Former President, CEO, and Chairman, Scott Beale has moved to divest himself entirely of his shareholding in the company following a threat by the US Department of Transportation (DOT) to revoke the airline’s interstate and foreign charter passenger air transport certificates. ADI has since named F. Darrell Richardson as President, CEO, and Chairman.
In late January, the DOT issued an order saying that it not only plans to deny Aerodynamics’ proposal for scheduled air service, but also plans to revoke its certificate to conduct charter services, which it currently provides. The order states that ADI “does not possess the managerial competency necessary to oversee its current charter and proposed scheduled passenger operations”.
The order also states that Aerodynamics does not have the “proper compliance disposition and regard for the laws and regulations governing its services.”
The DOT statements follow a court case in which ADI’s CEO at the time, Scott Beale, was found guilty of defrauding Flight Test Aviation of $500,000, demonstrating ADI was unfit to provide passenger airline service. According to the order, Beale had solicited the $500,000 to support charter flights “pursuant to a guaranteed revenue contract with a third-party company,” but the contract did not exist, according to the DOT order.
Beale, an 80-percent majority shareholder of ADI and a member of its board of directors, appealed the verdict, but a judge denied the appeal. The court awarded Flight Test Aviation $500,000 in compensatory damages and $100,000 in punitive damages.
These events have occurred around the same time that SeaPort Airlines Inc., a passenger carrier based in Portland, Oregon, has filed Chapter 11 bankruptcy, seeking relief from more than 200 creditors who collectively are owed as much as $10 million. SeaPort Airlines is owned by John Beardsley and his wife Janet, who, as of July, 14, 2015 are the owners of Aerodynamics, Inc. having bought the company from Beale. Despite having the same ownership, Aerodynamics Inc. claims that is an entirely different company than SeaPort, with both operating under individual operating certificates.
The DOT had balked at granting ADI’s application for the certificate needed to provide the proposed Chicago service because of the civil fraud finding against Beale. According to the DOT, ADI never notified the department about the verdict, issued in July.
“Mr. Beale’s actions indicate a disregard for the law,” the DOT’s order, issued late January, states. “Thus, Mr. Beale’s ownership and positions of influence at the air carrier raise serious question 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.”
The DOT’s order also outlined the Beachwood, Ohio-based company’s financial history. In October 2012, ADI ceased air transportation because of financial pressure, eventually filing for bankruptcy on Jan. 7, 2013. Aerodynamics emerged from bankruptcy on Aug. 12, 2013. In April 2014, the DOT granted oral authority for Aerodynamics to resume its charter operations.
The DOT’s decision to deny ADI its fitness certificate for scheduled service can be appealed.
Airport officials at Youngstown-Warren Regional Airport remain optimistic, hoping the route will be launched in spring of 2016. The route, which would be operated by SeaPort Airlines, could have launched as early as October 2015. In an interview with Youngstown’s The Business Journal Daily, Dan Dickten, director of aviation at YNG, responded to SeaPort’s bankruptcy filing by posing a question of his own: “What airline can you think of that’s never been through a bankruptcy? I’m planning on a launch this spring.”