Order 2010

- 12

- 8 Served: December 6 , 20 10


### UNITED STA

TES OF A MERICA DEPA RTMENT OF TRA NSPORTA TION OFFICE OF THE SECRETA RY WASHINGTON, D.C. Is sued by the Department of Transportation on the 6 th of December, 2010

ORDER RE - SELECTING CA RRIER AN D ESTA BLISHING SUBSIDY RA TE S Summary By this order, the Department is re - select ing Ellis Air Taxi Inc. d/b/a Copp er Valley Air Ser vice (Copper Valley

) , 1 to provid e subsidized essential air service (EAS) at Gulkana , May Creek, and McCarthy , Alaska, for the two

- ye ar period beginning February 1, 20 11 , at the annual subs idy rate s of $ 262,220 for Gulkana, and $176 , 692 for both May Creek and McCarthy

. 2 (See Appendix A for a map of the service area

. ) Background By Order 2008

- 12

- 19 , the Department selected Copper Valley to continue providing EAS at Gulkana, May

Creek, and McCarthy , Alaska, for the two

- ye ar period ending January 31, 2011, fo r a combined annual subsidy rate of $424,652. Gulkana currently receives two nonstop round trips per week to Anchorage with six

- seat Piper PA

- 31 aircr aft; May Creek and McCarthy

each receive two nonstop or one

- stop round trips per week to Gulkana using three - seat Cessna 185 aircraft during winter months and four

- seat Cessna 206 aircraft during summer months.

1 The air carrier has notified the Federal Aviation Administration that they are in the process of officially changing the name of the company to simply Copper Valley Air Service. For purposes of consistency, we will refer to the name of the company throughout the rest of the order as Copper Valley. 2 Such subsidy is calculated and distributed on a fiscal year basis, subject to the avai lability of appropriated funds. Essential Air Service at GULKANA, ALASKA MAY CREEK, ALASKA MCCARTHY, ALASKA

Under 49 U.S.C. 41731 et seq
. DOCKET OST
- 1995
- 4922

As the end of the contract was approaching , the Department issued Order 20 10

- 9

- 27 , September 27 , 20 10 , requesting proposals from carriers int erested i n providing service at the communit ies , w ith or without subsidy , for a new, two
- ye ar period beginning February 1, 2011

. Inrespon se, only

the incumbent carrier submitted a proposal. Carrier Proposal Copper Valley proposed one serv ice option to continue t o provide its historical service levels at the communities. At Gulkana , it would use six

- seat twin engine Piper PA

- 31 aircraft and operate two nonstop round trips each week year - round to Anchorage for an annual subsidy of $262,220. At May

Creek and McCarthy , Copper Valley proposed to provide two nonstop or one - stop round trips per week to Gulkana using three

- seat Cessna 185 aircraft during winter months and four

- seat Cessna 206 aircraft during summer months for an annual subsidy of $176,692. Community

Co mments On October 29, 2010, we requested community comments regarding the carrier

- selection decision at the three communities. We received a letter from Marc L uiken, Deputy Commissioner of Aviation for the State of Alaska, expressing support for the EAS p rogram at these three communities. We also received e

- mails and phone calls from citizens of the communities expressing their satisfaction with Copper Valley and the importance of air service to the livelihood of the communities. Decision The carrier

- se lection decision is straightforward. Copper Valley is the only appl icant and all feedback we received pointed to their re

- selection. We find the service and subsidy levels proposed by Copper Valley to be reasonable. W e shall make this selection continge nt upon the Department’s receiving properly executed certifications from Copper Valley that it is in compliance with the Department’s regulations regarding drug

- free workplaces and nondiscrimination, as well as the regulations governing lobby ing activities

. Carrier Fitness 49 U.S.C. 41737(b) requires that we find an air carrier fit, willing, and able to provide reliable service before we may

subsidize it to provide essential air service. Copper Valley is subject to the Department’s continuing fitness requ irements, and no information has come to our attention that would cause us to question the carrier's fitness at this time. We have contacted the Federal Aviation Administration, and it has raised no concerns that would negatively affect our fitness findin g. We therefore conclude that the carrier remains fit to conduct the operations proposed here. This order is issued under authority delegated in 49 CFR 1.56a(f).
AC CORDINGLY, 1. The Department selects Copper Valley Air Service , to continue to provide E AS at Gulkana , May Creek, and McCarthy , Alaska, and establishes the subsidy rate s , as detailed in Appendix B , for the two

- ye ar period beginning February 1, 20 1 1 ;3

2

. We set the final rate of compensation at $262,220 for Gulkana, and $176,6 92 for May Creek and McCarthy , for the provision of essential air service as described in Appendix C; 3. We direct Copper Valley Air Service to retain all books, records, and other source and summary documentation to support claims for pay ment, and to preserve and maint ain such documentation in a manner that readily permits its audit and examination by representatives of the Department. Such documentation shall be retained for seven years or until the Department indicates that the records may be destroyed, whichever com es first. Copies of flight logs for aircraft sold or disposed of must be retained. The carrier may forfeit its compensation for any claim that is not supported under the terms of this order; 4 . The Department finds that Copper Valley Air Service continues to be fit, willing and able to operate as a certificated air carrier and capable of providing reliable EAS at Gulkana, May Creek, and McCarthy ; 5

