Order 2014

- 3

- 15

Served: March 28 , 2014



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 28 th day of March, 2014



### ORDER REQUESTING PROPOSALS

Summary

B y this Order, the Department is soliciting proposals from air carriers interested in providing

E ssential A ir S ervice (“EAS”) at Excursion Inlet and Kake , Alaska

, for a new contract

, beginning October 1

, 201 4 , with or without subsidy. Air c arriers should file their proposals no

later than April 28 , 2014

. (See Appendix A for a service area map.)

Background By Order 2012

- 9

- 8 , issued on September 10, 2012 , the Department selected Air Excursions, LLC (Air Excursions) at Excursion Inlet to provide EAS for a first

- year annual subsidy of $27,111 and a second

- year annual subsi dy of $28,835. The airline currently provide s 3 weekly

n onstop round trips to Juneau during the 21

- week peak season with PA

- 32 Cherokee 6 aircraft,

and 1 weekly nonstop round trip during the 31

- week off

- peak u sing Cessna 206 float aircraft.

In addition, we selected Air Excursions at Kake for a first

- year annual subsidy of $163,621 and a

second

- year annual subsi dy of $177,574. The airline currently provide s 14 weekly nonstop round trips to Juneau during the 21

- week peak season and 7 weekly nonstop round trips during the 31

- week off

- peak season.

The complet e public file for EAS at Excursion Inlet and Kake may be accessed online through the Federal Dockets Management System at: http://www.regulations.gov by entering “DOT

OST

- 2002

- 12014 ” or “ DOT

- OST

- 2008

- 0217 ” in the “SEARCH for: Rules, Comments, Adjudications or Supporting Documents :” field.

R equest for Proposals

As the end of the current contract approaches, we are here requesting proposals from air carriers interested in providing service at Excursion Inlet and Kake

, with or without subsidy, for a new

contract beginning October 1 , 2014

. Air c arriers should file their proposals no later than Essential Air Service at

EXCURSION INLET , ALASKA KAKE, ALASKA

Under 49 U.S.C. 41731 et seq

. Docket DOT

- OST

- 2002

- 12014
Docket DOT

- OST

- 2008

- 02172

April 28 , 2014

. After that date, our s taff will then docket proposals, thereby making them public, and direct each air c arrier to serve a copy of its proposal on the civic parties and other applicants. S hortly thereafter, we will provide a summary of the proposals to community

officials and ask them for their final comments. We will give full consideration to all proposals filed in a timely manner. 1

Interested air 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 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 re

- solicit a new round of proposals. However,

n egotiation or rejection are only an occasional exception to the rule.

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 pr oposals. 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 inclu de 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

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 hub, frequency or equipment, for example

-- with subsidy requirements that remain competitive. T he community 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 th e operational needs of the airlines.

Service and Traffic History Proposals should provide sufficient capacity to accommodate historical levels of traffic. In order to assist air carriers in developing traffic and revenue projections for their proposals, we have provided a summary of historical passengers in Appendix B. The most recent calendar year period for which

data are available for Excursion Inlet and Kake is first through third quarter, 201 3

. We expect

service levels that are consistent with what the community currently rece ives that offers access to the

1 Air carriers should not expect the Department to accept late filings. In cases where an air carrier proposes to provide Essential Air Service without subsidy and we determine that basic EAS as required by 49 U.S.C. § 41732

can be reliably provided without such compensation, we typically 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 EAS in Alaska , 49 U.S.C. § 4173 3(c)(1) directs us to consider six 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; (5) the experie nce of the applicant in providing, in Alaska, scheduled air service or significant patterns of non

- scheduled air service; and (6) whether the

air carrier has included a plan in its proposal to market the service. In addition

, Consolidated Appropriations Act, 2012, Public Law 112

- 55, and continued by the Full

- Year Continuing Appropriations Act, 2013, Public Law No.

