OST-2001-11198

OST-2001-11198

http://en.wikipedia.org/wiki/Caribbean_Sun_Airlines

OST-2001-11164 - Scheduled and Charter Foreign Certificate
OST-2004-17517 - Caribbean Sun and Caribbean Star - US-Caribbean Codeshare

The principal immediate purpose of this application is to enable CSA to provide scheduled air transportation between San Juan, Puerto Rico and St. Thomas in the U.S. Virgin Islands, which represents a part of the service pattern described in CSA's concurrent application for foreign scheduled authority in Docket OST-01-11164. The ability to serve the San Juan-St. Thomas market requires U.S. interstate authority, since both points are located in United States territory. Although CSA requires only San Juan-St. Thomas authority at this time, CSA requests that it be granted interstate certificate authority of unrestricted scope in the form now routinely granted by the Department in the case of all applications for interstate authority subsequent to the Airline Deregulation Act of 1978.

Caribbean Star Airlines, Inc. hereby submits this Supplement No. 1 to the two captioned applications requesting issuance of two Certificates of Public Convenience and Necessity authorizing CSA to engage in scheduled interstate (Docket OST-01-11198) and foreign (Docket OST-01-11164) air transportation. The purpose of this Supplement No. 1 is two-fold: (1) to furnish citizenship, air carrier experience and other fitness-related information pertaining to a recently-hired member of CSA's key operations management group, and (2) to provide additional information pertaining to the working capital financing arrangements of CSA.

As this office continues processing the application of Caribbean Star Airlines, Inc. for a certificate to engage in scheduled and charter foreign air transportation, various issues arise for which additional information may be needed. Thus far we have identified the following areas that require additional information. We ask, therefore, that you provide answers to these questions and submit them to the Docket(s) as soon as convenient.

The source of the total of $2.5 million in equity investments made in CSA to date is Mr. R. Allen Stanford, who is the ultimate sole owner of CSA. The source of the guaranty securing the $4.8 million Irrevocable Standby Letter of Credit from The Toronto-Dominion Bank to CSA is provided by Caribbean Star Airlines Holdings, Inc., which is the sole shareholder of CSA, and which, in turn, is wholly owned by Mr. Stanford. The reference to a $5 million line of credit mentioned in the Explanatory Notes on page 3 of Exhibit CSA-104 refers to The Toronto-Dominion Bank Standby Letter of Credit. That reference was inadvertently not corrected to read "$4.8 million" following CSA's determination that a $4.8 million line of credit would be adequate for its standby working capital requirements.

There are no existing agreements at this time between CSA and its foreign affiliated carrier, Caribbean Star Airlines, Ltd. CSA anticipates that it will enter into a marketing alliance or code-share agreement with CSA Ltd., and one or more other carriers, under standard industry terms. In addition, CSA may enter into contracts with CSA Ltd. for the provision of ground handling services and maintenance support at points served in common by both carriers.

At this time, CSA has not yet entered into any Aircraft Lease Agreements nor has it prepared or received any draft lease agreements. CSA expects to lease its first DeHavilland Dash-8 aircraft shortly prior to the time that such an aircraft is required in connection with CSA's FAA Part 121 certification process, which will commence as soon as the Show Cause Order tentatively granting CSA's Section 41102 certificate application has been issued by the Department.

Mr. Stanford's reasons for creating CSA and prosecuting applications for U.S. DOT and FAA certificate authority are two-fold. First, Mr. Stanford desires to create a high-quality U.S. citizen air carrier which is legally able to provide the highest attainable standard of safe, reliable and efficient service between points within the United States, including transportation between the mainland U.S. and Puerto Rico, and to other U.S. points in the Caribbean. Those intra-U.S. markets are not available to CSA Ltd., which is a foreign carrier. Second, CSA Ltd. is based in Antigua and is licensed by Antigua. At this time, Antigua is designated a Category 2 Country under the FAA's International Aviation Safety Assessment Program. For that reason, CSA Ltd. is not currently able to apply for U.S. authority to perform air transportation between points in the U.S. and Antigua and other foreign points in the Caribbean region and in Central and South America.

