Earlier this year I wrote about Red Way, a bizarre new airline startup based in Lincoln, Nebraska. Specifically, the airline launched in June 2023, and operates point-to-point leisure oriented flights. In reality this is a paper airline, as all flights are operated by charter carrier Global Crossing Airlines.
In an update that will surprise absolutely no one, the airline is going out of business after operating for not even three months…
In this post:
Red Way ceasing operations as of August 31, 2023
Red Way has announced that it will cease operations as of August 31, 2023. Here’s how company describes its decision:
It is with a heavy heart that we announce the decision to cease operations. After careful consideration and evaluation, we have come to the difficult conclusion that we must close our doors. The last day of operations for Red Way will be August 31st, 2023.
Over our short time operating, we have had the immense privilege of serving our customers and connecting people across the US. We are immensely grateful to have had this time, and we know that demand exists strongly in Lincoln for expanded air service. However, we face insurmountable challenges as a small startup in our industry, and the compounding of costs and lack of resources have made it impossible for us to sustain operations. It is our hope that other carriers see the incredible potential, and with their economies of scale, are able to provide Lincoln with the service it is so worthy of.
The airline states that it will operate its schedule through August 31 as planned. All flights booked as of September 1 are canceled, and customers are being promised that they’ll receive full refunds. The refunds will be done automatically, and should be processed by the end of the week.
Is anyone actually surprised?
When this concept was announced, I think most of us were really confused. Lincoln only otherwise has air service from United Express to select hubs, and that’s it. If you’re going to launch a new airline, it seems really strange that you’d exclusively base yourself in Lincoln and specifically launch leisure flights from there.
Now, there was probably a reason for that. Reports suggested that the company got a few million dollars in subsidies from the local government to launch this service. I’m not sure if those subsidies were just (stupidly) awarded over a very short period, or if the airline has been losing so much money that this doesn’t make sense even with the subsidies.
On the plus side, as far as airlines ceasing operations goes, this should be a pretty easy wind-down. Red Way doesn’t operate its own planes, but rather the airline leases aircraft from a charter company. So the planes can just continue operating other missions, while the paper airline may just disappear.
So it seems that not only was this not a great idea, but it was also poorly funded. Less than three months of service is hardly enough time to build up name recognition and get established in a market. I’m not sure what made the people behind the airline think this would be some instant success.
Bottom line
In June 2023, Red Way started operating flights out of Lincoln, using aircraft leased from Global Crossing Airlines. The service never made much sense, aside from the angle of local subsidies.
Well, after just a few months, the airline is shutting down. Red Way will operate its last flight on August 31, 2023, and all flights as of September 2023 will be canceled. Customers on canceled flights can expect automatic refunds.
What do you make of Red Way going out of business?
I flew Red Way from Orlando to Lincoln and back in mid-August. It was a pleasant experience all the way, from booking to the flight itself.
Was this all a big cash grab of pandemic-era funding? Did the proprietors ever intended the airline to operate beyond the summer of 2023?
I knew when they did their first flight to Las Vegas wouldn't last, we were taking bets! I won.
I flew Redway in June, on their second LNK-LAS flight. It was very efficiently run (by Global X), but the aircraft had at most 30 passengers. It reminded me of the time many years ago when I flew the "new" Western Airlines from Ontario to Bellingham ( and they also went belly up a week later). The airport in Lincoln is just too bog for a city that size in this post-deregulation era. Gone is...
I flew Redway in June, on their second LNK-LAS flight. It was very efficiently run (by Global X), but the aircraft had at most 30 passengers. It reminded me of the time many years ago when I flew the "new" Western Airlines from Ontario to Bellingham ( and they also went belly up a week later). The airport in Lincoln is just too bog for a city that size in this post-deregulation era. Gone is the era of multiple commuter flights a day on US Airways Express to Kansas City. Unfortunately, most leisure travelers would rather drive to OMA to catch a Southwest flight than stay local with fewer options.
As an airline industry veteran of 35+ years, my observations:
1) Customers prefer scheduling choice. It seems they were offering 1x or 2x weekly service to most markets served. That immediately rules out 95% of business travellers (who provide the overwhelming majority of profit for most airlines). Some operators, such as Allegiant Air do very well focusing on leisure, but they also do a great job of selling hotels, rental cars, event tickets, etc....
