Order 20 10

- 6

- 15

Served: June 11 , 20 10



### UNITED STATES OF AMERICA

DEPART MENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 1 1 th day of June , 20 10

ORDER REQUESTING PROPOSALS

Summary By this order, the Department is requesting proposals from carriers interested in providing

essential air service (EAS) at Cape Yakataga and Icy Bay , Alaska , for a new two

- year period, beginning November 1, 2 0 10

, with or without subsidy. (See Appendix A for a map). Carriers should file their proposals no later than Ju ly 13

, 20 10

.

Background By Order 200 8

- 7

- 28

, July 30 , 200 8 , the Department re

- selected Alsek Air Service, Inc

. (Alsek) , to provide subsidized EA S at Cape Yakataga and Icy Bay

, through October 31, 20 10

. Under that order, Alsek provide s three round trips each week to Yakutat from May through October, and two round trips each week from November through April, with an intermediate stop at the East Ic y Bay, utilizing 4

- seat Cessna aircraft, for an annual subsidy rate for both communities of $ 78,000

.

Request for Proposals As the end of the current rate term approaches, we are here requesting proposals from carriers interested in providing service at Ca pe Yakataga and Icy Bay

, with or without subsidy, for the

two

- year period beginning Novem ber 1 , 20 10

. Carriers should file their proposals no later

than Ju ly 13

, 2010 . Staff will then docket the proposals, thereby making them public, and

direct each carr ier to serve a copy of its proposal on the civic parties and other applicants. Shortly afterwards, we will provide a summary of the proposals to the communit ies and ask

Essential Air Service at

CAPE YAKATAGA , ALASKA
ICY BAY , ALASKA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 1 996

- 2009- 2

-

them to submit their final comments. We will give full consideration to all proposals that are timely filed. 1

Interested carriers should prepare their proposals with every expectation that their initial proposals will represent their final and only proposals. However, 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 re

- solicit a new round of proposals. However, negotiation and rejection are only occasional exceptions to the rule.

We are here providing i nterested 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 amo unt 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 blo ck hours, revenues and expenses.

We strongly encourage clear, well

- documented proposals that will facilitate their evaluation by the affected communities and the Department. 2

With specific respect to Cape Yakataga and Icy Bay , we expect p roposals consist ing of service

with small aircraft (e.g., those with 3

- 5 seats ) and offering each community three round trips a

week during the peak season and two weekly round trips during the off

- peak season to
Yakutat or any other suitable hub

, such as Cordova . In tha t regard, our understanding is that weather conditions have typically allowed for a higher percentage of completed flights to Yakutat, so we encourage carriers to give consideration to providing service to Yakutat, at least as one option

. Further, flights meeting EAS guidelines at Alaskan communities should provide sufficient capacity to accommodate passenge r , freight and mail demand. Such service is generally co nsistent with what the communities currently receive , and fully sati sfies their

EAS requiremen ts. We encourage proposals that meet those requirements in an efficient manner. Carriers are also welcome to propose more than one service option, if they choose; they need not limit themselves to those requirements if they envision other, potentially mo re

1 Carriers should not expect the Department to accept late fillings. 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 in Alaska , 49 U.S.C. 41733(c )(1 ) directs us to

consider five factors: (1) scheduled service reliability; (2) contractual and marketing arrangements with a larger carrier to ensure service beyond the hub; (3) interline arrangements that the applicant has made with a larger

carrier at the hub; (4) community views, giving substantial weight to the views of the elected o fficials representing the users; and (5) the experience of the applicant in providing, i n Alaska, scheduled air service. In addition, the Consolidated Appropriations Act, 20 08, 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. Interested carriers should al so be aware that our general provisions governing essential air service will be included in the selection order as part of our authorization of subsidy for the selected service. Appendix C of this order contains those general provisions.- 3

-

attractive service possibilities

-- different hubs, 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 ad dition, because the document will be published on Regulations.gov, each page should be formatted to be viewed online.

Service and Traffic History

Alsek has served Cape Yakataga and Icy Bay since fall 2006

. In order to assist carriers in making their traf fic and revenue projections, we have included historical traffic data, as provided by Alsek in Appendix B. As is typically the case in Alaska, significantly more freight and mail flow from the hub to EAS communities than from EAS communities to the

h ub. In addition, the data show that there is some seasonal peaking of traffic. Proposals

should accommodate both of these factors.

Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying

activitie s, drug

- free workplaces, and nondiscrimination. 3 Consequently, all carriers receiving Federal subsidy for 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. Because the Department is prohibited from paying subsidy to carriers that do no t submit these documents, all carriers that plan to submit proposals involving subsidy should be aware that the selected carrier will be required to complete the required certifications. Interested carriers requiring more detailed information regarding th ese requirements should contact the Office of Aviation Analysis at (202) 366

- 5903. 4

Community and State Comments

The communit ies and State are welcome to submit comments at any time. We encourage prospective applicants to contact the communit ies before t hey submit their proposals so that they can tailor them to the communit ies’ 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 Ju ly 13 , the due date for proposals.

