In a recent audit report, it has been revealed that Red Way Airlines, a short-lived airline operating out of Lincoln Airport, experienced significant mismanagement and financial losses during its three-month operation. The audit, conducted by independent auditors, shed light on the airline's poor performance, unsustainable pricing strategies, and confusion regarding its dismal financial state.

Backstopped by $3 million in American Rescue Plan Act dollars provided by the City of Lincoln and Lancaster County, Red Way Airlines launched with the aim of providing new air service to Lincoln. However, the audit found that the startup airline quickly depleted the initial funding in less than three months. Furthermore, local governments spent an additional $700,000 on the failed airline until its operations ceased at the end of August.

According to the audit, out of the 274 flights operated by Red Way, only the inaugural flight to Orlando proved to be profitable. The airline's projected ticket sales of $8.8 million for its first three months of operation fell drastically short, with actual sales amounting to only a quarter of the projected amount.

The audit also highlighted significant shortcomings in Red Way's seat occupancy rates. The airline sold only about 45% of the available seats on its flights, significantly below the industry average of 84%. Additionally, many tickets were offered at unsustainable introductory prices, exacerbating the financial losses.

Confusion regarding the airline's financial situation was prevalent not just within Red Way but also among airport personnel. The audit report cited an email from the Lincoln Airport Authority to a senior Lancaster County official, sent just 10 days before Red Way's demise, falsely stating that the markets of Las Vegas and Orlando were "doing well," even though these destinations suffered the greatest losses.

Errors in invoices submitted by Red Way to the airport were also identified in the audit. The invoices were processed hastily, neglecting to address the inaccuracies until auditors discovered them. The report criticized the cavalier treatment of government funds as "monopoly money" and highlighted the lack of scrutiny from elected officials who accepted the faulty business plan.

Airport officials acknowledged their own missteps but emphasized that Red Way consistently over-promised and under-delivered throughout its short-lived operation. One major issue identified by the airport executives was the contract's requirement to operate flights to seven cities, which strained resources and affected the profitability of individual routes.

Despite the challenges, the audit suggested that given more time, routes to Las Vegas and Orlando could have potentially become sustainable. However, Red Way Airlines ran out of funds, leaving thousands of customers without flights and owed over $360,000 in refunds. A dispute between the airline and the airport further delayed the refund process.

The audit accused Red Way of violating federal rules regarding escrow requirements, including falsely certifying funds in the escrow account, which were then redirected to cover airline operating expenses rather than reimbursing customers.

While the county's role was not highlighted in the audit review, County Board Chairwoman Christa Yoakum expressed appreciation for the information provided to the Board. Lincoln Mayor Leirion Gaylor Baird declined to comment.

The audit report serves as a wake-up call for the Lincoln Airport Authority, highlighting the need for more stringent financial oversight and due diligence when evaluating potential airline ventures. It also underscores the importance of transparency and accountability when handling public funds.

Despite the setbacks, the Lincoln Airport Authority remains committed to attracting new air service to the region. Red Way Airlines' failed operation has provided valuable lessons for future endeavors in the quest to enhance air connectivity for Lincoln residents and businesses.

In the wake of its closure, Red Way Airlines had announced plans to expand its services with flights to Tampa, Florida, and Phoenix, starting in December. However, these plans have been abandoned due to the airline's demise and the subsequent audit findings.