Audit: PeoplExpress approached ORF before operating on the Peninsula

NORFOLK, Va. (WAVY) — A state audit into the Peninsula Airport Commission shows that now defunct airline PeoplExpress (PEX) wanted first to operate at Norfolk International Airport, but airport officials walked away from negotiations.

According to the audit, and confirmed by Robert Bowen, executive director at ORF, the two were in talks at the end of 2011 to enter a deal, but repeated requests for a business plan went unanswered.

“The business plan was fluid,” Bowen said. “And early on, they started asking us for incentives that were more than what we would give to even an established airline.”

Bowen said that included a request for $1 million cash, five gates and for ORF to build both a maintenance hangar and administrative office building exclusively for PEX.

Bowen says his executive team and a board began to do their due diligence.

“The more we looked into the background of the people we were dealing with, we didn’t see a lot of executive airline experience there, so that was another caution point for us.”

Bowen said the airline never had a plan for operating. Essentially, PeoplExpress promised it would find a company to lease planes from, but never presented an official plan. Bowen says that is very unusual, as most airlines that approach his airport are already certified by the Federal Aviation Administration and the Department of Transportation.

Eventually, negations stopped and PEX went on to solicit business at the Newport News-Williamsburg Regional Airport with the Peninsula Airport Commission.

That airport was dealing with the loss of AirTran and was in need of another airline to fill the gap.

The Peninsula Airport Commission eventually agreed to guarantee a $5 million loan taken out by PEX, and then used more than $4.5 million in taxpayer money to pay it off when PEX stopped operating.

The audit found that, “The PAC did not demonstrate adequate due diligence was performed prior to entering into an agreement to become guarantor on a $5 million loan to PEX.” The audit also said, “Information obtained during our review supports that PAC personnel, at a minimum, did not have a clear understanding as to the agreement, or lack thereof, in place between PEX and Vision Air.”

Vision Air is the company PEX hired to operate its fleet.