Spotlight Capital Holdings Inc. (SLCH)

[bg1641]

DD re:DOT Commuter Air Carrier Application Procedure and-more

Under Title 49 of the United States Code (“the Statute”),1 anyone who wants to engage in
scheduled passenger air transportation2 as an air carrier must first obtain two separate
authorizations from the Department of Transportation: “safety” authority in the form of an
Air Carrier Certificate from the Federal Aviation Administration (FAA),3 and “economic”
authority from the Office of the Secretary of Transportation (the Department) in the form of
either a Certificate of Public Convenience and Necessity or a Commuter Air Carrier
Authorization.

At the time an application for commuter authority is filed, the supporting information that
the applicant will rely on to convince the Department that it is “fit, willing, and able” to
operate scheduled passenger service should be submitted.

Should the applicant wish to seek confidential treatment for any portion of the fitness
information submitted, it should use the procedures set forth in section 302.12 of the
Department's Regulations, a copy of which is included in Part III. A sample of such an
application is included in Part II. Information for which confidential treatment will generally
be granted includes the specific fares to be charged, estimated revenue passenger miles,
available seat miles, and projected load factor, as well as aircraft leases, loan agreements,
and financial statements of individuals or entities (other than parent and/or sister companies)
providing funding to the applicant. Conversely, absent a clear and justifiable reason for
doing so, confidential treatment generally will not be granted for an applicant’s current or
historical financial statements, expense forecasts, or the identity of and resumes for key
personnel. Applicants should bear in mind that requesting confidential treatment of
documents may significantly slow the processing of a company’s application while the
Department reviews the confidentiality request. Therefore, applicants are advised to
carefully review the need for such treatment and submit for the public record redacted
versions of the documents at issue that reflect all information but that which the company
considers to be particularly proprietary or otherwise commercially or financially sensitive

Let's hope that AAVG doesnt file any Motion to Withhold Information from Public Disclosure, thus giving the shareholders a chance to really dig into the business model. They are a fully reporting OTCQB company so their fins are ready available to the public. As far as disclosing their safety record... To the best of my knowledge and belief, Twin Air has a good safety record. I searched for news articles related to Twin Air plane crashes and found only one "crash" back in 2005, which really was just an emergency landing in the Atlantic and no one was injured. there may have been another in 2006 but the article could have been revisiting the 2005 incident. Other than that I found nothing more recent.

Applications for commuter authority should be complete when filed, that is, all of the
information required by section 204.3 to determine a company’s fitness to operate, as
discussed below in “Evidence Requirements,” should be included. Applications should
not be filed with the Department until after the applicant has progressed to the point where it
has resolved all significant issues relating to its fitness. Thus, before filing an application, an
applicant should have (1) determined its operating proposal, including identifying the
aircraft it intends to use and the markets it intends to serve, and prepared complete revenue,
expense, and traffic data supporting its plan, (2) identified all key management personnel,
and (3) obtained the funding needed to meet the Department’s financial fitness criteria, or, at
a minimum, developed a reasonable and verifiable plan for doing so. Filing incomplete
applications will only result in delays in processing and the possible dismissal or
rejection of the application.

IMO this is why they have been PR'ing the loans and other financial deals they have been setting up. IMO AAVG is taking it's time to get this applications filed correctly to avoid delays.

Because of the substantial drain that processing incomplete or poorly prepared applications
places on the Department--particularly in diverting staff resources from processing the
applications of persons who are well prepared--if an applicant is unable to provide complete
information in its application or in response to the staff’s initial information request, the
Department may dismiss the application. Generally, such action is taken “without
prejudice” to the applicant’s refiling for commuter authority at a later date when it is able to
present a complete application.

