The US Department of Transportation (DOT) has dismissed, for the fifth time, Avatar Airlines' application for Part 121 scheduled air carrier authority.

The DOT said it had found deficiencies in each area of the carrier's fitness but "most notably the lack of evidence that Avatar has sufficient capital to support its proposed operations" which the DOT cited as being "critical to an applicant's fitness finding." The start-up carrier's application did not include evidence of any existing funding available or that it had raised capital from a USD300 million dollar private equity placement, which should have concluded in January. As a result, the DOT continued: "Absent of explicit evidence of adequate financing, there is no valid basis for the Department to continue to proceed with Avatar's application."

Just days before the DOT's dismissal decision on April 28, Michael Zapin, Executive Vice President and Chief Legal Officer at Avatar, wrote to the Department of the Treasury to inform Secretary Steven Mnuchin about "where we are in our evolution" and why the carrier was in his opinion "critical to the future of the aviation/transportation industry." In his letter, Zapin believes that while the COVID-19 outbreak will see the demise of many US carriers, "Avatar continues to move forward" and expects "to be fully operational by mid-2021" and is poised to deliver "a paradigm shift to the aviation industry."

Aiming to become an ultra-low-cost carrier (ULCC) market disruptor, using a fleet of 14 high-density configured, 581-seat B747-400s Avatar's initial network planned to serve Los Angeles Int'l, Las Vegas McCarran, New York JFK and Miami Int'l. Its unique business model planned to rely on significant advertising revenues to allow it to offer its low fares of USD19 on its short trips, USD79 on coast-to-coast flights, and USD99 to Hawaii.

In February, Avatar said it had signed a Letter of Intent (LOI) with Boeing (BOE, Chicago O'Hare) covering thirty new B747-8s. The start-up had claimed it would initially launch with its B747-400s before eventually transitioning to the B747-8s.

Avatar was initially incorporated as Family Airlines (Las Vegas McCarran), and failed to secure Part 121 authority back in 1993 under this name. Renamed as Avatar Airlines, it also filed applications in 2008, 2014, and 2017, all of which failed to pass the DOT's scrutiny.