Order: 201 4

- 4

- 1

Served: April 1 , 201 4


### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 1 st day of April , 20 1 4

ORDER REQUESTING PROPOSALS

Summary By this O rder, the Department is requesting proposals from ca rriers interested in providing Essential Air S ervice (EAS) at Chatham and Funter Bay , Alaska , for a new

contract peri od

, beginning October 1, 20 1 4

, with or without subsidy. (See Appendix A for a map). Carriers should file their proposals no later than April 30

, 20 1 4

.

Background By Order 20 1 2

- 9

- 2

, September 4, 2012 , the Department re

- selected Ward Air, Inc. (Ward

Air )

, to provide subsidized EAS at Chatham and Funter Bay , Alaska, through September 30 , 20 1 4 . Under that O rder, Ward Air provide s one round trip per month

between Chatham and Juneau; and one round trip per week between Funter Bay and

Juneau. All of the servic e is provided on DeHavilland Beaver , Cessna 185, or Cessna 206 aircraft, for a total combined annual subsidy rate of $ 23,936 in the first year ($11,040 for Chatham and $12,896 for Funter Bay) , and $24,888 in the second year ($11,472 for Chatham and $13,416 for Funter Bay)

.

Request for Proposals As the end of the current rate term approaches, we are here requesting proposals from carriers interested in providing EAS at Chatham and Funter Bay

, Alaska

, with or without subsidy, for a new contract period beginn ing October 1 , 20 1 4

. Carriers should file their proposals no later than April 30

, 201 4 . Staff will then docket the proposals, thereby making them public, and direct each carrier to serve a copy of its proposal on the civic parties and other applicants. Shortly afterwards, we will provide a summary of the proposals to the communit ies and ask them to submit their final comments. We will give full consideration to all proposals that are timely filed. 1

1 Carriers should not expect the Department to accept late fillings. In cas es where a carrier proposes to provide EAS without subsidy and we determine that service can be reliably provided without such Essential Air Service at

C HATHAM , ALASKA

FUNTER BAY , ALASKA

Under 49 U.S.C. § 41 731 et seq

. DOCKET DOT

- OST

- 1997

- 3134Interested carriers should prepare their proposals wit h every expectation that their initial proposals will represent their final and only proposals. However, we retain the discretion to negotiate proposals with carriers when we deem it desirable. We also retain the discretion to reject outright all unreaso nable or unrealistic proposals and re

- solicit a new round of proposals. However, negotiation and rejection are only occasional exceptions to

the rule.

We are here providing interested carriers with some basic information to serve as guidance when they pr epare their proposals, but we will not prescribe a precise format for their proposals. We expect proposals to adequately describe the service being proposed and the annual amount of subsidy being requested. The applicants can make their own judgments as to the level of detail they wish to present; however, we recommend they include information concerning proposed schedules and projected block hours. In addition, applicants are urged to provide financial data supporting their subsidy requests, including in formation on their projected expenses and revenues. We strongly encourage clear, well

- documented proposals that will facilitate their evaluation by the affected communities and the Department. 2

With specific respect to Chatham and Funter Bay , we expect p r oposals consisting of

service to Juneau with one round trip per month from Chatham, and one round trip per

week from Funter Bay, all with small aircraft. We encourage proposals that meet the se requirements in an efficient manner. Carriers are also welcome to propose more than one service option, if they choose; they need not limit themselves to those requirements if they envision other, potentially more attr active service possibilities (e.g. , a different length of contract ) with subsidy requirements that r emain competitive. We encourage carriers to work with the communities as they prepare their proposals in order to craft them to best meet the communities’ needs. As always, we will fully consider the communities’ views before making a long

- term carrier dec ision.

Filing Procedures Carrier proposals should be submitted to the Department with all materials compiled into a single document. In addition, because the document will be published on http://www.regulations.go v/ , each page should be formatted to be viewed online and for easy printing.

compensation, we typically do not proceed with the carrier

- selection case. Instead, we simply rely on that carrier’s subsidy

- fre e service as proposed.

