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People Express airlines has been given a four-and-a-half-month extension on a $500,000, taxpayer-financed loan, providing the startup more time to complete the purchase of a charter airline and begin operations at the Newport News airport in Virginia.
A committee that supports the Newport News-Williamsburg International Airport granted the original loan in January, with the paperwork approved through the Newport News Economic Development Authority.
The committee — called the Regional Air Service Enhancement Committee — voted on Friday to grant an extension on the loan to July 15. The Newport News EDA also voted Friday in favor of an extension. The loan is designed to help People Express purchase the charter airline.
People Express would own five jet planes upon the purchase of the unnamed airline, which would allow it to begin service. The original timeline was for People Express to complete the transaction by the end of February.
“Everything always takes longer than you expect it to,” said Florence Kingston, the Newport News economic development director who heads up the RAISE committee. She said the original timeline seemed aggressive when she first heard about the plans. “I didn’t think that they were going to be able to get all of the work that needed to be done as quickly as they thought they would.”
Michael Morisi, president of People Express, said “things are going great” with the startup airline.
“We are in the final days of the process,” Morisi said, referring to the purchase of the charter airline.
But Morisi declined to predict when People Express would begin flying.
People Express announced in February 2012 that it would re-launch the iconic 1980s airline, a pioneer in discount ticketing, by summer 2012. But the company has been beset with delays. Still, Morisi has vowed that the financing is in place.
Kingston said giving People Express until July should provide the company the flexibility it needs to finish the deal.
Doug Meredith, a member of the RAISE committee, said the financial help is low-risk and the airline has the potential to be an economic boon to the region.
Kingston said the $500,000 is not in jeopardy should People Express fail to purchase the charter airline. As for whether People Express has the potential to succeed, Kingston said she doesn’t know.
“I don’t feel like we’re in the position where we have enough information to make an assessment,” Kingston said.
Newport News and the Pittsburgh airport are in the running to be the corporate headquarters for People Express, which, if successful, would create about 1,000 jobs, Morisi has said. Regardless of whether Newport News is the corporate headquarters, People Express intends to fly out of Newport News, Morisi has said.
Communities served by the Peninsula airport contribute tax money to RAISE, which has so far collected $2.5 million to help support the airport.
What is RAISE?
The Regional Air Service Enhancement committee, which approved an extension of a $500,000 refundable loan to People Express airlines at the Newport News-Williamsburg International Airport on Friday, is a collaborative effort by Peninsula communities. Each locality chips in money every year based on a funding formula.
Newport News contributes about $108,000 of the $225,000 that’s put into the fund each year. Also contributing are Hampton, James City County, York County, Poquoson, Williamsburg and Gloucester.
The RAISE committee has collected about $2.5 million since it was created several years ago, with $1 million earmarked for incentives for Frontier Airlines. The group is made up of economic development officials. ___