As discussed below, CSA submits: (1) that the relief requested by Daystar is improper and is contrary to long-established Department policy, (2) that Daystar's attack on CSA's revenue and expense projections is flawed by fundamental factual errors, and (3) that Daystar has provided absolutely no probative evidence that there is even a shadow of doubt about CSA's manifest fitness for certification under every fitness test articulated by the Department. CSA also notes that Daystar's Answer has been filed over two months past the due date for answers in this case, without providing any credible justification for its failure to file a timely Answer.

Rather, as stated in its initial Comments and as clarified in its Further Reply, it is clear that the overriding paramount concern of Daystar relates to its prolonged inability to obtain landing rights in Antigua to enable Daystar to exercise the authority to serve various points in the Caribbean, including Antigua, granted to Daystar by the Department. Daystar asserts that the denial of its application by Antigua represents a serious breach of the existing aviation bilateral agreement between the U.S. and Antigua,' and that it undermines the purposes and effectiveness of the United States certification and carrier designation process.

The purpose of this letter is to confirm the willingness of CSA to change its formal corporate name, and, if necessary, its logo and the trade name in which it holds out its planned future service to the public, in a manner sufficient to resolve the Department's concerns. As you are aware, CSA is extremely anxious to avoid any further delay in the Department's issuance of a Show Cause Order in the referenced dockets, so as to enable CSA to proceed with its concurrent Part 121 certification process by the Federal Aviation Administration. In order to allow CSA adequate time to consider various possible alternative name changes, and to review such name changes with the Department's staff, but to avoid a further delay in the issuance of the long-awaited Show Cause Order, CSA requests that the Show Cause Order be issued immediately in the current name in which CSA's DOT and FAA applications have been filed.

As soon as a mutually-acceptable modified name has been agreed upon between CSA and the Department's staff, CSA will immediately file an amendment to the referenced applications, and to its concurrent FAA Part 121 application, for the purpose of changing the name in which those authorizations are to be issued. That amendment will be filed prior to the issuance of the Department's Final Order in these proceedings.

CSA was incorporated in the State of Delaware in January 2000 to provide scheduled air service from points in Florida and Puerto Rico to points in the Caribbean, Mexico, and Central and South America. Mr. R. Allen Stanford, a U.S. citizen, is Chairman of the Board of Directors and the carrier's sole owner. He is also Chairman and CEO of the Stanford Financial Group, a network of affiliated companies that provide international financial services. He also owns 100 percent of Caribbean Star Airlines Holdings, Ltd., which, in turn, wholly owns Caribbean Star Airlines, Ltd. (CSA Ltd.), an Antiguan air carrier. CSA Ltd. operates scheduled and charter services between Antigua and various points in the eastern Caribbean region. The applicant states that its services will be conducted separate from those of CSA Ltd. Nonetheless, because of the similarity of the applicant's name with that of Mr. Stanford's other airline, and the possibility this presents for confusion, the applicant has agreed to change its name in the near future.

If found fit, CSA proposes to provide service between San Juan, Puerto Rico and Antigua, West Indies; St. Kitts, Leeward Islands; Tortolla, British Virgin Islands; and St. Marten, Netherlands Antilles. Later in the year, the airline proposes to increase service to these points and begin flying between San Juan and St. Thomas, U.S. Virgin Islands. By the end of its first year of operations CSA expects to be operating a total of four leased 37-seat DeHavilland DHC-8-102 aircraft.

If granted the certificate authority it seeks, CSA proposes to operate up to four leased Dash-8 aircraft with 37 coach class seats on various Caribbean air routes. The carver proposes to begin service with two aircraft from both San Juan and Antigua, with non-stop service to St. Maarten, Tortola, and St. Kitts, as well as direct flights and non-stop service between San Juan and Antigua. Following CSA's lease of a third Dash-8 in November 2002, the carrier proposes to increase service in its initial scheduled service markets and commence the operation of a limited number of passenger charter flights in the Caribbean region. CSA then proposes to lease a fourth Dash-8 in February 2003, and add service between San Juan, St. Thomas and Antigua. The carrier also expects to increase service between San Juan and St. Maarten, in addition to offering expanded domestic and international passenger charter operations. With all four Dash-8s in service. CSA expects to operate 30 daily scheduled oneway flights.

