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Another airline sues over bypass mail law

Posted: Tuesday, September 03, 2002

ANCHORAGE (AP) -- Evergreen International Inc. is the suing the federal government over new mail-hauling rules in Alaska, the second airline to file such a lawsuit.

The McMinnville, Ore.-based airline's lawsuit was filed Aug. 19 in U.S. District Court in Anchorage. It argues that the rules are unconstitutional and that they unfairly limit competition for federally subsidized mail.

The airline also is seeking an unspecified amount of damages for not being allowed into the rural mail program.

Suing the federal government ''is definitely not something we wanted to do,'' said Jerry Rock, who heads Evergreen's Alaska operations.

But he said the new law favors existing carriers and effectively closes the door on competition for bypass mail, a system unique to Alaska where shipments of at least 1,000 pounds are stamped air mail but are never touched by postal workers and are delivered at cheaper parcel post rates.

''We've been doing business in Alaska 41 years,'' Rock said. '' We feel like we have the right to participate (in bypass mail).''

Under the new law, pushed by Sen. Ted Stevens, R-Alaska, no new carriers will be allowed on mainline routes between the state's larger cities and Bush hubs unless they provide a certain level of passenger service. The law exempts existing large carriers who have been in the mainline bypass mail market since January 2001.

Providing passenger service to many rural communities without bypass mail revenue is not workable, Rock said.

''It's nuts to limit the mainline market,'' Rock said. ''I want to be the senator's friend and I know he's done a lot for the state, but if he wants more passenger service, the new law all but eliminates that from happening.''

Evergreen's lawsuit is similar to that of Alaska Central Express Inc., which that filed suit Aug. 2, the day President Bush signed into law new rules for Alaska's rural mail system.

While both airlines are suing on constitutional grounds, Anchorage-based Alaska Central Express accuses the government, the U.S. Postal Service and four larger airlines of conspiring to drive the company out of business.

Alaska Central Express, already under Chapter 11 bankruptcy protection, laid off 40 of its 100 workers in late August. Executives blaming the layoffs on the new law.

Stevens in 1970 secured bypass mail for Alaska, hoping the additional revenue would encourage passenger and freight service to the Bush.

Each year, Stevens said, the Postal Service loses about $100 million on bypass mail. The new rules should lower the loss to $70 million annually, he said.

The new legislation will give nearly all bypass mail bound for small villages to carriers providing passenger service. About 30 smaller carriers have competed for bypass mail in the past. But those who don't offer passenger service will be phased out of the program over the next three years.



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