Before the Us Department Of

BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. ) CONTINUATION OF CERTAIN AIR ) SERVICE ) Docket DOT-OST-2020-0037 ) Under Public Law 116-336 §§ 4005 and 4114 (b) ) ) REQUEST FOR EXEMPTION FROM SERVICE OBLIGATION Communications with respect to this document should be sent to: Matthew Chaifetz Chief Executive Officer CORPORATE FLIGHT MANAGEMENT INC. 808 Blue Angel Way Smyrna, TN 37167 (516) 946-0482 [email protected] April 18, 2020 3 BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. ) CONTINUATION OF CERTAIN AIR ) SERVICE ) Docket DOT-OST-2020-0037 ) Under Public Law 116-336 §§ 4005 and 4114 (b) ) ) REQUEST FOR EXEMPTION FROM SERVICE OBLIGATION Corporate Flight Management, Inc. d/b/a Contour Airlines (“Contour” or the “Company”) is a direct air carrier that holds authority from the Federal Aviation Administration (“FAA”) to conduct passenger flights in common carriage under 14 CFR Part 135 and has been granted Commuter Economic Authority by the DOT under 14 CFR Part 298. Contour provides passenger service in the form of 14 CFR Part 380 public charter flights on a subsidized basis to several small communities participating in the Alternate Essential Air Service Pilot Program (“AEAS”) and has also provided public charter passenger service to other communities on an at- risk basis. The Company has applied to the Treasury Department for passenger air carrier economic assistance under Title IV, Subtitles A and B of Public Law 116-136, commonly referred to as the CARES Act (the “Act”). While Contour has not yet received any funds pursuant to the Act, it reasonably anticipates receiving an initial payment from the Treasury in the near future. Upon its receipt of such funds, Contour would meet the definition of a Covered Carrier under DOT’s Order 2020-4-2 Continuation of Certain Air Service Under Public Law 116-136 §§ 4005 and 4114(b) (the “Order”). Appendices B and C to the Order lists the Covered Cities and associated frequencies for each Covered Carrier. As permitted by the Order, Contour elects to use the Covered Cities listed for its “summer” service pattern and their associated flight frequencies as the basis for the evaluation of its Service Obligation under the Act and the Order. Of the seventeen (17) Covered Cities listed in the Order for Contour’s summer service pattern, the following thirteen (13) are AEAS communities and their associated hub airports: Beckley, WV Charlotte, NC Crescent City, CA Fort Leonard Wood, MO Macon, GA Nasville, TN Page, AZ Parkersburg, WV 2 Phoenix, AZ San Francisco, CA Metro (service to KOAK in Oakland, CA) St Louis, MO Tupelo, MS Washington, DC Metro (service to KBWI in Baltimore, MD) Contour provides 14 CFR Part 380 service to these cities at the frequencies required by its air service contracts and the corresponding grant agreements, and has done so without interruption since the onset of the COVID-19 crisis. The Act and the Order anticipate that these AEAS communities (and by definition, their hub airports) will continue to receive the air service for which they have contracted with the Company. Contour affirms that it will continue to provide public charter flights to each of these AEAS cities and hubs at the contractually agreed frequencies and gauge of service. The Company respectfully requests an exemption from providing service to the remaining four (4) Contour Covered Cities in its summer service pattern: Las Vegas, NV Sacramento, CA Santa Barbara, CA Tampa, FL The rationale for Contour’s exemption request is as follows: Contour Does Not Provide Scheduled Air Transportation Sections 4005 and 4114(b) of the CARES Act authorize the Secretary to require, “to the extent reasonable and practicable,” an air carrier receiving financial assistance under the [a]ct to maintain scheduled air transportation service as the Secretary deems necessary to ensure services to any point served by that air carrier before March 1, 2020”. This requirement is defined in the Order as the “Service Obligation”. The language of the Act governs the nature of the service, requiring that a Covered Carrier’s flights to its Covered Cities be conducted as scheduled air transportation. 14 CFR 110.2 (formerly 14 CFR 119.2) defines a Scheduled operation as “…any common carriage passenger-carrying operation for compensation or hire conducted by an air carrier or commercial operator for which the certificate holder or its representative offers in advance the departure location, departure time, and arrival location. It does not include any passenger- carrying operation that is conducted as a public charter operation under part 380 of this chapter.” [Emphasis added]. Based on this definition, DOT has long held that public charters are not scheduled air transportation and instead have classified such flights as “on-demand” or “charter” operations (see 14 CFR 110.2 and page 3 of DOT Order 2010-9-26). The fact that a timetable for a given series of public charter flights is published in OAG does not change the nature of the air service provided to the passenger. As noted above, all of the Company’s flights to and from its Covered Cities listed in the Order are public charters and are therefore conducted as on-demand air transportation consistent with DOT policy and the definitions in 14 CFR 110.2. 