Order 2021-7-11 Served: July 20, 2021

F TRA T O NS N P E O M R T T A R UNITED STATES OF AMERICA T A

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P O

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D DEPARTMENT OF TRANSPORTATION U N A I T IC E R OFFICE OF THE SECRETARY D E ST AM ATES OF WASHINGTON, D.C.

Issued by the Department of Transportation on the 20th day of July, 2021

Application of

EXPRESSJET AIRLINES LLC Docket DOT-OST-2021-0044 for a waiver of the 45-day advance filing requirements of 14 CFR § 204.7 and notice of intent to resume interstate and foreign scheduled air transportation

ORDER TO SHOW CAUSE

Summary

By this Order, the U.S. Department of Transportation (the “Department”) tentatively finds that ExpressJet Airlines LLC (“ExpressJet”) is a citizen of the United States and is fit, willing, and able to conduct interstate air transportation of persons, property, and mail as a U.S. certificated air carrier, subject to conditions. Before we issue a final decision on ExpressJet’s application to resume operations, we will afford interested parties an opportunity to show cause why we should not adopt as final these tentative findings and conclusions.

Background

Pursuant to section 41102 of Title 49 of the United States Code (the “Transportation Code”), any company proposing to provide air transportation as an air carrier must be found “fit, willing, and able” to conduct the services proposed. Moreover, once an air carrier is found fit initially, it must remain fit in order to retain its authority.1 If an air carrier ceases operations under its economic authority, 14 CFR § 204.7 of the Department’s Aviation Economic Regulations provides that its authority to conduct those operations is automatically suspended as of the date those operations ceased and the air carrier may not recommence operations until its fitness to do so has been re- established by the Department.

When conducting a redetermination of an air carrier’s fitness under section 204.7,2 the Department applies the same three-part test that it uses to determine the fitness of new air carrier applicants. The three areas of inquiry that must be addressed in order to determine a company’s fitness to

1 See 49 U.S.C. § 41110(e). 2 Section 204.7 provides that, if an air carrier ceases operations, it has one year from the date of cessation to resume operations, otherwise its certificate authority will be revoked for dormancy. 2 resume operations are whether it (1) will have the managerial skills and technical ability to conduct the proposed operations, (2) will have access to resources sufficient to commence operations without posing an undue risk to consumers, and (3) will comply with the Transportation Code and regulations imposed by Federal and State agencies. We must also determine that the air carrier remains a U.S. citizen.

ExpressJet holds certificates of public convenience and necessity to engage in interstate and foreign air transportation of persons, property and mail.3 The air carrier operated under its authority until September 30, 2020, when it conducted its last flight for United Airlines, Inc. (“United”).

On April 15, 2021, ExpressJet filed a Notice in Docket DOT-OST-2021-0044 to resume interstate scheduled passenger services and requested the Department waive the 45-day advance filing requirement of the information to be provided to the Department pursuant to 14 CFR § 204.3, so as to permit ExpressJet to resume operations at an earlier date.4 ExpressJet states that, although the business plan developed by the air carrier for the initial 12-month period following its resumption of scheduled operations does not involve service to foreign markets, in order to preserve operational flexibility ExpressJet asks that the Department find it fit, willing, and able to resume operations under its foreign authorities.5

On April 29, 2021, ExpressJet filed a Motion requesting that the Department shorten the answer period to its tentative decision in this proceeding from fourteen (14) calendar days to seven (7) business days.

We have received no answers opposing the application and no special issues regarding the applicant have come to our attention. Under these circumstances, we propose to decide the issue of the applicant’s fitness on the basis of the written record. Based on our review of the record of this case and other data available to the Department, we tentatively find that ExpressJet is a U.S. citizen and that it is fit, willing, and able to conduct interstate scheduled air transportation, subject to conditions. However, we will give interested persons an opportunity to show cause why we should not adopt as final these tentative findings and conclusions.

3 ExpressJet’s interstate and foreign certificate authority was last reissued by Order 2019-5-8. ExpressJet holds the following international authorities: - Blanket open skies certificate authority (See Order 2012-1-3). - U.S.-Mexico certificate authority (See Order 2020-10-11). - Exemption authority to engage in scheduled foreign air transportation of persons, property, and mail between a point or points in the United States and point or points in the Dominican Republic (See Notice of Action Taken, dated February 25, 2019, in Docket DOT-OST-2006-24591); between the United States and Belize (See Notice of Action Taken, dated December 8, 2016, in Docket DOT-OST-2006-25018); and between the United States and Bahamas (See Notice of Action Taken, dated March 4, 2004, in Docket DOT-OST-2004-17112). - Blanket route integration authority (See Order 2012-1-3). 4 ExpressJet supplemented its applications with additional information, most recently on May 13, 2021. 5 We have decided to defer action on ExpressJet’s request to resume foreign air transportation until the air carrier submits an operating plan describing its proposed foreign scheduled passenger operations.

