A lawsuit by the Allegheny County Airport Authority aimed at recovering $763,000 in subsidies isn’t the only legal fight the regional airline OneJet is facing.
The U.S. Internal Revenue Service has filed a federal tax lien against the beleaguered carrier seeking payment of $621,556 in excise taxes.
According to the lien, filed in Allegheny County Common Pleas Court, the quarterly excise taxes that have not been paid date back to Sept. 30, 2015, when there were two non-payments.
The lien, filed Aug. 14 by the IRS Detroit office, also involves two non-payments in 2016; four in 2017, including one on Dec. 31 for $215,753; and one on March 31, 2018, for $195,921.
No other information was available.
Matthew Maguire, OneJet CEO, could not be reached for comment.
According to the Federal Aviation Administration, aviation-related excise taxes are paid on passengers, cargo, and fuel. They are used to fund the Airport and Airway Trust Fund used to finance aviation programs, including capital improvements to airports.
Among the taxes are a 7.5 percent domestic passenger ticket tax and a domestic flight segment tax of $4.10 per passenger per segment, according to the IRS. A trip that involves one connecting flight would count as two segments.
Michael Boyd, a Colorado-based aviation consultant, said airlines are responsible for collecting the taxes and remitting them to the government. It is not known what specific excise taxes are involved in the OneJet lien.
News of the tax lien comes only days after OneJet’s proposed acquisition of Ultimate JetCharters, parent company of Ultimate Air Shuttle, was canceled.
Rick Pawlak, managing director of Ultimate Air, said last week that Ultimate JetCharters, an Ohio-based charter company with more than 30 years in the business, “has terminated all acquisition agreements with OneJet, effective immediately.”
Mr. Pawlak would not say why the agreement was terminated but he stated it had nothing to do with the lien or the airport authority’s lawsuit against OneJet claiming a breach of contract.
The OneJet acquisition of Ultimate Air — which offers public charter service from Cincinnati to Atlanta, New York, Chicago, Charlotte and Cleveland — was announced in May.
Ultimate Air flies 30-seat jets. OneJet currently is using two of the carrier’s planes but that will end soon, Mr. Pawlak said.
At the time of the acquisition announcement, Mr. Maguire said the deal would “further enhance the travel experience and service options for our collective customers, providing a wonderful platform for both organizations’ continued growth.”
Combined, the companies had hoped to serve 17 cities, including Pittsburgh.
Mr. Pawlak said Ultimate Air would continue to operate business as usual in light of the cancellation.
“We are going to continue our growth plans that were planned out even before OneJet got into the picture in the spring. So it’s really not affecting us,” he said.
Through its lawsuit, the county airport authority is trying to recover $763,000 of $1 million in incentives awarded to OneJet in a 2016 agreement. The suit, filed earlier this month, accuses OneJet of not living up to the pact’s terms, which required the airline to serve 10 destinations, including seven new markets.
OneJet did launch flights to 10 markets but is now down to just two — Hartford and Indianapolis — from Pittsburgh. The deal required the carrier to maintain round-trip nonstop service at least five days a week for at least five years to the new destinations, according to the lawsuit.
Mr. Maguire has said the airline plans to incrementally restore the flights it has cut from Pittsburgh as it upgrades to large 30-seat jets.
Adding to the turbulence were disclosures that two members of the airport authority board, Robert Lewis and Jan Rea, invested in OneJet. But solicitor Jeffrey Letwin has said the investments came well after the incentives were awarded.
He did not see any conflicts of interest as long as both recuse themselves in any votes involving the airline. Mr. Lewis also sits on the OneJet board as a nonvoting member. The authority obtained the seat in the 2016 incentive agreement.
Mark Belko: mbelko@post-gazette.com or 412-263-1262.
Updated at 6:05 p.m. Aug. 27, 2018
First Published: August 27, 2018, 5:25 p.m.
