SkyWest’s Planned Charter Service at Stake as FAA Flags Risk

Devils Lake Regional Airport is partway through a $14.8 million terminal renovation that will double its size and add a boarding bridge to protect travelers from the harsh North Dakota winter. A decision by federal regulators could pose a significant threat to jet service and how many passengers ever set foot in the revised airport.

(Bloomberg) — Devils Lake Regional Airport is partway through a $14.8 million terminal renovation that will double its size and add a boarding bridge to protect travelers from the harsh North Dakota winter. A decision by federal regulators could pose a significant threat to jet service and how many passengers ever set foot in the revised airport.

SkyWest Airlines is the only carrier that currently flies to Devils Lake, and its ambitious plan to keep and expand service in small US cities has been awaiting US Transportation Department approval for more than a year. But the Federal Aviation Administration signaled Thursday that it plans to make sweeping changes to regulations governing charter operations, potentially threatening SkyWest Inc.’s SkyWest Charter subsidiary as well as competitors like JetSuite Inc.’s JSX.

The plans concern federal rules that allow for charter flights to operate under less stringent standards than larger airline operations. SkyWest Charter would use regional jets reconfigured with 30 seats instead of 50 and operate flights on a public timetable open for anyone to book. 

It’s also an indirect way for SkyWest, the nation’s largest regional airline, to deal with a crippling pandemic-induced labor shortage: When flights are classified as charters, carriers can use older or less experienced pilots who would not be eligible for hiring on large jets.

SkyWest’s move has become a major flash point in the industry, attracting fierce opposition from the Air Line Pilots Association, the Association of Flight Attendants-CWA and other aviation labor groups that claim the plan takes advantage of a loophole in federal regulations and the flights will be unsafe and pose a security risk. 

The FAA said Thursday that it’s considering imposing stricter regulatory standards as a way to increase safety, spurred by the rapid growth of scheduled charter flying that it says is virtually indistinguishable from regular airline operations. It’s seeking public comments on such a change, which would increase costs and require such charter operations to hire more experienced pilots and make other changes to their business models.

In an emailed statement, SkyWest defended its charter plan as safe, saying that it complies with all commercial standards. SkyWest Charter flights are “essential for small community air service today and well into the future,” the company said. “SWC already exceeds current safety requirements and will transition to any additional requirements that may be adopted by the FAA.”

The rulemaking process could take at least a year, and it isn’t immediately clear how such a delay would affect SkyWest’s charter plans and its request with the Department of Transportation. The DOT declined to comment on its lack of action to date on SkyWest’s request.

The decisions will shape the futures of small airports that aim to welcome SkyWest Charter flights, not to mention the businesses and regional economic authorities that consider transit accessibility in their plans for investment and development. At least 16 small airports have lost all air service and more than 61 others — from Kalamazoo, Michigan, to Pocatello, Idaho — have lost more than half of their air service over the past four years, according to the Regional Airline Association trade group.

“It can be a little frustrating for us, because it’s the great unknown,” said Dennis Olson, chairman of the Devils Lake Regional Airport Authority board. “All we can do is hang on.” 

Some of the nation’s largest carriers could also be affected by the FAA’s proposal. United Airlines Holdings Inc. has a partnership with Dallas-based JSX and passengers can earn frequent-flyer miles on the larger carrier. JetBlue Airways Corp. has a minority stake in the company. Southwest Airlines Co. has voiced opposition to the SkyWest Charter model, and American Airlines Group Inc. has raised questions about JSX as part of its opposition to the plan. 

“Today’s notice is disappointing, both for the traveling public and for the advancement of vital air mobility programs around the nation,” said Ben Kaufman, JSX director of marketing and communications. The carrier, which he said complies with applicable regulations and exceeds safety standards, will continue normal operations.

Losing Captains

Devils Lake has a contract with SkyWest Airlines under the federally subsidized Essential Air Service program, which guarantees that some small communities have a minimal number of flights. It expired in June, Olson said, and DOT has extended it monthly since then. The agency is “reviewing the application,” a spokesperson said in an email. 

SkyWest’s parent company, which provides regional flights for American, United and Delta Air Lines Inc., asked the Transportation Department in June 2022 for authorization to operate SkyWest Charter, which would ferry passengers from smaller cities to larger airports. It proposed starting service to 25 markets, primarily between Denver and cities including Elko, Nevada; Laramie, Wyoming; and Sioux City, Iowa. It also plans a handful of flights from Houston and Chicago to other small cities.

