Big Sky successor struggling

Rural Eastern Montanans served by Big Sky Airlines shouldn't expect a fast transition to Great Lakes Airlines service because the deal is tied up in events affecting the aviation industry.

That's what Douglas Voss, board chairman and a founder of Cheyenne, Wyo.-based Great Lakes, said Tuesday to about 20 members of the Montana Essential Air Service Task Force and other officials from the seven Eastern Montana cities served by Big Sky.

Big Sky's holding company, MAIR Holdings Inc. of Minneapolis, announced last month that it is selling the airline's assets and will effectively go out of business.

This month, Big Sky ended flights east of the Mississippi River. On Tuesday, it flew its last flights to Bozeman; Boise, Idaho; and Portland, Ore.

The U.S. Department of Transportation then awarded the EAS subsidies for Eastern Montana to Great Lakes, effective Feb. 1.

EAS is a Transportation Department program that offers federal subsidies for air carriers to fly to small cities and towns with routes that otherwise wouldn't be profitable.

The Eastern Montana cities served by EAS flights are Glasgow, Wolf Point, Glendive, Miles City, Sidney, Havre and Lewistown.

Before the transition can happen, Voss said, Great Lakes must find the pilots and airplanes to accommodate the routes.

Great Lakes has two planes and crews, but it needs five planes and must hire at least 21 pilots to adequately serve Eastern Montana, he said.

Voss said he wasn't sure when Big Sky would quit flying or Great Lakes could start flying.

"We have options, but you're not going to enjoy the service on the front end," Voss said. "We may have to run two or three airplanes to deal with the pilot backfill. That's just reality."

He said Great Lakes still needs two airplanes to fill its EAS obligations in St. Louis and one plane for California. His airline also has 100 jobs open because of low unemployment rates.

After the Sept. 11, 2001, terrorists attacks, tourism and business travel took a big dip, producing a glut of airplanes. Companies like Raytheon stopped making turboprops to serve smaller EAS cities, Voss said.

Today, there is a severe shortage of both pilots and planes.

Great Lakes is trying to hire Big Sky pilots, Voss said.

"We'd like to hire as many as we can," he said. "But it's hard for us to achieve the level of compensation they're accustomed to."

Big Sky has leases with Mesa Airlines for 10 airplanes, but taking over those leases also won't be easy.

"Aircraft is a far more complicated issue. It could end up in the courts," Voss said.

If Mesa Airlines asks for Chapter 11 bankruptcy protection in the next few weeks, that could free up the 10 planes for Great Lakes to serve its Montana routes.

Voss was awaiting a long-delayed annual report issued Tuesday afternoon by Mesa Air Group Inc., which runs Mesa Airlines.

Mesa had net income in fiscal year 2006 of $37 million. But in 2007, after losing a big lawsuit, Mesa lost $72 million on continuing operations. Last October, Mesa lost a court case that will cost the company nearly $87 million for violating a confidentiality agreement with Hawaiian Airlines.

On Tuesday, Mesa stock fell 9 percent, or 26 cents, to close at $2.88. The stock price hit a high of $8.42 over the past 52 weeks.

Landing the Mesa airplane leases is also essential for Big Sky employees who are attempting to buy their company.

Because of the buyout attempt, the unions are trying to keep their members from hiring on with Great Lakes.

"I would go from making approximately $4,000 a month to around $1,200 a month," said Bruce Tall, a Billings pilot captain who heads Local 15 of the United Transportation Union. "I'd have to sell my house. I'd make more on unemployment."

Big Sky pilots who have nearly double the seniority of Great Lakes pilots would take a substantial pay cut to work for the Cheyenne airline, said Great Lakes Chief Executive Chuck Howell. A senior captain flying the Beachcraft 1900D would earn $30,000 to $38,000 per year flying with Great Lakes, he said.

The U.S. Department of Transportation has granted a request from Big Sky to advance an emergency increase in subsidy payments planned for March. Effective Jan. 11, Big Sky will receive an extra $136,000 per month - to a total of $705,000 per month - to fly EAS routes in Eastern Montana.

When task force members asked Voss and Howell what they should do to keep air service to their cities, they said to be patient and to help figure out why more people don't use the planes.

USA Today recently reported that a Big Sky flight from Lewistown to Billings costs the passenger $88 and the federal government $1,343 in subsidies. Only two passengers per day flew that Big Sky route in 2006.

Attempts to cut EAS funding will be strong this election year, Voss said.

"At the end of the day, this system needs to work," Voss said. "You can't tolerate one person getting on in Lewistown. It isn't going to work."

John Rabenberg of Fort Peck, who chaired the meeting, said he supported the employee buyout effort but said they need a company and the EAS contract, and that hasn't happened yet.

"If we're not careful, probably Essential Air Service will go out the door, and without EAS in Eastern Montana, we will not have air service," Rabenberg said. "There aren't enough people."