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ADI Files Counterclaim Against Port Authority

YOUNGSTOWN, Ohio – The airline that briefly provided flights from the Youngstown-Warren Regional Airport to Chicago last year has filed a countersuit against the Western Reserve Port Authority, saying it never misled the port authority about interline agreements between the company and any connecting carrier.

In papers filed with the U.S. Court for the Northern District of Ohio May 25, Georgia-based Aerodynamics Inc., or ADI, says it informed the port authority, which operates the airport, that there were no interline agreements signed and instead ADI was pursuing a hosting agreement with a third-party carrier.

On May 18, the port authority sued ADI, alleging the airline misrepresented that it had secured interline agreements with United Airlines and American Airlines, which would provide connecting flights at Chicago O’Hare International Airport for passengers traveling from Youngstown.

The port authority is seeking restitution of $361,714 it says it paid ADI as a revenue guarantee to ensure it remained profitable during the start-up phase.

However, ADI’s counterclaim alleges that the port authority “was on notice that ADI had no interline agreements in place and was, instead, working towards a hosting agreement with a third-party carrier.”

That carrier, Silver Airways, would “grant ADI the benefit of the existing interline agreements between the major airlines American Airlines, United Airlines, and Delta,” court documents say. “Therefore WRPA understood that ADI had no interline agreements in place, but was actively working towards establishing interline connectivity with other airlines through a hosting agreement.”

Yet the port authority argues in its initial filing in May that its agreement with ADI was based on the assumption that interline agreements had been arranged. Much of the funding was appropriated from a $780,000 U.S. Dept. of Transportation Small Community Air Service Development Program grant. Another $420,000 was made available through hotel bed taxes levied by Mahoning and Trumbull counties.

ADI, which operated as Great Lakes Jet Express, commenced flights from Youngstown to Chicago O’Hare International Airport on July 1, 2016. The flights stopped in late August after the port authority pulled its subsidies.

The port authority argues that it was ”fraudulently induced by ADI” in signing an agreement in which the Port Authority would subsidize flights from Youngstown to Chicago during the start-up phase based on the assurance of interline agreements.

Absent these agreements, passengers had difficulty connecting with flights to other destinations from O’Hare, causing inconvenience and resulting in lower ticket sales, the port authority contends.

However, ADI says that its contract with the port authority was not conditional upon interline agreements, noting that the agreement referenced only the parties’ “hope and intention to have interline connections with one or more major airlines,” documents say.

The agreements, therefore, “contained no affirmative obligation for ADI to have in place, or enter into, any interline agreements,” documents say. “At no point did ADI guarantee such connectivity. Instead, ADI kept WRPA continuously and accurately informed of the status of its hosting agreement and its relationship to other airlines.”

On August 16, 2016, ADI informed the port authority that it was unsuccessful in obtaining an interline agreement with United Airlines, documents show. The port authority terminated the contracts the following day, according to ADI’s counterclaim.

ADI was forced to discontinue service, the carrier’s counterclaim says, and alleges the port authority committed breach of contract because it did not notify the airline 90 days in advance of terminating the agreement.

The company is seeking $294,221.40 in damages related to an unpaid invoice and an award to be determined at trial compensating the company for “lost profits and penalties incurred as a result of WRPA’s breach,” court papers say.

Published by The Business Journal, Youngstown, Ohio.