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FITNESS

The Company

ExpressJet, a limited liability company organized under the laws of the State of Delaware, is headquartered in Atlanta, Georgia, and has provided scheduled passenger air transportation as a certificated air carrier for over 30 years. The air carrier began operations as a subsidiary of Delta Air Lines, Inc. (“Delta”) and Continental Airlines, Inc. (“Continental Airlines”), and later became an independent regional airline provider operating scheduled air service to Delta, American Airlines, Inc. (“American”), and United. ExpressJet is currently wholly-owned by ManaAir, LLC (“ManaAir”), which is, in turn, owned by KAir Enterprises LLC (“KAir”) (50.1 percent) and United (49.9 percent).6

Managerial Competence

ExpressJet’s management and key personnel consist of the following individuals, each of whom is a U.S. citizen:

Mr. Subodh Karnik - Chairman and Chief Executive Officer (“CEO”) Mr. John R. Greenlee - Chief Financial Officer (“CFO”) and Senior Vice President of Planning and Operations Control Mr. Perry Baker – Vice President of Finance Mr. Bruce Jones – Vice President of Maintenance and Engineering Mr. Kevin Langford – Vice President of Human Resources Mr. Jonyt Meyer – Vice President of Information Technology Mr. Douglas Brady – Director of Safety of Corporate Security and Compliance Mr. Darrin K. Greubel – Director of Operations Mr. Richard Marzullo – Director of Maintenance Operations Mr. Woleteberhan Hiwot Taddesse – Chief Pilot Mr. Kevin Tomlison – Chief Inspector and Director of Quality Control and Engineering

Mr. Subodh Karnik serves as President and CEO of ExpressJet and as Chairman and Managing member of ManaAir, the parent company of ExpressJet (2018-present). Mr. Karnik has over 30 years of aviation experience, beginning his career in 1991 with Northwest Airlines in Marketing and Strategic Planning roles. He later served in various senior management positions, including President and CEO, Chief Operating and Commercial Officer, Executive Vice President, Senior Vice President, and Vice President for various domestic and foreign air carriers, including United, Jet Airways Ltd. (Mumbai, India), Global Aero Logistics, Inc., Delta, Continental Airlines, and Northwest Airlines; and for aviation consulting firms ICF-SH&E and NBS Associates (1991- 2018). Before starting his aviation career, he served as Manager, Consulting for Ernst and Young (1988-1991), and Manager, Business Transformation for Unilever and Tata Consultancy Services, India (1982-1988). He holds an MBA degree from the University of Michigan, Ross School (1991) and a Bachelor of Science degree in Mechanical Engineering from Birla Institute of Technology and Sciences, Pilani, India (1981). He currently serves as a member on the Board of Directors of KAir, ManaAir, ExpressJet, and the Regional Airline Association, and previously served as a member on the Board of Directors of Copa Airlines, Worldspan, ARINC, CommutAir

6 ExpressJet’s ownership is further discussed under the CITIZENSHIP section of this order. 4

Cares, National Air Carrier Association (Chairman – 2008), National Defense Transportation Association, Tourism Fiji, Jamaica Tourist Board and Carter Center Board of Advisors.

Mr. John R. Greenlee serves as CFO and Senior Vice President of Planning and Operations Control for ExpressJet (2019-present). Prior to that, Mr. Greenlee served in various positions of increasing responsibilities for United, such as Managing Director, United Express; Managing Director of Financial Analysis, Project Quality and United Express Regional Department Finance; Managing Director of Fleet Planning and Management; and Senior Analyst of Long Range Network Planning and Corporate Development (1997-2019). Before that, he served as Project Manager for Bell Industries (1996-1997), Technical Sales for Honeywell, Inc. (1991-1995), and General Manager for Group Dekko International, Inc. (1989-1991) and Kendaville Aviation, Inc. (part time) (1982- 1989). Mr. Greenlee holds an MBA degree with a concentration in Finance and Operations from Indiana University (1997) and a Bachelor of Arts and Science degrees in Mechanical Engineering and Economics from Stanford University (1989). He is a licensed multi-engine instrument pilot and Certified Weather Observer.

Serving as Vice President of Finance for ExpressJet is Mr. Perry Baker (2020-present). Prior to joining ExpressJet, Mr. Baker served as Executive Vice President for Lending Point (2019), Vice President of Financial Planning and Analysis for ABM Aviation (2018), and Managing Director of Finance for Delta (2011-2017). He also held various positions of increasing responsibilities with Continental Airlines, including Senior Director of Operational Efficiency, Senior Director and Controller of Finance and Controller of Flight Operations, and Director of Finance of Cargo Division (1991-2011). Before that, he was employed with Airline Tariff Publishing Company (1990-1991). Mr. Baker holds an MBA degree from University of Houston (1999) and a Bachelor of Science degree in Business Administration from University of Arizona (1989).

