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For the week of Oct. 6, 1999 through Oct. 12, 1999

Air Ketchum discontinues scheduled flights

Owner says he can’t compete with competition’s subsidy


By TRAVIS PURSER
Express Staff Writer

"I was totally blindsided."

Leonard McIntosh, Air Ketchum president (Express Photo by Willy Cook)

o6air2.jpg (13742 bytes)Less than two weeks after the Ketchum and Sun Valley city councils unanimously voted to subsidize Horizon Air for up to $30,000 in losses in exchange for service between Friedman Memorial Airport and Boise, Horizon’s competitor, Air Ketchum, announced it was ceasing scheduled operations.

The city council actions came after $80,000 in similar guarantees was approved by the Sun Valley Company, the Sun Valley-Ketchum Chamber of Commerce and Elkhorn Resort.

Air Ketchum’s decision to halt its scheduled service was announced Thursday—the day after Horizon Air announced it would begin Sun Valley-Boise service this winter.

On Monday, however, Ketchum city attorney Margaret Simms told the Idaho Mountain Express she had concluded the city shouldn’t go forward with a $10,000 guarantee for Horizon because of questions about the guarantee’s legality.

Leonard McIntosh, Air Ketchum’s president, said in an interview that he was "blindsided" by the subsidies—learning about the city council decisions after returning from a vacation in Italy.

"Frankly," he said of the council members who made the decision, "they’re just too stupid to realize what they did."

McIntosh, 59, who had been operating the scheduled service for about four months, spoke to a reporter last Thursday before piloting his company’s last scheduled roundtrip between Hailey and Boise. He said he believed Air Ketchum had been the first locally-based airline to offer scheduled Sun Valley-Boise service.

The subsidies are earmarked to underwrite a daily Horizon Air flight between Sun Valley’s airport and Boise this winter, from Dec. 18 until April 1, in an effort to attract more winter tourism.

The carrier expects to capture a major chunk of business from southern Californians who want to ski in Sun Valley, said Cheryl Temple, Horizon’s manager of public affairs.

Seattle-based Horizon Air is a wholly owned subsidiary of Alaska Air Group, a New York Stock Exchange-listed corporation that also owns Alaska Airlines.

McIntosh said he had no quarrel with private firms, such as the Sun Valley and Elkhorn companies, kicking in subsidy cash to attract a larger competitor into the ski market here.

But he was clearly disenchanted with the actions of elected officials.

"I didn’t expect the community [service] I was subsidizing" to be undercut by the council members’ backing a subsidy "to my competitor," he said.

McIntosh said his subsidies for Air Ketchum—not yet in the black—came from a profitable charter service he has run out of Friedman airport for more than a decade.

He also had harsh words for the Sun Valley-Ketchum Chamber of Commerce, which he accused of "laundering" the Sun Valley City Council subsidy so that council members couldn’t be accused of breaking the law.

Under state law, he said, it’s illegal for cities to transfer public funds to private carriers.

Sun Valley council members voted to raise the chamber’s annual funding by $20,000 so the cash could be transferred to Horizon if the airline needed the money to cover losses.

The Air Ketchum chief said he had no quarrel with Horizon Air, which he called "a first-class airline."

In early September, Sun Valley Company marketing director Jack Sibbach asked the two city councils to join the resort, Elkhorn and the chamber in the subsidy plan.

Under the guarantee blueprint, as of Tuesday, Sun Valley Company will cover $50,000 of a possible shortfall; the chamber, $20,000; Elkhorn Resort, $10,000; and the city of Sun Valley, $20,000.

Presumably, any Horizon losses in excess of the $100,000 guarantee would have to be picked up by the air carrier.

McIntosh said he doesn’t think he’ll litigate the subsidy because he would have to prove damages in a long, expensive court process and, he said, it would be "an uphill battle."

What’s more, he added, he won’t ask for time to plead his case before either city council.

"I can read loud and clear what they’ve done. They’re not interested in the service I was providing," he said.

McIntosh said he had no idea what the city councils were up to until he returned to the Wood River Valley on Sept. 22 from Milan, where he had been vacationing. He said he read a story about it in the Idaho Mountain Express.

"I was totally blindsided," he said.

A Cleveland native, McIntosh came to the Wood River Valley in 1988 to start the Air Ketchum charter service. Last May, after one and a half years of waiting for Department of Transportation and Federal Aviation Administration approval, Air Ketchum began to offer 13 round-trips a week between Sun Valley and Boise involving two flights a day, except for Saturdays and Wednesdays.

Until last week, he said, his eight-seat Beechcraft King Air had been averaging two passengers per trip, and that he needed four a trip to be profitable.

A one-way fare, if bought from Air Ketchum’s Web site, cost $75; purchased over the phone, the tab was $98.

A round-trip ticket between Boise and Sun Valley on Horizon Air, whose Dash 8 planes will have a 37 passenger capacity, will range between $125 and $250 during the ski season.

When asked whether some people could say that because his scheduled service was not yet profitable and that the council decisions were an excuse to go out of business, he said, "Actually, the revenue was very encouraging. Obviously, it was going to take some time. But when the community chooses to subsidize the competition, it doesn’t give me a lot of reason to continue."

As a major ski destination, Sun Valley has long been plagued by its difficult-to-get-to location. Ski area rankings by Ski magazine this month list Sun Valley No. 1 overall among 60 United States resorts, but 58th for accessibility.

The addition of Horizon’s daily flights this winter is another step toward eliminating that unwanted notoriety, Sibbach recently told Ketchum City Council members.

"It’s not so much the money, but a philosophical backing," he added, referring to the reason he sought support from the two city councils. "This is a way the whole community can get involved."

 

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Copyright 1999 Express Publishing Inc. All Rights reserved. Reproduction in whole or in part in any form or medium without express written permission of Express Publishing Inc. is prohibited.