requesting a 90-day waiver to allow a margin for further unexpected delay for reasons beyond the control of BMAir.

Counsel:  Boston-Maine and Shaw Pittman, Nathaniel Breed, 202.663.8078

On September 21, 200 1, Boston-Maine filed a request for a 90-day extension of time in which to become operational. In support of its request, Boston-Maine stated that, while it had encountered some difficulties in completing its FAA Part 121 certification, it hoped to complete its required FAA certification shortly. However, in order to allow adequate time for completion of this certification process, followed by the preparatory steps (advertising, schedule publication, etc.) necessary for Boston-Maine to commence scheduled passenger service, Boston-Maine was requesting an 90-day extension of its revocation-for-dormancy date.

After review of Boston-Maine's request, we have decided to grant the extension requested. Therefore, Boston-Maine now has until January 2, 2002, to receive effective certificate authority and commence actual scheduled passenger operations.

By:  Patricia Thomas

In order to permit the contemplated air service to be provided at affordable prices, the Maryland Agreement provides for the payment of a financial assistance grant in the maximum amount of $2,250,000 for air transportation service provided during the eight-month period from November 1, 2001 through June 30, 2002, with an option exercisable by Maryland to extend the term of the Agreement for one year, through June 30, 2003, provided that the Maryland legislature appropriates funds for the payment of air service grants for fiscal year 2003.

The second significant change in BMAC's previously-filed fitness evidence is a three-fold increase in its passenger aircraft fleet to a total of ten (10) Jetstream 31 turboprop aircraft through the purchase of seven (7) additional Jetstream aircraft by Guilford Transportation Industries, Inc., and Guilford's lease of those seven aircraft to BMAC (Exhibit BMA-S/2-102)2 . The primary impetus for those additional Jetstream acquisitions arose from the fact that turboprop aircraft have recently become available on highly attractive terms as a result of the surging demand to replace turboprop aircraft with larger and faster regional jet aircraft in other sectors of the regional airline industry. BMAC anticipates that it will be able to utilize the six Jetstreams which are not required for its planned first-year scheduled- service operations in expanded charter services and through short-term subleases to other carriers.

The third material change in BMAC's previously-filed fitness evidence has been a very substantial increase in BMAC's projected pre-operating expenses from its initial projection of $184,000 in startup expenses to its current, and final, projection of $2,775,000

Counsel:  Boston-Maine and Shaw Pittman, Nathaniel Breed, 202.663.8078

BMAC continues to plan to operate the same aircraft and frequency of services in the Portsmouth-Bangor and Sanford-Fort Myers markets which it proposed in its initial application, although the planned commencement of that service has been significantly delayed by the unexpected amount of time required by BMAC's Part 121 certification process. As indicated by BMAC previously (Supplement No. 1, p. 2), BMAC plans to dedicate a total of six (6) Jetstream aircraft to serve those two markets, with two aircraft serving as back-up spares while performing other ad hoc charter flights.

As noted in BMAC's Supplement No. 2, BMAC also now plans to operate three daily scheduled roundtrip flights over a BWI-Cumberland-Hagerstown routing (two roundtrips on Saturday and Sunday) pursuant to an Air Service Agreement with the State of Maryland Aviation Administration. The Maryland service is expected to require the full-time utilization of one Jetstream aircraft, with other Jetstreams in BMAC's fleet available as back-up spares, as needed.

Counsel:  Boston-Maine and Shaw Pittman, Nathaniel Breed, 202.663.8078

Counsel:  Shaw Pittman, Nathaniel Breed, 202.663.8078, nathaniel.breed@shawpittman.com

For reasons beyond the control of BMAir, its Part 121 certification process has taken far longer than expected and is still not yet complete. While it now appears highly likely that the process will be completed in time to enable BMAir to commence scheduled operations before January 2, 2002 by its FSDO Manager that BMAir's Part 121 Operations Specifications will be issued on or before next Wednesday, December 19th, experience has taught BMAir that there is always a risk of further delay of its Part 121 certification due to unforeseen circumstances.

Counsel:  Shaw Pittman, Nathaniel Breed, 202.663.8078

First, this will confirm our verbal advice to you that the Federal Aviation Administration (FAA) has issued Air Carrier Certificate number B16A009J, and has issued amended Operations Specifications authorizing the performance of scheduled service operations, to Boston-Maine Airways Corp. d/b/a Pan Am and d/b/a Pan Am Clipper', effective as of December 18, 2001. A copy of pertinent excerpts from those documents has been faxed to you this morning by Mr. John Nadolny, Senior Vice President and General Counsel of BMAC.

Second, BMAC hereby requests the Department to issue an effective Certificate of Public Convenience and Necessity to BMAC, effective on or before December 20, 2001.

Third, based upon issuance of the foregoing FAA authorizations and assuming the issuance of an effective Certificate of PC&N to BMAC this week, BMAC hereby withdraws its request, filed on December 14, 2001, for a further 10-day waiver of the Section 204.7 revocation for dormancy provision.

The FAA had been requested by BMAC to issue its Air Carrier Certificate with only one trade name, "Pan Am Clipper Connection," rather than the two trade names shown. BMAC will request the FAA to reissue its Certificate, and will not use the trade name "Pan Am" alone in any of its operations.

Counsel:  Shaw Pittman, Nathaniel Breed, 202.663.8078

By this order, we (1) confirm our oral action taken with respect to Boston-Maine Airways Corp. d/b/a Pan Am Clipper Connection and (2) reissue to the carrier its section 41102 certificate authorizing it to engage in interstate scheduled passenger operations to reflect its effective date.

