Axes Fall after People Express Loan Guarantee Blows Up

People Express aircraft at Newport News/Williamsburg Airport. Photo credit: Daily Press

The executive director of Newport News/Williamsburg International Airport has been placed on administrative leave in the wake of a scandal involving the use of $3.55 million in state funds to help make good on a loan guarantee made to People Express airline.

The airport had backed the loan as part of a deal to get People Express to provide discount passenger service to the Newport News/Williamsburg area. The episode did not turn out well. People Express fell $100,000 behind in its passenger facility charges, and the Peninsula Airport Commission told the airline in 2014 to leave after less than three months of operation there. The company subsequently filed for bankruptcy.

Meeting in a closed session, the commission approved using the $3.55 million state funds plus $1 million in federal funds to meet its loan obligations. Such a use violated a 30-year state policy. Virginia’s transportation secretary Aubrey Layne called it the largest unauthorized use of state aviation funds ever, reports David Ress with the Daily Press.

Support for the airport evaporated as the state, the City of Hampton and the James City County Economic Development Authority decided to withhold payments to the body. In the most recent developments, reported this morning, the Newport News City Manager has resigned as an airport commissioner, the commission ended its six-decade-old relationship with its law firm, and the airport’s executive director Ken Spirito was put on paid administrative leave until completion of  a state audit.

Bacon’s bottom line: Let this be a warning to citizens serving on local commissions, authorities and other public entities. It seems easy and painless to guarantee a loan as a way to lure a business to your community. But if the loan needs a guarantee, there’s probably a lot of risk attached to it, and you could very well be on the hook for it. That’s what officials of the Peninsula Airport Authority learned to the detriment of their careers.

Kudos to the Daily Press, by the way, for bird-dogging this story every step along the way.

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