Kenmore Air Express will operate by air and on land when it expands its business to include shuttle service from Whidbey Island Naval Air Station to Wes Lupien Airport.

The Oak Harbor City Council last week accepted the airline’s bid for U.S. Department of Transportation grant funds. The council voted in March to enter into the grant agreement that, if successful, will provide a commercial shot in the arm for the rural airport and its airline tenant.

Kenmore was one of four companies that submitted bids for the shuttle subsidies included in the grant. Based on 7,200 trips, the airline’s bid of $155,880, which is the estimated total cost for the two-year contract, came in at approximately half of the second lowest bidder, Whidbey Transportation, which offered $314,400.

Whidbey Shuttle, and Whidbey-SeaTac Shuttle and Charter Service bid $370,786 and $387,000, respectively.

Oak Harbor was one of 26 recipients of the Small Community Service Development Grant Program worth $180,000. The grant is designed to reimburse the city as it expends funds. To fulfill a matching requirement, Oak Harbor pledged $3,000 to add to Island County’s $8,000, the Greater Oak Harbor Chamber of Commerce’s $7,000 and $3,500 from the Island County Tourism Committee.

Mike Lauver, co-owner of Whidbey-SeaTac Shuttle, which competes with Kenmore Air for passengers going to the regional airport, vehemently opposed the bid award last week, as he did in March when he called the grant application “flawed.”

He said Kenmore Air’s business has declined and its business model results in a monthly loss.

“We doubt that they’ll be around for two years to service this contract,” Lauver said Monday, adding that in the year he has been addressing the City Council, he has been met with “disdain.”

He also pointed out that Kenmore’s winning bid was substantially lower than bids made by the three existing shuttle companies.

“The one not in the business of providing ground transportation was way out of the statistical norm,” he said.

Mayor Jim Slowik assured Lauver that his words have not fallen on deaf ears.

The bulk of the grant money will be used for promotion and marketing, but it would also supplement a free shuttle service from Whidbey Island Naval Air Station, to Island Transit’s downtown Harbor Station, to the airport.

Craig O’Neill, Kenmore Air director of marketing and services, said if the airport was not hurting, the grant funds would not have been necessary. He questioned Lauver’s numbers and assured the council financial viability for the 62-year-old company is not an issue. Continued service in Oak Harbor, however, is a big issue.

“We have no intention of not being here two years down the road,” O’Neill said. “We have no intention of not being here 20 years down the road. Whether we are providing airline service in Oak Harbor is another question.”

He added that the grant provides the best chance of keeping air service on Whidbey Island. Since Island Transit does not operate on the base, O’Neill said shuttle service to and from NAS Whidbey has been largely ignored.

“We’ve got auto-less personnel trapped on the base without any way to get to Wes Lupien Airport,” he said. “That was the rationale behind the grant proposal.”

Although admittedly not an “over-the-road” company, O’Neill said Kenmore has experience whisking travelers back and forth from Seatac as well as offering transportation in inclement weather.

“Certainly the six miles between Wes Lupien Airport and Ault Field, I think is well within our abilities to serve and to serve well,” the Kenmore representative said.

O’Neill explained that the airline’s bid came in lower as a result of Kenmore’s intentions.

“We do not see this as a profit center,” he said. “We are not seeking money running the shuttle.”

Instead, O’Neill said Kenmore pursued the shuttle service in the “spirit of the grant” to increase the viability and success of air service in the community.

An advertisement in the June 18 News-Times announced that, beginning July 1, Whidbey-SeaTac Shuttle will offer service to NAS Whidbey by reservation. Lauver did not mention the new service at the council meeting but alluded to future competition.

“So, I want everyone to know, over the next few months it’s not personal, it’s business,” he said. “Over the next few months, if you encounter a few major speed bumps or potholes, don’t be surprised by this.

“So, what am I going to do for the next couple months? I guess I’m going to stay in it for the amusement value.”

City Administrator Paul Schmidt said there is no intention to harm other businesses.

“They too are a valuable service provider here on Whidbey Island,” he said of Lauver’s company.