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Airport Board Sues Aviation Technologies for $260K
"By Dan O'BrienWARREN, Ohio -- Sooner or later, the matter would've ended up in court.So says attorney Dan Keating, counsel for the Western Reserve Port Authority, which filed suit in Trumbull County Common Pleas Court to recover $260,000 from the aviation company that operated flights out of Youngstown-Warren Regional Airport last year."There's a dispute as to who owes who money," Keating allows. As a result, the Port Authority sued Aviation Technologies Inc. of Avoca, Pa., Feb. 23, citing a disagreement that arose "as to responsibility for claimed losses for the charter flights originating from the Youngstown-Warren Regional Airport."Aviation Technologies, in conjunction with Vacation Express, entered into a memorandum of understanding with the authority in January 2004. The airline established direct charter flights from the airport in Vienna to Orlando, Fla., and Myrtle Beach, S.C. Fares started at $69 but reached roughly $99 by the time the service ended.Under the memorandum, the port authority agreed to subsidize the airline with an initial security deposit of $300,000 to defray start-up costs and launch a marketing campaign. The money was also to cover any operational shortfalls.Keating, however, said the port authority appropriated an additional $150,000 for the airline while it was still operating and spent about $100,000 of those funds to help with operations. In all, the port authority spent $400,000 to help Vacation Express and Aviation Technologies.The memorandum also stipulated that the port authority waive all fees the first six months normally charged for services such as airport boarding gates, jetways, ticket counter, baggage and operations areas and aircraft parking.Passenger demand, while fairly strong at the outset, wasn't sufficient to offset higher expenses such as fuel, and eventually flight service was canceled in September.Michael Gallagher, chief financial officer for Aviation Technologies, called the lawsuit "ludicrous," and called it a tactic to stall payment he said the port authority owes his company. "In fact, they owe us $218,000," he stated.The port authority agreed to cover all shortfalls, Gallagher said, noting the airline needed about 85 passengers aboard each flight to break even. "At the beginning, they did. But then, we started hearing they would take care of it, that the check's in the mail," he said.To cover the shortfall, Aviation Technologies extended the port authority credit he estimated at $218,000."We established a business relationship with them and we felt they would honor that agreement and they didn't," he said.Eventually, Gallagher said, Aviation Technologies turned the matter over to a collection agency. "This suit has been brought on I think as a result of that," he said. "They're trying to buy time and in the process will go deeper in to debt. It's a tactic to stall it in the courts and they'll lose."Aviation Technologies, Gallagher said, had a similar agreement in place with the Wilkes-Barre/Scranton Regional Airport. Facing reduced demand, however, the Wilkes-Barre and Youngstown services were combined. Eventually flights originated in Wilkes Barre and stopped at Youngstown-Warren before proceeding to Orlando and Myrtle Beach."We discontinued service at Scranton at the same time and they paid in full," Gallagher noted, putting the Scranton charge at $250,000."