News

This startup wants to sell flights from Lincoln, Nebraska. But can it survive?

Meghna MaharishiAviation Reporter
Meghna Maharishi is an aviation reporter at TPG. She specializes in everything related to airlines, including their day-to-day operations, newly unveiled flight routes and lesser-known aspects of the industry.

April 10, 2023 • 7 min read

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Quick summary

Lincoln, Nebraska, is set to become the main focus for a new ultra-low-cost airline, Red Way, which will launch twice-weekly flights to several U.S. cities.
Red Way operates as a virtual airline, selling tickets under its brand while a charter operator provides and flies the aircraft.
The airline aims to fill gaps left by legacy carriers, targeting leisure travelers with seasonal, demand-driven routes.
Skepticism surrounds Red Way's long-term viability due to low historic demand for its planned routes and competition from nearby Omaha's larger airport.

What to consider

Introductory fares are low, but prices increase significantly when adding extras like carry-ons, checked bags and priority boarding.
Red Way's route selection and schedule may change quickly based on passenger demand, with unprofitable routes likely to be dropped.
The airline is supported by local COVID-19 relief funds through revenue guarantees, reducing its initial financial risk.

What you'll miss from the article

Details on Red Way's pricing structure, route strategy and the challenges facing small-city air service expansion.

Generated by AI with support from our editorial team.

Lincoln — Nebraska's capital city that has a population of approximately 290,000 — is home to one of the tallest capitol buildings in the U.S. as well as the National Museum of Roller Skating and more than 100 parks.

One thing it’s not known for, however, is a burgeoning center of airline service. That’s something the city is hoping to change this summer when it becomes the main focus area for an ultra-low-cost carrier.

The startup called Red Way, which seemingly sprang from nowhere and made headlines among local news outlets and airline industry blogs at the end of March, plans to operate twice-weekly flights out of Lincoln Airport (LNK) to a handful of U.S. cities.

Lincoln is one of numerous small U.S. airports that have struggled to retain commercial air service amid persistent pilot shortages and other lingering pandemic-era realities. Red Way nevertheless hopes to find success in the city.

Red Way acts more as a “virtual airline” by handling sales and bookings via a Red Way-branded website, while Florida-based charter operator Global Crossing Airlines will supply and operate the aircraft — Airbus A320 and A321 jets.

Lincoln, Nebraska. JOHN COLETI/GETTY IMAGES

Red Way CEO Nickolas Wangler said the pandemic spurred the creation of the airline as legacy carriers such as Delta Air Lines dropped routes from the city. United Airlines is currently the only airline that serves Lincoln Airport, with flights to its hubs in Chicago, Denver and Houston.

“What if we built something that was leisure-based, leisure-focused, where the point of origin was Lincoln,” Wangler said.

Wangler said he had been in talks with Lincoln Airport for a few years on its air service development. Sarah Riches, the chief marketing officer of Red Way, said they zeroed in on Lincoln because of the “strong community support.”

David Haring, the executive director of the airport, said Red Way was a product of the Lincoln community's desire to bring a leisure-based airline to its airport. COVID-19 relief funds from the city and county helped fund the project in the form of “revenue guarantees.”

Revenue guarantees are when an airport or a community pledges a minimum amount of revenue a carrier will earn upon launching service.

If the carrier fails to meet the minimum revenue guarantees, the airport or community has to make up the revenue shortfall between what was earned and what was guaranteed as a minimum.

Lancaster County and Lincoln poured $3 million in COVID-19 funding — which came from the American Rescue Act — to recruit a new air service, according to the Lincoln Journal Star.

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“Conceptually, we knew that we wanted to focus on leisure markets,” Haring said. “We've certainly done that. We also wanted to utilize the opportunity to backfill some of the markets that we lost in the wake of COVID-19.”

Red Way plans to sell flights from Lincoln to Atlanta, Austin, Dallas, Las Vegas, Minneapolis, Nashville and Orlando.

While Red Way sells flights to Delta hubs like Atlanta and Minneapolis, Wangler said Red Way is by no means going to compete with or replace legacy carriers.

He added that he thinks Red Way will be able to increase travel out of Lincoln Airport.

“This is purely a leisure play,” Wangler said. “The capacity that we're adding in pushes that up.”

Wangler said Red Way plans to respond directly to consumer demand, so if a particular route isn’t popular with passengers, Red Way will nix it. During the winter months, Red Way plans to operate more flights to warmer destinations in the U.S.

“The whole model is built around to fly to the peak markets and the peak time of year, to be nimble and seasonal in nature,” Wangler said.

Red Way will officially debut at Lincoln Airport on June 8 with its first flight to Orlando.

However, the viability of the charter airline has been met with great skepticism. Henry Harteveldt, a travel industry analyst and founder of consultancy Atmosphere Research, casted doubt on whether the startup could succeed long-term.

“Naming the airline ‘Red Way’ makes sense, as I expect the airline will hemorrhage money,” Harteveldt said.

Airline industry bloggers and commentators also expressed doubt about the startup’s ability to succeed. The doubt is in part due to Red Way’s choice of Lincoln as a focus city as well as its limited flight schedule and its bundles (which see prices jump significantly for ancillary perks such as carry-ons, checked baggage and priority boarding).

For example, Red Way sells introductory fares for a flight from LNK to Hartsfield-Jackson Atlanta International Airport (ATL) starting at $69. However, those fares shoot up to $169 when you add a carry-on and checked bag to the ticket. For even more perks like premium seating and priority boarding, Red Way sells fares for the LNK-ATL route for as high as $449.

Red Way's fare bundles for a flight from Lincoln to Atlanta. RED WAY

Wangler said the pricing model is comparable to that of JetBlue or Southwest.

Whatever the price, Red Way may have its work cut out for it, based on recent Department of Transportation data available on Cirium. Few people have been flying the new routes being added by Red Way, according to federal data covering the 12-month period ending Sept. 30, 2022 — the latest period for which the data is available.

For example, the number of passengers flying between LNK and Minneapolis-St. Paul International Airport (MSP) via a connecting stop averaged just 6.5 a day. Numbers on some other routes, which currently require a connection, were even lower; flights between LNK and ATL saw 1.3 passengers a day. By contrast, LNK’s most popular route, to O’Hare International Airport (ORD), had 23.9 passengers per day.

“There’s a reason other airlines don’t already operate flights from Lincoln to the cities Red Way intends to serve — very few people appear to fly to them from Lincoln,” Harteveldt said.

But the numbers aren’t the only obstacle facing Lincoln and Red Way.

Another challenge for LNK is a busier airport in nearby Omaha — the state’s biggest city, just 60 miles from downtown Lincoln.

Omaha already has flights to the destinations Red Way will sell flights to. Like many airports its size, one of Lincoln’s biggest challenges is convincing locals to fly from home rather than drive to Omaha for more convenient or frequent options.

Still, for all the criticism, Wangler is resolute in Red Way’s mission.

“We're focusing on one market and one catchment area, and that's really going to be where it's at,” Wangler said, referring to Lincoln and surrounding communities from which Red Way anticipates drawing customers.

He added that he thinks Red Way’s presence will provide a reprieve for Lincoln residents seeking affordable travel from the city’s airport.

“We're not building a market that isn't there,” he said. “We're simply just trying to recapture some of what we're losing every day anyway.”

Only time will tell if Red Way can find its footing in the Nebraska capital.

Editorial disclaimer: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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