Order 2010

- 12

- 33 Served: December 29, 2010


### UNITED STATES OF A MERICA DEPA RTMENT OF TRA NSPORTA TION OFFICE OF THE SECRETA RY WASHINGTON, D.C.
Issued b y the Department of Transportation on the 29 th of December , 20 10 Essential Air Service at ELFIN COVE and PELICA N , A LASKA Under 49 U.S.C. 41731 et seq
. DOCKET DOT - OST -2002 - 11586



### ORDER REQUESTING PROPOSA LS
Summary By this order, the Department is requesting proposals , by January 31 , from carriers interested in providing essential air service (EAS) at Elfin Cove and Pelican , Alaska, for a new rate term , with or without subsidy , beginning June 1, 20 1 1 . (See Appendix A for map.) Background By Order 200 7

- 6

- 2 , issued June 6 , 200 7 , the Department selected Alaska Seaplane Service, LLC (Alas ka Seaplane ), to continue providing subsidized EAS at Elfin Cove and Pelican for the two

- ye ar period through May 31 , 20 09 . That order established an annual subsidy rate of $ 185,772 , for service to Juneau provided with 6

- seat Beaver DHC

- 2 aircraft, consisting of six round trips per week from Pelican ye ar- round; and one round trip per week during the six

- month peak season, and five flag stops per week during the six

- month off

- peak season from Elfin Cove

. In its original EAS proposal, Alaska Seaplane had offered a four

- ye ar term, but with a provision that it could request, and presumabl y receive, a rate increase during the four

- ye ar contract without going through the carrier

- selection process as is the longstanding program practice. In rejecting Alaska Seaplane’s four

- ye ar offer in Order 2007

- 6

- 2, the Department stated that “ allowing the carrier to unilaterall y change its proposal half way through its term undercuts the potential benefits to the Department and community of having carriers compete for the service.” On June 2 2, 2007, Alaska Seaplane filed a Petition for Reconsideration of Order 2007

- 6

- 2. In its petition, Alaska Seaplane states that it would offer the four

- ye ar term “without any m id

- term rate review

. ” On August 17, 2007, we received a letter from the Mayor of Pelican fully supporting the selection of Alaska Seaplane for four years. Therefore, by2

Order 2007

- 9

- 7, September 7, 2007, we granted Alaska Seaplane’s Petition for Reconsideration and extended its subsidized EAS to a four

- ye ar term, through May 31, 201 1, at the same subsidy rate of $185,772. Request for Proposals As the end of the current rate term approach es , in order to provide sufficient time to complete the carrier

- selection process before the current contract expire s , we are here requesting propos als from carriers interested in providing service at Elfin Cove and Pelican , with or without subsidy

support, for a new rate term beginning June 1, 20 1 1

. Carriers should file their proposals no later than January 31 , 20 1 1

. Staff will then docket proposal s, thereb y making them public, and shortly afterwards will provide a summary of the proposals to the community

and ask them for their final comments. We will give full consideration to all proposals filed in a timely manner. 1 Interested carriers should p repare 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 outri ght all unreasonable or unrealistic proposals and 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 for their proposals. We expect proposals to adequatel y describe the service being proposed and the annual amount of subsidy being requested. The appli cants 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 stron gl y encourage clear, well

- documented proposals that will facilitate their evaluation by the affected communities and the Department. 2 Service and Traffic History Alaska Seaplane has provided service at the communities for a number of years. In order to a ssist carriers in making traffic and revenue forecasts, we have included historical traffic data, including mail and cargo data, in Appendix B.

1 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes t o provide essential air service without subsidy and we determine that service can be reliably provided without such compensation, we do not proceed with the carrier

- selection case. Instead, we sim ply rely on that carrier’s subsidy

- free service as proposed

. 2 In selecting a carrier to provide subsidized essential air service to an Alaska community , 49 U.S.C. 41733(c)(1) directs us to consider five factors: (1) service reliability; (2) contractual and marketing arrangements with a larger carrier at the hub; (3) interline arrangements with a larger carrier at the hub; (4) community views , giving substantial weight to the views of the elected officials representing the users; and (5) the experience of the applicant in providing, in Alaska, scheduled air servic e or significant non

- scheduled service. In addition , the Consolidated Appropriations Act, 2008, Public Law 110

- 161 , provides that when selecting a carrier to provide EAS, the Department may consider the relative subsidy requirements, thus codifying a fact or that we have considered since the inception of the program. Appendix C contains the general provisions governing essential air service; as in the past, these provisions will be included in the selection order as part of the Department’s authorization o f subsidy for the selected service.3

Proposals should provide sufficient capacity to accommodate historical levels of traffic over the critical outb ound segment because of the directional imbalance of traffic. 3 Specificall y for Elfin Cove and Pelican , we request proposals offering service comparable to what the communities currentl y receive, i.e., six round trips a week, with small aircraft (10 seats or less). Elfin Cove generated the equivalent of 264 and 361 passengers in the second and third quarters of 2009 , respectively