CSA believes that no response to Daystar's Comments is necessary or appropriate. CSA plans to file evidence of a change in its formal corporate name and trade name, or a change in the name of its sister carrier, Caribbean Star Airlines, Ltd., in order to resolve the Department's concern about the potential for public confusion arising from the similarity in the names of CSA and its affiliated sister carrier.

Caribbean Star Airlines, Inc. hereby submits this Supplement No. 3 to the two captioned applications requesting issuance of two Certificates of Public Convenience and Necessity authorizing CSA to engage in scheduled interstate (Docket OST-01-11198) and foreign (Docket OST-01-11164) air transportation. The purpose of this Supplement No. 3 is to submit updated fitness information and other documents in compliance with the requirements of Condition (1) in the Specimen Certificates attached to Show Cause Order 2002-6-16, served June 27, 2002, as follows:

The mailing address for CSA's headquarters office has changed to 610 SW 34 `" Street, Suite 303, Ft. Lauderdale, FL 33315, effective immediately. There has been no change in CSA's telephone and fax numbers.

In the near future, CSA plans to change its corporate name to "Caribbean Sun Airlines, Inc." in order to eliminate a risk of potential public confusion arising from the similarity between the names of CSA and its affiliated sister carrier, Caribbean Star Airlines Ltd.

Hereby submits this Amendment No. 1 to each of its pending certificate applications in the captioned proceedings'. The sole purpose of this amendment is to advise the Department of a change in the name of CSA to "Caribbean Sun Airlines, Inc.", and to request the Department to issue the two Certificates of Public Convenience and Necessity at issue in these proceedings in that new name.

CSA Inc. will change its formal corporate name to "Caribbean Sun Airlines, Inc." That new name, and the abbreviated name "Caribbean Sun", will appear on all corporate documents, tickets and reservation confirmations, and in all advertising, web site publications and other publications disseminated by CSA to the traveling public, other air carriers, travel agents and other persons involved with or interested in the field of air transportation.

Caribbean Sun Airlines, Inc. and Caribbean Star Airlines, Ltd. are affiliated but separate companies. The air service provided by each carrier is operated independently of the other and the rules applicable to your travel on each airline may be different. We have concluded that the actions described above resolve the issue of similarity of names. Further, we are placing a condition imposing this notice requirement in the Terms, Conditions and Limitations attached to the carrier's certificates.

Caribbean Star Airlines, Inc. has a proposal to resolve the potential for public confusion issue arising out of the similarity between the names of CSA Inc. and its affiliated sister, Caribbean Star Airlines Ltd. which is an Antiguan air carrier under common ownership with CSA Inc. and which currently provides small-aircraft service to various points in the eastern Caribbean.

The formal corporate name of CSA Inc. will be changed to "Caribbean Star International, Inc." That modified name will appear on all corporate documents, tickets and reservation confirmations, and in all advertising, web site publications and other publications disseminated by CSA Inc. to the traveling public, other air carriers, travel agents and other persons involved with or interested in the field of air transportation. The name "Caribbean Star International" will be painted on all aircraft operated by CSA Inc. Both CSA Inc. and CSA Ltd. will use the same green and gold color scheme and star-shaped logo on all aircraft and all public communications.

If necessary, in the view of the Department, CSA Inc. and CSA Ltd. will add the following small-print legend in all published advertising, brochures and other promotional materials used by both carriers: "Caribbean Star International, Inc. and Caribbean Star Airlines Ltd. are affiliated but separate companies. The air service provided by each carrier is operated independently of the other, although the flight schedules of the two carriers are closely integrated to provide convenient inter-carrier connections, baggage transfers, and other interline service amenities to the traveling public."

Enclosed herewith are copies of the two corporate documents reflecting the formal change of the name of Caribbean Star Airlines, Inc. to Caribbean Sun Airlines, Inc. on the records of the Secretary of State for the State of Delaware, effective September 10, 2002.

Enclosed herewith is a copy of Air Carrier Certificate No. CBRA 129K, and Sections A-1, A-3, A-6, A-7, B-50 and C-70 from the Operations Specifications related to that Certificate, issued to Caribbean Sun Airlines, Inc.

