Order 2012-7-9

Served: July 9, 2012

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 9th of July, 2012

Air Service at

DIOMEDE, ALASKA

Under 49 U.S.C. 41731 et seq. 

DOCKET DOT-OST-2009-0260

ORDER REQUESTING PROPOSALS

Summary

By this Order, the Department is requesting proposals by August 7, 2012, from carriers 

interested in providing service at Diomede, Alaska, with or without subsidy. 

Background

On October 5, 2009, Kawerak, Inc.,1 requested that the Department add Diomede to the list of 

communities eligible for EAS subsidies. Kawerak indicated that:

“This community has approximately 128 inhabitants, and is located on a small 

island off the coast of Alaska. It lies 2.5 miles from Russia, 28 miles from the 

nearest community of Wales, Alaska, and 135 miles from the nearest hub 

community of Nome. It is possibly the most remote community in the United 

States as it is accessible only by helicopter for the majority of the year, until the 

sea ice freezes solid enough to allow for an ice runway to be built to allow for 

small 9-seater airplane service.

Kawerak indicated that the Postal Service paid Evergreen Helicopters, Inc., to provide 

helicopter service to Diomede to deliver the mail under a direct air taxi contract. However, 

under the terms of such contracts Evergreen must focus first on moving the mail and second 

on passengers and freight on a space-available basis. 

Kawerak indicated Diomede’s air service needs as critical.

Currently, medical professionals, social service providers, telecommunications 

service providers, and other providers of basic services to the community have 

no way of flying to Diomede. The Alaska Air National Guard will fly a 

 1 Kawerak is a non-profit tribal consortium authorized to compact and provide services on behalf of 20 

tribes in the Bering Strait Region of Alaska. 
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helicopter to Diomede to pick up med-evac patients for life and death situations, 

but when the patients are discharged from Norton Sound Health Corporation 

they are stranded in Nome with no place to stay and no way to return to 

Diomede.” 

By letter dated October 15, 2009, the Department advised the State of Alaska that

“Because Diomede did not receive regularly scheduled air service from a certificated carrier 

on October 24, 1978, the date the Airline Deregulation Act of 1978 was signed into law, it is 

not eligible to be an EAS community. However, there are two possible options within this 

Department that may be worth exploring, and I will describe them briefly. The first program 

allows non-EAS communities to apply for subsidized air service. In order to be approved, the 

community or state must submit a proposal to the Department to provide compensation to an 

air carrier to provide transportation to the community; the state, local government, or an 

individual must pay 50% of the required subsidy; and, the Department must find the proposals 

“reasonable,” according to statutory criteria [under 49 USC Section 41736.] The second 

program administered by this Department that could possibly be of some assistance is called 

the Small Community Air Service Development Program (SCASDP). 

By letter dated January 13, 2010, we indicated to the State that 

“We are pleased to inform you that we have reached agreement with Evergreen 

Helicopters, Inc., to provide subsidized air service at Diomede, Alaska. While 

the agreement was only between Evergreen and the Department, it is the first 

step before we issue an order selecting Evergreen to inaugurate air service to 

Diomede. The next step is for the state to concur with the terms and conditions 

of Evergreen’s proposal. Once that is done, we will draft an order and forward 

it to the Assistant Secretary for decision.”

Funding was not forthcoming from the State at that time and the case went dormant until now. 

After more recent discussions with Kawerak, we received a letter from Mr. Curtis Thayer, 

Assistant Commissioner, Alaska Department of Commerce, Community, and Economic 

Development dated June 20, 2012. The letter states:

“I understand the community would be satisfied if there was at least one 

scheduled round trip flight per week to Nome, Alaska, above and beyond the 

current space-available mail service flights. The State of Alaska proposes to the 

Secretary of Transportation that compensation be provided to an air carrier to 

supply air transportation to/from Diomede. I am submitting this proposal under 

49 U.S.C. §41736, Air Transportation to Non-eligible Places, because Diomede 

is not eligible for subsidy support under 49 U.S.C. 41731, et seq, Basic Essential 

Air Service. Based on this request, I anticipate that the U.S. Department of 

Transportation (U.S. DOT) would issue a Request for Proposals (RFP), select an 

air carrier, and administer/pay the selected carrier for air service provided in a 

similar manner that it administers carrier selections and subsidy payments under 

Basic EAS. 
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The [State of Alaska’s] FY13 operating budget has been signed and becomes 

effective July 1, 2012. The funding was included as part of the Department’s 

base budget and would be subject to legislative appropriations and approvals by 

the Governor in subsequent years. The [State] is in the process of offering a 

grant to Kawerak, Inc. in the amount of $200,000. We have systems in place to 

provide the full amount of the grant as an advance payment. Kawerak, Inc., has 

indicated in the grant budget that they will be providing $190,476 in funding 

directly to the U.S. DOT for use in the project.” 

