Bismarck Tribune - Bismarck News - Where is Point2Point?

Where is Point2Point?

May 01, 2007 - 04:11:54 CDT

Associated Press Writer

By JAMES MacPHEBy JAMES MacPHERSON

A regional air service launched with a $1.25 million federal grant and support from the Bismarck City Commission may be out of business.

Point2Point officials have been unreachable, although one University of North Dakota official says he has seen employees at its office in Grand Forks.

The North Dakota Public Service Commission, which hired two Point2Point planes to fly commissioners and staff to a May 7 hearing in Langdon, received a terse e-mail message Monday canceling the flights, Commissioner Kevin Cramer said.

On Monday, the company's phone numbers were out of service, commission aide Tom Rafferty said. Cramer said the commission had used the company's services earlier for trips to Williston and Devils Lake.

Bismarck City Administrator Bill Wocken said he had been trying to reach Point2Point since last Thursday, after the Associated Press inquired about the company's operations. He said Monday he has still been unable to reach the airline.

"I don't want to presume something," Wocken said. "I can't answer questions until I get some answers. ... It's of concern, certainly."

The company had promised to open a Bismarck station by March 31, Wocken said. He said he drove around the Bismarck airport last week to try to find it.

"I didn't see it, but I may have been looking in the wrong place," Wocken said.

Point2Point Airways founder John Boehle did not respond to telephone calls and an e-mail from the AP. Telephone calls to the airline's reservation system were not returned.

Jan Steiner, who was hired as a station manager in Bismarck, hung up last week when asked by the AP about the airline's status.

Point2Point promised speedy, efficient air travel for businesses in the Upper Midwest, using a fleet of small planes headquartered in Bismarck.

Less than $50,000 remains of the $1.25 million U.S. Department of Transportation grant money that was funneled through the city, Wocken said. Point2Point is required to match the grant.

"The lion's share has been given to them," Wocken said.

The Bismarck City Commission awarded the airline the federal grant in 2005 to help begin the service. It was the largest contract among $90 million doled out to 182 projects across the country since 2002, the agency said.

Bismarck airport manager Greg Haug said the company had parked one of its planes at an airport hangar in February and March. He said the plane was removed April 11.

"So far this year, there have been 29 fuelings, but we haven't seen any since April 12," Haug said.

Niles Hushka, former chairman of the Bismarck-Mandan Development Association, said he wrote the application to get the federal money for Point2Point, but he did not know its status.

"I have heard a lot of rumors but I've seen no facts," Hushka said Monday. "It was a demonstration project, and if it failed, it demonstrated that it was not feasible."

Bruce Gjovig, director of the University of North Dakota's Center for Innovation, said Point2Point still has an office at the center in Grand Forks.

He said he had seen employees at the office last week, and believed the company was still in business and had met conditions of its grant contract with the city of Bismarck.

"They are searching for capital," Gjovig said. "They still have airplanes."

Gjovig said the center helped the airline during its startup phase.

Brent Seifert, president of Grand Forks-based GFK Flight Support, said his company filed a lien against one of Point2Point's airplanes in April for $20,000 in unpaid maintenance, fuel and hangar fees. Seifert said Point2Point paid the debt last week.

"They have cleared up the account with us," Seifert said.

North Dakota invested more than $200,000 in the Point2Point plan, and NASA put in $350,000. The city of Bismarck was given $250,000 to study the idea.

Point2Point said in December that it had 10 employees and had performed more than 440 flights in North Dakota and in some neighboring states in 2006. It reported that it had five single-engine, three-passenger airplanes.

The airline had promised to open a headquarters building in Bismarck more than a year ago. In billing statements, the company said it spent $32,495 for a "launch event" last May in Bismarck.

Charter airline operators in the state have called Point2Point a waste of taxpayers' money.

"It's a real travesty," Seifert said. "Where did the money go and how has it been justified?"

Steve Burian, chief executive officer of Grand Forks-based Advanced Engineering and Environmental Services Inc., said he's used Point2Point many times over the past year to meet with clients. Burian said the last time he used the airline was in mid-April. His company has a reservation with Point2Point for May 21.

The airline lists its business address in Grand Forks. The city's airport manager, Steve Johnson, said Point2Point has kept a low profile there.

"I'm not exactly sure where they're based," Johnson said. "Occasionally, they've paid a few landing fees associated with their operation, but only a handful."

State Aeronautics Commissioner Gary Ness said Point2Point was asked to be innovative.

"What appears to have caused the difficulty was ridership, obviously," Ness said. "Somebody didn't get on their airplanes."

