October 5, 2011 

Kevin Adams 

Department of Transportation 

Washington, DC 

=

!§LYNDEN 

=----='==g AIR CARGO 

Docket OST -2003-14695 

Lynden Aw Cargo. LLC 

6441 South A<rparl< Place 

.~nchomge, Alaska 99502-1809 

1907) 243-61f{J 

fax: (907i 245-0642 

Re: Response to USPS Comments on LAC Cost Data 

In response to Docket OST-2003-14695, Lynden Air Cargo, LLC, (LAC) provides data and comments 

regarding the United States Postal Service's objection to the proposed mainline service rates in the 

Show Cause Order 2011-9-6 ("the Order"). 

For the year ended March 31, 2010, LAC's system block hours were 9,371 as reported correctly in the 

attachedl0-2010-8-7 Show Cause Annual Update rather than the 11,590 hours stated in the Order. 

LAC's system block hours for the year ended March 31, 2011 were 7,529 as reported in the attached 

2011-9-6 Show Cause Annual Update. The year-over-year change is a decrease of20%, a significant 

figure that impacts the rate, but is not as dramatic as the 41% figure stated in the Order. 

The Order also speculates that the resulting increase in unit costs reflects management's decision not to 

trim back personnel and other expenses commensurately with the decrease in hours. This is not wholly 

accurate. The majority of the increase in LAC's non-fuellinehaul costs is attributable to an increase of 

$2,819,517 in maintenance costs, of which $2,120,803 was directly related to required heavy 

maintenance checks which are performed at FAA required intervals. The expense for these required 

checks, which are directly related to safety of flight, is recorded in the period the check is performed 

and may not always be commensurate with the hours flown for the same period. 