3 The Contour Airlines fleet consists entirely of regional jet aircraft with 30 passenger seats. As a Part 135 carrier, the Company is not eligible to operate these aircraft in scheduled air transportation service. It would be wholly inconsistent for the Department to impose a service obligation requiring scheduled air transportation on Contour when the company is precluded, based on operating 30-seat aircraft under its Part 135 FAA authority, from participating in the traditional Essential Air Service program because of the requirement that such service be provided as scheduled air transportation. Based on the forgoing, it is proper to conclude that the Service Obligation, by definition, does not apply to the public charter service provided by Contour to the Covered Cities and that it is appropriate to exempt the Company from providing service at Las Vegas, Sacramento, Santa Barbara, and Tampa. Tampa, FL Without limiting Contour’s position (as set forth in detail above) that the Service Obligation does not apply to its public charter flight operations, the Company offers the following additional rationale for its request to be exempted from providing service to Tampa, FL: Contour had provided service to/from Tampa on a year round basis since December 18, 2018. However, the company announced in November 2019 that it would be permanently ceasing service in the market and operated its last flight from Tampa on January 4, 2020, two months before the COVID-19 crisis developed in the United States. The Company’s notice to DOT’s Special Authorities Division canceling the associated public charter flights is included as the Attachment hereto. Presently, Contour has no personnel, vendors, or equipment in Tampa, nor does it have operating or terminal lease agreements in place with KTPA. It typically takes Contour 90-120 days to complete a new service launch under normal conditions. In addition to obtaining an approved prospectus for the service and making flights available for sale, contracts with the airport need to be negotiated; personnel and vendors need to be recruited, drug tested, background checked, and trained; and the service needs to be made available for sale and marketed. The Company does not have any flights scheduled or passengers booked on service to Tampa, nor does it even have an approved public charter prospectus for service to Tampa. Establishing service to Tampa would require the same effort as launching an entirely new air service program. Based on the forgoing, it would not be reasonable or practicable to require Contour to restart service at KTPA to meet the Service Obligation. Therefore, the Company should be exempted from providing service to Tampa, FL. Las Vegas, NV; Sacramento, CA; and Santa Barbara, CA Without limiting Contour’s position (as set forth in detail above) that the Service Obligation does not apply to its public charter flight operations, the Company offers the following additional rationale for its request to be exempted from providing service to Las Vegas, NV, Sacramento, CA, and Santa Barbara, CA: 4 As the COVID-19 crisis began to unfold, the Company acted swiftly to cut costs by reducing flight operations. On March 19, 2020, over a week before a draft of the Act was made public, and nearly two weeks before DOT’s Order to Show Cause 2020-3-10 was published, Contour gave written notice to the airports in Las Vegas, Sacramento, and Santa Barbara that it would be ending service to those cities in ten days (the minimum period for flight cancellations permitted for 14 CFR Part 380 public charters) and terminating the various agreements with those airports. All of the Company’s operations at these three airports ceased as of March 28, 2019. All personnel at each airport were separated and all vendor relationships were terminated. There are presently no flights available for sale on Contour in any of these markets and no passengers booked on a Contour flight to or from Las Vegas, Sacramento, or Santa Barbara for any date in the future. Any passengers that had been holding reservations for travel beyond March 28, 2020 had their reservations refunded on March 26, 2020, before the CARES Act was even signed into law. As with Tampa, FL, re-establishing service to Las Vegas, Sacramento, and Santa Barbara would require the same effort as launching multiple entirely new air service programs. All of the same tasks as listed in the previous section for re-establishing service at Tampa would need to be completed for each of these three airports, and each airport would have its own timeline and would require separate new investment from the Company.

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