Senate OKs bill to save millions on Alaska mail

Measure requires new air carriers to match competitors' number of seats

Posted: Monday, June 10, 2002

FAIRBANKS - The U.S. Senate has approved changes to Alaska's bypass mail system expected to save the Postal Service $30 million a year.

Under the current bypass program, shippers can send 1,000 pounds or more of material, including groceries, to rural Alaska at parcel post rates. It's dubbed "bypass" because the packages bypass post offices and go directly to eligible air carriers on a rotating basis.

The Senate late last week added the bypass mail language to a supplemental spending bill for the federal government's current fiscal year. Sen. Ted Stevens, an Alaska Republican, offered the amendment, which was adopted by unanimous consent.

The Senate action comes after more than a year of work on the proposal, which was supported by some air carriers in Alaska but opposed by others.

The House version of the supplemental bill, which passed last month, contains intent language supporting revisions to the bypass mail system. Rep. Don Young, an Alaska Republican, secured that language.

The House and Senate versions must be merged in a conference committee.

"I don't expect any problems from the House or anybody on this bill," Stevens told the Fairbanks Daily News-Miner.

Under the bypass system, the Postal Service pays air carriers using a formula based on industry costs.

Those costs will continue to rise if nothing is done and more companies get into the bypass mail business, according to Stevens. As the mail gets split among more carriers, the amount each carrier spends to deliver each shipment inevitably rises, he said. Under the cost-based formula, those rising expenses must be reimbursed by the Postal Service.

Eliminating the cost-reimbursement system isn't an attractive option, Stevens said Friday. If that were done, the Postal Service would contract out the mail delivery to the lowest bidder. Then air carriers would have to cut back their rural passenger service dramatically, something he doesn't want to see happen.

So he and Young pushed a two-pronged approach to cap costs while protecting passenger service.

Their legislation first would restrict new carriers on mainline routes between Alaska's larger cities and the Bush hubs. No new carriers on a route would be allowed unless they provided at least as many passenger seats as the current largest passenger carrier serving the hub community.

Existing carriers would not face the minimum passenger requirement. Those carriers include Northern Air Cargo, Air Cargo Express, Alaska Airlines and Lynden Air Cargo.

At least one company hoping to get into the bypass mail business Evergreen Aviation has said requiring new mainline carriers to carry a certain number of passengers while exempting existing carriers is unfair.

Stevens, however, said the restriction is necessary to prevent the cost escalation.

Provisions of the bill also will encourage consolidation of the mail into fewer, larger planes, he said.

The legislation's second prong would affect Bush routes between the hubs and the smaller outlying villages. Carriers that transport more passengers and nonmail freight would be given most of the bypass mail. Also, carriers using small planes would have to upgrade to twin-engine aircraft under certain conditions to remain eligible.

The legislation delays the new rules for 15 months.

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