Air Service to Galena, AK

[N3243A]

aalexander, I don't and won't presume to know all the vagaries of Part 135 route scheduling and the role of bypass mail but your post heavily implies that various carriers would like to do away with the hub and spoke system of bush travel so prevalent here in Alaska in order to increase their bypass mail revenue? And that they have already lobbied for this with our Representatives? Maybe so, but I don't believe that this current proposal by the FAA to "abandon" Galena's Navaids is all that sinister in its origins. I would look at the funding stream coming from FAA HQ that maintains all the states Navaids. My opinion is that they object to operation and maintenance (O&M) of a brand new airport to maintain that was not part of their forecast O&M budget for the next few years due to it's previous status as being part of the USAF infrastructure. O&M is huge and the FAA would likely have to hire an additional one or two personnel to handle all the Navaids at Galena, not to mention more parts, spares and electricity to pay for. This is my main problem, that they would rather cut service than try to find budgeting for adding this hub to the NAS, while on the other hand they are planning more AWOS's and WCAMS to every little bush village there is. It's the wrong prioritization of resources and is not in the best interest of the flying public. In any case, you bring up a scenario that I had not considered before.

 

[aalexander]

Maybe so, but I don't believe that this current proposal by the FAA to "abandon" Galena's Navaids is all that sinister in its origins. I would look at the funding stream coming from FAA HQ that maintains all the states Navaids. My opinion is that they object to operation and maintenance (O&M) of a brand new airport to maintain that was not part of their forecast O&M budget for the next few years due to it's previous status as being part of the USAF infrastructure. O&M is huge and the FAA would likely have to hire an additional one or two personnel to handle all the Navaids at Galena, not to mention more parts, spares and electricity to pay for.

This is all probably true. I didn't mean to suggest that frontier would have been the origin of this proposal, it likely came up for the reasons you describe, but I wouldn't be at all surprised that Frontier is lobbying with all its resources to get the proposal to go forward. These are the sort of motives and machinations which go into bureaucratic decisions such as this.

 

[mvivion]

aalexander,

I suspect you are overthinking this one a bit, but maybe not. And, don't forget that Senator Stevens listens to most citizens who write letters, even lowly single aviators.

And, as an old boss of mine told me once: "Just because you're paranoid doesn't mean they are NOT out to get you."

MTV

 

[aalexander]

I suspect you are overthinking this one a bit, but maybe not.

Well, perhaps, but this isn't some theory that I formed in a vacuum, based solely on the information in the original poster's link. I have some involvement in the issue, and the Galena bypass market specifically is one that has been the subject of considerable interest and attention by Frontier and others. More specifically, whether that market is served from Galena as a Mainline hub or from Fairbanks as a group of bush destinations, is an issue in which Frontier had been keenly interested.

And, don't forget that Senator Stevens listens to most citizens who write letters, even lowly single aviators.

Of course he does, that's how he keeps people convinced he has their best interests at heart. You would be hopelessly naive (and I don't think you are) if you didn't believe that he listens much, much more intently to those who arrive with a big bag of money in hand.

And, as an old boss of mine told me once: "Just because you're paranoid doesn't mean they are NOT out to get you."

Cynical might be more accurate than Paranoid.

 

[Buck]

WOW………You three are certainly articulate!…….I am probably naive but machination??? “an artful or secret plot or scheme, esp. one with evil intent:”
I would certainly hope Johnny, Craig et. al. aren’t involved in something like that.

aalexander would you mind sharing your insight to the bypass system and elaborating on it? All I can find is an article in the Alaska Journal of Commerce in Feb of 2006 speaking about amendments to the Rural Services Improvement Act where they change the criteria for carrying bypass to favor the 121 operators.

I intend to send an email to Stevens. I’m not yet cynical enough to believe it can hurt.

Buck

 

[mvivion]

Buck,

Speaking of Senator Stevens, the bypass mail system is one of the great secrets of Alaska, though there is bypass mail elsewhere, I understand.

It is THE ONLY reason there is even weekly air service to most Alaska villages. If it weren't for bypass mail, I doubt half the villages in Alaska would have an airplane a month.

MTV

 

[Buck]

MTV...........I know that in a general way .......I'm hoping aalexander will enlighten us with specifics.

