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vatveng
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VA cuts funding to PHF over PeoplExpress loan

Sat Jan 28, 2017 3:44 am

It appears that PEOPLExpress isn't done being a disaster for PHF. The Peninsula Airport Commission used state funds to pay off the PEX loan they guaranteed. The state is not happy about it.

http://www.dailypress.com/news/politics ... story.html

Quote:
As a result of the commission’s unauthorized use of $3.55 million of state funds, Layne said, he is cutting off all state money to Newport News/Williamsburg International Airport. Last year, those payments amounted to $2 million.

“I don’t feel I have any choice,” he said.

In response to queries from the Daily Press, the commission issued a written statement saying it used $3.5 million in state funds and $1 million of federal funds to repay money People Express borrowed from TowneBank.
 
CairnterriAIR
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Re: VA cuts funding to PHF over PeoplExpress loan

Sat Jan 28, 2017 3:47 am

Wonder why nobody is going after the powers that be at Peoplexpress???
 
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enilria
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Re: VA cuts funding to PHF over PeoplExpress loan

Sat Jan 28, 2017 4:04 am

They shouldn't have loaned them money, but frankly a simple incentive gift of that much would not be out of the ordinary for service like they had.
 
ahj2000
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Re: VA cuts funding to PHF over PeoplExpress loan

Sat Jan 28, 2017 5:42 am

enilria wrote:
They shouldn't have loaned them money, but frankly a simple incentive gift of that much would not be out of the ordinary for service like they had.

Is it common for airports to loan carriers money? I've never heard of that before-always incentives.

Also, is PHF really all that necessary? Newport News and Hampton can be served by ORF and the Williamsburg area is close to both ORF and RIC.
-Andrés Juánez
 
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atcsundevil
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Re: VA cuts funding to PHF over PeoplExpress loan

Sat Jan 28, 2017 6:28 am

ahj2000 wrote:
Also, is PHF really all that necessary? Newport News and Hampton can be served by ORF and the Williamsburg area is close to both ORF and RIC.

It serves its niche pretty well. It had a particularly strong draw when AirTran served it (prior to entering the RIC market around 2005ish). For a while, they had flights to at least six or seven destinations from PHF. It's also a very convenient little airport, so for many people, it tends to be less hassle than RIC or ORF.

I think this is a good move by the state. Unless the airport receives funds implicitly for subsidies, it is totally improper for the airport authority to reallocate taxpayer funds for a purpose other than intended. If the federal funds were similarly structured, they risk falling afoul of that too, and might have trouble securing AIP grants in the future. They could be tagged with increased restrictions as a result. PEX was a doomed venture from the start, and they honestly should have known better.
 
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richcam427
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Re: VA cuts funding to PHF over PeoplExpress loan

Sat Jan 28, 2017 9:59 am

I think it was a desperate move by the PAC and PHF to get service back to the airport after AirTran went belly-up because, let's be honest, it definitely hasn't recovered from losing its dominant carrier. I live roughly in the middle of ORF and RIC, and PHF is hell of a lot easier to use. Driving anywhere in this area is like walking on a tightrope while drunk, because the traffic can be downright atrocious and unpredictable in the sense that a normal 20-minute commute can easily turn into 2+ hours. If anyone here lives in Hampton Roads, you'll know exactly what I'm talking about. I'm often forced into those airports nowadays because of high fares at PHF, and it definitely adds to the frustration of traveling.
 
benin
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Re: VA cuts funding to PHF over PeoplExpress loan

Sat Jan 28, 2017 10:51 am

The optics of this are certainly questionable. But, a few things to consider:

From what I understand in the article below, the airport has the right to use the funds in this manner and they used it to help bring much needed flights back to the area (I travel way too often for my job and using PHF by far is the best option)

http://pilotonline.com/news/local/trans ... f1af8.html

If some of the followers on this thread live on the Peninsula and read the Daily Press often, you will know that the paper is full of stories that do not state all the facts. So I generally look around at other area papers to piece a story together and the VA Pilot does report both sides. I think as a tax paying citizen, if our money is authorized to be used a certain way and it benefits me and the community (like airports do), then it should be invested.

Seems like with legal opinions and a program allowance as reported, then it should be cleared once everyone goes through the process of checking.

As far as PHF is concerned, I think they are doing everything possible to stay competitive in this ever-changing industry. I see it often in many small communities I have to travel to. So, PHF should continue to convince airlines to add capacity. It seems logical for Spirit or Frontier to have a few destinations form there.

My two cents...
 
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vatveng
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Re: VA cuts funding to PHF over PeoplExpress loan

Sun Jan 29, 2017 6:30 am

benin wrote:
Seems like with legal opinions and a program allowance as reported, then it should be cleared once everyone goes through the process of checking.


The biggest problem is that they kept it from the state. It came out later - much later - that they used those funds to pay off a loan guarantee.

As far as PHF is concerned, I think they are doing everything possible to stay competitive in this ever-changing industry. I see it often in many small communities I have to travel to. So, PHF should continue to convince airlines to add capacity. It seems logical for Spirit or Frontier to have a few destinations form there.