. Docket OST

- 1995

- 492 will remain open until further order of the Department; and 6 . The Department wil l serve a copy of this order on the communities of Gulkana, May Creek , and McCarthy , Copper Valley Air Service , and the State of Alaska Department of Transportation. By :

SUSA N L. KURLA ND Assistant Secretary for Aviation and International Affairs (SEAL) An electronic version of this document is available on line at www.regulations.gov

### Appendix A

### Appendix B Page 1 of 2

### Appendix B Page 2 of 2

### Appendix C Page 1 of 2 Copper Valley Air Service Essential Air Service to be Provided at Gulkana, Alaska Effective Period : February 1, 2011 , through January 31, 2013 Scheduled Service : Two weekly nonstop round trips between Gulkana and Anchorage Ai rcraft : Six

- seat twin engine Piper PA

- 31 Rate per Eligible Flight: $ 1,261 1 Weekly Ceiling : $ 5,044 2
Note: The carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance with the terms and stip ulations of the rate order, including 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 co nstitutes a completed flight; absent 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 doe s not schedule or operate its flights 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 re placement 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, the 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 completely, terminates or reduces 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 carrier 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 not constitute a total or partial reduction or cessation of payment. Subsidy contracts are subject to, and incorporate by reference, relevant statutes and Department regulations, as they may be amended from time to ti me. However, any such statutes, regulations, or amendments thereto shall not operate to controvert the foregoing paragraph. Funds are not currently available for performance under this solicitation beyond December 3, 2010. The Department’s obligation fo r performance under this solicitation beyond December 3, 2010, is contingent upon the availability of appropriated funds from which payment for services can be made. No legal liability on the part of the Government for any payment may arise for performanc e under this order beyond December 3, 2010, until funds are made available to the Department for performance. If funds are not made available for performance beyond December 3, 2010, the carrier will receive notice in writing by the Department. All claim s for payment must be submitted within 60 days of the last day of service provided under this order.

1 Annual compensation of $262,220 divided by 208 annual departures (4 weekly departures x 52 weeks x 100 percent completion). 2 4 arrivals and departures per w eek multiplied by $1,261 per flight

.

### Appendix C Page 2 of 3 Copper Valley Air Service Essential Air Service to be Provided at May Creek , Alaska Effective Period : February 1, 2011, through January 31, 2013 Scheduled Service : May Creek : 2 nonstop or one

- stop round trips per week to Gulkana Aircraft : 3

- seat Cessna 185 (winter months) 4

- seat Cessna 206 (summer months) Rate per Eligible Flight: $ 425 1 ; Weekly Ceiling : $ 1,700 2
Note: 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, including 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; absent an explanation supporting subsidy eligibility for a flight that has not b een 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 flights in full conformance with the order for a significant period, it may jeop ardize 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 wr itten 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 safel y 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, the 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 completely, terminates or reduces 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 carrier may cease to provide service to that specific location without reg ard 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 not constitute a total or partial reduction or cessation of payment. Su bsidy contracts are subject to, and incorporate by reference, relevant statutes and Department regulations, as they may be amended from time to time. However, any such statutes, regulations, or amendments thereto shall not operate to controvert the forego ing paragraph. Funds are not currently available for performance under this solicitation beyond December 3, 2010. The Department’s obligation for performance under this solicitation beyond December 3, 2010, is contingent upon the availability of appropri ated funds 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 December 3, 2010, until funds are made available to the Department for performance. If funds are not made available for performance beyond December 3, 2010, the carrier will receive notice in writing by the Department. All claims for payment must be submitted within 60 days of the last day of service provided under this order.

1 Annual compensation of $17 6,692 divided by 2 = $88,346; $88,346 divided by 208 annual departures (4 w eekly departures x 52 weeks x 100 percent completion). 2 4 arrivals and departures per w eek multiplied by $425 per flight.

### Appendi x C Page 3 of 3 Copper Valley Air Service Essential Air Service to be Provided at McCarthy, Alaska Effective Period : February 1, 2011, through January 31, 2013 Scheduled Service : McCarthy : 2 nonstop or one

- stop round trips per week to Gulkana Aircraf t : 3

- seat Cessna 185 (winter months)

4

- seat Cessna 206 Rate per Eligible Flight: $ 425 1 ; Weekly Ceiling : $ 1,700 2
Note: 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, including 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; absent 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 flights 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 th e 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, the 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 unilate rally, either partially or completely, terminates or reduces 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 stipul ated amounts or at the stipulated service levels, the carrier 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 not constitute a total or partial reduction or cessation of payment. Subsidy contracts are subject to, and incorporate by reference, relevant statutes and Department regulations, as they may be amend ed from time to time. However, any such statutes, regulations, or amendments thereto shall not operate to controvert the foregoing paragraph. Funds are not currently available for performance under this solicitation beyond December 3, 2010. The Departme nt’s obligation for performance under this solicitation beyond December 3, 2010, is contingent upon the availability of appropriated funds from which payment for services can be made. No legal liability on the part of the Government for any payment may ar ise for performance under this order beyond December 3, 2010, until funds are made available to the Department for performance. If funds are not made available for performance beyond December 3, 2010, the carrier will receive notice in writing by the Department. All claims for payment must be submitted within 60 days of the last day of service provided under this order.

1 Annual compensation of $176,692 divided by 2 = $88,346; $88,346 divided by 208 annual departures (4 w eekly departures x 52 weeks x 100 percent completion). 2 4 arrivals and departures per w eek multiplied by $425 per flight.