Scenic Airlines, a long-time Grand Canyon tour operator, is getting out of the scheduled passenger business, primarily because of rising fuel prices.
It has been serving Nevada and California communities out of the North Las Vegas Airport with subsidies from the federal Essential Air Service program.
Scenic Airlines announced Tuesday that it will discontinue all of its regularly scheduled passenger service -- which linked Visalia and Merced, both in California, along with Elko and Reno, both in Neveda to the Las Vegas airport -- to concentrate on its main business of providing air tours over the Grand Canyon.
Ironically, Scenic was due to start new flights Friday from Merced to Reno, but those plans have been suddenly scrapped.
Scenic Airlines President Mark Slack said the service to Visalia was profitable for the airline, but its board of directors decided it needed to concentrate on its core air tour business.
Issues such as rising fuel prices and the airline's need to invest in infrastructure for its tour business also factored into the decision, Slack said.
"About 80 percent of our business is from the Grand Canyon," he said. "I know it seems strange to leave a profitable business, but we're looking at a lot of investments we need to make on the tour side."
Visalia City Manager Steve Salomon said Scenic's decision was "disappointing," but he also said he was optimistic that another carrier can be found to replace the airline.
"I hate to see it end because we had a good relationship with them," Salomon said.
Airport manager Mario Cifuentez said Tuesday that Scenic had been drawing larger numbers of passengers than the city's previous provider, Skywest, which serviced Visalia as United Express and provided connections to other airlines in Los Angeles.
Because of the increased passenger counts, City Council Member Don Landers said the city could be in a position to lure a carrier with service to a regional hub with connecting flights because the federal subsidy paid to airlines to serve the airport could go up.
"I see the cup as being half-full, not half-empty," he said.
Merced City Manager Jim Marshall stressed regularly scheduled passenger air service into Merced will continue until the DOT has designated a carrier to replace Scenic Airlines.Mesa Air Group and Great Lakes Airlines have expressed desire to serve Merced. Mesa served Merced for more than three years until 1998.
Scenic wants to terminate service Aug. 14 but airline officials said they will stay until a replacement is selected. The DOT is responsible for choosing Scenic's replacement and the timing of any switch.
"The most important thing is that Merced will continue to have regularly scheduled flights while Scenic transitions out of the business," Marshall said. "People will still be able to fly out of Merced on business and for personal travel until a new carrier arrives."
Kent Smith, Scenic's director of advertising, said Scenic has 1,200 to 1,500 boardings per month between Merced and Las Vegas.
Merced city spokesman Mike Conway said Scenic makes two flights a day into North Las Vegas Airport from Merced. Last year the airline had more than 8,600 passengers in Merced.
The airline has been serving Merced for about six years and just received a $696,788 annual Essential Air Service subsidy from the federal government in April.
Lloyd Partin, Merced airport manager, said Scenic has lost $350,000 due to rising fuel prices. Leases on the two Beech 1900 aircraft Scenic uses to serve Merced also come due July 31 and no similar aircraft are available for lease.
Partin said he will work with the DOT to see if the transition process can be accelerated, but is not sure how long it will take. He said Mesa and Great Lakes are expected to put together service proposals quickly to serve Merced.
There is a positive side to Scenic's intended withdrawal, Partin said. He said he's certain the two other airlines have expressed interest in serving the Merced marketplace.
This could ultimately lead to seamless travel connections between Merced and Las Vegas' McCarran International Airport, according to Partin. Scenic passengers now arrive at North Las Vegas Airport and are shuttled to McCarran.
Mark Slack, president and chief executive officer of Scenic Airlines, said the board of directors and management decided to gradually discontinue scheduled service operations so Scenic can invest in, grow and focus on its Grand Canyon tours.
"We are grateful for all the support our scheduled flights have received from passengers, employees, the communities we serve and the U.S. Department of Transportation over the past five years," Slack said.
Scenic Airlines was named the Merced County Chamber of Commerce's 2005 Business of the Year.
Scenic's announcement will not have any effect on improvements currently under way at the airport. A modular building has been added to the airport terminal to house Transportation Security Administration agents and their screening equipment.
The TSA has said it will continue plans to begin screening airline passengers by the end of the week.
Scenic Airlines started in the 1960s with flights to the Grand Canyon from Las Vegas. Scenic now is the largest operator of air tours to the Grand Canyon, carrying more than 155,000 passengers last year.
Slack, the Scenic president, said the airline started its scheduled service operation after the Sept. 11, 2001, terrorist attacks as a source of revenue to replace the loss of international tourists coming to Las Vegas.
"The result was that we created a great side business to Merced, Visalia, Ely, Elko and Reno and discontinuing our scheduled service operation is especially difficult because of the close bonds we have formed with these cities," Slack said.
The process for the DOT to determine a new carrier is expected to take at least three months.
Any customer who purchased tickets for the new service from Merced to Reno will receive a full refund, he said.
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