Coos County Airport District board members Mike Lehman, left, and Joe Benetti, along with Airport Director Gary LeTellier talk about the challenges facing the airport.-World Photo by Alex Powers

The first hint came in February.

Mike Lehman, chairman of the Coos County Airport District Commission, attended a conference where Horizon Air executives indicated North Bend’s air service was at risk of a cutback or even elimination.

“By then we were starting to get an inkling that the industry was scrambling, that a switch to bigger planes was coming,” he said. He sent a letter to Gov. Ted Kulongoski in March, urging state intervention.

The effort was in vain: On June 27, Horizon announced it would end service to the North Bend airport in October. The airline blamed rising fuel costs and its new, larger Q400 airplanes.

Reporter Jo Rafferty interviewed Lehman this week, along with Airport Commissioner Joe Benetti and Executive Director Gary LeTellier.

Key excerpts from that interview follow.

Question: Did you have any idea that switching to a larger aircraft could be a factor in continuing service at the airport?

Lehman: I thought they might cut a couple of flights out of here. It was never on my radar that they were going to pull out of here. In the last eight or nine years we’ve doubled the amount of passengers here.

LeTellier: Even Horizon indicated that up until the early part of June, they were still with us with the Q400s, but the price of fuel just overtook them.

Lehman: Horizon also said they were going to leave some Q200s in place until the fall 2009.

LeTellier: It’s the price of fuel that changed things.

Q: In hindsight, what do you think you might have done differently after you found out about the changes in aircraft?

Benetti: ... If Horizon would have stepped up and said, “You know, this may not work out,” this may have ended up differently.

LeTellier: This isn’t necessarily anybody’s fault. We’ve had a preponderance of events coming together here. The thing is not to wring our hands and say we should have done this, or we should have done that. Horizon’s business plan has failed, but it’s out of their control.

Q: Everyone keeps asking if there was a substantial increase in rent that could have caused Horizon Air to pull out. What was Horizon’s rent before and after the new terminal opened?

LeTellier: In the old terminal, we had hold room space and baggage space that Horizon didn’t pay for. We were going to start charging them in the old terminal but decided to let them wait until we got into the new terminal. But it’s more square footage here. The old terminal, we had about 2,000 square feet. Now we have common space here in the hold room that’s 2,920 square feet and a baggage room that’s 2,225 square feet, also at $12 per square foot.

Horizon and SkyWest pay 20 percent equally and the rest is paid based on the number of passengers that go through. Horizon’s share would be about $30,870. That would be new money for them, but money they were going to have to pay anyway.

For terminal space, Horizon was paying for the same, $12 per square foot for 923 square feet:  $11,076 a year in the old terminal. When Horizon moved over here, they had 974 square foot of space: $11,788 a year. A $600 difference.

Lehman: It’s probably double or triple what they were paying at the old terminal. Their rent went from $1,000 a month to about $2,500 to $3,000, depending on what SkyWest did. If they would have stayed in the old terminal, their rent would have gone from about $1,000 to $2,000.

Q: Was Horizon Air ever asked if it could provide the southbound service? If so, what was the answer?

LeTellier: Yes. They didn’t have a southbound hub. We were interested in San Francisco, but they don’t go to San Francisco. They may have one or two flights there. San Francisco is a United hub. Alaska competes with United. ...

Q: Have you asked SkyWest Airlines if it could provide flights to Portland? If so, what was the answer? What other options have you explored?

Lehman: We have explored every option. SkyWest, other airlines, non-scheduled flights like quasi-charter flights to see what’s out there to provide service to Portland. SkyWest was very clear they’re focused on getting southbound service in and doing it right. State partners, federal partners, we’re exploring everything.

LeTellier: There’s a huge agenda being worked right now behind the scenes. This isn’t going to end badly for us, we’re going to work this issue and end up better than when we started. I can’t tell you when.

Q: How much of the new terminal did taxpayers pay for? How were the costs broken down?

Lehman: No local property tax dollars and no state income tax dollars went into the terminal.

LeTellier: It was paid for with federal entitlement grants through ticket fees. I think it’s an 8- or 9-percent fee now. Congress sets the ticket fees. Some of our money came from that. Ten million came from the state lottery as a grant. We got a Connect Oregon I lottery funds grant. The Mill (Casino-Hotel) gave us a $100,000 grant. We borrowed $5.9 million from the state. But that’s a debt. We’re basically paying $1 million a year back. That will be paid with grants from our federal entitlement funds. In the end, probably within five years, the building will be free and clear.

LeTellier: We’ve put a huge amount of money back into the local economy.

Benetti: To local contractors.

LeTellier: And local suppliers, a lot of the construction supplies, much of it was bought locally.

Lehman: Bottom line is, yeah this was a lot of money, but it’s not property tax dollars that supported it. It probably brought more into the area than it took out.

Q: If you could go back in time, you said you would try to involve the public more than you did. Can you expand on that?

Lehman: Government bodies operate in this little cone of silence. Sometimes you lose sight of the fact that the public doesn’t understand why you have to buy $1,000 garbage cans. We lose sight of the fact that the public wouldn’t spend $1,000 on their garbage cans, so why would we? In their house, they don’t have security issues, you don’t want to have janitorial service emptying it four times a day and they don’t have to last for 20 years.

LeTellier: And you don’t have to meet fire codes.

Benetti: The point is just informing the public and trying to explain to them. Since this new board was elected, we have expanded to two meetings a month. I would really encourage people to step up and ask us a question there. ...

Q: What was the reason for holding an invitation-only party for the new terminal?

Lehman: We were strapped that night with parking, food and space. All but a couple of thousand dollars was funded by the people who built the building who wanted to show it off. It would have been hard to fit more in. In hindsight, we probably should have held the grand opening at 2 o’clock in the afternoon and had the party afterwards.

Benetti: The following days we had cookies and beverages out that we provided. I think we went through 1,200 cookies that first day. To the initial opening, the public wasn’t invited, but they were encouraged to come the next few days. And they did.

Q: In hindsight, would you have held a party if you knew what was coming?

Benetti: If we knew that Horizon wasn’t going to be here a month before, we wouldn’t have had the party. But by the time we knew Horizon was pulling out, all the vendors were committed, they bought products. You couldn’t stop it at that point. ...

Q: What is your work day like since Horizon Air made its announcement? Your off time?

LeTellier: We’ve all been pretty darn busy. We’ve been working pretty hard on this.

Lehman: ... I don’t see a lot of people sitting around feeling sorry for themselves, with their heads down. We’re going to figure this out. We’re going to find a way to bring back service.