Buck

 

[aalexander]

MTV...........I know that in a general way .......I'm hoping aalexander will enlighten us with specifics.

Buck

Buck,

Sorry for not responding sooner. I wasn’t ignoring you, just didn’t have the time to give you a reasonably thought out reply. Not sure exactly what you want to know about the Bypass Mail system, So I’ll give you a general description of how it works and we can go from there if you still have questions.

Essentially, Bypass Mail is a system of heavily subsidized air freight in Alaska. It’s called Bypass Mail because although it is done through the US postal Service, the mail never actually goes through the Post Office, it "bypasses" it. If you have a large amount of stuff to ship to the bush, and it meets certain criteria, you can send it through bypass mail. You will pay the post office postage on that stuff which is a fraction of what it would cost you to send the same stuff air freight. Then the post office pays the carriers the going rate for freight to the destination. The Postal Service pays out substantially more in freight than they collect for postage, somewhere north of twice as much, I believe I’m not completely sure of all requirements, but your stuff has to be palletized, I think there’s something like a 1000 lb. minimum (not per pallet though) and the palletized stuff has to be able to broken down into packages no heavier than the Postal Service’s standard 70 lb. maximum. The items have to meet certain size restrictions also. You couldn’t, for example, mail 2x4 studs or sheets of plywood. There was, however, a situation a few years back which made the papers in which a construction company was shipping concrete blocks to a village for a construction project. That was most economical way to get them to the village and they fit the P.O. criteria. People felt that this was an abuse, but I’m a little unclear on why shipping concrete blocks via bypass mail is bad while shipping triple mailers (3-12packs banded together, weighs 65 lb) of soda pop is not. Anyway, each individual package on a pallet is metered and has the meter stamp affixed. That’s how the PO collects the postage; charging through the postage meters. Generally it’s companies who do a large volume of shipping, like the A.C. Store, or the village stores or village co-operatives. The bypass mail is flown out of Anchorage, Fairbanks and Deadhorse by the mainline carriers, Alaska airlines, Northern Air Cargo Everts’ Air Cargo, and Lynden Air Cargo. to hubs, usually larger villages with better airports. Dillingham, King Salmon, Illiamna, Bethel, Saint Mary’s, Aniak, McGrath, Emmonak, Unalakleet, Nome, Kotzebue , Galena, Kodiak, Barrow and ,I think, St. Paul are all mainline hubs. There the pallets are broken down and distributed to the 135 operators to deliver to the smaller villages in 207’s, Navajos, Caravans, etc. The Post Office pays on a two tier system, they pay "mainline rates" to the Part 121 carriers, and "bush rates" to the 135 carriers. The rates differ according to the route, but on a per pound per mile basis the mainline rates are much lower than the bush rates. This reflects the fact that a DC-6 will haul cargo more efficiently than a 207, but in all cases the rates paid to the carriers are much greater than the postage levied. So, if the Postal Service pays the carriers much more than they collect in postage, where does the money come from? The post office, as you may know is (theoretically) self sustaining, so if the post office charges half what it pays to ship a 2400 lb pallet of soda pop (yes that is now much a pallet of soda pop weighs) to Hooper bay, they have to raise their rates on shipping Christmas presents from Omaha to Cleveland. In effect, the postal patrons in the lower 48 are unwittingly subsidizing the air cargo industry in Alaska, and indirectly, the village dwellers’ lifestyle. You can bet your next paycheck that the cost of living in the village would be quite a bit higher if the stores were paying the true cost of shipping their merchandise. As noted by Mike, the bypass mail was the brainchild of Uncle Ted. The purpose was to subsidize the air service in the bush, to provide better and more frequent air service to the villages, many of which would not have regular air service otherwise. Does it work...? well yes and no. What the carriers quickly noticed was that there was a lot more money in hauling bypass mail than people. As a carrier, once you had be certified to carry the bypass, you could file for any route, and be given an equal share of the mail for that route. If 4 carriers are providing scheduled service from Bethel to Kipnuk, they each get a 4th of the mail., guaranteed, and subsidized. No need to sell tickets, no complaining passengers, no no-shows, and above all, you don’t have to ensure your operation for passengers. A 207 load of soda-pop is worth about $300, if you buy it at Costco, but a 207 full of dead relatives is worth millions if you have a sympathetic jury, even if you did hate the relatives when they were alive . It doesn’t take a rocket scientist to figure out that hauling mail has a much lower liability that hauling people. So, the industry gravitated toward carriers who carried exclusively mail. Sure there were carriers who carried both, but there were a whole bunch others who existed only to carry the mail, which was not the result that Uncle Ted had in mind when he began the bypass mail system. So a few years ago there was a reform in the bypass mail laws. That’s what the article you found was about. Probably the biggest change was that for the bush routes, where the mail was not divided up evenly amongst everyone, but depended on how much of the passenger traffic on a route you carried. Don’t quote me exactly, but it was something along the lines of: 80 % of the bypass mail on a given route would go to the carriers who carried 70% of the passengers on that route. Suddenly, you had all the cargo only air taxi fighting over only 20% of the mail. That’s why a few years ago you saw a whole bunch of air taxis go out of business all at once. Larrys, Bellair, a bunch of others. Those who weren’t carrying enough, or any passengers were cut out of the majority of the bypass mail market. There were also provisions in the reform act which prevented 135 operators (Like Alaksa Central Express) from flying mainline routes, and also gave preference for giving a greater portion of the mail to carriers on bush routes who were operating turbine aircraft. That is why you’ve seen a lot more Beech 1900’s flying for the different carriers, in part because it nets them a greater share of the bypass mail.

