Tuesday, April 26, 2016

Pierre picks ADI - again - for subsidized air service

In front of a packed room and after 90 minutes of comments and discussion, Pierre’s City Commission voted 5-0 to recommend Aerodynamics Inc. (ADI) to federal aviation regulators as worthy to receive $4.5 million a year in subsidies to provide air service to the state capital.

It’s a sort of reprise of the same decision made about 18 months ago in the same City Hall.

But this is a new, improved ADI and a more dire situation as passenger numbers have kept plummeting, civic leaders said.

The vote appeared to be as much a rejection of Great Lakes Airline, the Cheyenne-based company that has been flying routes to Pierre for decades, than any ringing endorsement of ADI, an Atlanta-based charter airline that has never provided scheduled passenger service before.

The special meeting brought about 30 spectators, more than the City Commission's meeting room could hold as a couple people stood in the hallway.

Commissioner Jeanne Goodman said she was supporting ADI because of Great Lakes’ deficiencies: “When we look at the statistics, half of Great Lakes’ flights are delayed and a quarter are not even flying,” she said, citing statements by the airline task force members. “I have to ask myself, would I hire a professional that had that same kind of record? It seems like we have to look elsewhere.”

Commissioner Jim Mehlhaff blamed federal regulators and Congress.

“This whole thing to me is upsetting. Not so long ago this community was served by two airlines, unsubsidized, and my assumption is they were profitable. At one point, the business model for regional (air service) was ruined by FAA rules changing pilot training requirements. And that makes it nearly impossible for small airlines to find the pilots, to find the seats and to operate at a profit,” he said.

Mehlhaff then turned to Congress’ recent legislation on the Federal Aviation Administration: “For all the press releases about the FAA reauthorization bill and all the great things in it, they have done nothing to address the root of the the problem.”

The five-member Commission, which includes Mayor Laurie Gill, took the advice of the 12-member air service task force led by Gill.

Bernie Christenson, former head of the state’s Division of Criminal Investigation, former city commissioner and longtime owner of an air service in Pierre, summarized the task force’s view at the meeting.

 Great Lakes is in a steep glide down, losing business in several states, he said. “In 2014, 44 cities had Great Lakes. Now that number is 15 and by the end of 2016 it will be 11.”

 Great Lakes is using older turboprop planes and young pilots aren’t trained will for it and don’t want to fly those planes, Christenson said.

So while all regional airlines are having a tough time finding pilots, Great Lakes is having a tougher time, he said.

So Great Lakes on-time performance has slipped to 50 percent and a full 25 percent of its flights are cancelled, Christenson said.

There are too many trends against Great Lakes to make it a good choice, Christenson said.

A handful of the 11 Great Lakes employees who work on the ground crew at the Pierre Regional Airport were part of a crowd of nearly 30 who filled the room.

One of them, Lisa Blake, said Great Lakes deserves to get the city’s recommendation because it has a long history providing air service here and is  a victim of recent changes in the industry.

“We forget Great Lakes has been here a long time and did very very well till the last couple years,” said Blake who said she’s worked for Great Lakes in Pierre for 12 years. “I’m also a business owner and truly I don’t see ADI as a very good risk.”

Jim Protexter, COO of the Pierre Economic Development Corp., is on the dozen-member air service task force who interviewed executives from ADI and Great Lakes last week.
He was also on the task force when it interviewed the same companies in late 2014 and decided, then, too, on ADI. And that, he remembers "having that blow up in our face,” Protexter said of of the financial and legal woes of ADI’s then-owner/CEO come to light.

But ADI’s new leadership and ownership seem capable and open about its operation and willing to work with the city, he said.

By contrast, Great Lakes’ CEO Chuck Howell used  a phrase several times last week during the interview, Protexter said: “’We have been here whether good, bad or indifferent.’ And that really struck me as a way of looking at how they perceive their level of service. Three items – good, bad or indifferent – and of the three, two are bad. That struck me as not really getting it. We are not going to grow with Great Lakes.”

Jim Hight, a task force member who has a hunting business, flying clients in and who also flies frequently on personal trips, said Great Lakes’ customer service out of Denver “is nothing short of crap.”

Charles Ross who runs Scattergun Lodge said he moved his business to Pierre a few years ago to take advantage of the commercial air service. But the past two years have been bad, he said.

 "I've down $200,000 in 2016 in reservations because my guests will not fly on Great Lakes Aviation," Ross said.

Mayor Laurie Gill joined with other Commissioners and task force members, including Hight, in saying the Pierre-based Great Lakes employees are not the problem and that they provide great service in a difficult situation as boardings have fallen by two thirds in little over two years.

 The air service task force last week asked Mickey Bowman,  ADI’s senior vice president and chief operating officer, about Great Lakes’ Pierre employees and Bowman promised ADI would interview them for new jobs, Gill said.
Great Lakes has had a lot of time and opportunity to improve things and didn’t do it, Gill said.

The city will send the U.S. Department of Transportation its recommendation of ADI for the EAS program on Wednesday, Gill said.

Typically, DOT accepts a community’s choice of an airline under the EAS program.

But the significant difference between the two airlines’ bid proposals – ADI says it needs $4.5 million in EAS subisidies a year to make the 12-roundtrips per week plan work, versus Great Lakes’ proposal of $2.4 million for 12 round-trips per week to Denver – is something the DOT looks at.

Great Lakes executives made clear they were inclined to pull out of the Pierre market if it does not get the EAS money. The company could drop service to Pierre at any point.

ADI’s Bowman said the airline could begin flights between Pierre and Denver by late July or August.

But ADI’s bid for Pierre service depends on Watertown also choosing ADI as its recommendation to DOT for the EAS program.

Watertown’s City Council will make its decision at a noon meeting on Wednesday, Mayor Steve Thorson told the Capital Journal.

He’s not a member of the Council or Watertown’s airport board which will advise the Council.

 Thorson said it’s his considered view that the Council will not choose Great Lakes and that would leave ADI the obvious choice, if Pierre first decided to recommend ADI to the DOT.

Watertown’s Council also is still considering Boutique Air as a third possibility.

At Monday’s meeting in Pierre, Christenson gave an experienced view in reporting the task force’s work to the Commission.

“When I was a (City) Commissioner in the early ‘80s, one of the subjects were frequently discussed was Essential Air Service,” he said of the federal airline subsidy program for small, isolated communities. “If you or the public thinks this subject is going to get solved with the next airline we pick, it’s not going to happen. I will always be a problem in Pierre,South Dakota.”

Original article can be found here: http://www.capjournal.com

No comments: