Order 2012

- 10

- 14 Served: October 11, 2012



### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION 

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

Issued by the Department of Transportation on the 11 th of October, 2012

Essential Air Service at

Lake Minchumina, Alaska Rampart, Alaska

Under 49 U.S.C. 41731 et seq

. D ocket DOT

- OST

- 200 8

- 0237 Docket DOT

- OST

- 2008

- 0201

ORDER RE

- SELECTING CARRIER S Summary By this Order

, the Department is re

- selecting Wright Air Service , Inc. (Wright), to provide Essential Air Service (EAS) at Lake Minchumina, Alaska, for $ 102,300 annually for two nonstop round trips per week to Fairbanks

– one with a 9

- seat IFR Certified aircraft and one with 4

- seat single

- engine piston airc raft

– through October 31, 2 014

. 1 Also, we are re

- selecting Warbelow’s Air Ventures, Inc. (Warbelows), to provide EAS at Rampart, Alaska, for $76,416 annually for two nonstop round trips per week to Fairbanks with Piper Navajo equipment through October 31, 2014.

Background By Order 2010

- 7

- 20 , July 27 , 2010, the Department selected Wright to provide EAS at Lake Minchumina through October 31 , 2012

, 2 consisting of two nonstop round trips per week to Fairbanks , one with a 9

- seat aircraft and one with a 4

- seat aircraft for an annual subsidy of $93,080

. Likewise, by Order 2010

- 7

- 10, July 15, 2010, the Department selected Warbelows to provide EAS at Rampart through September 30, 2012, consisting of two nonstop round trips per week to Fairbanks with 9

- seat Piper Navajo aircraft for an annual subsidy of $ 97,679

.

1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds. 2 By memo dated August 3, 2010, we clarified that Wright’s selection period extend s through October 31, 2012.- 2

-

As the end of the current rate term s were approaching, Order 2012

- 6

- 8

, June 12 , 2012, requested proposals at both communities by July 9, 2012

. We received proposals from the two incumbents, Wright and Warbelow s , at Lake Minch umina and Rampart, respectively

. On Ju ly 10 , 2012, we requested community comments at both communities regarding th ose two carriers’ proposals

.
By Not ice dated August 3, 2012, we extended the deadline for comments at Rampart to August 29 , 2012. As discussed in that notice, o n August 2, 2012, Tatonduk Outfitters, Ltd. (Tatonduk), contacted Department staff and asserted that they had, in fact, submitted a timely

filed p roposal for Rampart. The Departm ent’s IT security experts confirmed Tatonduk’s

ass ertion, indic a ting that Tatonduk’s proposal had been dropped by the Department’s security filter

, thus initially preventing the EAS staff from seeing Tatonduk’s proposal . The notice extended the deadline for comments at Rampart to August 29.

Proposals at Lake Minchumina Under Option 1

, Wright proposes to provide one nonstop round trip per week to Fairbanks with 9

- seat IFR certified aircraft

– either Cessna 208 single

- engine turboprop or Piper Navajo twin

engine pisto n aircraft

. Wright requests $ 74,360 annual subsidy for this service.

Under Option 2

, Wright would supplement the service it proposes in Option 1 with one additional nonstop round trip per week to Fairbanks with a 4

- seat single

- engine piston aircraft

, either Cessna 206 or Beech Bonanza . Wr ight requests a total of $ 102,300 annual subsidy under this option

. The service in Option 2 corresponds to that selected by Order 2010

- 7

- 20.

Proposals at Rampart Tatonduk Tatonduk proposes to provide two nonstop round trips per week to Fairbanks for $46,187 annually. Over the course of a year, 30 round trips would be provided with either a Pilatus PC

- 12 or Cessna Caravan , both of which are 9

- seat IFR certified single

- engine turboprop aircraft

, and 74 round trips with a 5

- seat single

- engine Piper Lance aircraft.

Warbelows Under Option 1 , Warbelows proposes to provide two nonstop round trip s per week to Fairbanks with 9

- seat Piper Navajo twin

- engine piston aircraft. Warbelows request $76,416 annual subsidy for this service.

Under Option 2 , Warbelows proposes to provide three nonstop round trip per week to Fairbanks with 9

- seat Piper Navajo twin

- engine piston aircraft. Warbelows request $119,445 annual subsidy for this service.