My two cents...


Frontier did serve PHF for a few years, but pulled out during their ULCC conversion. They started out daily seasonal, then less-than-daily year-round, then less-than-daily seasonal, before pulling the plug. And while Spirit isn't interested, Allegiant did try less-than-daily SFB service for a little while. It lasted about two years.
 
flybaby
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Re: VA cuts funding to PHF over PeoplExpress loan

Sun Jan 29, 2017 2:46 pm

atcsundevil wrote:
ahj2000 wrote:
Also, is PHF really all that necessary? Newport News and Hampton can be served by ORF and the Williamsburg area is close to both ORF and RIC.

It serves its niche pretty well. It had a particularly strong draw when AirTran served it (prior to entering the RIC market around 2005ish). For a while, they had flights to at least six or seven destinations from PHF. It's also a very convenient little airport, so for many people, it tends to be less hassle than RIC or ORF.
...


It should be noted that PHF did fine until Southwest (which already served nearby ORF) bought AirTran and pulled out of PHF In 2012. That led to almost two thirds of annual pax bailing out of the airport. Most of them switched to RIC given Southwest's significant reduction of service out of ORF in the early-mid 2010s and the greater preponderance of LCCs in RIC than ORF and the resulting effect thereof on overall fares out of RIC. As such, RICs growth in the past few years is basically a mirror image of the passenger shrinkage at PHF.
 
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enilria
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Re: VA cuts funding to PHF over PeoplExpress loan

Sun Jan 29, 2017 2:51 pm

ahj2000 wrote:
enilria wrote:
They shouldn't have loaned them money, but frankly a simple incentive gift of that much would not be out of the ordinary for service like they had.

Is it common for airports to loan carriers money? I've never heard of that before-always incentives.

Also, is PHF really all that necessary? Newport News and Hampton can be served by ORF and the Williamsburg area is close to both ORF and RIC.

I've never heard of an airport intentionally loaning an airline money. There are certainly cases where an airline runs up huge bills and is not made to pay which is a de facto loan. Toledo advanced an airline money to advertise a new route (which they did) and then the route never started, so effectively that is an unpaid loan. That happens probably quite a bit, quietly. They should have just made this money an incentive. Perhaps there was some reason why they couldn't. Perhaps they thought they were being more responsible by being able to get the money back.

I
 
commavia
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Re: VA cuts funding to PHF over PeoplExpress loan

Sun Jan 29, 2017 2:54 pm

... yet again underscoring the ridiculous tragicomedy that was People Express 2.0.
 
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atcsundevil
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Re: VA cuts funding to PHF over PeoplExpress loan

Sun Jan 29, 2017 4:32 pm

enilria wrote:
I've never heard of an airport intentionally loaning an airline money. There are certainly cases where an airline runs up huge bills and is not made to pay which is a de facto loan. Toledo advanced an airline money to advertise a new route (which they did) and then the route never started, so effectively that is an unpaid loan. That happens probably quite a bit, quietly. They should have just made this money an incentive. Perhaps there was some reason why they couldn't. Perhaps they thought they were being more responsible by being able to get the money back.

I've heard of airports giving subsidies, profit guarantees, etc. Happens all the time. This, though? I'm with you -- this is a new one for me. If it's legal, then at the very least it's an unethical use of tax dollars, and as evidenced by the State of VA pulling its funding, the state agrees that this use of funds was unauthorized. It appears almost as if the airport authority acted as an investor in the airline, which crosses some serious boundaries.
 
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vatveng
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Re: VA cuts funding to PHF over PeoplExpress loan

Tue Jan 31, 2017 8:52 pm

To be clear, the airport did not loan PEX any money. PEX borrowed the money from TowneBank. The Peninsula Airport Commission guaranteed the loan. So this state money the airport received was not given directly to PEX. It went to TowneBank to pay off the loan. As far as risk to the airport goes, it's six vs. half-dozen, but from a legal standpoint it's very different.
 
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vatveng
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Re: VA cuts funding to PHF over PeoplExpress loan

Tue Jan 31, 2017 9:13 pm

And now this mess is causing Elite Airways to delay their PHF launch:
http://pilotonline.com/business/elite-a ... 3fd43.html
 
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richcam427
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Re: VA cuts funding to PHF over PeoplExpress loan

Tue Jan 31, 2017 9:23 pm

What a dumpster fire. Good to see my home airport totally screwing everything up.
 
727LOVER
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Re: VA cuts funding to PHF over PeoplExpress loan

Tue Jan 31, 2017 10:35 pm

richcam427 wrote:
I think it was a desperate move by the PAC and PHF to get service back to the airport after AirTran went belly-up because, let's be honest, it definitely hasn't recovered from losing its dominant carrier..



AirTran didn't go belly-up

Let's call a spade a spade.

The fault lies here:
"We must accept finite disappointment, but never lose infinite hope." - Martin Luther King, Jr.
 
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LAX772LR
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Re: VA cuts funding to PHF over PeoplExpress loan

Wed Feb 01, 2017 9:44 am

commavia wrote:
... yet again underscoring the ridiculous tragicomedy that was People Express 2.0.

