Pierre’s sole air carrier, Aerodynamics Inc., based in an Atlanta suburb, is being purchased by Ted Vallas, a 96-year-old millionaire from suburban San Diego who has been trying for years to start up his California Pacific Airlines.
“We are in the midst of closing (the sale) now,” ADI’s Vice President of Airline Services Mickey Bowman, told the Capital Journal on Monday. “It will be completed on or around the first of March.”
Bowman said he expects to stay on under the new owner to operate ADI.
The purchase “shouldn’t have any impact at all” on ADI’s service to Pierre and Watertown, Bowman said on Monday.
ADI, based in Kennesaw, Georgia, began Aug. 15, 2016, flying 12 flights a week from Watertown, South Dakota, to Pierre to Denver and back under the federally subsidized Essential Air Service program.
The U.S. Department of Transportation recently announced a new round of bidding for companies interested in winning another two-year EAS contract for the Watertown-Pierre-Denver flights beginning Aug. 1.
Bowman last week asked DOT to extend the deadline for submitting a bid for a new contract from Feb. 20 to “on or about March 14,” because ADI “is in the midst of being acquired,” in a letter to DOT.
“The prospective new owners of ADI have asked for time to review any such contract proposals after (March 1),” Bowman told DOT in the letter, which was posted to the federal public website, www.regulations.gov.
Bowman said on Monday that DOT has approved the extension.
He told DOT he had contacted Mike Isaacs, manager of the Pierre Regional Airport, and the manager of Watertown’s airport “and they have expressed no issue with this requested postponement.”
As it happened, other airlines interested in bidding on the Pierre-Watertown EAS contract, had also - for their own reasons -- asked DOT for more time to submit the bids, Bowman said.
He assured DOT that the delay would not hurt the process of choosing an airline for the EAS contract for the two years beginning Aug. 1.
Two years ago ADI won the bid for service to Pierre after being forced by DOT to jettison its CEO and principal owner Scott Beale in 2015 because federal officials said he had financial and legal difficulties with air service partners which he did not disclose to DOT during his attempt to be giving DOT authorization to start a “121” commercial passenger airline.
In 2015, Beale sold ADI to John and Janet Beardsley, real estate developers in Portland, Oregon, who had owned and operated SeaPort Airlines, a regional air service. ADI was a separate business entity not operationally connected to SeaPort, Bowman said. Two years ago, SeaPort declared bankruptcy, seeking relief from 200 creditors owed $10 million, according to the Business Journal.
SeaPort went out of business in September 2016, Bowman said. It appears the Beardsleys are selling ADI now as a completion of getting out of the airline business, Bowman said.
Pierre city officials have praised ADI for providing reliable air service since August 2016. It’s been doing business under the name Great Lakes Jet Express in an arrangement with Great Lakes Airlines of Cheyenne, which provides access to Denver’s airport and “code sharing,” that allows ticketing and baggage arrangements for passengers to make flight connections with major airlines in Denver. Of course, Great Lakes for years provided air service to Pierre.
That sort of access that Great Lakes has to major airlines is what Ted Vallas in San Diego is seeking by buying an already operating passenger airline company instead of forming his own, Bowman said.
Vallas has told his stockholders he plans to have California Pacific Airlines flying ADI’s 50-passenger Embraer out of Carlsbad, California’s McClellan-Palomar Airport to six airports: Sacramento, Oakland, San Jose, Las Vegas, Phoenix and Cabo San Lucas in southern Baja California, Mexico, according to the San Diego Reader.
Bowman said ADI will continue operating the Watertown-Pierre-Denver schedule — assuming it wins another two-year EAS round of subsidies. It also will continue its charter air service that is busy now flying college teams to
NCAA sports events.
ADI has been leasing three of the Embraer 145 jets, two available for the Pierre routes and one for charters, Bowman said. The plan is to lease two more for the new California Pacific airline that now, under the ADI-Great Lakes Jet Express arrangement - the federal authorization for scheduled commercial air service, Bowman said.
He said Vallas has mentioned an interest in moving into a larger, 75-passenger Embraer jet for California Pacific's routes.
ADI’s CEO Darrell Richardson will be CEO of California Pacific.
ADI has also done business the past year or so as SkyValue Airways in its charter work and in bidding (unsuccessfully) for new EAS-subsidized routes between several cities in Nebraska and Denver. SkyValue Airways also was announced as ADI “dba” name in the San Diego news about the still-to-be completed purchase by California Pacific.
But ADI will continue doing business at Great Lakes Jet Express in Pierre and Watertown, Bowman said.
Under the terms of the EAS contract with DOT, ADI/Great Lakes Jet Express is receiving subsidies of $4.5 million a year for the Pierre service and about $2 million a year for the Watertown service.
It’s gone better than ADI projected, with both cities eclipsing the key 10,000 passenger boardings figure for 2017, which means $1 million in federal money to each of the airports.
The EAS subsidy, which is paid in a sense per flight, has run at about $150 per passenger in Watertown’s case and about $190 per passenger for Pierre. Because that is less than one benchmark DOT looks at — $200 per passenger — in the EAS program, it’s a mark in favor of ADI.
Ted Vallas has been trying since 1980 to win federal approval to start a passenger air carrier service in the San Diego area, according to his account posted on World Airline News. It’s been his goal to reestablish a “hometown airline” for San Diego and California Pacific “will rejuvenate the regional air system concept,” Vallas has said.
As Pierre and Watertown officials have said about ADI’s service and local airports in South Dakota, Vallas also says California Pacific will mean no long lines to clear security and boarding regulations, and lower parking costs for passengers’ vehicles at the smaller airport.