### Order 2010

- 1

- 18

Served: January 26, 2010



## UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 26 th 

### day of January , 20 10

Essential Air Service at

CHISANA , ALASKA

HEALY LAKE, ALASKA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 199 8

- 4574

DOCKET DOT

- OST

- 1998

- 3546



## ORDER REQUESTING PROPOSALS

Summary

By this order, the Department is requesting proposals , by March 1

, from 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, 20 10 . (See Appendix A for map.)

Background

By Order 2008

- 4

- 41

, issued April 29 , 200 8 , the Department selected 40

- Mile Air

, Inc . ( 40

-

Mile Air ), t o continue provid ing subsidized EAS at Chisana and Healy Lake for the two

- year

period through May 31 , 20 10 . That order established an annual subsidy rate of $ 65,546 for

two nonstop round trips per week between Chisana and Tok with 3

- seat Cessna 185 or 4

- s eat

Cessna 206

- 207 aircraft; and $77,683 for two nonstop round trips between Healy Lake and

Fairbanks with 5

- seat Cessna 206 or 207 aircraft.

Request for Proposals

As the end of the current rate term approach es , in order to provide sufficient time to comp lete

the carrier

- selection process before the current contract expire s , we are here requesting

proposals from carriers interested in providing service at Chisana and Healy Lake , with or

without subsidy support, for the two

- year period beginning June 1, 20 1 0

. Carriers should file

their proposals no later than March 1 , 20 10 . Shortly after that date, our staff will docket the

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

on the civic parties and other applican ts. Shortly afterwards, we will provide a summary of

### 2

the proposals to the community and state and ask them to submit their final comments. We

will give full consideration to all proposals filed in a timely manner. 1



### Interested carriers should prepare the ir 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; in such cases, of course, we will give all

applicants th e 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.

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 pro posed 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 request s, 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



### Proposals should provide sufficient capacity to accommo date 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 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. Hist orical traffic data (Appendix B) show that two round trips a week is

sufficient to fulfill the EAS needs of the se communit ies

.

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

competitiv e.

1 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 carri er’s subsidy

- free service as proposed.

2 In selecting a 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

arrangeme nts 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 prov iding, 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 subsi dy 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 pa rt of the Department’s authorization of subsidy for the selected service.

### 3

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. 3 

### Consequently, all carriers receiving

Federal subsidy to support essential air s ervice 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 complianc e 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 the se

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. 4



### Community Comments

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

prospective applicants to contact the communit y before they submit their proposals so that

they can tailor them to the communit y ’ s needs, as they will not be able to amend them afte r

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 1 , 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 Chisana and Healy

Lake , Alaska, submit their proposals, with or without subsidy requests, no later than March 1

, 20 10

. The p roposals should be emailed to: EAS@dot.gov with the title “Proposal to Provide

Essential Air Service at Chisana

, Alaska (Docket DOT

- OST

- 199 8

- 4574 ) ” and/or “Proposal to

Provide Essentia l Air Service at Healy Lake, Alaska (Docket DOT

- OST

- 1998

- 3546) ” ; 5

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 Dep artment 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).

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

5 Q uestions regarding filings in response to this order should be directed to Renée Williams at

renee.williams@dot.gov or (202) 366

- 1058.

### 4

2. D ocket s DOT

- OST

- 199 8

- 4574 and DOT

- OST

- 1998

- 3546 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 Chisana and 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 Analys is

(SEAL)

An electronic version of this document is available on the World Wide Web at

http://www.regulations.gov

## Appendix A

AREA MAP

## Appendix B

Page 1 of 2

Historica l Origin

- Destination Traffic at

Chisana, Alaska 1

12 Months ended Septembe r 30, 2009

4Q 08 1Q 09 2Q 09 3Q 09 Total

Passengers

From Chisana 7 7 4 12 30

To Chisana 1 2 8 16 27

8 9 12 28 57

Cargo

From Chisana 255 177 200 25 657

To Chisana 10848 12539 9441 11050 43878

11103 12716 9641 11075 44535

Mail

From Chisana 505 367 73 294 1239

To Chisana 4009 13444 1453 1626 20532

4514 13811 1526 1920 21771

Total Outbound PEQs 2 86 142 68 93 389

12 Months ended September 30, 2008

4Q 07 1Q 08 2Q 08 3Q 08 Total

Passengers

From Chisana 8 4 8 12 32

To Chisana 5 4 14 16 39

13 8 22 28 71

Cargo

From Chisana 858 776 1838 25 3497

To Chisana 4537 9080 4047 11050 28714

5395 9856 5885 11075 32211

Mail

From Chisana 266 205 413 178 1062

To Chisana 7535 3497 5690 5685 22407

7801 3702 6103 5863 23469

Total Outbound PEQs 2

79 76 82 113 349



### ___________________ 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

Historica l Origin

- Destination Traffic at

Healy Lake, Alaska 1

12 Months ended September 30, 2009

4Q 08 1Q 09 2Q 09 3Q 09 Total

Passengers

From Healy Lake 9 0 9 5 128

To Healy Lake 27 1 13 15 131

36 1 22 20 259

Cargo

From Healy Lake 8 0 375 406 4276

To Healy Lake 1238 142 2028 1338 15208

1246 142 2403 1744 19484

Mail

From Healy Lake 3 1 4 8 16

To Healy Lake 572 364 348 725 2009

575 365 352 733 2025

Total Outbound PEQs 2 45 4 36 32 367

12 Months ended September 30, 2008

4Q 07 1Q 08 2Q 08 3Q 08 Total

Passengers

From Healy Lake 25 0 23 2 50

To Healy Lake 33 3 33 13 82

58 3 56 15 132

Cargo

From Healy Lake 1196 97 400 782 2475

To Healy Lake 3698 241 985 1606 6530

4894 338 1385 2388 9005

Mail

From Healy Lake 46 2 8 0 56

To Healy Lake 396 487 371 409 1663

442 489 379 409 1719

Total Outbound PEQs 2 85 7 65 29 186



### ___________________ 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

General Terms and Conditions for Essential Air Service

The carrier und erstands 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

se rvice, 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 a s 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 sub sidy 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 fro m 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 t hat 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 exten t 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 requiremen t 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 s ubject 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 order beyond September 30

, 20 10 . The Government's obligation for performance under this order beyond

September 30 , 20 10 , is subject to the availability of appropriated funds from which

payment for se rvices can be made. No legal liability on the part of the Government for

any payment may arise for performance under this order beyond September 30 , 20 10

, until funds are made available to the Department for performance. If funds are not made

available f or performance beyond September 30 , 20 10 , the Department will provide

notice in writing to the 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 Ce stnik 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 E xpress, 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 Cronkh ite 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 A ir, 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, Amand a 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 A ir 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, Willi am 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 A ir, 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