Mr. Bruce A. Jones serves as Vice President of Maintenance and Engineering for ExpressJet (2019-present). He was employed with United, formally Continental Airlines, between 2011 and 2019, where he served as Senior Manager of Fleet Transfers. From 1990 to 2011, Mr. Jones was employed with ExpressJet, formally Continental Express Airlines, and served in various positions of increasing responsibilities, including Senior Director of Maintenance Control, Maintenance Planning, and Production Control; Director Maintenance Control and Planning; and Manager Maintenance Control and Planning. Mr. Jones holds an Airframe and Powerplant Mechanic’s certificate and Airframe and Powerplant Airman’s certificate.

Mr. Kevin Langford serves as Vice President of Human Resources for ExpressJet (2019-present). Prior to that, he served as an Independent Human Resources Consultant for KJL Consulting (2019), Principal Human Resources Business Partner for BHP (2015-2019), Human Resources Leader for Equinor (2013-2015), Human Resources Advisor for Hess Corporation (2008-2013), Human Resources Generalist for Pepsi Beverages Company (2006-2008), and Staff Supervisor of Labor Relations for United States Steel Corporation (2004-2006). Previously, Mr. Langford served as Adjunct Professor at Indiana University Northwest (2007-2008), Human Resources Assistant for University of Illinois at Urbana (2003-2004), Human Resources Intern for SAP Ariba, Inc. (2003), Benefits Counselor for SURS of Illinois (2002-2003), and Human Resources Assistant for Plastipak Packaging, Inc. (2001-2002). Mr. Langford holds a Master of Human Resources and Industrial Relations degree (2004) and Bachelor of Science in Liberal Arts and Sciences degree from University of Illinois at Urbana (2001).

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Mr. Jonyt Meyer serves as Vice President of Information Technology for ExpressJet (2019- present) and is the Owner and Founder of ShopStorm Tools (2012-present). He was previously employed with ExpressJet from 2002 to 2011 as Staff Vice President of Information Technology and Senior Director of Information Technology. Mr. Meyer served as an Independent Information Technology Consultant from 2016 to 2019. He was employed with Continental Express Airlines from 1990 to 2001 where he served in various positions, including Director of Information Technology, Manager of Information Technology, Information Technology Specialist, and Crew Coordinator.

Mr. Douglas Brady, an Airline Transport Pilot with over 11,000 hours of flight time, currently serves as Director of Corporate Safety, Security and Compliance for ExpressJet (2020-present). Mr. Brady has been employed with company since 1997 and has served in various positions of increasing responsibilities, including General Manager of Aircraft Operations, Manager of Aircraft Operations Technology, Captain, Training Pilot and Check Airman, and First Officer. Mr. Brady holds a Bachelor of Science degree in Aeronautical Science from Embry-Riddle Aeronautical University (1997).

Mr. Darrin K. Greubel, an Airline Transport Pilot with over 6,400 hours of flight time, currently serves as Director of Operations for ExpressJet (2021-present). Mr. Greubel has been with the company since 1994 and has held various positions of increasing responsibilities, including Chief Pilot, General Manager and Manager of Flight Operations, Base Chief Pilot of Atlanta, Manager of Flight Operations and Standards, and First Officer and Captain. He holds a Bachelor of Science degree in Professional Pilot Technology from Indiana State University (1991).

Mr. Richard Marzullo serves as Director of Maintenance for ExpressJet (2019-present). Prior to that, Mr. Marzullo served the company as General Manager of Maintenance (2012-2019) and Senior Manager of Maintenance Control (2000-2012). He also served at Continental Express Airlines in various positions of increasing responsibilities, including Supervisor of Maintenance Control (1999), Maintenance Controller (1992-1999), Maintenance Inspector (1990-1992), and Line Maintenance Mechanic (1988-1990). Mr. Marzullo served in the United States Navy from 1979 to 1983.

Mr. Woleteberhan Hiwot Taddesse, an Airline Transport Pilot with over 14,000 hours of flight time, currently serves as Chief Pilot for ExpressJet (2021-present). Mr. Taddesse joined the company in 2006 holding various positions, including Manager of Line Operations and Flight Operations, Assistant Chief Pilot, Flight Operations Supervisor, and Captain. He did an internship in Flight Standards with ExpressJet (2006) and in Pilot Recruiting with JetBlue Airways (2004). Prior to that, Mr. Taddesse served as a Flight Attendant for United (1997-2005). He served in the United States Navy from 1993 to 1997. He holds a Bachelor of Science degree in Aeronautical Science from Embry-Riddle Aeronautical University (2006).

