OST-95-676 and OST-95-677 / Falcon Air / July 17, 1997

Delores King

Office of Aviation Analysis

Air Carrier Fitness Division

U. S. Department of Transportation

400 Seventh Street, S.W.

Room 6401

Washington, DC 20590

Re: Falcon Air Express, Inc.

Dockets OST-95-676 and OST-95-677

Dear Ms. King:

On behalf of Falcon Air Express, Inc. ("Falcon Air") and as a supplement to its pending June 6, 1997 Application for Exemption Authority (Docket OST-97-2592) and Application for Amendment of Certificate of Public Convenience and Necessity filed herein, we submit herewith balance sheets and profit and loss statements for the months of March, April and May 1997, reflecting an overall profit with the operation of two (2) aircraft. /1 See Exhibit FAE-6, attached hereto.

Falcon Air would also like to take the opportunity at this time to clarify some information and respond to certain questions posed by the Department regarding Falcon Air's applications.

1. Falcon Air's Traffic and Financial Statistic Reports

As of June 30, 1997, Falcon Air has submitted all traffic and financial statistic reports as required by 49 U.S.C. §41708 and 14 C.F.R. Part 241. A number of these reports (the T-100 reports from March, April and May 1996, and the T-100 and P-1(a) reports from January and February of 1997) were filed in a timely manner, as evidenced by Falcon Air's overnight mail receipts, but apparently were not received by the Office of Airline Information. These reports, together with media diskettes where available, have been resubmitted. All reports have also been filed with both the Office of Airline Information and the General Counsel's office.

1/ Falcon Air began operation of the second aircraft in the middle of April. Therefore, May is the first full month that both aircraft were in operation.

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Falcon Air's reports were generated and submitted by Ms. Cristina Vargas, a Falcon Air employee, until January, 1997, when she left to work for another carrier. Ms. Vargas left Falcon Air in January after training her replacement, Ms. Ines Buitrago, to use the DOT software to generate and submit the reports. Ms. Buitrago generated the reports for the first few months, but due to a difficult pregnancy, she has been absent from the office quite a bit. These absences, coupled with problems with understanding and using the DOT software caused her to miss report deadlines. As her pregnancy progressed, she was out of the office even more, and the delinquent reports began to stack up. Because Ms. Buitrago was the only Falcon Air employee trained to use the software, no reports were filed during this time.

Ms. Buitrago is the person at Falcon Air who receives the mail, and she received the certified letters from the DOT reminding Falcon Air that these reports were delinquent. She did not show these letters to anyone in Falcon Air's management because she always intended to catch up on her reporting requirements, but was unable to do so due to unplanned absences from the office. Meanwhile, Falcon Air's management assumed that these reports were being generated and submitted as required during the time that Ms. Buitrago was in the office.

Falcon Air's counsel was notified by DOT counsel on June 12, 1997 of Falcon Air's delinquent and outstanding reports. Counsel immediately notified Mr. Dirube at Falcon Air the same day as the above problem was discovered. Mr. Dirube immediately hired Ms. Anna Perez, a consultant who specializes in traffic and financial statistic reports, to bring Falcon Air up to date on its reporting requirements. Ms. Perez has substantial experience in the preparation and filing of DOT carrier reports. Ms. Perez located the reports which Falcon Air had filed in a timely manner, and generated those reports which were missing. All reports were submitted to the Office of Airline Information and the General Counsel's office by June SO, 1997.

Since June 12, 1997, Mr. Dirube has hired Ms. Perez to generate the reports and submit them to the Office of Airline Information each month while Ms. Buitrago is on maternity leave. Ms. Perez is also in the process of training another Falcon Air employee, Ms. Haydee Martinez, to generate and submit these reports. Falcon Air plans to have Ms. Buitrago resume her responsibilities generating and submitting traffic and financial statistic reports after she returns from her maternity leave, and Falcon Air also then plans to have Ms. Martinez available as a backup, should Ms. Buitrago be unable to complete these reports as required at any time. Falcon Air will, therefore, have two (2) full-time employees who are able to generate and submit these reports.

2. Flight Crews

Falcon Air's existing flight crews can operate three (3) aircraft operating 200 hours per month. Additional crews will need to be trained in August.

3. Security Deposits

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The security deposits for the aircraft Will be provided by Aeropostal Alas de Venezuela ("Aeropostal") and Pelican Courier Express ("Pelican"). Aeropostal and Pelican will provide Falcon Air will, security deposits their wet lease (Aeropostal) and charter (Pelican) contracts equal to the amounts of the security deposit on each aircraft. Such security deposits are commercially reasonable in long-term wet lease arrangements such as these.

4. Pelican Courier Express

Pelican is a Venezuelan tour operator which will be operating foreign-originating charter flights between Venezuela and points in the Caribbean, and between Venezuela and the United States. Falcon shall, of course, be filing a "mini-Prospectus" pursuant to 14 C.F.R. §380.42 at the appropriate time. Pelican does not intend to operate any U. S.-originating charters, and if it were to, both Falcon Air and Pelican would comply with all applicable provisions of the Public Charter Title, 14 C.F.R. §380, et. seq.

5. Falcon Air's Financial Information

It is our understanding that you will review the reports Falcon Air has submitted to the Office of Airline Information. In the event that you have questions about Falcon Air's financial information, balance sheets, profit and loss statements, or any other matter, we would be happy to answer them. Additionally, since time is of the essence, Mr. Dirube would be available to travel to Washington, DC and meet with you at your convenience next week to personally answer any other questions you may have.

Should you have any questions or require anything further, please do not hesitate to contact us.

Sincerely yours,

Pierre Murphy

Elizabeth C. Collins

Attorneys for Falcon Air Express, Inc.

FAE-6 – Financial Statements March 1997 | April 1997 | May 1997