Wednesday, January 16, 2019

Mayors: California Pacific Airlines can’t buy fuel; Pierre, Watertown, South Dakota mayors ask feds for emergency move to let them find new airline



The mayors of Pierre and Watertown, South Dakota, have asked federal officials issue an emergency order so the communities can find another air carrier because they say California Pacific Airlines is having difficulties even buying fuel for its subsidized flights from the South Dakota cities to Denver.

The letter dated Jan. 10 posted this weekend on the federal website www.regulations.gov., is the latest turn in what Pierre Mayor Steve Harding and Watertown Mayor Sarah Caron say appears to be CP Air’s inability to fly, beset by financial and mechanical problems.

CP Air, based at an airport in Carlsbad, just north of San Diego, was formed in 2009 but had no operations until last year when it bought Aerodynamics Inc., (ADI), based in Kennesaw, Georgia, an Atlanta suburb. CP Air’s only aircraft were the four 50-passenger jets ADI had been leasing for its charter service.

Rebranding and re-painting the jets as California Pacific Airlines in August, CPAir continued ADI’s schedule of 12 round trips per week from Watertown and Pierre to Denver, under the federally subsidized Essential Air Service program.

ADI first won a two-year EAS contract beginning flights Aug. 15, 2016. While CPAir was buying it last summer, ADI won a second two-year EAS contract last summer, due in part to the requests from Mayor Harding and Mayor Caron, who touted the great service ADI had provided.

The EAS contract pays ADI/CPAir $7 million a year for flying the 12 weekly flights, on a reimbursement plan that means if a flight is cancelled, no subsidy is paid for it.

But when CPAir last fall began focusing also on new flights from Carlsbad, California, to Las Vegas and Phoenix, service to Pierre and Watertown began to suffer, the mayors told officials of the U.S. Department of Transportation last month. In that December letter, the mayors asked DOT to step in and help CPAir get its finances and jet maintenance in order within 30 days, or allow the two communities to seek another airline under the EAS program.

CP Air owes the Pierre Regional Airport for several months of landing fees and other bills totalling about $38,000, AIrport Manager Mike Isaacs told the Capital Journal last week.

The general manager of the Ramkota Hotel in Watertown said the airline owes the hotel for about four months of bills for flight crews and other employees.

But in the Jan. 10 letter, the mayors said things were so bad, they couldn’t wait.

“It has become obvious that the financial situation at CP AIr has continued to worse in January and we no longer can wait for for those 30 days to determine next steps,” Harding and Caron wrote to Joel Szabat, deputy assistant secretary at DOT’s Office of Aviation and International Affairs. “Approximately two weeks ago, Watertown and Pierre began dealing with an outside investor for CP Air that started to rectify some past due bills, but most importantly was paying for several day-to-day functions such as purchasing fuel on his credit card. Due to CP AIr’s lack of payments to vendors, most vendors are now requiring payment at time of services rendered. Watertown and Pierre were notified this morning (Jan. 10) that the investor is no longer purchasing fuel for flights at Watertown and Pierre. With the inability for CP Air to consistently purchase fuel, many flights have been canceled and we have minimal expectations that CP Air will be able to continue service at Watertown or Pierre.”

Harding and Isaacs told the Capital Journal that a Texas oil company owner who is an investor in CP Air had been paying some of the airlines bills. The oil company's name actually has shown up on the credit card receipts of passengers buying tickets on CP Air recently through its 800 number.

The mayors asked DOT to allow them to start the search for a new airline as soon as possible.

“We formally request the (DOT) to issue an Emergency Request for Proposal for Essential Air Service at both Watertown and Pierre as expeditiously as possible, so that we can find a carrier that can operate at both communities and provide the Essential Air Service that both communities rely upon.”

According to CP Air’s website, at www.mycpair.com, the flights to and from Pierre and Watertown were on for Sunday. A CP Air employee at the Pierre airport on Sunday said the two flights on Sunday were on time, as they had been the past week.

But the number of passengers, at 17 boarding at Pierre, continues to be lower as it has been for the past couple of months, than normal levels in 2017 and earlier in 2018.

Last month, CP Air announced it was cancelling flights in California to focus on the EAS-subsidized flights from Pierre and Watertown.

ADI/CP Air officials have said a key problem is the same one faced by all smaller airlines the past five years: a pilot shortage. On its website, CP Air officials say the company is training new pilots who soon will be flying its jets.

Despite the strongly worded letter from the mayors, and their openness to finding a new airline, Harding said they haven’t shut the door to CP Air.

“We just want to make sure that DOT knows that both cities are concerned and we want them to continue to work on finding a resolution,” Harding told the Capital Journal on Sunday. “The best resolution is for California Pacific to address the concerns and get back on track and have back-up flights and we can just continue on.”

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

3 comments:

Tom Ibach said...

another airline circling the drain,

Manarii said...

If they are not managed with integrity, some other airline will take over and make money - the American way.

Anonymous said...

vvv There is no "pilot shortage" in this case. This company doesn’t have ample operating revenue and simply cannot pay their bills or there are no pilots out there that are willing to work for this organization.

Look what happened/is happening to Surf Air.