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Comments

Entrepreneur wrote on May 5, 2007 9:37 AM:

" Flawed business planning. Why would you fly planes in the upper Midwest where winter weather is a factor? How about this for an idea. I have thought of doing this for years. Start a regional airline that does nothing but fly people to the major hubs of Minneapolis and Denver? I think this is very feasible? Imagine what could happen to the fares? People could afford to fly out of Bis-Man, Minot, and Fargo! "

Not all Development Projects are the Same wrote on May 5, 2007 8:32 AM:

" But it is always a responsibility of those approving the projects to thoroughly understand the concept, perform the due dilligence and be comfortable that the data shows a more than even chance of success. Everyone can make their own determination as to whether they think that sufficiently occured or not. It isn't being negative or acting as an expert in hindsight to look at what went wrong with a project so loss can be avoided in the future - it's smart. "

What about the.... wrote on May 4, 2007 6:14 PM:

" What ever happened with the great new shipping station/commerce center the city decided to build? Haven't heard much about them in a while either...no announcements of new buiness coming to town related to that, either. "

Nice try "business observer" wrote on May 2, 2007 12:37 AM:

" Where is the ridership? No one wanted to pay those prices, so you blame the consumers? Have you ever heard that business is supposed to cater to consumers and not the other way around? Most of us are not Monday morning quarterbacks. We explained how this was impossible to succeed before the grant was even made. Mr Boehle is a con artist in my opinion. He spends all his time thinking how he is going to deflect the next question so he can continue sucking money from taxpayers until the house of cards collapes. That was the reason the private investment never came. If Mr. Boehle wouldn't come up with his own money, why would anyone else give him theirs? I'll give him credit for one thing, he is good at reading people and telling them exactly what they want to hear. I still want to get answers for where he exactly spent all the grant money. "

Business Observer wrote on May 1, 2007 11:08 PM:

" Doesn't take long for the naysayers and Monday morning quarterbacks to say success was impossible. This blog tells me that Bismarck is a govt town and unfriendly to entrepreneurs. You want security and assurances (govt), not opportunity and thus assuming some risk. Point2Point used federal dollars to innovate, to find a new model so Bismarck would not be dependent on Northwest Airlines. P2P did just as was asked of them and required by the grant. Matter of fact they took a grant and stretched it out longer than projected. But where was the paying ridership from Bismarck? The private investment? Their failure says as much about Bismarck as their business model of being undercapitaliazed. Starting air service with less than $2 M? And you expect total assurances? Sure is outrage and cries about federal funds used to innovate. New companies need not apply to Bismarck. "

Diamond Dan wrote on May 1, 2007 9:49 PM:

" Boehle should have known about the Weather conditions in ND in the winter! To blame an aircraft manufacturer (Diamond) for not getting certified for flight in icing conditions is naive at best. Anyone who has been around aviation for a day or two knows that these certification issues lie in the hands of the FAA - not the manufacturer. Hope he doesn't burn too many bridges trying to "restructure". "

Angry Taxpayer wrote on May 1, 2007 9:18 PM:

" Well, shame on Mr. Boehle for manufacturing and inflating operational numbers when speaking before the City Commission. And shame on the City Commmission for taking what was said at face value without requiring any due diligence. There isn't a person around that knows anything about the aviation industry that believed this "project" would last. It was nothing more than a big dog and pony show with nothing to back it up. Not only that, does writing a white paper on an airline make you qualified to run one? I don't think so. "

Dave wrote on May 1, 2007 6:36 PM:

" According to an email Boehle sent to the city of Bismarck, he blamed much of the airline's woes on "the inability of the airline to reliably dispatch aircraft due to inclement winter flying conditions." "

To commision held responsible: wrote on May 1, 2007 4:24 PM:

" Excellent points. From Gordon Weixel's article November 22, Boehle stated, "In the first quarter of 2006, P2P flew 31,000 miles; in the second, 54,141 miles; and in the third, 112,363 miles." Personally, I find that hard to believe, but if true, the Commission should have asked the hard question: "Are those Revenue Miles", -or- are do they include all of the repositioning, training, etc.? "

Tim from Bismarck wrote on May 1, 2007 4:14 PM:

" Whats that say about city and airport administration, the city planner driving around airport property looking for a airplane charter business that the airport manager didn't know about? Maybe it was out in the new transit center! "

Hey Not So Fast wrote on May 1, 2007 2:34 PM:

" Usually, a grantee is required to submit monthly or quarterly progress reports for monies received. Where are the progress reports? Bill Wocken driving around the airport property is another waste of money--doesn't the Airport Director know what's occurring on his own property? There's enough shame to go around for City Administration and the City Commission. "

Commission Held Responsible wrote on May 1, 2007 12:41 PM:

" The city commission should have more knowledge and should be held somewhat accountable. I found it strange that the city commission took such a huge stance on a private business. They are our elected officials not using taxpayer money to help out individual business owners. "

