AIR EXCURSIONS, LLC 

ESSENTIAL AIR SERVICE BID 

JUNEAU-KAKE 

JUNEAU-EXCURSION INLET 

DOCKET OST-2008-0217 

May 8, 2012 

&~1- 2 OOZ.- IZ.oJ 'f 

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Air Excursions, LLC hereby submits its bid to provide Essential Air Service between Kake, 

AK and its hub of Juneau, AK, and additionally between Excursion Inlet and its hub of 

Juneau, AK. Air Excursions holds a certificate of public convenience and necessity to 

provide scheduled transportation of passengers, property and mail, and has operated 

scheduled service to five points around Juneau since March, 2010. 

At Kake Air Excursions proposes to provide 14 round trips per week during the 21 week 

peak summer period, and 7 round trips per week during the 31 week off-peak period. 

This is the same schedule as proposed by Wings in 2008, and operated for the last two 

years by Air Excursions. The aircraft to be used is a nine passenger all-weather aircraft. 

When loads or weather do not require, Air Excursions will use a five passenger aircraft 

at a lower subsidy need per flight. 

Under the service pattern provided by Air Excursions, total traffic in the market has 

increased to its highest levels since compensated Essential Service began. Air Excursions 

recognized that a full service offering including school charters and other non-scheduled 

service would stimulate market growth. It now offers over 30% more flights than Wings 

of Alaska did in calendar year 2009. 
4500 

4000 

3500 

3000 

2500 

2000 

1500 

1000 

500 

0 

KAKE PASSENGERS 

& DEPARTURES 

...,_Departures 

---Passengers 

Air Excursions is locally owned and managed, and 100% of its service is in the Juneau 

area. Air Excursions has been in business for over 22 years, and has been locally owned 

for its entire existence. It hires local pilots, and maintains offices and maintenance 

facilities in both Juneau and Gustavus. Air Excursions will provide stable and consistent 

air service, and the Kake and Excursion Inlet operation will be a much more significant 

part of its business than for any certificated competitor. 

The key reason to choose Air Excursions is that its subsidy need is lower based on the 

lower operating costs of the Navajo and alternatively the Piper Cherokee 6. Even 

though the Navajo is faster than the Caravan on the route, it has a much lower capital 

cost and has lower total operating costs per hour. The faster flight speeds reduce costs 

per trip even more. In keeping with the current practice of Wings, Air Excursions 

proposes to substitute a smaller, single engine aircraft when the loads and operating 

conditions do not require the use of the Navajo. Experience over the route has resulted 

in reduced flight times compared to the 2010 bid. Air Excursions expects to save 5 

minutes per roundtrip, or slightly over 5% of the total block time estimated in 2010. 

The purpose of the peak and off-peak service requirement is to recognize the need to 

encourage traffic and economic development in the area through high quality air 

service. The Air Excursions proposal provides faster, multi-engine and icing approved 
aircraft with plenty of capacity. Local ownership and control assures responsive 

management, and there is a strong future commitment of a locally owned carrier. 

Appendix A details the bid which assumes Kake commercial revenue of $413,543 in the 

first year and total operating expenses and return of $577,164 in the first year (YE June, 

2013). In its previous bid, Air Excursions used the proposed charter rate for the Navajo 

Chieftain plus an estimated indirect expense of 68% of the charter rate. This yielded a 

total $726,892 for the year ended June, 2012 (second year of bid). Using experienced 

unit costs for the Navajo and computed indirect and G&A expenses, Air Excursions 

estimates the YE June, 2013 expense total is $577,164, and overall reduction of 

$149,728 compared to the YE June, 2012 estimated expenses. 

Air Excursions' efficiency would carry over to the Excursion Inlet route. During the 

summer, flights to Excursion Inlet land in the heart of the village. During the winter, 

when that runway is unavailable, service has been provided by a float plane which docks 

at the loading pier. Wings does not have any float aircraft in its fleet and has had to 

charter aircraft for the service. Air Excursions proposes to service the community with a 

Cherokee 6 during the longer 21 week summer period and with a Cessna 206 on floats 

(as necessary) during the winter. Air Excursions has the float aircraft in its fleet now and 

will be in complete operational control of the service year around. 

