Family Airlines Gets Smacked by the DOT

In news that will surprise absolutely no one, the DOT has sent a letter to Family Airlines saying that it needs to get its act together if it actually wants to fly. Riiight. That’ll happen. You have to read the request and Family’s completely inadequate response for maximum enjoyment. (Here’s a brief refresher on their silly plan for domestic 747s based in Vegas.)

You can read the letter from the DOT to Family Airlines (pdf) yourself, but in short, they aren’t happy. (FAI = Family Airlines, Inc)

Although a substantial amount of time has elapsed since FAI’s initial filing and FAI has submitted certain supplemental information to its application to the Department, FAI has to date failed sufficiently to meet its burden of demonstrating its fitness to allow us to continue processing its application. We remain concerned about FAI’s fitness in every area: managerial competence, finances, and compliance disposition.

The rest of the letter is a scathing rebuke of every single aspect of the airline. It is some fun-filled reading, but not nearly as much fun as the response from the “airline.” You can read that here (.doc).

The response was dated August 4, the same day the letter came from the DOT. Yeah, sure. It had three parts.

  1. This was simply a change of address. (It’s still wrong on the website.)

  2. This was a list of bios for all the new proposed officers without justifying how any of them are qualified. In particular, it didn’t address the DOT’s concern about having Dan Eikleberry as VP of Flight Ops. It also never even touched the concern that DOT had about Barry Michaels continued involvement.

  3. Finally, they addressed the DOT’s concern that they didn’t have enough money to run this operation. This is probably justified since the company’s balance sheet at the time of its previous submission showed $30 in assets. Seriously. The DOT says the airline would need $185 million to begin. The response? They are going to issue 22 million shares of preferred stock to institutional investors at $7.50 each for a total $165 million. Even a non-math whiz could figure out that’s still $20 million below what the DOT says they need. But what’s the chance they can even raise that? The only institutional investor that would be interested in this is one that is institutionalized.


I thought it would be fun to try to get Family Airlines’ take on this letter, so I called the number on the website. I was informed that “due to technical difficulties” my call could not be completed as dialed. Would the technical difficulty be that they don’t actually have any phones? I also sent them an email on Tuesday, August 11 but I haven’t heard back.

Methinks Family should look at an alternative business. If their website is any indication, they may be trying to get in on the healthcare game. Take a look:
Family Airlines

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317 Comments on "Family Airlines Gets Smacked by the DOT"

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Konstantin von Wedelstaedt
Guest
Konstantin von Wedelstaedt

In unrelated news, I read about Baltia Air Lines purchasing their first aircraft (also a 747) after more than 15 years of startup-phase – that’s where it’s a bit similar to Family. They’ve been granted one weekly frequency between JFK and LED. Sounds like a recipe for disaster to me…

Bobber
Guest

Is Baltia Air Lines frequent flier programme really called “Freeloaders”…….????

Tom
Guest

I like the fact that they make you pay $50 for their Flight Crew Application: http://www.familyairlines.com/Pilot_Application.htm

Nimitz
Guest

wow. i mean, wow.

David SF eastbay
Member
Maybe they should just put slot machines on the plane and just fly from coastal cities out over the ocean to international air space and let passengers gamble for a few hours and then return. They would make more money this way maybe…..lol Hey why not, if you take a day trip on a cruise ship to gamble you have to wait until they sail out to international waters, this way the plane can fly out in minutes and just circle for hours while people gamble. Hmmm….a A380 with it’s full double decks would be perfect, one deck filled with… Read more »
Axelsarki
Guest

CF, I have been watching this since your first post on the subject, and I have learned that this Micheals guy is a nutjob convict, and I would not be surprised to hear that all the people listed in the response are fictional.

LGBJohn
Guest

I mostly feel bad for the 747-400 that’s tied up in all this. Poor airplane… it didn’t do anything to deserve this.

A
Guest

I have to admit checking out their website and the “proposed” in-flight meal options. Wow, a virtual TGI Fridays in the sky. Not sure I’m looking for overpriced bar food fare while flying but kudos to them for wanting to have a more complete list of options than dried out turkey sandwiches and mixed nuts.

oldiesfan6479
Guest

A wrote:

…“proposed” in-flight meal options….dried out turkey sandwiches and mixed nuts.