Caribbean Sun Airlines, Inc. hereby submits this Supplement No. 4 to, the two captioned applications requesting issuance of two Certificate of Public Convenience and Necessity authorizing CSA to engage in scheduled interstate and foreign air transportation. The purpose of this Supplement No. 4 is to submit updated financial fitness information at the request of the Department's Fitness Division. That information is contained in the Exhibits attached to this Supplement.

Order 2002-12-18, the Department (1) confirms the oral action of December 23, 2002, making the Section 41102 interstate and foreign scheduled certificate authority issued to Caribbean Sun Airlines, Inc., effective on that same date (2) reissues to Caribbean Sun Airlines, Inc., the interstate and foreign scheduled passenger Section 41102 certificates issued to it by Orders 2002-9-18 and 2002-11-9, respectively, in the attached form to reflect their effective date, and (3) directs Caribbean Sun Airlines, Inc. to submit to the Air Carrier Fitness Division a first-year progress report within 45 days following the end of its first year of certificated operations.

On December 18, 2002, CSA filed a copy of its FAA operating authority, together with a statement indicating that it had not undergone any significant change in areas affecting its fitness and noting that it had previously filed evidence of appropriate insurance.' At the same time, it requested that the Department waive the six-day waiting period and make its authority effective immediately. On December 20, 2002, CSA filed updated financial information demonstrating that it continued to have available resources sufficient to meet the Department's financial fitness requirement.

Caribbean Sun seeks a temporary waiver of the provision to the extent necessary to permit it to delay re-commencement of scheduled service until November 2008 without any revocation of authority.

Caribbean Sun conducted operations through May 31, 2007, since when, as the Department is aware, it has not conducted any aircraft operations. Most recently, as the Department was advised on March 14, 2008, the company underwent a change of ownership and the detailed §204.3 fitness data required for both change of ownership and fitness re-determination for the re-commencement of operations is in the process of being prepared and will shortly be filed. Caribbean Sun will shortly be submitting to the Department the new ownership, financial and fitness information.

Caribbean Sun conducted operations through May 31, 2007, since when, as the Department is aware, it has not conducted any aircraft operations, however by a letter dated July 16, 2008, the Department granted Caribbean Sun a temporary waiver from the provisions of 14 C.F.R. §204.7 through November 1, 2008.

As the Department was advised on March 14, Caribbean Sun underwent a change of ownership and the detailed §204.3 fitness data required for both this change of ownership and fitness re-determination for the recommencement of operations was in the process of being prepared for filing, but various financing problems were encountered in the past several months. However, most recently, new funding and equity participation is in the process ofbeing secured from Miami Tech Line Maintenance, Inc.. , a well-known, Miami-based FAR 145 Repair Station (FAA Repair Station Certificate # XK7R917X), and as soon as the financing and new equity participation details have been finalized, these details will be filed with the Department.

Separately, various meetings have continued to be been held with the FAA, most recently on October 28, 2008 (with Caribbean Sun's FAA PMI Andy Pacheco and the FAA PAI Lloyd Morgan), and the FAA is aware ofthe most recent changes in plans as regards financing and equity participation and the delayed time-table for re-commencement of operations, and FAA continues to be willing to work with Caribbean Sun in its recommencement of operations and B-737-300 ale certification project.

Caribbean Sun therefore requests a further waiver from the one-year dormancy revocation provision to the extent necessary to complete the DOT fitness re-determination and new ownership process as well as the FAA re-commencement of operations process which Caribbean Sun would expect to be successfully concluded by February 28, 2009.

We have reviewed your request, and find good cause for allowing the carrier additional time to prepare documentation in support of its request to resume operations. Therefore, we grant Caribbean Sun a 60-day extension of our revocation for dormancy provisions, until November 1, 2008. If Caribbean Sun plans to resume certificated air carrier service, it must file with us a notice of its intent to do so at least 45 days prior to the proposed start-up date, but in no event later than September 17, 2008 (which is 45 days before the November 1, 2008, revocation date).

This letter is in reference to your October 29, 2008, request on behalf of Caribbean Sun Airlines, Inc. for an extension of the Department's revocation for dormancy provisions of section 204.7 until February 28, 2009. In your request, you state that Caribbean Sun underwent an ownership change on March 14, 2008, and that the new owners have not been able to secure adequate financing until recently. You state that Caribbean Sun is in the process of securing new funding, and that the air carrier will file the details of the transaction after it has been finalized.

