US regulators may dismiss Family Airlines' application to launch domestic operations due to the startup's failure to address DOT concerns about its management and finances.

Family Airlines sought US DOT approval last year to link Las Vegas with New York City, Los Angeles, Honolulu, San Francisco and Miami, where it seeks to establish an operations and maintenance base.

Las Vegas-based Family Airlines said in a regulatory filing that it plans to purchase three Boeing 747-300s and to acquire up to nine additional aircraft during its first year of operation.

But before the company can inaugurate flights, the carrier must alleviate DOT concerns about its CEO, Barry Michaels. Michaels was convicted of a fraudulent stock offering in 1993, which regulators said in May 2008 is enough to keep the company from winning clearance to launch operations.

Despite a DOT request that Michaels take a more "passive role" with the carrier, Michaels has maintained his involvement with Family Airlines, prompting the DOT to seek information about his past to review Michaels' "disposition toward compliance with laws, rules and regulations".

Family Airlines declined to provide DOT with the requested information and now is at risk of having its application dismissed unless it addresses DOT concerns within 14 days from 4 August.

Vanessa Balgobin, an analyst in the DOT's air carrier fitness division, says in a letter to Michaels, "We remain concerned about [Family Airlines'] fitness in every area: managerial competence, finances and compliance disposition."

She adds, "Considering [Family Airlines'] failure to date to meet its burden of establishing its managerial competence, its financial ability to begin operations and its compliance disposition, the department does not intend to continue to process [Family Airlines'] application unless the air carrier takes immediate steps to rectify these shortcomings."

Family Airlines was not immediately available for comment.

Michaels first attempted to launch Family in 1992 with 747 flights from Las Vegas to Los Angeles and New York. The company had purchased a single aircraft, but Michaels says he was pushed out of the company, and eventually that carrier went out of business without inaugurating service.

Source: Air Transport Intelligence news