Report: Subsidies Continued For Shaky Airline

Massachusetts Port Authority officials knew as early as last summer that Direct Air was struggling financially, but continued to subsidize the airline to keep Worcester's only commercial air service, a newspaper reported on Sunday.

The Telegram & Gazette, citing internal Massport emails and other records it obtained, reported that Direct Air received more than $1.1 million in subsidies for three years. For example, records show that Massport, which owns Worcester Regional Airport, made two payments totaling $55,850 for a Direct Air radio and television advertising campaign on July 13, 2011.

The parent of the discount airline filed for bankruptcy protection in March. Court documents showed the company had between $10 million and $50 million in debt and $500,000 to $1 million in assets.

Days before approving the payments, David S. Mackey, Massport's interim chief executive, said in an email to then-state Secretary of Transportation Jeffrey B. Mullan that the airline is operating "on a shoestring."

A few weeks later, in early August, Mackey said in another email that, despite repeated requests, Direct Air failed to make any payments to Massport and that the Myrtle Beach, S.C.-based airline also had not been paying the company that handled its ground operations in Worcester.

Mackey, Mullan and Lt. Gov. Timothy P. Murray said in recent interviews with the newspaper that although they were aware of financial and customer service problems with the charter service, they were stunned when Direct Air abruptly suspended flights in March and later filed for bankruptcy.

Mackey, asked if he believed public money was wasted to subsidize a carrier that wasn't viable, said officials did not expect it to go under and that money from the Federal Aviation Administration also was available.

"We did not anticipate, expect or plan that it was going to end the way it did," Mackey said. "We needed to nurture it along with Massport money, and there was an FAA grant too."

Ed Warneck, an owner of Direct Air and its marketing director, told the Telegram & Gazette that would not discuss representations he made to Massachusetts officials until the bankruptcy case runs its course.

This program aired on June 17, 2012. The audio for this program is not available.


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