“Mixed nuts”? I think you’re confusing inflight catering with the executive team.

Shane
Guest
The DOT letter was a fascinating read. I’m sure Mr. Balgobin had to fight off his whole department to be able to have fun and run with this one. In fact, I think FAI should be fined by DOT for wasting so much time with this application. Most interesting is would you (assuming you were an honest person trying to start an honest venture) convince somebody to lend you the scratch to purchase/lease a fleet of 747 plus all of the operating capital to run the airline when you only have 30 bones to your name? That teacher in Italy… Read more »
oldiesfan6479
Guest
Shane wrote: The DOT letter was a fascinating read. Yes, especially the grammatical errors and failure to proofread: “For each business, state the nature of the business, Mr. Michael’s title and duties related to the business, and what percentage of Mr. Michael’s time is committed/devoted to that entity.” The surname is Michaels, not Michael, so the possessive form is Michaels’ (apostrophe after the “s”). Elementary school English, at least when I went to school back in the…(never mind). “State whether FAI is willing to take any action to mitigate the Department’s concerns about the applicant’s lack of compliance disposition under… Read more »
Dan
Guest

Family Airlines phone has not changed. You mis-dialed. (702) 253-1520 works same for last two years. Since we get so few calls for FAI, the phone transfers to the Mini-Care side of the office. Just ask for Barry Michaels, CEO of Family Airlines. He also heads up the up-start Mini-Care clinic ($22 / visit, no matter what, no insurance accepted), also Nevada Only (a business that assist those wishing to file for corporation status in Nevada), and a few other small businesses from that office.

ttjoseph
Guest

My favorite quote from the DOT letter:

“Applying this revised estimate of pre-operating expenses, assuming FAI’s first year operating projections remain the same, FAI would need to have access to $185.4 million to commence its proposed operations. FAI’s balance sheet at September 16, 2008, showed the applicant having total current assets of $30 and current liabilities of $14,496, giving the company negative working capital of $14,466.”

Dan
Guest
The letter from the DOT, dated 4 Aug, was never received at Family Airlines. We discovered it from email from one of your readers. DOT is not good about sending out mail — they just post stuff on their very difficult to navigate website. The letter from FAI you cited above is NOT our response to the DOT questions! It was only a coincidence that simple update letter was sent the same day the DOT had new questions. Strange that they would not have questions for almost a year, and then post questions with an 18 Aug deadline without sending… Read more »
james
Guest

Experts blame legacy carriers for jamming up airspace flying regional jets on a high frequency schedules to major cities.

Yet here’s a carrier that’s flying one 747 to your city once on a Tuesday, with seasonal bi-weekly Saturday morning service — and people complain and want them to fail.

Some people have no respect.

oh – any word on who they’ll be code-sharing with?

Dan
Guest
Code-sharing. Good question. At this time, I don’t think there is any plan to code-share with anyone. No frequent flyer programs, just very very cheap fares, all day, every day. Much like Southwest Airlines, there is no plan to ‘interline’ your baggage, either. You check it in (no additional cost anticipated for checked baggage), you pick it up. Don’t expect to leap to another airline and have your bag show up! To keep an airline at absolutely lowest cost to passengers, this one will not be able to provide the luxuries found elsewhere. But if you wish to pay, the… Read more »
Tee
Guest

Please fill out this survey on your views of the changes of in the airline industry. It’ll help my dissertation!!!
http://www.surveymonkey.com/s.aspx?sm=KbUEdG15_2b7AOX3_2bEU5VeXA_3d_3d

Bobber
Guest

581 punters on a 747-400. Nice.

asad
Guest

“It includes an amazing excel spreadsheet” wow, that has to be an amazing spreadsheet, anyone have a link to the 101 page response ?

Dan
Guest
Cranky Flier calls this a ‘silly plan’ at the top of this page. Its only ‘silly’ if you don’t know the details, the background, the research and all the work we’ve done for about 10 years on this effort, and intensely for the past two years. You’ll need to understand some often overlooked concepts, and financial intracacies that make this thing work. There are several factors that contribute to this unusual concept’s successful formula. Probably the biggest factor is just how CHEAP you can buy a used Boeing 747 these days! The 747 can haul a LOT of people, if… Read more »
Dan
Guest

Woops!

That’s $5 MILLION to $10 MILLION per plane, not $5 to $10!