. Pelican generated the equivalent of 598 passengers in the second quarter of 2009 and 663 in the third quarter of the same ye ar. 4 We encourage proposals that meet these requirements in an efficient manner. Carriers are also welcome to propose more than one option, if they choose; they

need not limit themselves to those requirements if they envision other, potentially more attractive service possibilities

– different hubs or longer

- term contracts , for example

– with subsidy requirements that remain competitive. New Filing Procedures 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 Regulations.gov, each page should be formatted to be viewed online. Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobb ying acti vities, drug

- free workplaces and nondiscrimination. 5 Consequently , all carriers receiving Federal subsidy to support essential air service must certify that they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimin ation, and those 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. All carriers that plan to submit proposals involving subsidy should submit the required certifications along with their proposals. Interested carriers requiring more detailed information regarding these requirements, as well as copies of the certifications, should contact the Office of Aviation Analy sis at (202) 366

- 5903. The Department is prohibited from paying subsidy to carriers that do not submit these documents. 6 Community Comments Civic officials and the State are welcome to submit comments at any time. We encourage prospective applicants to contact the communitie s before they submit their proposals so that they can tailor them to the communities ’ needs, as they will not be able to amend them after the due date. As noted earlier, we will provide a copy of the proposals to the civic parties and

3 Ty pically in Alaska, mail and freight flows are asymmetrical, with up to 90% of total mail and freight flowing outbound from the hub to the EAS communities. 4 Alaska Seaplane has historically provided additional service during the peak season to accommodate increased loads. 5 The regulations applicable to these areas are: (1) 49 CFR Part 20

– New restrictions on lobbying; (2) 49 CFR Part 21

– Nondiscrimination in federally

- assisted programs of the Department of Tran sportation

– Effectuation of title VI of the Civil Rights Act of 1964; 49 CFR Part 27

– Nondiscrimination on the basis of disability in programs and activities receiving or benefiting from Federal financial assistance; and 14 CFR Part 382

– Nondiscriminati on on the basis of disability in air travel; and (3) 49 CFR Part 29

– Government

- wide debarment and suspension (non

-procurement) and government

- wide requirements for drug

- free workplace (grants). 6 The certifications are also available on the web at http: //ostpxweb.dot.gov/aviation/index.html.4

ask them to submit their final comments shortly after January 31 , 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 Analy sis. ACCORDINGLY, 1. We request that carriers interested in providing essential air service at Elfin Cove and Pelican , Alaska, submit their proposals, with or without subsidy requests, no later than January 31 , 20 11

. The p roposals should be emailed to: EAS@dot.gov with the title “Proposal to Provide Essential Air Service at Elfin Cove and Pelican , Alaska (Docket DOT

- OST

- 200 2

- 11586 ) ” ; 7 2. D ocket DOT

- OST

- 2002

- 11586 will remain open until further order of the Department; and 3. The D epartment will serve copies of this order on the civic officials of Elfin Cove and Pelican , the Alaska Department of Transportation and Public Facilities, and the parties listed in Appendix D. 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) day s 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 Anal ysis (SEAL) An electronic version of this document is available on the World W ide Web at http://www.regulations.gov

7 Q uestions regarding filings in response to this order should be directed to Kevin Adams at Kevin.Adams @dot.gov or (202) 366

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.

### Appendix A

AREA MAP

### Appendix B Page 1 of 2 Historical Origin

- Destination Traffic at Elfin Cove , Alaska 1

12 Months ended June 30, 2010 3Q09 4Q09 1Q10 2Q10 Total Passengers From ELV 150 11 10 108 279 To ELV 144 7 13 131 295 294 18 23 239 574 Cargo From ELV 1532 676 357 3577 6142 To ELV 5333 2592 2459 7883 1826 7 6865 3268 2816 11460 24409 Mail From ELV 4912 873 871 638 7294 To ELV 7994 3992 2523 11603 26112 12906 4865 3394 12241 33406 Total Outbound PEQs 2 361 51 48 336 796

12 Months ended June 30, 2009 3Q08 4Q 08 1Q09 2Q09 Total Passengers From ELV 109 16 7 96 228 To ELV 109 10 9 111 239 218 26 16 207 467 Cargo From ELV 1982 139 296 2786 5203 To ELV 4842 2458 2594 4538 14432 6824 2597 2890 7324 19635 Mail From ELV 2956 850 515 1 114 5435 To ELV 13014 4311 3217 6810 27352 15970 5161 3732 7924 32787 Total Outbound PEQs 2 307 60 45 264 676

___________________ 1 Source: Bureau of Transportation Statistics; Schedule T

- 100. 2 PEQs: Passenger Equivalents. Every 200 poun ds of freight or mail is the equivalent of one passenger.

