Order: 2014-10-12

Served: October 16, 2014

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 16h of October, 2014

ORDER SELECTING AIR CARRIER

Summary

By this Order, the Department is selecting Kalinin Aviation, LLC d/b/a Alaska Seaplanes, (Alaska 

Seaplanes) to provide Essential Air Service (EAS) at Excursion Inlet for a four-year term at a firstyear annual subsidy of $28,889, second-year of $29,827, third-year of $30,792, and fourth-year of 

$31,785, from October 1, 2014, through September 30, 2018. The airline will provide three

weekly nonstop round trips to Juneau, Alaska, during the 21-week peak summer season with 

Cessna 206/207 and Piper Cherokee aircraft, and one weekly nonstop round trip during the 31-

week off-peak winter season.

We are selecting Alaska Seaplanes to provide EAS at Kake, Alaska, using 9-passenger Cessna 

Caravan or Piper Navajo aircraft to Juneau to provide two round trips per day during the 21-week 

peak summer season, and one round trip per day during the 31-week, off-peak winter season, 1

for a

one-year term from October 1, 2014, through September 30, 2015, at an annual subsidy of 

$205,232.

2

 

 1 Peak = May through September; Off-peak = October through April. 2 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds.

Essential Air Service at

EXCURSION INLET, ALASKA

KAKE, ALASKA 

Under 49 U.S.C. 41731 et seq.

DOT-OST-2002-12014

DOT-OST-2008-0217 
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Background

By Order 2012-9-8 (September 10, 2012), the Department selected Alaska Seaplanes, to provide 

subsidized EAS at Kake, for a first year annual subsidy of $163,621, and a second-year annual 

subsidy of $177,574.

At Excursion Inlet, the Department selected Alaska Seaplanes to provide EAS for a first-year 

annual subsidy of $27,111 and a second-year annual subsidy of $28,835.

As the end of the contracts were approaching, we issued Order 2014-3-15 (March 28, 2014) 

requesting proposals from air carriers interested in providing EAS at the above communities for a 

new term beginning October 1, 2014. In response to that Order, we received proposals from 

Alaska Seaplanes, Harris Aircraft Services, Inc. (Harris Air), and SeaPort Airlines, Inc., d/b/a 

Wings of Alaska (Wings).

Summary of Proposals

Alaska Seaplanes

Alaska Seaplanes submitted a proposal for Kake and Excursion Inlet for a four-year term, with 

service to Juneau. At Kake their proposal consists of using 9-passenger, Cessna Caravan or Piper 

Navajo aircraft to Juneau, Alaska, for two round trips per day, and one, one-stop (through Sitka) 

per day, during the peak summer season; and one round-trip per day, and one, one-stop (through 

Sitka) per day, during the 31-week, off-peak winter season, for a first-year annual subsidy of

$205,232.

At Excursion Inlet, their proposal consists of using Cessna 207 and Piper Cherokee Six wheel 

planes, and a Cessna 206 on amphibious floats for occasions when the community is only 

accessible by water, with three weekly nonstop round trips to Juneau during the 21-week peak

summer season, and one weekly nonstop round trip during the 31-week, off-peak winter season,

for a first-year annual subsidy of $28,889.

Harris Air

Harris Air submitted a stand-alone proposal for Kake for a two-year term, with service to Juneau. 

They did not submit a bid for Excursion Inlet. Their proposal consists of utilizing 9-passenger, 

twin-engine, Piper Chieftans, for 14 weekly round trips during the peak season running from May 

through September, and 7 weekly round trips during the off-peak season running from October 

through April, for an annual subsidy of $136,123. 

SeaPort Airlines, Inc. dba Wings of Alaska (Wings)

Wings of Alaska submitted a stand-alone proposal for Kake for a two-year term, with service to 

Juneau. They did not submit a bid for Excursion Inlet. Their proposal consists of using a 9-

passenger, Cessna Caravan, for 14 weekly round trips during the 31-week peak season, and 7 

weekly round trips during the 31-week off-peak season, for an annual subsidy of $368,623.
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Community Comments

On April 29, 2014, the Department solicited comments from the communities and the State of 

Alaska regarding this air carrier selection case. 