<<>>

james
Guest
I am in my 30s, I don’t have kids, and often take quick turnaround weekend domestic trips. So I am probably not your demographic – but here’s a couple thoughts: My comment on code-sharing was sarcastic. I’m sorry it wasn’t more obvious. I work in advertising and media buying, and would take issue with the cavelier attitude regarding sponsors. When I see a show that has crap-tacular ads like MLM seminars, shamwows, and SpeedyCash outlets I DO think less of the product – because they can’t SELL their product as reputable and deserving of quality advertisers. The quality of a… Read more »
james
Guest

sorry to clarify — “I wouldn’t want to round up a vanful of kids for a 2:30am flight.”

David SF eastbay
Member
I was going to post saying this topic is giving me a headache and is turning into an ‘ad’ for Family Airlines. Then I got to thinking there has been many airlines start up with big ideas and plans over the years so why be surprised at one more. Who can really say at this point if it would work or not. After all, Southwest started as an idea drawn on a napkin with three cities (Dallas, Houston, San Antonio) and look where they are now. Those 500+ passengers will have to spend a lot of money on the ticket… Read more »
eponymous coward
Guest

So your airline is going to have business class seating on planes that look like a city bus?

Wonko Beeblebrox
Guest
I’m with Cranky. I’ve not read your excel spreadsheet, but I just don’t see this business plan working. Flying at 2AM? Who pays for all the TSA folks to be there screening all 581 pax for that 2AM departure? And can you imagine how many crying babies would be on a 581 pax 747-300 red-eye that is priced to attract families? My guess would be that noone on-board would get any sleep! As I recall….. Beyond that, America West had a red-eye hub in Vegas. The whole premise of that was that the aircraft all basically paid for themselves during… Read more »
Aviatrix
Guest

The chief pilot has a BS majoring in Aeronautical Engineering, Computer Science, Physics, and Engineering. A quadruple hard science major. Can you really do that? Unfortunately it doesn’t really address the airline’s concern regarding management experience.

Stephen
Guest

Hey Cranky – any chance you can get the year up there next to the date? You’ve been “cranking” for a while now, and I realize when I go back to some of the old posts you reference I don’t know what year you’re referring to (like the one here references the Family Airlines post from Feb 4….but I can’t remember if that was Feb 4, 2008 or Feb 4, 2009). I realize now I can just scroll down to the comments and see the year so maybe this is a moot point

Stephen
Guest

Oh how neat…if you Google “Family Airlines,” the text under the search result for the airline says “Family Airlines…A Non Profit Corporation. The ‘Almost’ FREE Clinic” . Now if that isn’t a marketing slogan, I don’t know what is.

David SF eastbay
Member

30+ comments on an airline that doesn’t even fly, that’s pretty good.

All we keep being told in this country is that Americans are fat and getting fatter. Now someone wants to stuff 581 overweight Americans on one plane. Going to need one large shoe horn and a jumbo can of WD-40 to make that work.

New York City at 2:30 in the afternoon isn’t safe, just think what 2:30 in the morning will be like.

And Mister Cranky I think you’ve found your new Alitalia :-)

E
Member

Dan, with all due respect, you’re an idiot if you think that business plan is going to work… but hey, everyone needs a hobby in retirement. I’d try golf or model railroading.

Shaydis
Guest
CF, I don’t know were he’s getting 581 pax on a 747-300/400. What I was find in all of my reference books and online was a max pax was at 568 with the 747-400D Domestic maybe less with the -300. And that would be with all seats at 32 ins pitch. Dan was saying that he also wanted a “business class upper deck” well thats gona cost you some seats. The typical setup on the upper deck is 2+2 with around a seat 39ins pitch, thats if you want to give them somthing they want other than a $19 flight… Read more »
Gumpfs
Guest

Dan,

Curt Lewis never tried to call Family. He runs a flight safety summary publication and posted a news story from Air Transport Intelligence. They are the ones who tried to call Family and failed, so it’s probably best to not repeatedly blame Curt.

Dan
Guest

@ Aviatrix:
Aviatrix wonders about my engineering background (USAF Academy). She seems to have failed to read the rest… Masters Degree in Aviation Management, Embry Riddle. Also, 28 years with United Airlines, dealing with every facet of a major airline, and 16 years on the 747-400, 747-200, 777 widebodies come pretty close to flying a 747-300.
True, I was never a Vice President at United, but, hey! Ya gotta start somewhere! If the FAA doesn’t like it, we’ll find someone else to fill the job.

