BETHEL -- Fierce competition for passengers in Western Alaska has seen fares drop recently to as low as $1 for some short flights amid questions over one small Bush carrier's government-reported numbers used to secure lucrative and vital U.S. Postal Service contracts.
Nowhere is the battle more pronounced than on remote Nelson Island. Trips to Toksook Bay, Tununak and Nightmute as well as nearby Newtok have been a stronghold for Yute Air.
Grant Aviation, which has been struggling and is trying to stage a comeback, wants back in. It hired a Yup'ik-speaking pilot who lives on the island. Then in mid-June, Yute began dropping Nelson Island fares -- and competitors Grant and Ravn Alaska rushed to match them.
The low fares are clearly a boon to island residents, some of whom are flying on a $40 roundtrip ticket to Bethel for grocery shopping, some 100 or more miles away. Yute says it wanted to help residents in its most isolated market who are experiencing tough economic times because of restrictions on fishing.
But executives with Grant assert that Yute was aiming right at them. Grant says rapid growth of its once-puny passenger counts caught the attention of competitors -- and the government.
After questions about the validity of its passenger counts on two routes -- to Toksook Bay and Newtok -- Grant was temporarily blocked from a coveted U.S. mail program. Now, following a weeklong push for a fix, Grant is again participating in the mail program, which costs the U.S. Postal Service tens of millions of dollars a year.
Grant says the U.S. Department of Transportation had questions only about the two routes, but a DOT computer glitch mistakenly indicated the airline had no passengers and blocked it from participating in the mail program in the Bethel and Emmonak hub markets. It only got to keep other routes because it was the lone passenger carrier in them.
"They went to zero-out two markets, in Newtok and Toksook, and somehow our entire system, everywhere in the whole state, shows zero passengers for a year," said Bruce McGlasson, one of Grant's owners.
Bob Lowrance, Grant president and chief operating officer, said: "Somebody made a mistake and wiped us out of the entire mail system instead of just suspending those two markets."
Bush airlines that carry an average of at least 20 percent of the passengers on a particular route automatically qualify for what's known as the bypass mail program.
The Postal Service subsidizes the cost of shipping goods by air to rural Alaska hubs. Most of it isn't mail but rather freight and bulk goods including lumber, produce and soda pop. The goods "bypass" the regular postal system, hence the name.
A third or even more of a Bush carrier's revenue on a route can come from the program, and it keeps passenger fares lower than they would be otherwise. But the more carriers that participate, the less each one makes. So carriers scrutinize each other's numbers.
The U.S. Postal Service said there had been corrupted data in the Alaska bypass mail program, but the problem did not originate in the Postal Service, said Dawn Peppinger, spokeswoman for the Postal Service in Alaska. The postal branch's transportation manager for Alaska worked with DOT officials and others, including from headquarters, to fix the problem, she said.
Efforts to confirm the events with the DOT were unsuccessful Friday.
Airlines send their passenger numbers weekly to DOT, which certifies them and lets the Postal Service know which carriers are eligible and for how much of the mail freight. The passenger numbers also are available to competitors, who may respond with changes in fares and schedules or other business strategies.
While Grant is again in the program, it's not yet approved for Toksook Bay and Newtok, where its reports of climbing passenger counts remain under review, said McGlasson and Lowrance.
The scrutiny is understandable, Lowrance said. Grant is trying to rebuild its once dominant Bethel-region passenger base.
"The numbers were so good that the DOT said 'what the heck is going on?' How did you go from being non-existent here to all of a sudden you guys are the king of Newtok and Toksook?"
Grant's spike in those markets came after it rehired Henry Simons, a Yup'ik pilot who lives in Toksook Bay and has flown for both Grant and Yute at different times, the executives said.
"They just love him," Lowrance said. "He's like a rock star."
Yute's station manager in Bethel, Andrew Flagg, said the popularity of a single pilot isn't why he started dropping fares. Yute also has a connection to the island, sending employees to participate to the Toksook Bay Blackberry Festival, for instance, he said.
Fares for select villages have gone up and down in recent weeks, but mainly down. After briefly offering a $1 fare for ultra-quick flights between the Nelson Island villages, Yute set its sale price -- still good as of Friday -- at $5 for flights between island villages, and $40 roundtrip to Bethel, a trip that usually costs nearly $400.
"Some of this stuff was literally happening by the hour. They would drop their fare. We would match it. Thirty minutes later, they would drop it again," Lowrance said.
What airline cost does $5 actually cover on a flight?
"The ear plugs and a sick sack, I think," said Cory Clark, Grant vice president of stations. "We're not driving this by any means."
Flagg said he didn't have an end date for the fare sale yet.
"At least through July," he said.