Megan Lavvreiice 

Managing Director, Government and Community Relations 

March 10,2010 

Mr. Dennis DeVany j ^ 

Chief, EAS & Domestic Analysis i^^ 

Office of Aviation Analysis g 

U.S. Department of Transportation - -~ 

1200 New Jersey Avenue, S.E. 

Washington, D.C. 20590 

Subject: Proposa;l of Alaska Airlines, Inc. ("Alaska Airliaes") to Provide Essential Air 

Service at Adak, Alaska, Docket DOT-OST-2000-8556 

Dear Mr. DeVany: 

Attached is the proposal of Alaska Airlines to provide essential air service to the 

community of Adak, Alaska. The proposal includes our subsidy request to provide this 

service. 

Also attached are the certifications pertaining to compliance with a drug-fi:ee workplace, 

nondiscrimination and lobbjdng regulations. 

Please contact me if you need additional information. 

Sincerely, 

Attachments 

B O X 6890 0 SEATTLE , W A 98168-0900/206-433-320 0 
Page 1 of 1 

Exhibit 

AS-1 

AS-2 

Alaska Airlines, Inc. 

Compensation Requirement 

ntial Air Service to Adak, Alaska 

Index of Exhibits 

Title 

Narrative Statement 

Subsidy Request 

Page 

1 

1 
AS-1 

Page 1 of 1 

Alaska Airlines, Inc. 

Compensation Requirement 

Essential Air Service to Adak, Alaska 

Narrative Statement 

Alaska Airlines, Inc. ("Alaska" or "the company") is pleased, in response to Order 2010-

2-5, to submit its EAS proposal for service to Adak, Alaska for a two-year contract term 

beginning July 1, 2010. Alaska submits a proposal requesting compensation in the 

amount of $1,675,703. That amount represents only a $192,581 increase over the current 

subsidy amount, and the entire increase is solely attributable to fuel costs. The 

compensation request assumes all other expenses, such as wage and fringe benefit costs, 

are flat. It is in recognition of the importance of jet service to the Adak community that 

the company is willing to absorb non-fuel operating cost increases that it normally would 

have included in its proposal. 

Alaska's compensation request also assumes operating revenue is flat and is based on 

actual revenue received for the one-year period ending September 30,2009. As noted, 

the cornpensation request assiunes all non-fuel costs are flat. In other words, Alaska is 

absorbing all post-September 30, 2009 non-fuel cost increases in the interest of 

presenting the Department with the lowest possible bid. Insofar as fuel costs are 

concerned, Alaska projects an expense of $2.47 a gallon based on the forward curve and 

fuel budget assumptions that the company uses for all of its internal projections. 

Alaska Airlines proposes to continue its established schedule pattern of twice-weekly B737-400 combination ("combi") passenger and cargo jet service, with each flight 

connecting passengers to the airUne's Anchorage hub - from which the passengers can 

benefit from expedited and seamless on-line connections to most major cities in the 

"lower 48." The 737-400 combi aircraft, which replaced the older 737-200 combi 

aircraft in the airline's fleet, provides enhanced freight, mail and cargo capacity and is 

equipped with Required Navigation Performance (RNP) precision technology. This 

technology, which Alaska Airlines uses throughout the state of Alaska and started using 

this winter to land at Adak, enables the airhne to more rehably access the airport during 

inclement weather, thus reducing diversions and cancellations. 

Alaska Airlines has served the Adak community under an EAS contract since 2003. The 

company views its provision of jet service to the community as serving a critical 

transportation function, in terms of reliably connecting the community to Anchorage and, 

in turn, the larger cities within the state of Alaska, as well as the lower 48. 

Alaska Airlines looks forward to the opportunity to continue to provide service to Adak, 

Alaska under a new two-year EAS contract term. 
Aiaslta Airlines, Inc 

Annual Compensation Requirement (Subsidy Request) 

Essential Air Service at Adal< 

July 1, 2010 and Forward 

Based on Need for Year Ended September 30, 2009 

AS-2 

Page 1 of 1 

Operating Revenue 

Passenger 

U.S. Mail 

Freight 

Excess Baggage 

Charter 

Trans. Related & Other 1/ 

Ooeratina Expense 

Direct 

Flying Operation - Non Fuel 

Flying Operation - Fuel 

Maintenance - Flight 

Depreciation - Flight 

Indirect 

Maintenance - Ground 

Flight Attendant 

Other Passenger Svc. 

Aircraft & Traffic Svc. 

Promotion & Sales 

General & Admin. 

Depreciation - Ground 

Transport Related 

Total Operating Exp. 

