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Air carriers say they will bid on Adak service

Posted: Tuesday, July 30, 2002

ANCHORAGE (AP) -- At least three airlines are eyeing service to Adak under a federal contract that has been the most costly in the nation.

Company officials from Alaska Airlines, PenAir and Evergreen International have indicated they will bid on the service to the Aleutian Island community of about 100 that is struggling economically after its 1997 U.S. Navy base closure.

The U.S. Department of Transportation began accepting bids for the subsidy July 8, after canceling Evergreen's two-year, $1.5 million contract when the airline failed to provide promised jet service.

Bill Mosely, spokesman for the Department of Transportation in Washington, D.C., said as of July 19, no bids had been received under the agency's Essential Air Service program. Airlines have until Aug. 7 to file with the agency for the federally subsidized route.

Joe Sprague, Alaska Airlines' director of sales in Anchorage, said the airline is running numbers on the 2,600-mile round trip-route and is hopeful that increased economic activity in the area, combined with a federal subsidy, may make the flight profitable.

''Count on us to bid on it. ... We are analyzing the possibility and see at least some potential,'' Sprague said.

Passenger and freight revenue alone would not allow jet service to the Aleutian Islands' community, he said.

Jerry Rock, president of Evergreen's Alaska operations, did not return telephone calls from the Alaska Journal of Commerce. A company official said the airline would resubmit a bid for the service.

The McMinnville, Ore.-based airline was awarded the two-year contract in July 2001 based on its proposed purchase of a Boeing 727-100 combined passenger and cargo jet. The ''combi'' is better able to handle cargo and the region's notoriously bad weather than propeller aircraft, according to written decision last summer by the federal Transportation Department.

But over the last year, Evergreen has only provided once-a-week mail and freight service with its DC-9 cargo jet to Adak.

Peninsula Airways has been providing passenger service with prop aircraft, under an interim federal award of about $4,000 weekly. PenAir has charged about $1,100 for a round-trip ticket from Anchorage to Adak.

Evergreen blamed the events of Sept. 11 and new bypass mail rules for not purchasing the combi jet it promised when it won the subsidy last year.

PenAir has been flying to Adak since December 2001 when Reeve Aleutian Airways went out of business. Reeve had operated two Boeing 727-100 combis that serviced Adak and other Aleutian destinations, as well as the Russian Far East.

Reeve operated its flights with no government subsidy.

PenAir officials have said they will resubmit a bid for the subsidy, although they are concerned that it requires use of an airplane with a minimum of 60 seats. The company is asking that the requirement be lifted.

In its yearlong interim service, the airline usually fills only six seats per flight to the Aleutian island community, said Dick Harding, vice president of Anchorage-based PenAir.

Mosely said community officials in Adak can ask to have the seat requirement amended.

That's unlikely, however, as the community fought hard for jet service and backed Evergreen's proposal last year, the only bid that offered jets.

When Evergreen did not provide a jet after a year, the community and members of the Aleut Corp., which now owns the abandoned Navy base, lobbied successfully to have Evergreen's proposal canceled.

The federal contract last year drew five bids from carriers, with proposals ranging from $1.3 million to $2.1 million annually for flying cargo and passengers to Adak.

The subsidy at the time had drawn criticism from some state officials who questioned if the federally subsidized route to the tiny community would be money well spent, since more than 150 communities in Alaska qualify for subsidized funding for air service, but receive none.

Adak officials say the subsidy is needed to help the struggling community grow its economy. The Aleut Corp. has been planning to use the existing airfield and deep-water port as a refueling and reprovisioning facility, and as a fish processing center for the Aleutian area.

Some 33 communities in Alaska and 86 nationwide receive a subsidy from the federal government under the Essential Air Service Program, established in 1978 to ensure small communities retain a link to the national air transportation system, according to DOT's Mosely.

The program's annual budget is $50 million, Mosely said.



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