By:  Randall Bennett

BMAC currently conducts interstate scheduled service operations utilizing ten leased 19-passenger British Aerospace Jetstream 3100 aircraft and all-cargo charter operations utilizing two leased CASA-212 twin turboprop freighter aircraft having a maximum payload capacity of 6,000 pounds. Those operations are conducted pursuant to a Certificate of Public Convenience and Necessity issued to BMAC by Order 2001-12-21, served December 27, 2001.

BMAC is a wholly-owned subsidiary of Pan American Airlines, Inc., a holding company which also owns Pan American Airways Corp. Pan Am is a certificated air carrier which is currently operating interstate and foreign scheduled and charter air transportation services utilizing a fleet of Stage 3-compliant Boeing B-727-200 aircraft (see Orders 99-8-15, served August 19, 1999 and Order 99-9-8, served September 9, 1999).

BMAC's initial interstate large-aircraft operations will be limited to the San Juan-St. Thomas, U.S. Virgin Islands market. BMAC plans to operate two nonstop round trip flights a day, five days a week, utilizing one B-727-200 aircraft configured to carry 141 passengers (Exhibit BMA-100). BMAC plans to lease that aircraft from Guilford Transportation Industries, Inc., which is the lessor of BMAC's existing Jetstream 3100 and CASA-212 aircraft. BMAC's initial B-727-200 aircraft will be based in San Juan, Puerto Rico, and will be serviced and maintained at BMAC's operational headquarters in Portsmouth, New Hampshire, by BMAC's own maintenance personnel and pursuant to contractual arrangements with authorized repair stations in Puerto Rico.

Counsel:  Shaw Pittman, Nathaniel Breed, 202.663.8078

Boston-Maine Airways Corp., d/b/a Pan Am Clipper Connection hereby submits this Supplement No. 1 to the captioned application for the purpose of responding to certain questions and requests for additional documents contained in the September 5, 2002 request by the Department's U.S. Air Carrier Fitness Division.

Counsel:  Shaw Pittman, Nathaniel Breed, 202-663-8078

We believe BMAC's real purpose in seeking authority to operate B-727s is to enable it to establish a non-union operation that would parallel and duplicate Pan Am's operation. Pan Am would then he able to escape its contractual obligations to its union ­represented pilots and its collective bargaining obligations under the Railway Labor Act simply by shifting flying to its sister corporation BMAC. The beneficial owners of BMAC have previously been found to be in violation of the Railway Labor Act for engaging in precisely this tactic on one of their railroad properties, and we believe that is their real purpose here.

In the absence of some plausible explanation for these huge losses, the inference of inept management is inescapable. BMAC should not be given authority to operate a larger airline, with larger aircraft, until it has established a record of success on its present scale. At the very least, the Department should conduct a searching inquiry to determine the reasons for these losses, particularly as they reflect on the competence of BMAC's management.

Finally, it is important to note the recent announcement by Pan Am of a substantial reduction in its own operations. This new development raises not only the question of whether it makes sense for BMAC to begin B-727 operations while its sister airline is sharply reducing such operations, but also whether the parent company is really able to guarantee the long-term viability of either airline in the current economic environment.

Counsel: ALPA, Jerry Anker  202 797-4087

ALPA's argument that BMAC is unfit for upgraded authority to operate large aircraft, based on its operating losses in CY 2000 and 2001, is patently ludicrous. ALPA is surely aware that the past several years, and particularly the past year since the heinous terrorist attacks on September 11, 2001, have been the most economically difficult period in the history of the U.S. aviation industry. As a recently-launched start-up carrier, BMAC has been particularly vulnerable to the combined severe adverse impact of the terrorist attacks and the economic recession on traffic demand which have beset the entire airline industry.

BMAC notes that it plans to file a separate application in the near future for authority to operate large aircraft in a number of foreign markets, distinct from those operated by Pan Am. That application will contain detailed and probative evidence of BMAC's fitness to operate the foreign air transportation which it will propose in that application. In compliance with 14 CFR Section 201.4, BMAC's application for foreign authority is required to be filed in a separate application from its pending application for upgraded interstate authority. BMAC's pending interstate application accurately reflects the entirety of BMAC's interstate large-aircraft service plans for the next year. BMAC strongly objects to ALPA's unfounded and offensive assertion that BMAC's pending interstate application is "disingenuous."

Counsel:  Shaw Pittman, Nathaniel Breed

As reported in the trade press, BMAC's sister carrier, Pan American Airways Corp. implemented a significant but temporary reduction of its service to various East Coast points and the Dominican Republic for the next three months, and made a corresponding reduction in its workforce and grounded several aircraft, due to substantial traffic declines in the area in which Pan Am's curtailed services are operated.  As that article noted, however, the Jetstream turboprop services operated by BMAC are not expected to be affected by the temporary reductions in Pan Am's flight schedules. It is too soon to determine whether Pan Am's recent service reductions will have any material impact on BMAC. BMAC notes, however, that its own new services to Canada have already developed strong load factors and are profitable. BMAC has also recently rescheduled its three daily roundtrip flights between Baltimore (BWI) and Cumberland and Hagerstown, Maryland to provide additional convenient morning and evening connections at BWI to the services operated by several other carriers at BWI. BMAC is strongly committed to maintaining and expanding its turboprop services, and its lessor, Guilford Transportation Industries has, just last week, finalized the acquisition of 13 additional Jetstream 31's to bring BMAC 's total Jetstream fleet up to 23 aircraft.

