Pacific Wings takes air war to Mesa’s home turf

It is bidding for subsidized air routes serving New Mexico

Maui-based carrier Pacific Wings, which unsuccessfully sued last year to keep Mesa Air Group's new interisland carrier go! out of the Honolulu commuter terminal, now is taking on the $1.3 billion airline on Mesa's own turf.

Pacific Wings President Greg Kahlstorf is in New Mexico this week meeting with government officials and business leaders, trying to drum up support for his company's bid for an expiring federal Essential Air Service contract held by Mesa for the rural cities of Carlsbad and Hobbs. Pacific Wings also has put in an EAS bid for Silver City and Clovis, two New Mexico cities served by Great Lake Airlines.

EAS subsidies are offered to carriers as a financial incentive to provide transportation to communities in underserved areas.

Kahlstorf said yesterday that Pacific Wings doesn't intend to stop with New Mexico, and plans to put in bids during the next couple of months for rural routes in Arizona and Nevada as well.

"We think it's a win-win," Kahlstorf said. "We think Pacific Wings has a unique and valuable product. We know how to use smaller, newer, more efficient aircraft to rightsize the level of service being delivered to rural communities, and to harness the economies of more modern aircraft to realize significant operational savings."

Mesa and Great Lake currently use 19-seat Beechcraft 1900s that Kahlstorf claims are wasteful because they often carry just "three or four" passengers. Pacific Wings operates nine-seat Cessna Caravan 208s, and Kahlstorf said Pacific Wings would operate "no fewer than three" aircraft in New Mexico depending upon the number of city pairs it is awarded.

"We just started Pacific Wings Express and we routinely have more passengers show up hoping there will be a seat available," Kahlstorf said. "Mesa cannot cut a 19-seat aircraft in half and operate nine seats if you just have a few passengers show up. However, if you operate nine-seat aircraft, you easily can scale up your capacity to meet demand at any time to the number of seats you need -- therefore eliminating the waste of operating a 19-seat airplane where the vast majority of the time, (Department of Transportation) statistics prove an average of only 3.4 passengers a day are boarding those (EAS) flights."

Kahlstorf said he doesn't take any special satisfaction in bidding against Mesa, but accused Chairman and Chief Executive Jonathan Ornstein of misleading the people of New Mexico.

Ornstein said yesterday that Pacific Wings' smaller aircraft wouldn't be able to meet the needs of the cities it will serve, and that Pacific Wings would hurt the residents if it reduces or eliminates the federal subsidy. He also said the flights would by bumpier with an unpressurized aircraft, which must fly at lower altitudes.

"They're talking about taking away the subsidies," Ornstein said. "That's also been done in the past and, unfortunately, what happens is that when a carrier can't make money (and goes away), the subsidy is lost forever and the city is left without any service.

"They can certainly come and try it. We've seen 16 carriers come and go over the last 25 years. Our feeling is the best service for New Mexico is with Mesa using twin-engine, pressurized aircraft, and especially with the smaller-capacity aircraft (of Pacific Wings), we don't think it will meet the needs of the city."

Kahlstorf said he has discussed the subsidy issue with the U.S. Department of Transportation and called Ornstein's comment "a complete and utter fabrication."

"If Mesa or any other carrier were to pull out of Mexico or Hawaii or any other market with or without a subsidy, the DOT issues an RFP (request for proposal)," Kahlstorf said. "... It appears that Mesa is attempting to scare the community into staying with the incumbent and thinking that if they save the federal taxpayer money, they're somehow going to be punished for that."

Pacific Wings, which has been provided EAS subsidies over the last decade for service to Hana on Maui, Kamuela on the Big Island and to Kalaupapa, Molokai, will voluntarily give up the subsidies later this year when its contract ends, because it believes it can fly those routes profitably without subsidies.

As for New Mexico, Kahlstorf questioned the validity of Ornstein's comments, considering that industry observers say go! is operating at a loss in Hawaii and that goExpress! will use the same type of aircraft that Pacific Wings uses.

"What Mesa Airlines is doing in Hawaii is offering high-frequency, code-share service using Caravans," Kahlstorf said.