This.

Their business model made SkyBus' look well-planned and reasoned.
I myself, suspect a more prosaic motive... ~Thranduil
 
727LOVER
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Re: VA cuts funding to PHF over PeoplExpress loan

Wed Feb 01, 2017 7:07 pm

ahj2000 wrote:
Also, is PHF really all that necessary? .


Seriously?...What kind of question is this? It's rather insulting. What exactly are you suggesting?
"We must accept finite disappointment, but never lose infinite hope." - Martin Luther King, Jr.
 
usflyer msp
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Re: VA cuts funding to PHF over PeoplExpress loan

Wed Feb 01, 2017 8:14 pm

727LOVER wrote:
ahj2000 wrote:
Also, is PHF really all that necessary? .


Seriously?...What kind of question is this? It's rather insulting. What exactly are you suggesting?


What is insulting about it? PHF is is a secondary airport in an area that has little need for such. It is not ridiculous to suggest that PHF is unneeded...
 
deltal1011man
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Re: VA cuts funding to PHF over PeoplExpress loan

Wed Feb 01, 2017 9:09 pm

ahj2000 wrote:
enilria wrote:
They shouldn't have loaned them money, but frankly a simple incentive gift of that much would not be out of the ordinary for service like they had.

Is it common for airports to loan carriers money? I've never heard of that before-always incentives.

Also, is PHF really all that necessary?
Newport News and Hampton can be served by ORF and the Williamsburg area is close to both ORF and RIC.

You go spend two hours sitting in the tunnel coming from ORF and then ask yourself that.

Traffic is absolutely impossible at times trying to get across the bay.

Also since PHF has DL and AA flying to it, the airline industry clearly think its necessary.








Having said all that, I wish DL would bring back NYC and BOS.
 
kcrwflyer
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Re: VA cuts funding to PHF over PeoplExpress loan

Wed Feb 01, 2017 11:42 pm

usflyer msp wrote:
727LOVER wrote:
ahj2000 wrote:
Also, is PHF really all that necessary? .


Seriously?...What kind of question is this? It's rather insulting. What exactly are you suggesting?


What is insulting about it? PHF is is a secondary airport in an area that has little need for such. It is not ridiculous to suggest that PHF is unneeded...


What's the longest you've ever been stuck in traffic whilst underwater? DL isn't flying mainline to any outright un-needed airports. Moving on.
 
usflyer msp
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Re: VA cuts funding to PHF over PeoplExpress loan

Thu Feb 02, 2017 2:58 am

kcrwflyer wrote:
usflyer msp wrote:
727LOVER wrote:

Seriously?...What kind of question is this? It's rather insulting. What exactly are you suggesting?


What is insulting about it? PHF is is a secondary airport in an area that has little need for such. It is not ridiculous to suggest that PHF is unneeded...


What's the longest you've ever been stuck in traffic whilst underwater? DL isn't flying mainline to any outright un-needed airports. Moving on.


Oh please. Even if there is a traffic problem getting to ORF, RIC is one-hour away. I PHF went away, people would survive and RIC/ORF would probably see new services due to their expanded catchment area...
 
catiii
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Re: VA cuts funding to PHF over PeoplExpress loan

Thu Feb 02, 2017 4:59 am

LAX772LR wrote:
commavia wrote:
... yet again underscoring the ridiculous tragicomedy that was People Express 2.0.

This.

Their business model made SkyBus' look well-planned and reasoned.


I remember getting a note on LinkedIn from their head of HR cold calling me about a recruitment opportunity. When I looked up her backgound on LinkedIn, her total experience was as a massage therapist before taking over all HR functions at People. They were a train wreck.
 
psa188
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Re: VA cuts funding to PHF over PeoplExpress loan

Mon Feb 06, 2017 9:07 pm

If anyone needs a recap, see https://airwaysmag.com/airchive/30-year ... -airlines/

The "new" operation merits a few paragraphs at the bottom of the article.
 
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enilria
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Re: VA cuts funding to PHF over PeoplExpress loan

Mon Feb 06, 2017 9:13 pm

psa188 wrote:
If anyone needs a recap, see https://airwaysmag.com/airchive/30-year ... -airlines/

The "new" operation merits a few paragraphs at the bottom of the article.

Just to be clear the $100k mentioned in that link is an unpaid bill, not a loan. That's not what the thread was about.
 
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vatveng
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Re: VA cuts funding to PHF over PeoplExpress loan

Fri Mar 03, 2017 3:49 am

And the fallout continues...

http://www.dailypress.com/news/newport- ... story.html

The Peninsula Airport Commission voted to fire their attorney, whose firm has advised the PAC for 60+ years. They also voted to put the executive director Ken Spirito on paid administrative leave during the state's audit, and the Newport News city manager resigned his seat on the PAC.

I found this sentence particularly telling:
And, for the first time, it said it regretted its dealings with People Express, which operated out of the airport for less than three months in 2014.

So it seems the PAC is finally starting to come to terms with the fact that the whole PEX idea was a mistake from the beginning.

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