Request for Proposals

We request proposals from carriers interested in providing service at Diomede. The level of 

service is limited to what can be provided with an annual subsidy of $380,952– half of that 

total from the State/Kawerak, and other half from the U.S. DOT. Carriers should file their

proposals by August 7, 2012. Staff will then docket the proposals, thereby making them 

public. Shortly afterwards, we will provide a summary of the proposals to the communities

and State and ask them to submit their final comments. We will give full consideration to all 

proposals filed in a timely manner.2 

Interested carriers should prepare their proposals with every expectation that their initial 

proposals will also be their final and only proposals. We retain the discretion to negotiate 

proposals with carriers when we deem it desirable. We also retain the discretion to reject 

outright all unreasonable or unrealistic proposals and, if necessary, solicit a new round of 

proposals. However, we anticipate that negotiation or rejection will remain only occasional 

exceptions to the rule.

We are here providing interested carriers with some basic information to serve as guidance 

when they prepare their proposals, but we will not prescribe a precise format. We expect 

proposals to adequately describe the service being proposed and the annual amount of 

subsidy being requested.3 The applicants can make their own judgments as to the level of 

detail they wish to present; however, they might want to include proposed schedules as well 

as supporting data for their subsidy requests, such as projected block hours, revenues, and 

expenses. We strongly encourage clear, well-documented proposals that will facilitate their 

evaluation by the affected community and the Department. Our selection criteria are stated 

in 49 U.S.C. §41736 (a)(2).4 

With specific respect to Diomede, we expect proposals that request no more than 

$380,952 annual subsidy. Carriers are free to request less subsidy for a given service 

level. As the State has indicated, one round trip per week connecting the community to 

the national transportation system is the goal, but carriers are free to offer more service 

 2 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to 

provide service without subsidy and we determine that service can be reliably provided without such 

compensation, we typically do not proceed with the carrier-selection case. Instead, we simply rely on that 

carrier’s subsidy-free service as proposed.

3 The $380,952 subsidy level is the ceiling level of subsidy. 

4 “In determining whether a proposal is reasonable, the Secretary shall consider, among other factors – (A) 

the traffic-generating potential of the place; (B) the cost to the United States Government of providing the 

proposed transportation; and (C) the distance of the place from the closest hub airport. At this time, we 

would note that since Diomede is an island with no scheduled air or surface transportation, it can be said to 

be extremely far from the closest hub.
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than that if they require the ceiling level of subsidy or less. Carriers may propose service 

for a one-year period.5 Consistent with the State’s letter, a typical two-year contract may 

be proposed, with service in the second year contingent on funding being available from 

the State.6 

We encourage proposals that meet the community’s requirements in an efficient manner. 

Carriers are also welcome to propose more than one service option, if they choose. When 

submitting their proposals, carriers need not limit themselves to connecting Diomede 

over either Nome or Wales, so long as subsidy requirements remain competitive. 

We note that Evergreen Helicopters currently provides service to Diomede pursuant to a 

direct contract with the Postal Service. This contract would not necessarily supplant the 

Postal Service contract.7 We could select a different carrier, or we could select 

Evergreen, should it choose to submit a proposal, for service over and above the level it 

provides to Diomede pursuant to its contract with the Postal Service. 

We encourage carriers to work with the community and State in advance of the due date 

for proposals when proposals can still be adjusted so that they can craft them to best meet 

the communities’ needs. As always, we will fully consider the community’s views 

before making a long-term carrier-selection decision. 

Filing Format

Carrier proposals should be submitted to the Department with all materials merged into a 

single document. In addition, because the document will be published on

www.regulations.gov, each page should be formatted to be viewed online.

Historical Traffic

In order to assist carriers in making their traffic and revenue projections, we have 

included historical traffic for the community in Appendix B. As typical in Alaska, freight 

and mail are very directional. However, Appendix B shows only service with fixed-wing 

aircraft when the ice-runway forms, because Evergreen Helicopters does not file the T100 Market report, the source of the data on Appendix B. In this instance, a fixed amount 

of subsidy support is available. To the extent carriers can maximize revenue by charging 

higher fares, or reducing service, additional service could be proposed.

Other Carrier Requirements

The Department is responsible for implementing various Federal statutes governing lobbying 

activities, drug-free workplaces, and nondiscrimination.8 Consequently, all carriers receiving 

Federal subsidy to support Air Service must certify that they are in compliance with 

Department regulations regarding drug-free workplaces and nondiscrimination, and those 

 5 Carriers should also recognize that in some undetermined periods of time during the winter an ice runway 

may or may not form, which would obviate the need for helicopter service. As shown in Appendix B, that 

period of time varies from year to year. 

6 If carriers wish, they can request longer contract periods than the typical two-year period.

7 Under the mail statute, if a certificated air carrier inaugurates service to a community where a direct air 

taxi contract is in place, that contract is vacated, provided that the certificated carrier’s service meets the 

needs of the Postal Service. 

