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Air cargo carrier sues over mail rules

Posted: Tuesday, August 27, 2002

ANCHORAGE (AP) -- An air cargo company based in Anchorage is suing the federal government over new mail-hauling rules in Alaska, saying they are unconstitutional and unfairly limit competition.

Alaska Central Express Inc. says the government, the U.S. Postal Service and four larger airlines have conspired to drive the company out of business, costing about 100 jobs.

''The legislation severely questions the ongoing viability of this company,'' said Mike Bergt, the airline's general manager. Alaska Central Express has been under Chapter 11 bankruptcy protection since January.

The lawsuit was filed in U.S. District Court in Anchorage Aug. 2, the day President Bush signed into law new rules that limit the number of air carriers that can handle federally subsidized mail in Alaska.

Bergt told the Alaska Journal of Commerce that about 70 percent of the company revenues come from bypass mail, a system unique to Alaska where shipments of at least 1,000 pounds are never touched by postal workers but are delivered at parcel post rates.

Alaska Sen. Ted Stevens and U.S. Rep. Don Young, who sponsored the law, say it will save the government about $30 million annually and passenger service to rural villages will increase because most of the mail delivered to villages will have to be carried in airplanes that also haul passengers.

But Alaska Central Express only operates small all-cargo aircraft.

Bergt said the legislation closes the door on competition and will actually boost bypass mail costs.

Some 35 airlines have hauled bypass mail in the past year, according to the Postal Service.

In smaller Bush markets, the new law will give 70 percent of mail to carriers who provide passenger service and 20 percent to carriers providing non-mail freight service. The remaining 10 percent would be split equally among all other carriers and will be phased out over the next three years. Carriers not qualifying for one of the new bypass mail pools will no longer get a cut of the service.

A bankruptcy judge in February ruled that Alaska Central Express could continue to haul mail during the legal dispute with the Postal Service. Shortly after, San Diego-based Western States Investment Corp., which had been majority owner of the airline, purchased the remaining 49 percent of company from Anne Butler, wife of former MarkAir owner Neil Bergt.

Craig Collins, Alaska Central Express' Los Angeles-based attorney, said the airline will continue to carry bypass mail until there is a ruling on the company's lawsuit.



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