That’s some of the generalities and recent history of the Bypass mail system. Hope that gives you a better understanding of how it works. If you have further questions, ask away, and I’ll try to answer. If I don’t know, I’ll make something up

 

[Buck]

aalexander,

Thank you for your thorough explanation of by-pass mail. I had a general idea of how it worked but I have a much better grasp of it now. I know when we mail groceries etc. from Fairbanks it is costing us around $0.30 a pound parcel post. If you shipped it air freight would be at least double. I wonder what by-pass costs the customer compared to parcel post rates? I wonder what “mainline carrier rates” versus “bush” (135) rates are?

You say in one of your posts; “Currently, bypass arrives in Galena by mainline carrier, at very low mainline rates. Frontier doesn't get a penny of that, as they are not a mainline carrier.” …………………Who are the mainline carriers who are bringing the by-pass mail to Galena? Evertz comes in twice a week on a schedule so are they mainline? Is mainline synonymous with part 121? I thought part 121 pertained to scheduled service and part 135 was on a as needed or impromptu basis.

I flew in the USAF and had an aerial application business which I think is part 137. As you can see I’m not very familiar with my “parts”.

Thanks again, Buck

 

[aalexander]

I wonder what by-pass costs the customer compared to parcel post rates?

less. How much less I don't know but it's less, plus the ability to ship palletized goods.

I wonder what “mainline carrier rates” versus “bush” (135) rates are?

I can't give you hard and fast figures, but I know that my company was the only mainline carrier to one small hub and we dropped it because we couldn't make money at mainline rates. There wasn't enough mail to make it pay. The P.O., for whatever reason wanted to keep it as a "hub" but no mainline carriers would pick it up, so they wound up paying a bush carrier bush rates to carry the bypass to that hub. As I recall the bush rate for that route was something like 5 times as much. Paradoxically, the PO would pay the bush carrier 5 times as much, but wouldn't raise the mainline rates of that destination a lesser degree (say double it) to make it profitable. I guess they have their rules and reasons. Didn't make sense to me. Now that's not to say that bush rates are all 5 times more, that's just an example, and I may not remember that perfectly, it's been a few years.

Who are the mainline carriers who are bringing the by-pass mail to Galena? Evertz comes in twice a week on a schedule so are they mainline?

Yep. The mainline carriers are Alaska, Northern Air Cargo, Everts' and Lynden. ERA and Penair may also qualify as Mainline carriers, I'm not sure.

Is mainline synonymous with part 121?

Yeah, the distinction is pretty much along the same line as as the differences between 135 and 121, although there are some subtleties there that I'm a little hazy on. Before the reform of the bypass mail, you did have part 135 operators carrying bypass on the mainline routes.

