After only two months of operations, startup carrier Red Way Airlines has announced that it will be shutting down at the end of the month. The Lincoln, Neb.-based airline’s last flights will take place on Aug. 31.

Insurmountable Challenges for a Small Startup

In a statement posted to its Facebook page, the airline describes its predicament as follows, “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.”

Red Way further stated that all passengers who have booked flights after Aug.31 will be automatically refunded and that its customer service team would be available until the end of the month.

Red Way’s Complicated Business Model

Red Way is what is known as a virtual airline, meaning that it does not operate any of its own aircraft and instead sells seats on flights operated by another company. This type of arrangement can be confusing for consumers, as there are multiple entities involved. Customers who have purchased tickets from Red Way have found that their flight was operated by an aircraft with GlobalX branding.

Red Way acted as a sales agent for Fly Next, LLC, a Delaware limited-liability company, which acts on behalf of GlobalX Air Tours, LLC. Fly Next purchases aircraft time – including crew, maintenance and insurance – from Global Crossing Airlines, which is the company that actually operates the flights. To further complicate matters, Global Crossing Airlines operates as GlobalX Airlines. All Red Way flights are therefore operated by GlobalX Airbus A320-200 and Airbus A321-200 aircraft. The airline was first announced in March 2023 and began flights on June 8.

A Loss for Lincoln

Like many small airports in the United States, Lincoln Airport has been struggling since the COVID-19 pandemic. When Red Way airlines announced fourteen weekly flights to seven destinations from Lincoln in March, it brought a wave of hope and optimism to the city. Lincoln Airport had lost Delta Connection service to Minneapolis around a year ago and the airport only had United Express service to Denver, Chicago and Houston.

To help accommodate the new flights, Lincoln Airport opened a new 35,000-square-foot terminal expansion in May. The $55 million expansion and renovation increased space for passenger gates and new restaurant and concession options. Approximately $3 million of federal stimulus funding from the American Rescue Plan Act were put into the project and to help Red Way launch operations, with the city council and the county board each contributing $1.5 million.

Red Way experienced challenges throughout its short time in the skies, announcing in late July that it would be dropping its routes between Lincoln and Minneapolis, Atlanta and Austin, TX due to lower-than-expected demand. While the airline’s shutdown may be unsurprising given its ambitious plans in a relatively small market, it nevertheless has brought disappointment to the city and airport.

Lincoln Airport has announced that it has terminated its contractual agreement with Fly Next, with Lincoln Airport Authority board chair John Olsson stating that, “The Lincoln Airport Authority Board is disappointed by the ultimate outcome of Red Way’s service in Lincoln. Board members have met to discuss the result of the service, actions necessary to both address this situation and chart future efforts and oversight on what’s to come.”

The airport further stated that the shutdown is “extremely disheartening” for the airport after all the efforts made to bring new air service to Lincoln. Despite the disappointment, the airport’s statement ends on an optimistic note.

“These are the exact relationships that are vital for our community to embrace both now and in the future as we seek to show airlines and other businesses that Lincoln is worth investing in,”Olsson said.