Posted on 01/23/2008 10:37:27 AM PST by tcrlaf
Rising fuel prices have forced two small but well-known US regional operators out of business permanently. Big Sky Airlines shut down in January after a disastrous eastwards expansion, while Air Midwest faces liquidation later this year.
Both operate on thin margins, relying on federal subsidies for rural service to smaller communities. Their demise is also a sign higher operating costs may force more domestic capacity cuts.
The demise of Big Sky forces its parent MAIR Holdings into liquidation. MAIR's major holding had been Mesaba Aviation, which Northwest Airlines bought last year, leaving it with only small turboprop operator Big Sky and the promise of funds owed by Northwest.
MAIR, which acquired Big Sky in late 2002, shifted last April some of its Raytheon 1900D 19-seat turboprops to Boston, where they flew as a Delta Connection carrier. But the unprofitable east coast operation was dropped in early January, and in late January Big Sky's remaining subsidised routes in the west were tansferred to Great Lakes Aviation.
MAIR executives blamed high fuel prices and bad weather in the northeast. The company will dissolve after the Northwest payments are distributed to shareholders. "We no longer believe that we can reach sustained profitability," says Big Sky president Fred DeLeeuw.
The planned liquidation of Air Midwest, a unit of the Mesa Air Group, caps years of effort to make that 1900D operation profitable. But Mesa chief executive Jonathan Ornstein says he saw "little prospect of future profitability" for it.
Mesa for several years sought a buyer for Air Midwest, which flies as US Airways Express. It will cease operations by year-end. Mesa has taken a $6 million loss from the discontinued operation.
Another 1900D operator, Colgan Air, has successfully transitioned itself following its sale last year to Pinnacle Airlines. Colgan in February will begin operating a new fleet of at least 15 and up to 30 70-seat Bombardier Dash 8 Q400s on behalf of Pinnacle partner Continental Airlines. It plans to retire its last 1900D by year-end.
Cities are losing service, and Airlines are getting out of the small Airliner business.
No one outside of the Soviet Bloc even builds a 19-Seater, anymore..
All thanks to Clinton's knee-jerk reaction to Media hysteria about "Commuter Safety" in the mid 90's, that was NEVER based on FACTS...
Essential Air Service at Columbia/Jefferson City, Joplin, and Kirksville, Missouri Re: Notice of Air Midwest to Terminate Service Re: Notice of Air Midwest to Terminate Service Re: Notice of Air Midwest to Terminate Service
Essential Air Service at Manhattan and Salina, Kansas Re: Notice of Air Midwest to Terminate Service
Essential Air Service at Grand Island and McCook, Nebraska Re: Notice of Air Midwest to Terminate Service
The rule changes did increase aircraft costs. TCAS etc. As per USA useless Today, route load factors were about zero. You could not have operated a kite profitably— Let alone an airplane.
It used to be a small town had to be on a rail passenger line, before that a navigable body of water, to have any service. Many were left out. Not really any different today. If you are not on an interstate, you are, and always will be, at a transportation disadvantage. It is called a geographical inefficiency.
I can make it nearly anywhere with one hop from Springfield, MO. I understand the city is building an even bigger airport, so that’s good. The only difference from KC or St. L are the little jets.
Is Scareways (Skyways) still operating? Bad memories.
“route load factors were about zero.”
The FAA would not allow the new 9-passenger Turboprop Airliners (Cessna 208, Pilatus PC-12) to operate EAS in the lower 48. (Until just this year, when Pacific Wings was awarded an EAS run in New Mexico).
In addition, turbos can no longer get in to places like Ohare, because of the costs, even though the FAA reserves slots for service from many small Midwest cities.
Skyways is in the process of shutting down.
They will only exist as a ground services handler for Midwest now.
I’ve non-revved a few times from MCI on Air Midwest to visit my sister in Manhattan, KS. Every time I flew with them, there were no more than four or five pax on the flight. EAS, generally, is a big joke. If a town really wants air service, they should be paying the airlines the entire cost. Get the government out of this business!
If Big Sky is also shutting its doors, it means most towns in Montana will completely lose service, as well.
The Beech 1900D is quite an interesting aircraft though, not that I’d ever want to fly one... especially at Air Midwest/Big Sky payscales.
Skyway is still operating, although its only a matter of time before they shut their doors. They are also ditching their Beech 1900Ds soon, as well as their EAS contracts. I believe most Wisconsin towns that got EAS from Skyway will recieve service from Mesaba on SAAB 340s from MSP.
I read a fascinating article in the local paper maintaining that railroads were not only on the way back to prominence, but that that’s where all of the hidden dot.com money went. Also that railroads would be attempting to reclaim lines that were converted into nature trails.
EAS has a place, especially for small towns, but the idea was SUPPOSED to be subsidys long enough to build thier own base of support.
Clinton destroyed those possibilities in 1997 when his bill that was “Supposed” to cost “just” 64 cents per passenger actually was over $100 per!
I sat in on meetings with Brian Bedford in 1999 where he predicted that exactly this situation was going to happen.
I cut my teeth with Britt and Air Kentucky, back in “the day”.
I doubt it will ever happen, but it would make a lot of economic sense. Especially with the huge growth of truck traffic on Interstates, it would be good to get a lot of the freight back onto rails.
I can see that, especially with rising fuel prices.
At $4 a gallon for diesel, moving frieght transcon by truck is getting less and less efficient.
I don’t see rail networks making a comeback. It might make sense in places like Atlanta or Chicago to have an extended network out to Macon or Akron...just as a secondary hub prospect...but thats as far as most folks would expect.
The problem is that a lot of these small towns simply don’t have the traffic any longer and probably will never get it back, economic incentives or not. The brain drain from these rural communities has been well documented and with the brains go high-paying jobs and a demand for air service. The writing has been on the wall for the 19-seat operators (and the cities they serve) for a while, without a doubt.
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