Where the application is complete, and where there appear to be no material issues of fact
that cannot be resolved on the written record, the Department will usually act on the
application by use of “show-cause” procedures.10 In such cases, the Department’s Assistant
Secretary for Aviation and International Affairs will issue an order tentatively finding the
applicant fit and proposing to issue it a Commuter Air Carrier Authorization for the
proposed scheduled passenger service. The order will allow interested persons an opportunity--usually 14 days--to file
comments and “show cause” why the Department should or should not adopt its proposed
fitness findings and award of authority.

I don't know why anyone would object... but now that I've buttered you all up with good news... here's some bad news:

In calculating start-up time, an applicant should anticipate that the Department will require a
minimum of four months to process the application beginning from the time a complete
application is filed.

So IMO even if AAVG files everything correctly, and very soon, we are looking at Christmas time for the DOT air carrier official approval.

Here is the link to the document I quoted above:
http://ntl.bts.gov/lib/000/900/912/cacpkt.pdf

Once the application is filed we can follow the docket. The document referenced above provided a link to do so: [dms.dot.gov] - pg 8; however, I tried it and it's broken so I plan on calling over to the DOT next week to get the correct link.


Now back to the good news.

Once approved by the DOT, Twin Air can do what many other regional carriers do and "codeshare" w/ the larger airlines via lucrative "wet lease" agreements.

Code sharing is very common in the airline industry that benefits both the large and the regional carriers:
Flights from both airlines that fly the same route – this provides an apparent increase in the frequency of service on the route by one airline
Perceived service to unserved markets – this provides a method for carriers who do not operate their own aircraft on a given route to gain exposure in the market through display of their flight numbers.

A wet lease agreement means one airline, called the lessor (a regional like Twin Air), supplies a complete aircraft package to another airline, called the lessee (a large carrier like Delta or Continental). This complete package includes the aircraft, a crew, maintenance for the aircraft and insurance.

The lessee pays for fuel, airport fees, crew meals and transportation, crew visa fees and other taxes.

The lessor charges the lessee by the hour and usually requires a minimum number of hours. These hours are paid for even if they are not used.

So it's my best guess that, once operational, this internet based reservation software can be used to book directly w/ Twin Air. However, if the Twin Air plane isnt booked to full capacity, Twin Air can utilize the above mentioned codesharing and wet lease agreements to fill the rest of the seats! and depending on how many seats are filled by a wet lease, Twin Air could have it's fuel, wages, fees, and taxes paid for by another airline like Continental in part or in full based on the agreements!

some sources re: above --

http://en.wikipedia.org/wiki/Codeshare_agreement#For_airlines

http://www.ehow.com/facts_5008631_what-wet-lease-agreement.html

Here's a good example of a small airline's website (Island Air out of Hawaii) that allows you to book directly with them:

http://www.islandair.com/

IMO looks pretty good and I will presume that Twin Air will have something similar. IMO Twin Air needs a serious upgrade to it's website anyway, and that will be a another great PR to anticipate.

Now, if Island Air can't sell out their seats using their own website, they have codeshare agreements with Continental Airlines, Hawaiian Airlines, go!, and United Airlines.

http://en.wikipedia.org/wiki/Island_Air

there may be some regulation coming w/ regard to how sharecoding is utilized by the big airlines, specifically, they should disclose that when you switch planes to complete a trip to a less traveled destination (say, ATL to Savannah GA or something similar) that the public is made aware of the name of that regional carrier taking you to Savannah. So there stands a chance that this sort of regulation could hurt the small / regional carriers b/c big airlines (Continental does this stuff all the time) might not want to disclose this and might choose to just discontinue service to off-the-path locations. Conversely, a big airline might just look at a smaller regional carrier as an acquisition opportunity so they can put their logos on the planes they fly from MIA to Key West or the Bahamas. Anyone paying attn to the airline industry knows there has been an orgy of M&A in recent years. IMO It's possible Twin Air could have buyout potential, with shareholders reaping the benefits!

http://www.investorplace.com/31771/regional-airlines-face-code-share-crackdown/


BOTTOM LINE, DOT AIR CARRIER APPROVAL WILL BE HUGE FOR AAVG!