Dan
Guest
@ David SFeastbay: David wonders why we call it ‘Family Airlines’. Good question. Wish I had a good answer. Ask the CEO. His choice. There was a time when we had a lady mayor in Vegas who kept saying “Vegas is a family town! Bring the kids!” We replaced her with a better mayor who says “Don’t bring the kids. We want to start a red light district down town, and I’ve got a martini waiting. This is a gambling and hot fun town. Bring money!” or something like that. I know of only two hotels on the Strip that… Read more »
jjjbbb
Guest

comment image

I came across this image while looking at pics from Mojave the other day. I hope FAI keeps this livery…

Tom
Guest

Why not call into the Barry Michaels Show, hosted by none other than their CEO? http://www.barrymichaelsshow.com/

Dan
Guest

@ Tom:

Barry Michaels Show. http://www.barrymichaelsshow.com/
Interesting. I did not know that web site existed.

The radio show is now defunct. Barry cancelled it in May or June. The lady who produced the show quit and probably had to look elsewhere for a paying job. Her job was a volunteer, no-pay job.

The radio show as an AM radio talk show. Time was paid for by its sponsors, which was mainly the Mini-Care start-up clinic here in town, and out of Barry’s pocket. There were no ratings, so Barry never knew how many listners there were..

Dan
Guest
@ jjjbbb: I had never seen that photo. There are some photos floating about that were taken at San Bernardino airport (old Norton AFB) where the plane was moved in 1993 after an earlier attempt to start up an airline fell apart (also called Family Airlines, but no relation to the current start-up attempt, other than same name and same CEO — go figure). I see “Family” has been painted over. And since it was at Mojave, I’m guessing the plane had been sold and moved up there from San Bernardino. It appears to have both engines on the left… Read more »
oldiesfan6479
Guest

Dan wrote:

…or the SW Shamu the Whale plane.

Shouldn’t an airline person, commenting on a commercial aviation blog, know that Southwest is WN, not SW?

aerokate
Guest

@ Dan:
CF, good call exposing this story. The more I read about FAI and see the reposnses from “Dan”, I just shake my head and wonder if these folks are really that clueless or they think the DOT are idiots. Maybe both. I’m still laughing about the $30 bank account.

AStabAtEmpathy
Guest

Dan,

You’re a good man, it seems, and you deserve better. But come on, you were a mainline pilot tasked with lots of responsibilities, which certainly required the application of a good daily dose of common sense. How much does it take for you to finally have your senses in regards to this FAI trainwreck?

Your CEO apparently is a convict with a record of securities fraud – related to that first incarnation of FAI, nonetheless. Think you got ANY chance to place your offering? Ever? You need to raise $200m, and have a current balance sheet with negative 14k. Delusional.

airmm
Member
@ CF: The common thread here is that Family/Dan believe they have a brilliant plan, and everyone else is wrong. I can’t tell you how many times I’ve seen (as an aviation consultant) a start-up plan for an airline that was the best thing ever concocted but was looney tunes in the real world. This is one more. Last airline to fly 747s domestically? Tower Air – a total disaster, and they had the same plan as Family, without the frills. The aircraft? Every major airline operating the 747 is getting rid of them. I guess LH, BA, SQ and… Read more »
Shaydis
Guest
The thing that bugs me about this is the use of a 747-300/400 on a shot haul market. It just wasn’t designed for it. Its a long haul A/C, its got 2 more engines than you need. If you really want to find a used high capacity A/C find some 767s or some A310s or even if you find them MD-11’s. The 747SP was used in the Asian market with high frequency rates, and that was successful. But there were only 45 delivered. Maybe 300/400 could work on a LAS-LAX pairing with 2 flights a day with 2324 pax, but… Read more »
Fred
Guest

@ Shaydis:

Tell it to the Japaneese, they do it every day. Also tell it to Fred Smith the founder of FedEx he was obviously an idiot for coming up with a crazy plan like next day delivery. Isn’t there any creative thinkers on this site? I’m guessing they’re either all burnt out airline guys or would be’s

aerokate
Guest

@ Fred

At least FedEx had a unique idea

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