U.S. accuses travel agency of diverting refund money Republic Air advertised flights from BWI

November 03, 1993|By Suzanne Wooton | Suzanne Wooton,Staff Writer

Republic Air Travel, a Dallas-based travel agency that recently began advertising low-cost charter flights from Baltimore-Washington International Airport to Florida, has diverted hundreds of thousands of dollars from customer refund accounts to cover its operating expenses, federal regulators say.

The U.S. Transportation Department on Monday filed a civil complaint against Republic Air and Airlift Group Inc., a charter operator, saying they also failed to make refunds on time, illegally canceled flights and gave consumers inadequate notice about cancellations.

According to the Transportation Department complaint, Republic collected "hundreds of thousands, if not millions of dollars from consumers or their travel agents for charter flights, depositing the payments into its operating or payroll accounts of various banks."

The company placed "little of the money" in escrow accounts, according to the department's complaint. Under federal regulations, money collected from charter customers must be placed in escrow accounts until the customers complete their trips. The escrow accounts serve essentially as insurance policies for passengers if the flights are canceled.

In addition to seeking more than $1 million in fines, the Transportation Department said it wants the leader of Republic Air, Scot Spencer, banned from the airline business. Mr. Spencer was the subject of an earlier Transportation Department complaint involving his role at the former Braniff Airlines.

Republic is a travel agency that books flights for a Florida charter company, Airlift Group. Airlift then contracts with a charter air carrier, Express One of Dallas, to provide the flights. Officials at the three companies could not be reached for comment yesterday.

Republic Air began last summer offering travelers sharply discounted fares from Dallas-Fort Worth to New York, Miami and Los Angeles. And for several months, Republic Air has been advertising charter flights, starting at $49, from BWI to several points in Florida. That service began in early October at BWI, with several flights some days and none on others.

Officials at BWI said yesterday that they had received several complaints from passengers about Republic flights having been canceled at short notice. Those complaints were referred to the Transportation Department, which regulates both scheduled carriers and charter operations.

"Because it is a charter, we don't have much to do with them," said Jay Hierholzer, deputy administrator in charge of marketing at BWI. He said the charter company has a contract with Signature Aviation to provide ground services, like ticketing and baggage handling. Formerly known as Butler Aviation, Signature is a national company and one of two large ground-service companies at BWI.

Transportation officials also accused the Dallas-based Express One of depositing money into its operating accounts instead of placing it into escrow accounts. They said Express One failed to ensure that its charter operator partners were complying with federal regulations.

The three companies have 15 days to respond to the Transportation Department complaint, which will be heard by an administrative law judge.

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