Mr. Kevin Neal Tomlinson currently serves as Chief Inspector and Director of Quality Control and Engineering for ExpressJet (2020-present). Mr. Tomlinson has been with the company since 1985 (formally Atlantic Southeast Airlines), and has served in various positions of increasing responsibilities, including General Manager of Regulatory Compliance, Manager of Regulatory Compliance, Chief Inspector, and Director of Quality. He served as Powerplant Mechanic in the United States Navy from 1981-1985 and holds an Airframe and Powerplant mechanic’s certificate.

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In view of the experience and background of the applicant’s key personnel, we tentatively conclude that ExpressJet has demonstrated that it has both senior management and key technical personnel who have the managerial skills and technical ability to support its resumption of service. Moreover, the FAA has advised us that ExpressJet’s key technical personnel are acceptable in their respective positions to that agency.7

Operating Proposal and Financial Plan

If authorized to resume operations, ExpressJet intends to resume interstate air transportation as an independent air carrier operating under the ExpressJet brand at small and midsize communities, initially on routes with an average stage length of approximately 540 miles. The air carrier will resume operations using one Embraer EMB-145 (“ERJ-145”) aircraft in a single class configuration, with plans to add nine (9) additional ERJ-145 aircraft over the next 12 months following the air carrier’s resumption of scheduled operations.8

In establishing financial fitness, the Department typically asks an applicant to demonstrate that it has access to financial resources sufficient to cover its pre-operating expenses and any negative working capital balance, plus a working capital reserve equal to the operating costs that are reasonably projected to be incurred during three months of “normal” operations. Because projected expenses during the first several months of air service frequently do not include all costs that will be incurred during a “normal” period of operations, it is our practice to base our three- month test on one-quarter of the first year’s operating costs. Further, in calculating available resources, projected revenues may not be used.

ExpressJet provided historic and current financial statements. For calendar year 2019, the company reported a net loss of $46.66 million on operating revenues of $369.41 million. For calendar year 2020, the company earned net income of $46.78 million on operating revenues of $186.95 million. For the first two months ending February 28, 2021, the company reported a net loss of $2.32 million with no operating revenues to report. The company’s balance sheet as of April 30, 2021, shows that it has a positive working capital balance of approximately $29.06 million.

ExpressJet provided a list of pre-operating expenses and projected first-year operating expenses associated with its proposed resumption of certificate operations. ExpressJet anticipates that it will incur approximately $760,000 in pre-operating expenses, which consists of initial training costs, core ground services equipment, IT system installation, and pre-payment of vendor services at airports, and about $360,000 in aircraft deposits. ExpressJet expects to incur approximately $61.3 million in operating expenses during the first year of operations.

We have reviewed the air carrier’s forecasts and find them to be reasonable. Thus, to meet the Department’s financial fitness test, the applicant will need access to approximately $16.09 million in working capital reserves or other available financial resources.9

7 Before authorizing an air carrier to conduct air transportation operations, the FAA also evaluates certain of the air carrier's key personnel with respect to the minimum qualifications for those positions as prescribed in the Federal Aviation Regulations. The FAA’s evaluation of these key personnel provides an added practical and in-person test of their skills and technical ability. 8 All aircraft will be leased. 9 The $16.09 million noted above consists of approximately $760,000 in pre-operating expenses plus approximately $15.33 million, which is one-quarter of the air carrier’s estimated first-year expenses. 7

In support of its ability to fund its resumption of service, ExpressJet provided third-party verification from Wells Fargo Bank, N.A. stating that as of May 10, 2021, the company has account balances in excess of $31.5 million. Also, as previously noted, ExpressJet’s most recent financial statements show the air carrier having sufficient working capital to meet our financial fitness criteria.

In light of the above, we tentatively conclude that ExpressJet has access to sufficient financial resources to enable it to resume operations without posing an undue risk to consumers or their funds.10

Compliance Disposition

ExpressJet is currently involved in 12 pending cases, all of which it considers part of its normal course of business.11 The air carrier states that, other than the referenced cases, there are no actions or outstanding judgments against it, persons holding a substantial interest in it, or its key personnel, and that none of these parties have been the subject of any charges of unfair, deceptive, or anti- competitive business practices, or of fraud, felony, or antitrust violations, or other legal action during the past ten years.

ExpressJet also states that there are no pending investigations, enforcement actions, or formal complaints involving the applicant, persons holding a substantial interest in it, or its key personnel with respect to compliance with the Transportation Code or the Department’s regulations. Furthermore, ExpressJet asserts that none of its key personnel have been involved in an accident or incident in the past year or at any time in the past that remains under investigation by the FAA, the National Transportation Safety Board, or the company itself.

A review of the Department’s records and other information available to us has uncovered no information that would reflect negatively on the applicant or any of its key personnel. Furthermore, the FAA has advised the Department that ExpressJet is making satisfactory progress towards the resumption of operations and that it knows of no reason why the Department should act unfavorably on the company’s application to resume operations.

