Encompass Aviation filed a lawsuit against all-you-can-fly membership program Surf Air on Tuesday, seeking $3.1 million in delinquent payments and damages from breach of contract after the latter severed ties with the former on Friday. Part 135 operator Encompass had been flying 15 of Surf Air’s PC-12s on its California routes since last April. On Friday, Surf Air awarded this flying to Advanced Air.
In the lawsuit, filed in the U.S. District Court in Southern New York, Encompass alleged that Surf Air is “financially distressed” and, virtually from the outset of the contract, failed to pay for flights two weeks in advance, as required by the agreements, and “consistently was delinquent in paying following the provision of flight operations and maintenance.” The breach-of-contract claims arise from “Surf’s failure to provide Encompass with its bargained-for rights of first refusal and last offer within the…agreement and the purported termination of the relevant contracts.”
According to a statement from Surf Air, “The Encompass claims are not accurate, the lawsuit is without merit, and Surf Air intends to defend itself vigorously. Surf Air is also considering counterclaims.” Surf Air has not yet confirmed to AIN that it is subject to $2.33 million in IRS liens for unpaid excise taxes, as per documents filed with the California Secretary of State’s office.