How Many Tax Dollars Went To Subsidizing PEOPLExpress?

The story may not be over but there hasn’t been a whole lot of news since PEOPLExpress grounded its “fleet” a little over a month ago.  At that time, I forecasted that we had likely heard the end of PEOPLExpress.  Since then, you could say they’ve made progress, but it’s still hard to say.

It appears they secured a “wet lease”, where they lease planes from another carrier, but that requires DOT approval.  While they’ve begun that process, there’s no firm timeline.  So, thing are indefinitely on hold while PEOPLExpress continues to burn cash and refund people money.

When I realized it had been over a month with no substantial news, I poked around the internet a bit to see if I missed something.  In doing so, I found out a bit about the economics of how PEOPLExpress came to be in Newport News.

They were scheduled to receive a combined $1.6MM+ in grants from the local and federal government for new service out of Newport News.  Not all of that money has been spent yet, but a nice chunk has:

The commission has paid $650,000 to the firm that People Express hired to provide and operate planes, as an advance against the federal grant. Nevada-based Vision Airlines operated two planes for People Express, which had promised it would have three.

The airport is also providing support to Frontier.  The article notes that the airline has a revenue guarantee for the off-season to keep service going:

The committee, meanwhile, reported it had made a first payment of $133,471 under its agreement to guarantee off-season revenue for Frontier Airlines’ service to Denver.

Under that agreement, which expired in May, the committee agreed to provide up to $500,000 to support Frontier’s operation between Labor Day and May 1, committee chairwoman Florence Kingston said.

Although there may be additional bills coming, she said she is optimistic that the total that will be paid to Frontier will be less than the $500,000 cap on that subsidy.

RAISE, which is funded by six Peninsula localities and Gloucester County, has $764,000 available to it to support air service, in addition to the $700,650 it set aside for the People Express service.

All interesting tidbits about how your tax dollars are going to increase competition and build new air service for communities that need it.  

If you’re doubtful, just consider that PEOPLExpress was due to spin up service between Charleston, WV and Orlando a few weeks ago to the tune of another $700,000 in subsidies, this time from the Charleston airport authority.  While that still may happen, the airport authority has formally pulled the offer letter.

While the Orlando economy may benefit from this new service (Hi, Mickey!), I doubt a whole lot of folks are flying from Orlando to Charleston to spend money.

There you have it, folks.  We’re still on a death watch for PEOPLExpress.  The patient has a heart beat but the prognosis is still not looking good.


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