http://racerealty.com/

Local charter wants to step up Southeast air service

Competitor accuses Air Excursions of failing to pay taxes; feds issue warning

Posted: Friday, July 03, 2009

Gustavus-based charter Air Excursions is ready to fly scheduled flights in Southeast - if the federal government overrules an objection from a competitor that the company owes more than $600,000 in federal taxes.

David J. Sheakley / Juneau Empire File
David J. Sheakley / Juneau Empire File

"Competition is not necessarily a bad thing. But when there's competition that has an illegal and unfair advantage because they're not paying their taxes, we're not going to stand for that," said Kent Crayford of Alaska Juneau Aeronautics Inc., the Oregon-based parent company of Wings of Alaska.

"I think they are just reaching for whatever they can do to maintain the upper hand," said Air Excursions owner Michael Loverink, who said his company is paying its taxes properly.

Air Excursions LLC flies charters in Southeast now and has applied to the U.S. Department of Transportation to carry people and mail on a regular schedule between Juneau and Gustavus, Hoonah, Haines and Skagway - the same places Wings currently flies on a schedule. Air Excursions has a fleet of four PA-32 Cherokee Six single-engine planes that carry five passengers each.

The stakes could run into the hundreds of thousands of dollars, according to Loverink, and it's about competition for federal money as well as passengers. Having scheduled flights is the first step toward getting contracts to carry U.S. mail, which Wings has now and Air Excursions wants.

And if Air Excursions encroached into either Kake or Excursion Inlet with scheduled service, Wings' federal Essential Air Service subsidies of about $350,000 a year could be at risk. That's a program in which the government pays air carriers to operate in places that wouldn't otherwise have air service; if there are competing carriers, it doesn't apply.

Alaska Juneau Aeronautics accused Air Excursions of already effectively offering flights on a regular, predictable schedule, contrary to its permit. According to AJA, the company therefore should have been paying a federal excise tax. AJA estimated from Air Excursions' financial statements that the unpaid tax amounted to $630,000. Air Excursions denies wrongdoing.

Federal investigators looked into the claims and found some Air Excursions records last year "created the appearance" that its service "may have exceeded" its authority to fly charters. But it was "not clear" whether that meant the carrier was offering five-day-a-week regular roundtrips, which would be a problem. The enforcers gave Air Excursions a warning and closed the file.

Noting that, the FAA on June 12 looked at Air Excursions managers' resumes and financial statements and found the company tentatively "fit, willing and able" to fly scheduled service.

Wings objected again.

By June 30, Air Excursions was eager to get started. It urged DOT to act quickly and "recognize the impending 4th of July holiday by allowing passengers in the Juneau area to be independent of monopoly scheduled air service."

DOT spokesmen said they could not comment on Air Excursions' application, which was still pending as of Thursday.

• Contact reporter Kate Golden at 523-2276 or kate.golden@juneauempire.com.



CONTACT US

  • Switchboard: 907-586-3740
  • Circulation and Delivery: 907-523-2295
  • Newsroom Fax: 907-586-3028
  • Business Fax: 907-586-9097
  • Accounts Receivable: 907-523-2270
  • View the Staff Directory
  • or Send feedback

ADVERTISING

SUBSCRIBER SERVICES

SOCIAL NETWORKING