Order 2012-2-5

Served: February 6, 2012

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 6th day of February, 2012 

 Essential Air Service at

 CHISANA, ALASKA 

 HEALY LAKE, ALASKA

Under 49 U.S. C. 47131 et seq.

 DOCKET DOT-OST-1998-4574

 DOCKET DOT-OST-1998-3546

ORDER REQUESTING PROPOSALS

Summary

By this Order, the Department is requesting proposals from air carriers interested in providing 

Essential Air Service (“EAS”) at Chisana and Healy Lake, Alaska for a new two-year period, 

with or without subsidy, beginning June 1, 2012. (See Appendix A for a map). Proposals are 

due March 8, 2012. 

Background

By Order 2010-4-15, issued April 23, 2010, the Department selected 40-Mile Air, Inc. 

(“40-Mile Air”), to continue providing subsidized EAS at Chisana and Healy Lake for the 

two-year period through May 31, 2012. That Order established an annual subsidy rate of 

$74,345 for two nonstop round trips per week between Chisana and Tok with 3-seat Cessna 

185 or 4-seat Cessna 206-207 aircraft; and $98,915 for two nonstop round trips per week 

between Healy Lake and Fairbanks with 5-seat Cessna 206 or 207 aircraft.

Request for Proposals

As the end of the current rate term approaches, we are here requesting proposals from air 

carriers interested in providing EAS at Chisana and Healy Lake, with or without subsidy

support, for the two-year period beginning June 1, 2012. Air carriers should file their 

proposals no later than March 8, 2012. Shortly thereafter, our staff will docket the proposals, 

thereby making them public, and direct each air carrier to serve a copy of its proposal on the 

civic parties and other applicants. We will then provide a summary of the proposals to the 

community and the State and ask them to submit their final comments. We will give full consideration to all proposals filed in a timely manner.1 

 

1 In cases where an air carrier proposes to provide EAS without subsidy and we determine that service can be 

reliably provided without such compensation, we typically do not proceed with the air carrier selection case. 

Instead, we simply rely on that air carrier’s subsidy-free service as proposed. 
2

Air 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.

We are here providing interested air 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

Interested air carriers should prepare their proposal with every expectation that their initial 

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

proposals with air carriers when we deem it desirable; in such cases, of course, we will give 

all applicants the same opportunity. 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.

Proposals should provide sufficient capacity to accommodate historical levels. Specifically, 

we request proposals for two nonstop round trips a week between Chisana and Tok and two 

nonstop round trips a week between Healy Lake and Fairbanks, with small aircraft (10 seats 

or less). In order to assist air carriers in making traffic and revenue forecasts, we have 

included historical traffic in Appendix B. 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. Historical traffic data (Appendix B) show that two round trips a week is 

sufficient to fulfill the EAS needs of Chisana and Healy Lake.

We encourage proposals that meet these requirements in an efficient manner. Air 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. The communities and air carriers are encouraged to work together in advance of 

the due date for proposals to craft a service pattern that is desirable to the community and 

meets the operational needs of the airlines.

 

2 In selecting an air carrier to provide subsidized Essential Air Service to an Alaskan 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 air carrier at the hub; (3) interline arrangements with a larger air 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 an air 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

Other Air Carrier Requirements

The Department is responsible for implementing various Federal statutes governing lobbying

activities, drug-free workplaces and nondiscrimination.3 Consequently, all air carriers

receiving Federal subsidy to support EAS must certify that they are in compliance with 

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

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 air carriers that 

plan to submit proposals involving subsidy should submit the required certifications along 

with their proposals. Interested air 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 

air carriers that do not submit these documents. 4

Community Comments

Civic officials and the State are welcome to submit comments at any time. We encourage

prosepctive 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 

ask them to submit their final comments shortly after March 8, 2012, the due date for air 

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 air carriers interested in providing Essential Air Service at Chisana and 

Healy Lake, Alaska, submit their proposals, with or without subsidy requests, no later than 

March 8, 2012. The proposals should be emailed to: EAS@dot.gov with the title “Proposal 

to Provide Essential Air Service at Chisana, Alaska (Docket DOT-OST-1998-4574)” and/or 

“Proposals to Provide Essential Air Service at Healy Lake, Alaska (Docket DOT-OST-1998-

3546)”;5

2. Dockets DOT-OST-1998-4574 and DOT-OST-1998-3546 will remain open until further 

Order of the Department; and

 

3 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 (nonprocurement) and government-wide requirements for drug-free workplace (grants).

4 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.

5 Questions regarding filings in response to this Order should be directed to Mr. Scott Faulk at scott.faulk@dot.gov

or (202) 366-9967.
4

3. The Department will serve copies of this Order on the civic officials of Chisana, Healy 

Lake, 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
Appendix A

AREA MAP1

 1 This map is provided by Planet Profitability Forecasting System and is being used with

express permission of the copyright holder, Sabre Airline Solutions®.
Appendix B

Chisana, Alaska1

Origination Destination Origin and Destination

Year Quarter Pax

Freight 

PEQ

Mail 

PEQ Total Pax

Freight 

PEQ

Mail 

PEQ Total Pax

Freight 

PEQ

Mail 

PEQ Total

2009 1 7 1 2 10 2 63 67 132 9 64 69 142

2009 2 4 1 1 6 8 47 7 62 12 48 8 68

2009 3 27 11 1 39 22 47 8 77 49 58 9 116

2009 4 9 2 2 13 7 23 5 35 16 25 7 48

Total 47 15 6 68 39 180 87 306 86 195 93 374

2010 1 2 5 1 8 5 40 9 54 7 45 10 62

2010 2 6 2 2 10 7 7 6 20 13 9 8 30

2010 3 26 10 2 38 30 24 9 63 56 34 11 101

2010 4 8 4 1 13 10 41 7 58 18 45 8 71

Total 42 21 6 69 52 112 31 195 94 133 37 264

2010 4 8 4 1 13 10 41 7 58 18 45 8 71

2011 1 17 5 1 23 11 42 5 58 28 47 6 71

2011 2 13 4 1 18 12 31 12 55 25 35 13 73

2011 3 12 2 1 15 26 22 12 60 38 24 13 75

Total 50 15 4 69 59 136 36 231 109 151 40 290

 