Community Response , Lake Minchumina We received comments on July 23 , 2012, from the Lake Minchumina Homeowner’s Association. The community endorses Wright’s Option 2

-- twice weekly service. It discusses its need for twice

weekly service as follow s :- 3

-

“We have had the once

- weekly option in the past and found it inadequ ate to meet our needs. It results in delayed bills, accounting

, and deadlines. It also means any appointment with doctors or other professionals requires residents to stay a whole week in town for a single visit, which get prohibitively costly when stayin g in a hotel. The twice

- weekly schedule is ideal for our economic future since many visitors and tourists can only come for half of a week. ....[We also] compliment Wright for their outstanding service. It is the most reli able service this village has ever had, with on

- time flights and reliable, helpful staff. Many days of bad weather would have prevented Scheduled VFR flights, but the routine availability of an IFR aircraft has nearly eliminated missed flights. Wright ha s certainly earned the good, trusting relationship that was lacking with other carriers.”

Community Response, Rampart By letter dated August 27, 2012, Ms. Peggy Wright, the Post Mistress for Rampart, support ed Tatonduk “providing weekly Essential Air Se rvice to the Village of Rampart. Village residents desire direct non

- stop service between Fairbanks and Ramparts and [Tatonduk] is best suited for this service. In the past, the service into and o ut of Rampart has not been direct non

- stop to Fairbanks .”

By letter dated August 28, the Rampart Village Council supported the proposal of Warbelow’s Air Ventures. The Village Council feels that “Warbelow’s staff, service, and schedule are an asset to the people of this community, and their proposal for twin

- engine air transportation will provide us the level of service, safety, and commitment we need.” On August 29 Baan o yeel kon Corporation indicated that “On behalf of the Community of Rampart we are in support of the air carrier services Warbelow’s Air Ve ntures. The community needs to have consistent, reliable air carriers service to Rampart each week.”

Decision , Lake Minchumina The carrier

- selection issue at Lake Minchumina is straightforward

. Wright is the only carrier proposing service, the requested level of subsidy appears reasonable, and the community favors the incumbent carrier, Wright. The carrier has submitted two options, Option 1

-- one trip per week with 9 seat aircraft for $74,360 annual subsidy and Option 2

– two trips p er week, one with 9

- seat aircraft and one with 4

- seat aircraft for a total of $102,300 annual subsidy . The service in Wright’s Option 2 matches the level of service it was selected to provide by Order 2010

- 7

- 20, Ju ly 27, 2010, and there is only a modest increase in subsidy from the current rate , from $93,080 to $102,300.

We will select Option 2. A second round trip, as mentioned by the community, doubles its

access to the national transportation system, and Wrig ht has kept this option viable in terms of subsidy by proposing to provide that second flight with smaller, 4

- seat aircraft. The service proposed under Option 1, while less expensive, would not fully accommodate historical traffic for several months of th e most recent year , as shown in the request for proposals. In brief, both service and subsidy level s appear reasonable and we will select that proposal.

Decision, Rampart The first issue at Rampart is which level of service to select

– two round trips per week or three. The three round trip s per week proposed by Warbelow would require significantly more subsidy than its two round trips per week option, and more than double the level of subsidy requested by- 4

-

Tatonduk. Moreover, based on historical traff ic, the third round trip is unnecessary because either carrier’s two

- round

- trip s

- per

- week opti on would accommodate historical traffic for each month of the year , as shown in the request for proposals

. The second issue is which carrier’s two round trip per week option to select. Tatonduk has a clear advantage in terms of the level of subsidy requested ; i n terms of community support, Warbelows has an advantage. The single letter of support for Tatonduk was from the Rampart Post Mistress. However, the letters supporting Warbelows were from local organizations, including the Village Council, and those two letters better reflect the views of the community overall

. We note that traffic has been stable to slightly increasing at Rampart. The Village Counc il values twin

- engine aircraft. Warbelows proposal is for strictly twin

- engine aircraft. The single

- engine turboprops proposed by Tatonduk

– either Pilatus or Cessna 208s

– are comparable to the twin

- engine piston aircraft proposed by Warbelows. However , Tatonduk proposes to use single

- engine piston aircraft more than 70 percent of the time. Warbelows ’ historical subsidy requests reflect a good downward trend

-- $97,679 two years ago versus $76,416 now. Finally, Warbelows is the incumbent at Rampart, and selecting them would not require a carrier transition. The level s of service and subsidy that Warbelow s requests appear reasonable, and we will therefore select that carrier

Carrier Fitness 49 U.S.C. §§ 41737(b) and 41 738 require the Department to find an air carrier fit, willing, and able to provide reliable service before the Department may subsidize it to provide E AS

. Both Warbelows Air Ventures, Inc., and Wright Air Service, Inc., are subject to the Department’s continuing fitness requirements

. The Department has contacted the Federal Aviation Administration, and it has raised no concerns that would negatively affect our fitness finding s

. The Department therefore concludes that the carrier s remain fit to conduct the operations proposed here.