I thought part 121 pertained to scheduled service and part 135 was on a as needed or impromptu basis.

Not exactly, 121 v 135 has more to do with the size of the airplane. 121 tends to be mostly scheduled service, but 121 carriers do ad-hoc charters all the time, both cargo and passenger. Also, you can have scheduled service with a 207 or a Navajo or a King-Air, those are part 135 airplanes and 135 operations though.

The 1900 falls in a middle ground between the two. Although it is larger than 12,500 lb, the cutoff point for "large" aircraft, it is not a transport category aircraft certificated under part 25. Formerly, 1900s were operated under part 135, but the FAA initiated a "one level of safety" philosophy a while back and the former "commuter" operations are on a program of phased compliance with Part 121.
The division between part 135 and 121 is different depending on whether you're talking about passengers of cargo. The line is 9 passengers or 7500 lb. payload. A 1900 carries 19 passengers, so it's now a part 121 passenger plane, but it's payload in cargo configuration is less than 7500 lb. A 1900 operated cargo-only would still be completely part 135, as is Alaska Central Express. I believe that for the post office, the mainline v bush operator line is based on the 7500 lb payload figure.

Clear as mud now?

 

[mvivion]

Not that it matters much in the current discussion, but doesn't Evert's operate under part 125?

MTV

 

[aktango58]

Why would them guys from the south complain about funding our existence? They sure seem to cheer the USPS Nextel cup car. What does that cost in percent of the new postal increase?

Tell me how the government can sponsor at least four cars when they are mandated to not compete or operate in competitive business, nor make profits????

I believe that the state does take care of GAL. Call the DOT Fairbanks office and talk to Bill O'halloran. Also Mike Coffey would be a good one to complain to. Mike needs to be bothered, tell him to buy a house for his wife :lol:

Bill will give you the proper channels to call/contact to get info, but I will tell you the state does not want the weather or instrument stuff. But he knows the folks funding all of it.

If Bill is not available, talk to Jeremy.

 

[Bill Rusk]

Aalexander

Thanks for posting. It is interesting learning about Alaska

Bill

 

[aalexander]

Not that it matters much in the current discussion, but doesn't Evert's operate under part 125?

Everts' Air fuel operates under Part 125

Everts' Air cargo operates under Part 121.

Two separate operations and two separate operating certificates. Fuel may be delivered under Part 125, as the fuel belongs to the company until it is sold to the buyer at the destination. As such it is not common carriage.

Common Carriage must be conducted under a Part 121 certificate.

Everts' Air Fuel used to haul other stuff for hire, but it wasn't legal, and they got in trouble for it when other properly certificated carriers complained. Essentially, it was Chisel Charter on a larger scale. As I understand the history there, part of their penance for their sins was to get a part 121 certificate

 

[Hyrdflyr]

One thing to consider when contemplating the "subsidized mail service" rural Alaska receives, is the fact that some postal rates everywhere are subsidized, if you want to call it that, by the average system expense.

Simply put, the non-priority parcel you send across town costs the same amount to mail if it goes across the state, as does the letter to grandma in Florida, versus the reminder card sent out by your dentist. Most postal zones in the lower 48 can and do utilize trucks, whereas that is just not doable in most of Alaska.

I think a lot of the intent behind the bypass system was to sort of level the playing field for Alaska's lack of roads and infrastructure, and the fact that is just plain HUGE, in relation to other state's size.

I also think that the amount of benefit this country has received from rural Alaska in the form of the federal tax revenues collected on the billions of barrels of oil that has flown down the pipeline would more that make up the difference of the postal rates for bypass mail and a lot of the other "subsidized service as well. I was on a State ferry some time ago, during an "off" time of the winter, traveling across Prince William sound and observed to the Mate that the five of us passengers and few vehicles aboard, wouldn't begin to pay for even a small part of the fuel burned. He just looked at me and commented that the federal highway system doesn't make any money either. Mail is not a lot different.

Ex governor Wally Hickle's beef for years was that statehood promised the state 90% of the revenues from oil production, and we really got the short end instead.

It would be interesting to know the real revenue cost equation for sure.

 

[mvivion]

Not sure about the percentage the state gets from the slope oil fields, but it's high, for the moment.

