BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, DC .,**~** ;;.,, I \ '-;: 

### 3L:. EssentialAir Service at BAR HARBOR, MAINE PRESQUE ISLE/HOULTON, MAINE PLATISBURGH, NEWYORK ) ) ) Docket DOT-OST-2011-0185 ) Docket DOT-OST-2000-8012 ) Docket DOT-OST-2003-14783



# ___________________________________ )
COMMENTS OF PENINSULAAIRWAYS, INC. ON PROPOSALS OF OTHER CARRIERS TO PROVIDE ESSENTIAL AIR SERVICE AT PRESQUE ISLE, BAR HARBOR, AND PLATTSBURGH
Correspondencewith regard tothis documentshould be addressed to:

Danny Seybert, CEO Scott Bloomquist, President PENINSULAAIRWAYS, INC. 6100 Boeing Avenue Anchorage, AK 99502 907-243-2485

January 11, 2012

\\DC.00472!1000002•3)49109v2 Robert E. Cohn Patrick R. Rizzi HOGAN LOVELLS US LLP Columbia Square 555 Thirteenth Street, NW Washington, DC 20004 202 637 4999/5659 robert.cohn@hoganlovells.com patrick.rizzi@hoganlovells.com Counselfor PeninsulaAirways, Inc.EssentialAir Service at BAR HARBOR, MAINE BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, DC
) ) PRESQUE ISLE/HOULTON, MAINE PLATTSBURGH, NEWYORK ) Docket DOT-OST-2011-0185 ) Docket DOT-OST-2000-8012 ) Docket DOT-OST-2003-14783



# __________________________________ )

January 11, 2012
COMMENTS OF PENINSULA AIRWAYS, INC.

ON PROPOSALS OF OTHER CARRIERS TO PROVIDE ESSENTIAL AIR SERVICE AT PRESQUE ISLE, BAR HARBOR, AND PLATTSBURGH
Peninsula Airways, Inc. ("PenAir") hereby provides brief, narrowly-tailored comments to highlight the fundamental flaws and substantial deficiencies with the proposals of Sovereign Air and Air Choice One for essential air service to Presque Isle, Bar Harbor, and Plattsburgh. 1

SovereignAir[USovereign"). Sovereign's proposals suffer from several basic flaws and deficiencies: lack ofthe requisite operating authority; use oferroneous datawhich leads to highly unrealistic, under-estimated subsidy amounts; lack ofexisting marketing/interline agreements with major carriers serving Boston Logan International Airport; and an apparent lack ofthe aircraft proposed forthe service.

To the extent required, PenAir seeks leave to file these comments, which will present a more complete record for decision and will assist the Department and the communities in evaluating the strengths and weaknesses ofthe respective bid proposals.

\\DC- 004721/000002-3349109 v2Comments ofPeninsula Airways, Inc. Page 2 

### First, Sovereign does not have the requisite FAA or DOT authorityto operatethe passenger service it proposes. In DOT Order 2011-11-30 (dated November 23, 2011), the Department rejected Sovereign's EAS bid because: "By Order 2010-10-21, the Department dismissed Sovereign Air's application for CommuterAir CarrierAuthority, and by Order2011-2-3, the Department dismissed its petition for reconsideration of that order. Therefore, the carrier does not currently have, 

### nor has it any current prospectofreceiving soon, the requisite operating authorities to provide scheduled air service from either DOT or FAA." (at page 

### 2 (emphasis added).) And, more recently, less than a month ago, the Department rejected Sovereign's proposal to provide replacement EAS at Devils Lake, North Dakota, noting that "Sovereign does not have the requisite operating authority from either the Federal Aviation Administration or the Department,

...." DOT Order 2011-12-6, at 2 (dated December 14, 2011). Indeed, this particular deficiency was one of the reasons why Sovereign's 2010 proposalto serve Presque Islewas rejected. See DOT Order2010-6- 

### 5, at 3.

### Second, as shown in the charts below, Sovereign's subsidy proposals are based
on unrealistically low stage lengths and block hours for each ofthe routes. Sovereign's Actual Stage Length Difference Stage Length (perGreatCircle Mapper) (Actual v. Sovereign) Boston-Presque Isle 205 miles 333 miles +62% Boston-Plattsburgh 174 miles 201 miles +16% Boston-Bar Harbor 174 miles 196 miles +13%

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### Comments of Peninsula Airways, Inc. Page 3
Sovereign's Realistic Difference BlockTime (basedon actual T-100 data2) (Realistic v. Sovereign) Boston-Presque Isle 0:50 (jet) 1:45 +110% 1:00 (t/prop) +75% Boston-Plattsburgh 0:30 (jet) 1:19 +163% 0:35 (t/prop) +126% Boston-Bar Harbor 0:30 (jet) 1:17 +157% 0:35 (t/prop) +120% 

