BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

WASHINGTON, DC ., ~ ;;.,, I \ '-;: 3L:. 

Essential Air 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 PENINSULA AIRWAYS, INC. 

ON PROPOSALS OF OTHER CARRIERS TO PROVIDE ESSENTIAL AIR SERVICE 

AT PRESQUE ISLE, BAR HARBOR, AND PLATTSBURGH 

Correspondence with regard to this document should be addressed to: 

Danny Seybert, CEO 

Scott Bloomquist, President 

PENINSULA AIRWAYS, INC. 

6100 Boeing Avenue 

Anchorage, AK 99502 

907-243-2485 

January 11, 2012 

\\DC. 00472!1000002 • 3)49109 v2 

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@ hogan lovells. com 

Counsel for 

Peninsula Airways, Inc. 
Essential Air Service at 

BAR HARBOR, MAINE 

BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

WASHINGTON, DC 

) 

) 

PRESQUE ISLE/HOULTON, MAINE 

PLATTSBURGH, NEW YORK 

) 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 

Sovereign Air [USovereign"). Sovereign's proposals suffer from several 

basic flaws and deficiencies: lack of the requisite operating authority; use of erroneous 

data which leads to highly unrealistic, under-estimated subsidy amounts; lack of existing 

marketing/interline agreements with major carriers serving Boston Logan International 

Airport; and an apparent lack of the aircraft proposed for the 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 

of the respective bid proposals. 

\\DC- 004721/000002-3349109 v2 
Comments of Peninsula Airways, Inc. 

Page 2 

First, Sovereign does not have the requisite FAA or DOT authority to operate the 

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 Commuter Air Carrier Authority, and by Order 2011-2-3, the 

Department dismissed its petition for reconsideration of that order. 

Therefore, the carrier does not currently have, nor has it any current 

prospect of receiving 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 proposal to serve Presque Isle was rejected. See DOT Order 2010-6-

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 of the routes. 

Sovereign's Actual Stage Length Difference 

Stage Length (per Great Circle 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% 

\\DC· 004721/000002 • JJ49109 v2 
Comments of Peninsula Airways, Inc. 

Page 3 

Sovereign's Realistic Difference 

Block Time (based on actual T-1 00 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 for the fact that the proposed Dornier jet may be slightly faster than 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 for these routes confirm as much. Moreover, any carrier with knowledge 

about serving Boston Logan International Airport knows that it is simply not realistic to 

assume that a typical 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 per flight on route from T-1 00 data for YE Q3 2011. 

\\DC- 004721;000002 • 3349109 v2 
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 account for 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 ... purchase the 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. 

\\DC· 0047211000002- 3349109 v2 
Comments of Peninsula Airways, Inc. 

Page 5 

Air Choice 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-seat aircraft. See 49 U.S.C. § 41732; DOT Order 2011-11-26, at 3. 

Second, even with 4 roundtrips per day to 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 per day 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 or medium 

hub that 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 per day each way x 9 seats per flight= 36 seats per day each way. 

See FAA Enplanements at Primary Airports CY 2010. 

\\DC. 0047211000002. 3J49109 v2 
Comments of Peninsula Airways, Inc. 

Page 6 

service for that area. See CAB Order 84-7-76. Houlton is located approximately 42 

miles south of Presque Isle. ld. at 12. 

Conclusion. By contrast to the proposals of Sovereign and Air Choice, PenAir's 

EAS proposals readily satisfy all of the 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 

air service during the High Season for two 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 4999/5659 
Exhibit 1 

Summary of Corrections to Sovereign Air Numbers 

(Turboprop Comparison) 

Revenue 

Direct Costs(@ $2,700) 

Indirect Costs 

Total Costs 

Loss 

5% Profrt 

!Total Subsidy 

Block Hours 

Block Time (Hours) 

Miles 

Departures 

ISubsidy Per Departure 

Revenue 

Direct Costs (@ $3,600) 

Indirect Costs 

Total Costs 

Loss 

5% Profit 

lTotal Subsidy 

Block Hours 

Block Time (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 

Sovereign Air 

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 

Sovereign Air 

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 

Sovereign Air 

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 $1,903.62 
Exhibit 2 

Summary of Corrections to Sovereign Air Numbers 

(Jet Comparison) 

Revenue 

Direct Costs (@ $3,300) 

Indirect Costs 

Total Costs 

Loss 

5% Profit 

!Total Subsidy 

Block Hours 

Block Time (Hours) 

Miles 

Departures 

ISubsidy Per Departure 

Revenue 

Direct Costs (@ $4,549) 

Indirect Costs 

Total Costs 

Loss 

5% Profit 

!Total Subsidy 

Block Hours 

Block Time {Hours) 

Miles 

Departures 

ISubsidy Per Departure 

Sovereign Air 

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 

Sovereign Air 

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 

Sovereign Air 

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 

Sovereign Air 

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 time for jet aircraft by taking the ratio used by Sovereign (50 minutes/60 minutes) 

21 Adjusted block time for jet aircraft by taking the ratio used by Sovereign (30 minutes/35 minutes) 
CERTIFICATE OF SERVICE 

I hereby certify that a copy of the foregoing Comments of Peninsula Airways, 

Inc., has been served this January 11, 2012, upon each of the following addressees: 

Dennis DeVaney, USDOT 

Dennis.DeVany@dot.gov 

Michael Martin, USDOT 

Michael. F. Martin@dot. gov 

Essential Air Service Program 

EAS@dot.gov 

Scott Wardwell 

Airport Director, Northern Maine Regional Airport 

swardwell@presqueisleme. us 

Chris Kreig 

Manager, Plattsburgh International Airport 

kreigc@co. clinton. ny. us 

Garry Douglas 

North Country Chamber of Commerce, President & CEO 

gfdoug@hotmail.com 

M. Allison Navia 

Manager, Hancock County-Bar Harbor Airport 

manager@bhbairport.com 

Shane Storz, CEO of Air Choice One 

shane@airchoiceone .com 

Robert B. Karns, VP GM of Sovereign Air 

bob@sovereignairinc.com 

Andrew Bonney, Cape Air 

Andrew. Bonney@capeair. com 

\\DC- 004721/000002-3349109 Y2