10 As is our practice, prior to making any authority issued to ExpressJet effective, we will require the company to demonstrate that it continues to have access to the financial resources needed to meet our financial fitness criteria. 11 Employment Related - See Grace Erica Bothwell, on behalf of herself and others similarly situated v. ExpressJet Airlines LLC: This case is before the U.S. District Court or the Northern District of Georgia, Atlanta Division, Case No 1:20-cv-02079- WMR-AJB, filed May 14, 2020. See Michael Lohr v. ExpressJet Airlines, Inc.: This case is before the U.S. District Court, Southern District of Texas, Houston Division, Case No: 20-3399, filed October 1, 2020. See Davis v. ExpressJet Airlines LLC: This case is before the Magistrate Court of Gwinnett County, Case No. 20-M-28193, filed June 23, 2020. Breach of Contract - See City of Shreveport v. ExpressJet Airlines, Inc.: This case is before the First Judicial District Court, Caddo Parish, Louisiana, Case No. 612,460-C. See SkyWest Leasing, Inc. v. KAir Enterprises LLC: This case is before the U.S. District Court, Northern District of Georgia, Case No. 1:20-cv-5156, filed December 18, 2020. See SkyWest Inc. and SkyWest Airlines Inc., v. ManaAir LLC: This case is before the Court of Chancery of the State of Delaware, Case No. 2021-0038-PAF. Personal Injury - See Nathanial Foster, et al v. United Continental Holding, Inc., et al: This case is before the U.S. District Court, Northern District of California, Case No. 3:19-CV-02530-JD, filed May 10, 2019. See Raitsin v. United, Et. Al.: This case is before the U.S. District Court, District of New Jersey, Case No. 2:19-CV-20794-KSH-CLW, filed November 26, 2019. See Lucena v. John Doe Pilot, et al: This case is before the Superior Court of New Jersey Law Division: Essex County, Case No. ESC- L-6831-20, filed October 13, 2020. See Karen T. Gales v. United Airlines, Inc. et al.: This case is before the Circuit Court of Loudoun County, Virginia, Case No. 21-1801. See Serena Hall v. Aries Shuttle, et al.: This case is before the Circuit Court of Cook County, Illinois, Case No. 2020 L 9148. Wrongful Death - See Kimberly Mills, etc. v. United Airlines, et al: This case is before the 157th Judicial District Court of Harris County, Texas, Case No. 202069428. 8

While the pendency of above referenced cases does not impede the issuance of a tentative finding of fitness in this case, we remind ExpressJet of its obligation to provide current, updated fitness information to enable the Department to evaluate ExpressJet’s ability to operate as a U.S. air carrier. The applicant’s failure to do so may reflect negatively on its compliance disposition.

In light of these circumstances, we tentatively conclude that ExpressJet has the proper regard for the laws and regulations governing its services to ensure that its aircraft and personnel conform to applicable safety standards, and that acceptable consumer relations practices will be followed.

CITIZENSHIP

Section 41102 of the Transportation Code requires that authority to engage in air transportation be held only by citizens of the United States as defined in 49 U.S.C. § 40102(a)(15). That section requires that the president and two-thirds of the Board of Directors and other managing officers be U.S. citizens, that at least 75 percent of the outstanding voting interest be owned by U.S. citizens, and that the air carrier must be under the actual control of U.S. citizens.

ExpressJet, a limited liability company organized under the laws of the State of Delaware and structured as a corporation, is wholly owned by ManaAir. ManaAir is a limited liability company organized under the laws of the State of Delaware and is owned by KAir (50.1 percent), a Georgia limited liability company, and United (49.9 percent), a U.S. certificated air carrier.12 Mr. Subodh Karnik, a U.S. citizen, wholly owns KAir.

Moreover, all of ExpressJet’s key personnel are U.S. citizens and the company has provided an affidavit attesting that it is a citizen of the United States within the meaning of the Transportation Code. Furthermore, our review of the applicant’s citizenship has uncovered no reason to suggest that control of ExpressJet rests with non-U.S. citizens.

In light of the foregoing, we tentatively find that ExpressJet is owned and actually controlled by U.S. citizens, consistent with 49 U.S.C. § 40102(a)(15), and is fit, willing, and able to provide its proposed operations, subject to conditions.

REQUEST FOR CONFIDENTIAL TREATMENT

On April 16, 2021, ExpressJet filed motions for confidential treatment under 14 CFR §302.12 (“Rule 12”) of the Department’s regulations seeking to withhold from public disclosure certain information contained in (1) its traffic and financial forecasts, and (2) resumes for key personnel as set forth in exhibits accompanying the application and notice. The elements from its traffic and financial forecast for which ExpressJet seeks confidential treatment include (a) specific routes, (b) available seat miles and revenue passenger miles, (c) load factors, and (d) market-specific fares and passenger revenue projections. The personal information for which confidential treatment is sought is comprised of the home addresses, personal phone numbers and email addresses, and FAA license numbers for the air carrier’s “key personnel.” In support of its request for confidential treatment of the above information, ExpressJet states that this information is sensitive, commercial,

12 ExpressJet states that United, by virtue of its 49.9 percent minority shareholding in ManaAir, is aware that ExpressJet is seeking the Department approval to resume scheduled operations as an independent carrier and has advised that it has no objections to ExpressJet seeking such approval. 9 and financial and/or confidential in nature and falls within the parameters of Exemption 4 to the Freedom of Information Act.