Ooeratina Profit (Loss) 

Return 2/ 

Interest 

Compensation 

Svstem 1/ 

2,331,304,951 

31,215,446 

60,027,873 

42,324,623 

9,003,211 

505,649.380 

$2,979,525,484 

462,765,983 

561,213,171 

281,592,981 

133,616,926 

$1,439,189,061 

9,206,587 

158,976,526 

53,420,298 

422,983,545 

168,994,251 

203,663,821 

41,676,043 

276,180,807 

$1,335,101,878 

$2,774,290,939 

Actuals 

Adak 

1,467,709 

193,899 

391,159 

26,646 

-

588,497 

$ 2.667,910 

838,657 

791,418 

683,006 

106,030 

$ 2,419,111 

10,718 

139,557 

4,473 

475,061 

40,185 

$286,692 

48,520 

$376,880 

$ 1,382,087 

$ 3.801,197 

$ 

$ 

Proposal 

Adak 

1,467,709 

193,899 

391.159 

26,646 

-

588,497 

2,667,910 

838,657 

1,080,758 

683,006 

106,030 

2,708,451 

Fuel cost adjusted 3/ 

$ 

$ 

$ 

10,718 

139.557 

4,473 

475,061 

40.185 

$286,692 

48,520 

$376,880 

1.382,087 

4,090,537 

(1,422,627) 

204,527 

48,549 

1,675,703 

1/ Excludes public service revenue 

21 5 % of Operating Expense 

3/ Fuel price adjusted from $1.80 to $2.47 based on forward curve and internal Alaska Airlines budget. 
UNITED STATES OF AMERICA 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

OFTICE OF AVIATION ANALYSIS 

CERTIFICATION REGARDING DRUG-FREE WORKPLACE REQUIREMENTS 

IN THE PERFORMANCE OF SUBSIDIZED ESSENTIAL AIR SERVICE 

A. The subsidized essential air service carrier certifies that it will, or will continue, to provide a drugfree workplace by: 

(a) Publishing a statement notifying employees that the unlawful manufacture, distribution, 

dispensing, possession or use of a controlled substance is prohibited in the carrier's wor]q)lace, and 

specifying the actions that wiU be taken against employees for violation of such prohibition; 

(b) Establishing an ongoing drug-free awareness program to inform employees about— 

(1) The dangers of drug abuse m the workplace; 

(2) The grantee's policy of maintaining a drug-free workplace; 

(3) Any available drug counseling, rehabilitation, and employee assistance programs; and 

(4) The penalties that may be imposed upon employees for drug abuse violations 

occurring in the workplace; 

(c) Making it a requirement that each employee to be engaged in the perfomiance of work 

supported by die subsidy be given a copy of the statement required by paragraph (a); 

(d) Notifying the employee in the statement required by paragraph (a) that, as a condition of 

employment supported by the subsidy, the employee will— 

(1) Abide by the terms of the statement; and 

(2) Notify the employer in writing of his or her conviction for a violation of a criminal 

drug statute occurring in the workplace no later than five calendar days after such 

conviction; 

(e) Notifying the agency in writing within ten calendar days after receiving notice under 

paragraph (d)(2) from an employee or otherwise receiving actual notice of conviction. 

Employers of convicted employees must provide notice, including position title, to the 

Office of Aviation Analysis. Notice shall include the order number of each affected 

subsidi2Ed service; 

(f) Taking one of the following actions, within 30 days of receiving notice under paragraph 

(d)(2), with respect to any employee who is so convicted--

(1) Taking appropriate personnel action against such an employee, up to and including 

termination, consistent with the requirements of the Rehabilitation Act of 1973, as 

amended, or 

(2) Requiring such employee to participate satisfactorily in a drug abuse assistance or 

rehabilitation program approved for such purposes by a Federal, State or local 

health, law enforcement, or other appropriate agency; 
(g) Making a good faith effort to continue to maintain a dmg-free workplace through 

implementation of paragraphs (a), (b), (c), (d), (e) and (f). 

B. The subsidized essential air service carrier may, but is not required to, insert in the space provided 

below the site for the performance of work done in connection with the specific grant 

Places of Performance (street address, cify, county, state, zip code). For the provision of essential air 

service, workplaces include outstations, maintenance sites, headquarters ofGce locations, traming sites 

and any other worksites where work is performed that is supported by the subsidy. 

Check [ ] if there are workplaces on file that are not identified here. 

Date 
INSTRUCTIONS FOR CERTIFICATION 

1. By signing and/or submitting this ^plication or grant agreement, the subsidized essential air service . 

carrier is providing the certification. 

