US Postal Service Loses Millions on Mail to Alaska

Sunday, 29 Jun 2014 09:14 AM

By Elliot Jager

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The U.S. Postal Service spent $77.5 million in 2013 delivering subsidized groceries to remote Alaska settlements, The Washington Post reported. The money is covered by stamp-buying customers and benefits isolated Indian settlements and the commercial enterprises that service them.

Critics say the Postal Service, which is billions of dollars in the red, should not be required to shoulder the Alaska-exclusive program, the Post reported. They say it would be more economical for Alaska to build roads to deliver groceries by truck.

The program was the brainchild of the late Alaska Republican senator Ted Stevens who 33 years ago sponsored the Alaska Bypass legislation. Besides creating universal postal services not available to the lower 48 states, the law regulates passenger service and requires the Transportation Department to guarantee a hefty 15.5 percent profit margin for carriers.

Efforts to tamper with the program are resisted by Alaska's congressional delegation and lawmakers from other states whose rural constituents also benefits from special handling by the Postal Service.

Many people who live in Alaska's 100 remote settlements also receive other forms of government subsidies. Toilets with running water are not all that common in these areas.
Food, groceries, dog food, diapers, flat-screen televisions, and other supplies make their way from the lower 48 to Alaska by jet and are then transferred to smaller planes that can land on dirt strips.

Justin Cadran, who describes himself as a conservative Republican, oversees logistics for Era Aviation. At first he questioned why the Postal Service should be picking up the tab for delivering supplies to residents in remote Alaska settlements. He has since reconsidered. "If Bypass wasn't here, it would take food out of people’s mouths."

It can cost the Postal Service $21 to move a 12-pack of coke to a cut off Alaska settlement. With transport subsidized the local grocery store can markup the cost by 31 percent.
"Until the law gets changed, I have to abide by it," said Postmaster General Patrick Donahoe. "If you talk to people in Alaska, they're very satisfied with this service."

"It's sort of a good-old-boy Ted Stevens deal," said Rep. Darrell Issa, R-Calif., chairman of the House committee which oversees the Postal Service. He said the program is inefficient and that the Postal Service ought to be allowed to recover at least 50 percent of its Alaska Bypass losses.

A spokesman for Alaska Airlines, the biggest Bypass carrier, said his company would rethink the market if Bypass subsidies were reduced. That could negatively impact passenger service and increase safety risks, he said.

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