Soaring fuel cost behind airline's pullout

Fuel prices driving airline's decision to terminate passenger air service between Visalia, Merced, and Las Vegas


The same soaring fuel prices pinching Valley motorists also are driving an airline's decision to terminate passenger air service between Visalia, Merced and Las Vegas.

But these cities are not alone in the plight.

Visalia and Merced are just two of more than a dozen small markets in the federal Essential Air Service program that Air Midwest, a subsidiary of Mesa Air Group, has notified recently of its desire to cease service.

Air Midwest, flying 19-seat airplanes under the US Airways Express brand, began a loop of flights between Visalia, Merced and Las Vegas in November and was only six months into a subsidized EAS contract with the federal Department of Transportation when it filed its notice of termination a week ago.

The company's notice states it wants to cease service effective Aug. 19.

"I think the biggest thing is the increased cost in operating expenses, especially for fuel," said Jeffrey Hartz, planning manager for the Phoenix-based Mesa Air Group. "There's no foreseeable slowdown to the increase in fuel costs."

The Essential Air Service program, administered by the U.S. Department of Transportation, was created by Congress after the airline industry was deregulated in 1978 to ensure that smaller communities continued to have air service connecting them to major airline hubs.

In some communities -- including Visalia and Merced -- the federal government pays the airline a subsidy that maxes out at $200 per passenger.

But not even a subsidy of up to $1.6 million a year for the combined Visalia/Merced route could offset the increase in fuel and other expenses, Hartz said.

"When we bid this contract, fuel prices were substantially lower and we expected them to stay lower," he said.

Besides higher expenses, Hartz blamed foggy fall mornings, maintenance delays and a lack of security screeners at Visalia Municipal Airport in the first few months of the service for lower passenger counts.

"It was a 'perfect storm' of sorts to not be able to serve those markets profitably," Hartz said.

The same factors are affecting other small airports served by Air Midwest and Mesa Air Group across the country.

On the same day Air Midwest said it wanted out of Visalia and Merced, the airline declared its intention to quit seven other subsidized EAS markets: Ely, Nev.; Roswell, Farmington and Alamogordo, N.M.; and Moab, Vernal and Cedar City, Utah.

Less than three weeks earlier, Air Midwest filed notices of termination for six additional subsidized communities: Hagerstown, Md.; Franklin, Lancaster and DuBois, Pa.; Lewisburg, W.Va.; and Athens, Ga.

Bill Mosley, a spokesman for the U.S. Department of Transportation, said many small airport markets are struggling to maintain service.

"It is difficult," Mosley said. "It's an increasing trend in recent years that some communities that were once served without a subsidy are now needing to be subsidized."

Mosley said it's not uncommon in a competitive and changing airline industry to see EAS communities change carriers frequently.

But such change may be unavoidable, said Lloyd Partin, manager of the Merced Airport.

"That's one of the problems with the EAS subsidy," Partin said. "It's nothing specific to Visalia or Merced, but it's endemic to the Valley; our demographics make it extremely difficult for airlines to establish air service and be competitive enough to charge reasonable fares."

With airports offering jet service within driving distance of both Visalia and Merced, Partin said, "there's not a lot of need for consolidated business travel."

That's little consolation to Visalia, where a game of "musical chairs" might describe the comings and goings of airlines in recent years.

"It's very frustrating," Visalia Municipal Airport Manager Mario Cifuentez said.

"Our local public has said, 'We want to fly from our hometown.' ... Our numbers are on the rise, and we believe if the schedules were reliable and on time, Visalia would be a profitable market."

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