This Order is issued unde r authority delegated in 49 CFR Part 1.56a(f).

ACCORDINGLY,

1 . We select Wright Air Service, Inc., to provide EAS at Lake Minchumina, Alaska;

2 . We set the final rate of compensation for Wright Air Service, Inc., for the provision of Essential Air Service at Lake Minchumina, Alaska, as described in Appendix B

- 1;

3 . We select Warbelows Air Ventures, Inc., to provide E AS at Rampart

, Alaska ;

4 . We set the final rate of compensation for Warbelows Air Ventures, Inc.

, for the provision of Essential Air Service at Rampart

, Alaska

, as described in Appendix B

- 2 ;- 5

-

5 . We direct Warbelows Air Ventures, Inc., and Wright Air Service, Inc., to retain all books, records, and other source and summa ry 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 dat e 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 te rms of this Order ;

6 . We find that Warbelows Air Ventures, Inc., continue s to be fit, willing and able to operate as a certificated carrier and capable of providing reliable E AS at Rampart, Alaska ;

7 . We find that Wright Air Service, Inc., continues to be fit, willing and able to operate as a certificated carrier and capable of providing reliable EAS at Lake Minchumina, Alaska;

8 . Th ese docket will remain open until further o rder of the Department; and

9 . We will serve copies of this Order on the civic officials of Lake Minchumina and Rampart

, Alaska, the Alaska Department of Transportation and Public Facilities, and on Tatonduk Outfitters, Ltd., Warbelows Air Ventures, Inc., and Wright Air Service , Inc.

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

Nonstop Great Circle Miles from Fairbanks (FAI) Minto (MNT) 50 Healy Lake (HKB) 74 Ramparts (RMP) 82 Manley (MLY) 83 Central (CEM) 104 Circle (IRC) 130 Lake Minchumina (LMA) 148Appendix B

- 1

Essential Air Service to be Provided to Lake Minchumina, Alaska , Docket 200 8

- 0237

Effective Period : November 1, 2012, through October 31, 2014 Scheduled Service : Two nonstop round trips per week to Fairbanks; one with 9

- seat C

- 208 or Navajo ; one with 4

- seat Cessna 206 or Beech Bonanza aircraft. Rate per Eligible Flight 1 9

- seat aircraft, $ 681; 4

- seat aircraft, $303. Weekly Ceiling 2 $ 1,96 8

Note: The carrier understands that it may forfeit its com pensation 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 eligib ility 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 complet e 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

serv ice 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 tha t 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 reducti on 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
op erate to controvert the foregoing paragraph.

Funds are not currently available for performance under this Order beyond September 30, 2012 . The Government’s obligation for performance under this Order beyond September 30, 2012 , is subject to the availabil ity 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 September 30, 2012 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30, 2012 , 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 Annual compensation of $102,300 divided by the estimated annual completed departures, arrivals, and seats, as follows: 2 flights/week x 52 week s x 4 seats and 2 flights/week x 52 weeks x 9 seats = 1,352 seats. $102,300 ÷ 1,352 = $75.67 per seat, or $303 per 4

- seater and $681 per 9

- seater. 2 $ 681 x 2 directions + $303 x 2 directions = $1,968

.Appendix B

- 2

Essentia l Air Service to be Provided to Rampart, Alaska, Docket 2008

- 02 01

Effective Period : October 1, 2012, through October 31, 2014

. 1 Scheduled Service : Two nonstop round trips per week to Fairbanks

. Aircraft Type: Piper Navajo, 9

- seats. Rate per Eligible Flight 2 $367

. Weekly Ceiling 3 $1, 468

. 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 schedu le 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 carr ier 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 ad justed 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 compl etely, 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 stipulate d 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 De partment 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, a ny 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 September 30, 2012. The Government’s obligation for performance under this Order beyond September 30, 2012, 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 Sept ember 30, 2012, until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30, 2012, the Department will provide notice in writing to the carrier.

All claims for payment must be subm itted within 60 days of the last day of service provided under this Order.

1 We are extending Warbelows ’ rate to a 25

- month period, to make that rate coterminous with Wright’s rate. 2 Annual compensation of $76,416 divided by the estimated annual completed departures and arrivals: 2 flights/week x 52 weeks x 2 directions = 208. 3 2 round trips per week x 2 directions x $367.