2 In selecting a carrier to provide subsidized EAS for an eligible place in Alaska, 49 U.S.C. § 41733(c)(1)

directs us to consider six factors: (a) service reliability; (b) contractual and marketing arrangements with a larger carrie r at the hub; (c) interline arrangements with a larger carrier at the hub; (d) community views, giving substantial weight to the views of the elected officials representing the users; and (e) whether the carrier has included a plan in its proposal to marke t its service to the community , and ; (f) the experience of the applicant in providing, in Alaska, scheduled air service or significant non

- scheduled service

. In addition, the Consolidated Appropriations Act, 2014, Public Law No. 113

- 76, provides that whe n selecting a carrier to provide EAS, the Department may consider the relative subsidy requirements, thus codifying a factor that we have considered since the inception of the program. Interested carriers should also be aware that our general provisions g overning Essential Air Service will be included in the selection Order as part of our authorization of subsidy for the selected service. Appendix C of this Order contains those general provisions.Service and Traffic History In order to assist carriers in making their traffic and revenue projections, we have

included historical traffic data in Appendix B. As is typicall y the case in Alaska, significantly more freight and mail flow from the hub to the EAS communities than from

the EAS communities to the h ub.

Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing

lob bying activities, drug

- free workplaces, and nondiscrimination. 3 Consequently, all carriers receiving Federal subsidy for EAS must certify that they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimination, and tho se carriers whose subsidies exceed $100,000 over the life of the rate

- term must also certify that they are in compliance with the regulations governing lobbying activities. Because the Department is prohibited from paying subsidy to carriers that do not s ubmit these documents, all carriers that plan to submit proposals involving subsidy should be aware that the selected carrier will be required to complete the required certifications. Interested carriers requiring more detailed information regarding these requirements should contact the Office of Aviation Analysis at (202) 366

- 5903. 4

Community and State Comments

The communit ies and State are welcome to submit comments at any time. As noted earlier, we will provide a copy of the proposals to the civic par ties and ask them to submit their final comments shortly after April 30, 2014, the due date for proposals.

This O rder is issued under authority delegated in 49 CFR 1. 25 a( b ) and re

- delegated to the Director, Office of Aviation Analysis.

ACCORDINGLY,

1. W e request that carriers interested in providing EAS at Chatham and Funter Bay

, Alaska , submit their proposals, with or without subsidy requests, no later than April 30,

2014

. T he proposals should be e

- mailed to: EAS@dot .gov with the title “Proposal to

Provide Essential Air Service at Chatham and Funter Bay, Alaska , Docket DOT

- OST

199 7

- 3134 ” ; 5

2. This docket will remain open u ntil further o rder of the Department; and

3 The regulations applicable to these areas are: (1) 49 CFR Part 20

-- New restrictions on lobbying; (2) 49 CFR Part 21

-- Nondiscrimination in federally

- assisted programs of the Department of Transportation

-- Effectuation of title VI of the Civil Rights Act of 1964; 49 CFR Part 27

-- Nondiscrimination on the ba sis of disability in programs and activities receiving or benefiting from Federal financial assistance; and 14 CFR Part 382

-- Nondiscrimination on the basis of disability in air travel; and (3) 49 CFR Part 29

-- Government

- wide debarment and suspension (n on

- procurement) and government

wide requirements for drug

- free workplace (grants).

4 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.

5 Questions regarding filings in response to this Order may be directed to A.J. Muldoon at (202) 366

- 1058

or albert.muldoon@dot.gov

.3. We will serve copies of this O rder on the Alas ka Department of Transportation and

the service list for this docket

.

Persons entitled to petition the Department for review of this O rder under the Department’s Regulations, 14 CFR 385.3 1(a) , must file such petitions within seven ( 7 ) days aft er the date of service of this O rder.

This O rder will be effective immediately, and the filing of a petition for review shall not preclude its effectiveness.