2. The certification is a material representation of fact upon which reliance is placed when the agency 

awards the subsidy. If it is later determined that the subsidized carrier knowingly rendered a false 

certification, or otherwise violated the requirements of the Drug-Free Workplace Act, the agency, in 

addition to any otherremedies available to the Federal Government, may take action authorized under 

the Drug-Free Workplace Act. 

3. Workplaces under grants, for grantees other than individuals, need not be identified on the 

certification. If known, they may be identified in the subsidy application. If the subsidized carrier does 

not identify the workplaces at the time of application, or upon award if there is no application, the 

carrier must keep the identity of the worlqjlaces on file in its office and make the information available 

for Federal inspection. Failure to identify all known workplaces constitutes a violation of the 

subsidized carrier's drug-fi^e workplace requirements. 

4. Workplace identifications must include the actual address of buildings (or parts of buildings) or 

other sites where work under the grant takes place. Categorical descriptions may be used (e.g., all 

counters at the airports served by the carrier). 

5. If the workplace identified to the agency changes during the performance of the subsidized service, 

the subsidized carrier shall inform the agency of the change, if it previously identified the workplace in 

question. 

6. Definitions of terms in the Nonprocurement Suspension and Debarment common rule (49 CFR Part 

29) and Drug-Free Workplace common rule (49 CFR Part 29, Subpart F) apply to this certification. 

Carriers' attention is called, in particular, to the following definitions from these rules: 

Controlled substance means a controlled substance in Schedules I through V of the Controlled 

Substances Act (21 USC 812) and as further defined by regulation (21 CFR 1308.11 tiirough 1308.15); 

Conviction means a finding of guilt (including a plea of nolo contendere) or imposition of sentence, or 

both, by any judicial body charged with the responsibility to determine violations of the Federal or 

State criminal drug statutes; 

Criminal drug statute means a Federal or non-Federal criminal statute involving the manufacture, 

distribution, dispensing, use, or possession of any controlled substance; 

Employee means the employee of a subsidized carrier directly engaged in the performance of work 

supported by the subsidy, including: (i) All direct charge employees; (ii) All indirect charge 

employees unless their impact or involvement is insignificant to the performance of subsidized service; 

and (iii) Temporary personnel and consultants who are directly engaged in the performance of work 

supported by the subsidy and who are on the subsidized carrier's payroll. This definition does not 

include woikers not on the payroU of the subsidized carrier (e.g., volunteers, even if used to meet a 

matching requirement; consultants or independent contractors not on the subsidized carrier's payroll; or 

employees of subrecipients or subcontractors in covered woriq)laces). 
UNITED STATES OF AMERICA 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

OFFICE OF AVIATION ANALYSIS 

TITLE VI ASSURANCE 

(Implementing Title VI of the Civil Rights Act of 1964, as amended) 

ASSURANCE CONCERNING NONDISCRIMINATION ON THE 

BASIS OF DISABILITY IN FEDERALLY-ASSISTED PROGRAMS 

AND ACTrVrriES RECEIVING OR BENEFITING FROM 

FEDERAL FINANCIAL ASSISTANCE 

(Implementing the Rehabilitation Act of 1973, as amended, and the 

Air Carrier Access Act of 1986) 

49 CFR Parts 21 and 27 and 14 CFR Parts 271, and 382 

)\\tt&Vt.^ V^-l.-rtg.^, Xuic . (the Recipient) HEREBY AGREES THAT, 

(Name of Recipient) 

I. As a condition to receiving any Federal financial assistance from the 

Department of Transportation, it will comply: with Titie VI of the Civil Rights Act of 1964, 

as amended, 42 U.S.C. 2000d-42 U.S.C. 2000d-4; aU requhements imposed by or pursuant 

to: Title 49, Code of Federal Regulations, Part 21, Nondiscrimination in Federally-Assisted 

Programs of the Department of Transportation—Effectuation of Titie VI of the Civil Rights 

Act of 1964; and other pertinent directives so that no person in the United States shall, on the 

grounds of race, color, or national origin, be excluded from participation in, be denied the 

benefits of, or be otherwise subjected to discrimination under any program or activity for 

which the Recipient receives Federal financial assistance from the Department of 

Transportation. This assurance is required by Titie 49, Code of Federal Regulations, section 

21.7(a) and Titie 14, Code of Federal Regulations, section 271.9(c). 

n. As a condition to receiving any Federal financial assistance from the 

Department of Transportation, it will comply with: section 504 of the Rehabilitation Act of 

