Printer-friendly Version

FOR IMMEDIATE RELEASE: December 10, 2004

SCHUMER DEMANDS FULL PUBLIC ACCOUNTING OF MONEY FOR SOUTHEAST AIRLINES TICKET REFUNDS

Southeast Airlines abruptly folded this month, leaving several Stewart Airport ticket holders with no recourse to get refunds

Schumer, who has led the charge to boost Stewart International Airport, demands that the banks holding Southeast's ticket revenues in escrow publicly disclose how much money is in the account and how many customers are entitled to refunds

With many Stewart International Airport patrons holding onto obsolete Southeast tickets, US Senator Charles E. Schumer today demanded a full public accounting of any money available for refunds by the banks entrusted to hold Southeast’s ticket revenues in escrow. After Southeast Airlines abruptly folded this month, ticket holders seeking refunds were left with no recourse to get their money back.

"The last thing you should have to worry about when you buy a plane ticket is whether the airline will still be in business," Schumer said. "These ticket holders not only were left without a flight, but now they are stuck without a refund. The least they should do is get their money back and we'll keep pushing the banks involved until that happens."

Southeast has been serving Stewart International Airport for more than two years and most recently offered four flights per day out of the airport including flights to Fort Lauderdale, Orlando, and St. Peterburg, Florida; Gary, Indiana; Columbus, Ohio; and Allentown, Pennsylvania. Last week, Southeast ceased operations without notice, leaving hundreds of passengers stranded at Stewart Airport. Passengers who booked their flights as long as two months in advance have gotten little or no help in receiving refunds. Since Southeast's closing, Stewart Airport has been flooded with phone calls from travelers seeking their reimbursements.

To rectify the situation, Schumer today called on Valley National Bank and United Bank of St. Petersburg, the two banks entrusted to hold Southeast’s ticket revenues in escrow, to produce a full public accounting of any money available for refunds. After his office found that there indeed was an account, Schumer today specifically demanded that the banks disclose how many passengers are holding unused tickets, how many deserve a refund, how much money is in the account, and whether or not there will be enough money to refund passengers in full.

In addition, Schumer today demanded that former Southeast and bank executives cooperate with Department of Transportation (DOT) investigators to quickly determine when victimized customers will receive their refunds, how much they will receive, and who will be responsible for any shortfalls. He advised affected customers to contact the Department of Transportation immediately to make them aware that they are owed money, and to submit their information to the banks.

In a letter to the DOT Secretary Norman Mineta, Schumer today urged the secretary to immediately become engaged in the situation, seek a swift resolution, and conduct a thorough investigation into the circumstances leading to the demise of Southeast. "I hope you will conduct an investigation in to circumstances leading to this discrepancy and to Southeast Airline's eventual demise. Present law should guarantee that there is at least an amount equal to the value of every outstanding ticket in the escrow account," Schumer said in the letter.

In his letter to the Comptroller General of the United States, Schumer raised his concern that this situation is not limited to Southeast Airlines. With many of the major airlines in financial trouble, Schumer wrote that the GAO should ensure that millions of travelers are not left in the lurch if one of the legacy carriers fails. "I urge your office to conduct a full investigation to ensure the airlines are prepared for and the traveling public well aware of the consequences of a major carrier ceasing operations, and to recommend steps all parties can take to limits future damages," Schumer said in his letter. Schumer also asked that the review include a comprehensive study of laws on the books protecting passengers in the event of a major airline shutdown and of what, if any, contingency plans the airlines have in place should they fold.

Schumer said that if the banks did not comply with these requests he would consider introducing federal legislation forcing them to do so. In addition, Schumer said he wanted to know if Southeast executives illegally drew down the account balance. "The bottom line is it's vital that we know how much money is in the escrow account," Schumer said. "We must immediately determine if Southeast or the banks behaved improperly, and if so, force the party responsible to compensate for the loss." Both United and Valley National banks have denied responsibility for the refunds.

At the time Southeast closed, Chuck Seliga, President of Stewart Airport, his staff along with Independence Air, Air Tran, US Airways and others accommodated passengers' immediate needs. Seliga and his staff provided taxi service to John F. Kennedy and La Guardia Airports, breakfast, free overnight parking, and arranged travel both to and from Stewart for stranded passengers. Independence Air, AirTran, USAir, and others offered special fares for passengers so they could get to their destinations.

Schumer was joined today by Stewart Airport President Chuck Seliga and ticket holders seeking refunds.

###