Friday, January 23, 2015YOUNGSTOWN, Ohio -- The U.S. Department of Transportation has issued a “tentative decision” against Aerodynamics Inc.’s proposal to provide daily passenger service from Youngstown-Warren Regional Airport to Chicago, says the company has “failed to demonstrate it continues to be fit to operate as an air carrier” under the control of owner Scott Beale.
The “show cause” order, issued Thursday by Brandon Belford, deputy assistant U.S. Aviation secretary, specifies that Beale did not notify the department about a civil lawsuit in which he was required to pay $600,000 in damages as a result of Beale making false statements to obtain $500,000 in investment capital.
Aerodynamics Inc. plans to appeal, according to Dan Dickten, director of aviation at the Vienna Township airport, who called the DOT order “a setback. ADI does not initially see this as something they cannot overcome,” he said.
In an email response to The Business Journal’s request for comment, Dickten related that Mickey Bowman, ADI vice president of airline services, said the company “will make every effort to keep us informed of their intent and progress.”
The Western Reserve Port Authority, which operates the airport, has offered ADI a $1.2 million revenue guarantee, funded by a federal grant, as well as $130,000 from its own revenues to help fund its startup operations.
ADI was incorporated in Michigan, maintains its corporate office in Beachwood and an operations office in Kennesaw, Ga. It is a wholly owned subsidiary of ADI Holdings Inc., which is a subsidiary of Aviation Capital Partners LLC, a Delaware company. Beale holds an 80% interest in ACP and is the CEO of ADI.
According to court documents, Beale solicited funds from Flight Test Aviation Inc. and “made false statements to an agent of FTA to induce him to give ADI $500,000 in investment capital, as part of an agreement to support charter flights pursuant to a guaranteed revenue contract with a third-party company.” Contrary to Beale’s statement, no such contract existed.
On Oct. 24, Beale appealed the July verdict against him but a judge denied the appeal and reaffirmed the jury’s decision. The court awarded FTA $500,000 in compensatory damages and $100,000 in punitive damages.
“Beale’s actions indicate a disregard for the law, thus his “ownership and positions of influence at the air carrier raise serious questions as to ADI’s ability to satisfy the department’s requirements that an air carrier must possess a positive compliance disposition and the requisite competency to oversee its operations,” states the DOT order.
“We tentatively find that ADI’s application for interstate scheduled passenger authority should be denied and its interstate and foreign charter passenger certificates should be revoked,” the order states. “The department’s review indicates that ADI does not possess the managerial competency necessary to oversee its current charter and proposed scheduled passenger operations, nor does it have the proper compliance disposition and regard for the laws and regulations governing its services with the continued involvement of Mr. Beale.”
Further, based on “careful review” and “the totality of the circumstances,” DOT tentatively concluded that ADI “has failed to demonstrate it continues to be fit to operate as an air carrier” under Beale’s “direction and control.” It recommends that the application for interstate scheduled passenger authority should be denied and ADI’s interstate and foreign charter passenger certificates should be revoked.
DOT will give “interested persons 14 days following the service date of this order to show cause why the tentative findings and conclusions set forth here should not be made final.” Answers to the objections will be due within seven days later.
Copyright 2015 The Business Journal, Youngstown, Ohio.
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