“The future of bypass mail is in trouble,” said Sen. Ted Stevens, R-Alaska. “We have to do something about the cost of fuel that is driving up the post office's costs or this service will go away in the near future.”

Steven's comments were made during an interview at the Alaska Journal of Commerce Aug. 13.

“The high cost of fuel is going to force the postal service to do something about this,” Stevens said. “The carriers have no choice but to charge higher price for the fuel they use.”

The loss of bypass mail could affect 30 percent of a carrier's gross revenue, and in some cases the mail represents as much as 60 percent of some mainline carriers' all cargo operation's revenue.

Mainline carriers are Federal Aviation Regulation Part 121 (airline) carriers that haul mail from Anchorage or Fairbanks to regional hubs like Bethel or Nome.

The U.S. Postal Service currently has a proposal to cut its costs by adding several new mail hubs in rural Alaska. This proposal would force air carriers to use smaller aircraft.

In Bettles, the price of aviation fuel was at $8.70. In Northway, a popular spot to fuel up to and from Alaska, Avgas was $8.11 a gallon. These prices are up from last year's average price of $4.50 a gallon.

As a possible cost cutting measure, the USPS earlier this year named 14 villages as new hub communities for mainline bypass mail.

Villages included in the proposal are Anaktuvuk Pass, Chevak, Holy Cross, Kiana, Point Hope, Sand Point, Shishmaref, Togiak, Eagle, Hooper Bay, Pilot Point, Red Devil, Tanana, Wainwright and Savoonga.

USPS officials said the move would cut $7 million a year from the $150 million annual cost of bypass mail. Mail is subsidized at a lower rate when it is flown to a mainline hub, at 40 cents a pound, verses $1 a pound from the hubs to the villages.

Air carriers delivering the mail are bound by U.S. Department of Transportation regulations, which also sets the rates for the mail flown.

Amendments to the Rural Services Improvement Act passed in 2006 to help save the Postal Service money and to force carriers to offer passenger service before allowed to carry mail.

Stevens crafted RSIA with the idea of improving safety and service to rural Alaska.

Attached to the U.S. Postal Reform bill, the amendments removed a mandate that could have forced smaller air carriers to convert to a larger operation using more efficient aircraft to keep their mail-rate status for carrying U.S. Postal Service bypass mail.

Stevens said his office has received information that the population in rural Alaska has dropped by 50 percent just in the past few months, all over the rising cost of living in rural Alaska.

Christine Klein, deputy commissioner of aviation for the state Department of Transportation told the Journal that airlines operating in Western Alaska have seen as many as 1,000 fewer passengers than last year at the same time.

U.S. Post Office officials did not respond to phone calls for this story.

A unique solution to Alaskan's energy challenges has been offered by a group of residents in Interior Alaska, and is headed by Fairbanks businessman Richard Tilly.

Tilly and others are asking why the state can't take some of its royalty oil, refine it and sell it at a lower cost to Alaskans.

“The state government is selling its royalty oil, at near 3 million barrels a month, to the highest bidder and adding $100 million a week to its treasury,” said Tilly. “The government is being unjustly enriched while residents' bank accounts and wallets are being bled dry. There must be a corrective action for us to survive the winter heating season, as well as afford the climbing prices for all products shipped by truck, rail, marine or aviation.”

Tilly found that one Alaska law compels the commissioner of Natural Resources to take oil and gas royalties in-kind unless he determines that taking royalty in-value (selling the crude and collecting the cash) is in the best interests of the state.

Another law also describes how to determine the state's best interests.

The loss of bypass mail this decade has been anticipated by some, like Rob Evert, of Evert's Air Cargo, based in Fairbanks.

“We have a business model projected in 2010 that completely takes bypass mail out of our business plan,” said Evert.

In the meantime, other aviation operators are adjusting their aircraft, flight frequencies and some are planning mergers, much like Frontier and Hageland Air did earlier this year.

“It's going to be a long, cold expensive winter,” said Boyuck Ryan, president of the Alaska Air Carriers Association. “Something has to be done, or you are going to see a lot of businesses go by the wayside.”