The U.S. Postal Service awarded 18 air transportation contracts to airlines last week in a move the agency says will improve efficiency and service.
The contracts, which were open to competitive bidding, take effect June 28. The annual value of the deals will be unavailable until the end of each fiscal year when total mail volumes flown by the airlines is known. Last year, the USPS paid $370 million to airlines.
Under the old contract structure, participating airlines transported mail at a flat rate established by the USPS. An equitable tender provision required that mail be shared among carriers that serviced the same routes.
In the new contracts, airlines will be required to scan mail at the time it is received, when the carrier loads the mail onto a flight, during transfers to connecting flights and upon delivery to the postal service. Failure to meet on-time performance standards could result in the airline losing business to competing airlines.
The change to the contract process came about in part from Federal Aviation Administration security restrictions put in place after 9/11 that reduce the amount of mail that can be carried on commercial passenger airlines.
Many airlines voiced concerns that this drop in volume, coupled with the equitable tender provision, was putting a financial strain on them. The postal service developed the competitive bidding process after discussions with the airlines and the Air Transport Association.
Airlines awarded contracts are ABX/Airborne Inc., Air Flamenco, American Airlines, America West Airlines, American Trans Air, BAX Global Inc., Continental Airlines, Delta Air Lines, Four Star Aviation, Frontier Airlines, JetBlue Airways, M&N Aviation Inc., Midwest Express Airlines, Northwest Airlines, Roblex Aviation, Southwest Airlines, Spirit Air, United Airlines and US Airways. Delta and United share one contract.