Capacity constraints imposed 15 years ago on Aloha Air Cargo (KH, Honolulu) are delaying the air transport of intra-Hawaiian mail, causing the United States Postal Service (USPS) to resort to moving mail between islands by boat.

According to a regulatory filing, the Hawaii-based cargo specialist is the only air carrier using large jets to transport USPS mail between the Hawaii islands, but it says demand is exceeding its capacity. Aloha Air Cargo wants to add at least one additional aircraft to its fleet immediately but cannot add capacity because the US Department of Transportation (DOT) has restricted it to operating five aircraft.

The limitation was imposed in 2008 due to circumstances surrounding an expedited transfer of the scheduled cargo authority contained in Aloha Air Cargo's operating certificate as part of an asset sale while the company was in Chapter 7 bankruptcy.

At the time, parent Aloha Airlines (Honolulu), already in Chapter 11 bankruptcy protection, shut down its still-profitable air freight division after its primary lender decided to provide no further financing to the cargo division. Seattle-based Saltchuk Resources then bought the cargo division for USD10.5 million. The company also owns Northern Aviation Services, which operates Northern Air Cargo (NC, Anchorage Ted Stevens), Alaska's largest cargo airline. Saltchuk set up a new subsidiary, Aeko Kula, to operate Aloha Air Cargo.

Since then, Aloha Air Cargo's operating certificate included a condition that it would only be effective as long as the holder remained a wholly-owned subsidiary of Saltchuk. The condition was placed on the certificate in 2008 when it was transferred from Aloha to Aeko Kula as part of the asset sale.

"The passage of nearly 15 years and Aeko Kula's solid operational and commercial track record have rendered moot the need for this condition," the company says in the filing.

It has asked the DOT to:

  • amend its certificate of public convenience and necessity for interstate air transportation to remove the condition which requires it to be a wholly-owned subsidiary of Saltchuk Resources;
  • remove the limitation of no more than five large aircraft; and
  • grant a "pendente lite" [pending litigation] exemption to exceed the five large aircraft limitation to address immediate capacity limitations delaying the transport of USPS mail.

Aloha Air Cargo provides domestic scheduled and charter cargo service for a variety of customers in Hawaii using its fleet of B737s and between Hawaii and the mainland US under blocked space and wet-lease arrangements with operators of B767s. According to the ch-aviation fleets module, the fleet comprises one B737-300(F), two B737-300(SF)s, and two B737-400(F)s.