Red Way Blames for Lincoln Airport for Delinquent Refunds, Airport Director Says Red Way Causing Confusion

Oct. 17—Recent emails sent by defunct airline Red Way to customers seeking refunds for canceled fights cast blame for the delay on Lincoln Airport.

Red Way is saying it can't give refunds until the airport makes good on the money it is owed.

That's not true, says Dave Haring, the Lincoln Airport's executive director.

Haring said that Red Way CEO Nick Wangler is "causing confusion" by conflating two revenue-related issues that have no correlation.

"We have never had access to, possessed or received any passenger revenue at all," Haring told the Journal Star on Tuesday. "Realistically, there's nothing on our end — there are no refunds that we owe to people."

It's true that Red Way is still owed a little more than $700,000 from a $3 million incentive fund for its final month of flying, but the money has been frozen, pending the results of state-mandated and airport-ordered independent audits.

That $700,000 is about 55% of the nearly $1.3 million invoice Red Way submitted for August, its final month of operation.

The final payment, to be paid after an independent auditor signs off on the report, was capped to not exceed the $3 million — $1.5 million each from the city of Lincoln and Lancaster County in American Rescue Plan Act funds — used to launch Red Way.

In reality, it appears that Red Way, which began flights out of Lincoln Airport in June, tore through that amount in less than three months, racking up about $3.6 million in losses, according to their invoices.

It's what prompted the airport to order the independent audit days before State Auditor Mike Foley announced his investigation.

"We have a fiscal obligation to ensure that the money was being spent appropriately," said Haring, who made it clear that Red Way is on the hook for every dollar that exceeds the $3 million.

Regardless, the money Red Way will get from the airport is to be used for flight costs, not ticket refunds, says John Olsson, chairman of the Lincoln Airport Authority board.

"This situation is frustrating for everyone involved," Olsson said.

According to the U.S. Department of Transportation regulations, when a customer purchased tickets with Fly Next LLC (doing business as Red Way), " Red Way, as the charter operator, has to take specific steps to protect that customer's money," Olsson said.

The air carrier is required to have a surety agreement, such as a bond or, more commonly, an escrow account at a bank to hold that money until the flight is completed.

"Neither the Lincoln Airport, nor any other airport, has access to these escrow funds," Olsson said. "That agreement exists solely between the customer and the charter operator."

That paints a different picture from the emails Red Way sent to frustrated customers last week. In the email, it stated:

"We are working to complete refunds as quickly as we possibly can. Fly Next LLC (dba Red Way) is owed a substantial sum by the airport authority and municipality, which was due by Oct. 6. This amount is required to complete refunds. As the amount has not been received within the contractual timelines, refunds unfortunately remain unprocessed. ..."

Wangler did not return phone calls to the Journal Star.

"All we know is there's only $700,000 left and that's only for completed flights," said Rachel Barth, the Lincoln Airport's communications director. "So to tie the two together, to say what Red Way is now basically claiming, that 'we can't pay them because the airport and the municipalities still owe us this money,'" isn't true.

Haring wouldn't speculate on what happened to the funds that were earmarked for the escrow account.

As of Tuesday, about 670 ticketholders still awaited refunds, including Brian Schaefer, who isn't counting on ever seeing the charge refunded for his canceled December flight to Las Vegas for the U.S. Nationals Rodeo.

"I told my wife we'll never see that money again," Schaefer said. "It's typical corporation BS, really."

Schaefer said he received an email from Red Way, saying he would be paid by Oct. 6. When that day came and went, he called a phone number on the air carrier's website and listened to a long message, but when it came time to leave a message, the call was disconnected.

"I'm at a loss," he said. "I don't know what else to do at this point. I mean, if everybody banded together to make a class-action lawsuit, what are we going to get out of them? They've already gone bankrupt."

Reach the writer at 402-473-7391 or [email protected]

On Twitter @psangimino

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