Grant Aviation, Inc P .0. Box 92200 Anchorage, AK 99S09 Proposal to Provide EAS at South Naknek, Alaska Docket OOT-OST-2015-0060 EAS & Domestic Analysis Division Office of Aviation Analysis U.S. Department

of Transportation 400 71 hStreet S.W., Room 6401 Washington, D.C. 20S90 May 18,2015 Dear Sirs, Enclosed, find Grant Aviation, Inc.'s proposal to provide Essential Air Service between King Salmon, Alaska and South Naknek, Alaska for the period June 1S, 2015 through June 14, 2017. While our currently filed scheduled service provides three direct non-stop flights weekly between South Naknek and King Salmon, the community has adamantly and persistently requested greater frequency
of service, complaining that three round trips perweek does not provide them with adequate accessto health care facilities, pharmaceuticals, educational opportunities, perishable commodities, commercially available manufactured goods, and general commerce. In responseto the need of the people of South Naknek, Grant Aviation has, for overtwo years,been operating six flights per week, sothat travelers from South Naknek maytravel to King Salmon or Dillingham for medical appointments, shopping, and educational events. Providing six round trips weekly also permits travelers to catch
a flight from King Salmon to Anchorage without overnighting

in King Salmon. We have attempted
to provide for their travel needs, but areunable to continue our provision of an adequate frequency
of safe, reliable service without subsidy. Anchorage

is the only fully developed population center in our state, to which the citizens of remote communities must travel to have accessto state of the art medical treatment, higher education, and significant commercial opportunities. Further, organizations providing economic and political support for remote Native Alaskan villages are primarily headquartered

in Anchorage. Without reasonable accessto these organizations, the isolated communities have no voice in legislative action having dramatic impact upontheir communities. In accord with the Department's request for proposals, Grant Aviation here proposesfour alternate plans for providing Essential Air Service to South Naknek. The first provides for aminimal level of service of three direct nonstop round trips weekly between South Naknek and King Salmon, with alternate plans providing either four, five, or,aswehave been conducting without subsidy, six direct, nonstop flights perweek as required to provide this isolated community with adequate transportation service. The primary aircraft types to be utilized for the proposed service areeither

aCessna C-207 or Gipps Aero GA-8, carrying six orseven passengers respectively. Both plane types are single engine, capable of providing transportation

in VFR conditions under Part 13S

. This proposal provides for passenger transport
aswell as handling and interim storage of mail and freight between King Salmon and the village of South Naknek.The brief summary table below states the total expected annual economic cost, total expected market derived revenue, and total resulting annual subsidy required to perform at the rate of 100% for each proposed option. Summary of Four Options to Provide EAS between South Naknek and King Salmon Number of Weekly Total Annual TotaiAnnuaiRevenue

Total Annual Round Trips Economic Cost Derived from Market Required Subsidy 3 $196,328.S4 $S0,404.28 $14S,924.26 4 $258,61S

.34 $50,404.28 $208,211.06 5 $320,902.14 $S0,404

.28 $270,497

.86 6 $383,188.93 $50,40S

.28 $332,783.65 Detailed cost sheets follow for each of the above proposed frequencies. We look forward to working with you in providing transportation service to the people of South Naknek. If you require further information,

I may be contacted
by phone at 907 529-6999,
or by e-mail at bmcglasson@flygra nt.com. R .Bruce McGlasson CEO Grant Aviation, Inc.Grant Aviation, Inc. South Naknek EAS Proposal Summaryw/ C207 orGA-8 Option

-3 Round Trips Weekly Weekly Round Trips Annual RT Flights@ 100% completion Per RT Block Time (Hours) Annual Block Hours Distance AKN

-South Naknek Airport (stat miles) Annual OIW Passengers expected OW fare Annual maillbs expected Current mail rate

I lb Annual Freight lbs expected Current Freight rates

I lb Expected Revenue Derived from Operations

3 1S6 0.39 60.84 14 190 $ 94.88 48,600 $

O

.S378 12,000 $ O.S2 Passenger Fares

$ Annual Revenue 18,027.20 26,137.08 6,240.00 Mail Revenue

$ Freight Revenue

$ Total Annual Revenue from Scheduled Operations

$ 50,404.28 Expected Direct Expense of Operations Fuel- LL100 Aviation Gasoline Aircraft lease expense Maintenance (engine&prop +labor+parts) Pilot labor, inclusive of tax and benefits Aviation Insurance annual hull and liability Expected Indirect Expense of Operations Hanger lease & rampacservices Ticketing

& ground service Total Annual Direct Expense Freight

& mail Handling AKN, South Naknek Pilot housing

+ utility Sum of Direct and Indirect Expense Add Burden subtotal Add Profit@ S.O% Total Annual Indirect Expense Annual Direct Exp

. $ 7,7S7

.10 $ 33,171.43 $ 10,099.44 $ 46,928.S7 $ S,892.86 $ 103,849.40 Annual Indirect Exp. $ 20,S71.43 $ 6,240.00 $ 7,272.00 $ 12,8S7.14 $ 46,940.57 $ $ $ $ 1S0,789.97 36,189.59 186,979

.S6 9,348.98 Total Annual Economic Cost
$ 196,328.54 Less Annual Revenue Derived from Scheduled Operations

$ (S0,404

.28) Annual Subsidy Required

$ 145,924.26Grant Aviation, Inc. South Naknek EAS Proposal Summaryw/ C207 orGAMS Option
M 4 Round Trips Weekly Weekly Round Trips Annual RT Flights @ 100% completion Per RT Block Time (Hours) Annual Block Hours Distance AKN- South Naknek Airport (stat miles) Annual OIW Passengers expected OW fare Annual maillbs expected Current mail rate