After reviewing your request, and in consultation with the Federal Aviation Administration, we find good cause for allowing Caribbean Sun additional time to submit documentation in support of a request to resume certificated operations. Therefore, we grant Caribbean Sun an extension of our revocation for dormancy provisions until February 28, 2009. Please be advised, however, that the Department is not inclined to grant Caribbean Sun any further extensions beyond the February 28, 2009, revocation date. At February 28, 2009, Caribbean Sun's new ownership will have been in place for nearly one year, which is a sufficient amount of time for the air carrier to provide the Department with the necessary information to resume certificated operations. Thus, if Caribbean Sun fails to timely submit the required fitness information, as well as demonstrate that it is making satisfactory progress in obtaining operating authority from the FAA, the Department intends to revoke Caribbean Sun's authority without further notice.

OST-2001-11198 - Scheduled Interstate Certificate	December 18, 2001	Application for Certificate of Public Convenience and Necessity	Scheduled Interstate Air Transportation
		Service List

OST-01-11164 OST-01-11198	February 7, 2002	Supplement No. 1 to Application	Certificate of Public Convenience and Necessity - Scheduled and Charter Foreign Service
		Exhibit CSA S1-1: Resumes
		Exhibit CSA S1-2: Letter of Credit
		Service List

OST-01-11164 OST-01-11198	March 13, 2002	Supplement No. 2 to Application	Certificate of Public Convenience and Necessity - Scheduled and Charter Foreign Service
		Attachment A: Request for Additional Informational (March 7, 2002)
		Service List

OST-01-11164 OST-01-11198	March 15, 2002	Reply of Caribbean Star Airlines	Certificate of Public Convenience and Necessity - Scheduled and Charter Foreign Service
		Service List

OST-01-11164 OST-01-11198	April 3, 2002	Surreply of Caribbean Star and Motion for Leave to File	Certificate of Public Convenience and Necessity - Scheduled and Charter Foreign Service
		Service List

OST-01-11164 OST-01-11198	June 21, 2002	Re: Caribbean Star Airlines is Willing to Change Formal Corporate Name, if Necessary, to Resolve Departments Concerns	Certificate of Public Convenience and Necessity - Scheduled and Charter Foreign Service
		Service List

Order 02-6-16 OST-01-11164 OST-01-11198	Issued June 27, 2002 Served June 27, 2002	Order to Show Cause Proposing Issuance of Certificate Authority	Certificate of Public Convenience and Necessity - Scheduled and Charter Foreign Service
		Attachment: Terms, Conditions and Limitations
		Service List

OST-01-11164 OST-01-11198	July 17, 2002	Re: Caribbean Star Airlines Does Not Intend to File Answer to Comments of Daystar Airways	Certificate of Public Convenience and Necessity - Scheduled and Charter Foreign Service
		Service List

OST-01-11164 OST-01-11198	September 4, 2002	Supplement No. 3 to Application	Issuance of Two Certificates of Public Convenience and Necessity - Scheduled Interstate and Foreign Air Transportation
		Exhibits

OST-01-11164 OST-01-11198	September 5, 2002	Amendment No. 1 to Certificate of Applications and Motion for Leave to File	Certificates of Public Convenience and Necessity
		Service List

OST-01-11164 OST-01-11198	September 5, 2002	Re: Name Change	Certificates of Public Convenience and Necessity
		Service List

OST-01-11164 OST-01-11198	September 30, 2002	Re: Formal Name Change to Caribbean Sun Airlines	Scheduled Interstate Air Transportation
		Service List

OST-01-11164 OST-01-11198	December 18, 2002	Re: Air Carrier Certificate	Certificate of Public Convenience and Necessity - Scheduled and Charter Foreign Service
		Service List

OST-01-11164 OST-01-11198	December 20, 2002	Supplement No. 4 to Application	Scheduled Interstate Air Transportation
		Index to Exhibits
		Exhibits
		Certification
		Service List

Order 02-12-18 OST-01-11164 OST-01-11198	Issued and Served December 26, 2002	Order	Scheduled Interstate Air Transportation
		Service List