The City of Kake, the Kake City School District, and multiple businesses support the incumbent, 

Alaska Seaplanes. Mayor Henrich Kadake, Sr. stated the City of Kake Council formally supports 

Alaska Seaplanes. The Kake City School Board supports Alaska Seaplanes, based on its 

fulfillment of the IFR requirement prior to August 1, 2014, the size of its fleet, and the addition of 

larger planes making it more appealing. Mr. Dennis Gray of Rocky Pass Seafoods, LLC, supports 

Alaska Seaplanes and stated that it’s vital their business have reliable flight service for moving 

parts and people to keep its operation running smoothly.

The Organized Village of Kake, the Kake Senior Center, as well as private citizens support Harris 

Air’s proposal. The Kake Tribal Corporation also recommends the carrier, stating “Harris Air has 

done an excellent job at serving the community of Kake, Alaska with safe and reliable service for 

years”. Factors included in their support are Harris’s employment of local workers, its strong 

customer service, and its IFR capable aircraft.

Neither Excursion Inlet nor the State of Alaska submitted comments supporting any particular air 

carrier. 

Decision

When selecting a carrier to provide EAS in Alaska, 49 U.S.C. §41733(c)(1) directs us to consider 

six factors: (1) service reliability; (2) contractual and marketing arrangements with a larger carrier 

at the hub; (3) interline arrangements with a larger carrier at the hub; (4) community views; (5) the 

carrier’s plan to market its service to the community; and (6) the experience of the applicant in 

providing scheduled air service or significant patterns of non-scheduled air service. In addition, 

the Continuing Appropriations Act, 2014, Public Law No. 113-46, 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.

At Excursion Inlet, only Alaska Seaplanes submitted a proposal, and its subsidy request is 

virtually the same as the current rate ($28,835 vs. $28,889) for the same level of service. 

Therefore, we will select it for four more years.

In the case of Kake, the two elected bodies representing the community, the City of Kake and the 

Organized Village of Kake (OVK) submitted divergent support letters. The City of Kake 

supported the proposal put forth by Alaska Seaplanes, but the OVK supported Harris Air’s 

proposal.

Since Wings did not receive community support for its proposal and requires the highest subsidy, 

the Department will not further consider Wings’ proposal.

Harris Air filed an application for a Certificate of Public Convenience & Necessity on August 25, 

2014, which is required for Harris Air to provide its proposed service. That application is 

currently pending before the Department. While a number of commenters, including the City of 
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Kake, support Alaska Seaplanes, the OVK supports Harris Air and Harris Air requests a 

significantly lower annual subsidy. Therefore, we will make our selection of Alaska Seaplanes for 

only one year, at which time we may be in a better position to re-examine the community’s service 

needs together with the participation of all carriers holding the necessary certificate authority.

We make this selection of Alaska Seaplanes at Kake and Excursion Inlet contingent upon the 

Department’s receiving properly executed certifications from the air carrier that it is in compliance 

with the Department’s regulations regarding drug-free workplaces and nondiscrimination, as well 

as the regulations concerning lobbying activities.3

Carrier Fitness

49 U.S.C. §§ 41737(b) and 41738 require that we find an air carrier fit, willing, and able to provide 

reliable service before we may subsidize it to provide EAS. Alaska Seaplanes is subject to the 

Department’s continuing fitness requirements, and no information has come to our attention that 

would cause us to question the air carrier’s fitness at this time. We have contacted the Federal 

Aviation Administration, and it has raised no concerns that would negatively affect our fitness 

findings. We therefore conclude that Alaska Seaplanes is reliable and fit to conduct the operations 

proposed here.

This Order is issued under authority delegated in 49 CFR Part 1.25a(b).

ACCORDINGLY,

1. We select Kalinin Aviation, LLC d/b/a Alaska Seaplanes to provide Essential Air Service at 

Excursion Inlet and Kake, Alaska, and establish the annual subsidy rate as described in 

Appendix C. 