Attachments 

Sincerely, 

1 

~~~;,. 

Judy A. McKenzie 

President 
' 

Appendix D-1 

Operating Expenses. Alaska Airlines, Northern Air Cargo, Lynden Air Cargo, and Tatonduk Outfitters. Ltd. 

Intra-Alaska Class Service Mail Rates--Year Ended March 31. 2010 

Lynden Northern 

Alaska Airlines Air Cargo Air Carl;\o Tatonduk Outfitters, Ltd. 

(AS) (LAC) NAC (TOL) <TOL) 

#617 #556 #620 #218 #461 

Total 8-737-400 Hercules 737-200 DC-6 Brasilia 

Domestic Fuel $137.427.664 $6,610,272 s 10,809.082 $10,276.347 $431.656 

Dom. N-Fuel ~297,041,586 ~35,449,897 :1!13,843,630 :1!13,199,859 :1!1,945,030 

Total $434,469,250 $42,060,169 $24.652,712 $23.476.206 $2,376,686 

Intra-AK Skd. B.Hrs. 39,073 25,460 1,696 5.298 5,549 1.070 

Intra-AK Adj. Fuel B.Hrs. 3,266 

Domestic Total 114,606 91,813 9.371 5,822 6,492 1,108 

Intra-AK Fuel $60,578,447 $38,109.073 $3.432,646 $9,836,227 $8,783,649 $416.852 

Intra-AK N-Fuel $114,544.800 $82,370,457 $6,415.860 $12.597,656 $11.282,504 $1,878.323 

Intra-AK Skd. ATMs 187.492,053 132,676.400 10,899,372 26,305,663 16,711,793 898.825 

$/ATM. Fuel $0.323099 $0.287233 $0.314940 $0.373921 $0.525596 $0.463774 

$/ATM. N-Fuel $0.610931 $0.620837 $0.588645 $0.478895 $0.675122 $2.089754 

Intra-AK Mail RTMs 22.853,334 6,501,984 3,985.608 5.677.223 6,308,294 380,225 

RTM% of Total 99.99% 28.45% 17.44% 24.84% 27.60% 1.66% 

S/ ATM. Fuel $0.382290 $0.08172 $0.05493 $0.09288 $0.14506 $0.00770 

$/ATM, N-Fuel $0.619270 $0.17663 $0.10266 $0.11896 $0.18633 $0.03469 

Total AS LAC II NAC TOL 

Account '#6900 $15.578.850 $9,880,965 

System Tons Enpl. 32,292 32,854 

Intra-AK Skd. Svc. $52,295.038 $5,511,039 $14,470,210 $7,344,708 

Intra-AK Skd. Svc. Tons 148,607 12,937 29,994 24.421 

$/Ton Enplaned $351.90 $425.99 $482.44 $300.75 

AK Mail Tons Enplaned 54,348 14,026 9,635 14.325 16.362 2/ 

Mail Tons% of Total 100.01% 3/ 25.81% 17.73% 26.36% 30.11% 

Wtd. $/Ton Enplaned $384.09 $90.83 $75.53 $127.17 $90.56 

II Lynden developed its intra-Alaska costs by directly assigning all terminal costs, and then allocating the remainder 

on intra-Alaska and system departures. 

21 Mainline aircraft only: 16,610 enplaned tons, allocated between mainline and bush on scheduled payload: 

16,610 * 49,117 mainline payload tons+ 49,861 sytem payload tons. 

3/ Total may not sum to I 00% due to rounding. 
Appendix D-1 

Operating Expenses, Alaska Airlines, Northern Air Cargo, Lynden Air Cargo, and Tatonduk Outfitters, Ltd. 

Intra-Alaska Class Service Mail Rates--Year Ended March 31, 2011 

Lynden Northern 

Alaska Airlines Air Cargo Air Car~o Tatonduk Outfitters 

Domestic Fuel II 

Dom. N-Fuel 2/ 

Total 

Intra-AK Skd. Blk. Hrs. 3/ 

Domestic Total 4/ 

Intra-AK N-Fuel 

Intra-AK Skd. A TMs 3/ 

$/ATM, N-Fuel 

Intra-AK Skd. Mail RIMs 3/ 

RTM% of Total 

$/ATM, N-Fuel 

Terminal Expense 5/ 

System Tons Enplaned 6/ 

Intra-AK Skd. Svc. 7/ 

Intra-AK Skd. Svc. Tons 8/ 

$/Ton Enplaned 

AK Mail Tons Enplaned 9/ 

Mail Tons% of Total 

Wtd. $/Ton Enplaned 

Total 

45.058 

133,554 

$110,191,981 

192,350,893 

$0.572870 

22,975,028 

99.99% 

$0.623960 

53,802 

100.00% 

$368.85 

CAS) 

#617 

B-737-400 

$167,613,000 

~240,736,000 

$408,349,000 

25,504 

86,310 

$71,135,801 

133,088,509 

$0.534500 

6,591,512 

28.69% 

$0.15335 

AS 

$49,373,399 

149,141 

$331.05 

14,448 

26.85% 

$88.89 

(LAC) 

#556 

Hercules 

$15,609,574 

~38,395,694 

$54,005,268 

1,585 

7,529 

$8,083,036 

10,095,107 

$0.800688 

3,586,546 

15.61% 

$0.12499 

LAC 

$4,613,395 

11,294 

$408.48 

7,414 

13.78% 

$56.29 

(NAC) (TOL) 

#620 #218 

737-200 DC-6 

$15,976,963 $12,357,200 

~ 16,526,027 ~12,109,487 

$32,502,990 $24,466,687 

5,069 5,904 

6,546 7,182 

$12,797,194 $9,954,666 

25,559,044 17,639,281 

$0.500691 $0.564346 

5,248,404 6,423,390 

22.84% 27.96% 

$0.11436 $0.15779 

NAC TOL 

$15,256,982 $10,536,057 

33,361 34,682 

$13,827,826 $7,989,686 

30,236 26,300 

$457.33 $303.79 

13,803 16,775 

25.66% 31.18% 

$117.35 $94.72 

I I Alaska Airlines, Schedule P5.02, #5145.1; PenAir, Schedule F2, Line #2. LAC, NAC, TOL are from P5.1, Line #40. 

21 Sources have same schedules as above. For PenAir, we have excluded Passenger Liability Insurance, Line #5. 

CTOL) 

#461 

Brasilia 

$593,440 

$1 945 099 

$2,538,539 

1,139 

1,230 

$1,801,193 

983,837 

$1.830784 

400,049 

1.74% 

$0.03186 

3/ Per T-1 00 Segment Report, except for PenAir. We relied on a special internal report of PenAir, because the T-1 00 report 

does not distinguish between service with mainline and bush aircraft with any precision. 

41 PerT -1 00 Segment Report. 

51 Form 41, #6900 account for NAC and TOL. For PenAir, we rely on Schedule F2, Departure Related Expense and 

Capacity Related Expense, Line # 13 and # 14. 

6/ PerT -I 00 Market Rep01t for NAC and TOL and PenAir. 

7 I For AS and LAC, the sources are special internal reports. For NAC, TOL, and PenAir, it's allocated based on the data shown. 

8/ For LAC, the data is based on a special internal report. For the others, the data is from the T -100 Market Report. 

91 T -I 00 Market Report, with those results for TOLand PenAir adjusted by payload to estimate the mainline portion, as follows: 

TOL: 17,017 * 103,717,189 mainline payload~ 105,215,289 sytem payload, T-100 Segment Report. 

PenAir: 6,126*32,275, I 00 mainline payload+ 145,140,803 system payload, T -100 Segment Report. 

PenAir 

456 

Saab 340 

$10,372,276 

~25, 10 I ,328 

$35,473,604 

4,918 

22,989 

$5,369,887 

4,216,953 

$1.273405 

356,587 

1.55% 

$0.01974 

PenAir 

$13,741,212 

29,972 

$13,552,782 

29,561 

$458.47 

1,362 

2.53% 

$11.60 

PenAir 

459 

Saab 340 

$828,285 

~1,977,380 

$2,805,665 

939 

1,768 

$1,050,204 

768,162 

$1.367165 

368,540 

1.60% 

$0.02187