Myrtle Beach-based Direct Air racks up $9.6 million in federal fines for abruptly canceling flights during the spring

dbryant@thesunnews.comAugust 21, 2012 

Myrtle Beach-based Direct Air racked up $9.6 million in federal rules violations during the spring when it abruptly canceled about 350 flights, according to bankruptcy court filings.

Direct Air canceled 144 flights between March 15 and March 24 and another 206 flights between March 25 and April 11, which violated federal rules aimed at protecting passengers, according to a filing by the U.S. Department of Transportation, which regulates charter operators such as Direct Air and tallied the civil penalties.

Federal rules do not allow charter operators such as Direct Air to cancel flights less than 10 days before the scheduled departure unless it is physically impossible to fly, as Direct Air did through March 24, according to the DOT.

Direct Air also should have notified passengers scheduled to fly on 206 flights March 25 through April 11, when Direct Air’s bankruptcy case was converted to Chapter 7 liquidation, that the flights had been canceled. Federal rules require that charter operators notify each passenger in writing within seven days after the cancellation but not less than 10 days before the scheduled flight.

Direct Air abruptly canceled flights in mid-March after some of the carriers that flew the routes did not fly them because they had not been paid. That left hundreds of passengers – including vacationers in Myrtle Beach trying to get home and others planning to come to Myrtle Beach -- scrambling to make it to their destinations. Direct Air filed for Chapter 11 bankruptcy reorganization that week, which was quickly converted to Chapter 7 liquidation.

“No circumstances of physical impossibility existed during that 10-day period that would have prevented [Direct Air] from performing the scheduled flights,” the DOT said in its administrative claim to the fines accumulated prior to the case’s conversion to Chapter 7.

The civil penalty of $9,625,000 could be adjusted after DOT receives flight information from Sky King, one of five carriers that flew flights for Direct Air, according to the court filing.

One of those carriers, Miami-based World Atlantic Airlines, was fined $180,000 last month by the DOT for its role in the sudden cancellation of flights.

Another Direct Air carrier, Vision Airlines, started flying to Myrtle Beach under its own name this summer but has turned off some passengers after repeated instances of daylong flight delays.

The DOT also is looking into Direct Air’s handling of a required escrow account that officials say is underfunded, which is another federal violation. The maximum civil penalty is $27,500 per violation per day, but the total in Direct Air’s case is still unknown, according to the DOT’s court filings.

“The investigation is ongoing,” DOT spokesman Bill Mosley said. “We are looking into this broadly.”

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

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