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Panhandle pilots see clear skies ahead.

Panhandle Pilots See Clear Skies Ahead

FOR SOUTHEAST ALASKA air carriers, 1989 would have been a year of cloudless skies fueled by modestly rising passenger counts, if not for the turbulence caused by regulatory storms with the Federal Aviation Administration. Most Panhandle carriers expect 1990 to prove equally free of economy-caused storm clouds and possibly be less bumpy on the regulatory front.

Peggy Ormasen, vice president of marketing and sales for LAB Flying Service of Haines, the region's oldest and largest air taxi operator with about 25 planes, says, "For us it was a comfortable, smooth year. The weather was great, passenger loads were up, both the regular economy and tourism were good. We just had a good summer and a pleasant year."

Bobby Jacobsen, owner of Wings of Alaska, Juneau's fastest-growing commuter airline with 16 planes, saw passenger loads increase by nearly 30 percent in 1989. But he says 20 to 25 percent of the growth was the result of upheaval in different markets caused by the FAA's decision to close three of the region's carriers because of alleged safety violations.

"Without the closures, which no one in the industry liked, our business would have been up a steady 5 to 10 percent. It wouldn't have been spectacular, but it would have been a nice, safe year," adds Jacobsen.

Arnie Johnson, owner of Mountain Aviation in Sitka, says his business, while not at record levels last year, was up over 1988. He explains that because his three-plane, three-helicopter operation caters to mining, timber and fishing interests rather than tourists, it is a good barometer of the health of the region's resource economy.

"Mining exploration in the Sitka area was a bit down; logging was just as hot as in recent years; and fishing was good. It was a good year for the region's economy and thus a good year for us. And I expect 1990 to be exactly the same: Not greatly better, but steady," says Johnson.

The story was the same for the major jet carriers. While Delta Airlines reported slightly smaller passenger loads for the first six months of the year compared to the same period in 1988, the region's main carrier, Alaska Airlines, reported a slight increase in passengers and a sharp jump in mail and air freight shipments to the Panhandle for the first half of 1989 over the first half of 1988.

According to a Civil Aeronautics Board report, Alaska Airlines indicated a 33.5 percent rise in air freight deliveries to Juneau during the second quarter of 1989, on top of a 23 percent rise in the first three months of the year. With passenger counts up about 2 percent, the airline clearly surpassed its 1988 totals when it carried more than 163,300 people to Juneau in 1989. That performance was up 23 percent from just four years earlier.

Greg Witter, spokesman for Alaska Airlines in Seattle, says the airline's 1989 traffic in Southeast was strong, especially in summer. Last winter the airline added an extra flight to Juneau three days a week. It also allotted an additional plane daily for a series of flights into Southeast during the busy summer travel season.

Says Witter, "Traffic in Southeast was good last year, and we expect it to be equally good, if not to exceed last year's loads this year. All the indications are that traffic in 1990 will be strong throughout the Panhandle."

Regional airlines report they faced sharp jumps in fuel prices during the year. At one point aviation fuel rose 14 cents a gallon. The rise in fuel was partially offset by generally falling insurance rates and by modest increases in passenger counts.

Cruise ship visitors to Southeast fell by about 9,000 from 1988 to 193,777 in Juneau, according to the Juneau Convention and Visitors Bureau. But the resulting drop in sightseeing tours sold to cruise ship passengers generally was offset by new excursions sold to either cruise ship passengers or independent travelers.

According to Chip Waterbury, president of the Southeast Alaska Tourism Marketing Council, customs service visitation to the region was up about 11 percent in 1989. Says LAB's Ormasen, "The cruise ship business was a bit down, but new excursion flights - from Skagway to Haines and back, for example - really took off. Those flights really made our summer."

Linda Hayes, part owner of Glacier Bay Airways, one of the three Southeast carriers closed by the FAA, says new business to fishing lodges other than the Glacier Bay Lodge made 1989's first nine months very successful for the 20-year-old carrier based in Gustavus. The National Park Service-owned Glacier Bay Lodge in the region's lone national park formerly was the community's main drawing card.

"Business was so good we were able to afford bigger planes that allowed us to have a very strong year, at least until the closure (October 13)," says Hayes. "It was a good year and I'm an optimist. I think 1990 will be equally good and that we'll be back in the air to participate."

The major blot on the year for regional air carriers was the FAA regulatory crackdown triggered by the 1987 crash in Homer of a Ryan Air Service commuter flight in which 18 people were killed. Since the crash and resulting recordkeeping crackdown, the FAA has closed eight carriers statewide for alleged safety violations.