In response to the Fitness Division's comment noting its practice of limiting initial grants of large aircraft authority to the number of aircraft which the applicant proposes to operate during the first year of expanded service, BMAC confirms that it plans to operate one B-727-200 aircraft in scheduled interstate service during the first year of such operations. Accordingly, BMAC would have no objection to a condition limiting BMAC to a single B-727 aircraft for interstate services during the first year, subject to three provisios: (1) that BMAC be permitted to use a part of the time of a second B-727 aircraft, to be leased from its existing aircraft lessor and used as needed as a maintenance spare from time to time, (2) that BMAC would remain free to apply to the Department for authority to operate an additional B-727 aircraft in interstate service during the first year if circumstances warrant such additional capacity, and (3) that the proposed limitation to one B-727 aircraft for interstate services would not preclude BMAC from applying for, and being granted, authority to operate additional large aircraft in foreign air transportation services, as described below.

Counsel: Shaw Pittman, Nathaniel Breed,  202 663-8078

Enclosed herewith is a copy of the signed and notarized Title 18 Certification of John R. Nadolny, Senior Vice President and General Counsel of Boston-Maine Airways Corp. (BMAC), filed on September 26, 2002, verifying the accuracy of BMAC's Supplement No. 2 to the referenced application.

Counsel: Shaw Pittman, Nathaniel Breed

I have finished my review of Boston-Maine's Supplement No. 1 to its application for amended certificate authority. This review has found that the financial information presented for Pan American Airlines, Inc. (Boston-Maine's parent) does not support a finding that this company has the ability to provide the funds committed (line-of-credit of $750,000) to Boston-Maine. Indeed, the June 30, 2002, balance sheet submitted indicates that Pan American Airlines, Inc., has a negative working capital position of more than $5.7 million and a negative stockholders' equity position of more than $14.9 million. Therefore, we can not accept the line-of-credit provided as evidence that Boston-Maine will have funds sufficient to meet our financial fitness criteria available to it. As a result, Boston-Maine must submit a new financing plan, accompanied by independent 3rd-party verification, which fully demonstrates that it will have access to sufficient financial resources meeting our financial fitness criteria.

By: Janet Davis

I am continuing to process Boston-Maine's request for large aircraft authority. In the course of this process, I have noticed that none of Boston-Maine's key technical personnel on the operational side of the house (Director of Operations and Chief Pilot) appear to have any experience overseeing operations using large aircraft (that is, aircraft with more than 60-seats). This is troublesome by itself and made even more so because Mr. Long, Boston-Maine's Vice President and General Manager, who has primary day-to-day responsibility for Boston-Maine, also lacks experience overseeing an airline conducting operations with large aircraft. Therefore, I ask that you elaborate on how these individuals will ensure the operational integrity of Boston-Maine's proposed large aircraft service. If Boston-Maine will be appointing another individual to oversee its large aircraft operations, please identify this individual and supply full resume and compliance information for him/her, even if this individual will not hold a key technical position with the carrier.

Request of the Air Carrier Fitness Division for additional information.

By: Janet Davis

Request of Air Carrier Fitness Division to Boston-Maine for additional information to the application.

By: Janet Davis

Request of Air Carrier Fitness Division to Boston-Maine for Additional Information to its Supplement No. 1.

By: Janet Davis

BMAC has developed and implemented a new financing plan which fully addresses and resolves the concerns expressed by the Fitness Division regarding BMAC's initial financing plan. BMAC has decided not to rely on the $750,000 Letter of Credit facility provided by its parent corporation, Pan American Airlines, Inc. (PAA), to satisfy its working capital requirement under the Department's financial fitness test. In place of that credit facility, BMAC has obtained a cash infusion of $750,000 from PAA. That infusion of funding, in the form of additional paid-in capital, was deposited into BMAC's bank account on Friday, October 18, 2002, as evidenced by the bank balance confirmation contained in Exhibit BMA-S/3-4, infra.

Counsel: Zuckert Scoutt, Nathaniel Breed,  202 298-8660

This letter is submitted on behalf of Boston-Maine Airways Corp. (BMAC) in response to your request for a more legible copy of Exhibit BMA-S/3-4, which was attached to BMAC's Supplement No. 3 to the referenced application filed on October 21, 2002.

Attached to this letter is an enlarged and darkened copy of the same document, which is a telecopier transmission from the Fleet Bank of Massachusetts to Boston-Maine Airways Corp.. dated October 21. 2002, confirming total credits amounting to $865,000 into BMAC's primary checking account on that date, bringing BMAC's total ledger balance in that account, after deduction of concurrent debits. up to $863.047.29. Please note that the attached Fleet Bank report also refers to a second and much smaller checking account of BMAC with Fleet Bank having a ledger balance of $13.070.99.

The total credits reflected on the Fleet Bank report include an additional sum of $115,000 transferred to BMAC on the same day for the reimbursement of certain liability insurance premium payments made by BMAC, in addition to the concurrent cash infusion of $750.000 paid into BMAC by its parent corporation. Pan American Airlines, Inc. (PAA) as additional paid-in capital in lieu of a prior Letter of Credit facility in that amount which had been provided by PAA to BMAC. BMAC will receive a hard copy of its checking account statements from Fleet Bank as of October 31, 2002 in the first or second week of November, and we will submit a copy of that statement on Fleet Bank letterhead to you for the record as soon as it has been received by BMAC.

Counsel: Zuckert Scoutt, Nathaniel Breed,  202 298-8660

It is our understanding that, since Mr. Hughes' departure, Gordon Long, Boston-Maine's Vice President and General Manger, has also served as its Director of Operations. Given our concerns over the adequacy of Boston-Maine's management to oversee the B727 operations proposed, including Mr. Long's lack of experience overseeing any type of large aircraft operations, we ask that the company provide a statement as to whether the FAA will approve Mr. Long to serve as both General Manager and Director of Operations for Boston-Maine's large aircraft operations.

In addition, another matter, related to how the company holds itself out to the traveling public, has come to our attention. Boston-Maine has authority to hold its services out in its corporate name and under the trade name "Pan Am Clipper Connection. " However, in performing its services, Boston-Maine is not authorized to represent itself as if it were Pan Am. All advertising of the services involved must clearly advise the public when service will be provided under a code-sharing arrangement. Failure to provide such notification violates Part 257 and is considered to be an unfair and deceptive practice in violation of 49 USC 41712.