Rule 12 instructs us to evaluate requests for confidential treatment by the standards of disclosure found in the Freedom of Information Act (5 U.S.C. section 552). Information may be withheld from disclosure under 5 U.S.C. § 552(b)(4) if it is (1) commercial or financial, (2) obtained from a person outside of government, and (3) privileged or confidential. Gulf and Western Industries, Inc. v. United States, 615 F.2d 527, 529 (D.C. Cir. 1979).

There is no question that the information for which ExpressJet seeks confidential treatment is financial or commercial in nature and that it was obtained from a person outside the government. The remaining question is whether the information is privileged or confidential--whether “disclosure of the information is likely to have either of the following effects: (1) impair the Government’s ability to obtain necessary information; or (2) cause substantial harm to the competitive position from whom the information was obtained.” National Parks and Conservation Association v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974). Further, to be privileged or confidential, the information must not be of the type that is usually released to the public. Gulf and Western Industries, 615 F.2d at 530.

We have reviewed the material submitted and determined that in the past the Department has granted confidential treatment to material of this type, having found that public disclosure of this type of information would be an unwarranted invasion of privacy and not particularly probative of an applicant’s fitness to provide air transportation.13 Thus, we will grant confidential treatment to the information for which such treatment is sought.

OBJECTIONS

When the Department issues an order providing interested parties with the opportunity to show cause why the tentative findings and conclusions set forth in the order should not be made final, such parties are normally given 14 calendar days following the service date of the order to file objections, with answers to objections due within 7 calendar days thereafter.

On April 29, 2021, ExpressJet filed a Motion requesting that the Department shorten the answer period for the filing of an objection to its tentative findings and conclusions from 14 calendar days to 7 calendar days. In support of its request, ExpressJet states that, prior to ceasing operations on September 30, 2020, the air carrier had provided air transportation for over 30 years, its ownership remains unchanged from when the Department last reviewed the air carrier’s acquisition by ManaAir in 2019, and that its senior management is largely unchanged from when the air carrier suspended its United Express operations. In addition, ExpressJet holds all necessary FAA authorization to resume scheduled air carrier operations.

Generally, it is not the Department’s practice to shorten the answer period for the filing of objections to an order to show cause.14 However, we find that it is in the public interest to do so in this proceeding since (1) ExpressJet currently holds the underlying certificate authorities needed to resume operations, albeit in a suspended capacity, (2) no objections were filed to ExpressJet’s

13 See Guidance on How to Become a Certificated Air Carrier, available at: https://www.transportation.gov/sites/dot.gov/files/docs/Certificated_Packet_2012_final.pdf. 14 See Order 2021-3-5. 10 application to resume operation and motion requesting to shorten the answer period for the filing of objections to a show cause order, and (3) the FAA has confirmed that ExpressJet is making satisfactory progress and has nearly completed the safety recertification activities necessary to resume operations.

To ensure interested parties have sufficient time to prepare objections, we will provide interested parties 7 business days following the service date of this Order to show cause why the tentative findings and conclusions set forth here should not be made final; answers to objections will continue to be due 7 calendar days thereafter. We expect such persons to direct their objections, if any, to the application and points at issue and to support such objections with detailed economic analyses. If an oral evidentiary hearing or discovery procedures are requested, the objector should state in detail why such a hearing or discovery is considered necessary, and what material issues of decisional fact the objector would expect to establish through a hearing or discovery that cannot be established in written pleadings. The objector should consider whether discovery procedures alone would be sufficient to resolve material issues of decisional fact. If so, the type of procedure should be specified (see Part 302, Rules 19 and 20); if not, the reasons why not should be explained. We will not entertain general, vague, or unsupported objections. If no substantive objections are filed, we will issue an order that will make final our tentative findings and conclusions with respect to ExpressJet’s fitness.

CERTIFICATE CONDITIONS & LIMITATIONS

If ExpressJet is found fit to resume operations, we remind the air carrier that its authority is only effective to the extent that it complies with the terms and conditions attached to its certificate. Among other things, this includes the air carrier’s receipt of appropriate safety approvals from the FAA, as well as the air carrier obtaining a fully executed OST Form 6410 evidencing liability insurance coverage that meets the requirements of section 14 CFR 205.5(b).

