Airlines bid for subsidized air service to Unalakleet

By Laura Robertson |

Three airlines submitted proposals to provide subsidized air service to Unalakleet before the bidding period closed on September 2. Public comments are due on September 12. 
The proposals came after a troubled summer for aviation to and from Unalakleet. 
Long-time server Ravn Alaska put in 140-day notice in December, and their last flight was in May. 
In the meantime, the U.S. Department of Transportation put out a request for proposals to provide flights under the Essential Air Service program to Unalakleet. Two bids came in. Sterling Airways made a bid, while Kenai Aviation made an unsubsidized one. USDOT awarded the route to Kenai Aviation.  
“In relying on the subsidy-free EAS proposal for Unalakleet, the Department has determined that this option best serves the interest of the community while responsibly managing scarce federal resources,” USDOT wrote in an explanation. They added that the proposal “exceeds the community’s designated service levels.” 
In a February announcement of the new route, Kenai Aviation said they would make two flights a day, seven days a week, between Unalakleet and Anchorage. (The EAS requirement for Unalakleet is three round-trip flights per week.) But this summer, the flights did not materialize. 
“It just blows my mind every time I think about it. How did we go from in the 1960s when we barely had a water system in place—having jet service then and we barely have nine-seater service now,” said Kelsi Ivanoff. 
On March 4, the City of Unalakleet submitted a letter stating a “unanimous decision” to recommend that USDOT award Unalakleet’s EAS service to Sterling Airways. They explained that the costs on Kenai were too high—nearly $500 one way—and the size of the plane meant only nine passengers per flight and only one 50-pound personal bag per passenger. The letter was co-signed by eight community leaders. The City submitted a second letter on April 29 reiterating many of the same concerns. 
Kenai began flights to Unalakleet on April 29. By May 8, Reeve Air had taken over their flights. 
In a letter to USDOT on August 1, Paul Ivanoff requested that the route be re-awarded to Aleutian Airlines by September 1. He wrote that, of the previous 150 flights, only 96 had been flown. Between July 6 and 28, only 24 of the 50 scheduled flights had been flown. 
The problem got worse in August. 
On August 12, citing “a temporary lack of available aircraft,” Kenai Aviation announced on Facebook that it was unable to provide any service to the Unalakleet between August 18 to August 31. 
The following day, Kenai CEO Jacob Caldwell posted a letter to the Facebook page. He called it the decision tough and thanked community members for their grace. “I knew that the decision to pause our flights temporarily wouldn’t be very popular, and that social media would have something to say about that. But safety comes first, even when the timing is lousy,” he wrote.
He added that he had a long family history in Unalakleet, and that they had “worked with Bering Air to add flights between Unalakleet and Nome.” 
In response to the cancellation, state representatives wrote a joint letter to Albert Muldoon, the Acting Director of EAS at USDOT, asking for “emergency action.” They requested the DOT issue an Emergency Order allowing other airlines to provide service. 
“There are local reports that the current provider has been performing far below the service quoted before the award was granted,” wrote Representative Neal Foster and Senator Donald Olson in the letter on August 13. “The lack of air service to and from Unalakleet sets a dangerous precedent that will impact access to medical care, food security, and postal service.” 
On August 19, USDOT put out a new request for proposals for EAS to Unalakleet, writing that the department could “no longer rely on Kenai’s unsubsidized service at Unalakleet to satisfy the community’s basic EAS requirements.” They gave carriers until September 2 to file their proposals. 
Also on August 19, Caldwell responded with his own letter, reposting it on Facebook after the fact. “We’ve seen the DOT’s concerns. We’ve heard the community,” he wrote, saying that aim of the letter was address concerns and reassure both the DOT and the community. 
“We acknowledge that our July performance in Unalakleet fell short,” Caldwell wrote. He said that the airline had made the decision to ground aircraft “out of an uncompromising commitment to safety,” but that “the impact on service was real.” He added that a new Beechcraft King Air was arriving in October. 
“By the time new contracts are awarded, Unalakleet will already be served at the appropriate level by Kenai Aviation without subsidy,” wrote Caldwell. 
As of the time of writing, neither Muldoon nor Caldwell has responded to a request for comment. 
Unalakleet community members including the mayor, Native Corporation CEO, Bering Straits School District Superintendent and others responded directly to the letter.  They pushed back on claims made in the letter. “We urge you to strongly consider the community’s needs, hear our concerns, continue with the RFP process, and choose a carrier that is ready to serve communities in rural Alaska,” they wrote. 
In its letter, Kenai Aviation spoke to the benefits of their daily schedule. The letter-signers in Unalakleet responded: “While daily scheduling sounds beneficial, the reality has been zero flights.” 
They explained that while they could fly through Nome, doing so often meant adding hundreds of dollars in airfare and hotel rooms to the total cost of their trips. The cancellations caused problems with bringing people in to do summer construction, sometimes adding unexpected costs. They said that all three contractor visits to the electric cooperative had been delayed due to lack of seats getting in and subsequently extended due to lack of seats getting out. “In instances where we need emergency repairs, we cannot wait days for flights for both passengers and cargo,” they wrote. 
In 2022 and 2023, there were around 19,000 passengers on flights in or out of Unalakleet, according to Bureau of Transportation statistics attached to DOT documents. That number fell to around 14,000 in 2024. 
On September 2, three bids came in. 
Sterling Airways is bidding again and proposing a SAAB 2000 plane with the option of three, four or five weekly roundtrip flights to Unalakleet. Service would be on Tuesday, Thursday and Saturday, with the possibility of Monday and Friday depending on the option chosen. The flights would leave Anchorage at 10:10 a.m., arriving in Unalakleet at 11:35 a.m.. They would leave again at 12:05 p.m., returning to Anchorage at 1:30 pm. Passengers would be able to book multi-leg itineraries with Sterling and either Alaska or Delta flight, and could check their luggage all the way through. They wrote that they currently have a 97 percent controllable completion rate and an 86 percent controllable on-time performance. The required annual subsidy would be between $3.1 million and $5.6 million depending on the number of flights weekly. 
Alaska Central Express is also bidding. They would fly a Beech 1900C into Unalakleet five times per week. Their requested subsidy would be $1.8 million per year. 
The third bidder is TransNorthern LLC. They propose a Metroliner with seven flights per week. They added that they have a ticket counter and gate inside Ted Stevens International Airport, that their flights would be online booking sites like Expedia, and that they will seek to join the Alaska Airlines mileage plan, extending its frequent flyer program to EAS routes. They have a maintenance hangar and “additional suitable aircraft” at Ted Stevens. The requested subsidy would be $1.8 million for the first year of service and $2.1 million for the second. 
On Thursday, September 4, Kenai Aviation posted a video of Unalakleet on its Facebook page. “Unalakleet! We have news,” the company wrote. They said that they were immediately starting “some limited flights” and would have their normal fleet ready soon to resume normal service. “Thank you so much for your patience with us. Now we’ll get started earning back your trust.” 
The following morning, community leaders in Unalakleet met to decide which of the three new airline bids to support. That decision is likely to be finalized on Monday, September 8.