Essential Air Service at 

CENTRAL,ALASKA 

CIRCLE, ALASKA 

Under 49 u.s.c. 41731 et seq. 

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June 28,2011 

EAS & Domestic Analysis Division, X-53 

Office of Aviation Analysis 

U.S. Department of Transportation 

400 i h Street S.W. Room 6401 

Washington, D.C. 20590 

Dear Sirs: 

DOCKET OST-1998-3621 

Enclosed please find our proposal for Essential Air Service to Central and Circle for the 

period December 1,2011 to November 30th, 2013. 
Discussion 

As it has for a number of years, traffic at Circle and Central has been static, with small 

variations up and down year to year. 

Year Passenger Equivalents 

2002 802 

2003 1039 

2004 925 

2005 868 

2006 816 

2007 977 

2008 933 

2009 874 

2010 897 

We expect the trend to be flat over the next two years, with similar slight variations, or a 

slight downward trend. However, when we compare only the 2007-2008 years on which 

the previous subsidy was based, to the 2009-1010 data for this period, there is a 7% 

reduction in PEQ's. 

Our base proposal covers five flights weekly with either a Piper PA31-350 or Cessna 

208B. We expect to increase the percentage of flights flown with the newer Cessna 208B 

aircraft as we retire the PA31-350 fleet over time. 

We have adjusted two numbers from the historical data. First, we have used our current 

fuel costs, which are considerably higher than the average over the last two years. We 

have projected no further increase at this time in fuel costs over the next two years. 

Second, we have adjusted the depreciation numbers as most of our Chieftain fleet is fully 

depreciated, and existing and expected Cessna 208B upgrades to the fleet are reflected in 

this adjustment. 

Both aircraft are capable of IFR operations, and while neither Circle or Central have IFR 

approaches it is often necessary to fly IFR to get from the Tanana to Yukon River valley. 

In some cases, it is necessary to fly to Fort Yukon, execute the IFR approach there, and 

then continue VFR up river to Circle and Central. 

Our proposed flight schedule would continue with the current days and times for the five 

day per week service Monday thru Friday: 

Arrive 

Leave 

Fairbanks 

1200 

Central 

1250 

1300 

Circle 

1320 

1330 

Fairbanks 

1420 

These scheduled times reflect our OAG schedule and closely reflect historic block times. 

Therefore our proposal is based on 2.0 hours per flight. Total flight hours per year with 
100% completion is 52 weeks x 5 days per week x 2.0 hours roundtrip flight = 520 hours 

per year and 1040 hours for the two year subsidy period. 

See appendix A for the cost analysis, Appendix B for the revenue analysis and Appendix C 

for the subsidy analysis. 

Additive Alternative A 

We recently met with the Circle Tribal Council and they expressed an interest in service to 

Fort Yukon, which is a regional hub and currently provides medical services to the Circle 

Native community. Therefore we have proposed an Alternative A which would provide 

five flights per week, but on only four days. On one of the four days, both a morning and 

evening flight would be provided, with connections to Fort Yukon. The routing would be 

Fairbanks - Fort Yukon - Central - Circle - Fort Yukon Fairbanks, and this routing would 

be repeated in the late afternoon. 

This would meet a number of the community's needs. Residents could travel to either 

Fairbanks or Fort Yukon, conduct business or medical appointments, and return to Circle 

in a single day. In addition, medical providers who travel from the Fort Yukon clinic 

could travel to Circle and provide services there for the day. This travel is currently being 

done ad hoc through charters, but does not meet the community'S needs. 

We therefore also offer an Additive Alternative A, providing 5 round trips per week, on 

four days, with connecting service between Fort Yukon on two flights operated on a single 

day. Flight time from Circle to Fort Yukon is 25 minutes, adding 1.7 hours of flight time 

per week. 

Therefore the additional cost to provide the Fort Yukon link would be 1.7 hours per flight 

x $683.18 per flight hour (direct and indirect) x 52 flights per year = $60,393.11. 

If this proposal is accepted, we request the option to include Chalkyitsik in the routing 

between Circle and Fort Yukon on a flag stop basis, as there are community ties here as 

well. We have calculated no additional costs for this optional flag stop. 

Conclusion 

We look forward to working with you on this renewal, and providing continuing service to 

the communities of Circle and Central. Please contact me at (907) 378-7203 if you have 

any further questions. 

Sincerely, 

Warbelow's Air Ventures, Inc. 

//"'\\ t t, .i f;4trr "" " ",.-_/:iAL"'i::" 

Arthur Warbelow, President 
Appendix A - Cost Data 2009 - 2010 

Direct Exeense 102009 202009 302009 402009 

Pilot/Co-pilot 259225 242598 253560 256248 

Fuel/Oil 274526 420740 499485 390165 

Other 40066 37638 37638 37638 

Maintenance 436700 610021 588454 929451 

Deprec/Rental 38388 44688 47913 42678 

Total Direct Exp 1048905 1355685 1427050 1656180 

Hours Flown 2607 3042 3240 2731 

Cost per hour 402 446 440 606 

Indirect Exeense 102009 202009 302009 402009 

Traffic Related 82549 93015 234775 125617 

Departure Related 195907 194421 204000 236797 

Capacity Related 155395 170168 187232 249826 

Total Indirect Exp 433851 457604 626007 612240 

Hours Flown 3229 4159 4358 3983 

Cost per hour 134 110 144 154 

Adjusted 

Average Historical 

Direct Exeense 102010 202010 302010 402010 Per Hour Data 

PiloVCo-pilot 248675 281741 277451 278865 89.95 

Fuel/Oil 354299 461998 512658 456643 199.72 144.49 

Other 36509 34250 34250 34250 12.53 

Maintenance 409055 421867 552077 810947 203.99 

Deprec/Rental 37566 40965 43905 39969 47.00 14.41 

Total Direct Exp 1086104 1240821 1420341 1620674 553.20 

Hours Flown 2663 2869 3176 2999 23327.00 

Cost per hour 408 432 447 540 

Average 

Indirect Exeense 102010 202010 302010 402010 Per Hour 

Traffic Related 103626 120459 205180 195498 34.07 

Departure Related 196964 203518 224325 222681 52.84 

Capacity Related 171552 172953 188208 126546 48.49 

129.75 

Total Indirect Exp 472142 496930 617713 544725 

Hours Flown 3798 4300 4861 4153 15729 

Cost per hour 124 116 127 131 129.98 
Appendix B - Revenue Data 2009 - 2010 

Passenger Revenue Pax Fare 

Central 40 97.00 

Circle 877 99.00 

Passenger Total 

Cargo Revenue Pounds Rate 

Central 8600 0.45 

Circle 17000 0.51 

Cargo Total 

Mail Revenue Pounds Rate 

Central 72400 11 

Circle 54600 11 

Mail Total 

Total Revenue 

11 Mail Revenue: 

Central: (7240012000) x 104 miles = 3765 ton miles 

Central: 

Circle: 

Circle: (5460012000) x 131 miles = 3576 ton miles 

Terminal charge 

Ton-mile mileage charge 

Terminal charge 

Ton-mile mileage charge 

Totals 

3,880.00 

86,823.00 

90,703.00 

3,870.00 

8,670.00 

12,540.00 

67,797.44 

59,321.65 

127,119.09 

$230,362.09 

Weight Rate 

72400 0.35808 25924.99 

3765 11.1215 41872.45 

67797.44 

Weight Rate 

54600 0.35808 19551.17 

3576 11.1215 39770.48 

59321.65 
Appendix C - Subsidy Calculation 2011 - 2013 

Total Direct Expense 

Total Indirect Expense 

Total Operating Cost 

Profit Element @ 10% of TOC 

Total Economic Cost 

Total Revenue 

Subsidy need at 100% Completion 2 yr subsidy 

1 yr subsidy 

$575,328 

$135,179 

----------- -----------

$710,507 

$71,051 

=========== 

$781,558 

$230,362 

$551,196 

$275,598