Mesa Air Group has decided to shut down its Air Midwest unit and surrender its operating license for financial reasons.
The move means Air Midwest will stop providing government-subsidized service to 16 small cities by June 30.
The communities are served by Mesa's fleet of 19-passenger Beechcraft 1900 turboprop aircraft under subsidy from the Department of Transportation's Essential Air Service program. Mesa said it notified DOT last year it planned to discontinue all EAS flights.
In an updated notice last week, Air Midwest said it planned to discontinue all air carrier operations, liquidate its assets and surrender its FAA and DOT certificates.
The company added that it had "no choice," telling the DOT that it "does not have the financial resources to continue air carrier operations. Air Midwest is in severe financial distress due to the fact that it has incurred significant and unrelenting losses over many years and has no prospect of future profitability, particularly in light of current conditions, including record high fuel prices."
Flights to Lewisburg, W.Va.; DuBois and Franklin, Pa.; and Athens, Ga., will cease May 23. Air Service to Ely, Nev.; Merced and Visalia, Calif.; Prescott and Kingman, Ariz.; and Farmington, N.M., will be suspended May 31.
Effective June 30, flights will end to Columbia, Joplin and Kirksville, Mo.; Grand Island and McCook, Neb.; and Little Rock, Ark.
"Air Midwest plans to cooperate with the DOT and any replacement carriers in the interest of lessening the impact on the communities affected," said Greg Stephens, Air Midwest's president.
Air Midwest operates 20 Beech 1900D aircraft serving 27 cities throughout the country. The Phoenix-based company said it hoped to minimize the impact on passengers and employees, but it did not provide any details.
The EAS program currently provides air service to about 145 smaller communities, 41 of which are in Alaska. DOT said funding for fiscal year 2008 was set at $125 million.
The EAS program began in 1978 to prevent the loss of essential service at small communities under deregulation, but it is not set up to address today's market reality, said Roger Cohen, president of the Regional Airline Association.
"The program as it is set up isn't serving the communities. It isn't serving the airlines. It isn't serving the traveling public, and it isn't serving the government," Cohen said.
The FAA reauthorization bill includes an update of the EAS program, but the legislation got hung up in the Senate this month.