Rising fuel prices have forced two small but well-known US regional operators out of business permanently. Big Sky Airlines shut down in January after a disastrous eastwards expansion, while Air Midwest faces liquidation later this year.
Both operate on thin margins, relying on federal subsidies for rural service to smaller communities. Their demise is also a sign higher operating costs may force more domestic capacity cuts.
The demise of Big Sky forces its parent MAIR Holdings into liquidation. MAIR's major holding had been Mesaba Aviation, which Northwest Airlines bought last year, leaving it with only small turboprop operator Big Sky and the promise of funds owed by Northwest.
MAIR, which acquired Big Sky in late 2002, shifted last April some of its Raytheon 1900D 19-seat turboprops to Boston, where they flew as a Delta Connection carrier. But the unprofitable east coast operation was dropped in early January, and in late January Big Sky's remaining subsidised routes in the west were tansferred to Great Lakes Aviation.
MAIR executives blamed high fuel prices and bad weather in the northeast. The company will dissolve after the Northwest payments are distributed to shareholders. "We no longer believe that we can reach sustained profitability," says Big Sky president Fred DeLeeuw.
The planned liquidation of Air Midwest, a unit of the Mesa Air Group, caps years of effort to make that 1900D operation profitable. But Mesa chief executive Jonathan Ornstein says he saw "little prospect of future profitability" for it.
Mesa for several years sought a buyer for Air Midwest, which flies as US Airways Express. It will cease operations by year-end. Mesa has taken a $6 million loss from the discontinued operation.
However, another 1900D operator, Colgan Air, has successfully transitioned itself following its sale last year to Pinnacle Airlines. Colgan in February will begin operating a new fleet of at least 15 and up to 30 70-seat Bombardier Dash 8 Q400s on behalf of Pinnacle partner Continental Airlines. It plans to retire its last 1900D by year-end.
Source: Airline Business
