OST-96-1075 | May 6, 1997

Mr. Curt Coward

Counsel for Pro Air, Inc.

McGuire, Woods, Battle & Boothe

8280 Greensboro Drive, Suite 900

McLean, Virginia 22102

Dear Mr. Coward:

Thank you submitting the information on May 2 as a follow up to your submission on April 29. The April 29 filing was intended to satisfy the provisions set forth in Item 1 of the Terms, Conditions and Limitations attached to Pro Air's DOT certificate. The provisions provide that Pro Air's certificate would not become effective until six (business) days after receipt of documents as described in the Terms, Conditions and Limitations. An initial review indicated deficiencies in that a copy of Pro Air's Operations Specifications was not included. Since this was a important piece of information, we contacted you via telephone. Also, compliance disposition information on certain new personnel was not included. Although the Operations Specifications and other information were submitted on May 2, they were not filed with Dockets. I think that this was due to a misunderstanding. Therefore, I have taken it upon myself to file the Op Specs and other material in the Docket. As I indicated to you on May 5, we have completed our review of the information submitted thus far and have found that additional information is needed to make Pro Air's certificate authority effective. The six day period will not commence until complete information has been filed with the Department of Transportation Dockets.

As I indicated to you, on April 22 we received a request from Winston & Strawn to have the names James T. Pitts and Mary E. Wall added to the service list in Docket OST-96-1075. The firm's address is Winston & Strawn, 1400 L Street, NW, Washington, DC 20005. They represent the Detroit City Airport Study Committee. I have supplied that firm with copies of the April 29 and May 2 supplemental information.

Of course, we now have before us the issue of the environmental impact assessment evaluation and the impact it may have on Pro Air's commencement of operations. It is our understanding that the assessment results are being reviewed by the FAA, but that no findings have been issued and that any findings will not likely be out by the May 20 date that Pro Air proposes to commence service. It is our understanding that Pro Air cannot begins operations at the Detroit City Airport until there is a finding that the proposed service will not have a significant environmental impact. We note that Pro Air did not inform us that there was a potential problem with being able to operate out of Detroit City Airport. Along those lines, we note that the Detroit City Airport is not among the airports authorized for scheduled operations in Pro Air's Operations Specifications. We also note that Boston is not listed in the Operations Specifications. As you may recall, Boston, Milwaukee and Baltimore were the cities upon which Pro Air's service proposal was based. Since it appears that Pro Air will not be able to operate out of Detroit City Airport by May 20, the carrier should advise us of any new operating plans and provide updated estimates of its expenses and funding needs. Since it appears that all facilities (security, ground handling, ticketing, etc.) are located at Detroit City Airport, how will Pro Air provide for such functions if it is able to operate out of Detroit Metro or another airport? Further, if Pro Air determines that it will operate out of Detroit Metro or another airport, how will this affect the proposed start-up date?

Although the applicant has provided an update on its capitalization and financing, the Pro Air did not provide independent third-party verification of such funding and a revised list of preoperating expenses already paid and those remaining to be paid. In the show-cause order startup costs were estimated to be $1.5 million with another $4.5 million in expenses during three months of normal certificated operations. It now appears that pre-operating costs alone will be in excess of $3.5 million and we are unsure as to what additional pre-operating expenses will be incurred or what the expenses will be for three months of normal operations. Thus, it is unclear as to what would be required for the working capital reserve. Since we must make a finding that Pro Air continues to meet our financial fitness test, please provide information which will clarify this matter.

With respect to the private placement (Item B on page 4, April 29 filing), provide the names, addresses and principal business of any individuals holding 10 percent or more of the referenced stock. For Items C through E provide the names of the individuals or entities providing this funding. As indicated above, provide third-party verification of all additional funding.

With respect to the reservation center in Virginia, have these costs been accounted for in the increase in pre-operating costs as set forth on page 5 of the April 29 filing? It is our understanding that the cost of the center may be exceed $1.5 million. If not included in the increase in pre-operating costs, where did Pro Air obtain funding? Since this is a reservation center it would seem that it should be in operation prior to any commencement of operations. What is the operational status of the center. If not operational at this time, how will the carrier handle reservations?

With respect to the compliance disposition information submitted for Messrs. Stamper, Denomme and Belmondo, the supplied information is deficient. The applicable sections regarding compliance disposition are set forth in section 204.3(1), (m), (a), (p) and (q). It also appears that other key personnel have been replaced since the issuance of the show-cause order. Messrs. Tann, Davis and Pope who hold the positions of Director of Safety, Director of Maintenance and Chief Inspector, respectively, are not the individuals set forth in the showcause order. We have checked and can not find any notification of such changes. Please, provide resumes and compliance disposition information for those individuals.

Finally, it have been over almost nine months since the issuance of the show-cause order. Therefore, we request that Pro Air provide a balance sheet reflecting the carrier's current financial posture.

As indicated, the six-day period will not begin to run until we have received complete information as required under the Terms, Conditions and Limitations of Order 96-8-47.

If you have any questions, please feel free to contact me on 202-366-1064.

Sincerely,

James A. Lawyer

Air Carrier Fitness Division

Office of Aviation Analysis

cc: Mr. Craig Belmondo

President

Pro Air, Inc.

101 Elliot Ave. West, Suite 500

Seattle, WA 98119

Mr. James Pitts

Ms. Mary Wall

Winston & Strawn

1400 L St. NW

Washington, DC 20005

Docket 96-1075