The subsidy need of $163,621 for YE June 2013 at Kake is 29% less than the current 

contract for YE June, 2012, and could be reduced further through substitution of aircraft 

as appropriate. The Excursion Inlet bid is 20% lower than the current contract despite 

assuming a longer peak period (21 weeks). Air Excursions believes that it has shown 

that it is uniquely capable of providing a high level of service and customer satisfaction 

with a lower subsidy need, and has proposed a four year contract for service to Kake 

and Excursion Inlet as well as the two year period requested by the Department. 

Respectfully submitted, 

Mike Loverink, owner 

Air Excursions, LLC 
KAKE 

Traffic Type 

Passengers 

Freight 

Mail 

TOTAL 

PROJECTED OPERATING REVENUE 

Appendix A 

Page 1 of 3 

2011 EAS Yield 2011 Rev. YE 6/13 YE 6/14 YE 6/15 YE 6/16 

2,044 $130.00 $265,720 $279,006 $292,956 $307,604 $322,984 

76,694 $0.6000 $ 47,216 $ 49,577 $ 52,056 $ 54,659 $ 57,392 

84,596 $0.9565 $ 80,914 $ 84,960 $ 89,208 $ 93,668 $ 98,351 

$393,850 $413,543 $434,220 $455,931$478,727 

EXCURSION INLET 

Traffic Type 2011 EAS Yield 2011 Rev. YE 6/13 YE 6/14 YE 6/15 YE 6/16 

Passengers 30 $ 55.20 $ 1,656 $ 1,739 $ 1,826 $ 1,917 $ 2,013 

Freight 2,763 $0.5000 $ 1,381 $ 1,451 $ 1,523 $ 1,599 $ 1,679 

Mail 9,114 $0.6892 $ 6,282 $ 6,596 $ 6,925 $ 7,272 $ 7,635 

TOTAL ~ 9,319 ~ 9J86 ~ 10,274 ~ 10J88 ~ 11,328 

ASSUMPTIONS: 

1. All traffic based on EAS flights operated, excluding charters 

2. Yields based on market experience 

3. 2011 estimated revenue increased by 5% per year for YE 6/13-YE6/16 
Appendix A 

Page 2 of 3 

COMPUTATION OF SUBSIDY NEED 

KAKE SERVICE 

OPERATIONS 

JNU-KAE Average Block Time 1 way 

Total Annual Block Time 

EXPENSE AND SUBSIDY NEED 

ITEM 

Direct Expense PA-31 @$324.60 

Indirect Expense 

G&A@ 10.29% 

TOTAL EXPENSE 

Profit Margin {5%) 

TOTAL INCLUDING R.O.I. 

COMMERCIAL REVENUE 

SUBSIDY NEED, TOTAL 

SCHEDULED DEPARTURES 

SUBSIDY PER PA-31 DEPARTURE 

SUBSIDY PER PA-32 DEPARTURE 

CEILING PER WEEK- PEAK 

CEILING PER WEEK- OFF-PEAK 

45.5 minutes 

775.02 hours 1/ 

YE 6/13 YE 6/14 YE 6/15 YE 6/16 

$264,149 $279,998 $296,797 $314,606 

$234,246 $248,301 $263,199 $278,991 

$ 51,285 $ 54,362 $ 57,624 $ 61,081 

$549,680 $582,661 $617,620 $654,678 

$ 27,484 $ 29,133 $ 30,881 $ 32,734 

~5771164 ~6111794 ~6481501 ~687A12 

~4131543 ~4341220 ~4551931 ~4781727 

$163,621 $177,574 $192,570 $208,685 

1,022 1,022 1,022 1,022 

$ 160.10 $173.75 $ 188.42 $ 204.19 

$ 143.57 $ 156.23 $ 169.85 $ 184.51 

$4,482.80 $4,865.00$5,275.76 $5,717.32 

$2,241.40 $2,432.50$2,637.88 $2,858.66 

!/ 100% completion at with PA-31 Navajo aircraft