Postal service announces plan for new bypass mail hubs

Postal officials, concerned about the high costs of providing bypass mail service to rural Alaska, have announced plans to go ahead with a measure to create hubs at remote locations.

Steve Deaton, mail specialist for the U.S. Postal Service in Alaska, told the Anchorage Air Cargo Association on Jan. 27 of the agency’s intent to create at least three new bypass mail hubs for the Southwest, Northwest and Bering Straits regions.

The proposed new hubs would preclude service from major carriers that currently deliver mail to hubs.

Bypass mail is shipped directly from urban merchants to rural customers via air carriers, bypassing the post office. The program dates back to 1985, designed to reduce the cost of living in rural Alaska. Bypass mail can make up as much as 60 percent of some carriers’ annual revenue.

Major carriers Alaska Airlines, Northern Air Cargo and Lynden take mail, food items and other cargo to the hub areas, such as Bethel, Kotzebue or Nome. From there, smaller airline companies take packages to more remote communities.

One new hub would be allocated for each region, Deaton said. The villages being considered are Hooper Bay or Chevak in Southwest Alaska, Kiana or Noorvik in Northwest region, and Shishmaref, Wales or Savoonga in the Bering Straits region.

Post service officials think that with the addition of these new hubs they can trim as much as $7.3 million from the $154 million annual cost of delivering bypass mail.

“We met with the villages and carriers and determined that there is somewhat of a bottleneck to the communities in these areas,” Deaton said. “By making a new hub, it will offer better and more expeditious service to receive larger aircraft with direct shipments of bypass mail to these communities.”

Bypass mail to hub areas costs the USPS less per pound and air mile when compared to getting goods to more rural areas, thus the reason for moving the hubs farther out, Deaton said. By moving the hubs out farther, the rate paid to a carrier will drop, creating a cost savings for the service.

Air carriers say they are concerned about the USPS proposal, noting the lack of infrastructure at the proposed new village hubs. The small, gravel runways, and the lack of weather reporting services and instrument landing systems pose a safety risk, they say. There is also a lack of lack of hangars and storage facilities in the proposed communities.

Officials with Alaska Airlines, currently a major carrier to the hub communities, said the airline wouldn’t be able to offer service to the proposed new hubs.

“At a time when the economy is taking a downturn and travel is being limited, this proposal is playing with a very fragile system,” said Bill McKay, vice president of Alaska service for Alaska Airlines. “The bypass mail service is meant to work with passenger service, we certainly won’t be able to offer flights to any of these new hubs.”

Nationally the USPS has posted a $2 billion deficit, and is offering early retirement to reduce its workforce, mainly due to the dwindling demand for first class and priority mail. Alaska mail volumes are somewhat different.

“Bypass mail is somewhat of an anomaly to the rest of the U.S. Postal Services’ system,” Deaton said. “In 2006, we delivered 118 million pounds of bypass mail, in 2007 it grew to 120 million, and for 2008 we saw an additional increase to 125 million pounds of bypass mail. So yes, bypass is growing.”

Deaton says the postal service is committed to bypass, but the agency needs to reduce its costs.

“We are hemorrhaging money to the tune of $60 million a year,” he said. “We are also looking at other means of cutting costs while continuing this service.”

The new hubs will require air carriers to change the type of aircraft they use or a new carrier will have to emerge to provide the service.

“The common thread here is carriers must be willing to file in and out of hubs to make this work; this will have to be a cooperative effort,” said Deaton.

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