Carrier fined for role in Myrtle Beach-based Direct Air case

dbryant@thesunnews.comJuly 27, 2012 

— A carrier that operated flights for now bankrupt Direct Air will have to pay a hefty fine to federal regulators for its actions during Direct Air’s final days of operation in March.

World Atlantic Airlines, one of eight carriers for Direct Air, was fined $180,000 Friday by the U.S. Department of Transportation because of several violations, including abruptly canceling flights it was scheduled to fly for Direct Air after it didn’t get paid what it was owed by the Myrtle Beach-based company, according to the DOT.

Carriers aren’t allowed to cancel flights less than 10 days before their scheduled departure, except for weather.

World Atlantic also didn’t provide transportation, as required, for round-trip passengers who had flown the outbound leg of their trip. After the Direct Air flights were abruptly cancelled in March, passengers -- including many golfers and vacationers along the Grand Strand -- scrambled to find other ways to get home, with some renting cars. Others who had future flights booked on Direct Air also searched for other transportation.

DOT has only issued a fine against a carrier for abruptly stopping service roughly twice in the last decade, said Bill Mosley, spokesman for DOT, which has been investigating Direct Air since the flights suddenly stopped in mid-March and Direct Air filed for bankruptcy a few days later.

“It is a significant fine,” he said. “It reflects the seriousness of the violation.”

World Atlantic, based in Miami, Fla., could not be reached for comment Friday.

“This is something that they agreed to to avoid further litigation,” Mosley said.

The fine Friday is the first penalty in Direct Air’s demise, and DOT continues to investigate Direct Air and its carriers, though Mosley couldn’t say whether more fines are expected. Direct Air is amid Chapter 7 bankruptcy liquidation, with the bankruptcy court sorting through the financials. Investigators already have determined that there wasn’t as much money in escrow accounts as there should have been, but are still sorting through the details.

“The Department [of Transportation] is continuing to investigate Direct Air handling of its escrow account and its compliance with other public charter rules,” Mosley said in an email.

World Atlantic stopped flying for Direct Air on March 13 after not getting paid all the money it was owed by Direct Air, according to the DOT. Before that, several payments by Direct Air were late, which DOT’s Aviation Enforcement Office said should have prompted World Atlantic to look into whether Direct Air was following public charter rules. DOT requires that carriers get paid prior to operating a public charter flight and make reasonable efforts to make sure that the charter operator it is serving is complying with those rules, DOT says.

“Our public charter rules are designed to protect consumers from sudden cancellations and being stranded away from home with no return flights,” U.S. Transportation Secretary Ray LaHood said in a news release.

DOT continues to investigate the other carriers for Direct Air, including Vision Airlines, which started serving Myrtle Beach under its own name in late May. Mosley confirmed that Vision was a carrier for Direct Air, but declined to comment further on Vision Airlines’ role in the Direct Air case.

The other carriers that flew for Direct Air: Swift Airlines, Miami Air International, Sun Country Airlines, Xtra Airways, North American Airlines and Sky King.

“We are aware that other carriers also stopped operating,” Mosley said. “It’s something we are still looking into. The investigation of the other carriers is continuing.”

Officials haven’t yet determined how many passengers were left stranded because of the sudden cancellations, in part because of insufficient records, Mosley said. About 1,300 claims from those owed money -- including passengers, carriers, oil companies and others -- have been filed in the bankruptcy case, according to court records.

Contact DAWN BRYANT at 626-0296 or at dbryant@thesunnews.com or follow her at Twitter.com/TSN_dawnbryant.

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