Our tentative findings are based on the operating plan described in ExpressJet’s application, i.e., the use of no more than ten (10) aircraft. These findings might no longer apply if the company were to substantially change the scope of its operations through the introduction of additional aircraft. Therefore, once the applicant’s certificates become effective, should ExpressJet propose to acquire additional aircraft beyond the 10 aircraft it initially proposed, it must notify the Department at least 45 days in advance and demonstrate its fitness for such operations prior to implementing service with those additional large aircraft.

Additionally, we remind ExpressJet of the requirements of 49 U.S.C. § 41110(e). Specifically, that section requires that, once an air carrier is found fit initially, it must remain fit in order to hold its authority. To be assured that air carriers continue to be fit after effective authority has been issued to them, we require that they supply information describing any subsequent substantial changes they may undergo in areas affecting fitness. Therefore, if ExpressJet is issued authority to conduct scheduled passenger air transportation and should it subsequently propose substantial changes in its ownership, management, or operations, it must first comply with the requirements 11 of section 204.5 of our rules.15 The compliance of the company with this requirement is essential if we are to carry out our responsibilities under section 41110(e) of the Transportation Code.16

Finally, if ExpressJet is granted effective authority, it would be required to submit a detailed progress report, within 45 days following the end of the first year of actual flight operations, to the Air Carrier Fitness Division. The report should include a description of the air carrier’s current operations (number and type of aircraft, principal markets served, total number of full-time employees), a summary of how its operations have changed during the year, a discussion of any changes it anticipates from its current operations during its second year, current financial statements,17 and a listing of current senior management and key technical personnel. The air carrier should also be prepared to meet with staff members of the Fitness Division to discuss its current and future operations.

ACCORDINGLY,

1. We direct interested persons to show cause why we should not issue an order making final the tentative findings and conclusions stated above.

2. We grant the Motion to shorten the answer period to the filing of objections to this Order from 14 calendar days to 7 business days filed by ExpressJet Airlines LLC on April 29, 2021.

3. We defer action on ExpressJet Airlines LLC’s request to resume foreign air transportation until the air carrier submits an operating plan describing its proposed foreign scheduled passenger operations.

4. We direct any interested persons having objections to the issuance of an order making final any of the proposed findings, conclusions, or award of authority set forth here to file them with the U.S. Department of Transportation Dockets, 1200 New Jersey Ave. SE, West Building Ground Floor, Room W12-140, Washington, D.C. 20590, in Docket DOT-OST-2021-0044 and serve them upon all persons listed in Attachment A no later than 7 business days after the service date of this Order. Answers to objections shall be filed no later than 7 calendar days thereafter.

5. If timely and properly supported objections are filed, we will accord full consideration to the matters or issues raised by the objections before we take further action.18

15 The air carrier may contact our Air Carrier Fitness Division to report proposed substantial changes in its operations, ownership, or management, and to determine what additional information, if any, will be required under section 204.5. In addition, by Notice dated July 21, 1998, the Department requested air carriers to provide a 30-day advance notification of any proposed change in ownership, restructuring, or recapitalization. If the air carrier fails to file this updated information or if the information fails to demonstrate that the air carrier will continue to be fit upon implementation of the substantial change, the Department may take such action as is appropriate, including enforcement action or steps to modify, suspend, or revoke the air carrier's economic authority. 16 We also remind ExpressJet about the requirements of section 204.7 of our rules. This section provides, among other things, that (1) the economic authority granted to a company shall be revoked if the company does not commence actual flying operations under that authority within one year of the date of the Department's determination of its fitness; (2) if the company commences operations for which it was found fit and subsequently ceases such operations, it may not resume operations unless its fitness has been re-determined; and (3) if the company does not resume operations within one year of its cessation, its authority shall be revoked for dormancy. 17 These financial statements should include a balance sheet as of the end of the company’s first full year of actual flight operations and a 12-month income statement ending that same date. 18 Since we have provided for the filing of objections to this Order, we will not entertain petitions for reconsideration. 12

6. In the event that no objections are filed, we will consider all further procedural steps to be waived and we will enter an order making final our tentative findings and conclusions.

7. We grant the Motion for confidential treatment filed by ExpressJet Airlines LLC on April 16, 2021.

8. We will serve a copy of this Order on the persons listed in Attachment A.

By:

Carol A. (Annie) Petsonk Deputy Assistant Secretary for Aviation and International Affairs

An electronic version of this document is available at: http://www.regulations.gov

Attachment SPECIMEN

Terms, Conditions, and Limitations

EXPRESSJET AIRLINES LLC

is authorized to engage in interstate air transportation of persons, property, and mail between any point in any State, territory, or possession of the United States or the District of Columbia, and any other point in any of those entities.

This authority is subject to the following provisions:

(1) The authority to operate under this certificate will not become effective until six (business) days after the Department has received the following documents; provided, however, that the Department may stay the effectiveness of this authority at any time prior to that date:

(a) A copy of the holder's Air Carrier Certificate and Operations Specifications authorizing such operations from the Federal Aviation Administration (FAA).

