Southeast leaves chaos, confusion
Customers and employees blindsided by the airline's collapse find few answers.
By JEAN HELLER and STEVE HUETTEL
Published December 3, 2004
LARGO - Confusion over the Southeast Airlines collapse deepened Thursday with consumers seeking refunds for worthless tickets and employees taking legal action over worthless paychecks.
Consumers expressed frustration that they were unable to find anyone who could tell them how to collect refunds for unused tickets. Even the federal agency responsible for overseeing the process was having trouble sorting things out.
And dozens of Southeast employees whose paychecks bounced this week flooded the Pinellas-Pasco State Attorney's office to file complaints that could lead to a criminal investigation of the airline.
The demise of the public charter airline left legal and emotional problems on several fronts, and it promises to be weeks or longer until the ramifications are clear.
Federal officials say they cannot guarantee that everyone left holding unused airline tickets will get money back, even though federal law says funds eventually should be available.
One consumer who intends to try is Mike Seip, program director for a youth swim club outside Allentown, Pa.
The club spent $9,484 for 45 tickets on Southeast for swimmers and coaches to fly to Fort Lauderdale for training later this month.
Members and friends have been unable to find out where to get a refund.
"It's very frustrating," Seip said. "Obviously, nobody has an answer at this point."
Former Southeast employees are angry.
Bruce Bartlett, chief assistant to Pinellas-Pasco State Attorney Bernie McCabe, said "a considerable number" had come in "to get the paperwork to begin the process of pressing (bad check) charges."
"We were told to expect as many as 100 more today," Bartlett said Thursday. Once the paperwork is in, he said, an attempt would be made to determine if someone at Southeast would make the checks good. If not, the matter would be referred for criminal investigation.
"There are some issues on the face of it," he said. "Whether it will end in prosecution I don't know at this point. I hope someone will make those checks good. It's astonishing that this would happen at any time, but at this time of year, so close to Christmas, it's heartbreaking."
The U.S. Department of Transportation, which writes the rules under which public charter airlines operate, including the rules that are supposed to keep passengers' ticket payments safe, said Thursday it didn't know the whole Southeast story.
Unlike scheduled airlines, which are free to use ticket payments as soon as they're received, public charters must put those payments in escrow accounts and can claim the funds generated by an individual flight only after that flight is completed.
The escrow account is supposed to be backed up by a surety bond. The bond is important to consumers because it would pay the excess if there are not sufficient funds in escrow to make ticket refunds.
"The bond is a second line of protection for the consumer," said Bill Mosley, a spokesman for DOT in Washington. "Money in escrow comes and goes. The bond is a set amount that's always there."
But is it in Southeast's case?
On Thursday, DOT officials identified Valley National Bank in New York City as the holder of the escrow account.
Southeast stated in its contract with customers that their payments were protected under a bond issued by United Bank and Trust Co. of St. Petersburg. DOT repeated that claim Thursday.
United initially disputed it.
"United Bank and Trust Company has no authority to issue surety bonds and has not issued a surety bond, or bonds, for the benefit or protection of Southeast Airlines or any of that airline's customers," the bank said in a statement posted on its Web site.
But late Thursday afternoon, senior vice president Susan Blackburn declined to say whether the information was accurate.
"We are working diligently and closely with the Department of Transportation and others to determine the appropriate procedures for claims," she said. "I'm sure everyone will be making changes and updates."
Asked about the confusion, DOT's Mosley said, "We're standing by our statement, which is the truth as we know it this afternoon." He said an investigation of Southeast is continuing.
Even if the bond exists, consumers who paid for tickets by credit card more than 60-90 days ago might have difficulty getting refunds from their credit card issuers, since refund rules set a time limit for applying for reimbursement. There was some good news for Southeast employees. The Salvation Army will try to provide toys and Christmas meals for those left in need.
Starting today,from 10 a.m. to 7 p.m., former Southeast employees with children who live between Ulmerton Road and Tarpon Springs can go to the organization's office at 940 Court St. in Clearwater and sign up for toys.
To qualify, the person making application must bring proof of Southeast employment such as an ID badge or a pay stub; copies of bills, such as mortgages, rent statements and car payments to prove obligation; and Social Security cards issued to the children. Those without children can sign up for food assistance. The signup program continues next week, Monday through Wednesday, from 10 a.m. to 4 p.m.
"Someone who lives outside the North Pinellas jurisdiction should call us, and we'll give them a referral to the Salvation Army in their area," said Sharon Autry.
Anyone with questions can call Ed Langdon, the social services director, at (727) 446-4177.
Left with a ticket? Here's what to doLARGO - For consumers left holding unused tickets or ticket credits when Southeast Airlines ceased operations this week, the U.S. Department of Transportation posted instructions Thursday for getting refunds.
There was a caveat: There are no guarantees.
Those who charged Southeast tickets to a credit card may be able to have the cost credited to their account. Write the credit card issuer and enclose a photocopy of evidence of the purchase, or indicate the price of the tickets and the date they were charged.
State that Southeast Airlines has ceased flying, you will not receive the services charged to your account, and you are requesting a credit pursuant to the Fair Credit Billing Act.
Under the law, this notice must be received by the credit card issuer no later than 60 days after the date you received the first monthly statement that listed the charge for the Southeast flight. Credit card companies, however, sometimes waive this deadline for future transportation.
If you paid for your Southeast ticket by cash or check, you should make a written request for a refund to Southeast Airlines' escrow bank and securer:
Valley National Bank
Global Escrow Services
1040 Avenue of the Americas
New York, NY 10018-3703
Consumers also should be able to apply for refunds to the bank that issued the bond that guaranteed the escrow account, but it was unclear Thursday if such a bond had been issued, as required by federal law, and if so, by whom.