1 Source: Bureau of Transportation Statistics; Schedule T-100. PEQs: Passenger Equivalents. Every

200 pounds of freight or mail is the equivalent of one passenger.
Appendix B

Healy Lake, Alaska2

Origination Destination Origin and Destination

Year Quarter Pax

Freight 

PEQ

Mail 

PEQ Total Pax

Freight 

PEQ

Mail 

PEQ Total Pax

Freight 

PEQ

Mail 

PEQ Total

2009 1 0 0 1 1 1 1 2 4 1 1 3 5

2009 2 6 2 1 9 13 10 2 25 19 12 3 34

2009 3 5 2 1 8 15 7 4 26 20 9 5 34

2009 4 19 1 1 21 25 14 2 41 44 15 3 62

Total 30 5 4 39 54 32 10 96 84 37 14 135

2010 1 0 0 0 0 7 1 2 10 7 1 2 10

2010 2 4 1 1 6 11 6 3 20 15 7 4 26

2010 3 1 3 0 4 6 7 2 15 7 10 2 19

2010 4 1 1 0 2 15 7 1 23 16 8 1 25

Total 6 5 1 12 39 21 8 68 45 26 9 80

2010 4 1 1 0 2 15 7 1 23 16 8 1 25

2011 1 0 0 0 0 3 4 1 8 3 4 1 71

2011 2 0 0 0 0 4 5 1 10 4 5 1 10

2011 3 5 2 0 7 13 6 1 20 18 8 1 27

Total 6 3 0 9 35 22 4 61 41 25 4 133

 

2 Source: Bureau of Transportation Statistics; Schedule T-100. 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 air 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 air 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 air 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 air 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 air carrier to provide service on these routes. The air 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 air 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 air 

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 May 31, 2014. 

The Government's obligation for performance under this Solicitation beyond May 31, 2014, is 

subject to 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 solicitation beyond May 31, 2014, until funds are made available to the Department 

for performance. If funds are not made available for performance beyond May 31, 2014, the

Department will provide notice in writing to the air carrier.

All claims for payment must be submitted within 60 days of the last day of service provided 

under this Order.
Appendix D

Aero Twin, AACA, Tony Cestnik DHS, Randy Webb

Alaska Air Carriers Association, Joy Journeay Northern Air Cargo, John Eckles

Alaska Airlines, Joe Sprague Northern Air Cargo, Keven Schlosstein

Alaska Airlines, Sandy Sinick Pacific Airways, Steve Montanus

Alaska Central Express, John Seamon PenAir Consultant, Patrick Rizzi

Alaska Central Express, Mike Bergt PenAir, Betty Gonzalez

Alaska Central Express, Steve Endlich PenAir, Danny Seybert

Alaska DOT, Christine Klein PenAir, Orin Seybert

Alaska DOT, Rebecca Cronkhite PenAir, Robert Cohn

Alaska DOT-Medicaid Passenger Fares PenAir, Scott Bloomquist

Alaska Seaplanes, Craig Loken PM Air, d/b/a Promech, Marc Sessoms

Alsek Air, Les and Debra Hartley RITA, Benard Stankus

Arctic Circle, Donald Singsaas Servant Air, Wes Osowski

Arctic Circle, Kelly Harris Skagway, Ben Lingle

Arctic Transportation Services (ATS), Wilfred Ryan Smokey Bay Air, Claire McCann

Arctic Transportation Services, (ATS), Jim Hjelm Spernak Airways, Mike Spernak

Baker Aviation, Marjorie Baker Tanana Air Service, Brian Martin

Bering Air, Allen Haddadi Taquan Air Service, Brien Salazaar

Bering Air, Jim Rowe Taquan, Beckie Allen

Congressional, Murkowski, Arne Fuglvog Tatonduk, Controller, Tina Paylor

Congressional, Begich, Amanda Clausen Tatonduk, Marketing, Robert Ragar

Congressional, Young, Jeremy Price Tatonduk, Owner, Robert Everts

Consultant, Hank Myers USPS, Greg Garcia

Consultant, Ken Acton USPS, Joel Rosen

Consultant, Norm Israelson USPS, Mary Tobias

Ellis Air Taxi, Lynn Ellis USPS, Meredith Chavez, Consultant

Era Aviation, Mike Lenorman USPS, Steve Deaton

ERA, David M. Richards USPS, Taylor, Mary T

Frontier Flying, Bob Hajducovich USPS, Tina Campbell

Grant Aviation, Bruce McGlasson USPS, William Jones

Hageland, Mike Hageland Warbelows Air Ventures, Arthur Warbelow

Hageland, Patrick Thurston Ward Air, Ed Kiesel

Hageland, Steve Wahrnke Wings of Alaska, Bob Jacobsen

Harris Air, Fly Hackett Wings of Alaska, Michelle Donohue

Harris Air, Scott Wright Air Service, Bob Bursiel

Harris Air, Scott Harris Yute, Tim Vottis

Homer Air, Andy Smircich

Iliamna Air, Tim LaPorte

Inland Aviation, Stephen Hill

Island Air Service, Bob Stanford

Katmai Air, Sonny Peterson