By:  Air Carrier Fitness, Janet Davis

Following its receipt of the Department's November 4, 2002 letter, BMAC has taken immediate steps to terminate its use of the Pan Am two-letter designator code in its schedule listings and website, and has taken other steps to eliminate any potential risk of public confusion in differentiating between services offered by BMAC and services offered by Pan Am as follows...

Counsel: Zuckert Scoutt, Nathaniel Breed, 202 298-8660

Hereby submits this Supplement No. 5 to the captioned application for the purpose of responding to certain requests of and discussions with representatives of the Department's Office of Aviation Enforcement and Proceedings

Counsel: Zuckert Scoutt, Nathaniel Breed, 202 298-8660

Order 2002-12-20, the Department tentatively finds that Boston-Maine Airways Corp. d/b/a Pan Am Clipper Connection (Boston-Maine) is fit, willing, and able to provide interstate scheduled air transportation of persons, property, and mail as a certificated air carrier, using Large aircraft, subject to limitations and conditions. Objections due: January 13, 2003 Answers to Objections due: January 22, 2003.

Boston-Maine has presented an operating plan which indicates that, if granted the certificate amendment it seeks, it will commence two round trips, five days per week, between St. Thomas and San Juan using a single 141-seat B727 aircraft.6 While the company states that it would also utilize such aircraft to perform operations in conjunction with the interstate and foreign scheduled service operations of Pan Am, it has not included a forecast for any such operations in its application.

We are, however, concerned that Boston-Maine's team of key technical personnel has little experience in overseeing large aircraft operations of the type proposed. While Boston-Maine has added two positions (Manager of Flight Operations and B727 Fleet Manager) specifically to provide stronger oversight of the proposed large aircraft operations, the individuals selected to fill these positions (Mr. Jollifee and Mr. Bailey) lack strong management experience in such operations. Nonetheless, the FAA has advised us that Boston-Maine's key technical team as a whole is likely to be sufficient for the single B727 operations proposed.

While we do not dispute that ALPA may have a future claim against Pan Am if its owners shift its operations to Boston-Maine in such a manner as to violate the Railway Labor Act, we can not find that Boston-Maine lacks a satisfactory compliance disposition at this time based on ALPA's speculations. However, should the owners of Boston-Maine and Pan Am later engage in the behavior anticipated by ALPA and such behavior is determined by the courts to constitute a violation of the Railway Labor Act, ALPA could request that we review the continuing fitness of the parties involved.

By: Read Van de Water

Respectfully objects to Order 2002-12-20, served December 30, 2002, which proposes to grant Boston­Maine Airways Corp. amended certificate authority to perform interstate air transportation using large aircraft, namely, a Boeing 727. The ground for ALPA's objection', as more fully described below, is that the Department's determination that BMAC has sufficient working capital to cover "the operating costs that would be incurred in three months of 'normal' [large aircraft] operations" took into account only the projected operating costs of BMAC's proposed new B727 service, and failed to consider the ongoing operating costs of the carrier's existing small-aircraft services. Those small­aircraft operations have consistently suffered substantial operating losses, which we believe must be taken into account in determining what the carrier's true "operating costs" will be during "three months of 'normal' operations." If the operating costs are calculated in this manner, BMAC's current working capital reserve is grossly insufficient to meet the Department's minimum requirements.

Counsel: ALPA, Jerry D'Anker, 202 797-4087

BMAC notes that Pan Am had previously advised the Department, and the public, of its planned temporary suspension of operations between January 15 and February 13, 2003, and has taken exhaustive steps to insure that no passenger is adversely affected by Pan Am's reluctant and temporary suspension of scheduled services. Notwithstanding ALPA's professed skepticism about Pan Am's service resumption plans, Pan Am has already mailed recall notices to certain flight crew personnel, effective February 12. 2003, and dates shortly thereafter. It will also recall furloughed flight crew personnel earlier, as needed, to perform on demand charter flights.

Counsel: Zuckert Scoutt, Nathaniel Breed, 202 973-7919

We have carefully considered the points raised by ALPA in its objection. However, like the applicant, we disagree with ALPA's premise that the Department incorrectly determined the level of funds required for Boston-Maine to meet our financial fitness standard. It is the Department's practice to determine an applicant's financial fitness based on the level of funds required to cover the applicant's pre-operating costs for the proposed operations, and to provide the company with a working capital reserve equal to one-quarter of its operating expenses for the first year of the proposed operations. Further, when an applicant already has established operations, we include in our funding requirement the level of funds needed to cover any current working capital deficit (i.e., the difference between the applicant's current assets and current liabilities). This policy is applied to applicants seeking expanded authority (whether through the addition of larger aircraft, or through the addition of aircraft beyond the numerical limits set in the applicant's current authority) regardless of whether its past operations have been profitable. Indeed, companies may not have positive working capital despite profitable operations, just as those companies experiencing operating losses may not be in a negative working capital position. This policy effectively protects the public while implementing Congress's intent, through the Airline Deregulation Act, to enhance competition through a liberal entry policy.

By: Read C. Van De Water

Boston-Maine Airways Corp., d/b/a Pan Am Clipper Connection hereby submits this Supplement No. 6 to the captioned application for the purpose of furnishing additional service plan information and related fitness evidence pertaining to the revised plan of BMAC to operate additional interstate scheduled services beyond the scope of service proposed in BMAC's initial certificate amendment application filed on August 27, 2002 in the referenced Docket.

