## BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, DC

_______________________________ ) In the matter of the application of ) ) WINGS AIRWAYS INC. ) DOCKET DOT

- OST

- 2010

- 0023 ) For a certificate of public convenience ) And necessity under 49 USC 41102 ) _______________________________)

REPLY OF WINGS AIRWAYS INC. TO CORRESPONDENCE OF AIR EXCURSIONS, LLC DATED FEBRUARY 16, 2010

Communications with respect to this document should be addressed to: Holly Jo hnson Wings Airways 2 Marine Way #175

Juneau, AK 99801 (907) 586

- 6275 holly@wingsairways


## . com

February 26 , 2010

## BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, DC

_______________________________ ) In the matter of the app lication of ) ) WINGS AIRWAYS ) DOCKET DOT

- OST

- 2010

- 0023 ) For a certificate of public convenience ) And necessity under 49 USC 41102 ) _______________________________)

REPLY OF WINGS AIRWAYS INC. TO CORRESPON DENCE OF AIR EXCURSIONS, LLC D ATED FEBRUARY 16, 2010



## Wings Airways hereby replies to the correspondence of Mike Loverink, owner of Air Excursions, LLC

. The reasons listed below will prove all claims are erroneous.

Aircraft
The five aircraft listed in the Wings Airways application a re currently in lease negotiations between Wings Airline Services and Alaska Juneau Aeronautics, Inc. with no known settlement at this time. Wings Airways is not privy to copies of current lease agreements, as they are between two private entities. Wings Airways has shown leasing plans as requested under 14 CFR 204.3(n)(2 ) by an interest in the Wings Airline Services aircraft if they become available. Appendix A provided by Mr. Loverink highlights a submission by Alaska Juneau Aeronautics, Inc. that stat es “AJA currently leases 2 Caravans and 3 Cessna 207’s and will continue to have the needed aircraft to meet its contractual obligations to the DOT”, yet it does not specify tail numbers of the aircraft listed . Further proof an agreement between Wings Air craft Services and AJA has not been confirmed.
In the case that aircraft owned by Wings Airlines S ervices would no t be available to Wings Airways other options would be implemented . T he current aircraft mar ket is saturated with suitable aircraft for lea se or purchase. Wings Airways ’ financial fitness allows it to exercise the

## option of either purchasing or leasing other aircraft. If Wings Airways chooses to lease aircraft from another company, it is anticipates costs will be similar to a lease agreemen t with Wings Airline Services.

The current contract Alaska Juneau Aeronautics has with the DOT does not involve Wings Airways and therefore should not have a bearing on Wings Airways receiving authority to operate on a scheduled basis. Air Excursions is simply using the Wings Airways application as an excuse to reopen the bid for Essential Air Service to Kake and Excursion Inlet.
Employees
As a point of correction, a total of five shareholder employees and managers have resigned from Alaska Juneau Aeron autics, Inc

. d.b.a. Wings of Alaska (AJA) and now work exclusively for Wings Airways Inc

. Further establishing that Mr. Loverink and his council have little knowledge of Wings Airways ’ management or employee structure. This information only serves to pr ove that qualified longtime employees are behind a venture that would require vast experience and knowledge.
The majority of pilots flying for Wings Airways during the summer months are current in both types of aircraft proposed for service. Wings Airw ays receives applications from qu alified pilots on a daily basis and believe s that p ilots are accessible if needed per the application. Unemployment rates are at an all time high creating a positive climate for obtaining employees

. Prior to our applica tio n submission, conversations had taken place with potential key employees from the various communities and each person had expressed interest in future employment

. Wings Airways holds an esteemed reputation within the industry and the communities of Southe ast Alaska fostering a desire for others to become part of the team.

Facilities
Wings Airways holds a concrete lease with Fountain Village Development to occupy a hangar facility located at the Juneau International Airport. The lease is valid through 2013 . Appendix A highlights this lease that allows “unrestricted shared space on the 16,800 square foot ground floor and 2,688 square feet of storage on the 2 nd 

## floor of the two story hangar building”. The large hangar includes extensive office space, facili ties for cargo and maintenance operations,

## offices, meeting space and parking as well as convenient runway access for the aircraft. Options to extend the lease are available.
Land at the Juneau International Airport is available for the option to build a hanger if the desire of the company would be to do so in the future.
Ticket counter space is routinely available at the Juneau International Airport. Specific space would be available if a disruption in the current Alaska Juneau Aeronautics service w ould occur. Currently , the space of a former airpo rt tenant has not been occupied and is available.
Rental space is available in each of the outlying communities and towns.

