Order 2010-12-33

Served: December 29, 2010

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 29th of December, 2010

Essential Air Service at

ELFIN COVE and PELICAN, ALASKA

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

DOCKET DOT-OST-2002-11586

ORDER REQUESTING PROPOSALS

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, 2011. (See Appendix A for map.)

Background

By Order 2007-6-2, issued June 6, 2007, the Department selected Alaska Seaplane Service, 

LLC (Alaska Seaplane), to continue providing subsidized EAS at Elfin Cove and Pelican for 

the two-year period through May 31, 2009. 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 year-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-year term, but with a 

provision that it could request, and presumably receive, a rate increase during the four-year 

contract without going through the carrier-selection process as is the longstanding program 

practice. In rejecting Alaska Seaplane’s four-year offer in Order 2007-6-2, the Department 

stated that “allowing the carrier to unilaterally 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 22, 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-year term “without any

mid-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, by
2

Order 2007-9-7, September 7, 2007, we granted Alaska Seaplane’s Petition for 

Reconsideration and extended its subsidized EAS to a four-year term, through May 31, 

2011, at the same subsidy rate of $185,772.

Request for Proposals

As the end of the current rate term approaches, in order to provide sufficient time to complete 

the carrier-selection process before the current contract expires, we are here requesting 

proposals from carriers interested in providing service at Elfin Cove and Pelican, with or 

without subsidy support, for a new rate term beginning June 1, 2011. Carriers should file 

their proposals no later than January 31, 2011. Staff will then docket proposals, thereby 

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 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 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 adequately describe the service being proposed and the 

annual amount of subsidy being requested. 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 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 

assist 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 to 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 simply 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 service 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 factor 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 of subsidy for the selected service.
3

Proposals should provide sufficient capacity to accommodate historical levels of traffic over 

the critical outbound segment because of the directional imbalance of traffic.3 Specifically for 

Elfin Cove and Pelican, we request proposals offering service comparable to what the 

communities currently 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 year.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 lobbying 

activities, 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 nondiscrimination, 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 

Analysis 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 communities 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 Typically 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 Transportation – 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 –

Nondiscrimination 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 Analysis.

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, 2011. The proposals 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-2002-

11586)”;

7

2. Docket DOT-OST-2002-11586 will remain open until further order of the Department; and

3. The Department 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) 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

 

7 Questions regarding filings in response to this order should be directed to Kevin Adams at 

Kevin.Adams@dot.gov or (202) 366-1047.
Appendix A

AREA MAP
Appendix B

Page 1 of 2

Historical Origin-Destination Traffic at

Elfin Cove, Alaska1

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 18267

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 4Q08 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 1114 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 pounds of freight or mail is the equivalent of one 

passenger.
Appendix B

Page 2 of 2

Historical Origin-Destination Traffic at

Pelican, Alaska1

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 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.
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 Express, 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)

Congressional, 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 Israelson

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

Hageland, 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, Bob 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, Dennis 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