Following the self-imposed grounding of new airline startup PEOPLExpress, the city of Newport News has told the carrier it will have to pay back grant funding if service isn’t quickly resumed.
"They are in default," said Newport News City Manager James Bourey, who also acts as chairman of the Peninsula Airport Commission.
By canceling service, the airline is violating terms of the grant, Bourey said.
PEOPLExpress and partner Vision Airlines have so far received $650,000 out of a sum of $1.65 million in federal and regional aid to operate daily services to Newark and Boston for a minimum of one year, Bourey explained.
A collision with an airport truck forced one plane out of service, while by engine issues grounded its other plane on Friday, leaving customers stranded.
PEOPLExpress decided to cancel all subsequent flights until at least October 15.
The airport commission continues to talk to management of PEOPLExpress and "we hope they succeed," Bourey said.
PEOPLExpress is actively seeking a cash injection of at least $5 million to resume services but will consider other possibilities rather than continuing to rent aircraft and crew from Vision Airlines.
"We are evaluating all available options and will report our decision once we have finalized our selection," the carrier’s spokesman Thomas Becher said.
