Lincoln Airport Takes Creative Route to Adding New Leisure Service

Flying in the face of economic trends that stymied years of efforts to boost local air connectivity, Lincoln Airport (LNK) in southeast Nebraska recently tapped an unexpected pool of federal dollars to jumpstart new air service. Now the local community has nonstop flights to seven popular U.S. leisure markets. And seats are filling up.

The new venture is called Red Way, and leaders from the airport and community are quietly confident LNK’s novel approach to air service development is a winner. They also believe the model may provide a blueprint for other similar-size airports that also suffered schedule cuts when mainstream U.S. carriers reshuffled their networks to larger markets after the COVID-19 pandemic subsided.

David Haring, executive director for the Lincoln Airport Authority, explains that local leaders spent years trying to use traditional methods to lure more flights to LNK, a medium-sized, multi-use facility that serves the Cornhusker State’s capital city. But when fee waivers, marketing assistance and other typical incentives proved unsuccessful, LNK found a novel solution in a most unexpected place: Congress’ $1.9 trillion COVID-19 stimulus package, the American Rescue Plan Act (ARPA) of 2021.

After Haring read an article about another Midwestern city using ARPA money to support new air service, he enlisted Airport Authority Board members to convince leaders from the city of Lincoln and Lancaster County to direct some of the ARPA funds they received to LNK for air service development. The city and county each contributed $1.5 million, but the strict timeline associated with ARPA funds presented challenges. Specifically, LNK had until 2024 to obligate its plans for the ARPA money, and must spend it before 2026. If recipients don’t meet ARPA deadlines, they risk losing the funds back to federal coffers in Washington, D.C.

Haring wanted leisure service for LNK, but low-cost carriers serving such destinations weren’t a good fit given the airport’s need to get off the ground quickly to meet ARPA deadlines. Major airlines weren’t promising either, because Haring worried that even a $3 million revenue guarantee might not be enough to keep a legacy airline committed to the Lincoln market for the long haul.

“We had conversations with Delta (Air Lines) and some other carriers, but we realized these were probably not going to realistically happen within that timeframe we needed,” says Haring. “So we started our next phase of pursuit.” 

Enter the startup Red Way, which earlier this summer launched twice weekly nonstops to seven U.S. leisure markets, four of which never previously had direct flights from LNK. In the first 90 days following its March 31 announcement, Red Way sold more than 20,000 tickets.

“That metric alone is pretty remarkable,” says Nickolas Wangler, the Red Way’s chief executive officer. “We’re super happy with what we’re seeing. It’s been—knock on wood—successful so far. And the cool part about this is there are probably about 20 other cities in the United States where this model is a home run.”

Several other communities have already contacted him for more information about how the new airline is working.

Charting a New Course

Fly Next LLC owns and operates Red Way, which flies as a scheduled public charter operator under FAA Part 380. Based in Colorado, Fly Next acts as a “virtual airline” and sales agent, managing ticketing and payment channels. It also arranges ground handling at the eight airports it serves. To support its flight operations, Fly Next committed to purchasing 240 hours per month of aircraft, crew, maintenance and insurance time from Miami-based Global Crossing Airlines, also known as GlobalX. The sole aircraft used for flight service is an Airbus A320 with 12 business class seats, 18 premium economy seats and 120 economy seats—a configuration that offers more legroom to passengers, even in standard economy.

Leisure and convention mainstays Orlando International (MCO) and Harry Reid International in Las Vegas (LAS) were the first to welcome Red Way service from LNK on June 8, followed by Hartsfield–Jackson Atlanta International (ATL), Dallas Fort Worth International (DFW) and Minneapolis−St. Paul International (MSP) one week later. Service to Austin-Bergstrom International (AUS) in Texas and Nashville International (BNA) began June 24.

Red Way flights will typically operate to each market twice a week, with schedules currently running six days per week through late November. LAS and MCO will continue through the winter, to be joined by snowbird destinations Phoenix Sky Harbor International (PHX) and Tampa International Airport (TPA), plus potentially one more sunshine-centric market. Wangler intends to fly year-round, in some cases swapping markets to maximize peak seasonality. Red Way’s model allows for easy scheduling flexibility.