2. We direct Kalinin Aviation, LLC d/b/a Alaska Seaplanes to retain all books, records, and other 

source and summary documentation to support claims for payment, and to preserve and maintain 

such documentation in a manner that readily permits its audit and examination by representatives 

of the Department. Such documentation shall be retained for seven years from the service date of 

this Order or until the Department indicates that the records may be destroyed, whichever comes 

first. Copies of flight logs for aircraft sold or disposed of must be retained. The carrier may 

forfeit its compensation for any claim that is not supported under the terms of this Order;

3. We find that Kalinin Aviation, LLC d/b/a Alaska Seaplanes is fit, willing and able to operate as 

a certificated air carrier, and capable of providing reliable Essential Air Service at Excursion Inlet 

and Kake;

4. These dockets will remain open pending further Department action; and

 3 The certifications are available online under “Reports and Publications” at http://www.dot.gov/policy/aviationpolicy/small-community-rural-air-service/essential-air-service
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5. The Department will serve a copy of this Order on the Alaska Department of Transportation, 

the Mayor of Kake, Alaska, the President of the Organized Village of Kake, the airport manager of 

Kake Airport, Kalinin Aviation, LLC d/b/a Alaska Seaplanes, Harris Aircraft Services, and 

SeaPort Airlines, Inc. dba Wings of Alaska

By:

SUSAN L. KURLAND

Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available at

http://www.regulations.gov
Appendix A

AREA MAP

Maps generated by the Great Circle Mapper - copyright © Karl L. Swartz
Appendix B

Alaska Seaplanes Proposal for EAS at Excursion Inlet and Kake

KALININ AVIATION, LLC PROJECTED E.A.S. REVENUE, EXPENSE & SUBSIDY NEED

BLOCK TIMES: OW TRIPS BLK HRS.

JNU-KAE 56 511 476.9

KAE-JNU 54 511 459.9

1022 936.8

JNU-EXI 27 94 42.3

EXI-JNU 23 94 36.0

188 78.3

OPERATING EXPENSE:

KAKE YE 12/2013 YE 6/2014 YE 6/2015 YE 6/2016 YE 6/2017 YE 6/2018

Direct $ 450,736 $ 468,766 $487,516 $507,017 $ 527,298 $ 548,390

Indirect $ 338,052 $ 351,574 $365,637 $380,263 $ 395,473 $ 411,292

subtotal $ 788,789 $ 820,340 $853,154 $887,280 $ 922,771 $ 959,682

Profit $ 39,439 $ 41,017 $ 42,658 $ 44,364 $ 46,139 $ 47,984

TOTAL 100% $ 828,228 $ 861,357 $895,812 $931,644 $ 968,910 $1,007,666

96% Completion $ 862,738 $ 897,247 $933,137 $970,462 $1,009,281 $1,049,652

EXCURSION INLET

Direct $ 25,458 $ 26,477 $ 27,536 $ 28,637 $ 29,783 $ 30,974

Indirect $ 19,094 $ 19,858 $ 20,652 $ 21,478 $ 22,337 $ 23,230

subtotal $ 44,552 $ 46,334 $ 48,188 $ 50,115 $ 52,120 $ 54,204

Profit $ 2,228 $ 2,317 $ 2,409 $ 2,506 $ 2,606 $ 2,710

TOTAL $ 46,780 $ 48,651 $ 50,597 $ 52,621 $ 54,726 $ 56,915

KAKE Traffic Type EAS Traffic Yield YE 6/14 YE 6/15 YE 6/16 YE 6/17 YE 6/18

Passengers 3220 $ 143.0000 $488,088 $522,254 $ 558,811 $ 597,928 $639,783

Freight 103043 $ 0.6000 $ 66,154 $ 70,784 $ 75,739 $ 81,041 $ 86,714

Mail 105748 $ 1.1568 $128,445 $134,867 $ 141,610 $ 148,691 $156,125

TOTAL $682,686 $727,905 $ 776,161 $ 827,660 $882,622

ANNUAL SUBSIDY NEED $205,232 $ 194,302 $ 181,621 $167,030

EXCURSION Traffic Type EAS Traffic Yield YE 6/14 YE 6/15 YE 6/16 YE 6/17 YE 6/18

Passengers 30 $ 98.0000 $ 3,087 $ 3,241 $ 3,403 $ 3,574 $ 3,752

Freight 3500 $ 0.5000 $ 1,838 $ 1,929 $ 2,026 $ 2,127 $ 2,233

Mail 12000 $ 1.2500 $ 15,750 $ 16,538 $ 17,364 $ 18,233 $ 19,144

TOTAL $ 20,675 $ 21,708 $ 22,794 $ 23,933 $ 25,130

ANNUAL SUBSIDY NEED $ 28,889 $ 29,827 $ 30,792 $ 31,785
Appendix C

Page 1 of 2

Kalinin Aviation, LLC d/b/a Alaska Seaplanes

Essential Air Service to be provided at Excursion Inlet, Alaska

Docket DOT-OST-2002-12014

Effective Period: October 1, 2014, through September 30, 2018

Scheduled Service: Peak (21 weeks): Three weekly nonstop round trips to Juneau

 Off-peak (31 weeks): One nonstop round trip per week to Juneau. 

Aircraft: Cessna 206/207 and Piper Cherokee aircraft

Rate per Eligible Flight: $1541(Oct. 2014-Sep. 2015); $159 (Oct. 2015-Sep. 2016); $164 (Oct. 2016-Sep. 2017); 

$169 (Oct. 2017-Sep. 2018)

Weekly Ceiling: 

Peak = $924 (Oct. 2014-Sep. 2015); $954(Oct. 2015-Sep. 2016): $984 (Oct. 2016-Sep. 2017); $1,014 (Oct. 2017-

Sep. 2018)2

Off-peak = $308 (Oct. 2014-Sep. 2015): $318 (Oct. 2015-Sep. 2016; $328 (Oct. 2016-Sep. 2017; $338 (Oct. 2017-

Sep. 2018)

Note: 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 landing 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 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 subsidy claim for the period in question. If the carrier contemplates any such changes beyond 

the scope of the Order during the applicable period of this rate, 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 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 service levels, the carrier may cease to provide service to that 

specific location without regards to any requirement 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 contract 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 may not be available for performance under this order beyond December 11, 2014. The Government’s obligation for 

performance under this order beyond December 11, 2014, 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 December 11, 2014, until funds are made available to the Department for performance. If sufficient funds are 

not made available for performance beyond December 11, 2014, the Department will provide notice in writing to the carrier.

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 31; August claims must be submitted by November 30, and so on.

 1 Annual compensation of $28,889 divided by 188 flights (6 weekly flights x 21 peak weeks + 2 weekly flights x 31

weeks). 2 Peak: 6 flights x $154; Off-peak: 2 flights x $154
Appendix C

Page 2 of 2

Kalinin Aviation, LLC d/b/a Alaska Seaplanes 

Essential Air Service to be provided at Kake, Alaska

Docket DOT-OST-2008-0217

Effective Period: October 1, 2014, through September 30, 2015

Scheduled Service: Peak (21 weeks): Two round trips each day to Juneau 

 Off-peak (31 weeks): One round trip each day to Juneau. 

Aircraft: Cessna Caravan or Piper Navajo Chieftain3

Rate per Eligible Flight: $2014

Weekly Ceiling: Peak = $5,628; Off-peak = $2,8145

Note: 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 landing 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 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 subsidy claim for the period in question. If the carrier contemplates any such changes beyond 

the scope of the Order during the applicable period of this rate, 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 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 service levels, the carrier may cease to provide service to that specific location 

without regards to any requirement 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 contract 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 may not be available for performance under this order beyond December 11, 2014. The Government’s obligation for 

performance under this order beyond December 11, 2014, 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 December 11, 2014, until funds are made available to the Department for performance. If sufficient 

funds are not made available for performance beyond December 11, 2014, the Department will provide notice in writing to 

the carrier.

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 31; 

August claims must be submitted by November 30, and so on.

 3 Per the carrier’s proposal, when Alaska Seaplanes substitutes the Piper Cherokee, Cessna 206/207, or DeHavilland 

Beaver aircraft, we will pay the air carrier $112 flight ($201 x 5/9ths). 4 Annual compensation of $205,232 divided by 1,022 flights (4 daily flights x 7 days x 21 peak weeks + 2 daily 

flights x 7 days x 31 weeks). 5 Peak: 28 flights x $201; Off-peak: 14 flights x $201