As to the bypass mail system, it was largely designed to subsidize passenger service to the bush, rather than to subsidize cargo carriage, though the net effect did both. The fairly recent discussions on the main line carriers wound up limiting the main line carriers BECAUSE some of them had jumped in there and were carrying bypass mail ONLY, with no passenger service. Senator Stevens sorta fixed that, but left a couple of the cargo only carriers in that market. Nevertheless, a very large part of the original intent was to encourage more flights to the bush, with passenger seats available at low cost, since the flights were basically being paid for by the mail.

That's always been a big argument for bypass mail, and it's done the job.

If bypass mail went away, life in the bush would very fundamentally change, virtually overnight. Most villages wouldn't see flights once a week.

MTV

 

[aalexander]

One thing to consider when contemplating the "subsidized mail service" rural Alaska receives, is the fact that some postal rates everywhere are subsidized, if you want to call it that, by the average system expense.

Simply put, the non-priority parcel you send across town costs the same amount to mail if it goes across the state, as does the letter to grandma in Florida, versus the reminder card sent out by your dentist.

That is a vastly different concept than a subsidy, sure some destinations will cost slightly more others slightly less, but although it costs the same to mail a parcel across town as it does across the state, but if you mail it across more states the rates rise to reflect the increased cost due to the increased distance. Unless you have different rates for each and every zip code, you will have some minor disparity in the delivery costs within a given postal zone. That's very different than the bypass subsidy

I also think that the amount of benefit this country has received from rural Alaska in the form of the federal tax revenues collected on the billions of barrels of oil that has flown down the pipeline would more that make up the difference of the postal rates for bypass mail and a lot of the other "subsidized service as well.

According to the figures I've seen that's not even close to being true. In 2002 the federal government spent 7.6 billion on Alaska. In the same year the tax revenue was 3.2 Billion. The federal government gets very little money from Alaska oil. Remember, the State land selections were carefully placed to gain ownership of oil. The Federal Government owns very little of the producing oil fields. Federal Oil revenues from Alaska were somewhere between 10-20 million. That's right, million, with an m. 10 million is 0.01 Billion. Hardly a drop in the bucket. Federal Timber sales revenues aren't even worth mentioning.

Bottom line, Alaska takes in far more in Federal dollars that the federal government gets from Alaska, by a very wide margin.

It would be interesting to know the real revenue cost equation for sure.

If you're speaking of the bypass mail, it's hard to pin down firm numbers, but the pre-reform figures range from 50-70 million *loss* not cost, loss, while all service in Alaska costs between 120-135 million. So, given those numbers, Postal service in Alaska costs 50-100% more than it receives in postage. Stevens claimed that his reforms would reduce costs by 30 million.

 

[Buck]

AKTANGO 58 and All,

Bill O'Halloran has been "in the loop" for some time as is the Natl. Wx. Serv. , AOPA, and other entities with interests in Galena.

My selfish reason for starting this thread was to garner support for keeping Galena IFR capable.

Buck

 

[dpearce]

I also think that the amount of benefit this country has received from rural Alaska in the form of the federal tax revenues collected on the billions of barrels of oil that has flown down the pipeline would more that make up the difference of the postal rates for bypass mail and a lot of the other "subsidized service as well.

According to the figures I've seen that's not even close to being true. In 2002 the federal government spent 7.6 billion on Alaska. In the same year the tax revenue was 3.2 Billion. The federal government gets very little money from Alaska oil. Remember, the State land selections were carefully placed to gain ownership of oil. The Federal Government owns very little of the producing oil fields. Federal Oil revenues from Alaska were somewhere between 10-20 million. That's right, million, with an m. 10 million is 0.01 Billion. Hardly a drop in the bucket. Federal Timber sales revenues aren't even worth mentioning.

Bottom line, Alaska takes in far more in Federal dollars that the federal government gets from Alaska, by a very wide margin.

Just curious if the 3.2B in tax revenue is just the "separation tax" from the north slope or does this include the additional taxes gathered in other states due to the processing of those goods after they've left AK? I would suspect it's the former. If the North Slope goes away the economy up and down the West Coast would feel it as would the federal tax coffers. If my time spent in several of those refineries is any indicator, I bet the amount would be well beyond 3.2B.

