Monday, January 15, 2007
Pacific Wings Flies Beyond Pacific
In a risky move to expand its horizons, Pacific Wings is bidding on essential air service in Mesa's (MESA) backyard. It bid on service between Clovis and Silver City/Hurley/Deming, N.M. to the regional hub at Albuquerque. The airline underbid Great Lakes by $1 million according to the Maui News, for the contract that expires in May.
President Greg Kahlstorf's strategy is to get the low-volume route off subsidy, just as he is doing in Hawaii, which he said would mean no other airline could apply for subsidy in order to compete. Last month, the airline notified the Department of Transportation (DOT) that it no longer needed a subsidy to serve Kalaupapa, Hana and Waimea.
Great Lakes is using the 19-seat Beech 1900D to serve Clovis carrying about three to four passengers a day, according to Pacific Wings, which plans to fly the nine-seat Cessna Grand Caravan on the route. Kahlstorf said that any route with traffic under 10 passengrs a day is a target for his airline. He charged other carriers serving EAS markets are content to milk the subsidy with no business plans to get them off subsidy, a charge echoed by DOT officials before Congress.
His plans project Pacific Wings will serve half as many passengers on the routes and the subsidy will cover about three-quarters of annual expenses. His bid includes a five percent return on investment and is set at $1.4 million per year. He pointed out that Eastern New Mexico, although sparsely populated, has significant tourist value, including Taos and a casino. He said it was similar to the Hana-Hilo route he now serves with six flights a day without subsidy.
If it wins the right to expand to the mainland, Pacific Wings will likely add unsubsidized service from Taos and other points.