### Even accounting forthe factthat the proposed Dornierjet may be slightlyfasterthan the Saab aircraft reported in the T-100 reports (and which PenAir proposes to use), Sovereign's block hour projections are still woefully unrealistic. The actual T-100 data
on block hours forthese routes confirm as much. Moreover, any carrierwith knowledge about serving Boston Logan International Airport knows that it is simply not realistic to
assume that atypical flight can leave the gate area at BOS, taxi to the runway, take-off, climb out, fly 200 miles to PBG, descend, land, and taxi-in to the gate in only 30-35 minutes block-to-block. Sovereign's flawed stage length and block hour assumptions produce significantly understated costs which, in turn, grossly understate the necessary subsidy. Accordingly, Sovereign has presented an unrealistic and unsustainable subsidy proposal. Correcting Sovereign's stage lengths and block hours results in subsidies on these routes for Sovereign costing many millions of dollars more annually than the subsidies requested by PenAir. For example, when Sovereign's "turboprop" proposal is

2 Average block hours perflight on route from T-100 data forYE Q3 2011.

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### Comments of Peninsula Airways, Inc. Page4
corrected to account for realistic block times, Sovereign's annual subsidy requirement for serving Presque Isle and Plattsburgh increases dramatically to $7.08 million and $5.85 million, respectively. As a result, Sovereign's corrected subsidy requirement exceeds PenAir's by $2.70 million for Presque Isle and $3.14 million for Plattsburgh. See Exhibit 1. And, when Sovereign's "jet" proposal is corrected to accountfor realistic block times (even taking into account the slightly faster speed of the Dornier-328), the annual subsidies for Sovereign's Presque Isle and Plattsburgh services increase significantly to $7.27 million and $6.38 million, respectively. Consequently, Sovereign's corrected annual subsidy requirement exceeds PenAir's by $2.88 million for Presque Isle and $3.66 million for Plattsburgh. See Exhibit 2. Third, 

### unlike PenAir, which already has substantial interline agreements with major carriers at Boston Logan International Airport, the best Sovereign can muster on this point is that it "will

### have passenger, (ticketing, baggage and cargo) agreements with most magor [sic] aircarries [sic] and discount carries [sic] as well." (Sovereign Proposal, at "NOTE" (emphasis added).) Fourth, 

### Sovereign does not appear to have the aircraft it proposes to use in its fleet at 

### this time insofar as the "NOTE" to each proposal states that Sovereign's proposal "covers the total expense required to

... purchasethe aircraft

...." Fifth, 

### Sovereign's one-stop proposals to serve Presque Isle do not comport with the Department's expectation that proposals present "service levels that are comparable with what the communities currently receive [which is nonstop service]." DOT Order 2011-11-26, at 3.

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### Comments of Peninsula Airways, Inc. Page 5



### AirChoice One [«Air Choice"). Air Choice's EAS proposal also suffers from several deficiencies. 

### First, Air Choice proposes service to PQI, BHB, and PBG with only 9-seat Cessna Grand Caravan aircraft. Such a proposal does not satisfy the statutory requirement of at least 15-seat aircraft and the Department's request for proposals using at least 19-seataircraft. See 49 U.S.C. 

### § 41732; DOT Order2011-11-26, at 3. 

### Second, even with 4 roundtrips per dayto Presque Isle, Air Choice would still not offer at least 67 seats per day each way as the DOT's Order contemplates. See DOT Order 2011-11-26, at 3 ("With respect to Presque Isle, under EAS statutes the community is guaranteed 67 seats perday in each direction."). 3 

### Third, Air Choice proposes service from each of the three EAS communities to Portland, Maine, not Boston Logan International Airport. Setting aside the far greater benefits of service to Boston, Portland is a small hub airport,4 

### but the DOT's Order requested service proposals for "nonstop service to Boston or 

### any large ormedium hubthat offers access to the national air transportation system." DOT Order 2011-11- 26, at 3 (emphasis added). Air Choice's proposals to serve Portland do not meet this basic criterion. 

### Fourth, Air Choice proposes to serve Houlton, Maine ("HUL"), not Presque Isle via the Northern Maine Regional Airport
- the primary airport to meet the essential air

3 4 4 flights perdayeach way x 9 seats perflight= 36 seats perdayeachway. See FAA Enplanements at PrimaryAirports CY2010.

\\DC.0047211000002. 3J49109v2Comments of PeninsulaAirways, Inc. Page 6
service for that area. See CAB Order 84-7-76. Houlton is located approximately 42 miles south ofPresque Isle. ld. at 12.


### Conclusion. By contrast to the proposals ofSovereign and AirChoice, PenAir's EAS proposals readily satisfy all ofthe requisite criteria set forth in the Statute and the Order, present realistic and sustainable operations, and offer superior benefits for passengers and the local communities. Accordingly, PenAir urges the Department to select it (i) to provide essential air service for two years between Boston, on the one hand, and Presque Isle/Houlton and Plattsburgh, on the other hand, at the subsidy levels presented in its Proposal, and (ii) to provide non-subsidized BOS-BHB essential airservice during the High Seasonfortwo years.