Years ago, Wangler cut his teeth in the industry under Maury Gallagher of Allegiant Travel Company, whose business model clearly influenced the Red Way approach. Like Allegiant, Red Way focuses on leisure destinations. In addition, the sole aircraft it uses begins and ends its day at the same airport to simplify maintenance and decrease catering and crew costs. In time, Red Way aspires to hire flight attendants based in Lincoln to further cut its operating expenses and stimulate the local economy through the addition of jobs.

The Lincoln Chamber of Commerce helps with Red Way’s marketing, and LNK provides approximately 30 employees for ground handling. Wangler, who also consults for LNK on air service development through his firm Forecast Inc., says having an airport-run ground handling team may later benefit LNK because it could offer those services as an added value to new entrants.

“Now we’ve got the people and equipment,” he says, adding that the return of Delta or the addition of American Airlines, for example, would complement LNK’s existing service.

Garnering local buy-in for the upstart airline was critical, as sometimes innovations can be a hard sell. Haring acknowledges that convincing Lincoln stakeholders about the merits of “going it on their own” required upfront effort. 

“It was so different than what people had seen in the past that we needed to do some grassroots [campaigning],” he recalls. His strategy was to explain that Red Way would not be a typical airline, but it had the potential to seismically change air service in the community. He also stressed the need for solidarity, telling local leaders, “We’re all in this together. If it succeeds, it benefits all of us.”

The Small(er)-Town Air Service Blues

While people on the coasts sometimes categorize Nebraska as a “flyover state,” that description was all too literal for scheduled air service at LNK.

Before Red Way, the airport was served solely by United Airlines, with destinations limited to the carrier’s key hubs of O’Hare International (ORD) in Chicago, Denver International (DEN) and Houston’s George Bush Intercontinental (IAH). Delta last flew to LNK in early 2022, and United recently trimmed its schedules there.

When Haring assumed his role with the Lincoln Airport Authority in 2014, LNK had nearly 144,000 enplanements that year thanks to scheduled commercial service to four markets by United and Delta. By 2022, LNK logged slightly less than 90,000 annual enplanements. Restoring air service has been a challenge before and after the COVID-19 pandemic, Haring specifies.

“With airline network planners, we were always one to two years away, even after talking to them for three years,” he laments. “We understood, but it was frustrating.”

Brad DiFiore, a co-founder and managing director at Ailevon Pacific Aviation Consulting, says the market conditions smaller airports face today are more challenging than at any point in his 30+ years in the industry. Ailevon Pacific’s services include helping various sized airports expand their airline connectivity.

For years, regional jets powered the service for most small and midsized markets, including LNK. It was common for such communities to enjoy multiple nonstops because regional aircraft with 50 or so seats could get passengers to airline hubs across the country. Over the past two decades, however, consolidation among U.S. carriers has resulted in fewer hubs, thereby dampening the financial viability of many routes once served solely by regional jets.

Aging regional jet fleets and ongoing global demand for commercial pilots are only exacerbating the situation, adds DiFiore. “If you have two pilots that are flying a 50-seat airplane, but could also fly a 300-seat airplane, the economics are just going to be better on the bigger airplane,” he explains. “Fuel is also a huge part of the cost. Small jets burn more fuel per seat.”

As a result, airlines are placing a greater emphasis on larger aircraft. They’re also increasingly focused on larger hub airports rather than serving multiple small airports within a region.

“Places that used to have pretty robust service don’t anymore,” DiFiore advises. “The bigger planes are instead going to places that are a short drive away.” Indeed, Lincoln is just an hour away from Omaha via Interstate 80. And Omaha’s Eppley Airfield (OMA) is a strong competitor with service from Alaska, Allegiant, American, Delta, Southwest and United.

That doesn’t mean all hope is lost for small-town nonstop flights. Consumers will gravitate toward local options when they’re available and present a better bargain than driving to the closest hub airport. Business travelers often prefer close access over faraway nonstops, and in a university town such as Lincoln, direct flights can play a key role in athletic and academic recruiting, and for fans on game days.

