2 More Objections Cast Doubt on ADI’s Reliability
VIENNA TOWNSHIP, Ohio – Two more companies filed objections last week to the U.S. Department of Transportation’s order granting Aerodynamics Inc. authority to provide daily scheduled passenger service between O’Hare International Airport in Chicago and the Youngstown-Warren Regional airport here.
The two companies – Sun Air Express and JA Flight Services LLC – filed their objections Friday. The filings bring to three the number of objections filed since DOT’s Jan. 28 order granting ADI a certificate of public convenience and necessity. Executive Express Aviation LLC filed an objection Wednesday.
Both JA Flight Services, or JAFS, and Sun Air, claim actions taken after the public comment period for the final order justify the late filings.
According to the objection filed by JA Flight Services’ president, Bruce A. Jacobs, SeaPort Airlines, which ADI owner John Beardsley also owns and operates, leased aircraft from JAFS “for several years” for use in its Essential Air Service operations. Last September, Seaport management approached JAFS with a request to cancel existing aircraft leases, “as SeaPort intended to stop providing EAS service and ‘might file bankruptcy,’ JAFS concluded an agreement with SeaPort in October to return the aircraft in conjunction with continued lease payments” under an agreement signed that month.
SeaPort didn’t make the December or January lease payments, even though it received EAS payments from DOT both months. JAFS notified Seaport it was in default of its contract Jan. 5.
“The president of the organization has since left, and current management refuses to contact JAFS or in any way discuss the situation,” JAFS’ fling states. “It is JAFS’ belief that Beardsley intends to bankrupt SeaPort as soon as he receives authorization to operate ADI to avoid paying SeaPort’s creditors, in contradiction to his stated position of ‘always paying his debts.’”
In the filing, JAFS also claimed that SeaPort has had “significant issues with the quality and documentation of the maintenance of the aircraft” JAFS has leased to it. An aircraft SeaPort returned and its then-director of maintenance signed off as airworthy “had some 25 major non-airworthy defects” along with several other defects that needed to be corrected before the aircraft could be placed back in service, a situation the Federal Aviation Administration investigated.
SeaPort agreed to change its method of documentation for maintenance to conform to normal business practices, as in placing entries in the aircraft log books. “This was apparently not done per the agreement, but rather the aircraft were returned without documentation and/or without sign-off of the maintenance performed over the prior 12-18 months in the aircraft log books.”
JAFS also noted SeaPort failed to make its lease payments “exactly as soon as the comment period” for objections to the ADI application expired, to avoid “adverse” objections such as JAFS’ filing.
The company said it agreed with Executive Express Aviation’s filing that Beardsley, “upon recognition that he was about to be granted” the certificate for ADI’s service, “immediately began shifting focus and resources from SeaPort to ADI” and “used seaport as a vehicle for receiving revenue from [DOT] but has failed to pay the vendors who generated said revenue in his behalf.”
SeaPort recently violated a series of “hold in orders” regarding Essential Air Service, “leaving communities stranded without air service,” Philip LeFevre, president of Sun Air Express, said in his filing Friday. SeaPort and ADI recently coordinated a bid for Salina, Kan., and “immediately after” ADI wasn’t selected for EAS for Salina, “SeaPort abandoned the route without the required notice,” he said.
“It has become clear that the controlling shareholders and management hold little regard for compliance with the [Department of Transportation’s] regulations, a factor which was not sufficiently clear” when DOT issued its final order,” he continued. “This pattern of poor compliance disposition is also apparent in the resignation/termination of the CEO of both ADI and SeaPort.” Sun Air heard from “multiple industry sources,” before DOT’s issuance of its final order, that the CEO was departing, information not included in either company’s fitness filings.
Sun Air has “no contractual or other interests” in ADI or Seaport, “but does have an interest in seeing EAS communities receive the basic service to which they are entitled,” he said. “We do not believe air carriers should be allowed to willfully abandon communities as a matter of convenience, and that the actions taken by Seaport and ADI strongly imply a lack of proper compliance disposition which [DOT] should fully investigate and consider prior to making any certificate effective.
“Should ADI be allowed to operate with scheduled authority, the public and communities served will ultimately pay the price.”
Copyright 2022 The Business Journal, Youngstown, Ohio.