I lb Annual Freight lbs expected Current Freight rates

I lb Expected Revenue Derived from Operations

4 208 0.39 81.12 14 190 $ 94.88 48,600 $ 0.5378 12,000 $ 0.52 Passenger Fares

$ Annual Revenue 18,027.20 26,137.08 6,240.00 Mail Revenue

$ Freight Revenue

$ Total Annual Revenue from Scheduled Operations

$ 50,404.28 Expected Direct Expense of Operations Fuel

-LL100 Aviation Gasoline Aircraft lease expense Maintenance (engine&prop +labor+parts) Pilot labor, inclusive oftax and benefits Aviation Insurance annual hull and liability Expected Indirect Expense of Operations Hanger lease & rampacservices Ticketing

& ground service Total Annual Direct Expense Freight
& mail Handling AKN, South Naknek Pilot housing

+ utility Sum of Direct and Indirect Expense Add Burden subtotal Add Profit @ 5.0% Total Annual Indirect Expense Annual Direct Exp. $ 10,342.80 $ 44,228.57 $ 13,46S

.92 $ 62,571.43 $ 7,857.14 $ 138,465.86 Annual Indirect Exp. $ 27,428.57 $ 8,320.00 $ 7,272.00 $ 17,142.86 $ 60,163.43 $ $ $ $ 198,629.29 47,671.03 246,300.32 12,31S.02 Total Annual Economic Cost
$ 258,615.34 Less Annual Revenue Derived from Scheduled Operations

$ (S0,404.28) Annual Subsidy Required

$ 208,211.06Grant Aviation, Inc. South Naknek EAS Proposal Summaryw/ C207 orGA-8 Option-

5 Round Trips Weekly Weekly Round Trips Annual RT Flights @ 100% completion Per RT Block Time (Hours) Annual Block Hours Distance AKN

-South Naknek Airport (stat miles) Annual OIW Passengers expected OW fare Annual maillbs expected Current mail rate

I lb Annual Freight lbs expected Current Freight rates

I lb Expected Revenue Derived from Operations

$ $ $

s 260 0.39 101

.40 14 190 94.88 48,600 0.5378 12,000 0.52 Passenger Fares

$ Annual Revenue 18,027

.20 26,137.08 6,240.00 Mail Revenue

$ Freight Revenue

$ Total Annual Revenue from Scheduled Operations

$ 50,404.28 Expected Direct Expense of Operations Fuel- LL100 Aviation Gasoline Aircraft lease expense Maintenance (engine&prop +labor+parts) Pilot labor, inclusive of tax and benefits Aviation Insurance annual hull and liability Expected Indirect Expense of Operations Hanger lease & rampacservices Ticketing

& ground service Total Annual Direct Expense Freight
& mail Handling AKN, South Naknek Pilot housing+ utility Sum of Direct and Indirect Expense Add Burden subtotal Add Profit @ 5.0% Total Annual Indirect Expense Annual Direct Exp. $ 12,928.50 $ SS,28S.71 $ 16,832

.40 $ 78,214.29 $ 9,821.43 $ 173,082.33 Annual Indirect Exp. $ 34,285.71 $ 10,400.00 $ 7,272.00 $ 21,428.57 $ 73,386.29 $ $ $ $ 246,468

.61 59,152.47 305,621.08 15,281.05 Total Annual Economic Cost
$ 320,902.14 Less Annual Revenue Derived from Scheduled Operations

$ (50,404.28) Annual Subsidy Required

$ 270,497.86Grant Aviation,Inc. South Naknek Working EAS Proposal Summary w/GA-8 Option

-6Round Trips Weekly Weekly Round Trips AnnualRT Flights @100% completion PerRTBlockTime (Hours) AnnualBlockHours DistanceAKN-South Naknek Airport (stat miles) Annual0/W Passengers expected OWfare Annual maillbs expected Current mailrate/lb Annual Freightlbs expected Current Freightrates/lb Expected Revenue Derivedfrom Operations Passenger Fares MailRevenue

$ $ $ $ $

6 312 0

.39 121.68 14 190 94

.88 48,600 0

.5378 12,000 0.52 Fre

i ghtRevenue

$ Annual Revenue 18,027

.20 26

,137

.08 6,240.00 TotalAnnual Revenue from Scheduled Operations

$ 50,404.28 Expected Direct Expenseof Operations Fuel

-ll100 Aviation Gasoline Aircraft lease expense Maintenance (engine&prop +labor+parts) Pilot labor, inclusiveoftaxandbenefits Aviation Insurance annualhulland liability Expected Indirect Expenseof Operations Hangerlease& rampacservices Ticketing

& ground service TotalAnnual Direct Expense Freight
&mail Handling AKN,South Naknek Pilot housing+ utility SumofDirectandIndirect Expense AddBurden subtotal AddProfit @S.O% TotalAnnual Indirect Expense Annual Direct Exp

. $ 15,514

.20 $ 66,342

.86 $ 20,198.88 $ 93,857.14 $ 11,785

.71 $ 207,698

.79 Annual Indirect Exp. $ 41,142

.86 $ 12,480.00 $ 7,272.00 $
25

,714.29 $ 86,609.14 $ $ $ $ 294

,307.94 70,633.90 364,941

.84 18,247

.09 TotalAnnual Economic Cost
$ 383,188

.93 lessAnnual RevenueDer

ivedfrom Scheduled Operations

$ (50,404.28) Annual Subsidy Required

$ 332,784.65