Alaska bypass mail subsidy lands on the Trump chopping block again
President Trump wants to take over the U.S. Postal Service and fire the bipartisan postal review board, the Washington Post reported Thursday night.
Alaska has more to lose than anywhere else in the country if this happens because the bypass mail subsidy program, a central element in Alaska commerce, would certainly be at risk of elimination once again.
The program, which began in 1972, helps keep costs from rising even higher for thousands of Alaskans in 239 small communities across the state. It was long championed by the late Sen. Ted Stevens.
The last time the subsidy was threatened was under Trump during his first term, triggering pushback from the Alaska Congressional delegation.
Trump backer Louis DeJoy, installed by Trump as postmaster general, complained about the unfunded mandate of bypass mail in Alaska. At that time it was a $120 million subsidy.
In 2020, Dillingham Rep. Bryce Edgmon, then, as now, House Speaker, predicted devastating consequences if bypass mail were to end.
“This would essentially lead to the collapse of rural Alaska if bypass mail went away. It’s that significant,” he told the Anchorage Daily News in 2020.
DeJoy, who announced plans this week to retire, is leaving at a time when Trump is again talking about privatizing the mail, which would also mean an end to the Alaska subsidy.
Bypass mail remains an unfunded mandate, as far as the Postal Service is concerned, costing about $133 million in 2022.
In a chart submitted with Senate testimony in December, DeJoy described the bypass program this way:
“Alaska Bypass Service allows mailers to ship goods such as food and other cargo on pallets directly to rural customers in Alaska. Commercial airline carriers deliver goods on pallets to hub airports in either Anchorage or Fairbanks. Smaller airline companies or independent pilots then break down these pallets and deliver the goods to remote communities accessible only by air, which are commonly called bush sites. The shipped goods ‘bypass’ the Postal Service’s network. With Alaska Bypass Service, the Postal Service pays for the cost of air transportation from hub airports to bush sites. The difference between this cost of air transportation from hub airports to bush sites and the average cost of ground transportation if it were available is called the Alaska Air Subsidy. The Commission previously concluded that the Alaska Air Subsidy is part of the USO.431 The Alaska Air Subsidy increased from $120 million in FY 2018 to $135 million in FY 2019.”
A 2021 Inspector General’s report on uncompensated services said that bypass mail is unique in that the Postal Service does not sort or prepare it.
“Instead, the Postal Service is merely the facilitator of and payer for the air transportation component,” the report said.
From 2015-2019, the program cost $625 million, but revenues were only $165 million. The minimum weight of a shipment is 1,000 pounds.
The Postal Service has lost money on this service every year since it started. The Alaska response has generally been that it is a subsidy Alaskans deserve.
The IG report said the standardized rate calculations “provide little incentive for bypass airlines to lower their costs, which results in high costs for the Postal Service.”
In addition, the Postal Service does not ask Congress for extra money to cover the subsidy.
Commerce Secretary Howard Lutnick has urged Trump to push for privatization, the Post reported.
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