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REGIONAL AIRPORT Pan Am plan grounded



Published: Tue, August 2, 2005 @ 12:00 a.m.



The airline president said his company will not post a performance bond.

VIENNA -- A dispute over $250,000 in marketing money between the Western Reserve Port Authority and Pan Am Clipper Connection has grounded plans for scheduled flights from the Youngstown-Warren Regional Airport.

"I am going to take my airplanes, and there are three other areas that have asked us to come in," said David A. Fink, president of Pan Am Clipper Connection, run by Boston-Maine Airways.

"I'm going to look at other areas and other options available to me," he said. "Right now I can't tell you what is the best."

The airline president spoke to The Vindicator after receiving a letter from the port authority, which is postponing providing $250,000 in advertising help until U.S. Department of Transportation questions about the airline's financial health are settled.

"I'm sorry it had to be this way," Fink said.

Strained relationship

The port authority, citing a "fiduciary responsibility to its community," said Monday that it will postpone providing the $250,000. At the same time, Fink insisted he will not post a performance bond requested by the port authority to secure those dollars.

Fink said it sounds to him like the port authority's decision is permanent; local officials insist that's not necessarily so.

"This is absolutely not a permanent decision," said the port authority's marketing consultant, Vic Rubenstein, who said he believes the port authority can still reach out to the airline.

Fink said he is disappointed, yet without the port authority's marketing money he has no choice but to re-evaluate the relationship. He conceded his company is "in an unusual situation," with a DOT investigation pending, and said he understands the port authority's position and wishes it luck.

At issue is Pan Am's announced flight schedule from the Vienna Township airport to begin Nov. 10. The port authority is concerned about whether the airline can resolve its difficulties with DOT while keeping its commitment here at the same time.

Fink said his commitment is good -- if the port authority provides the $250,000 and doesn't require a performance bond.

Financial risks

A performance bond is an insured guarantee of performance that would protect the port authority's investment. The money is a $250,000 Department of Transportation Small Community Air Services grant, awarded one year ago, to attract and promote a carrier.

"We haven't done it before, and I'm not going to do it now," Fink said, noting posting a bond would "set a precedent" for his company.

His company was willing to commit $3 million here, he noted. "The risk on our side is extremely high."

Fink said he would not object to the port authority's looking for another airline that would be willing to post such a bond. The airport continues its effort to market itself to potential carriers and cargo companies.

The port authority runs the local airport, and its decision comes in response to questions being asked of Pan Am's parent company at the federal level. The Trumbull 100 civic group has already spent $30,000 to hire a marketing consultant, and $100,000 has been spent in donated goods and services, but there has not been any direct advertising.

"My concern, in my position at the airport, is that these DOT issues need to be resolved before we can be assured of adequate service," said Chuck Johnson, air services development manager. He said it's his experience that such issues take a long time to resolve and could affect the three Boeing 727s Pan Am now flies, as well as four more it seeks DOT blessing to fly.

"We have to be fiscally responsible for our actions," added Steve Bowser, director of aviation. "We don't know where these fiscal fitness issues are going to be going with the DOT."

"The thing that makes this so painful is that we cannot afford to have them come in and cause any discomfort or pain among passengers. We can't afford another airline leaving this area," said Rubenstein, of Rubenstein Associates, Liberty. "There has to be some assurance that things are OK."

Investigation

The Air Line Pilots Association says John Nadolny, former general counsel for Boston-Maine Airways Corp., falsified investment account and cash balance amounts in documents submitted to the DOT as evidence of the company's fiscal viability.

"As far as the viability of my company, I stand on it. It's a blip in the road," Fink said.

Nadolny was with the airline 18 years but "made some questionable transactions," Fink said. "I'm very sorry it happened ... I got rid of him. I think I've done the right thing." Fink said he also reported these events to the Massachusetts Bar Counsel.

A federal administrator, however, has ordered an investigation into the airline's management and ethical standards "to prove there were no other irregularities regarding prior DOT filings," a statement from the port authority said.

Pan Am announced its plans for the airport in June, but twice moved back its service start date, from Sept. 15 to mid-October, then to Nov. 10. Orlando/Sanford, Fla.; St. Petersburg-Clearwater, Fla.; Newburgh, N.Y.; and San Juan and Aguadilla, Puerto Rico, were announced destinations.




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