BEFORETHE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

Essential Air Sennce at EXCURSION INLET, ALASKA KAKE, ALASKA Under49 U.S.C. 41731 et. Seq. October2, 2012

SUPPLEMENT NO. 1 Docket DOT-OST-2002-12014 Docket DOT-OST-2008-0217

PETITION OF SEAPORTAIRLINES, INC D/B/AWINGS OFALASKA FOR RECONSIDERATION OF THE SELECTION OFAIR EXCURSIONSTO PROVIDE ESSENTIAL AIR SERVICE AT KAKE AND EXCURSION INLET, ALASKA On September 8, 2012, the US Department of Transportation (hereafter referred to as "the Department") issued Order 2012-9-8 selecting Air Excursions, LLC (hereafter referred to as "Air Excursions") to provide Essential Air Service (EAS) at Excursion Inletand Kake, Alaska. 1 On September 21, 2012, SeaPort Airlines, Inc., and doing business in Southeast Alaska as "Wings ofAlaska" (hereafter referred to as "SeaPort"), submitted a petition to the Department requesting that it reconsider its selection ofAir Excursions and instead select SeaPortto provide EAS atthese communities. In support of its request, SeaPort outlined in its petition what it believes are incorrect, incomplete, or mischaracterized facts cited by the Department in Order 2012-9-8. Also we discussed two accidents and one incident involving aircraft operated by Air Excursions which occurred after the RFP was issued by the Department and after the communities submitted comments, but before the Department's Order announcing its carrier selection. Given these significant events, and asstated in our petition, SeaPort believes that the communities should have be provided an opportunity to submit additional comments and that the Department reconsider its selection of Air Excursions to provide EAS at Kake and Excursion Inlet and instead selected SeaPort.

1 Order2012-9-8

### Supplement No. 1to Petition of SeaPortAirlines, Inc. for Reconsideration Docket DOT-OST-2002-12014 & 

### Docket DOT-OST-2008-0217 Page2
To supplement information provided in its petition, additionally SeaPort states the following:


### SeaPort Anticipates Finalizing An Interline Agreement With AlaskaAirlines 

### By The End of October 2012 By October 31, 2012, SeaPort Airlines anticipates implementing an interline agreement with Alaska Airlines that includes interline electronic ticketing (lET) and baggage check-in to final destination. Necessary testing between the respective reservation systems of Alaska Airlines and SeaPort Airlines has been completed, with details of the interline agreement contract remaining to be completed priortofinal signatures and implementation. When implemented, the agreement will represent a significant improvement to air service at rural communities in Southeast Alaska that are served by SeaPort.2 

### Specifically, customers will be able to purchase and to travel on itineraries that include flights of both SeaPortAirlines and Alaska Airlines using a single-ticket. To a customer in Kake, for example, this means an itinerary to any destination in the Alaska Airlines network will be able to be purchased on a single ticket and baggage checked-in at the originating airport (i.e., Kake) through to the final destination. The agreementwill also provideenhanced customer protections such as reaccommodation in the event offlight irregularities (i.e., "Rule 240).3 

### Forthe tourism industry, this agreement will result in display of and ability to purchase connecting itineraries on major GDSs, including online travel retailers such as Orbitz, Travelocity, Expedia, Hotwire, Hipmunk, etc. Thiswill make it easierfor potentialvisitorsto build vacation itineraries to the rural communities in Southeast Alaska served by SeaPort and, therefore, the ability ofthose communitiesto capture greater amounts of discretionaryspending ofAlaska vacationers. For the Southeast Alaska communities that SeaPort serves, the interline agreement between SeaPortAirlines and Alaska Airlines will result in true connectivity with the nationalair transportation system. SeaPort firmly believes the interline agreement should be factored alongsidethe information provided in its September 21, 2012 petition, aswell as any community

2 Connections between Alaska Airlines and SeaPort can made at Juneau International Airport providing single-ticket service to/from Gustavus, Haines, Hoonah, and Skagway.
3 Neitherthe interline agreement orthis filing is intended to infersupportbyAlaskaAirlines for selection ofSeaPort as the provider of EAS at Kake and Excursion Inlet.Supplement No. 1to Petition of SeaPortAirlines, Inc. for Reconsideration Docket DOT-OST-2002-12014 & Docket DOT-OST-2008-0217 Page 3
comments, as the Department reconsiders its selection of Air Excursions to provide EAS at Kake and Excursion lnlet.4 In support of this view, we note 49 U.S.C. 

