Whether passengers will soon be flying again from the South Arkansas Regional Airport in El Dorado is up in the air as the U.S. Department of Transportation reviews the community’s appeal of the airline selected to provide subsidized Essential Air Service.
The DOT choose Southern Airways Express LLC of Memphis in December to replace SeaPort Airlines of Portland, Oregon, which filed for bankruptcy in September. The airport commission had hoped the contract would go to Contour Airlines of Smyrna, Tennessee.
Southern was also chosen to provide EAS flights to the Boone County Regional Airport in Harrison and the city-owned Hot Springs Memorial Field Airport. SeaPort had serviced them too.
Those airports also recommended different airlines — Boone County recommended Contour and Hot Springs recommended Boutique Air of San Francisco — but they are not appealing.
Tim Johnson, manager of the El Dorado airport, said it doesn’t know when the DOT will make a decision on the appeal. Southern said the same, and the agency didn’t specify a timeline.
The El Dorado airport’s commission is appealing because it thinks Contour Airlines would have better served the community’s needs, Johnson said. Contour submitted a higher bid but offered the city larger aircraft — twin-engine turboprop Jetstream 31 planes — and a daily round trip to Nashville, Tennessee, on top of the Dallas/Fort Worth International Airport flights that Contour and Southern both offered.
“There is a lot of sentiment and belief in the community that that would better serve the market and attract a broader range of passengers,” Johnson said. “Obviously, the airport is to serve the community and to help grow and develop business and bring people to the area … The marketing efforts Contour proposed seemed a better fit.”
The DOT said in its order that Southern was selected for several reasons, including that it required a smaller annual subsidy to provide service similar to what SeaPort provided.
The price difference is substantial: $7.1 million a year for all three contracts, a little more than half the $13.6 million that would have been paid had the recommended airlines been chosen.
For El Dorado, Southern could be paid $2.3 million in subsidies a year, while Contour’s bid came in at $4.9 million. Johnson said the city received about $2 million before.
Southern plans to use the same planes SeaPort had — single-engine, nine-seat Cessna Caravans.
The DOT order also states that the airline was chosen for its reliability, marketing resources, substantial growth since acquiring Sun Air Express of Dania Beach, Florida, last year and because the airports wouldn’t have to spend money, delay service or upgrade their status.
An official with the DOT wrote in an email to Arkansas Business that it “accommodated the communities’ wishes for service to a specific hub.”
Johnson said the DOT usually approves the recommendations of commissions and has done so in the past for the airport. “Cost is obviously a factor,” he added. “The type of equipment that the airlines are flying was a factor. I know all three cities were choosing airlines that would provide aircraft that would be larger and better serve the market.”
Mayor, CEO Protest
El Dorado Mayor Frank Hash and Contour CEO Matt Chaifetz wrote to the agency to protest the selection of Southern. Contour also protested the selection of Southern for the Harrison airport.
Chaifetz argued that Southern’s unpressurized aircraft regularly fly above 8,000 feet and the EAS law requires that pressurized aircraft be provided because passengers are more likely to suffer health effects from being in an unpressurized airplane at that altitude.
“Different airplanes have different abilities, and aircraft that is pressurized is able to deal a little more with inclement weather than the others,” Johnson said. “That’s the primary reason” for the appeal.
In its written response, Southern said it is approved to fly up to 10,000 feet but rarely goes above 7,000 in that region and would direct its pilots to not exceed the 8,000 feet if the community desires that.
Southern CEO and Chairman Stan Little also defended the Cessna aircraft. “It operates more safely, more efficiently and more reliably than any other aircraft in its class,” and that makes for a good value that is passed on as savings to passengers and taxpayers, he said.
He said the Memphis airline is thrilled to have snagged the contracts, which expire Feb. 28, 2019, because “we view Arkansas as our own backyard.”
Airline Ready to Go
Southern is a 4-year-old airline operating more than 100 departures from 21 cities in 10 states. It has hubs at Pittsburgh International, Washington Dulles International, Baltimore-Washington International and Memphis International airports.
The airline also has an agreement with Seaborne Airlines of Puerto Rico and plans to acquire Seaborne to bring SeaPort passengers connectivity to carriers like Delta, United, American and JetBlue.
Little said Southern is ready and “anxious” to begin service in El Dorado but is holding off out of respect for the community.
No one knows when flights will start. The DOT official said, “There is no statutory or regulatory timeline for a decision to be made; however, the department will make its decision as expeditiously as feasible.”
The deputy assistant secretary for Aviation & Internal Affairs will have the final say.
Little told Arkansas Business the contracts are advantageous to Southern because it flies from Memphis to Florida and Mississippi. Installing infrastructure between those and growing flights in the area closest to its hubs makes sense, he said.
“So much in the airline industry is built on scale. You want to have as many planes and as many pilots in a single area so that you can maximize your use of both,” Little said.
Southern has already experienced more success than expected in Harrison, where it started service on Jan. 31. Little said it’s seen full flights and passenger loads that have outdone those in many of the Mid-Atlantic cities where the airline has been operating for years. Southern is flying 12 weekly nonstop round trips to DFW and six weekly nonstop round trips to Memphis International.
Its plans are to begin servicing Hot Springs on March 23 with two daily nonstop round trips to DFW, and to add a third later in the spring.
El Dorado was also offered 18 weekly nonstop round trips to DFW.
Little said Southern can offer the flights for less than other airlines because it has an economies of scale in being the second-largest commuter airline in the country.
He also said the airline has a dedicated marketing staff. “We try to become the hometown airline of every town that we serve.”