Freedom Air worked because of a loophole in the law forbidding smoking on US Flight. As 777guy stated, the ban applies to scheduled FAR
Part 121 carriers. Private charters and private travel clubs, of which Freedom Air operated as, are exempt from the ban. Smokers had to purchase a membership in the Freedom Air Club, and then pay the fare for the flight (which, I believe, was reduced to make them more attractive). If you were not a member of the "Club", you couldn't book on Freedom Air.
Even with the DOT ban, if a 121 Carrier were to offer charter flights on their aircraft, smoking could be allowed on board but only on those specific charter flights.
Freight Dogs Anonymous - O.O.T.S.K.
DAMN! This SUCKS! I just had to go to the next higher age bracket in my profile! :-(