Postal Service abruptly ended negotiations with Alpine Air in Montana

The U.S. Postal Service abruptly stopped air service in Montana this week even after Alpine Air, its air cargo contractor in the state, offered a roughly $3 million reduction in its contract, according to the company CEO.

In a phone call Wednesday, Alpine Air CEO Michael Dancy said negotiations were underway as early as last week for the company that has worked with the Postal Service in Montana for some 35 years.

But the Postal Service didn’t respond to the discounted offer, he said. As a result, Alpine Air is looking at layoffs in Montana, according to Dancy. It employs 60 people in the state including 20 who have worked on the Postal Service contract.

Additionally, Dancy said people who want two-day delivery will have to look to companies such as the United Parcel Service — where “two-day means two-day” — and not the Postal Service. Alpine also delivers for UPS.

“We care about the state of Montana and its inhabitants,” Dancy said. “That’s important to us. We’re a Montana company.”

The Alpine Air Express website said it’s a Montana corporation doing business through its subsidiary Alpine Aviation of Utah.

Last Wednesday, Alpine Air sent the Postal Service a proposal for a deeply reduced contract for service in Montana and South Dakota, Dancy said. He declined to provide the contract amount.

The Postal Service indicated it would respond Thursday, he said, but it never did: “I’ve been involved for 25 years, and I’ve never seen anything like this. Ever.”

Alpine Air cites a 99+% on-time performance rate for its delivery service, and Dancy said the Postal Service never told the company it had any complaints, nor did it offer a target dollar amount for a renegotiated contract.

“We felt like we were doing everything we can to preserve the delivery of expedited mail in particular throughout Montana,” Dancy said.

In an email, the Postal Service said it is not suspending mail or delivery or products such as Priority Mail and Priority Mail Express.

“It is simply switching to more reliable surface transportation,” the Postal Service said in a statement from a spokesperson.

Dancy, however, said surface transportation can be challenging in Montana in the winter especially.

Montana’s congressional delegation pushed back on the decision by the Postal Service — and one also mentioned winter weather.

Last week and this week, U.S. Sens. Jon Tester and Steve Daines both noted effects on Montanans and on Alpine Air in letters to Postmaster Louis DeJoy.

Tester, who has pressed the Postal Service to continue other services in Montana, said Montanans already have “unacceptably inconsistent delivery,” and the decision to cut air transportation will only degrade mail service.

“Once again, it appears that the USPS is turning its back on rural America and attempting to solve its budget woes on the backs of our nation’s rural citizens,” said Tester, a Democrat, in a July 18 letter to DeJoy.

He said air service is important for getting goods to Montanans especially in winter, where “extreme weather can often make long stretches of road unsafe or even impassable.”

Daines, a Republican, said the Postal Service has a record of distributing important parcels to rural customers, but that could change.

“Montanans who may live hundreds of miles from the nearest urban center rely on these services to receive their prescription medicines, pension payments, disability benefits, important bills and logistical support to help run their small businesses,” Daines said in his July 22 letter to DeJoy.

Tester, a Democrat, has been critical of DeJoy and called for new leadership of the federal agency. He and Daines also noted the effect on Alpine Air.

“I understand that Montana’s Alpine Air has been a long-standing contracted partner of the USPS to facilitate air distribution service and has provided excellent and consistent service for the last 30 years, and this decision will result in immediate job losses and the further erosion of service standards,” Daines said; Wednesday, he described Alpine Air as the sole bid applicant, operator and provider in Montana for the past 30 years. .

Tester said the decision is poorly timed and raises questions about the transition in service.

“Alpine Air has partnered with USPS for over 30 years and employs 20 Montanans who work as pilots, mechanics, and support staff who have been critical in getting folks their mail quickly,” Tester said.

“The sudden decision to end their contract jeopardizes the future of the company and their employees and does not give them sufficient time to plan any major transition.

“In addition, the apparent hastiness of this decision raises obvious questions about how USPS could possibly have the staff and equipment necessary to transition to a ground-based approach on such a short timeline.”

In an email, the U.S. Postal Service said it needed to reverse “years of mounting losses” to the tune of $160 billion during the course of 10 years.

However, a USPS spokesperson did not address a question about how delivery time would be affected by the changes, the amount of money it might save, or the reason for the abrupt end to contract negotiations with Alpine Air.

The USPS said it has realized cost savings in a variety of ways, including “by reducing our dependence on air transportation.” It also pointed to its strategic plan, Delivering For America.

“DFA has also refocused our use of contracted air transportation since we do not own a private fleet of airplanes,” the plan said. “Before our modernization plan began, we were beholden to the complexities and inefficiencies of the airline industry for transporting mail long distances to meet our service standards. This dependency was especially evident during our peak season when weather disruptions used to make the air transportation system very unreliable.”

Jeff Roach, director of aviation and transit for Billings Logan International Airport, said it handled roughly 300,000 pounds of freight in the first six months of the fiscal year from Alpine Air compared to 70 million pounds annually in all.

“We expect it to be a minimal impact overall, although we hate to lose any business that we have here at the airport,” Roach said.

Billings had the 63rd busiest air cargo operation in the United States out of more than 400 sites, Roach said. It’s building a fifth cargo pad this summer for $7.5 million.

He said the airport is proud it is heavily used for air freight in the region. The airport has the longest surface runway in the state of commercial airports, “a very robust instrumentation system for aircraft to land,” and it doesn’t have mountainous terrain, he said, which all make it easier to land.

Roach also said freight generates revenue for the operation, which is important because it doesn’t receive local or state taxes.

Dancy said Alpine Air typically has operated on multiyear contracts, plus extensions, for the Postal Service.

Its most recent contract ended last November, but the federal agency said it planned to extend, Dancy said; it didn’t know for how long, but it acknowledged Alpine Air’s competitive pricing.

Dancy said the challenge is that the Postal Service has volumes that fluctuate, and flying to rural locations can be more expensive.

But he said people shouldn’t be punished by getting late mail because they live in a rural state, and Alpine Air did everything it could to try to preserve service.

“The requirement has been to provide the same level of service, irrespective of where you are in the country,” Dancy said. “You shouldn’t be penalized for living in a beautiful state like Montana even though it has fewer inhabitants as opposed to New York.”

Because of the distance between communities, air travel is needed to get packages delivered, especially in the winter months, he said.

“It is more expensive to fly things than it is to ground truck it,” he said. “But the reason is the sorting centers are far apart. The sorting centers are far apart because the locations are far apart. So you’ve got to fly it.”

But he said the Postal Service only gave the company a week’s notice about not continuing negotiations, and then it never responded to the proposal that offered a steep discount.

The Postal Service said it would respond Thursday but did not, Dancy said; Alpine Air reached out Friday and Monday, he said, and it heard nothing.

“That’s incredibly unprofessional,” he said.

He said Alpine Air subsequently reached out to Montana politicians, but the Postal Service has remained aloof: “It just seems like they’re thumbing their nose at the state of Montana.”

As a result, he said, Alpine Air will have to make staffing adjustments in order to be good stewards of its resources. Most employees work in Billings, he said, although the company also has staff in Kalispell, Great Falls, Butte, Havre and other places.

“It’s just really unfortunate,” Dancy said of the now-needed reductions.