OST-00-7916

Falcon Air Express, Inc.

Falcon proposes to dedicate two (2),aircraft to fulfill a long-term wet lease contract entered into with Aeropostal Alas de Venezuela, C.A. ("Aeropostal") a Venezuelan air carrier. The FAA's IASA program has for a number of years now assessed Venezuela as a "Category II" country, thereby requiring Aeropostal to wet lease aircraft from a qualified U.S. or foreign air carrier to perform its U.S.- Venezuela operations. Because the universe of air carriers qualified to perform Aeropostal's U.S.- Venezuela operations is very small, and because Falcon's service is so well-received, both Falcon and Aeropostal would benefit greatly from the proposed operation.

Counsel:  Pierre Murphy, 202.872.1679, pmurphy@lopmurphy.com 

Falcon Air Express, Inc.

As previously stated, the two (2) additional aircraft authority applied for is required to satisfy the lift requirements of Aeropostal, a flag-carrier of Venezuela which operates its own large fleet of aircraft in domestic and international operations, but which cannot operate any of its own aircraft in its substantial U.S. operations. Aeropostal requires two (2) wet-leased aircraft to maintain these U.S. operations. Aeropostal's lift requirements provide a substantial commercial opportunity for the very small number of U.S. carriers which are left in the ACMI/wet-lease combination business, however, absent the requested increase of two (2) aircraft sought herein, Falcon would be unable to operate for Aeropostal while at the same time continuing to operate on behalf of its other customers to whom Falcon is contractually bound.

Counsel:  Pierre Murphy, 202.872.1679, pmurphy@lopmurphy.com 

Falcon Air Express, Inc.

On September 11, 2000, Falcon filed an application in Docket OST-00-7916 requesting authority to add another two aircraft to its fleet. In this connection, the company advises that it intends to use these two additional aircraft to provide sub-service flights between the U.S. and Venezuela for Aeropostal Alas de Venezuela, C.A. (Aeropostal). Falcon states that it has made arrangements to lease the two additional aircraft and is hiring and training needed additional operational personnel. The company further advises that the terms of its arrangements with Aeropostal, including initial deposits and minimum operational guarantees, should provide the carrier with sufficient revenues to cover the operating expenses for the two aircraft.

We have contacted the FAA about Falcon's proposed fleet expansion and been advised that that agency is working with the carrier to add the aircraft to Falcon's FAA operating certificate. While the carrier's current weak financial position is of some concern to us, we note that the company has received an advance payment from Aeropostal which Falcon states will cover the costs of initiating its services with the two additional aircraft, and we would expect that the guarantees in Falcon's contract with Aeropostal should provide sufficient funds to cover Falcon's expenses under the contract. Moreover, the additional revenues from this operation should help improve the carrier's overall financial position.

In a related matter, we are taking this opportunity to reissue Falcon's interstate and foreign certificates to remove the one-aircraft restrictions contained therein. We have already authorized the carrier by exemption to operate four aircraft, and by this order we are authorizing it to add another two aircraft to its fleet. Thus, the one-aircraft restriction contained in Falcon's current certificates is now outdated. Instead, so that we can continue to monitor the carrier's fitness should it wish to expand its operations further, we will impose a reporting requirement similar to that imposed on other new entrant carriers, directing Falcon to advise us at least 45 days prior to any planned expansion of its operations beyond six aircraft and to demonstrate its fitness to operate such aircraft prior to the commencement of such expanded operations. This change will alleviate the need for Falcon to file exemption requests whenever it wishes to expand its fleet of aircraft.

By:  Randall Bennett

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