Anyone who wants to provide air transportation service as an air carrier must first obtain two separate authorizations from the Department of Transportation:
- Economic Authority from the Office of the Secretary of Transportation (the Department) in the form of a certificate for interstate or foreign passenger and/or cargo authority
- Safety Authority in the form of an Air Carrier Certificate and Operations Specifications from the Federal Aviation Administration (FAA)
Economic authority for U.S. carriers may be in the form of a certificate for interstate or foreign passengers and/or cargo and mail authority, a certificate for interstate or foreign all-cargo authority, or authorization as a commuter air carrier. For applicants requesting new economic authority, see Air Carrier Fitness Division; for those U.S. air carriers currently holding certificate authority from the Department and requesting authority to serve foreign markets, see International Economic Authority.
Air Carrier Fitness Division
The Air Carrier Fitness Division analyzes and evaluates all applications for NEW economic authority to determine if the airline applicant is "fit, willing, and able" to conduct commercial airline operations and that the applicants are U.S. citizens as defined by the transportation statute. The Division also monitors on a regular basis the operations and financial conditions of all licensed U.S. airlines to ensure that they continue to be fit to hold their operating authority and to serve the U.S. public.
This involves analysis of the applicant's managerial capabilities and experience, the financial resources available for the proposed operations, its service plan, and the ability of the management personnel to comply with U.S. laws, as well as the ownership of the applicant.
Receiving Initial Economic Authority
To receive authority from the Department, the air carrier must file an application in the public docket via www.regulations.gov . Separate applications are required to obtain interstate authority and foreign authority.
The Department uses a three-part test to determine the fitness of a company:
- First, it examines the managerial competence of the applicant's key personnel to determine whether they have sufficient business and aviation experience to operate an airline, and whether the management team, as a whole, possesses the background and experience necessary for the specific kind of operations proposed.
- Second, it reviews the applicant's operating and financial plans to see whether the applicant has a reasonable understanding of the costs of starting its operations and either has on hand, or has a specific and verifiable plan for raising, the necessary capital to commence operations. Before being granted effective air carrier authority, the applicant must submit third-party verification that it has acquired the necessary capital to conduct its operations.
- Third, the Department looks at the applicant's compliance record to see whether it and its owners and managers have a history of safety violations or consumer fraud activities that would pose a risk to the traveling public, or whether other factors indicate that the applicant or its key personnel are unlikely to comply with government laws, rules and directives.
In addition, the applicant must establish that it is owned and controlled by U.S. citizens. A U.S. Citizen, as defined in 49 U.S.C. 40102 (a)(15), is:
(A) An individual who is a citizen of the United States; (B) A partnership each of whose partners is an individual who is a citizen of the United States; or (C) A corporation or association organized under the laws of the United States or a State, the District of Columbia, or a territory or possession of the United States, of which the president and at least two-thirds of the board of directors and other managing officers are citizens of the United States, which is under the actual control of citizens of the United States, and in which at least 75 percent of the voting interest is owned or controlled by persons that are citizens of the United States.
For more information on the economic licensing process, please review the How-To Guides below.
Obtaining FAA Authority
As noted above, the economic authority issued to air carriers by the Department is separate from the safety authority (commonly referred to as Part 135 or Part 121 Operations Specifications) granted to them by the Federal Aviation Administration (FAA). For safety authority application procedures and related questions, air carriers should contact the appropriate FAA flight standard district office based upon the geographical location of the air carrier.
Application Filing Instructions and Fees
All applications (initial and otherwise) are docketed and can be filed electronically at www.regulations.gov. Electronic filing instructions can be found here. Additional assistance with electronic filing can be obtained by contacting the DOT Docket Management Office at (202) 366-9826. Applications can also be hand-delivered or filed my mail.
The DOT Docket Management Office physical address is:U.S. DOT Docket Management
1200 New Jersey Avenue, S.E.
West Building Ground Floor
Washington, D.C. 20590
Filing fee payments must be made electronically at www.pay.gov.
Continuing Fitness Requirement
Once a company has been found fit initially, it becomes subject to the requirements of 49 U.S.C. 41110(e) which provide that the company must remain fit in order to continue to hold its authority to provide air transportation services. Periodically, the Department will assess changes in ownership, management, financial condition, and operations that may affect an air carrier’s continuing fitness since its initial DOT authorization or last fitness review, and will request updated information from the air carrier in order to conduct a continuing fitness review.