\\DC. 004721/000002- J349l09 v2 Respectfully submitted,

# ~Aff=-~ Robert E. Cohn Patrick 

### R. Rizzi HOGAN LOVELLS US LLP Columbia Square 555 Thirteenth Street, NW Washington, DC 20004 +1 202 637 4999/5659Exhibit 1 

### Summary ofCorrections to Sovereign Air Numbers (Turboprop Comparison)

Revenue Direct Costs(@ $2,700) Indirect Costs Total Costs Loss 5% Profrt !Total Subsidy Block Hours BlockTime (Hours) Miles Departures ISubsidy Per Departure

Revenue Direct Costs (@ $3,600) Indirect Costs Total Costs Loss 5% Profit lTotal Subsidy Block Hours BlockTime (Hours) Miles Departures ISubsidy Per Departure PQI -Turboprop Sovereign Air Numbers Used $3,951,523 $5,448,600

$971,753 $6,420,353 ($2,468,830) 321,018 $2,789,848 2,018.0 1 205 2,018 $1,382.48 SovereignAir Corrected Block Time $3,951,523 $9,535,050

$971,753 $10,506,803 ($6,555,280) 525,340 $7,080,6201 3,531.5 1.75 333 2,018 $3,508.73

PBG -Turboprop SovereignAir Numbers Used $2,475,090 $2,965,872 $1,220,300 $4,186,172 ($1'711,082) 209,309 $1,920,391 824.0

0.58 174 1,412 $1,360.05 SovereignAir Corrected Block Time $2.475,090 $6,709,680 $1,220,300 $7,929,980 ($5,454,890) 396,499 $5,851,3891 1,863.8 1.32 201 1,412 $4,144.04 PenAir PenAir Savings $4,381,014 $2,699,606 3,355

1.75 333 1,917 $2,285.35 $1,223.38

PenAir PenAir Savings $2,713,149 $3,138,240 1,599

1.32 201 1,211 $2,240.42 $1,903.62Exhibit 2 

### SummaryofCorrections to Sovereign Air Numbers (Jet Comparison)

Revenue Direct Costs (@ $3,300) Indirect Costs Total Costs Loss 5% Profit !Total Subsidy Block Hours BlockTime (Hours) Miles Departures ISubsidy Per Departure

Revenue Direct Costs (@ $4,549) IndirectCosts Total Costs Loss 5% Profit !Total Subsidy Block Hours BlockTime {Hours) Miles Departures ISubsidy Per Departure SovereignAir Numbers Used $3,951,523 $5,548,400

$971,744 $6,520,144 ($2,568,621) 326,007 $2,894,628 1,681.0 0.83 205 2,018 $1,434.40

SovereignAir Numbers Used $2,475,090 $3,212,322 $1,162,300 $4,374,622 ($1 ,899,532) 218,731 $2,118,263 706.0

0.50 174 1,412 $1,500.19 PQI-Jet SovereignAir Corrected Block Time/1 $3,951,523

PBG- Jet $9,711,570 $971,744 $10,683,314 ($6,731,791) 534,166 $7,265,9571 2,942.9 1.46 333 2,018 $3,600.57

SovereignAir Corrected Block Time/2 $2,475,090 $7,267,482 $1,162,300 $8,429,782 ($5 954,692) ' 421,489 $6,376,1821 1,597.6 1.13 201 1,412 $4,515.71 PenAir PenAir Savings $4,381,014 $2,884,943 3,355

1.75 333 1,917 $2,285.35 $1,315.22

PenAir PenAir Savings $2,713,149 $3,663,033 1,599

1.32 201 1,211 $2,240.42 $2,275.29

1/Adjusted block timeforjetaircraft bytaking the ratio used by Sovereign (50 minutes/60 minutes) 21 Adjusted block timeforjetaircraft bytaking the ratio used by Sovereign (30 minutes/35 minutes)

### CERTIFICATE OFSERVICE I hereby certify that a copy of the foregoing Comments of Peninsula Airways, Inc., has been served this January 11, 2012, upon each ofthefollowing addressees: Dennis DeVaney, USDOT Dennis.DeVany@dot.gov Michael Martin, USDOT Michael.F.Martin@dot.gov Essential AirService Program EAS@dot.gov ScottWardwell Airport Director, Northern Maine RegionalAirport swardwell@presqueisleme.us Chris Kreig Manager, Plattsburgh InternationalAirport kreigc@co.clinton.ny.us Garry Douglas North Country Chamber ofCommerce, President

### &CEO gfdoug@hotmail.com M. Allison Navia Manager, Hancock County-Bar HarborAirport manager@bhbairport.com Shane Storz, CEO ofAir Choice One shane@airchoiceone.com Robert B. Karns, VP GM ofSovereign Air bob@sovereignairinc.com Andrew Bonney, CapeAir Andrew.Bonney@capeair.com

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