\\DC - 042333/000001 - 6176866 v3 BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Essential Air Service at Elfin Cove, Alaska Pelican, Alaska Angoon, Alaska Tenakee, Alaska Under 49 U.S.C. 41731 et seq. ) ) ) ) ) ) ) ) ) Docket DOT-OST-2002-11586 Docket DOT-OST-2002-11586 Docket DOT-OST-2006-25542 Docket DOT-OST-2006-25542

MOTION FOR LEAVE TO FILE AND OPPOSITION OF KALININ AVIATION LLC TO PROPOSAL OF HARRIS AIRCRAFT SERVICES, INC.

Communications with respect to this document should be addressed to: Kent Craford Kalinin Aviation LLC 1873 Shell Simmons Dr. Suite 110 Juneau, AK 99801 Robert E. Cohn Patrick R. Rizzi HOGAN LOVELLS US LLP Columbia Square 555 Thirteenth Street, NW Washington, DC 20004 +1 202 637 4999/5659 robert.cohn@hoganlovells.com patrick.rizzi@hoganlovells.com Counsel for Kalinin Aviation LLC

October 30, 2014\\DC - 042333/000001 - 6176866 v3 BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Essential Air Service at Elfin Cove, Alaska Pelican, Alaska Angoon, Alaska Tenakee, Alaska Under 49 U.S.C. 41731 et seq. ) ) ) ) ) ) ) ) ) Docket DOT-OST-2002-11586 Docket DOT-OST-2002-11586 Docket DOT-OST-2006-25542 Docket DOT-OST-2006-25542 October 30, 2014

MOTION FOR LEAVE TO FILE AND OPPOSITION OF KALININ AVIATION LLC TO PROPOSAL OF HARRIS AIRCRAFT SERVICES, INC.
Kalinin Aviation LLC (“Kalinin Aviation”) hereby requests leave to file this opposition to the proposal of Harris Aircraft Services, Inc. (“Harris Air”) to provide subsidy-free essential air service (“EAS”) between Angoon, Tenakee, and Pelican, Alaska, on the one hand, and Sitka, Alaska, on the other hand. See Proposal of Harris Air to Provide EAS, dated October 22, 2014. Good cause for accepting this Opposition is warranted to provide the Department with a more complete record on the relevant policy and factual issues pertaining to this EAS proceeding.

I. Harris Air’s EAS Proposal to Serve Sitka Does Not Satisfy the Established EAS Determinations for Angoon, Tenakee, and Pelican. Harris Air proposes to provide subsidy-free EAS for Angoon, Tenakee, and Pelican to Sitka. (Harris Air Proposal, at 1, 3-4.) Harris Air’s proposal is a non-starter and is ineligible to meet the essential air service requirements for these communities for the following reasons:Motion for Leave and Opposition of Kalinin Aviation Page 2

\\DC - 042333/000001 - 6176866 v3 (i) Harris Air proposes Sitka as the “hub”: “Our proposal uses the

Sitka airport terminal building as the hub providing access to the major airlines route structure.” (Harris Air Proposal, at 1.) (ii) Harris Air’s proposal to serve Sitka does not meet the EAS

determination for these communities long ago established by the Civil Aeronautics Board (CAB Order 1980-1-167, Appendix A) and reaffirmed by the Department, which requires service to Juneau as each community’s designated EAS hub; (iii) Sitka is neither a “hub” nor a focal city for these communities; (iv) Harris Air’s service to Sitka would not provide convenient access

to a major community of interest or the national air transportation system; (v) the communities strongly favor continued direct service to

Juneau; and (vi) a sua sponte change in the EAS hub designation by the

Department over the objection of the communities in the context of this proceeding would be unlawful. Juneau – not Sitka – is the long-established EAS “Service Hub” and “Regional Point” for Angoon, Tenakee, and Pelican, and these communities have relied on that vital lifeline for many decades. See CAB Order 1980-1-167, Appendix A. In making this determination in 1980, the CAB explained: “In making our determination for each community, we have considered the views of the communities and the communities’ ability to generate air traffic . . . . Based on this information, we have made an analysis to determine each point’s primary community of interest, and to determine which hub or regional center would assure theMotion for Leave and Opposition of Kalinin Aviation Page 3

\\DC - 042333/000001 - 6176866 v3 community access to the national air transportation system.” CAB Order 1980-1-167, at 2. Nothing has changed in the last 35 years that would warrant a change in the determination that Juneau is the regional EAS hub and primary community of interest for these three communities. Indeed, the Department has more recently confirmed the designation of Juneau as the EAS “Service Hub” or “Regional Point” for Angoon, Tenakee, and Pelican in its Essential Air Service Determinations for Alaska Communities, dated April 1998 and updated September 2012 (available at http://www.dot.gov/office-policy/aviationpolicy/alaskan-essential-air-service-determination). Sitka is not a hub, a regional center, or even a “focal” point for service to these communities. A change from Juneau to Sitka would constitute an “alternate service pattern”, and, under longstanding DOT policy and precedent, “alternate service patterns” cannot be adopted by the Department without the consent of the communities. See, e.g., DOT Order 2005-3-1[2], at 2, noting that approval of an alternative service pattern is subject to the following conditions: (1) the alternate service pattern must be equal to or greater than that determined to be essential; and (2) the communities do not object to the alternate service pattern. That consent is lacking here. Each of the communities has vigorously opposed such a change. And the service to Sitka would not be “equal to or greater than” that determined to be essential; it would be a substantial degradation of service. Notwithstanding footnote 1 in DOT Order 2014-9-13, any change in the designated EAS hub for these communities would not render this proceeding “moot”. On the contrary, such a change would be unlawful in theMotion for Leave and Opposition of Kalinin Aviation Page 4