1973, as amended (29 U.S.C. 794); the Air Carrier Access Act of 1986 (49 U.S.C. 1374(c)); 

and all requirements imposed by or pursuant to Titie 49, Code of Federal Regulations, Part 

27, Nondiscrimination on the Basis of Handicap in Programs and Activities Receiving or 

Benefitting from Federal Financial Assistance, Titie 14, Code of Federal Regulations, Part 

382, Nondiscrimination on the Basis of Handicap in Air Travel; and other pertinent directives 
so that no oflierwise qualified person with a disability, be excluded from participation in, be 

denied the benefits of, be discriminated against by reason of such handicap in the provision 

of air transportation, or otherwise be subjected to discrimination under any program for 

which the Recipient receives Federal financial assistance from the Department of 

Transportation. This assurance is required by Titie 49, Code of Federal Regulations, section 

27.9 and Titie 14, Code of Federal Regulations, sections 271.9(c) and 382.9. 

in. It will promptly take any meaures necessary to effectuate this agreement The 

Recipient fiirther agrees that it shall take reasonable actions to guarantee that it, its 

contractors and subcontractors subject to the Department of Transportation regulations cited 

above, transferees, and successors in interest will comply with aU requirements imposed or 

pursuant to the statutes and Department of Transportation regulations cited above, other 

pertinent directives, and the above assurances. 

IV. These assurances obligate tiie Recipient for the period during which Federal 

financial assistance is extended. The Recipient agrees that the United States has a right to 

seek judicial enforcement with regard to any matter arising under the statutes and Department 

of Transportation regulations cited above, other pertinent directives, and the above 

assurances. 

V. These assurances are given for the purpose of obtaining Federal subsidy 

under the Essential Air Service Program and are binding on the Recipient, contractors, 

subcontractors, transferees, successors in interest and all other participants receiving Federal 

subsidy m the Essential Air Service Program. The person or persons whose signatures 

appear below are authorized to sign this agreement on behalf of the Recipient 

VI. In addition to these assurances, the Recipient agrees to file: a summary of all 

complaints filed against it witiiin the past year that allege violation(s) by the Recipient of 

Title VI of the Civil Rights Act of 1964, as amended, section 504 of tiie Rehabilitation Act of 

1973, as amended, or the Air Carrier Access Act of 1986; or a statement that there have been 

no complaints filed against it The summary should include the date the complaint was filed, 

the nature of the complaint, the status or outcome of the complaint (i.e.. whether it is still 

pending or how it was resolved). 

L3/^// 

Date Legal Name of Recipient 

By: 

Signature)<5^Xuthorized Official 

v_ 
UNITED STATES OF AMERICA 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

OFFICE OF AVIATION ANALYSIS 

CERTIFICATION REGARDING INFLUENCING ACTIVITIES 

Certification for Contracts, Grants, Loans, 

and Cooperative Agreements 

The undersigned certifies, to the best of his or her knowledge and belief, that: 

(1) No Federal appropriated fiinds have been paid or will be paid, by or on behalf of the 

undersigned, to any person for influencing or attempting to influence an officer or employee 

of any agency, a Member of Congress, an officer or employee of Congress, or an employee 

of a Member of Congress in connection witii the awarding of any Federal contract, the 

making of any Federal grant, the making of any Federal loan, the entering into of any 

cooperative agreement, and the extension, continuation, renewal, amendment or 

modification of any Federal contract grant, loan, or cooperative agreement. 

(2) If any fiinds other than Federal appropriated funds have been paid or will be paid to any 

person for influencing or attempting to influence an officer or employee of any agency, a 

Member of Congress, an officer or employee of Congress, or an employee of a Member of 

Congress in cormection with this Federal contract grant loan, or cooperative agreement die 

undersigned shall complete and submit Standard Form-LLL, "Disclosure Form to Report 

Influencing Activities," in accordance with its instructions. 

(3) The undersigned shall require that tlie language of this certification be included in the 

award documents for all subawards at all tiers (including subcontracts, subgrants, and 

contracts under grants, loans and cooperative agreements) and that all subrecipients shall 

certify and disclose accordingly. 

This certification is a material representation of fact upon which reliance was placed when 

this transaction was made or entered into. Submission of tiiis certification is a prerequisite 

for making or entering into this transaction imposed by section 1352, title 31, U.S. Code. 

Any person who fails to file the required certification shall be subject to a civil penalty of not 

less than $10,000 and not more than $100,000 for each such failure. 

Signature Q Date 

m . % ^ 7\ , Air Carrier 

Essential Air Service Point(s) To Which Certification Applies