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Web posted Friday, February 5, 2010

Consolidation of air carriers enhances customer convenience

By Sean Manget
Alaska Journal of Commerce

Flying from one rural Alaska community to another just got a lot simpler.

Small air carriers Era Aviation, Frontier Flying Service, Hageland Aviation Services and Arctic Circle Air, all of which are owned by the same parent company, on Jan. 10 consolidated under one brand name: Era Alaska.

On the consumer side, the ticket-buying process is streamlined. Customers may now buy one ticket connecting them from a flight on one air carrier to another instead of having to purchase multiple tickets.

Bob Hajdukovich, CEO of Era Alaska parent company HoTH, said he doesn't believe the consolidation carries with it very many immediate economic advantages, however.

Internally, this move will ensure that the four carriers interact with one another and the customers in a more logical fashion, Hajdukovich said.

"We've created a more stable workforce home for the future," Hajdukovich said.

The air carriers will have the same brand name, but they'll still operate as separate organizations under one parent company, as they did before.

Though all of their planes will feature the Era Alaska insignia, tickets will show the consumer which air carrier they will be flying with on each leg of the trip. Also, a smaller insignia painted slightly to the left of the door on each plane will also show passengers which air carrier the plane belongs to.

The atmosphere within the industry that facilitated such a consolidation has existed since 2002, Hajdukovich said, when the Rural Services Improvement Act was passed.

RISA requires the U.S. Post Office to send bypass mail via air carriers that carry passengers, meaning that many all-freight carriers couldn't survive without offering some sort of passenger service as well.

While he believes it helps create economies of scale and stability, Hajdukovich also says it hurts mail delivery some for the carriers because the U.S. Postal Service considers them to be one carrier, and as such, allocates enough mail for only one carrier.

The roots of the consolidation could easily be traced back to 2005, when Frontier Flying Service bought the assets of Cape Smythe Air, an ill-fated carrier based in Barrow.

Shortly thereafter, Frontier Flying Service and Hageland Aviation, formerly bitter rivals, according to Hajdukovich, joined forces in March 2008. Frontier had the market cornered when it came to servicing the interior area of Alaska, Hajdukovich said, whereas Hageland owned the market when it came to the coastal area of the state. The two joined forces primarily because they both wanted to penetrate into the other's territory, but both were firmly entrenched.

The fusion of these two carriers led to the creation of the holding company that currently owns all four of the carriers now carrying the Era Alaska brand name, HoTH. The moniker is actually an acronym: the "H" stands for Hajdukovich, and the "o" is a placeholder, with the "T" and the remaining "H" standing for James Tweto and Mike Hageland, respectively. Hageland and Tweto are co-owners of HoTH, along with John Hajdukovich, Bob Hajdukovich's father.

In March 2009, HoTH acquired Era Aviation, adding service to south-central Alaska to the parent company's repertoire, and in Oct. of the same year, HoTH acquired Arctic Circle Air, which gave HoTH access to the carrier's two back-loading Sherpas. This greatly advanced HoTH's ability to service customers who wanted to ship large items, like refrigerators and laundry machines.

Era Aviation was also the only carrier of the four to offer 37-seat passenger planes, as Frontier's largest passenger plane can seat a mere 19.

Hajdukovich said the four carriers now fall under the banner of Era because Era services "a big bowl" of people in the state, and its name is the most recognizable.

In all, HoTH's carriers employ about 750 people, Hajdukovich said. Any job losses that occur will not be due to layoffs, but rather through attrition, as some job positions will not be filled once they are vacated.

Some employees are being reallocated, however.

On June 1, the entire fleet of planes operated by all of the carriers out of Anchorage will be relocated to one hangar.

Hajdukovich said relations between the carriers are not perfect, but they're improving over time.

"I won't say we've perfected everything," Hajdukovich said, "but we're making progress everywhere."

Sean Manget can be reached at sean.manget.@alaskajournal.com.

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