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August 30,2012

Mr. Dennis J. DeVany

Chief, EAS and Domestic Analysis

U.S. Department of Transportation

1200 New Jersey Avenue, SE

Washington, DC 20590

RE: Essential Air Service for Akutan Docket 2000-7068

Dear Mr. DeVany:

PenAir appreciates your letter dated August 30, 2012, to Mayor Joe Bereskin of

the City of Akutan, explaining the Department's carrier selection procedures and

process as regards to essential air service at Akutan.

PenAir would also like the record to reflect its position with respecto service to

Akutan.

PenAir has diligently and ably provided essential air service at Akutan to and

from Dutch Harbor since 2000, operating Grumman Goose 21 aircraft ("the Goose").

Throughout this entire period, Akutan could only be served by sturdy amphibious aircraft

like the Goose. Given the vagaries of inclement weather which often affects VFR air

service at Akutan and Dutch Harbor, PenAir has compiled a good safety and completion

record there. And, while PenAi/s service has been subsidized, itonly gets paid for the

flights it operates. L

The Goose has been a mainstay of PenAir's fleet for decades, but as an older

aircraft without a supply of "off-the-shelf' replacement parts, the Goose is very costly to

operate and maintain. Because of these high operating and maintenance costs, PenAir

pf ans to stop using the Goose by the end of 2012.

The opening of the new runway on Akun lsland for Akutan provides an

unprecedented opportunity for the provision of alternative air services to Akutan. For its

part, PenAir has worked closely with, and participated ina number of meetings with, the

State Department of Transportation and the City of Akutan concerning the future of

essential air service at Akutan. lt has been PenAir's expectation that the opening of the

Akun lsland runway would provide the opportunity for other airlines to offer essential air

service to Akutan, perhaps even on a non-subsidized basis.

peninsula airways inc. | 6100 Boeing avenue I anchorage alaska 99502

907.771.2500 | fax 907.771.2661 | info@penair.com I penair.com

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However, there are at least two significant issues that need to be resolved before

the full benefits of the Akun lsland runway can be achieved.

First, the new runway requires IFR capability in order for it to receive Part121

flights. We understand that the community desires service to Anchorage, and PenAir

has indicated its willingness to consider providing direct EAS service between

Anchorage and Akun with its flagship aircraft, the Saab 340. However, the new airport

at Akun lsland does not have IFR capability (and, we were recently informed, may not

have IFR capability for a year or more), and PenAir simply cannot serye the new airport

with its Saab 340 aircraft if the new airport does not have IFR capability.

Second, anangements need to be made for transporting and paying for the

movement of mail between Akutan and Akun lsland. That is a burden that cannot

reasonably be assumed by the designated EAS air carrier. This issue could be an

obstacle to Akutan receiving EAS service at its new airport on Akun lsland, particularly

subsidy-free service, because mail revenue is necessary to sustain the EAS operations

and the cost of transporting mail between Akutan and Akun lsland is too much for an

airline to take on itself.

PenAir filed its notice of termination of service to Akutan as the necessary

procedural trigger for the Department to begin the EAS review and carrier selection

processes. Because PenAir wishes to terminate its Grumman Goose service at the

earliest opportunity, PenAir strongly urges the Department to promptly issue an Order

soliciting EAS proposals. PenAir has been a long time EAS provider in Alaska and

understands its "hold-in" obligations and will continue to serve Akutan until a

replacement carrier is selected and implementservice.

Danny Seybert

Chief Executive Officer

Cc: Mayor Bereskin

Senator Lisa Murkowski

Senator Mark Begich

Congressman Don Young

State of Alaska DOT and PF

Grant Airlines

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