Horizon Air To Submit New Bid Including Pendleton-Portland Service

PENDLETON, Ore.--(Business Wire)--
Horizon Air said today it will submit a new bid to the Department
of Transportation (DOT) for Pendleton service -- and in a change from
its earlier bid, it will include flights to Portland.

The bid is in response to the DOT's resolicitation of
two-year-term proposals under the Essential Air Service (EAS) program.
The city of Pendleton rejected all earlier proposals and asked the DOT
to seek additional bids.

"Sustained high fuel costs have dramatically changed airline
economics, and we have had to carefully reevaluate how we serve every
market, even those we've served for more than a quarter century," said
Dan Russo, vice president of marketing and communications for Horizon
Air. "It's our sincere desire to continue serving the Pendleton
community with our award-winning service, as we have since 1982, and
we're doing everything possible within the framework of our economics
to ensure that outcome. While we believe our earlier proposal for two
flights a day to Seattle met the EAS program's requirements and added
many new connection opportunities, we understand the community's
interest in continuing to have access to Portland. We've responded by
working hard to find a way in our new proposal to include flights to
Portland as well."

Horizon's flights would be operated with 76-seat Q400 aircraft,
which are replacing the 37-seat Q200 aircraft Horizon currently
operates to Pendleton and other communities. Horizon is retiring the
smaller Q200 after Oct. 28. The Q400 is a high-speed, twin-engine
turboprop, and is one of the most technologically advanced regional
aircraft in the world. It's as quiet and comfortable as a jet - thanks
to special technology that suppresses noise and vibration, generously
sized overhead storage bins, unobstructed under-seat space, and ample
headroom (6 feet, 5 inches). The Q400 is also among the most
environmentally friendly aircraft today, burning 30 percent less fuel
and producing 30 percent lower emissions than comparable jets.

Horizon will continue to serve Pendleton at least through Nov. 28,
in accordance with DOT guidance. For the 30 days leading up to this,
Horizon is being allowed to operate per its previous proposal (two
daily flights to Seattle with a stop in Walla Walla). As a result,
Horizon has discontinued tickets sales on direct flights between
Pendleton, Pasco and Portland for flights after Oct. 27 and will offer
flights from Pendleton to Seattle (with a stop in Walla Walla) with
connections to Portland and other cities throughout North America,
starting Oct. 28. These new flights are expected to be available for
purchase starting Sept. 14.

The DOT's latest solicitation requires new bids to be submitted by
Sept. 23. The DOT is expected to make a decision on the submitted bids
by Nov. 1, after a public comment period.

The original EAS bidding process began on June 28, when Horizon
filed a notice with the DOT of its intent to terminate subsidized
service at Pendleton effective Oct. 27. Horizon's notice was filed in
order to trigger a request for proposals from the DOT for a new
contract. Filing with DOT to withdraw from the EAS market is the only
means by which a carrier can obtain an increase in the subsidy that
reflects unanticipated dramatic cost increases, like the recent spike
in fuel costs.

In response to the first DOT order on July 7 soliciting bids,
Horizon submitted a proposal to provide Pendleton with a combination
of two one-stop (via Walla Walla) or nonstop Q400 roundtrips from
Pendleton to Seattle each weekday and one over each weekend. A
competing proposal offered five daily nonstop roundtrips between
Pendleton and Portland, utilizing nine-seat Cessna 402 aircraft, for
an amount more than $1 million higher than Horizon's proposal.

On Aug. 20, the Pendleton City Council recommended that the DOT
reject both proposals and resolicit proposals for EAS. The city
acknowledged that the process could leave Pendleton without air
service after Nov. 28 because of the time necessary to solicit,
evaluate and award a new contract. The DOT subsequently released
Horizon from its obligations under the current EAS contract after Nov.
28. Horizon's latest proposal includes a provision that ensures there
will be no interruption in the airline's service to Pendleton if the
DOT selects Horizon's bid.

Horizon serves 48 cities throughout Arizona, California, Oregon,
Washington, Idaho, Montana, Nevada, Baja California Sur (Mexico), and
British Columbia and Alberta (Canada). Together, Horizon Air and
Alaska Airlines serve 94 cities and are subsidiaries of Alaska Air
Group, Inc. (NYSE:ALK).

Horizon Air
Dan Russo, 206-431-4524

Copyright Business Wire 2008