As an airline industry veteran of 35+ years, my observations:
1) Customers prefer scheduling choice. It seems they were offering 1x or 2x weekly service to most markets served. That immediately rules out 95% of business travellers (who provide the overwhelming majority of profit for most airlines). Some operators, such as Allegiant Air do very well focusing on leisure, but they also do a great job of selling hotels, rental cars, event tickets, etc. to create more of an overall "vacation experience" rather than just transportation to and from the destination. If you are going to go with such limited flight frequency, you absolutely must......
2) Complete your scheduled flights! It seems they had some challenges and alienated a good many customers by abandoning flights to certain destinations with little notice.
3) Origin and Destination (O&D) traffic from Lincoln is probably not huge, and even at just once or twice a week, it's tough to fill up a 150+ passenger jet.
4) Seemingly ineffective advertising and brand identity. (see comment from @B L. ) Startup airlines have to stand out somehow. Virgin America had the Virgin brand and a very "cool", travel experience. JetBlue effectively positioned themselves as the new, hip alternative in the Northeast. Spirit has developed a reputation as the absolutely cheapest way to travel by air.
The airline industry is tough. There are so many examples of failed attempts: Independence Air and ExpressJet which tried to be low cost carriers operating with high cost regional jets, Accent Air, which tried to be Des Moines hometown airline by flying a pair of 737's from DSM to New York (LGA) and Los Angeles (LAX).....that's it. Eastwind Airlines tried, and failed, to operat as a LCC with three 737's based out of Trenton, New Jersey. There's an old axiom that is telling and true. Do you know how to have a million dollars in the airline industry? Start with $10 million!
Look no further than United to see this was destined to fail. Does UA (or any other carrier) fly 150 seat Airbus to LAS/DFW/MCO? NO. and there’s a reason for that - insufficient demand.
Hopefully locals did not invest in this wild venture
As a student in Lincoln, it was also interesting the targeting of their advertising. I talked to quite a few people that didn't know of their existence. I'm curious if they had concentrated starting up flights around away football games and school vacations if there would've been more demand, in addition to not having as many destinations all at once.
On the positive side, I flew out of the newly renovated LNK terminal and...
As a student in Lincoln, it was also interesting the targeting of their advertising. I talked to quite a few people that didn't know of their existence. I'm curious if they had concentrated starting up flights around away football games and school vacations if there would've been more demand, in addition to not having as many destinations all at once.
On the positive side, I flew out of the newly renovated LNK terminal and it was a major improvement over their old terminal. When Delta was still flying to MSP, every Delta flight was full and I knew a lot of people who would take their flights. I'm curious to see how students rely on transportation to OMA as the university just stopped offering their shuttle bus to University of Nebraska-Omaha, and $100 for a shuttle or ride share is a bit steep for students to use to get to the airport.
Do you wish you’d had a chance to review it Ben?
Believe the refund when you receive it.
Top tier grift to be honest. rake in government subsidies. Provide a service for a few months, and pay executives bonus packages before it goes belly up.
Lincoln sucks - or our leaders suck!! This should have been successful but we don’t have the people in power to make it happen! Just shut down the airport! It’s a failure, I used to take flights out of Lincoln but it’s too expensive and has no airlines flying to nowhere! This was a promise but as usual, a big disappointment! Going to Omaha is a Paine but we will have to do that to fly out of this state!!!
Yeah I had a redway flight scheduled for the 11th of August. They canceled my flight from Atlanta less than 2 weeks before I left. I found 3 seats on 2 different (redeye flights only) that were less than 1k dollars. Truly frustrating
I’m a Lincolnite and had the bad fortunate of taking the last round trip to Minneapolis. We were all at the gate ready for the return flight when the Gate Attendant said the flight was cancelled. No reason was given. The attendant announced that hotel cost would be reimbursed by Redway up to $200. They stiffed us and claimed there was no offer.
Oh, no! I hate to see this end! I first heard about this airlines on August 11th & booked my first flight August 17th. It was wonderful! I live 34 mins from Eppley airport and 35 min. from the Lincoln airport. It was so convenient and everyone was so professional & kind!
https://journalstar.com/news/local/business/red-way-lincoln-airline-startup-ceases-operation/article_cbc74068-41c9-11ee-bdf9-cfd7819aeb81.html
Every single one of their destinations was already served nonstop from OMA. There's basically no inbound demand to LNK; in fact, I can't think of many places most people would rather fly less. Here in AUS they even operated out of the South Terminal, which adds 15 minutes on to the drive. This business model was so bad it almost seems like they were laundering money.