 

[aalexander]

Just curious if the 3.2B in tax revenue is just the "separation tax" from the north slope or does this include the additional taxes gathered in other states due to the processing of those goods after they've left AK? I would suspect it's the former. If the North Slope goes away the economy up and down the West Coast would feel it as would the federal tax coffers. If my time spent in several of those refineries is any indicator, I bet the amount would be well beyond 3.2B.

No. the 3.2 billion is non-oil tax. Income tax, Social security collections, excise tax. Like I said in the previous post, the federal Revenue from Alaska oil is comparatively insignificant, 10-20 million, unless I've missed something.

 

[dpearce]

No. the 3.2 billion is non-oil tax. Income tax, Social security collections, excise tax. Like I said in the previous post, the federal Revenue from Alaska oil is comparatively insignificant, 10-20 million, unless I've missed something.

In 2005 the combined corporate income tax for ExxonMobile, Chevron and BP was $44.3 billion. I wonder how much of that can be attribute to the processing and distribution of Alaskan oil in West Coast refineries? Combine that with the personal income tax collected on each employee of those companies working to process that oil would seem to add up to a wad of change. All of it tied directly to the availability of Alaska oil on the market. Maybe I'm all wet here but that would seem to be the federal tax revenue stream made available due to Alaskan oil not just the separation tax.

 

[mvivion]

You also have to understand that anywhere from some to a lot of the oil from Alaska is sold overseas, so doesn't go through west coast refineries.

This is a VERY complex issue, and simplistic math probably won't work.

As aalexander points out, the bypass mail system is a significant federal subsidy to rural Alaska. He is also spot on when he states that Alaska receives a LOT more money from the federal government than it or its citizens pay into the federal treasury.

That is largely due to Alaska having a very powerful senator in Congress. When Senator Ted retires or....there will be paybacks, and that picture will change at least some. Welcome to the American way.

MTV

 

[dpearce]

You also have to understand that anywhere from some to a lot of the oil from Alaska is sold overseas, so doesn't go through west coast refineries.

When TAPS was built, oil was to be sent strictly to west coast refineries. That decision was overturned in 1995. Between 1996 and 2000 roughly 4% of Alaskan oil went to Asia. Due to declining output of oil from the North Slope even that has stopped. All of it goes to West Coast refineries.

This is a VERY complex issue, and simplistic math probably won't work.

Totally agree which is why I was just asking where the numbers came from. I think any true number take an army of accountants to dig up.

As aalexander points out, the bypass mail system is a significant federal subsidy to rural Alaska. He is also spot on when he states that Alaska receives a LOT more money from the federal government than it or its citizens pay into the federal treasury.

That is largely due to Alaska having a very powerful senator in Congress. When Senator Ted retires or....there will be paybacks, and that picture will change at least some. Welcome to the American way.

MTV

It is quite sad and sick to be working within and around organizations in this state that only know how to feed from the federal sow. Trying to change minds to look at actually competing to generating an independent revenue stream is met with fear. The mourning will be extensive when "Uncle Ted" moves on.

 

[aalexander]

Totally agree which is why I was just asking where the numbers came from. I think any true number take an army of accountants to dig up.

Yeah the numbers I quoted were strictly direct revenues like Sale of leases and royalties for offshore production. They didn't include any kind of indirect revenues. As far as where I got them, they came from a report written in 2003 on Federal revenues and expenditures in Alaska.

http://www.iser.uaa.alaska.edu/Publications/federalspendingak.pdf

Also interesting also is the fact that the Alaska State Government receives (or did in 2002) more money from Federal Grants than it did from Oil Royalties. I expect that balance has changed as the royalties increased quite a bit with the increasing price of oil in the last few years. Even if Federal grants are no longer *the* largest single source of revenue for the state government, it's still almost certainly a major source. It's remarkable just how much of our economy is based on Federal spending.

When Senator Ted retires or....there will be paybacks, and that picture will change at least some. Welcome to the American way.

Yeah, I don't think that Alaskans have a very good idea of how much resentment Stevens is breeding with his antics. There will be a day of reckoning.

The mourning will be extensive when "Uncle Ted" moves on.

Only in Alaska

 

[mit greb]

Nice to read a 13 year old thread.