In Addition
As stated in the narrative history from the Wings Airways ’ applicati on , a primary motivation is to provide a defensive strategy to protect the current markets served by Alaska Juneau Aeronautics if a disruption of service should occur. If this disruption were to happen , Wings Airways would attempt to recover any and all o f the current office space, employees, ground equipment, etc. from Alaska Juneau Aeronautics. Wings Airways has sufficient funds to p rocure any additional equipment needed to run daily operations in Juneau or the outlying stations . As shown in the applicati on , the owners and managers of Wings Airways h ave extensive expertise and knowledge of the industry to begin operations immediately.
Traffic Projections
An estimated pretax fare was used to calculate passenger and freight revenues. Air Excursions made t he argument that their specific rates were not used in this case. Wings Airways determined it was in the best interest of the applicant to use realistic rates based on Wings Airways costs, not that of a separate entity.
Air Excursions asserts Wings Airway s assumes it will carry nearly 100% of the passenger and freight in the markets. This statement is obviously false and unfounded. The estimate assumes capacity at the same level as a similar sized operation (Wings of Alaska) at a time when they had simi lar competition (2008). During the period when the projections were calculated, t he market consisted of Wings of Alaska, LAB (until August 2008) and the unreported totals of Air

## Excursions. Within Air Excursions Appendix C , LAB was not taken into account. The

s tat e ment that Wings Airway s a s sumed they w ould carr y between 49.38 % and 85.97 % of m ai l

tra f fic is inaccurate. The foreca s t consisted of t w o carriers, each carrying 50 % of t he mail.
Numbers calculated are based on the 2008 total mail carried in the proposed markets

. Wing s Airways is projecting seat capacity slightly higher than AlA experienced , not less as

as s er t ed in Air Excursions ' letter. According to their letter ( Appendix D pages 1 through 6) , total a v ailable seats for Wings of Ala s ka were 61 , 435. Total projected a v ailable seat s for Wings Airways are 65,520 (Wings Airways Application , Appendix H, page 1). Air Excursions has
distorted their compari s ons by using a di f ferent calculation method to determine total load factor le v el s

. Appendi x B restates Air E xcur s ions data w ith tota l load f a ctors pres e nted in P E Q 's (pa s senger equivalent s) so they may be compared with Wings Airways projections. From thi s it
is apparent the projected load factors are consistently lower than experienced by Wings of
Alask a.

Air Ex cursion s assert s that W i ngs Airw a y s had not provided a detailed bre a kdown of the ba s is of projections. The source of the projections are clearly stated in the application , Appendix H , page 1, under Notes.
WHEREFORE, Wings Airwa y s Inc

. recasts the principal thrust s of Air Ex cursions objection with ex planation of cause , intent, resources and fe asibilit y. A clear case ha s been pre s ented and substantiated

. Respectfully s ubmitted , 

# ~§
~~ Holly A. Johnson, Pre s ident Wings Airways lnc 2 Marine Wa y, Suite 175 Juneau , Alaska 9980] (907 ) 5 8 6-6 2 75

## WHEREFORE, Wings Airways Inc. recasts the principal thrusts of Alaska Seaplane Service

obje c tion with explanation of cause, intent , resources and feasibilit y

. A clear case has been pre se nted and substantiated. Respectfully submitted ,



# . 1\

. C 6 ?· ~ /

~ . • 1 

## Holl y A. Johnson , Pre s ident Wing s Air w ays Tnc 2 Ma r ine Way, Suite 175 Juneau , Alaska 99801 (907) 586-6 2 75

### Appendix A Page 1 of 2

THIS LEASE is e nte r ed i n t o th is J s t d a y of April, 2 008, between F oun t ain V i l lage De ve lopment, a n Oregon g e n e ra l partner s hi p (" L a nd lo rd " ), and Al a sk a C o as ta l Airlines , Inc. , a n Al a s k a "S" Corporat i on db a W i n g s Ai r wa y s ( "Tena n t ")

.
Landlord o w ns and operates a building and other improvemen t s ( the "Bu i lding " ) located at 8421 Living s ton Way , Juneau, Alaska, 99801 , legally described 

### as Lot 4, Block 100 Juneau Airport, Copper River Meridian (CRM) (the "Property").

Landl o rd he r eby leases t o Tenant and Tenan t he r e b y le a ses from L a ndlord un r est r icted shared space on the 

### 16,800 square foot ground floor, 

### 2,688 squ a re fe e t of s tor a ge o n the 

### 2 nd floor, plu s a to be determin e d area for of f ice and confer e nce room u s e also on the 2n d floor , of the two 

### st or y ha n g a r build i ng

. as o u t li ne d on t h e a ttached E x hibi t A ("t h e P r em i se s") a l l in th e Bui l d in g
on the te r ms and cond i tions s et forth in this le a se

.
Ids unde r stood and agreed that th e leased a r ea is unrest r ictediy shared with Tenant's former "sister" avi at i o n enterprise , Alaska Juneau Aeronautics, Inc

. an Alaska "C" Corporation, dba Wings of Ala s ka ("Co-Tenant")

. 