After examining the current status of certain domestic markets and considering the opportunities presented by service reductions implemented by other carriers, BMAC has decided to expand its initial interstate service proposal to include B-727-200 aircraft service in three additional city-pair markets; Manchester (MHT)-Orlando (SFB), Manchester-Myrtle Beach (MYR) and Myrtle Beach-Orlando. BMAC's planned first-year flight schedule for service in the foregoing markets is contained in Exhibit BMA-S/6-1, infra.' BMAC estimates that the foregoing expanded interstate service will require two additional B-727­200 aircraft, each configured to carry 141 passengers, and both to be leased from Guilford Transportation Industries, an affiliated company, on the same lease terms as those applicable to the initial B-727-200 aircraft described in BMAC's initial large-aircraft application in this docket

BMAC projects that its expanded B-727-200 interstate operations will carry 70,715 passengers, generating $8,649,495 in gross revenues and entailing direct and indirect operating expenses of $7,954,478, yielding an operating profit of $695,016 in its first year of large aircraft service.

Counsel: Zuckert Scoutt, Nathaniel Breed, 202-973-7919, npbreed@zsrlaw.com

April 25, 2003

OST-00-7668 - Interstate Large-Aircraft Operations

Response of Air Line Pilots Association

For the reasons set forth below, ALPA opposes BMAC's request to expand its large-aircraft authority and urges the Department to deny it. When it originally sought authority to operate large-aircraft, BMAC repeatedly represented to the Department that it intended initially to operate only one B-727. The Orders granting such authority specifically restricted BMAC to that one aircraft, and expressed substantial doubt that its current management team had the necessary experience to operate more than a single large aircraft. So far, the carrier has not even obtained FAA approval to commence operating any large aircraft. Nor has it taken any action to strengthen its management team to remove the Department's doubts concerning its fitness. In these circumstances, the Department should adhere to the one-aircraft restriction contained in its prior Orders.

Counsel: Jerry Anker, 202-797-4087

May 6, 2003

Reply of Boston-Maine Airways and Motion for Leave to File an Otherwise Unauthorized Document

Boston-Maine Airways Corp., d/b/a Pan Am Clipper Connection hereby submits this Reply, with an included Motion for leave to file an otherwise unauthorized document, in response to the Answer of the Air Line Pilots Association , filed on April 25, 2003 in response to BMAC's Supplement No. 6, filed April 18, 2003 in the captioned proceeding.

BMAC submits that ALPA is seeking relief for its basic labor complaint in the wrong forum against the wrong party, and that ALPA's argument that BMAC is unfit to operate large aircraft is patently specious. BMAC urges the Department to again reject ALPA's repeated and transparently baseless opposition to BMAC's application for authority to operate large aircraft.

Counsel: Zuckert Scoutt, Nathaniel Breed, 202-973-7919

OST-00-7668 - Certificate - Interstate Large-Aircraft Operations
OST-03-14985 - Certificate - Foreign Large-Aircraft Operations

July 9, 2003

Request for Additional Information

I am currently reviewing Supplement 6 to Boston-Maine's application in Docket OST-00-7668 (for interstate scheduled authority using large aircraft) and its application in Docket OST-03-14985 (for foreign scheduled authority using large aircraft), both filed April 18, 2003. As you know, while the Department's rules require that companies seeking both interstate and foreign certificate authority file separate applications, we do not evaluate these applications in a vacuum. Rather, we consider the fitness of the applicant to conduct all of the operations proposed in making our decision as to whether the requested certificate authority should be granted. In addition, since Boston-Maine has not yet had the single large aircraft authority previously granted made effective, our review of the carrier's fitness for the amended interstate and new foreign certificate authority it now seeks must also include these operations.

Therefore, we ask that Boston-Maine submit revised Exhibits BMA-S/6-1, BMA-S/6-2 (pages 1 and 3), BMA-S/6-3, BMA-S/6-4, and BMA-S/6-7 in Docket OST-00-7668, and revised Exhibits BMA-101 (pages 2 and 3), BMA-102, BMA-103, and BMA-106 in Docket OST-03-14985. These revised exhibits should reflect consolidated data for all of the large aircraft operations Boston-Maine intends to operate, both domestically and in foreign operations. In addition, so that our decision on Boston-Maine's requests may be based on the most recent information available, we ask that Boston-Maine provide updated information in support of its financial fitness. Specifically, Boston-Maine is requested to supply a detailed profit and loss statement reflecting its operations during the 12-months ended June 30, 2003, and a balance sheet as of that same date.

By: Janet Davis

OST-03-14985 - Certificate - Interstate Large-Aircraft Operations
OST-00-7668 - Certificate - Foreign Large-Aircraft Operations

July 10, 2003

Response of Air Carrier Fitness Division

We specifically ask that Boston-Maine elaborate on the reasons it believes that its current management team should be deemed capable of overseeing not only its on-going small aircraft operations, but also the seven large aircraft as well. As noted in my July 9 letter, we expect Boston-Maine to supply any supporting documentation, including resumes of any individuals hired to expand its large aircraft management capabilities, as well as any experience in large aircraft operations that has been gained by its previously identified team members since the date of Order 2002-12-20 (that is, December 27, 2002).

By: Janet A. Davis, 202-366-9721

July 17, 2003

Supplement No. 7 to Application for Amended Certificate Authority

Hereby submits this Supplement No. 7 to the captioned application for the purpose of furnishing certain combined first-year projection information and updated fitness evidence pertaining to the revised plan of BMAC to operate additional interstate scheduled services beyond the scope of service proposed in BMAC's initial certificate amendment application filed on August 27, 2002 in the referenced Docket.

