(Courtesy: The Lincoln Municipal Airport)
Approximately three months after the shutdown of Lincoln Airport’s new airline, Red Way, Nebraska State Auditor Mike Foley has completed his audit of the failed charter service.
In the Auditor’s scathing report, Foley alleges Red Way violated federal regulations, mismanaged public funds, and continues to withhold customer refunds… despite a previous announcement from Nebraska Attorney General Mike Hilgers indicating all Red Way reimbursements should be received.
“This report shows that we think there’s over $100,000 of refunds that have not been paid yet,” Foley told KLIN News.
Foley highlighted that the Red Way debacle was partly attributed to errors in local leadership. He noted, “People generally know we blew $3 million of federal funds. What they don’t know is we also mismanaged $700,000 of local funds. It was approved unanimously by the Lincoln Airport Authority, the Lincoln City Council, and the Lancaster County Board. Not a single one of those public officials voted no.”
As for violated regulations, “Red Way operated in the state for a number of months, when they weren’t even certified to do business in our state. They violated federal rules regarding taking money out of the customers escrow accounts and using it for other expenses,” detailed Foley, “When the customers should be first in line to get those refunds: They were last in line.”
Foley also scorched the charter’s promotional operations, unearthing some shocking profit margins, “They were selling tickets at $9 each in some cases. You can’t make money doing that. They flew 274 flights, and only one singular flight was profitable: Red Way’s inaugural flight to Orlando… and that was only because the plane arrived nearly full on fuel. Every other flight lost money.”
Foley summarized in his report’s conclusion, “Red Way was a failed riverboat gamble bankrolled by taxpayers. Had the Red Way business plan been prepared for the eyes of a reputable commercial bank lender, its proponents would not have gotten past the junior teller. The cavalier treatment of government funds as monopoly money paved the way for the plan to be sold as a worthy risk to elected officials, who accepted it with few questions asked.”
Read the State Auditor’s full report below: