Essential Air Service at CENTRAL,ALASKA CIRCLE, ALASKA Under49

## u.s.c. 41731 et seq. ) ) ) ) ) )

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

### )

June 28,2011
EAS & Domestic Analysis Division, X-53 Office ofAviation Analysis U.S. Department ofTransportation 400

### i h Street S.W. Room 6401 Washington, D.C. 20590 Dear Sirs: DOCKET OST-1998-3621

Enclosed please find ourproposal for Essential Air Service to Central and Circle for the periodDecember 1,2011 to November 30th
, 2013.Discussion As it has for anumber ofyears, traffic at Circle and Central has been static, with small variations up and down year to year. Year PassengerEquivalents 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 overthe next two years, with similar slight variations, or a slight downward trend. However, when we compare onlythe 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. Ourbaseproposal covers five flights weekly with either aPiperPA31-350 orCessna 208B. We expectto increase the percentage offlights flown with the newer Cessna 208B aircraft as we retire the PA31-350 fleet overtime. Wehave adjusted two numbers from thehistorical data. First, wehaveused our current fuel costs, which are considerablyhigher than the average overthe last two years. We have projectedno further increase at this time in fuel costs overthe next two years. Second, we have adjusted the depreciation numbers as most ofourChieftainfleet is fully depreciated, and existing and expected Cessna 208B upgrades to the fleet are reflected in this adjustment. Both aircraft are capable ofIFR operations, and while neither Circle orCentral have 

### IFR approaches it is often necessaryto fly 

### IFR to get from the Tananato YukonRiver valley. Insome cases, it is necessary to fly to Fort Yukon, executethe IFR approach there, and then continue VFR up riverto Circle and Central. Ourproposed flight schedule would continue with the currentdays and times for the five day perweek 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 ourproposal is based on 2.0 hours perflight. Total flight hours per year with100% completion is 52 weeks x 5days 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 Bfor the revenue analysis and Appendix C for the subsidy analysis. Additive Alternative A Werecently met with the CircleTribal Council and they expressed an interest in service to Fort Yukon, which is a regional hub and currentlyprovides medical services to the Circle Native community. Therefore we have proposed an Alternative A which would provide five flights perweek, but on onlyfour days. On one ofthe four days, both amorning and evening flight would beprovided, with connections to Fort Yukon. The routing would be Fairbanks

- FortYukon

- Central

- Circle

- Fort YukonFairbanks, and this routing would berepeated in the late afternoon. This would meet anumber ofthe community's needs. Residents could travel to either Fairbanks orFortYukon, conductbusiness or medical appointments, andreturn to Circle in a single day. In addition, medical providers who travel from the Fort Yukon clinic couldtravel to Circle and provide services there for the day. This travel is currentlybeing done ad hoc through charters, but does not meet the community'S needs. Wetherefore also offer an Additive Alternative A, providing 5round trips per week, on four days, with connecting servicebetweenFort Yukon on two flights operated on a single day. Flighttime from Circleto Fort Yukon is 25 minutes, adding 1.7 hours offlight time per week. Therefore the additional costto providethe FortYukon 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. Ifthis proposal is accepted, we request the optionto include Chalkyitsik in the routing betweenCircle and Fort Yukon on aflag stopbasis, as there are communityties here as well. Wehave calculatedno additional costs for this optional flag stop. Conclusion We look forward to working with you on this renewal, and providing continuing serviceto the communities ofCircle and Central. Please contact me at (907) 378-7203 ifyou have any further questions. Sincerely, Warbelow's Air Ventures, Inc. //"'\\ t 

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",.-_/:iAL"'i::" ArthurWarbelow, PresidentAppendix 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 124 116 127 131 129.98Appendix B - Revenue Data 2009 - 2010 

### PassengerRevenue 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 59321.65Appendix 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