\\DC - 042333/000001 - 6176866 v3 absence of a formal change to the EAS determination which must be subject to prior notice and input by the affected communities. Importantly, the basic objective of the EAS Program is to provide rural communities with air service that connects them to a primary community of interest and the national air transportation system. As the CAB stated in its original Order designating Juneau as the EAS hub for these communities, “We believe that this system will best meet the needs of the Alaska communities for service to their major communities of interest and for access to the national air transportation system .” CAB Order 1980-1-167, at 4 (emphasis added). Indeed, in the Order requesting proposals in this proceeding, the Department stated: “We expect service levels that are consistent with what the community currently receives that offers access to the national air transportation system.” DOT Order 2014-9-13, at 3 (emphasis added). Sitka does not meet this critical requirement. Sitka cannot reasonably be considered a “Service Hub” or “Regional Center”, and indeed CAB Order 1980-1-167 (at page 5) did not identify Sitka as a hub or regional center. For Angoon, Tenakee, and Pelican, Juneau is the major community of interest and hub:

 It is the capital of the State of Alaska;

 It is the mail processing and dispatch center for each community;

 It has large-scale grocery and equipment businesses for supplies and commodities;

 It has advanced medical facilities; and

 It has substantial cultural and social ties to each community.Motion for Leave and Opposition of Kalinin Aviation Page 5

\\DC - 042333/000001 - 6176866 v3 Sitka does not offer these critical services or communities of interest. Service to Sitka would be a substantial downgrade and would not meet the needs of the communities. Furthermore, Juneau has many times more Alaska Airlines flights than Sitka, to numerous key destinations, including Seattle, Anchorage, Ketchican, Petersburg, Wrangell, Yakutat, and Cordova, and is also served by Delta, whereas Sitka is not. For CY 2013, Juneau Airport had 360,000 passenger enplanements (ranking #138 among U.S. commercial airports), and Sitka had just 68,000 (ranking #249). 1 By contrast, Kalinin Aviation proposes to continue to provide the current level of EAS service to Juneau, directly linking the three communities to the national air transportation system. The communities of Angoon, Tenakee, and Pelican have formally stated their strong opposition to the elimination of subsidized EAS to Juneau. These communities have longstanding ties with Juneau and, for many decades , have relied on reliable direct air service to Juneau to sustain them. Eliminating direct EAS service to Juneau for Angoon, Tenakee, and/or Pelican would be disastrous for the residents and businesses of these remote, rural communities. See Letter of M. Kookesh, Mayor of Angoon, to DOT (September 26, 2014); Letter of D. Pegues, Mayor of Tenakee Springs, to DOT (October 15, 2014); Letter of P. Phillips, Mayor of Pelican, to DOT (October 16, 2014); Letter of T. Harry, President of Tenakee Springs Business Association, to DOT (October 10, 2014).

1 See FAA Commercial Service Airports, Calendar Year 2013 Enplanements (September 29, 2014).Motion for Leave and Opposition of Kalinin Aviation Page 6

\\DC - 042333/000001 - 6176866 v3 II. Harris Air is Not Eligible for Selection. Harris Air is not a DOT certificated or commuter air carrier and does not hold authority to provide more than four weekly scheduled passenger flights on any given route or to transport the U.S. mail. As recognized in the Department’s EAS award in the Kake proceeding (DOT Order 2014-10-12) and its Order requesting proposals in this proceeding (DOT Order 2014-9-13), this is another dispositive and fundamental flaw with Harris Air’s proposal for Angoon, Tenakee, and Pelican.

III. Kalinin Aviation’s Proposal Should Be Promptly Selected. Kalinin Aviation has submitted the only qualified EAS proposal that meets the Department’s EAS determination. Kalinin Aviation proposes to continue to provide EAS to these communities which it has provided for the last 17 years, however, enhanced by the addition of Caravan aircraft. Kalinin Aviation urges the Department to select it for a four-year term. Anything less than a four-year term would not be acceptable and would be inconsistent with Kalinin Aviation’s EAS proposal and DOT’s prior selection for these communities. Kalinin Aviation’s previous EAS selection by the Departmentwas for a four-year term. See DOT Orders 2011-3-11 and 2010-12-7. A fouryear term is critical for Kalinin Aviation’s business planning. These communities constitute Kalinin Aviation’s only float plane scheduled markets, and anything less than four years would not provide enough time to finance and amortize Kalinin Aviation’s investments (in aircraft, ground equipment, facilities, etc.) to serve the communities. A shorter term award would be counterproductive andMotion for Leave and Opposition of Kalinin Aviation Page 7

\\DC - 042333/000001 - 6176866 v3 create unnecessary anxiety for the communities and undermine the effectiveness of Kalinin Aviation’s business plan. Moreover, a shorter than four-year term would undermine the carrier’s and the communities’ abilities and incentives to work together and invest in long-term programs to promote the service and expand the traffic base.

IV. Conclusion. For the reasons explained above, Harris Air’s proposal to provide EAS for Angoon, Tenakee, and Pelican should be rejected, and Kalinin Aviation’s proposal should be granted for a four-year term.

Respectfully submitted,

______________________________________ Robert E. Cohn Patrick R. Rizzi HOGAN LOVELLS US LLP 555 Thirteenth Street, NW Washington, DC 20004 +1 202 637 4999/5659 Counsel for Kalinin Aviation LLCMotion for Leave and Opposition of Kalinin Aviation Page 8

\\DC - 042333/000001 - 6176866 v3 CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing Opposition of Kalinin Aviation has been served this 30th day of October 2014, upon each of the following:
pmurphy@lopmurphy.com scott@harrisair.com hank@MTCWorld.com

Patrick R. Rizzi