-rHE SF2tFat-r c)F AL-A!+}<,A.

August 30,2012

Mr. Dennis

J. DeVany Chief, EAS and Domestic

Analysis U.S. Department

of Transportation 1200 New Jersey Avenue, SE Washington,

DC20590 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 respect

o service

to Akutan. PenAir has diligently and ably provided essential airservice

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,

it only gets paid for the flights it operates. L The Goose

has been

a mainstay

of PenAir's

fleet for decades,

butas 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. Theopening

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

in a number

of meetings

with, the StateDepartment

of Transportation

and the City

of Akutan

concerning

the future

of essential air service

at Akutan. lt has beenPenAir's expectation

that the opening

of the Akunlsland

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 \DC - 004721/000002 - 3486138 v2However, 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 newrunway

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 itsflagship

aircraft, the Saab

340. However,

the newairport at Akunlsland

does not have IFR capability

(and, we were recently informed,

may not haveIFR

capability

for a year

or more),

and PenAir

simply cannot serye the new airport with its Saab

340aircraft

if the new

airport does not have IFRcapability. 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 thedesignated

EAS air carrier.

This issue could be an obstacle to Akutan

receiving EAS service at its newairport

on Akun lsland,

particularly subsidy-free

service, because mailrevenue

is necessary

to sustain

the EAS operations and the cost

of transporting

mail between Akutan andAkunlsland

is too much

for an airline to take on itself. PenAir filedits notice

of termination

of service

to Akutan

as the necessary procedural

trigger for the Department

to begin the EASreview

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 hasbeen

a long timeEAS

provider in Alaska and understands

its "hold-in"

obligations

and willcontinue

to serve Akutan until a replacement

carrier is selected

and implements

ervice.

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

\DC - 004721/000002 - 34861 38 !2