Closures on the Panhandle began May 21 when the FAA issued an emergency license revocation against Juneau-based Channel Flying, alleging the airline was guilty of five counts of safety violations. Supposed violations included not properly training pilots, pilots flying more than the allowed number of flight hours and allowing "unairworthy" planes into the air.

Eventually the FAA dropped most of its complaints against Channel, allowing the airline to apply for a new operating certificate. But it took until early December for two of the company's three owners, Ken and Craig Loken, to recertify a reduced number of aircraft and get their slimmed-down charter operation back in the air. Before the closure, Channel employed 13 people, operated five planes and provided scheduled service to 11 Southeast communities.

In October the FAA shut down Glacier Bay Airways for roughly the same allegations, confiscating the airline's most valuable plane in the dispute. Several weeks later, the administration also closed Petersburg's small Alaska Island Air Service for similar alleged violations.

Closure of Glacier Bay, one of the few airlines in the region never to have had a serious accident, fueled a major protest. Residents of tiny Gustavus, which sports a winter population of around 225, wrote petitions, carried picket signs in airport protests and wrote their congressmen.

Alaska's Sen. Ted Stevens publicly questioned the fairness of the FAA's paperwork crackdown and met with FAA administrator James Busey Dec. 7. After the meeting, the FAA signaled a possible reversal of policy by restoring Alaska's FAA operation's chief, Franklin Cunningham, who since has announced plans to retire, to a position from which he could influence safety inspection policy. Following the Homer crash, Cunningham had been divorced from inspection policy decisions.

Kim Daniels, executive director of the Alaska Air Carriers Association based in Anchorage, said in December, "We certainly haven't seen any changes yet in FAA policy, but we're hopeful that progress will be forthcoming. We at least have reason to hope that reason will return to the inspection process."

The air carriers' attitudes were further brightened Dec. 14 when a National Transportation Safety Board administrative judge, Jimmy Coffman, threw out the charges against Alaska Island Air, saying the FAA had not proved the alleged safety violations against the 22-year air taxi operator.

Wings of Alaska's Jacobsen, former vice president of the air carriers association and current vice president of the Alaska Visitors Association, says, "Really careful carriers usually had nothing to fear from the FAA. But a return to a system where the FAA will work with you to remedy paperwork problems, rather than use any mistakes as proof of your unfitness to operate, will go a long way to remedy problems that the carriers have had with the FAA. It will help to improve relations between the air carriers and the agency."

Horizon Watch. Outside of inspection concerns, the Panhandle's traditional air transport problems also are presently in check. One annual concern is whether federal subsidies will remain to continue helping jet carriers provide essential air service to moderate-sized towns in the region.

The level of subsidy has fallen in recent years. In 1985, Alaska Airlines was paid $3.57 million to provide service to Petersburg, Wrangell, Gustavus, Yakutat and Cordova. In October, Congress continued the $35.5 million essential air service program nationwide, including about $2 million to Alaska Airlines for service to Southeast towns - about the same level of subsidy as last year.

Another traditional concern for air carriers, too much competition, isn't much of an issue at present. "It is highly competitive in Southeast, but not too competitive," says Glacier Bay's Hayes. "If two more carriers were to move into the region, that would be more than the economy could support. But right now everyone who is flying can make a living at it, and that is about all you can hope for."

Jacobson says he worries that smaller air carriers in the region may be spending too much on expansion and be overextending themselves economically. "Juneau is a key to everyone's economic health, and oil revenues are the key to state employee travel and, thus, the timber and fishing probably won't be contributing many more customers to us in the years ahead," he explains. "A lot of carriers could be in trouble come 1995 when their fixed expenses remain, but the customer base is way down. We have to get everyone to start planning for the long-term."

The fact that the region's carriers even have time to contemplate business far over the horizon is proof that the immediate skies appear pretty friendly for air carriers in the Panhandle through the remainder of this year.

PHOTO : Freight handlers load cargo on an Alaska Airlines flight south.

PHOTO : Channel Flying, one of three Southeast air carriers closed by the FAA in 1989, has been recertified as an air taxi operator under the name of Loken Aviation.
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Article Details
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Title Annotation:Alaskan commuter airlines
Author:Kleeschulte, Cluck
Publication:Alaska Business Monthly
Article Type:company profile
Date:Feb 1, 1990
Previous Article:Air cargo climbs.
Next Article:Passing the buck.

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