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Feds say airline not fit to provide Chicago flights from Youngstown
By Ed Runyan
VIENNA
ADI application denial
Document
Denial of application of Aerodynamics Incorporated (“ADI”) for a certificate of public convenience and necessity under 49 U.S.C. Section 41102 to engage in interstate scheduled air transportation of persons, property, and mail.
The U.S. Department of Transportation has tentatively denied the application of Aerodynamics Inc. to begin daily air service between the Youngstown-Warren Regional Airport and Chicago O’Hare International Airport based on the airline’s lack of “fitness.”
The government also went another step, proposing that ADI also have its existing certification to provide charter flights revoked — all on the grounds that the company doesn’t have the “managerial competence necessary” nor the “proper compliance disposition and regard for the laws and regulations governing its services.”
The written order DOT released Thursday says ADI will have the opportunity to show cause why the tentative conclusions should not be adopted.
ADI officials informed Dan Dickten, director of aviation at Youngstown-Warren, that the order is a “setback,” but the company “does not initially see this as something that cannot be overcome,” Dickten said in an email.
Dickten added that he believes ADI “will address the issues posed by DOT and will move forward with our service,” but added that he has meetings with other airlines next week, so ADI is not the airport’s only option.
ADI will discuss its options through Monday and formulate a response, Dickten said.
Dickten and other local officials had hoped ADI, which is based in Beachwood, Ohio, and Atlanta, would be able to restart daily flights at Youngstown-Warren as early as this spring, something that had been missing since 2002. Dickten and others have described daily flights as important to enhancing the economic growth of the Mahoning Valley.
The proposed service would have flown between here and Chicago about 10 times per week in 50-passenger aircraft and enabled customers to catch connecting flights in Chicago to anywhere in the world.
But the DOT became aware of the outcome of a civil case that went to trial July 14-15 involving a former business partner of ADI. The DOT learned that the company’s CEO, Scott Beale, had been found to have committed fraud. The DOT then “re-examined ADI’s continued fitness to conduct its operations.”
Beale owns 80 percent of the company and is ADI’s chief executive officer and a member of its board of directors, and therefore has the ability to control and influence the decisions of the air carrier, the DOT noted.
The order says it examined ADI’s “disposition” regarding compliance with laws, rules and regulations to decide whether the company is likely to be diligent in maintaining safe operations.
“The court found that Mr. Beale committed fraud while soliciting funds for ADI from an investor and expended those funds in a manner which was not consistent with the agreement between the parties,” the order says.
“Mr. Beale’s actions indicate a disregard for the law,” it said.
“Exacerbating this issue is the fact that ADI failed to notify the Department regarding the outcome of this civil matter as required by [federal law] at any point during the pendency of its application” and “indicates ADI’s lack of regard for the regulations and raises further concerns about its ability to report information on an ongoing basis, as is required by the Department,” the order adds.
Interested parties have 14 days to object to the tentative decision, the order says.
ADI ceased flight operations in October 2013 because of financial issues and filed for bankruptcy protection in January 2013. It emerged from bankruptcy protection in August 2013 and asked DOT for permission to resume charter flights, the DOT says. The department granted oral authority for ADI to resume operations April 25, 2014, and it has been providing such services since then.
ADI applied for permission to start up the Youngstown- Chicago flights June 25, 2014.