Currently:
Currently AAT serves a schedule to move mail and passengers for the villages of Nikolai and Takotna to and from McGrath and passengers into Merrill Field, Anchorage, twice a week and this service is with NO Essential Air Service (EAS) subsidy - in fact the route is ineligible for EAS subsidy. AAT is the only scheduled airline serving Nikolai and Takotna into Anchorage. Though there could be some other unsubsidized competitors in our market that provide periodic flag-stop service or charters, these do not provide a published schedule or reliable service.
Wright Air is offering McGrath service to the Fairbanks hub, and that seems like a much needed connection from the Upper Kuskokwim and GASH regions to Fairbanks. However as of now, Wright Air is not providing a published schedule for McGrath community members to get to Anchorage. So neither AAT nor Wright Air are completing with Reeve in the McGrath market. The community does not have three airlines serving the current McGrath to Anchorage route.
Just a little history:
After RAVN declared bankruptcy in April 2020 and the Governor re-opened the state for essential travel late May 2020, AAT stepped up and ran the only airline schedule for McGrath during the next 6-months (completely unsubsidized), and during the heat of COVID, a time that provided lower than normal passenger counts. AAT remained profitable on this route even without subsidy by flying predominantly Pilatus PC-12’s, which are very efficient pressurized turbo-props with better safety records than the twin engine King Air aircraft. Again, we served the market during a time when any airline including Reeve could have jumped in to serve but did not. Since AAT had no highly compensated Essential Air Service (EAS) carrier to compete against, the McGrath market was truly a free market.
In December 2020, AAT was not awarded the EAS subsidy for McGrath, but rather Reeve was selected and awarded the McGrath market with a healthy financial subsidy, and AAT stepped down. However, AAT continued then and continues now, its scheduled service for the communities of Nikolai and Takotna where a free market continues to exist. AAT offers inter-village and village to Anchorage connections twice a week for the Nikolai and Takotna communities.
I share this history and specific example only to highlight that Essential Air Service (EAS) subsidy does not support competition in a market, but does exactly the opposite by likely deterring competition. While EAS will provide the community with one subsidized air carrier that hopefully will provide some lower fares, the other unsubsidized or “would be other carriers” don’t have the financial leg-up that subsidy provides their EAS subsidized competition. The “would be other carriers” exit the market as it is difficult to compete against a highly subsidize competitor.
Again, the very existence of Essential Air Service (EAS) is due to the US government’s belief that airlines would not choose to serve smallish routes unless provided financial incentive in the form of Federal dollars. McGrath has one scheduled airline carrier as we know it and that is the current EAS subsidized air carrier Reeve. This next US DOT award will determine your next subsidized airline for McGrath for the next 2-year period starting in December 2024.
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