@Jerry - LNK has plenty of inbound and outbound demand for a city of it's size. The problem is that the airlines have figured out that most of that demand can be served through OMA. No need to serve LNK when you can serve the larger Omaha market, and effectively serve LNK at the same time.
Put it another - if you took the entire city of Lincoln and transported it 90 miles west...
@Jerry - LNK has plenty of inbound and outbound demand for a city of it's size. The problem is that the airlines have figured out that most of that demand can be served through OMA. No need to serve LNK when you can serve the larger Omaha market, and effectively serve LNK at the same time.
Put it another - if you took the entire city of Lincoln and transported it 90 miles west to where Grand Island (GRI) currently sits, it would have plenty of air service. Not Omaha level, but maybe something like Cedar Rapids.
That said this Redway thing was sheer idiocy from the beginning. The airport authority and city should be ashamed.
Note: born and raised in Lincoln. Lived there 25 years, still go back 3 or 4 times a year.
I'm not overly surprised, but you completely miss the boat on a lot of things with this airline and the experiment that it was, which actually provides some great data points for the model. Your questions as to their funding and such are easily answered by a few actual airline industry publications. They did a lot of things well and quite a bit of innovation. Certainly some lessons learned but Red Way will serve to make the next attempt like this more solid.
@ NedsKid -- I like to learn, so if you have any insights/links, I'd love to hear them! Curious what data points and lessons have been learned from this operation of less than three months.
Absolutely!
An explanation of the funding and some background, namely why this sort of arrangement was somewhat out of necessity because of the abbreviated timeline to use the funds (which were not airport money, nor traditional service guarantee):
https://airportimprovement.com/article/lincoln-airport-takes-creative-route-adding-new-leisure-service
Working with a carrier with established service like United is not opportune because of their demands on share of revenue.... not only a share, and fixed payments, but additional dollars per ticket.
LNK...
Absolutely!
An explanation of the funding and some background, namely why this sort of arrangement was somewhat out of necessity because of the abbreviated timeline to use the funds (which were not airport money, nor traditional service guarantee):
https://airportimprovement.com/article/lincoln-airport-takes-creative-route-adding-new-leisure-service
Working with a carrier with established service like United is not opportune because of their demands on share of revenue.... not only a share, and fixed payments, but additional dollars per ticket.
LNK Airport went into offering ground handling itself. Part of the legalize is that they can't give an airline money to pay for ground handling to a third party but they can offer incentive as a cost reduction through providing the service itself at a lower cost. This is valuable in approaching other airlines, like Delta. Speaking of Delta, much discussion points to Delta not serving or pulling out of LNK - the last foray was a daily MSP service that ran mid-day. The airport told them demand would suck. It didn't connect well, and LNK being primarily a business market that morning departure/evening return does a lot better.
The Red Way folks knew and admitted some markets wouldn't work, but there were surprises like BNA doing better than expected. Also the amount of traffic from Omaha, which wasn't planned, and that sales had started to be meaningful from the destination cities to Lincoln. But with this arrangement, buying a week worth of aircraft hours, the hours were there to use. Basing and crew positioning also presented some challenges to work out, and again serves as data points.
Other items like start-up costs, IT infrastructure, handling sales/credit card, etc., also were relatively unknown to this specific scenario beforehand, and Red Way admits some costs were things they should have known but didn't consider. The dynamic packaging realm as well was explored and good groundwork/research done on how to integrate that into this sort of operation.
They weren't aware that there would be a need for IT infrastructure or handling sales? That was an unknown to the scenario of starting an airline?
You said "They did a lot of things well and quite a bit of innovation."
What did they do well besides spend federal money that was a one-off? What did they (the airline? the airport?) innovate besides coming up with a creative way to spend federal money that was a one-off?
Possible lessons learned:
"Next time spend less and you can ride the government subsidies longer"
"Next time create a business plan that does not provoke immediate laughter"
"Next time, not Lincoln"
I also am interested to know the many lessons learned.
Lucky, what’s going on with Northern Pacific? Seems like the same situation.
How do we get refunded for flights inOctober?
You could read the article and see "The refunds will be done automatically, and should be processed by the end of the week."
Did they charge you? I booked in July for November and reviewed my statements and never was charged.
They just made it official on their Facebook page, their last day of operations is the 31st of August.
While not a definitive sign of anything either, they've also turned off commenting on their Facebook. It's certainly a bit suspicious given the other circumstances to say the least.
OMA: “Stop trying to make LNK happen. It’s not going to happen.”
They are not closing!
I guess they thought they could fake selling out tickets but maybe that's only for Huskers football