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.
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.
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