ANCHORAGE (AP) -- Market changes and increased regulation of the airline industry forced Village Aviation Inc. owner Don King to make a tough decision for the future of his company.
''We needed to become a cargo airline, a passenger airline, or no airline at all,'' King told the Alaska Journal of Commerce.
Skyrocketing insurance rates nixed any plans for continued passenger service for the airline, King said. And folding the company meant putting hardworking employees out of work and losing the money he has invested.
So the company went into the cargo business, King said.
''We have good infrastructure, good people and good credit, so we're as healthy as anybody at this point,'' King said.
The company, now doing business as Village Air Cargo, has hubs in Anchorage, Kotzebue and Bethel and hauls cargo and mail throughout Western Alaska and north to Prudhoe Bay.
The airline recently invested $3.2 million, including the purchase of two Spanish-built CASA twin-turbine airplanes at $1.2 million apiece.
''We are dedicated to this service and have expanded our employee and customer base,'' said Chuck Bennett, Village Air Cargo's operations manager. Bennett said the airline added eight pilots, three mechanics and an administrative position, bringing to 42 the number of employees at the airline.
The airline's fleet now consists of seven airplanes with the addition of the CASAs, which have a payload of about 5,500 pounds and can handle awkward and heavy cargo through their rear-loading doors.
''A Subaru can fit in them,'' King said. The airline also operates five single-engine Cessnas configured for cargo, Bennett said. The short-landing and take-off CASA airplanes are ideal in the Bush, where there are more than 200 runways that are 3,000 feet long or less.
Already the company is seeing much business in freight, with the large number of sewer and water projects and other construction projects in the Bush, King said.
''That's the kind of business we're after,'' King said.
King bought the airline in 1996 when it was primarily a small passenger carrier known as Camai Air, owned by five small Alaska Native corporations in the Bethel area.
King began making the transition to a cargo-only airline in the past few years, handling freight for Anchorage-based Northern Air Cargo at its Bethel and Kotzebue hubs.
The company handles about 1 million pounds of fish annually for the airline out of both hubs. In addition to freight and fish, the airline is vying for a share of government-subsidized mail out of its rural hubs, since it is the only carrier to many villages, King said.
New federal rules limit the types of air carriers who can handle subsidized mail, which includes everything from food and construction materials to medical supplies.
Known as bypass mail, it's a system unique to Alaska where shipments of at least 1,000 pounds are stamped air mail but never touched by postal workers and delivered at cheaper parcel post rates.
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.
Village Air Cargo will be eligible for bypass mail business available to cargo companies.
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