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Transportation commission to Kitsap Airporter: Drop your rates!
The Bremerton-Kitsap Airporter may be making too much money for its own good. But the solution proposed by state regulators could force the company to adopt drastic reductions in service along with personnel cuts.
The Washington Utilities and Transportation Commission last August filed a complaint against the company, saying its profits were excessive and ordering the business to reduce fares by $2 per trip.
That complaint was heard in April by a WUTC-appointed court administrator, who issued a preliminary decision in the agencys favor. The Port Orchard-based company intends to appeal the ruling to the WUTC board of directors and, if necessary, to a Superior Court judge.
The Airporter, which operates a daily passenger shuttle service between Kitsap County and SeaTac Airport, holds a certificate of authority from WUTC. The agreement grants the company a monopoly in this market but caps its profits at 7 percent annually.
But that figure isnt set in stone.
Its a guideline, really, said Richard Asche, who founded the Airporter 22 years ago. Its not written down anywhere that you cant make more than a 7 percent profit.
More importantly, the agency imposes the 7 percent limit before federal income taxes and interest on loans are paid out by the company.
This is a very capital-intensive operation, Asche said. We operate 13 buses and three vans. The interest on our loans is substantial, and capping our profits at 7 percent without taking that into account doesnt allow us to make enough money to stay in business.
In its complaint, however, WUTC noted that Asche earned $66,000 as the companys chief operating officer for the 12 months ended Sept. 30, 2000. In addition, Asche collected $355,000 in bonuses during that span. The state maintains Asches salary is reasonable for his duties, but the bonuses are evidence of windfall profits.
Asche disagrees, arguing that the bonuses should be considered operating expenses rather than shareholder dividends since much of the money was reinvested in the company. A portion of the bonus was used to construct the Airporters Port Orchard operating facility, which Asche and his wife own and lease back to their company.
The Bremerton-Kitsap Airporter reported a total 8,467 trips from Kitsap County during April alone, Asche said. In addition, the company also provides shuttle service to customers on Fort Lewis and McChord AFB, which accounted for another 1,449 trips.
Asche estimates the company would have lost more than $47,000 during the past three quarters under the states profit formula.
We already have the lowest rates in the state and maybe the lowest in the country, he said.
The companys one-way fares range from a high of $19 to a low of $11. WUTC is demanding the Airporter cut $2 from each Kitsap trip and $2.50 from its Fort Lewis/McChord routes.
The companys Web site indicates they make stops at Subase Bangor, Poulsbo, Silverdale, Bremerton, Gorst, Port Orchard, Purdy and Tacoma.
If I have to do that, well have to cut our service by five or six trips a day, Asche said. And well also have to reduce the number of people we employ.
Asche estimates he has already spent more than $100,000 in legal fees fighting the WUTCs edict, with the tab expected to go much higher if he appeals in Superior Court.
I dont want to cut back on our service, and I certainly dont want to fire anyone, Asche said. But my back is against the wall. I just dont know what were going to do.