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Oberstar hears small airport concerns

BEMIDJI. Minn. -- The Northwest/Delta merger, which creates the world's largest air carrier, has small Minnesota airports worried they might be lost in the shuffle.

U.S. Rep. Jim Oberstar, DFL-8th District, after meeting two hours Friday in Bemidji with a half-dozen airport managers, said he came away "with very exciting ideas, but also troubling news about the overbearing power of Northwest Airlines, their almost cavalier treatment of the regional airport system in Minnesota."

It's a system, he said, "that has been the source of strength for Northwest, their source of revenue, built this airline up and now, even before they became the new Delta, they are treating regional airlines with disdain, frankly, and that is very troubling."

He tasked the airport managers to make suggestions by next week on how a system could be created to spur competition at small regional airports, severing the monopolistic hold large airlines like Northwest/Delta have over them.

Oberstar, chairman of the U.S. House Transportation and Infrastructure Committee, wants to rewrite the Essential Air Service Program that provides subsidized air service to communities to provide a minimum level of scheduled air service. A program that came after airline deregulation in 1978, Oberstar all but said that now may be the time to re-regulate at least some air service.

Airport managers from Bemidji, Brainerd, Duluth, Hibbing, International Falls and St. Cloud receiving a briefing on the economic stimulus package approved Thursday by the U.S. House from Oberstar, who then asked about EAS.

"It's broken, sir," Bemidji Regional Airport Executive Director Harold Van Leeuwen told Oberstar. "It's being misused by the airlines."

Northwest cut flights to Bemidji in January to two daily, with a pledge of an increase in February, Leeuwen said, with the airline saying the move was necessary for maintenance.

"Then we just found out that they got Essential Air Service for Columbus, Mo.," he said. "They're putting five flights a day in there under Essential Air Service, projecting 25,000 passengers in the first year."

Meanwhile, cities like Bemidji have been making money for Northwest, but then cut flights which then draws down enplanements, he said. Bemidji is not an EAS airport. "We can't put 22,000 or 23,000 people on two or three flights a day -- it's not going to happen."

Bemidji enplanements have declined from 30,000 a year to 22,000 a year. St. Cloud has about 22,00o a day, with four flights, Brainerd at 16,000. "And we're all making them money," Leeuwen said.

He alluded Northwest is taking airframes away from profitable communities and using them for EAS subsidized services elsewhere.

With Thief River Falls and Chisholm-Hibbing airports the only two EAS airports in Minnesota, higher fares are putting them out of competition.

Shaun Germolus, Chisholm-Hibbing Airport Authority executive director, said with fares to the Twin Cities $150 to $160 more than Duluth, passengers are driving to Duluth to get flights.

"It infuriates me that the outstate airports have to compete with one another," he said. "I can't even get to 10,000 enplanements right now, and my passengers in my region are driving to Duluth to get on, so they can save $150 per ticket."

The airport managers said they've tried to meet with Northwest about the issue, but some managers aren't even getting calls returned.

In fact, they said they can't even find out when Northwest becomes Delta. In the case of one airport, the hint came when the Northwest ticket area was repainted Delta colors.

"This is a very, very serious matter," Oberstar said, which raise issues of fairness, adequacy and equitable air service.

Competition may equal that playing field, he said, if the large airlines can be separated from providing service to the smaller airports, such as Northwest-owned Northwest Airlink does now, and allowing small carriers to feed into the large national hubs.

The managers said Northwest/Delta might see competition when Southwest begins air service to Minneapolis/St. Paul.

"When Southwest opens an office here (Bemidji), St. Cloud, Hibbing, I Falls with a ticket office, and then all of a sudden you'll get the sweetest fares you've ever seen," Oberstar said.

More independent regional contractors are needed to simply provide passengers transportation to Minneapolis/St. Paul and to any major carrier, said Steve Sievek, airport manager of Brainerd Lakes Regional Airport.

Leeuwen gave Oberstar a report he helped draft on behalf of the Minnesota Local Air Service Action Committee on improving local air service.

That panel recommends legislatively mandated divestiture of airlines establishing regional and main line carrier distinction, and establish an oversight/regulatory body or agency.

"Prohibit through absolute clear distinction and rules, agreements between main and regional carriers (with) distinct financial, management and ownership separations," it recommends. "Limit EAS to only regionals and establish clear accountability for expense and use of EAS funds."

Germolus recommends that EAS criteria include rating the airline on percentage of flights on time, cancellations and for what reasons, marketing efforts, scheduling access, competitive airfares. "Have you done anything to enhance the service?" he said.

If not, then perhaps the EAS subsidy should be reduced, he said. "There ought to be some accountability on those issues."

Oberstar said it would be tough for new airlines to start, but perhaps current freight carriers could adopt to passenger service.

"We really need to separate these things out," Leeuwen said. "There's different markets, different competition. ... It can be done, it incentivizes competition, it creates growth, new development and jobs."

With major airlines the only carrier to smaller airports, competition is driven out by below rate fares, the managers said. In Bemidji, Northwest cut airfares to Minneapolis to $30 when Bemidji Airlines offered a competing service.

In an interview, Oberstar said that "we have a national aviation system, not a national airline system. The airports are there for the public, not just for the airlines' benefit."

Oberstar said he'd take the lessons learned Friday, "the problems, the hardships experienced by air travelers at the regional airports of Minnesota, and shape those into a national policy that will benefit all of aviation, perhaps through our Essential Air Service Program."

He called the idea of independent regional carriers "intriguing" but a number of steps would need to be pursued before implementing it as a free-standing option.

But it is an option "to the challenge of providing dependable, competitive air service to the travelers of northern and greater Minnesota."