LINCOLN- State Auditor Mike Foley, in a forensic audit, slammed a “riverboat gamble” Lincoln officials made with the now-defunct start-up airline, saying it squandered $3.7 million in federal and local funds, and that dozens of ticket holders still haven’t been reimbursed for canceled flights. The Lincoln Airport Authority had contracted with Red Way Airlines to provide new flights from the Lincoln Airport.

But the Colorado-based startup shut down in August after only three months of operation, after flights drew far fewer passengers than projected, despite offering one-way tickets for as little as $9. Foley, in an 84-page report, said that Red Way “clearly violated” federal regulations by draining a $1.5 million escrow account intended to refund customers for tickets on canceled flights.

Overall, Foley said that the Lincoln Airport Authority provided more than $700,000 in local public funds under its control to assist Red Way, as well as waiving tens of thousands of dollars in fees that the airline would have been obligated to pay. “In the final analysis, Red Way was a failed riverboat gamble bankrolled by taxpayers,” the auditor said in a press release.

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