### §**417~3(c)(1)** which directs the Departmentto considerfour factors when selecting a carrier to provide Essential Air Service: (1) service reliability; (2) contractual and marketing arrangements with a larger carrier at the hub; (3) interline arrangements with a larger carrier atthe hub; and (4) community views.
There Is No ChangeToSeaPort's Reguest For Subsidy
While an improvement to the narrative description as provided in SeaPort's EAS proposal, implementation of the interline agreement does not change the annual subsidy request of$364,506at Kake and $33,537 

### at Excursion Inlet. At the time of the Kake and Excursion Inlet EAS proposal submission, SeaPort had verbally reached an agreement to enter into an interline agreement with Alaska Airlines but had notfinalized commercial details or initiated data sharing tests between each carrier's respective reservation system. SeaPortdeterminedthat ratherthan riskfailing to deliveras promised to the Department and communities, discussion of the interline agreement would not be included in the narrative ofour proposal. Nonetheless, SeaPort was confident that even under our worst case scenarios the agreementwould be implemented within a reasonable time period of the beginning ofthe new EAS contract, such that the subsidy request in our proposal included all of the expense and revenue assumptions with respect to incremental ticket revenue, higher distribution costs, interline revenue accounting settlement costs, etc. Other than revealing implementation of the interline agreement with Alaska Airlines which is additive in nature, SeaPort's proposal to provide EAS at Kake and Excursion Inlet remains unchanged. Specifically, this includes key components of our proposal that aretypically important to both the Department and community, such as level of subsidy, aircraft type, preliminary flight schedules, average fares, and projected levels of passenger traffic. In this context, SeaPort's proposal is compliantwith the Department's directivethat "interested carriers

4 SeaPort's research indicates that such connectivity has not existed for any of Southeast Alaska our communities, including Kake and Excursion Inlet, sincethe adventofelectronicticketing.Supplement No. 1to Petition ofSeaPortAirlines, Inc. for Reconsideration Docket DOT-OST-2002-12014 & Docket DOT-OST-2008-0217 Page4


### shouldprepare theirproposals with everyexpectation thattheirinitialproposals willalso be their 

### finaland

### onlyproposals. ' 16

Summation
In its petition filed on September 21, 2012, SeaPort outlined whatwe believe are factual errors in Order 2012-9-8 that, including the recent operational issues at Air Excursions, more than adequately supportour requestthatthe Departmentto reconsider its EAS carrier selection at Kake and Excursion Inlet, Alaska. This supplement strengthens that request by notifyingthe Department and communities Kake and Excursion Inlet that SeaPortwill be implementing an interline agreement with Alaska Airlines within the next couple of weeks, providing connectivity with the national air transportation system and described as "basic essential air service" in 49 U.S.C.§41733 (C). For the reasons provided in our September 21, 2012 petition as supplemented herein, SeaPort respectfully restates its request that (1) the Department reconsider its selection of Air Excursions, (2) that the communities be permitted to provide additional comments regarding their carrier preference, (3) thatthe interline agreement between Alaska Airlines and SeaPort be included as part ofthat reconsideration, and (4) thatthe Department instead select SeaPort to provide EAS at Kake and Excursion Inlet, Alaska. Respectfully submitted, Timothy F. Sieber Vice President- Commercial SEAPORTAIRLINES, INC. D/B/AWINGS OF ALASKA 7505 NEAirportWay Portland InternationalAirport Portland, Oregon 97218 (971) 340-1716 Email: tsieber@seaportair.com October 2, 2012

5 Order2012-4-13, p.2Supplement No. 1to Petition of SeaPortAirlines, Inc. for Reconsideration Docket DOT-OST-2002-12014 & Docket DOT-OST-2008-0217 PageS
SERVICE LIST SUPPLEMENT NO. 1 PETITION OF SEAPORTAIRLINES, INC D/8/AWINGS OF ALASKA FORTHE DEPARTMENTTO RECONSIDER SELECTION OF AIR EXCURSIONS TO PROVIDE ESSENTIALAIRSERVICEAT KAKE AND EXCURSION INLET, ALASKA
City Manager, City of Kake citymanager@cityofkake.org Organized Vilage ofKake gewilliams@kakefirstnation.org
KakeTribal Corporation vicki.wolfe@kaketribalcorp.com
Mr. Bruce Gordon (representing Excursion Inlet) bruce@btpost.net
Air Excursions, LLC kentcraford@hotmail.com
Ward Air Inc. tom@WardAir.com
U.S. Department ofTransportation, Essential Air Service Division dennis.devany@dot.dov michael.f.martin@dot.gov

Alaska Airlines kyle.levine@alaskaair.com