Many smaller communities will seek nonstops from ultra-low-cost or point-to-point carriers such as Allegiant, Avelo, Breeze Airways or Sun Country, believing those options might help reconnect missing routes once flown by the likes of American, Delta or United. For some, strong local demand could also support a path forward for a scheduled charter model like the one LNK developed with Red Way.

“Everybody is looking for answers,” DiFiore observes. “In Lincoln, they came up with an answer on their own.”

“Nebraska’s Way to Fly”

At the same time LNK was working with partners to bring on Red Way, it was also in the midst of a major terminal improvement program. The $56 million expansion and renovation includes two new gates, six boarding bridges, an improved security checkpoint and new flooring, lighting and concessions. The first phase opened June 1, just one week before Red Way’s inaugural flights.

“We’re seeing people who have never flown before out of Lincoln, or haven’t flown for years, and they’re seeing the renovations going on,” says Rachel Barth, director of Communications and Customer Engagement for the airport. “People are really excited for us to have a new terminal—and a new airline.”

One pleasant surprise has been Red Way’s ability to draw travelers from outlying communities, including Omaha. Also, more than 10% of bookings have come from the upstart airline’s outbound cities. Inbound passengers include people traveling to Nebraska to visit friends and relatives, or fans attending University of Nebraska Cornhusker football games.

Maintaining a statewide identity for the new venture is critical, Barth notes. “We really wanted to make sure Red Way embodies Nebraska,” she says. “We were very specific when coming up with a name that it didn’t say Lincoln. We want it to be Nebraska’s way to fly.”

Haring describes Red Way as a “dark horse” economic booster for Lincoln because it brings in out-of-state visitors and pulls outbound passengers from as far away as central Nebraska. He reasons that such travelers often stay overnight in Lincoln’s hotels and dine in its eateries before catching an affordable flight to an attractive leisure destination.

“I want more people coming into the community, not just Lincoln residents leaving,” Haring explains.

Customer service was so important to LNK that it is covering Red Way’s first-year costs for ground services by having airport employees perform duties such as ticketing, boarding check-in and baggage handling. Haring says the expense will amount to nearly $900,000, but hiring from the local workforce provides greater quality assurance.

Market Forecast

Only time will tell how successful the Red Way model will be at LNK. Operating costs for airlines typically rise each year, thus requiring continued growth to provide additional revenue. And while a government backstop gave Red Way some solid seed money, it must quickly find its own path to profitability to sustain service. Still, Wangler believes purchasing blocks of aircraft, crew, maintenance and insurance time by the month mitigates some pressures to expand.

“Next summer this is likely the same size,” he predicts. “It doesn’t have to grow in a traditional sense…I just need to be smart about how I use the airplane.

“Is this ever going to be 10 airplanes? Absolutely not. But could it be two? Maybe.”

Ticket sales will provide the financial momentum going forward, as well as ancillary revenue from in-cabin sales and packaged products, Wangler adds. He’s also working with local businesses on incentives to lure visitors into Lincoln, thereby boosting Red Way’s overall economic impact. More flights mean more passenger facility charges and parking fees collected by the airport, plus additional revenue for local restaurants and hotels.

Haring predicts that “spot demand”—flights for football games or school breaks, for example—will present natural growth opportunities in 2024, along with possible expansion to additional markets. Regardless of how it occurs, Fly Next must make the Red Way service self-supporting or pursue additional backstopping from local businesses, the Chamber of Commerce or Lincoln’s tourism board, he adds. 

Revenue that is above and beyond Red Way’s operating costs is set aside in an air service escrow account that could provide a minimum revenue guarantee for future service to Lincoln. 

“Nothing would make us more excited than to be sitting here a year or two years from now, the service is flying, and we turn money back to the city and the county,” Haring says. “That is the ultimate goal.

“We don’t know the longevity of it, but we believe it’s sustainable and can be replicated. And it’s started off better than we ever hoped it would.”