After two generations of family ownership and 56 years of flying from the Kenai Municipal Airport, the charter air taxi service Kenai Aviation has closed and is beginning to sell its hangars, equipment, and airplanes.
Owner Jim Bielefeld, son of Kenai Aviation’s founder Bob Bielefeld, said a decline in oil field work since global prices began dropping in late 2014, along with the consolidation of the oil and gas operators who were the charter’s primary customers, prompted his decision to close the business while it was still able to meet financial obligations.
Bielefeld said the closing has been “a long time coming.”
“Things have been pretty slow and getting worse,” Bielefeld said. “With so little happening in the oilfield we just couldn’t go another year. There wasn’t enough left. We’ll see what happens. It could be somebody picks it up again and goes a different direction.”
Air taxis made 22,545 of the 40,178 flights that passed through the Kenai airport in 2009, according to previous Clarion coverage. Emplanement reports by the Kenai’s airport administration to the city Airport Commission show that Kenai Aviation boarded 3,201 passengers that year. The company’s boardings varied between 2,000 and 3,000 in the subsequent years, and in 2014 it boarded 2,577 passengers.
“November and December (2014) is when things started slowing down,” Bielefeld said. “2015 wasn’t too bad a year — definitely slow. I can’t say we made a profit in 2015. But 2016, things really, really slowed down.”
In late 2014 independent oil and gas producer Hilcorp began operating its own flights out of the Kenai Airport rather than transporting employees, equipment, and contractors with charter flights such as Kenai Aviation’s. Many of the Cook Inlet oil and gas fields that Kenai Aviation had flown to for previous operators Marathon and Chevron had consolidated under Hilcorp ownership by 2012. As production in Cook Inlet’s oil fields slowed, the two global oil companies focused their investments elsewhere in the world, allowing the privately-owned, Houston, Texas-based Hilcorp to acquire Chevron’s Cook Inlet assets in 2011 and Marathon’s in 2012.
In 2015 Hilcorp’s flights had 3,574 boardings, and Kenai Aviation 1,102. Kenai Aviation had 509 boardings in 2016; Hilcorp had 4,328.
“The winter of 2014 – 2015, there were four of us flying full time,” Bielefeld said. “That spring I laid off two of them, and that fall I laid off the third one, and then it was just me.” A part-time pilot also flew for Kenai Aviation, he said, during days off from another job.
ConocoPhillips’ exit from Cook Inlet followed. The Anchorage-based electrical utilities Municipal Light and Power and Chugach Electric Association bought ConocoPhillips’ portion of the Beluga River gas field in February 2016, hiring Hilcorp to operate it. In October 2016 Hilcorp bought ConocoPhillips’ North Cook Inlet field.
The Kenai Peninsula Borough continued supplying regular work. On behalf of the borough, Kenai Aviation flew teachers, nurses, IT staff, and equipment to Tyonek’s Tebughna School, as well as a once-a-week delivery of school lunches. With Kenai Aviation’s closure, the borough now books flights to Tyonek through a charter service in Nikiski.
As for the oil and gas passengers who had been the bulk of the company’s business, Bielefeld said Kenai Aviation’s main industry customers in recent years were from Aurora Gas, operator of five gas fields on the west side of the Inlet. Aurora Gas filed for bankruptcy in 2016.
“We had three regular passengers for Aurora Gas that we took back and forth to work every couple weeks,” Bielefeld said. “All three of them left. They were our last passengers. Them, and borough maintenance.”
Sustained by the Cook Inlet oil and gas industry, Kenai Aviation had also been born alongside it. Bob Bielefeld came to Alaska from California in 1951 as a driller for Coastal Drilling, where he worked on the second well sunk in Cook Inlet’s first oilfield at Swanson River, north of Sterling. Bob Bielefeld had learned to fly in his home state and “ended up in the air taxi business, though he didn’t originally plan on that,” Jim Bielefeld said.
Jim Bielefeld hadn’t originally planned to run the business, either. Prior to working with his father at Kenai Aviation, he had four other jobs as a cargo airline pilot. It was an unlucky career — three of the airlines went bankrupt.
“In 1998 it was looking like Dad needed some help — he was getting older, and I could see that the job I was in wasn’t going to last much longer — it did ultimately go bankrupt,” Jim Bielefeld said. “So I went to work for him, and we ran the business together.”
Growing up on the Kenai airport, Bielefeld remembers that during the oilfield’s peak in the late 1960s, the Kenai airport had five air taxi operators supported predominantly by oil work, though with different specialities — some flew helicopters, others worked mostly as commuter services. Kenai Aviation also offered flight instruction.
“The oilfield was pretty active in the late 70s, early 80s,” Jim Bielefeld said. “Everything was moving so fast. It didn’t matter what it cost, get it moving.”
1970 was Cook Inlet’s peak year of oil production, when companies extracted about 230,000 barrels per day. During this hectic period, Bob Bielefeld also taught as a flight instructor and served on the Kenai City Council. He flew his last commercial flight after his 79th birthday, Jim Bielefeld said, and died in May 2016.
With Kenai Aviation’s closure, the only remaining air taxi on the Kenai Airport is North Air, a relatively new business that came to the airport about a year and a half ago, according to its owner Brian Baranek. Though North Air does some flights in the summer for tourism companies, “the rest of the year is pretty much 100 percent oil support,” Baranek said. His company offers its own flightseeing trips as well, but the market is seasonal, Baranek said, and wouldn’t sustain the business on its own. Most of the tourism aviation market consists of pilots with floatplanes who also serve as hunting and fishing guides, Bielefeld said. Both Baranek and Bielefeld said a switch from industry-based charter flight to tourism is difficult, though Baranek said his company is looking for ways to diversify during the oil industry contraction.
“We’re basically just in survival,” Baranek said. “Hoping things turn around.”
Bielefeld’s decision to close came at the end of the July when Kenai Aviation’s insurance — a large expense for an air taxi business — came up for renewal.
“I was holding out hope that there would be something going on, right up until the week I decided to shut down,” Bielefeld said. “…It’s one of those things I’ve been thinking about for a year, wondering what’s going to happen. But I didn’t make the decision until a week before the insurance ran out.”
At that point, he decided to “get out while I could still pay my bills.” Kenai Aviation has since sold two hangars to Schilling Rentals, a business run by brothers David and Michael Schilling, owners of Kenai’s GLM Turbine manufacturing shop.
The remaining Kenai Aviation building is the business’s office on the corner of Willow Street and Main Street Loop. Jim Bielefeld remembers helping his father clear trees and shrubs out from behind the building when they were constructing it. Now the Kenai Aviation apron is back there, with the company’s five planes sitting on it — all but one now for sale. The twin-engine Piper Chieftain is parked in front of a hangar. A red and white Piper Colt is tied down nearby, with three Cessna 206s surrounding it. As he walks past them, Bielefeld fondly recalls the challenges of loading and unloading awkward cargoes in the 206’s back seat and long tail compartment: lengths of metal piping, an oven for the kitchen of Tyonek’s Tebughna School.
“It was the neatest thing, when things were busy, to have all three 206s warming up in the yard, loaded and ready to taxi out,” Bielefeld said. “I love that sound.”
Bielefeld said he was proudest of his business’ safety record: no fatalities in 56 years of flying. One of the 206s, he said, has been in continuous operation since his father bought it new in 1967.
“We’ve had it operating for 50 years, and it’s never been wrecked,” Bielefeld said. “It’s had little dents and dings, but it’s never been wrecked, and it’s been in Kenai all that time. I was four years old when we got that airplane. I’m keeping it.”
Reach Ben Boettger at benjamin.boettger@peninsulaclarion.com.
