Jonesboro among cities regaining airline service.(NE Journal: A Look at News From Northeast Arkansas)

SeaPort Airlines of Oregon expects to start its air service to Jonesboro in October.

SeaPort recently accepted a $6 million contract to provide air service to Jonesboro and three other Arkansas cities.

The Jonesboro Municipal Airport has been without air service since Air Midwest Inc. of Phoenix, a wholly owned subsidiary of Mesa Air Group, left in June 2008.

SeaPort Airlines submitted a $7.1 million bid in May to the U.S. Department of Transportation to offer daily round-trip flights from Jonesboro to Memphis. The two-year contract also covers service from El Dorado, Harrison and Hot Springs. Those cities are served by Essential Air Services, a federal government program that subsidizes smaller carriers so they can provide a minimal level of scheduled air service to smaller communities that otherwise would not be profitable. The program was created in 1978 after the deregulation of the airline industry, which allowed airline carriers to drop unprofitable routes to and from small cities.

After SeaPort submitted its bid, the DOT countered the offer. The DOT said it would pay $6.05 million annually and SeaPort would have to run only 18 round trips per week instead of the 21 that it had proposed.

"This will result in a savings of over $2 million over the course of the twoyear period and still provide the communities with access to the national air transportation system," the DOT said in its offer.

The lower bid still will hurt the company because it has fixed costs, said Kent Craford, president and CEO of Alaska Juneau Aeronautics Inc., the parent company of SeaPort Airlines.

"That will squeeze us a little bit, and we're looking at ways right now to make sure we can contain costs," he said. "I think we'll be OK, but it will definitely be a lot tighter than it would have been under our original bid."

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