For the second time in a year, the city is shopping for a new airline to provide passenger flights at Merced Municipal Airport.
Mesa Air Group announced Monday that it's cutting service to Merced and several other small communities effective Aug. 19.
The announcement comes eight months after Mesa signed a two-year, $1.6 million federal contract to provide Merced's passenger flights. It was a year ago this week that the city's previous carrier, Scenic Airlines, abruptly announced it was taking off from Merced's runways for good.
News of Mesa's departure surprised city officials, who said they had no warning of the carrier's change in plans.
Airport Manager Lloyd Partin, who heard the news from a reporter, stressed that Mesa's exit won't mean an interruption in flights from Merced Municipal. The carrier offers three to four flights daily to Las Vegas' McCarran International Airport. Mesa is required to maintain that schedule until a new carrier takes over.
Mesa's Vice President of Planning Tom Bacon said the carrier is cutting Merced, Visalia, Ely and several small East Coast cities from its roster to focus instead on routes in the Midwest and Arizona.
"The simple answer is, we're losing money doing this service today," Bacon said. The company recently announced "incredibly disappointing" second-quarter earnings, Bacon said. In March, Mesa sold only 47 percent of available seats on its Merced-Visalia-Ely-Las Vegas route. The rising cost of jet fuel, which has spiked about 20 percent this year, has also eaten into the Phoenix-based company's profits.
Now the Department of Transportation will solicit bids from airlines that want to fill Mesa's shoes by taking over the federal Essential Air Service subsidy, which pays for passenger flights in small cities that can't sustain air service on their own, said DOT spokesman Bill Mosley.
The city will review the bids, choose one to support, and submit a letter backing the carrier to the Department of Transportation. The DOT has final say on which carrier wins the funding, but community support plays a key role in the DOT's choice.
During the last round of bidding, city officials chose to support Mesa partly because it was perceived to be the most financially secure of the carriers competing for the subsidy, said Assistant City Manager Bill Cahill, who supervises the airport.
"It is repetitious to have to do this over again and we certainly look forward to the time when there's more stability," Cahill said. "That, of course, will be one of the things we'll be looking for (in this round of bidding)."
Big Sky and Great Lakes Airlines also submitted bids for the Essential Air Service subsidy last time it was up for grabs. Cahill said he expects multiple airlines to submit proposals during this go-round, too.
The competition between airlines for the Essential Air Service subsidy could also reignite the rivalry between Merced Municipal and the county-run Castle Airport.
Last June, Castle officials asked the Department of Transportation to consider Castle instead of Merced as the host airport for the federally funded passenger service. None of the airlines that submitted EAS bids in 2006 listed Castle as their airport of choice in their proposals.
Since then, Castle has reopened its air traffic control tower and is set to complete a new passenger terminal this fall. But county spokesman Mark Hendrickson said it's too early to say whether Castle will work to attract passenger air service to its runways in the coming months.
"We need to remain focused on working collaboratively with the city to develop air service that benefits local and regional residents," Hendrickson said. "Any time you have a business that exits from a community, it hurts the economy and damages local residents."
Mesa beat out two other carriers to win a $1,599,207 government subsidy to provide Merced's passenger service for the next two years.
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