County Challenge to Surf Air (Encompass) Explained

On June 15, 2017 Encompass filed an Application with the Department of Transportation (DOT) “for authority to conduct scheduled passenger operations as a commuter air carrier.” The San Mateo County filed an Answer in Opposition to this Application on July 6, 2017.
This Answer is attached as a pdf. The material gets complicated.Summarizing Surf Air’s business plan, we quote Mr. Allen, “It’s a travesty of a mockery of a sham of a mockery of a travesty of two mockeries of a sham.”

Some of the statements from the County Answer:

“Thus Surf Air’s entire legal structure seems designed to circumvent direct regulation by DOT.” Pg 19

“If Encompass Application is granted, Encompass would facilitate the unauthorized operations of Surf Air.” Pg 18

“Surf Air’s operation is a classic indirect carrier operation and its “innovative” business model is simply a distraction.” Pg 12

…the arrangement between Encompass and Surf Air seems carefully designed to avoid DOT regulation of Surf Air.” Pg 18

“County also requests the DOT to investigate (1) Surf Air for operating as a direct or indirect air carrier without the appropriate economic authority from DOT..” pg 19

There is a more detailed discussion of Surf’s operation in the County Answer. Here are some of the points with their page location if you want to follow the subterfuge as Surf tries to game the system so they can fly what we consider an “airline” (Part 121, flying scheduled passenger service, TSA) under rules (Part 135) applicable to a charter or commuter service.

In the beginning, and “as of late 2016, Surf owned and operated its own aircraft in intrastate travel, and therefore did not require economic authority from the DOT. When Surf decided to add interstate service, which would have made it a direct carrier, it changed its model, as described above, to cease direct operations itself and to use the services of other direct carriers to provide its service.” Pg 18 – 19

The County Answer claims Surf Air knew it would need permission from the federal government for interstate flights and that Encompass has applied for the federal approval “only to facilitate Surf Air’s plans.”

“Surf leased all its aircraft to Encompass and then contracted with Encompass to provide full use of those aircraft for Surf Air’s customers. Surf contracted with Advanced Air to provide its Las Vegas flights, and Advanced Air then sought economic authority to provide interstate service. Now Encompass also seeks economic authority to provide Surf Air’s interstate service.” Pg 19

Encompass, which in mid-May took over Surf Air’s flight operations, currently can only fly within California. “Surf air separately contracts with operators – Encompass and Advanced- and dictates virtually all of the service – schedule, aircraft type, airport, and livery-other than the actual operation of the flight.” Pg 12

Surf Air is a Direct Carrier. See page 12 – 17 for a good explanation of the why Surf would be considered a direct air carrier in spite of their claims otherwise.

Surf Air is a common carrier pg 17 and an air carrier engaged in interstate air transportation pg 18

“If Encompass Application is granted, Encompass would facilitate the unauthorized operations of Surf Air.” Pg 18

“…the arrangement between Encompass and Surf Air seems carefully designed to avoid DOT regulation of Surf Air.” Pg 18

“Thus Surf Air’s entire legal structure seems designed to circumvent direct regulation by DOT.” Pg 19

“County also requests the DOT to investigate (1) Surf Air for operating as a direct or indirect air carrier without the appropriate economic authority from DOT…” pg 19

This situation is discussed further in the website FAQ (26) Who Owns Surf Air Now?