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As ACE Assumes Mail Delivery For Unalaska, PenAir Cites New Planes For Declining Cargo Revenue

Laura Kraegel/KUCB

When Unalaska’s primary air cargo provider announced it was shutting down service this summer, community members were concerned.

People rely on PenAir’s cargo planes for most of their mail. Grocery stores depend on them for fresh produce, meat, and milk. And seafood companies count on them to ship products that sustain the local economy.

Now, another freight company has announced it’ll be ready to step in, right away. 

“We’ve reached an agreement with the U.S. Postal Service,” said Steve Deaton, senior vice president of ACE Air Cargo. “Effective June 1, ACE will bring mail flights out in the mornings, Monday through Saturday.”

The statewide freight service has flown cargo to the island for years, but picking up the mail contract marks a new direction for the company.

“It’s what we do. It’s our forte. But having said that, this is a big deal to us and we plan on doing it right,” said Deaton. “We consider Dutch one of our communities, because we have a facility, operations, and employees out there.”

On top of that, Deaton said ACE has a fleet of cargo planes ready to haul more freight. The company flies Beechcraft 1900C models. 

“We can take a little over 5,000 pounds in a single trip,” he said.

While ACE is gearing up, PenAir Cargo is winding down.

The regional carrier is in the process of selling its two cargo planes. Spokesperson Missy Roberts said the Saab 340s have delivered most of Unalaska’s air freight for as long as she can remember.

“Our biggest client is the post office,” said Roberts.

That became a problem, though, when PenAir started flying Saab 2000s last year.

The bigger, faster planes are used for passenger service, not freight. But Roberts said their addition to the fleet has affected how much the federal government pays PenAir to haul mail.

“Because we operate the 2000s in our route structure, they determine the mail rate. Not the 340s,” she said. “So we don’t get paid as much money for operating that size of an aircraft.”

The mail rate is governed by a complicated formula, set by the U.S. Department of Transportation. Roberts said the end result is that PenAir is making a lot less money from cargo.

“I can’t give you a dollar figure, but any time you lose anything, you want to look at it,” she said. “And if it can’t be offset, then you need to take action.”

In Unalaska, PenAir will accept final freight shipments on May 29.

Meanwhile, the carrier will continue limited cargo service for other communities in southwest Alaska.

“If somebody -- a private individual -- wants to send something to Dillingham, we will certainly send it on an existing passenger flight,” said Roberts. “But we won’t be delivering the mail.”

She said that wasn’t an option for Unalaska, because of the unique partnership between PenAir and Alaska Airlines.

PenAir knew cargo revenue might drop off when they bought the Saab 2000s. Ultimately, Roberts said improving the quality of passenger flights was a bigger priority than keeping the mail contract.

Laura Kraegel reported for KUCB from 2016 until 2020. She was KUCB's news director starting in 2019. We are proud to have her back in the spring of 2023 filling in as an interim reporter for KUCB.
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