New operator sought for Midway Atoll airport

 - May 15, 2008, 8:17 AM

Early last month Midway Phoenix, a subsidiary of Phoenix Air Group of Cartersville, Ga., and the U.S. Fish and Wildlife Service (USFWS) separately announced the formal termination of the cooperative agreement governing the operation of Midway Airport (MDY) by May 1, the withdrawal of nearly 150 Midway Phoenix employees by May 8 and closure of the 100-guest ecotourist resort on Sand Island, 1,200 mi northwest of Honolulu in the Midway Atoll National Wildlife Refuge. In February Midway Phoenix had verbally warned of such actions (AIN, March, page 20).

The airport remains open under a special permit to Midway Phoenix until May 1 while the USFWS requests bids for a new operator. All tourist charter flights by Aloha Airlines to Midway Atoll have ceased.

The field is important for its availability within 1,000 mi of extended twin-engine operations (Etops) over the North Pacific. As such, Boeing had become a chief advocate to settle financial disagreements between USFWS and Midway Phoenix. The nearest Etops alternate fields are Hawaii’s PHLI (Lihue), PHBK (Kehaha/Barking Sands), PHNL (Honolulu) and PWAK (Wake Island).

Midway Phoenix executive v-p Bob Tracey said his company would leave intact all of its improvements to the airfield, buildings, restaurants and equipment from the historic Navy complex. In addition, Midway Phoenix committed to Boeing to support Etops needs and to keep the field prepped for Part 139 status through May 1 for the new operator.

Midway Phoenix cited $15 million in losses since it began a 20-year lease with the USFWS in July 1996, losing $2 million in the last year while replacing 50-year-old infrastructure. Tracey blamed the losses on environmental costs compounded by a poor economy. The USFWS countered that the same regulations apply today as when the contract began, adding that the U.S. government has invested $5 million in its own improvements.

Discussions surrounding the bidding process are complex. The Coast Guard relies on the field for refueling and the INS uses Midway as an emergency divert point for unauthorized entries. Factors include not just Etops but emergency options under excess fuel or depressurization, and pilot union and FAA duty requirements for Pacific flights.

Despite listing precise dollar figures to support their stance, neither Midway Phoenix nor USFWS will release firm statistics on flight operations. Midway’s yearly total is estimated at 200 operations, mainly Coast Guard and military C-130s and C-9s. Most of the 30 or so yearly GA flights are high-profile or celebrity-owned business jets.

Midway Phoenix had planned to generate revenue by operating the resort, harbor, sanitary and power systems on the 1,200-acre Sand Island. But it asserts that USFWS exacerbated the drop in tourism by limiting the maximum number of visitors to 100 and keeping “dictatorial” rein on guest movements to protect the Hawaiian monk seal, green sea turtle and some two million seabirds, including the Laysan albatross (“gooney bird”). Both USFWS and Midway Phoenix, though, applaud the measures as having enabled the rising population of such creatures.

In December Midway Phoenix began refusing fuel to transient aircraft and bumped the price of JP5 jet fuel to $5 per gallon. Tracey denied that the hike represented price gouging, saying it was designed to deter all but the most needy from landing and to help shore up financial losses. The island has since received a tanker delivery from the Defense Logistics Agency while flight volume has nearly ceased, leading Tracey to promise lower prices through May 1.

Midway Phoenix flew its own 19-seat Gulfstream I turboprop and chartered a 126-passenger Aloha Airlines 737 from Honolulu once weekly. Any aircraft regardless of type or weight paid an $800 landing fee at MDY, and Tracey said the fee will remain unchanged until May 1.

The USFWS has promised to open a bidding process for the operation of both the resort and the airport. Tracey said that Midway Phoenix would consider bidding to stay on as a turnkey operator if the USFWS pays on better terms. He cited the yearly contractor fees to operate Wake Island as nearly $5 million in labor alone.

“You need a fire department, powerplant employees, a septic systems crew, people in food preparation, a fleet of 15 to 20 repair people, welders, plumbers and electricians. You need a minimum of 100 people to run the island,” he said.

Tracey was angered that a planned joint statement to announce the dissolved agreement was instead released on March 6 solely by the USFWS. Anne Badgley, regional director of the USFWS Pacific Region, said she was “sad” the parties could not resolve their differences, and announced that the agency would find a new contractor to run the airport. In response to a query from AIN, Tracey issued his own company’s response on March 11.