8 The certifications are available on the web at http://ostpxweb.dot.gov/aviation/index.html.
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carriers whose subsidies exceed $100,000 over the life of the rate term must also certify that 

they are in compliance with the regulations governing lobbying activities. Because the 

Department is prohibited from paying subsidy to carriers that do not submit these documents, 

the selected carrier will be required to submit them in order to receive subsidy. Interested 

carriers requiring more detailed information regarding these requirements, as well as copies of 

the certifications, should contact the Office of Aviation Analysis at (202) 366-5903. The 

Department is prohibited from paying subsidy to carriers that do not submit these documents.

Community Comments

Civic officials and the State are welcome to submit comments on the proposals at any time. 

As noted earlier, we will provide a summary of the proposals to the civic parties and ask 

them to submit their final comments shortly after June 21, the due date for carrier proposals.

This Order is issued under authority delegated in 49 CFR 1.56a(f) and re-delegated to the 

Director, Office of Aviation Analysis.

ACCORDINGLY,

1. The Department requests proposals from carriers interested in providing Service at 

Diomede, Alaska. Carriers should submit their proposals, with subsidy if necessary, by 

August 7, 2012. Proposals should be emailed to EAS@dot.gov, with the title “Proposal to 

Provide Air Service at Diomede, Alaska, DOT-OST-2009-0260.” Questions regarding 

filings may be directed to Kevin Adams at 202-366-1047 or Kevin.Adams@dot.gov;

2. This Docket will remain open until further Order of the Department; and

3. We will serve this Order on the service list for this Docket.

Persons entitled to petition the Department for review of this Order under the 

Department’s Regulations, 14 CFR 385.50, must file such petitions within ten (10) days 

after the date of service of this Order. 

This Order will be effective immediately, and the filing of a petition for review shall not 

preclude its effectiveness.

By: 

TODD M. HOMAN

Director

Office of Aviation Analysis

(SEAL)

An electronic version of this document is available on the World Wide Web at

http://www.regulations.gov
Appendix A

Nonstop Great Circle Miles

Diomede (DIO) to Wales (WAA) 26

Diomede (DIO) to Nome (OME) 134

Nome (OME) to Wales (WAA) 109

Nome (OME) to Bethel (BET) 283

Nome (OME) to Savoonga (SVA) 163

Diomede (DIO) to Savoonga (SVA) 151
Appendix B

Diomede, T-100 Market Report, Scheduled Air Service, Historical Traffic

Origin of Diomede (DIO) Dest of Diomede (DIO) O&D of Diomede (DIO)

Passenger Equivalents (PEQ) Passenger Equivalents (PEQ) Passenger Equivalents (PEQ)

Year Month Pax Frt. Mail Total Pax. Frt. Mail Total Pax. Frt. Mail Total

2008 4 60 7.1 1.5 68.5 77 56.2 85.3 218.5 137 63.3 86.8 287.0

2008 5 26 1.4 1.2 28.6 20 18.4 36.2 74.6 46 19.8 37.4 103.2

Total 86 8.4 2.7 97.2 97 74.6 121.5 293.0 183 83.0 124.2 390.2

2010 2 44 1.2 1.5 46.7 54 26.8 44.9 125.7 98 28.0 46.4 172.4

2010 3 93 2.3 4.4 99.7 88 38.5 70.0 196.5 181 40.8 74.4 296.2

2010 4 67 1.7 0.9 69.6 62 44.2 96.4 202.6 129 45.9 97.3 272.2

2010 5 28 2.0 2.1 32.1 45 14.3 20.3 79.6 73 16.3 22.4 111.7

Total 232 7.2 8.9 248.1 249 123.7 231.6 604.3 481 130.9 240.5 852.4

2011 2 12 0.4 1.3 13.7 16 8.8 9.0 33.9 28 9.2 10.3 47.6

2011 3 69 2.4 4.3 75.7 99 37.9 80.3 217.3 168 40.4 84.6 293.0

2011 4 65 3.9 3.1 72.0 53 39.2 33.5 125.7 118 43.1 36.7 197.7

Total 146 6.7 8.7 161.4 168 86.0 122.9 376.9 314 92.7 131.6 538.3

2012 2 14 0.3 0.3 14.6 13 5.2 4.3 22.4 27 5.4 4.6 37.0

2012 3 67 4.2 0.7 71.9 66 50.9 88.2 205.1 133 55.1 88.9 277.0

2012 4 54 2.8 3.1 59.9 65 36.3 71.2 172.4 119 39.1 74.3 232.4

2012 5 45 0.7 9.2 54.9 55 19.4 25.6 100.0 100 20.1 34.8 154.9

Total 180 8.0 13.3 201.3 199 111.7 189.3 500.0 379 119.7 202.6 701.3

For payload purposes, 200 lbs. of mail or freight is one passenger equivalent, PEQ.

Evergreen does not submit the T-100 report. For periods of time when no traffic is shown, presumably

the ice runway did not form sufficiently for scheduled air service with fixed-wing aircraft to operate.
Appendix C

Example of General Terms and Conditions for Air Service

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 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 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 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 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 

[DATE]. The Department’s obligation for performance under this solicitation beyond 

[DATE], 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 performance under this Order beyond [DATE], until funds are 

made available to the Department for performance. If funds are not made available for 

performance beyond [DATE], 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.