113

- 6, provides that when selecting a carrier to provide EAS, the Department may consider the relative subsidy

requ irements, thus codifying a factor that we have considered since the inception of the program. Interested air carriers should also be aware that our general provisions governing Essential Air Service will be included in the selection Order as part of our au thorization of subsidy for the selected service. Appendix C of this Order contains those general provisions.3

national air transportation system. Excursion Inlet currently receives 3 weekly nonstop round trips to Juneau during the 21

- week peak season an d 1 weekly nonstop round trip during the 31

- week off

peak season. Kake currently receives 14 weekly nonstop round trips to Juneau during the 21

- week peak season and 7 weekly nonstop round trips during the 31

- week off

- peak season.

Filing Requirements Air carrier proposals should be submitted to the Department with all materials merged into a single document. The document will be published on www.regulations.gov and each page

should be formatted to be viewed o nline.

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

- free workplaces, and nondiscrimination. 3 Consequently, all air carrier s receiving Federal subsidy for 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. Because the Department is prohibited from paying subsidy to air carriers that do not submit these documents, all air carriers that plan to submit proposals involving subsidy should be aware that the selected air carrier will be required to complete the required certifications. Interested air carriers requiring more detailed information regarding these requirements should contact the Office of Aviation Analysis at (202) 366

- 5903. 4

Community and State Comments

The commu nity and State are welcome to submit comments at any time. We encourage prospective appl icants to contact the community before they submit their proposals so that they

c an tailor them to the community’ s needs, as they will not be able to amend t hem after the due date. As noted earlier, we will provide a summary of the proposals to the civic parties and ask

them to submit the ir final comments shortly after April 28 , 2014 , the due date for proposals.

This O rder is issued under authority delegated in 49 CFR Part 1.25a(b) and re

- delegated to the Director, Office of Aviation Analysis.

ACCORDINGLY,

1. We request that air carriers interested in providing E ssential A ir S ervice at Excursion Inlet

and Kake , Alaska , submit their proposals, with or without subsidy requests, no later than April 28 , 2014

. The proposals should be e

- mailed to: EAS@dot.gov with the title “Proposal to

Provide Essential Air Service at Excursion Inlet an d Kake , Alaska

, Docket DOT

- OST

- 2002

- 12014 ; ” or “ DOT

- OST

- 2008

- 0217 5 ”.

3 The regulations applicable to these area s are: (1) 49 CFR Part 20

-- restrictions on lobbying; (2) 49 CFR Part 21

-- Nondiscrimination in fe derally

- 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 financ ial 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 T he certifications are available online under “Reports and Publications” at http://www.dot.gov/policy/aviation

policy/small

- community

- rural

- air

- service/essential

- air

- service

. 5 Questions regarding filings in response to this O rder may be directed to Michael Gormas at (202) 366

- 1853 or michael.gormas@dot.gov

.4

2

. Th is docket will remain open until further order of the Department; and

3

. We wil l serve copies of this O rder on the Alaska Department of Transportation, the Mayor s and Airport Manager s of Excursion Inlet and Kake , Alaska , and the service list for this Docket

.

Persons entitled to petition the Department for review of this O rder under the Department’s

Aviation Economic Regulations, 14 CFR Part 385. 31(a) , must file such petitions within seven ( 7 ) days after the date of service of this O rder.

This O rder 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.govAppendix A



## AREA MAP

Maps generated by the Great Circle Mapper

- copyright © Karl L. SwartzAppendix B

Pass e n ger/Freight/Mail Traffic at Excursion Inlet 1

1 Source: Bureau of Transportation Statistics: Schedule T

- 100Appendix B Page 2 of 2

Pass enger

/Freight/Mail Traffic at KakeAppendix C

E xample of G e n e r a l T e r m s a nd C ondi t ions f or Es s e n t i a l A ir Se r v i c e

The air c a rr i e r un d er st a nds t h a t it m a y f o rfe it its c omp e ns a tion f

or a n y f li g hts th a t it do e s not op era te in c o n f

o r m a n c e with the t er ms a nd stipul a tions of the ra te Order

, i n c luding

the s er vi c e pl a ns outlin e d in the Order a nd a n y oth e r s i g ni f i c a nt e l e m e nts of the re qui re d

s er vi ce , without p r ior a p p r ov a l. The air c arr i e r und e r st a nds th a t a n a i r cr a f t t a k e

