Airline looking to renegotiate contract
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September 29, 2005

Airline looking to renegotiate contract

Citing increased operating costs, the airline servicing Bradford
Regional Airport is looking to renegotiate its two-year contract
under the federal Essential Air Service program. However, airline
officials said this week they are committed to remaining in
Bradford and that service will continue to the rural facility.

During a meeting Wednesday with airline officials, Airport
Manager Tom Frungillo and Rob Huber, Airport Advisory Committee
member, The Era exclusively learned US Airways Express regional
airline Colgan Air Inc. will be notifying the U.S. Department of
Transportation today of its intent to discontinue service to
Bradford Regional, a requirement under the EAS program.

Officials said the Department of Transportation will then likely
“lock-in” Colgan for a period of 90 days, and open service to the
facility up for bid – Colgan has already indicated they are
strongly committed to staying in the Bradford market. There was no
immediate word on how many airlines might be interested in bidding
for the service.

This will be the third time in two years that a carrier will
look to negotiate a deal under the EAS program, which ensures that
communities that had commercial air service before deregulation
continue to receive it.

“We have received tremendous community support, but have been
hit with escalating costs,” Dennis Burnett, director of development
for Colgan, said. “We can’t continue service under the subsidized
scenario at this point.

“I would love to think we’ll be here a long time,” Burnett
continued, “but the subsidy rates paid for by the DOT don’t allow
us to do that right now. We want to give the community something
they can use.”

Burnett said a hike in fuel prices and a small slip in
passengers has led to the decision.

“We are no exception to what has been going on nationally with
the airline industry,” Burnett said. “We want to be in this market,
but this move will help us protect our bottom line. There’s a lot
at stake here. This is just an unfortunate environment in aviation
right now.”

According to Burnett, Bradford is not the only airport being
affected by the downturn. Colgan officials also met with airport
officials in nearby Jamestown, N.Y. – which currently operates in
tandem with Bradford Regional for Colgan service – about its
decision. Meanwhile, Burnett said Thursday the airline has “several
service cutbacks across the board,” including changing service from
Altoona-Pittsburgh to Altoona-Washington’s Dulles Airport and
discontinued a flight into Johnstown.

For his part, Chris Tucker, communications director for U.S.
Rep. John Peterson, R-Pa., said Thursday the congressman “strongly
believes Bradford needs air service.”

“The congressman has been a big supporter of the EAS program and
will remain engaged in the process and do whatever we can to help,”
Tucker said. “We look forward to following the developments.”

Peterson has fought on a yearly basis in Congress to continue
the EAS program in the federal budget. The program is seen by many
in Washington as outdated and is routinely on the chopping block
each year.

When Colgan was first selected to provide service to Bradford
Regional, it was obtaining an annual subsidy rate of $1,003,874 for
both Bradford and Jamestown as part of the two-year contract.

“Our long-term goal is to get off EAS,” Huber said. “But, the
DOT really holds the purse strings on this. Colgan has a history of
reviving a market, but we will be looking at all the best
options.”

Frungillo said “we want Colgan,” adding the group traveled
around to local businesses Wednesday and “everybody had a positive
thing to say.”

This is not the first time the airport has gone through this
process.

After flying into Bradford Regional for nearly 10 years, Mesa
Air Group Inc. filed an order to terminate service in February
2003, with the intent of getting EAS service started. The DOT later
collected proposals to provide air service to Bradford, with three
airlines – Mesa, Colgan and CommutAir – submitting paperwork. Mesa
flies under the US Airways banner, while CommutAir was under the
auspices of Continental.

The choice of airport officials to service the Mount Alton
facility was CommutAir, with the hope of changing hubs from
Pittsburgh to Cleveland. However, the DOT ruled that it would
instead subsidize Colgan.

Manassas, Va.-based Colgan then began service at Bradford
Regional in October 2004, and has worked with airport officials to
heavily market the facility and add a fourth morning flight
tailored toward business travelers.

The arrival of Colgan also signaled an increase in the size of
planes landing at the airport; Colgan currently flies 34-seat Saab
340’s complete with a steward and bathroom.

Bradford Regional Airport officials said Colgan Air Inc.’s
decision to renegotiate its contract for the Bradford market could
open new doors for the facility – including a possible change in
hubs from Pittsburgh to Washington.

“This opens up a lot of doors for us,” Airport Advisory
Committee member Rob Huber, who is also vice president of sales and
marketing for Bradford Travel Service said, stressing the airport
and community’s relationship with Colgan has been well received.
“While we are an EAS airport and will not lose service, we are also
trying to make a transition here.

“We feel from the airport authority to the advisory committee on
down that this opens up an opportunity to address things,” Huber
added.

One of those things could be a change in hubs from Pittsburgh to
Washington Dulles International Airport. As it stands, Colgan
currently operates to Dulles – the airline is based in nearby
Manassas, Va. – among other cities.

Due to increased operating costs, Colgan announced this week it
is looking to renegotiate its two-year contract under the federal
Essential Air Service program. However, airline officials said they
are committed to remaining in Bradford.

Colgan will be notifying the U.S. Department of Transportation
today of its intent to discontinue service to Bradford Regional, a
requirement under the EAS program.

Once that is done, the DOT will likely lock-in Colgan for a
period of 90 days, and open service to the facility for bids.

“We want to do something that works for the community,” Dennis
Burnett, director of development for Colgan, said.

Burnett said if Colgan is retained by the DOT, and a change in
hubs is made, travelers leaving Bradford would have a non-stop
flight to Washington. Colgan is currently serving Bradford Regional
with four flights to Pittsburgh, a US Airways hub.

This is not the first time airport officials have sought a
change in hubs. In 2003, after then-carrier Mesa Air Group Inc.
sought subsidized help under EAS, leaders turned their focus toward
Continental carrier CommutAir, which services Cleveland. However,
the DOT eventually chose Colgan, with Mesa, another US Airways
Express carrier, losing out altogether.

“One of the main things we have been struggling with is flights
from Pittsburgh have been decreasing,” Huber said. “People have
been left sitting in Pittsburgh for hours. This gives us a chance
to look at another hub city.

“The success rate out of Dulles would be tremendous,” Huber
added, “and could go a long way in helping to increase our
enplanements at the airport. The community has said it would be the
best for them.”

The ultimate decision, however, lies with the DOT, who could
decide on Washington, Pittsburgh or Cleveland for hubs.

Officials said Dulles would also provide lower, competitive
fares, more connections – including to international destinations –
and more direct flights to other cities across the country.

Meanwhile, a shift in parent airlines is also a possibility.

Burnett said in addition to US Airways, Colgan also flies under
the banner of Continental and, as of Tuesday, will begin a
relationship with United Airlines. US Airways also has a unique
code sharing agreement with United, which allows for connections
between airlines using one ticket.

Airport officials also said a recent $220,000 federal grant from
the DOT would be used to heavily market the carrier servicing
Bradford Regional – especially if Dulles is selected as the new
hub. An aviation business council to direct the marketing efforts
is currently being formed.

“We hope to change the system to better suit us,” Huber
said.

It still was not clear how the current relationship with nearby
Jamestown, N.Y., airport would be involved in any future changes.
Officials also said the flight schedule into Bradford Regional
could be altered slightly.

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