Exhibit BMA-S/7-1: Comined First-Year Interstate and Foreign B-727-200 Flight Schedule
Exhibit BMA-S/7-2: First-Year Traffic, Revenue and Expense Projection
Exhibit BMA-S/7-3: First-Year Projected Operating Statistics
Exhibit BMA-S/7-4: Projected Preoperating Expenses
Exhibit BMA-S/7-5: Financial Fitness Test Calculation
Exhibit BMA-S/7-6: BMAC Proft and Loss Statement
Exhibit BMA-S/7-7: BMAC Balance Sheet
Exhibit BMA-S/7-8: Third-Party Verification
Exhibit BMA-S/7-9: First-Year Traffic, Revenue, Expense and Cash-Flow Projections - Combined
Exhibit BMA-S/7-10: First-Year Projected Operating Statistics - Combined
Exhibit BMA-S/7-11: Projected Preoperating Expenses - Combined
Exhibit BMA-S/7-12: Financial Fitness Calucations
Exhibit BMA-S/7-13: New and Updated Management Resumes
Exhibit BMA-S/7-14: Title 18 Certification

Counsel: Zuckert Scoutt, Nathaniel Breed, 202-973-7919, npbreed@zsrlaw.com

OST-03-14985 - Certificate - Interstate Large-Aircraft Operations
OST-00-7668 - Certificate - Foreign Large-Aircraft Operations

July 29, 2003

Re: Information Request

With respect to the operations proposed in the Manchester-Orlando, Manchester-Myrtle Beach, and Myrtle Beach-Orlando markets, please explain why some of the flights in these markets are listed on your timetable (BMA-S/7-1) as scheduled service, while others are listed as charter service. Will the scheduled services be operated as Boston-Maine? Will the charter services be operated on behalf of a tour operator or another air carrier, or will they be direct sales charters? How do the flights listed in the noted markets relate to the operations recently announced by Pan Am (see enclosure) which appear will be operated on the same days of the week as the Boston-Maine flights?

By: Janet Davis, Air Carrier Fitness

August 8, 2003

Supplement No. 8 to Application for Amended Certificate Authority

BMAC plans to operate a pattern of twice-weekly nonstop scheduled flights in the Manchester-Orlando market, and a mix of nonstop and one-stop charter flights four days a week in the Manchester-Myrtle Beach-Orlando markets. The charter flights serving Myrtle Beach will be operated on a seasonal basis and will be available for individual and group travel as Public Charters, operated in conformity with Part 380 of the Department's Regulations, and marketed and sold by BMAC and various Charter Operators.

Exhibit No. BMA-S/8-1: Resume and Fitness Questionnaire for William Moore
Exhibit No. BMA-S/8-2: Resume and Fitness Questionnaire for Frank Doglione
Exhibit No. BMA-S/8-3: Title 18 Certification of John Nadolny

Counsel: Zuckert Scoutt, Nathaniel Breed, 202-973-7919, npbreed@zsrlaw.com

OST-00-7668 - Certificate of Public Convenience for Interstate
OST-03-14985 - Foreign Certificate of Public Convenience

September 30, 2003

Re: Request for Additional Information

According to the Federal Aviation Administration (FAA), Boston-Maine's current Pre-application Statement of Intent shows its intent to add only one Boeing 727 (B-727) airplane. Has Boston-Maine requested FAA approval to operate a total of seven B-727 airplanes in domestic and foreign operations? If so, please provide a copy of the amended request, including the date that Boston-Maine submitted this request. If not, please indicate when Boston-Maine intends to submit its request and explain why Boston-Maine has not yet submitted it to FAA.

As we noted in our July 29, 2003, letter, several of Boston-Maine's senior management and technical personnel appear to have joined the company prior to its April 18, 2003, filings, yet Boston-Maine did not note these changes in those filings. In response to our questions regarding this matter, Boston-Maine stated that its failure to mention these changes was "an inadvertent oversight attributable to its primary focus on [its] first-year plan and related traffic, revenue, and expense projections in that [April 18] filing." We find this oversight troubling in that Boston-Maine was on notice through our discussion in Order 2002-12-20 that we had serious concerns regarding its managerial capabilities. Further, not only did Boston-Maine fail to advise us of changes it its management staff, but it specifically told us that no such changes had occurred. This "inadvertent oversight" by itself, therefore, raises additional concerns about Boston-Maine's managerial capabilities. Therefore, please identify the individual who was responsible for the portion of Boston-Maine's April 18, 2003, filing that dealt with its management and technical personnel and explain in detail why this individual did not know of the changes or did not believe it was necessary to advise us of them.

By: Air Carrier Fitness, Vanessa Wilkins

October 3, 2003

Supplement No. 9 for Amended Certificate Authority

At the outset, however, BMAC is compelled to note its serious frustration with the extremely slow processing of its application for large-aircraft authority, which BMAC is manifestly fit to hold, and to exercise safely, responsibly and in compliance with the requirements of the law. The relief at issue was requested, and fully documented, in a filing by BMAC on April 18, 2003. More than five months have now elapsed without substantive action on BMAC's application. That delay is utterly inconsistent with the spirit of airline economic deregulation and open market entry enacted by Congress twenty-five years ago in October 1978.

BMA-S/9-1: Resume and Fitness Questionnaire for David Mailhot
BMA-S/9-2: Vice President Airline Operations and Manager of Flight Operations Dueites and Required Qualifications
BMA-S/9-3: Updated Operating Management Chart
BMA-S/9-4: Title 18 Certification of John Nadolny

Counsel: Zuckert Scoutt, Nathaniel Breed, 202-973-7919, npbreed@zsrlaw.com

OST-00-7668 - Certificate of Public Convenience for Interstate
OST-03-14985 - Foreign Certificate of Public Convenience

October 21, 2003

Correspondence from Office of Aviation Analysis

Correspondence from Office of Aviation Analysis informing Boston-Maine Airways that until FAA has authorized it to operate with any large aircraft, the Deparment will not be able to make its currrent interstate certificate effective for large aircraft operations. It may, at that time renew its requests for additional large aircraft authority.