### 1. TERM The term o f this L ease (the "T erm ") shall be for a period of five (5 ) y ears , co m mencing on Ap r il I, 200 8 and termin a tin g on March 31. 2013

.
2. RENT Beginning on the Commencement Date and continuing during the entire Term, Tenant shall pay to Landlord , in monthly i nstallments, rent for each fiscal year period "Base Rent" as defined in this Section , and on subs e quent anniv e rs a r i es by the appl i ca ti on of 

### U

. S

. Dept

. of Labor ' s A nchorage CPI f

a ct o r as prov i d e d in Sect i on 4 c below. 

### All Rent shall be paid wh e n due wi t hout not i ce, offset, or deduction for any rea s on.
Base Rent i s : •••• p e r mon t h fo r the in i t ia l per i od A p r i l 1

. 2 0 08 t hrough March 31 , 2009

.
Base Rent shall be paid i n advance on or before t he first da y of each cal e ndar mon t h during the Term , except for the: first calendar month. Upon execution of this Lease , Tenant shall pay to Landlord Base Rent f

o r t he first calendar mon t h ofthe Term which 

### is equal to ••• ( a) General
All references to "R e nt " or " Rental " in this L e ase shall m ea n B a se Re nt , an d all other pa y men ts
re qu i red of Tenant u nd e r t h i s Lease u nless otherwi s e express l y spec i f ie d and all p a ymen t s required 

### by Tenant under this Le a se shall be d e emed "Rent "

.

(h) Place of Payment
Tenant shall pay Rent and othe r amoun t s required to be paid 

### by T e nant hereunder to Landlord at the addres s for Landlord set forth o n the last page of this Lea s e , or at such o t he r place a s L a ndlord ma y from r i me t o time d e s ign a te i n wr i tin g.

S t andard Fo r m of RET A r L LEASE Page 1 of 13 411 1 2008 , P l ease 

# IThb..-..

. '

. : : J- 

# r )

Landlord Tenant

### Appendix A Page 2 of 2

4. INSURANCE; 

### INDEMNITY During the Term, Landlord shall m a intain in full force a policy or p o li c ies of standard multi-peril insurance covering the Building and other improvements (exclusive of Tenant's equipment, tenant improvements and other personal property) situated on the Property for the perils of fire, lightening, windstorm and other perils commonly covered in such policies. Additionally, the perils of earthquake, landslide, flood, and/or other perils may be covered at the election of Landlord. Landlord shall use its reasonable efforts to secure s a id insurance at competitive rates. During the Term Tenant shall maintain its own comprehensive liability i nsurance policy insuring Landlord against liability for bodily injury and property dama g e occurring in, on or about the Property

. Ten a nt shall indemnify, defend, and sa v e harmless Landlord from any and allliahility, dam a ge, expenses, attorney's fees , causes of actions, suits, claims or judgments. a r ising out of or connected with (i) the use

. occupancy, manag e ment, or control of the Premises, (ii) any failure of Tenant to comply with the terms of this Lease, and (iii) the acts or omissions of Ten ant, its agents, officers, directors , employees, or invitees; provided, however, that Tenant shall not be liable for claims caused by the sole negligence of Landlord. Tenant shall, at its own cost and expense, defend any and all suits which may be brought against Landlord either alone or in conjunc t ion with other upon any such above m e ntioned cause or claim , and shall satisfy, pay , and discharge any and all settlements paid by or judgments that may be entered against Landlord regardless of whether a lawsuit is actually filed

. Tenant shall at its own expense during the Te r m carry in full force and effec t a comprehensive pub l ic l i ability insurance policy including property and personal injury coverage, with an insurance carrier satisfactory to Landlord, naming Landlord, Landlord's management agent, and Landlord's lender as additional insureds, with a combined s i ngle limit for bodily injury or property damage in an amount of Dot Jess than the greater of (a) $2,000,000 , or (b) $2,000,000 per occurrence and in aggregate, insuring against any and all liability of Ten a nt with respect to the Pre m ises and under this Lease including without lim i tation Tenant ' s i ndemnity obligations under this Lease, or arising ou t of the maintenance, use or occupancy of the Premises

. Such pol i cy sh a ll provide that the insurance shall not be cancelable or modified without at l e ast a ten (10) days prior written notice to Landlord, and shall be deem e d primary and noncontributing with other insurance available to Landlord. On or before the Commencement Date, Tenant shall furnish Landlord with a certificate or other acceptable evidence that such insurance is in effect. Tenant shall also provide and maintain insurance to comply with Worker's Compensation and Employer's Liability Laws

.