### Appendix B Page 2 of 2 Historical Origin

- Destination Traffic at

Pelican , Alaska 1

12 Months ended June 30, 2010 3Q09 4Q09 1Q10 2Q10 Total Passengers From PEC 250 81 45 200 576 To PEC 198 73 51 238 560 448 154 96 438 1136 Cargo From PEC 6960 2638 1638 12013 23249 To PEC 29021 22422 13938 21259 86640 35981 25060 15576 33272 109889 Mail From PEC 3740 3381 1978 2585 11684 To PEC 14069 13665 8566 13166 49466 17809 17046 10544 15751 61150 Total Outbound PEQs 2 663 334 209 610 1817

12 Months ended June 30, 2009 3Q08 4Q08 1Q09 2Q09 Total Passengers From PEC 367 57 43 171 638 To PEC 311 84 40 218 653 678 141 83 389 1291 Cargo From PEC 5904 2230 903 10810 19847 To PEC 25773 10055 8071 25153 69052 31677 12285 8974 35963 88899 Mail From PEC 3864 3240 1622 2380 11106 To PEC 17435 14518 8488 16548 56989 21299 17758 10110 18928 68095 Total Outbound PEQs 2 894 264 166 598 1921

___________________ 1 Source: Bureau of Transportation Statistics; Schedule T

- 100. 2 PEQs: Passenger Equivalents. Every 200 pounds of freight or mail is the equivalent of one passenger .

### Appendix C

Example of General Terms and Conditions for Essential A ir 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 supp orting 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 conformanc e 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 Analy sis 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 safel y 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 pay ments 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 pay ments 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 mutuall y agreed to in writing b y the Department and carrier do not constitute a total or partial reduction or cessation of pay ment. 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 pay ment for services can be made. No legal liability on the part of the Government for any pay ment 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 b y the Department. All claims for pay

ment must be submitted within 60 day s of the last day of service provided under this order.

### Appendix D

40

- Mile Air, Leif Wilson 40

- Mile Air, Vanessa Thompson Adams, Kevin, Work Aero Twin, AACA, Tony Cestnik Alaska Air Carriers Association, Joy Journeay Alaska Airlines, Joe Sprague Alaska Airlines, Sandy Sinick Alaska Central Ex press, John Seamon Alaska Central Express, Mike Bergt Alaska Central Express, Steve Endlich Alaska DOT, Christine Klein Alaska DOT, Rebecca Cronkhite Alaska DOT

- Medicaid Passenger Fares Alaska Seaplanes, Craig Loken Alsek Air, Les and Debra Hartley Arctic Circle, Donald Singsaas Arctic Circle, Kelly Harris Arctic Transportation Services (ATS), Wilfred Ryan Arctic Transportation Services, (ATS), Jim Hjelm Bering Air, Allen Haddadi Bering Air, Jim Rowe Bob Stanford (Islairbk@Alaska.com) Congre ssional, Begich, David Ramseur Congressional, Begich, Megan Foster Congressional, Begich, Tiffany Zulkosky Congressional, Murkowski, Arne Fuglvog Congressional, Young, Jeremy Price Consultant, Hank Myers Consultant, Ken Acton Consultant, Norm Isr aelson Dorato Jets Dorato Jets, Mark McKenna Ellis Air Taxi, Lynn Ellis Era Aviation, Mike Lenorman ERA, David M. Richards Frontier Flying, Bob Hajducovich Grant Aviation, Bruce McGlasson Hageland, Mike Hageland Hageland, Patrick Thurston Hagelan d, Steve Wahrnke Harris Air, Fly Hackett Harris Air, Scott Harris Air, Scott Harris Homeland Security, David Bernier Homeland Security, Ragan, William Homer Air, Andy Smircich Iliamna Air, Tim LaPorte Inland Aviation, Stephen Hill Island Air, Bo b Stanford Island Air, Jennifer Stanford Katmai Air, Sonny Peterson LAB Flying Service, Eric Bennett Larrys Flying, Jean Chenaille DHS, Michael Duffy Myers, Larry (OST) Northern Air cargo, Dave Squier Northern Air Cargo, Keven Schlosstein OST, D ennis DeVany Pacific Airways, Steve Montanus PenAir Consultant, Patrick Rizzi PenAir, Danny Seybert PenAir, Kim Kawaguchi PenAir, Orin Seybert PenAir, Robert Cohn PenAir, Scott Bloomquist ProMech, Mark Sessoms RITA, Benard Stankus Salmon Air, Ron Salmon SeaPort Airlines, Jim Day SeaPort Airlines, Rob McKinney SeaPort, Daniel Helland Servant Air, Wes Osowski Skagway, Ben Lingle Smokey Bay Air, Claire McCann Spernak Airways, Mike Spernak Tanana Air Service, Brian Martin Taquan Air Service, Brien Salazaar Taquan, Beckie Allen Tatonduk, Controller, Tina Paylor Tatonduk, Marketing, Robert Ragar Tatonduk, Owner, Robert Everts USPS, Greg Garcia USPS, Leonard Kilburn USPS, Mary Tobias USPS, Steve Deaton USPS, Tina Campbell USPS, William Jones Warbelows Air Ventures, Art Warbelow Ward Air, Ed Kiesel Wings of Alaska, Mike Steadman Wright Air Service, Bob Bursiel Yute, Tim Vottis