By: Patricia Thomas

May 20, 2004

Supplement No. 10 to Application

BMAC expects to be issued amended Part 121 Operations Specifications by the Federal Aviation Administration authorizing BMAC to operate B-727-200 aircraft, on or about June 25, 2004. BMAC has successfully completed the training of its initial cadre of pilots, flight engineers and flight attendants, as well as the required emergency evacuation and ditching demonstrations, all under the oversight of the FAA. A copy of relevant excerpts from BMAC's amended Operations Specifications will be filed with the Department upo their receipt by BMAC.

Counsel: Zuckert Scoutt, Nathaniel Breed, 202-973-7919, npbreed@zsrlaw.com

OST-00-7668 - Certificate of Public Convenience and Necessity - Interstate Scheduled Service Operations
OST-03-14985 - Certificate of Public Convenience and Necessity - Foreign Large Aircraft Operations

June 17, 2004

Re: Updated Status and Anticipated Timing of Pending Application to the FAA

BMAC is now in the final stage of its FAA Part 121 application process. BMAC's FAA "tabletop exercises" have gone very well and are expected to be completed today. BMAC's B727 proving runs will begin on Monday, June 21, 2004, and will continue through that week. BMAC anticipates that the FAA will issue amended Operations Specifications to BMAC authorizing operations with its first B‑727‑200 aircraft on Monday, June 28, 2004.

BMAC hereby renews its requests submitted in the referenced Dockets in Supplement No. 10, filed on Monday May 20, 2004, and in Supplement No. 11, filed concurrently today, requesting the Department to take oral or written action issuing effective amended certificate authority to BMAC to begin revenue operations with its first B‑727‑200 aircraft, effective immediately following issuance of amended FAA Operations Specifications to BMAC.

Counsel: Zuckert Scoutt, Nathaniel Breed, 202-973-7919

OST-00-7668 - Certificate of Public Convenience and Necessity - Interstate Scheduled Service Operations

June 17, 2004

Supplement No. 11 to Application

Submits this Supplement No. 11 to the captioned application for the purpose of furnishing certain additional updated fitness information and exhibits, in response to a request by the Department's Fitness Division on June 14, 2004, and in compliance with Condition (2) of the specimen Certificate attached to Final Order 2003-2-24, served on February 28, 2003. Supplement No. 11 is hereby submitted in support of BMAC's request for expedited final action by the Department on BMAC's pending applications for authority to operate large aircraft in interstate services in this proceeding, and in foreign air transportation in Docket OST-03-14985.

Counsel: Zuckert Scoutt, Nathaniel Breed, 202-973-7919

OST-00-7668 - Certificate of Public Convenience and Necessity - Interstate Scheduled Service Operations
OST-03-14985 - Certificate of Public Convenience and Necessity - Foreign Large Aircraft Operations

June 14, 2004

Re: Request for Updated Information

We need updated forecast income and expense projections for BM (for domestic operations, foreign operations, and combined operations). The most recent information we have on file is dated July 2003.

By: Vanessa Wilkins

June 22, 2004

Re: Request for Additional Information

Boston-Maine's March 31, 2004, balance sheet filed on May 20, 2004, as an exhibit to Supplement 10 does not balance. Please submit a revised balance sheet.

Provide a statement from the responsible Boston‑Maine official stating whether there have been any events that have occurred after the preparation of the company's March 31, 2004, balance sheet that may have a significant impact on the financial position or on the operations of Boston‑Maine.

Provide current verification (within 45 days of this letter) of Boston‑Maine's funds on deposit from the company's financial institution(s).

Provide a more current 12‑month income statement for Boston‑Maine (for a period ending no earlier than March 31, 2004). Alternatively, the carrier may provided an income statement beginning January 1, 2004, through a date not earlier than March 31, 2004.

By: Vanessa Wilkins

June 24, 2004

Supplement No. 12 for Amended Certificate Authority

Boston-Maine Airways Corp., d/b/a Pan Am Clipper Connection hereby submits this Supplement No. 12 to the captioned application for the purpose of furnishing certain additional updated fitness information and exhibits, in response to a further request by the Department’s Fitness Division on June 22, 2004, and in compliance with Condition (2) of the specimen Certificate attached to Final Order 2003-2-24, served on February 28, 2003. Supplement No. 12 is hereby submitted in support of BMAC’s request for expedited final action by the Department on BMAC’s pending applications for authority to operate large aircraft in interstate services in this proceeding, and in foreign air transportation in Docket OST-03-14985.

Operating Revenues:

Total Operating Revenue 985,920

Operating Expenses:

Total Operating Expense 2,968,200

Net Income (Loss) (1,982,280)

Counsel: Zuckert Scoutt, Nathaniel Breed, 202-973-7919, npbreed@zsrlaw.com

OST-00-7668 - Certificate of Public Convenience and Necessity - Interstate Scheduled Service Operations
OST-03-14985 - Certificate of Public Convenience and Necessity - Foreign Large Aircraft Operations

July 16, 2004

Re: Request for Immediate Issuance of Order Issuing Effective Certificates of Public Convenience and Necessity

Enclosed herewith is a copy of Air Carrier Certificate No. B 16A009J, reissued December 18, 2001, and Sections A-1, A-3, A-6, A-7, B-50 and C-70 from the revised Operations Specifications related to that Certificate, issued to Boston-Maine Airways Corp. d/b/a Pan Am Clipper Connection by the Federal Aviation Administration on July 15, 2004.