SkyWest took the step after watching as many as 1,500 of its captains lured away by higher-paying, larger carriers over the last 18 months. Those industry behemoths were in recruitment mode after the pandemic spurred a wave of retirements and career changes that had left them without enough aviators to staff their flight schedules. 

SkyWest has dropped flights to 13 cities since January 2022 because of the pilots shortage, the airline said, with flying picked up by smaller carriers. Long-term service to another 18 cities is still at risk, it said.

“I don’t know of another airline that’s ever applied for commuter authority that’s as qualified as Skywest is,” Chief Executive Officer Russell “Chip” Childs said in an interview. “We hope we come to a solution with DOT sooner than later. We’re determined to get approval.”

Small-City Lifeline

Charter flights historically have been on-demand trips booked by individuals or groups, but have expanded in the past 10 years to include scheduled commuter operations that often provide service to small cities or rural areas.

That service is a lifeline not only for residents of smaller cities like those around Devils Lake, but is essential to efforts to attract companies, new development and jobs, according to comments filed with the Transportation Department by mayors, airport officials and companies in support of SkyWest. 

David Ahlem, CEO of Hilmar Cheese Co., said flights are critical to support a $600 million cheese and whey processing plant the company is building in Dodge City, Kansas — a town of about 28,000.  

“We’ve made a substantial investment in Dodge City and Southwest Kansas, and we’re hoping the Department of Transportation will do the same,” Ahlem said in an email. 

The company declined to comment on the project’s fate if Dodge City loses flights. 

Devils Lake is among the many airports using federal funds, some provided as part of the pandemic-era CARES Act, to expand or improve terminals, runways or other facilities, and has to finish using the money by July 2024. Two Kansas airports received federal grants this spring  — $7.3 million for a new terminal at Dodge City Airport and $2.3 million for a new snow removal equipment building at Hays Regional Airport — on the assumption they’d have sufficient flights to justify the cost, wrote Senator Roger Marshall and Representative Tracey Mann, both of Kansas, in a letter to Transportation Secretary Pete Buttigieg in June urging approval of the SkyWest plan. 

“It’s our last hope,” Barrett Ziemer, executive director of the Chisholm-Hibbing Airport Authority in Chisholm, Minnesota, said of the SkyWest plan. “Air transportation is our only form of public transportation in this area. No train service, no bus service.” 

The airline told four cities in the Hibbing area “that they simply will not be able to put in a bid for our routes if they don’t get that charter commuter authority,” Ziemer said. 

Safety Concerns

Aviation labor groups say approval of the plan would allow the carrier to skirt established regulations including required 1,500-hour flying experience for most first officers, rest rules and mandatory retirement at age 65 for pilots, and maintenance of a safety risk management system. They also say it will sidestep Transportation Security Administration screening for passengers, and that other carriers will continue to exploit the same policies.

“Closing the public charter loophole would be a step forward for safety that will guarantee one level of safety, so passengers flying into small communities can depend on the same safety and security as passengers flying in Atlanta or New York,” Jason Ambrosi, president of the Air Line Pilots Association International, said in a statement.

Pete DeFazio, a former US representative who headed the House Transportation and Infrastructure Committee, said the government should deny SkyWest’s charter application. It is “fantasizing” to claim that existing rules would enhance service to smaller communities, said DeFazio, a Democrat, who previously has spoken out against the SkyWest plan.

SkyWest denies the safety claims, saying it will begin operations with pilots holding captain’s rank in both cockpit seats — it’s hired 100 so far —  and will use aviators that already have 1,500 hours of experience and hold a license to fly for large airlines. Once it begins to hire first officers, those aviators will build experience to be promoted to captain. The company said it will meet all the standards for a traditional passenger carrier and will use standard TSA checkpoints if commuter authority is approved.

The Air Line Pilots Association and American Airlines also raised questions about JSX as part of their opposition to the SkyWest application, claiming it has exploited the same loophole and should be subject to more stringent regulations. The suggestion that JSX is operating through a regulatory loophole “is fraudulent,” and the company meets or exceeds all of the relevant federal requirements, said Ben Kaufman, a JSX spokesperson.

United supports the SkyWest plan as safe and “the only way I know of that we’re going to have any dent on small-city service problems,” Chief Executive Officer Scott Kirby said in a Bloomberg interview. 

(Updates with SkyWest comment and additional details from seventh paragraph)

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