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While travelers battle long TSA wait times and canceled or delayed flights due to air-traffic-controller shortages amid the government shutdown, smaller airlines are facing separate, deep-rooted challenges. To say that this has been a difficult year for small or even mid-sized airlines would be an understatement. Regional airlines have fought to survive since the Covid pandemic, currently challenged by high operating costs, weak margins, and increasingly aggressive competition. In 2025, several carriers filed for bankruptcy or shut down operations, canceling all flights, including: Silver Airways (USA) Fly PLAY (Iceland) Braathens International Airways AB (Sweden) Spirit Airlines (USA) Azul Linhas Aéreas Brasileiras (Brazil) Ravn Alaska (USA) Air Belgium (Belgium) SKS Airways (Malaysia) Jetstar Asia (Singapore) Kachina Air (USA) The list is far from complete, and what’s worse, the year is not over yet. More recently, the United Kingdom-based budget carrier Eastern Airways has canceled all of its flights to northern England and Scotland. While the official documents ask for more time to restructure, its future “looks increasingly bleak as several of its planes have already been returned to their leasing companies,” writes Veronika Bondarenko for TheStreet. In the latest news, Alaska regional air carrier Kenai Aviation ceased all operations. Kenai Aviation abruptly shuts down, cancels all flights due to debt Alaska regional air carrier Kenai Aviation abruptly ceased all operations on Monday, Nov. 3, citing financial insolvency, reported the Anchorage Daily News. Kenai Aviation owner Joel Caldwell shared the news on the company’s official website and Facebook page. Caldwell highlighted that the Covid pandemic had a devastating impact on Kenai Aviation, giving it a “debt load that we haven’t been able to get back on top of. Carrying that burden increased the effects of every obstacle that we’ve had to navigate.” A simple plane grounding for maintenance this summer hurt the company financially, he said, adding that even though The King Air is back up and running and its flights to Anchorage are full, “the bank is calling that debt.” “We have to cease all operations immediately. I am devastated.” While Kenai’s announcement came suddenly, many other regional airlines face similar troubles. Management consulting firm McKinsey and Company recently highlighted that “despite its global importance, regional aviation has not experienced the same dynamic postpandemic recovery as other parts of the aviation industry.” Kenai Aviation’s shutdown has a devastating impact on the community When the aircraft was grounded, it left the Western Alaska community without a reliable direct route from Anchorage to Unalakleet. Now that the airline is ceasing all operations, it means the Unalakleet community will no longer have regular scheduled air service, reports the Anchorage Daily News. The connecting troubles escalated when Ravn Alaska, once the largest regional air carrier in Alaska, abruptly pulled out of routes to remote communities such as Unalakleet and St. Paul Island. Even though Kenai Aviation took over, as a smaller airline it struggled to maintain operations, and flights were often delayed and canceled. Further, a smaller aircraft means fewer seats, limited baggage, longer flight times, and less-reliable connections. These disruptions significantly impact community residents, some of whom depend on air travel for essential services, such as cancer treatment in Anchorage. To address these situations, leaders of the island community of St. Paul even declared an “economic and social emergency,” and both communities are seeking more stable and reliable air-service contracts under the federal Essential Air Service (EAS) subsidy program. To make things more complicated, awarding a new essential air services subsidized carrier contract is not possible during the government shutdown, said Kelsi Ivanoff, an Unalakleet resident who has been working to resolve flight service challenges. She added that without Kenai, the only way to fly out from Unalakleet is by an expensive, indirect trip through Nome. Now that Kenai Aviation is ceasing all operations, residents of these two communities and surrounding villages will be left with even fewer options to reach needed destinations. Kenai flew to communities including Fairbanks, Glennallen, Homer, Seward, Kenai, Valdez, and Unalakleet. Customers get emails that flights have been canceled, but owner not giving up Some customers who had reservations to fly with Kenai this week received emails confirming their flights had been canceled. It is still unclear whether the company will be able to issue refunds or honor points, and whether it plans to continue flying charters. However, Caldwell also said that “our operations may stop, but this vision continues.” He said that Kenai Aviation has been providing something valuable to Alaska, something that is “worth saving.” The owner said that although he is not making promises, he refuses to give up. “We need capital, we need partners, we need a lifeline. That investor is out there, we just need to find them. One promise that you can hold me to, is that, if at all possible, I will find that life line.” Founded in 1961, Kenai Aviation traces its origins to Bob Bielefeld’s 1959 arrival in Alaska to work in the oil-field industry with Coastal Drilling. Bielefeld recognized the need for air service to help support the Cook Inlet energy industry. In 2018, Alaska Airlines pilot, Caldwell, acquired Kenai Aviation to save it from shutting down.
