XTRA Airways sued for $50M - Marianas Variety

10Apr2018

By Bryan Manabat - bryan@mvariety.com - Variety News Staff

XTRA Airways is facing a $50-million federal lawsuit that stemmed from its termination of the charter service between China and Saipan.

The lawsuit, filed in federal court by five business companies and 21 Chinese tourists, is alleging fraud, negligence and violations of the Racketeer Influenced and Corrupt Organizations Act and the CNMI Consumer Protection/Unfair Competition Act.

The complaining business companies are Dream Pacific Aviation Services Hong Kong Ltd; Evelen U.S.A Corp., doing business as Impression Tour; Bright Investment LLC, owner of Saipan Restaurant; Rionda Company Ltd., owner of New Shin Restaurant; and BW International Inc., doing business as BW Car Rental.

The complaining tourists are Cui Xing, Kong Fanjing, Li Huakun, Li Xiuxia, Liang Wei, Luo Feng, Meng Jie, Qian Dongyuan, Qian Yutian, Shi Songzhen, Song Guangsen, Wang Fang, Wang Mingqiang, Wang Qianduo, Wang Yaming, Wang Yelan, Yang Shiping, Zhang Guifeng, Zhang Lin, Zhang Shuangli, and Zhao Jingjian.

Named defendants were Frank J. Visconti, president and chief executive officer of XTRA Airways; Nicolas Finazzo, director of XTRA Airways and AerSale Inc.; and Andrew Lotter, chief operating officer and director of operation for XTRA Airways.

Visconti, Finazzo and Lotter are all citizens and residents of Florida. According to the lawsuit they all personally authorized and actively participated in “the fraudulent and wrongful conduct” against the plaintiffs.

Eleven of the 21 tourists were stranded and abandoned by XTRA Airways on Saipan, the lawsuit stated.

The 21 tourists traveled from China to Saipan via XTRA Airways prior to Nov. 4, 2017, and were scheduled to return to China with the same airline on or after that date.

The plaintiffs are represented by attorney Robert O’Connor and the Torres Brothers law firm.

Dream Pacific, in addition, is suing the defendants for breach of contract/interference with contract, unjust enrichment, and conversion.

The plaintiffs are asking the court to hold the defendants liable to pay them $50 million in punitive damages, plus other damages, attorney’s fees, and court costs.

The lawsuit also named as defendants TEM Enterprises Inc., AerSale Inc., and Aerline Holdings LLC — companies based in Coral Gables, Florida.

TEM Enterprises owns XTRA Airways while Aerline Holdings LLC is the parent corporation owner of XTRA Airways.

AerSale Inc. owns the B-737-800 aircraft that XTRA Airways used for the Saipan/China flights.

XTRA Airways pilot, Carlton Conkling from Texas, was also named as a defendant. He served as captain of several XTRA Airways flights between Saipan and China.

According to the lawsuit, on March 18, 2017, Dream Pacific and XTRA entered into an aircraft charter agreement to provide charter air services between Saipan and China.

XTRA agreed to make one aircraft with crew available to Dream Pacific for charter flights: three weekly flights between Saipan and Nanjing; three weekly flights between Saipan and Tianjin; and one weekly flight between Saipan and Changsha.

But Visconti, Finazzo, and Lotter later determined that XTRA’s contractual relationship with Dream Pacific was dissatisfactory and disadvantageous to XTRA, the lawsuit stated.

On Aug 16, 2017, Dream Pacific and XTRA — in a bid to expand the service — amended the original charter agreement by providing two aircraft rather than one; and by changing the schedule of charter flights to include three weekly flights between Saipan and four cities in China: Nanjing, Tianjin, Wuhan, and Shenzhen. The minimum monthly hours were set at 230 hours per plane.

The five business plaintiffs agreed to arrange and provide for entertainment, food, and lodging of the anticipated average 2,000 Chinese tourists per month to Saipan via XTRA Airways charter flights.

Dream Pacific sold air tickets and travel packages to and from Saipan to the tourist plaintiffs.

But according to the lawsuit, XTRA Airways supplied only one plane to provide service for charter flights: a two-engine B373-800 passenger aircraft with 186 passenger seats.

The single plane provided by XTRA Airways was not fit for its intended purpose, the lawsuit stated.

It added that XTRA Airways operated its Saipan/China flights in violation of Civil Aviation Administration of China and U.S. Federal Aviation Administration safety regulations, including but not limited to regulations concerning duty times and crew rest requirements.

The lawsuit stated that XTRA Airways was cited by the Civil Aviation Administration of China for its failure to satisfactorily address various permitting concerns.

XTRA Airways, the lawsuit added, advised Dream Pacific on Nov. 4, 2017 that its sole plane on Saipan had run into a mechanical problem which required parts that could only be obtained in the mainland U.S.

The passengers on that date’s flight from Saipan to Tianjin had already boarded the plane on Saipan, expecting to return to China. Instead they were deplaned at the Saipan airport due to the reported problem, the lawsuit stated.

It added that XTRA Airways had no second plane available for the deplaned and stranded passengers.

XTRA refused to feed, house or otherwise accommodate the stranded tourists, including the stranded tourist plaintiffs, the lawsuit stated.

It added that because XTRA refused to repatriate or pay for the repatriation of the stranded tourists, Dream Pacific was forced to house, feed and repatriate them.

According to the lawsuit, XTRA also refused to pay LSG for supplying food and beverage for the charter services so Dream Pacific made the payments.

On Nov. 10, 2017, after the plane was repaired, XTRA flew back to the U.S. and later terminated the aircraft charter agreement, cutting further charter services to or from Saipan.

The lawsuit stated that approximately 2,000 intending tourists, including the tourist plaintiffs, had signed up and paid to fly roundtrip from China to Saipan and back via XTRA Airways on various dates between Nov. 10 and Dec 10, 2017 but all of the flights had to be cancelled.

Dream Pacific has asked XTRA Airways to resume its air charter services but the latter refused to do so, the lawsuit stated.

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