Bluestone Events said it will no longer run the event, having helped organise it in 2010 and been responsible for its delivery in 2011. It said the recession has meant a lack of grant funding and sponsorship revenue that was previously available to the festival.
The Windermere Air Festival was started 11 years ago and organised by the Rotary Club of Windermere until last year. It was run for the first time as a commercial entity in 2011.
Bluestone Events' Kate Thomas said the risk of running the event this year was simply "too great".
"We would support anyone wishing to take on the running of the event in the future when the economic climate has improved," she said. "The Windermere Air Festival is a great event and we are proud to have been involved in it over the last two years."
Rotary Club president Pat Crowfoot said: "I would like to thank Bluestone Events for making a success of this year's Windermere Air Festival. Without their involvement, it simply wouldn't have taken place. The Rotary Club hopes that when economic conditions have improved a private company will re-launch the festival."
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