By:

TODD M. HOMAN

Director Office of Aviation Analysis

(SEAL)

An electronic version of this document is available

on the World Wide Web at http://www.regualtions.govAPPENDIX A

Great Circle Miles
Chatham to Juneau 60 Funter Bay to Juneau 14 Chatham to Funter Bay 51APPENDIX B

Historical Traffic at Chatham and Funter Bay , Alaska 6

Passengers Freight (lbs.) Mail (lbs.) Passengers Freight (lbs.) Mail (lbs.) Passengers Freight (lbs.) Mail (lbs.)

2012 1Q 0 0 23 0 795 40 0 795 63

2Q 9 9 3 6 9 25 15 18 28

3Q 4 0 4 0 0 39 4 0 43

4Q 1 0 6 2 120 45 3 120 51

2013 1Q 0 0 18 0 895 45 0 895 63

2Q 1 0 5 4 0 54 5 0 59

3Q 1 0 9 1 0 113 2 0 122

4Q 3 0 13 0 684 165 3 684 178 Origin Destination Total Chatham, AK

Passengers Freight (lbs.) Mail (lbs.) Passengers Freight (lbs.) Mail (lbs.) Passengers Freight (lbs.) Mail (lbs.)

2012 1Q 2 0 80 1 0 180 3 0 260

2Q 10 3 48 5 45 273 15 48 321

3Q 6 0 62 3 0 505 9 0 567

4Q 23 4 57 22 3 642 45 7 699

2013 1Q 8 23 39 4 0 266 12 23 305

2Q 12 0 20 8 0 325 20 0 345

3Q 0 61 34 8 4 395 8 65 429

4Q 3 0 18 2 0 411 5 0 429 Funter Bay, AK
Origin Destination Total

6 Source: Bureau of Transportation Statistics; Form 41, Schedule T

- 100.1 APPENDIX C

Example of General Terms and Conditions for Essential Air Service

The carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance with the terms and stipulations of the rate Order, incl uding the service plans outlined in the Order and any other significant elements of the required service, without prior approval. The carrier understands that an aircraft take

- off and landing at its scheduled destination constitutes a completed flight; abs ent an explanation supporting subsidy eligibility for a flight that has not been completed, such as certain weather cancellations, only completed flights are considered eligible for subsidy. In addition, if the carrier does not schedule or operate its flig hts in full conformance with the Order for a significant period, it may jeopardize its entire subsidy claim for the period in question. If the carrier contemplates any such changes beyond the scope of the Order during the applicable period of these rates, it must first notify the Office of Aviation Analysis in writing and receive written approval from the Department to be ensured of full compensation. Should circumstances warrant, the Department may locate and select a replacement carrier to provide service on these routes. The carrier must complete all flights that can be safely operated; flights that overfly points for lack of traffic will not be compensated. In determining whether subsidy payment for a deviating flight should be adjusted or disallowed, th e Department will consider the extent to which the goals of the program are met and the extent of access to the national air transportation system provided to the community.

If the Department unilaterally, either partially or complete, terminates or redu ces payments for service or changes service requirements at a specific location provided for under this Order, then, at the end of the period for which the Department does make payments in the stipulated amounts or at the stipulated service levels, the car rier may cease to provide service to that specific location without regard to any requirement for notice of such cessation. Those adjustments in the levels of subsidy and/or service that are mutually agreed to in writing by the Department and carrier do no t constitute a total or partial reduction or cessation of payment.

Funds may not be available for performance under this Order beyond [DATE]. The Government’s obligation for performance under this Order beyond [DATE], is subject to the availability of fu nds from which payment for services can be made. No legal liability on the part of the Government for any payment may arise for performance under this Order beyond [DATE], until funds are made available to the Department for performance. If sufficient fund s are not made available for performance beyond [DATE], the Department will provide notice in writing

to the carrier.

Subsidy contracts are subject to, and incorporate by reference, relevant statutes and Department regulations, as they may be amended fro m time to time. However, any such statutes, regulations, or amendments thereto shall not operate to controvert the foregoing paragraph.

All claims for payment, including any amended claims, must be submitted within 90 days of the last day of the month fo r which compensation is being claimed. For example, claims for service provided in July must be filed by October 31st; August claims must be submitted by November 30th, and so on.