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Chicago carrier ADI faces new turbulence
By Kalea Hall
VIENNA
Another objector has come forward with a complaint against Aerodynamics Inc., which is preparing to offer flights between Youngstown and Chicago.
The objection was filed by Executive Express Aviation just a few days after ADI received final approval Jan. 28 to offer flight service between Youngstown-Warren Regional Airport and Chicago O’Hare International Airport.
“EEA believes that the applicant’s actions, its ownership and its sister company, SeaPort Airlines, make it unfit to operate in the public interest,” EEA’s objection dated Feb. 1 reads.
On Wednesday, ADI countered by calling for its rejection by the U.S. Department of Transportation because it lumps two separate companies with the same owner together as one.
The airline still has to supply some items to the DOT and has to wait for the Federal Aviation Administration to sign off on the operation.
Mickey Bowman, vice president of airline services for ADI, expects the FAA’s certification to take four to six weeks. The largest hurdle for ADI was receiving approval from the DOT.
“It was a very joyful day,” Bowman said. “We have got to finish the race now.”
Bowman foresees service starting by the end of April or early May.
Pricing for the Youngstown-Chicago flights is fluid at this point, Bowman said.
“We just see it as a real opportunity,” Bowman said of the service. “We are eager to get there and get the service up and started.”
Tennessee-based EEA’s contention is SeaPort Airlines, which is owned by John Beardsley, who also owns ADI, did not make payments to the company from a “wet-lease” contract the two companies had. A wet-lease contract is a form of a leasing agreement that provides multiple services to the company doing the leasing.
In this case, EEA agreed in 2015 to provide similar Cessna Caravan service on SeaPort’s behalf for four routes in exchange for charter fees equal to an Essential Air Service subsidy, EEA writes in its objection. Such a federal subsidy guarantees that small communities are served by certificated airlines,
SeaPort retained all ticket revenue and paid all taxes, according to EEA.
For two months of the contract, SeaPort followed it, EEA said.
“On or about Jan. 12, 2016, SeaPort received its subsidy payment from DOT but made no payment to EEA by its Jan. 15 deadline,” EEA’s objection reads. The amount was not disclosed.
Then, on Jan. 16, SeaPort announced its flights except for select routes were canceled, EEA said.
“It used EEA’s share of the EAS subsidy for unknown purposes,” EEA’s objection reads. “To any outside observer it should be quite apparent that Mr. Beardsley, upon recognition that he was about to be granted a scheduled certification for ADI, immediately began shifting focus and resources from SeaPort to ADI.”
On its website, SeaPort announced in a Jan. 21 release it postponed air service to Moses Lake, Wash., Port Angeles, Wash., and Seattle because of a pilot shortage. SeaPort also recently announced it would cease operations of scheduled flights between Portland and North Bend/Coos Bay, Ore., starting March 21.
Beachwood and Atlanta, Ga.-based ADI contends EEA “wrongly claims that allegations about SeaPort’s action involving a contract between SeaPort and EEA have implications for ADI’s fitness to hold certificate authority. They do not.”
The objection, ADI argues, is clearly about a contract dispute between EEA and SeaPort, not ADI.
ADI is not a party in the agreement.
“ADI does not and did not operate [and could not have operated] the routes covered by the agreement,” ADI’s filing against the objection reads. “EEA’s effort to conjoin the two carriers is improper and invalid.”
ADI, a charter service company, received approval from the DOT to provide 10 flights a week from Youngstown-Warren to Chicago O’Hare in a 50-passenger aircraft after a 19-month review process by the DOT.
The DOT initially denied the application because of concerns with the airline’s previous ownership.
Beardsley and his wife, Janet, took over the company in a stock-purchase agreement last year.
They own the Portland, Ore.-based airline, SeaPort.
The Youngstown-Chicago service was tentatively approved in November, after a public comment period took place and an objector came forward.
The objector, James Paquette and Via Airlines, claimed the company’s ownership was in default on a promissory note. ADI’s ownership paid the promissory note and agreed to pay an additional $10,500 as a full and final settlement of all claims relating to collection costs and fees on the note.