Wings of Alaska takes over competing regional carrier

Company will keep Alaska Coastal Airline's routes

Posted: Sunday, April 01, 2001

Wings of Alaska is taking over Alaska Coastal Airlines, Wings President Bob Jacobsen announced Thursday.

"This acquisition will make Wings and all carriers in the region stronger," Jacobsen said.

Increasing costs of insurance and fuel have pinched the bottom lines of Southeast's air carriers in recent years and are a factor in the pressures for consolidation, he said.

"The increased costs in the aviation business are providing incentives for those of us in the business to become more efficient," he said.

"I also think it's important that we've been seeing (airline) consolidation in the Lower 48 ever since deregulation in '98," he said. "That really hasn't happened here, maybe because Alaska is a little slower."

Alaska Coastal and Haines Airways have operated in Southeast Alaska since the mid-1980s and were bought in 1999 by Alaska Coastal Air Group, headed by Juneau physician Tom Hall.

The two companies merged and since January of this year have done business under Alaska Coastal's name. The company provides regular passenger, cargo and mail service to Haines, Juneau, Gustavus and Hoonah, as well as charter flightseeing service.

Haines Airways had a turbulent past - including a ditching in Lynn Canal that left four dead in 1997 - and continued with a bumpy start as Hall stepped in in 1999.

As the new company initially tried to bring three new Cessna Caravans on line, federal regulators ordered the carrier to cease operations briefly after a dispute with its insurance company caused a lapse in coverage. Company President Ken Simpson blamed the federal intervention on unnamed competitors who, he said, were jealous of Hall's financial resources. The situation was resolved within a week.

Simpson said Friday that, per the agreement with Wings, he could not comment on whether Alaska Coastal had been turning a profit. "But we were very successful," he said. "This is an opportunity for two carriers of quality air transportation to combine their resources."

Simpson said Alaska Coastal had done well in the last year competing against the 20-year-old Wings, "but it became apparent there was a need for one company" to provide service in Southeast.

The company had been keeping its eye on accelerating costs, including insurance rates, he said, but did not expect a change unless new aviation insurance carriers came into the state - which would be a reversal of the current trend.

"It just doesn't make much sense for two comparable companies to butt heads in this market," Simpson said.

Wings flies about 30,000 passengers per year on scheduled flights, Jacobsen said, and another 30,000 on flightseeing tours during the tourist season. The summer flights largely subsidize operations the rest of the year, he said.

He estimated Coastal and Haines Airways carried more than 10,000 passengers per year.

Wings fields 17 aircraft and expects to gain a couple of DeHavilland Beavers in the deal, Jacobsen said. The airline also is encouraging Alaska Coastal employees to apply for positions with Wings, he said.

Wings will maintain former Coastal and Haines routes and honor all outstanding tickets, said Holly Bierkortte, Wings director of marketing. Plans are for Wings to occupy the Coastal/Haines facilities in Hoonah and Gustavus in the near future. And Wings will continue to operate from its present counter location at the Juneau Airport and from its current facilities at the Haines airport. All other locations are to remain the same.

Wings will also honor the Alaska Coastal and Haines Airways frequent-flyer program under the current rules of Wings' own program.

Fernand Chandonnet can be reached at fchandonnet@juneauempire.com.



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