An Eastern Oregon Regional Airport employee helps prepare the afternoon Boutique Air flight for takeoff April 14 in Pendleton. The airline won a new two-year contract through May 31, 2024, from the U.S. Department of Transportation to provide air service to Pendleton.

PENDLETON — Boutique Air gave notice in February that it wants to pull out of Pendleton, but the U.S. Department of Transportation grounded that request. And now the airline is seeking a new contract.

Oregon Regional Airport Manager John Honemann said Boutique’s notice came as the number of passengers flying the small airline in Pendleton began to increase after falling during the pandemic.

Boutique Air relies on the federal Essential Air Service program to stay in business in Pendleton. The U.S. Department of Transportation oversees the EAS program, which subsidizes airlines to connect communities across the country that otherwise would not receive scheduled air service.

Boutique in 2016 won an EAS contract for 21 round-trips a week between Pendleton and Portland, with the option to operate one service a day to Seattle-Tacoma International Airport instead of Portland. The Pendleton City Council in 2018 awarded a four-year, $10.4 million EAS extension to Boutique. While the U.S. Department of Transportation foots the bill, the federal agency follows the local community’s direction.

The transportation department’s February list of communities receiving the subsidy, shows only one place in Oregon: Pendleton.

Honemann explained the EAS contract with Boutique was due to expire Dec. 31, 2022, and Boutique submitted a Notice of Termination of Service to the DOT.

Honemann said the reason for the notice was economic, with Boutique citing “wages, fuel costs, Inflation, supply chain issues with aircraft parts.” Additionally, he said, there is a “pilot shortage and downward pressure on industry as pilots move up to larger aircraft, and carriers that offer higher salaries.”

The federal transportation department on Feb. 24 accepted the notice, Honemann said, and on March 21 issued an order prohibiting termination of service and requesting proposals.

“The EAS contract and bid process for Pendleton has been accelerated and moved from later in the year to now, seven months early,” he said.

The bids were due April 11.

“The DOT received one bid for our EAS Service,” Honemann said. “That respondent was Boutique Airlines.”

The East Oregonian left messages for local Boutique Air manager Shawn Simpson, but as of deadline Monday, April 18, he had not offered a comment.

Passenger numbers on rise

The number of passengers boarding the small airline hit 447 in March in Pendleton, the most since February 2020, the start of the pandemic, which had 541, according to data from Honemann.

“There was an obvious decrease in enplanements in early 2020 when the country went into pandemic response mode, and some recovery later in 2020 and into 2022,” he said.

Boutique in 2019 at Pendleton, he reported, had a total of 6,763 passengers. Then ridership plunged as the pandemic ramped up, with the airline recording 343 passengers in March of that year and just 58 in April. That was the low point, though, according to the data.

Since then, Boutique Air’s passenger count has been climbing, with occasional dips punctuating the trend.

“We are not at pre-pandemic enplanements, lagging (more than) 25% compared to averaged pre-pandemic enplanements,” Honemann said.

Boutique in November and December 2021 carried 416 and then 399 passengers, but in January the numbers dropped 297. Honemann said that was not due to the coronavirus.

“January 2022 was a rough month for weather in Pendleton and Portland,” he explained, “(with) low ceiling, freezing fog conditions, snow … Weather cancellations were the primary cause of that dip.”

Honemann offered some industry context about Boutique’s termination notice.

“Skywest, a major EAS provider,” he said, “also submitted a Notice of Termination of Service to the DOT for 29 communities, citing similar economic challenges.”

Honemann also said he does not think recent developments at the Walla Walla Regional Airport are going to dent Boutique’s numbers.

Alaska Air Group, parent company of Alaska Airlines, is planning to transition from turboprop planes to full-jet aircraft for its Horizon Air services sometime in 2023.

The Embraer 175 jet aircraft will be the newest addition to the airport, replacing the turboprop Bombardier Q-400, which has served passengers for many years and is considered a good workhorse aircraft for regional flights.

The Port of Walla Walla is preparing now for the switch, with a facilities remodel to accommodate the new planes.

But Horizon’s flights out of Walla Walla go to Seattle, Honemann said, not to Portland. He said “there is little to zero competition” so the platform shift for service of the Walla Walla to Seattle route won’t have an effect on enplanements or operations at Pendleton.