(b) A certificate of insurance on OST Form 6410 evidencing liability insurance coverage meeting the requirements of 14 CFR § 205.5(b) for all of its aircraft.

(c) A statement of any changes the holder has undergone in its ownership, key personnel, operating plans, financial posture, or compliance history, since the date of the Show Cause Order in this case.

(d) A revised list of pre-operating expenses already paid and those remaining to be paid, as well as independent verification that the holder has available to it funds sufficient to cover any remaining pre-operating expenses and to provide a working capital reserve equal to the operating costs that would be incurred in three months of operations.

(2) Pending receipt of effective authority, the holder may not accept payment of any kind (i.e., cash, check, or credit card) or issue tickets for the operations proposed under this certificate, and any advertisement or listing of flights by the holder must prominently state: "This service is subject to receipt of government operating authority."

(3) The holder shall at all times conduct its operations in accordance with the regulations prescribed by the Department of Transportation for the services authorized by this certificate, and with such other reasonable terms, conditions, and limitations as the Department of Transportation may prescribe in the public interest.

(4) The holder's authority under this certificate is effective only to the extent that such operations are also authorized by the Federal Aviation Administration (FAA), and comply with

all U.S. Government requirements concerning security, including, but not limited to 49 CFR Part 1544.

(5) The holder shall at all times remain a "Citizen of the United States" as required by 49 U.S.C. § 40102(a)(15).

(6) The holder shall maintain in effect liability insurance coverage as required under 14 CFR Part 205. Failure to maintain such insurance coverage will render a certificate ineffective, and this or other failure to comply with the provisions of Subtitle VII of Title 49 of the United States Code or the Department's regulations shall be sufficient grounds to revoke this certificate.

(7) The holder is authorized to conduct charter flights in interstate and/or foreign air transportation in accordance with the provisions of 14 CFR Part 212.

(8) The holder may reduce or terminate service at any point or between any two points, subject to compliance with the provisions of 49 U.S.C. § 41734 and all orders and regulations issued by the Department of Transportation under that section.

(9) Should the holder propose any substantial change in its ownership, management, or operations (as defined in 14 CFR § 204.2(l)), it must first comply with the requirements of 14 CFR § 204.5.

(10) In the event that the holder does not commence actual flying operations under this certificate within one year of the date of the Department's determination of its fitness, its authority shall be revoked for dormancy, unless the holder is conducting operations under another type of certificate authority. Further, in the event that the holder commences operations for which it was found "fit, willing, and able" and subsequently ceases all such operations, its authority under all certificates held shall be suspended under the terms of 14 CFR § 204.7 and the holder may neither recommence nor advertise such operations unless its fitness to do so has been redetermined by the Department. Moreover, if the holder does not resume operations within one year of its cessation, its authority shall be revoked for dormancy.

 To assure compliance with all applicable U.S. Government requirements concerning security, the holder shall, before commencing any new service (including charter flights) to or from a foreign airport, contact its Principal Security Inspector (PSI) to advise the PSI of its plans and to find out whether the Transportation Security Administration has determined that security is adequate to allow suh airport(s) to be served.

Attachment A SERVICE LIST FOR EXPRESSJET AIRLINES LLC

ELIZABETH M GALBAVY PETER LYNCH DEPUTY GENERAL COUNSEL ASST CHIEF COUNSEL FOR EXPRESSJET AIRLINES LLC ENFORCEMENT, AGC-300 1745 PHOENIX BLVD SUITE 250 FEDERAL AVIATION COLLEGE PARK GA 30349 ADMINISTRATION 800 INDEPENDENCE AVE SW WASHINGTON DC 20591

JONATHON H. FOGLIA OFFICE OF AIRLINE INFORMATION COUNSEL FOR EXPRESSJET AIRLINES LLC DOT/RITA/BTS E-34 COZEN O’CONNOR 1200 NEW JERSEY AVE SE 1200 19TH STREET NW WASHINGTON DC 20590 WASHINGTON DC 20036

CINDY DOMINIK BILLY SMITH ASST CHIEF COUNSEL PRINCIPAL OPERATIONS FOR ENFORCEMENT INSPECTOR FAA AGC-300 FEDERAL AVIATION ADMINISTRATION 800 INDEPENDENCE AVE SW WASHINGTON DC 20591

KIM EDWARDS DAVID LUSK TECHNICAL PROGRAMS MANAGER BRANCH CERTIFICATION & EVALUATION PROGRAM AFS 260 OFFICE FEDERAL AVIATION FAA AFS-900 ADMINISTRATION 45005 AVIATION DRIVE 800 INDEPENDENCE AVE SUITE 131 WASHINGTON DC 20591 DULLES VA 20166