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

-- G overnment

- wide debarment and suspension (non

- procurement) 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.- 4

-

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 providin g essential air service at Cape Yakataga and Icy Bay , Alaska , submit their proposals, with or without subsidy requests, with or without subsidy requests, no later than Ju ly 13 , 20 10

. The proposals should be e

- mailed to: EAS@dot.gov with the title “Proposal to Provide Essential Air Service at Cape Yakataga and Icy Bay , Docket DOT

- OST

- 1996

- 2009 ” ; 5

2. This docket will remain open until further order of the Department; and

3. We will serve copies of this order on the pa rties 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.regualtions.gov

5 Questions regarding filings in response to this order may be directed to Brian Swanson at (202) 366

- 5392 or brian.swanson@dot.gov . Proposals should also be e

- mailed to brian.swanson@dot.gov and dennis.devany@dot.gov

.Appendix A

SERVICE AREA MAPAppendix B

Aviation activity at Cape Yakataga and Icy Bay, Alaska

Month/Year Passengers Mail (lbs.) Freight (lbs.)

November 2006 8 20 300

December 2006 2 0 0

January 2007 0 29 1133 February 2007 0 22 405

March 2007 11 70 3072 April 2007 18 249 3400 May 2007 35 233 3747

June 2007 29 103 4920 July 2007 32 320 4234 August 2007 26 254 2346 September 2007 20 62 1099

October 2007 16 117 857

November 2007 3 115 442

December 2007 2 60 1165

January 2008 4 25 434 February 2008 3 11 450

March 2008 1 60 959

November 2008 19 90 2264

December 2008 3 1403 1071

January 2009 4 3 417 February 2009 2 7 76

March 2009 5 915 48 April 20 09 9 173 180 May 2009 32 266 2413

June 2009 15 587 796 July 2009 8 1918 1067 August 2009 25 518 1018 September 2009 45 1273 4635

October 2009 12 263 2608

November 2009 3 140 355

December 2009 0 145 155

January 2010 2 245 36 February 2010 4 6 67 803

March 2010 4 95 1276 April 2010 9 152 2514

Source: Alsek Air Service, Inc.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 l anding 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 sub sidy. 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 be yond 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 th e 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

pa yments 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 serv ice 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]

. Th e Department’s obligation for perform ance 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 Department for any payment may ari se 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 f or payment must be submitted within 60 days of the last day of service provided

under this order.Appe ndix D

SERVICE LIST

Aero Twin, AACA, Tony Cestnik Northern Air Cargo, John Eckles Alaska Air Carriers Association, Joy Journeay Northern Air Cargo, Keven Schlosste in Alaska Airlines, Joe Sprague Pacific Airways, Steve Montanus Alaska Airlines, Sandy Sinick PenAir Consultant, Patrick Rizzi Alaska Central Express, John Seamon PenAir, Betty Gonzalez Alaska Central Express, Mike Bergt PenAir, Danny Seybert

Alaska C entral Express, Steve Endlich PenAir, Orin Seybert Alaska DOT, Christine Klein PenAir, Robert Cohn Alaska DOT, Rebecca Cronkhite PenAir, Scott Bloomquist

Alaska DOT

- Medicaid Passenger Fares PM, Air, d/b/a Promech, Marc Sessoms Alaska Seaplanes, Craig Loken RITA, Bernard Stankus Alsek Air, Les and Debra Hartley Servant Air, Wes Osowski Arctic Circle, Donald Singsass Skagway, Ben Lingle Arctic Circle, Kelly Harris Smokey Bay Air, Claire McCann Arctic Transportation Services (ATS), Wilfred Ryan Sperna k Airways, Mike Spernak Arctic Transporation Services, (ATS), Jim Hjelm Tanana Air Service, Brian Martin Baker Aviation, Marjorie Baker Taquan Air Service, Brian Salazaar Bering Air, Allen Haddadi Taquan, Beckie Allen Bering Air, Jim Rowe Tatonduk, Con troller, Tina Paylor Congressional, Murkowski, Arne Fuglvog 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, Mary T. Taylor Frontier Flying, Bob Haiducovich USPS, Tina Campbell

Grant Aviati on, Bruce McGlasson USPS, William Jones Hageland, Mike Hageland Warbelow’s Air Ventures, Arthur Warbelow Hageland, Patrick Thurston Ward Air, Kiesel Hageland, Steve Wahrnke Wings of Alaska, Bob Jacobsen Harris Air, Fly Hackett Wings of Alaska, Michelle Donahue Harris Air, Scott Harris Wright Air Service, Bob Bursiel Homeland Security, David Bernier Yute, Tim Vottis Homeland Security, William Ragan Homer Air, Andy Smircich Iliamna Air, Tim LaPorte Inland Aviation, Stephen Hill

Island Air Servi ce, Bob Stanford Katmai Air, Sonny Peterson