5. USE OF PREMISES
The Premi s es shall be used for the responsible ope r ation of an multi aircraft h a ngar, in c luding ai r craft repair a nd m a intenance , including painting, parts stor a ge, offices a nd classrooms, and other unspecified related activities. In connection with the use of Premises, Tenant shall:
a) Conform to all applicable laws, st a tutes , rules, ordinances, orders, regulations and requirements of any public authority ( " Laws") affecting the Premises and the use of the Premises and correct, at Tenant's own expense, any failure of compliance created through Tenant's fault

or

. by reason of Ten ant's use , unless such failure is due to Landlord ' s defaul t in the 

### performance of the agre e ments set forth in t his Lease to be kep t and performed by Landlord. Without limiting the generality of the foregoing, Tenant shall comply with the Americans with Disabilities Act as it applies to the Premises and all obligations pertaining to asbestos as required by the Occupational Safety and Health Administration (OSHA) applicable to the Premises and to Tenant's employees:

b) Refrain from making an y marks on or attaching any sign , insignia, antenna, window covering, aerial or other device to the exterior or inte r i o r walls , w i n d o w s or roof of the Premises without the written consent of the Landlord, which consent sh a ll not be unreasonably withheld

. Prior to installing any signs, Tenant shall submit detailed color drawing s to Landlord for approval indicating the location, size, layout , design , and color of proposed sign, including all lettering and graphics. Electrica l service to all signs shall be at Tenant's sole expense. Notwithstanding Landlord's consent to any s i gns, Tenant shall (i) comply with all Laws and obtain any necessary permits and governmental approvals related to such signs as its
own cost and expense, and (ii) within 15 days after Lease expiration or earlier termination , remove all such signs and repair any damage to the Premises caused thereby, at Tenant ' s own cost and expense; Standard Form of RETAIL LEASE Page 3 of13 4/1/2008 ' , Pl)e\ni~



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. 1.,J Landlord' TenantAppendix BPaxTotalPaxTotalPaxTotalPeriod Market Seats Pax Freight Mail Load FactorLoad Factor3Load Factor Load Factor Load Factor Load FactorApr-JunHNH65543439595975989652.47%61.59%49.00%52.00%-3.47%-9.59%Jul-SepHNH76974591710766142859.65%68.25%60.00%67.00%0.35%-1.25%Oct-DecHNH46382458471745131053.00%63.61%46.00%52.00%-7.00%-11.61%Jan-MarHNH33471631345523574048.73%59.23%28.00%33.00%-20.73%-26.23%TotalHNH222361211921239920837454.50%63.96%46.00%52.00%-8.50%-11.96%Apr-JunHNS709540047766511036056.43%69.68%45.00%54.00%-11.43%-15.68%Jul-SepHNS741242318832313220957.08%71.96%59.00%70.00%1.92%-1.96%Oct-DecHNS420023587236712158356.14%79.23%35.00%45.00%-21.14%-34.23%Jan-MarHNS28871348450218556846.69%69.31%25.00%36.00%-21.69%-33.31%TotalHNS215941194128337644972055.30%72.27%43.00%53.00%-12.30%-19.27%Apr-JunSGY694438999426315618156.15%74.18%62.00%75.00%5.85%0.82%Jul-SepSGY792147958966614923060.54%75.62%83.00%98.00%22.46%22.38%Oct-DecSGY1753784239455065944.72%66.00%33.00%41.00%-11.72%-25.00%Jan-MarSGY987411119773201841.64%63.93%20.00%28.00%-21.64%-35.93%TotalSGY17605988921985138808856.17%73.44%51.00%62.00%-5.17%-11.44%**Total All Markets 61435** **33949 715626** **1046182 55.26%** **69.60% 47.00%** **56.00% -8.26%** **-13.60%**1Wings of Alaska experience data from Air Excursion Letter, Appendix D, pages 1 through 62Wings Airways projected load factors from Wings Airways Application, Appendix H, page 13Total Load Factor is calculated using PEQ's (passenger equivalents) as was used in the Wings Airways application.PEQ calculation is: Pounds of freight plus pounds of mail divided by 200 pounds, plus number of passengers, divided by number of seats.Projected Load Factors2DifferenceWings AirwaysLoad Factor ComparisonWings of Alaska Actual and Wings Airways ProjectedWings of AlaskaExperience Data1