7 airlines split $1 billion postal contract
The U.S. Postal Service has selected seven airlines to haul mail on their passenger routes under a five-year contract potentially worth about $1 billion, according to spokeswoman Yvonne Yoerger.
American Airlines and Continental Airlines recently said they have received contracts to transport Priority, First Class and Express mail. Other airlines that will begin moving mail between U.S. cities when the contract goes into effect Sept. 30 are Jet Blue, Sun Country Airlines, American Trans Airlines, US Airways and Midwest Airlines, Yoerger said.
American said its contract could be worth as much as $500 million, which represents the largest single contract ever awarded to its cargo division. The Forth Worth, Texas-based airline carries more mail than any other passenger airline. Continental said its contract has an estimated value of $258 million.
USPS awarded 18 contracts to 34 airlines, many of them working in teams, under the previous three-year arrangement. Many airlines that have carried mail opted not to participate or did not meet the pre-qualifications necessary to bid. In 2003, the USPS implemented a performance-based contract for the first time that holds carriers accountable for on-time delivery and for scanning mail bins at the point of possession, when loading or transferring to another flight, and when turning the mail back over to the USPS. The new standards have forced airlines to invest in systems that can efficiently dispatch and track the mail.
Airlines such as Delta and Southwest did not pursue more mail business. United didn’t meet the necessary performance standards, Yoerger said.