BMAC has previously filed, in Supplement No. 10, filed May 20,2004, Supplement No. 11, filed June 17, 2004, and Supplement No. 12, filed June 24, 2004, all of the updated fitness information and other documents specified in Condition (2) of the specimen Certificate attached to Final Order 2003-2-24, served February 28, 2003. There have been no material changes in the fitness information filed by BMAC subsequent to June 24, 2004.

Accordingly, BMAC hereby requests issuance of an Order Issuing Effective Certificates of Public Convenience and Necessity to BMAC, or equivalent verbal authority, effective immediately, without awaiting the passage of six business days following submission of the enclosed Part 121 Certificate and Operations Specifications.

Counsel: Zuckert Scoutt, Nathaniel Breed, Jr., 202-298-8660

Order 04-08-21
OST-00-7668 - Certificate of Public Convenience and Necessity - Interstate Scheduled Service Operations

Issued and Served August 18, 2004

Order Confirming Oral Action and Reissuing Interstate Certificate | Word

By this order, we (1) confirm our oral action of July 16, 2004, making the authority of Boston-Maine Airways Corp. d/b/a Pan Am Clipper Connection to operate large aircraft in interstate scheduled air transportation effective on that date, (2) reissue the carrier’s interstate scheduled passenger certificate to reflect the effective date of this authority, and (3) authorize the carrier to operate up to three large aircraft in its interstate service.

By: Randall Bennett

December 29, 2004

Motion of Air Line Pilots Association to Revoke Certificate for Lack of Fitness

In September, 2002, ALPA opposed Boston-Maine's application for an amendment to its certificate of public convenience and necessity to enable it to fly large aircraft on the ground, among other things, that the real purpose of the application was to facilitate the shift of Pan Am's operations to Boston-Maine in violation of Pan Am's obligations under the RLA. In the order proposing to find Boston-Maine fit to provide large aircraft service, DOT noted that ALPA might have a valid RLA claim against Pan Am and invited ALPA to request a continuing fitness review of appropriate parties if and when warranted. Similarly, when the Department reissued Boston-Maine's interstate certificate in August of this year, it reserved the right to review the fitness of Boston-Maine and Pan Am should their owners be found to be violating the RLA.

There now has been a judicial determination that the owners of Boston‑Maine and Pan Am did in fact violate the RLA by transferring work from Pan Am to Boston­ Maine with the purpose and intent of destroying ALPA as the lawful representative of Pan Am's pilots. There have also been numerous other court and agency decisions showing that these owners have a striking disregard for their legal obligations. The Department has on many occasions found that such a disregard provides the basis for denying or revoking operating authority.

OST-04-19919 - US-St. Kitts and Nevis Scheduled Services

By: Russell Bailey

January 7, 2005

Answer of Boston-Maine Airways to Motion of the Air Line Pilots Association

ALPA has virtually acknowledged that its purpose in opposing BMAC's large‑aircraft applications is an attempt by ALPA to circumvent a labor dispute between ALPA and BMAC's affiliated sister corporation, Pan American Airways Corp. Pan Am and BMAC are separate and independent companies, but they are affiliated through common ownership by a holding company, Pan American Airlines, Inc. which is a closely‑held corporation owned by a small group of investors. Those investors acquired Pan Am and other related companies out of a Chapter 11 bankruptcy proceeding in June 1998.

The thrust of ALPA's argument that BMAC is unfit to retain its long‑standing certification is based entirely upon the alleged and unrelated conduct of other parties, including Pan Am. Indeed, ALPA has no alternative in formulating its attack on BMAC, because BMAC itself has demonstrated its successful and consistent commitment to compliance with all applicable safety, operating, corporate and regulatory requirements and ALPA could not, in good faith, allege otherwise.

Counsel: Zuckert Scoutt, Nathaniel Breed, 202-973-7919, npbreed@zsrlaw.com

January 13, 2005

Motion of Air Line Pilots Association to File an Unauthorized Reply and Reply to Answer of Boston-Maine

BMAC first attempts to disassociate itself from the many law violations cited in ALPA's motion by claiming that those violations were committed by other corporate entities, not by BMAC. It contends that ALPA's motion is thus "deficient as a matter of law" because it "fail[s] to establish any basis warranting a finding by the Department that BMAC has committed  act or omission in violation of Federal aviation law or regulations, or any violation of any other federal or state law . . . ."  BMAC even goes so far as to argue that "[b]ecause of its lack of involvement in the instances of misconduct cited by ALPA, BMAC has no direct knowledge of the facts or current status of any of the cited cases."

These arguments boggle the mind. To begin with, the very first law violation discussed in ALPA's motion ‑‑ the case of ALPA v Guilford Transportation Industries (the Injunction case) ‑‑ found egregious Railway Labor Act violations to have been committed by both Pan Am and BMAC, acting in concert.

Counsel: ALPA, Jerry Anker, 202-797-4086

January 18, 2005

Surreply of Boston-Maine Airways and Motion for Leave to File an Otherwise Unauthorized Document

The unifying thread in all of ALPA's numerous, and increasingly strident, pleadings in opposition to BMAC's application for authority to operate large aircraft in the captioned proceeding is ALPA's desire that BMAC not be permitted to operate B-727-200 aircraft in its interstate and foreign scheduled and charter service operations.

The fatal infirmity in ALPA's Motion To Revoke and in its subsequent Reply in support of that Motion is ALPA' s failure to demonstrate even a single instance of a violation of the law by BMAC, or by the owners and senior officers of BMAC acting pursuant to their control over, and responsibility for, BMAC's duty to comply with the requirements of the law in the conduct of its air carrier operations.

Counsel: Zuckert Scoutt, Nathaniel Breed, 202-973-7919, npbreed@zsrlaw.com

March 24, 2005

Application for Grant of an Emergency Exemption

BMAC hereby requests that the foregoing exempti