Order 201 2

- 1 2

- 3

Served: December 6 , 2012



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION



### OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 6 th of December , 201 2

Essential Air Service at

CAPE YAKATA GA

, ALA S KA

Under 49 U.S.C. § 41731 et seq

. DOCKET OST

- 199 6

- 2009

ORDER SUSPENDING SUBSIDY ELIGIBILITY AND FINALIZING RATES

Summary By this Order

, the Department is suspending the Essential Air Service (EAS) subsidy eligibility of Cape Yakataga, Alaska. We are also settin g final subsidy rates for Alsek Air ’s (Alsek) provision of EAS at Cape Yakataga, for the period from November 1, 2012

, through Janua ry 31, 2013, or until the carrier terminates service, whichever comes first.

Background By Order 2010

- 9

- 21 (September 17, 2010) the Department reselected Alsek to provide EAS at Cape Yakataga and Icy Bay, Alaska, for the two

- year period ending October 31, 2012. Alsek provided two (off

- peak) or three (peak) round trips per week to Yakutat wit h 4

- or 5

- seat Cessna aircraft for a combined annual subsidy of $91,000. In anticipation of that expiration, we issued

Order 2012

- 7

- 4 (July 5, 2012) soliciting proposals from carriers interested in providing EAS at these communities for a new contract per iod. We received only one response, from Alsek, to continue its existing service. 1

State Comments As is our normal practice in dealing with EAS issues in Alaska, we contacted the Alaska Department of Transportation and Public Facilities (the State) to discuss the air service situation

1 The Department was subsequently notified that the Icy Bay airport has been converted to private use, and therefore we can no longer require service there. See Order 2012

- 11

- 21 (November 19 , 2012).- 2

-

at Cape Yakataga. 2 On November 8, 2012, we received a letter in response . According to th at letter, the State has taken exhaustive efforts to determine if there is any longer a permanent community at Cape Yakataga. T he State Demographer examine d census records as well as

Alaska Permanent Fun d Dividend applications and was able to find only one individual who claimed residence in Cape Yakataga since 2010.

Furthermore, the State asked the Federal Aviation Administration personnel who maintain the runway at Cape Yakataga whether or not there are any permanent residents there. Those personnel explained that there used to be a logging camp at Cape Yakataga

, bu t they are not aware of anyone living there now. Therefore, at this time, the State do es not see sufficient demand to justify continued EAS at Cape Yakataga. However, the State reserves the right to

requ est EAS be reinstated in the future, should circums tances change.

Decision We appreciate the important role the State plays in EAS matters within Alaska. It has always taken a very practical view of the EAS needs in Alaska, as it has again done here. Based on the State’s letter, we will not continue su bsidy support for EAS at Cape Yakataga and we will permit

the carrier to terminate service at its discretion

. 3 Before Alsek terminate s service, we expect the carrier to contact all passengers holding reservations for affected flights, to notify them of the termination of service and to assist them in making alternate travel arrangements or provide a

refund of the ticket price, without pe nalty, if requested

. 4

This O rder is issued under authority delegated in 49 CFR Part 1.56a(f).

ACCORDINGLY,

1. The Department suspends the subsidy eligibility of Cape Yakataga, Alaska, and allows Alsek Air Service to terminate service at the community at its discretion;

2

. The Department sets the final rate of compensation for Alsek Air Service, for the provision of EAS at Cape Yakataga, Alaska, for the perio d from November 1, 2012 through January 31, 2013, or until the carrier terminates service, whichever comes first, as described in Appendix C.

3. We direct Alsek Air Service to retain all books, records, and other source and summary

documentation to su pport 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 date of service of thi s Order, or until the Department indicates that the records may be destroyed, whichever comes first. Copies

2 49 U.S.C. § 41732(b)(1)(B) gives the State of Alaska som e statutory authority over service levels within the State, and it typically acts as the spokesman for the local communities.

3 Regardless of when the carrier decides to terminate service, we will not provide subsidy beyond January 31, 2013. The Department conducted informal rate discussions with Alsek Air. Based on those discussions, we have arrived at what both parties agree to be a reasonable rate for the provision of EAS for the period from November 1, 2012 through January 31, 2013. See Appendix B.

4 I n light of the State’s comments, this decision may be revisited in the future at the State’s request.- 3

-

of flight logs for aircraft sold or disposed of must be retained. The carrier may forfeit its compensation for any claim that is not sup ported und er the terms of this O rder;

4 . We find that Alsek Air Service continue s to be fit, willing and able to operate as a certificated

carrier and capable of providing reliable E ssential A ir S ervice at Cape Yakataga

, Alaska ;

5 . Th is docket will remain open until further o rder of the Department; and

6

. We will serve copies of this O rder on the Division of Statewide Aviation of the Alaska Department of Transportation and Public Facilities, and Alsek Air Service

.

By:

Susan L. Kurland Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available on the World Wide Web at http://www.regulations.govAppendix A

SERVICE AREA MAPAppendix B



### Total Round Trips 130 1/ Flights 260 2/
Hub Yakutat
Block Hours 254 3/ Passengers 120 Freight/Mail Pounds 9,682

Passenger Revenue @ $120 per passenger $14,400 Other Revenue @ $0.45 per pound $4,357
Total Revenue $18,757

Total Expenses, Including Profit, @ $550 per hour $139,700

Subsidy Rate $120,943

1/ 26 weeks peak x 3 trips per week + 26 weeks off-peak x 2 trips per week = 130. 2/ 130 flights x 2 directions = 260. 3/ 130 round trips x 1.7 block hours per round trip x 1.15 for flights attempted but not completed (turnbacks). Alsek Air Subsidy Need at Cape Yakataga, Alaska
Docket 1996-2009Appendix C

Alsek Air Service Essential Air Service to be Provided to Cape Yakataga and Icy Bay, Alaska, Docket: OST

- 1996

- 2009

Effective Period: November 1, 2012 through January 31, 2013

Scheduled Service: From Yakutat, two round trips each week to Cape Yakataga.

Aircraft: 4 or 5 seat s ingle engine Cessna 185 or 206. Rate per Eligible Flight: $ 582 1
Weekly Ceiling: $ 2,328 2

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 destin ation 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 car rier 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 du ring 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 selec t 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 w ill 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, eithe r 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 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 are not currently available for performance under this order beyond March 31 , 2013. The Government’s obligation for pe rformance under this order beyond March 31 , 2013, is subject to the availability of appropriated 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 March 31 , 201 3 , until funds are made available to the Department for performance. If funds are not made available for performance beyond March 31, 2013 , 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.

1 See Appendix B. $120,943 ÷52 weeks = $2,326. $2,326 ÷ 4 flights per week = $582

. 2 $582 x 4 flights per week = $2,328.