To Good Riddance wrote on May 1, 2007 11:52 AM:

" You make an excellent point. Do one thing at a time and do it well... before starting other ventures. It seems wise to build upon success, and not mere appearances of success. "

747JetMech wrote on May 1, 2007 11:49 AM:

" I thought the idea was doomed from the start. I hope someone moves quickly to recover the taxpayers money. "

Surprised it lasted this long wrote on May 1, 2007 11:42 AM:

" To expand on my previous comments, please review the May 27, 2005 Bismarck Tribune(search for point2point in the archives) In that article, Jim Sweeney, president of Fargo Jet Center, an air taxi operator is quoted. The article states, "Sweeney said Point2Point's business plan has no chance at success. He pointed out, as one example, that in the last 12 months, the total air taxi work in hauling passengers probably totaled less than 1,500 trips. Boehle's plan calls for 4,500 trips the first year. It also was noted that the planes Point2Point plans to use would be grounded 64 percent of the time during the winter, according to FAA regulations. "You're investing in something that is going to fail," Sweeney said. "If this fails it will reflect on all the operators in North Dakota that we are failing; we are not. You're going to fail and do it with my money." Obviously this "plan" never had a chance. The article also questioned what was going to be considered "matching funds". I hope they had to match with cash, but I am going to guess it was not, and probably ends up coming out of everybody's pocket but Mr. Boehle. "

A Fool's World wrote on May 1, 2007 11:28 AM:

" "Fool me once, shame on you, fool me twice, shame on me!" "

Surprised it lasted this long wrote on May 1, 2007 11:28 AM:

" If you pull up old Tribune articles, you will see that many people thought this was basically a scam. The current air taxi services in the state explained that there was no way Point-to-Point could possibly have as many passengers as their business plan predicted. Turns out they were exactly right. I wonder how much Mr. Beohle personally received? I personally thought this money was wasted as soon as it was handed over so I have had a year or so to get over it. "

Not So Fast wrote on May 1, 2007 11:07 AM:

" Before you from the lynch mob, consider that this was a real company who provided a real service and was making real progress. At $1.25 million, they are severely undercapitalized and were poised to raise money. Who ever heard of an airline taking off on only $1.25M! They were probably making dollars stretch as best they can. A half dozen of their competitors still exist and are struggling as well, but the idea of rural aviation links thru smaller air taxi services will work and will survive. The need and demand are there but all the issues need to be, and will be worked out. One thing is FOR SURE, existing charter services (at 4-10X the cost of an airline ticket), have not worked. People won't pay charter prices on a regular basis and are scared to death of these services (Wellstone syndrome). So don't be so quick to throw stones. Business success is NEVER guaranteed, over 99% of all startups fail within the first three years. Perseverance in face of those odds is what has made America great and is what will lead to a new era of rural aviation connectivity. Believe me, whatever the problems are with this new model, you don’t want to be 100% dependent on Northwest Airlines. "

mmmm wrote on May 1, 2007 10:11 AM:

" I bet the state auditors department can find them. "

Good Riddance wrote on May 1, 2007 9:38 AM:

" Just "Google" these guys and find out what they're really up to... Seems they've been trying to start up operations in Illinois and California simultaneously. Nothing like ND taxpayers footing the bill for ventures outside our border. They probably would have made it work if they would have focused on North Dakota. "

Not surprising wrote on May 1, 2007 8:59 AM:

" This Boehle guy seemed more impressed with himself and with flashy presentations than with the nuts and bolts of the operation. The "rosy" numbers he gave at the city council update a while back sounded "fishy". The city needs to be held accountable to investigate. "

Grantor wrote on May 1, 2007 8:38 AM:

" I'm not all that surprised. The only thing that surprises me is how apparently lax the city of Bismarck was in monitoring what Point2Point was doing. Bill Wocken drove around the airport looking for them? How silly. Why didn't the city require Point2Point to show them their Bis. operation by the deadline? And it doesn't sound like the city made them pony up the funds they were supposed to match. It all sounds like really bad grant management to me. I work for an entity that manages federal grants. If we managed ours this way, we'd be crucified. "

Imagine that! wrote on May 1, 2007 8:16 AM:

" I think that we could see this coming all along! The city should get to keep the airplanes to repay the $1.25 M. It is not a good sign when your only employee in Bismarck hangs up on the press! "

Ugh. wrote on May 1, 2007 8:10 AM:

" Something smells rotten. When does the investigation start? "

Should They Have Seen it Coming? wrote on May 1, 2007 7:51 AM:

" Some economic development projects are good risks but this one seemed to have neon lights blinking 'warning! warning!' that were ignored. I hope it turns out everything is fine but disconected phones are not one of the more hopeful signs that everything is OK. Prepare for the scurrying for cover and the finger pointing. "

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