- o f f a nd

l a nding a t its s c h e du l e d d e stin a tion c onstitut e s a c ompl e t e d f li g ht; a bs e nt a n e x pl a n a tion

suppo r ting subsi d y e li g i b ili t y f o r a f l i g ht th a t h a s n ot b ee n c ompl e t e d, su c h a s cer t a in

w ea th e r ca n ce ll a tions, o n l y c ompl e t e d f li g hts a r e c onsid ere d e l i g ible f or su b si d y

. I n

a ddition, if the air carr i e r d o e s not s c h e dule or o p era t e its f li g hts in f ull c on f o r m a n c e with

the Order f

o r a s i g ni f

i ca nt p e r iod, it m a y j e op ar di z e its e nti r e subsi d y c l a im f or t he p er iod in qu e stion. I f the air c a rr i e r c ont e mpl a t e s a n y su c h c h a ng e s b e y ond the s c ope o f the

Order du r ing the a ppli ca ble p e r iod of th e se ra t e s, it must f i r st noti f y the O ff

i c e of

Avi a tion An a l y sis in w r iti n g a nd r ece ive w r itt e n a pp r o v a l f r om the D e p a r tm e nt to be

e nsu re d o f f

ull c omp e ns a tion. S hould c i rc umst a n ce s w arr a n t , the D e p ar tm e nt m a y l o c a te

a nd s e l e c t a re pl a ce m e nt air c arr i e r to p r ovide s er vi c e on th e se r out e s. The air c a rr i e r

must c ompl e te a ll f

li g hts th a t ca n b e s a f

e l y op era t e d; f

l i g hts th a t ov e rf

l y points f

o r l ac k of

t r a f f ic will not be c omp e ns a t e d. I n d e t er m i ning wh e t h e r subsi d y p a y m e nt f o r a d e v i a ting

f l i ght should be a djust e d or dis a llow e d, t he D e p a r tm e nt will c onsid e r the e x t e nt to whi c h

the g o a ls of the p r og ra m a r e m e t a nd the e x t e nt of acce ss to the n a tion a l a ir t ra nspo r t a tion

s y s t e m p r ovid e d to the c ommuni t y

.

I f the D e p ar tm e nt unil a t e ra l l y
, e ith e r p a r ti a l l y or c ompl e t e l y , t er min a t e s or re du ce s

p a y m e nts f

or s e r vi c e or c h a ng e s s er vi c e r e qui re m e nts a t a sp ec i f ic lo c a tion p r ovid e d f

or und e r this Order, th e n, a t the e nd of the p e r iod f or whi c h the D e p ar tm e nt d o e s m a ke

p a y m e nts in the stipul a t e d a mounts or a t the stipul a t e d s er vi c e l e v e ls, the air c a rr i e r m a y

cea se to p r ovide s er v i c e t o th a t sp ec i f ic lo c a tion without re g a r d to a n y r e qui re m e nt f or noti c e of su c h c e ss a tion. Those a djustm e nts in the l e v e ls of subsi d y a nd/or s er vi c e th a t

ar e mutu a l l y a g r ee d to in w r iting b y the D e p ar tm e nt a nd air ca r r i e r do not c on s titute a

tot a l or p ar ti a l re d u c tion or ce ss a tion of p a y m e nt.

Funds may not be available for performance under this Order beyond [DATE]. The Government’s obligation for performance under this Order beyond [DATE] is subject to the availability of 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 Order beyond [DATE], unti l funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond [DATE], the Department will provide notice in writing to the carrier.

Subsidy contracts are subject to, and incorporate by ref erence, 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.

All claims for payment, including any amended claims, must be submitted within 90 days of the last day of the month for which compensation is being claimed. For example, claims for service provided in July must be filed by October 31st; August claims must be submitted by November 30th, and so on

.