In order to ensure that a company remains fit after it is given effective authority, the Department may impose conditions on the company’s operations--such as a limit on the duration of the authority (e.g., for one year), on the number, type, or size of aircraft that the applicant may operate, or on the type of service that can be provided. If, at a later date, the company wishes to expand its operations beyond those limits, it would need to notify the Department and establish its fitness to do so.
First Year Progress Report
Once an air carrier is granted the authority for which it seeks, it is 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, principle 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, and a listing of current senior management and key technical personnel. If any substantial changes in personnel have been made since the air carrier was found fit, the Department requires the air carrier to provide updated resumes.
If, after the commencement of air service, substantial changes are planned or occur, such as a change in ownership, a major change in the management team, a major expansion in operations (e.g., going from the use of “small” to “large” aircraft), or a filing for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code, the Air Carrier Fitness Division must be notified promptly so it may determine whether the company will remain fit to operate. In the case of a proposed change in ownership, restructuring, or recapitalization, air carriers are requested to provide a notification thirty (30) days in advance of the scheduled closing. After receiving the company's description of the proposed substantial change, the staff of the Air Carrier Fitness Division will inform the company what additional information it must file to support its fitness to continue operating in light of the proposed change.
If an air carrier does not institute air transportation operations within one year of being found fit by the Department to do so, its economic authority will be terminated for reason of dormancy as provided in section 204.7(a) of the Department’s Regulations.
On the other hand, if an air carrier starts its air service within one year and subsequently ceases that service, its economic authority is automatically suspended and it has one year from the date of the cessation to resume service or that authority will be terminated for dormancy (see section 204.7(b)). Any air carrier proposing to resume service within the one-year period must file with the Department’s Dockets Section, at least 45 days before the date on which service is expected to resume, a notice of such intent and updated fitness information as required by section 204.3. The air carrier may not recommence service unless and until it is authorized to do so by the Department. If the air carrier wishes to resume air service in less than 45 days, it may request a waiver from the 45-day advance notice requirements of section 204.7. Any such waiver request must be filed with Dockets or uploaded via www.regulations.gov. A $280 filing fee must be paid on www.pay.gov.
If, however, the air carrier will not be able to commence or recommence operations before the end of its one year, it may request a waiver from the revocation provisions of section 204.7. Such waivers are not granted routinely, but only where “good cause” is shown. The waiver request must be filed before the end of the one-year dormancy period with Dockets or uploaded via www.regulations.gov. A $280 filing fee must be paid online at www.pay.gov.
Transfer of Authority
Certificates are not transferable without prior Department approval. Applications for transfer of certificate authority should be filed jointly by the transferor and the transferee with the Department’s Dockets Section at least three months in advance of the proposed effective date of the transfer. Additional time would be required if objections are filed or complex or unusual issues are raised by the application. Applicable filing fees, to be paid via www.pay.gov, are $290 (interstate authority) and $255 (foreign authority). Under section 41105 of the Statute, in order to approve a transfer, the Department must find that the proposed transfer is “consistent with the public interest,” that is, that the transferee is fit to conduct the proposed operations.
The Department must also analyze the effects of the transfer on (1) the viability of each air carrier involved in the transfer, (2) competition in the domestic airline industry, and (3) the trade position of the United States in the international air transportation market. Applicants for a certificate transfer should describe the circumstances of the transfer, attach evidence supporting the fitness of the transferee as set forth in section 204.3, and provide sufficient information to enable the Department to analyze the effects of the transfer as noted above. In addition, a balance sheet for the air carrier immediately prior to and immediately following the projected closing date of the transfer, as well as copies of all agreements between the transferor and transferee, should be filed.
Required Fitness Forms
- OST Form 6410 - U.S. Air Carriers Certificate of Insurance under 14 CFR Part 205
- OST Form 6411 - U.S. Foreign Air Carriers Certificate of Insurance under 14 CFR Part 205
- OST Form 4507 - Air Taxi Operator Registration and Amendments under 14 CFR Part 298 Subpart B
- OST Form 4523 - Montreal Agreement