RegionsAir won’t go down without a fight

 - August 29, 2007, 4:32 AM

Grounded Jetstream 32/Saab 340 operator RegionsAir filed suit last month against the federal government for breach of contract and seizing property without due process. The FAA on July 10 canceled RegionsAir’s operating certificate for alleged failure to meet federal aviation regulations related to its line check airman program.

Filed August 6 in the U.S. Court of Federal Claims, the complaint asserts that FAA inspectors pressured company president Douglas Caldwell into signing a consent agreement to abide by a series of demands, and that the government breached its contract by failing to commit any resources to allow for RegionsAir’s compliance. The complaint asks for damages of $11.65 million plus interest and the reinstatement of RegionsAir’s operating certificate.

“The United States government breached the contract by failing to commit even one person to ensure [the] plaintiff could comply with the terms, when the contract required the FAA to commit sufficient resources for compliance,” the filing asserts.
The claim names the U.S. Senate via Sen. Dick Durbin (D-Ill.) as one of the parties to the suit for his role in an alleged campaign to close the airline. In late February Durbin met with American Eagle CEO Peter Bowler in Dallas to ask him to bid on RegionsAir’s three Illinois EAS destinations–Decatur, Marion and Quincy, all of which came due for contract renewal in July.

A week later Durbin sent letters to Bowler, DOT Secretary Mary Peters and the mayors of the cities in question to voice concern about RegionsAir’s on-time and completion record, in which he cited DOT statistics for November, December and January showing that the airline canceled 15.6 percent, 27 percent and 15.5 percent of its flights in those respective months.

On March 2 inspectors from the Nashville FSDO asked RegionsAir to cease operations to perform a records review. According to the consent agreement, the review revealed that nine inadequately trained check airmen administered line checks to 15 pilots who flew on “numerous” revenue flights between May 2006 and March this year. Nevertheless, the FAA allowed RegionsAir to reopen on March 5. Four days later, however, the FAA’s regional office in Atlanta forced the airline again to stop flying.

“RegionsAir cannot provide even the most basic air service, let alone the reliable service our downstate communities deserve,” Durbin said in a statement following the March 9 closure. “The U.S. Department of Transportation, working with the affected communities, has accelerated its efforts to find a reliable replacement carrier and will be announcing its decision shortly.” As of press time that replacement–Great Lakes Aviation–hadn’t yet resumed service, and Durbin’s office has since removed from his Web site the statement along with the original correspondence to Peters, Bowler and the mayors.

Because the Court of Federal Claims holds jurisdiction over complaints against only the U.S. government, the suit cannot name more defendants unless the judge hearing the case agrees to add others under a legal exception called pendant jurisdiction, explained Michael Moulis of Moulis & Associates, the Fort Lauderdale, Fla.-based lawyer representing RegionsAir. Until then, the U.S. Senate (via Durbin) and the Department of Transportation (via the Secretary of Transportation) will remain named simply as parties to the case.

Consent Coerced, Alleges RegionsAir
The lawsuit claims that the regional inspectors told RegionsAir principal employees that the FAA would issue an emergency suspension of the airline’s operating certificate and exercise its authority under FAR Part 119 to bar them from any future employment if the airline didn’t sign the consent agreement. According to the filing, the inspectors gave Caldwell no more than 45 minutes to sign the agreement and gave no specific reason for the agency’s actions.

Beyond the findings related to the Nashville FSDO’s March 2 records check, the agreement itself indicated only that “the FAA has legitimate safety concerns as to the adequacy and accuracy of flight attendant and pilot records that RegionsAir is required to maintain under the Federal Aviation Regulations.”

According to the lawsuit, RegionsAir complied with all the terms of the consent agreement by ensuring it employed enough check airmen to administer line checks, retraining all its pilots and supplying new names of the required personnel within the 120 days. Nevertheless, an investor in the airline appointed as its agent for service, Southland Holdings CEO Robert Creighton, filed a request for a 60-day extension, which the FAA denied on the basis that RegionsAir “no longer employs any pilots, any dispatchers, any mechanics or other personnel required to run an airline.”

According to Moulis, the FAA suggested that Creighton file the extension even though RegionsAir believed it had already met the terms of the consent agreement. Moulis characterized the reason the FAA gave for refusing the extension as absurd. “Of course you’re going to furlough people,” he said. “If the FAA said in its consent agreement that [RegionsAir] couldn’t furlough anyone, then I’d have another basis for action.”

An FAA spokeswoman said she couldn’t comment on the litigation, adding only that on July 10 RegionsAir failed to meet the terms of its consent agreement and that
the failure involved training documentation. According to Moulis, the problem centered on language in the airline’s manuals on indoctrination training for check airmen that contradicted FAR Part 121.413.

Founded in 1996 as Corporate Express Airlines, RegionsAir used the training manuals in question for 11 years–and for the two-and-a-half years following the crash of one of its Jetstream 31s in Kirksville, Mo., in which 13 people died and for which the NTSB laid the blame squarely on the pilots. Nevertheless, once the FAA asked RegionsAir to revise its manual, it did so, said Moulis.