### Order: 201 4

- 1 2

- 13 Served: December 23 , 201 4



### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on th e 23 rd 

### day of December , 20 1 4

ORDER REQUESTING PROPOSALS

Summary By this O rder, the Department is requesting proposals from ca rriers interested in providing Essential Air S ervice (EAS) at Adak , Alaska , for a new contract period
, beginning October 1, 20 1 5
, with or without subsidy. (See Appendix A for a map). Carriers should file their proposals no later than February 11 , 201 5

. Background By Order 2013

- 7

- 14, issued July 16, 2013, the Department selected Alaska Airlines, Inc. (Alaska Airlines), to provide subsid ized EAS at Adak, Alaska, from October 1, 2013, through September 30, 2015. Under that Order, Alaska Airlines provides Adak with two nonstop round trips per week to Anchorage. Service is provided with Boeing 737

- 400 aircraft at an annual subsidy rate of $2,057,114.

In this instance, the Department is providing a longer period of time for carriers to prepare and submit proposals. Adak’s remoteness and other unique aspects create challenges that make it more difficult to develop a comprehensive service pr oposal. In addition, in order to comply with Federal Aviation Administration runway safety area standards, significant airfield modifications will go into effect on October 1, 2015 that may impact carriers’ proposals. These modifications include the clos ing of the crosswind runway (RWY 18

- 36) and displacing the west threshold of the main runway (RWY 05

- 23) 600 feet to the east, effectively shortening the main runway by 600 feet. Therefore, the Department is providing additional time to allow for carriers , the community, and the State of Alaska to communicate with each other and investigate various service options.

Request for Proposals The Department is here requesting proposals from carriers interested in providing EAS at Adak
, Alaska
, with or without s ubsidy, for a new contract period beginning Essential Air Service at

ADAK, ALASKA

Under 49 U.S.C. § 41731 et seq

. DOC KET DOT

- OST

- 2000

- 8556

### - 2

-

October 1
, 20 1 5

. Carriers should file their proposals no later than February 1 1 , 2015

. Staff will then docket the proposals, thereby making them public. Shortly afterwards, the Department will provide a summar y of the proposals to the commun ity and the State and ask them to submit their final comments. The Department will give full consideration to all proposals that are timely filed. 1



### Interested carriers should prepare their proposals with every expectation that their initial proposals will represent their final and only proposals. However, the Department retain s the discretion to negotiate proposals with carriers when deem ed desirable. The Department also retain s the discretion to reject outright all unrea sonable or unrealistic proposals and re

- solicit a new round of proposals. However, negotiation and rejection are only occasional exceptions to the rule.

The Department is here providing interested carriers with some basic information to serve as guidance when they prepare their proposals, but we will not prescribe a precise format for their proposals. The Department expect s proposals to adequately describe the service being proposed and the annual amount of subsidy being requested. The applicants can

ma ke their own judgments as to the level of detail they wish to present; however, the Department recommend s they include information concerning proposed schedules and projected block hours. In addition, applicants are urged to provide financial data supporti ng their subsidy requests, including information on their projected expenses and

revenues. The Department strongly encourage s clear, well

- documented proposals that will facilitate their evaluation by the affected communities and the Department. 2



### With resp ect to Adak
, the Department expect s p roposals consisting of service cons istent with what the community current ly receives , namely two nonstop round trips per week to Anchorage with large jet aircraft , or more frequent service with smaller aircraft to a sui table regional hub airport

. The Department encourages proposals that meet the se requirements in an efficient manner. Carriers are also welcome to propose more than one service option, if they choose; they need not limit themselves to those requirements i f they envision other, potentially more attr active service possibilities (e.g. , a different length of contract ) with subsidy requi rements that remain competitive. The Department

1 Carriers should not expect the Department to accept late fillings. In cases where a carrier proposes to provide EAS without subsidy and we determine that service can be reliably provided without such compensation, we typically do not proceed with the carrier

- selection case. Instead, we simply rely on that carrier’s subsidy

- free service as proposed.
2 In selecting a carrier to provide subsidized EAS for an eligible place in Alaska, 49 U.S.C. § 41733(c)(1) directs us to consider six factors: (a) service reliability; (b) contractual and marketing arrangements with a larger carrier at the hub; (c) interline arrangements with a larger carrier at the hub; (d) community views, giving substantial weight to the views of the elected officials representing the users; (e) whether the carrier has included a plan in its proposal to market its service to the community ; and (f) the experience of the applicant in providing, in Alaska, sch eduled air service or significant non

- scheduled service

. In addition, the Consolidated Appropriations Act, 2012, Public Law 112

- 55, and continued by the Consolidated and Further Continuing Appropriations Act, 2015, Public Law No. 113

- 235 , provides that w hen 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. Interested carriers should also be aware that our general provisions governing EAS will be included in the selection Order as part of our authorization of subsidy for the selected service. Appendix C of this Order contains those general provisions.

### - 3

-

encourage s carriers to work with the communit y as they prepare their proposal s in order to craft them to best meet the communities’ needs. As always, the Department wil l fully consider the community’s views before making a long

- term carrier decision.

Filing Procedures Carrier proposals should be submitted to the Department with a ll materials compiled into a single document. In addition, because the document will be published on http://www.regulations.gov/ , each page should be formatted to be viewed online and for easy printing.

Service a nd Traffic History In order to assist carriers in making their traffic and revenue projections, the Department has included historical traffic data in Appendix B. For the year ended September 30
, 2014, the most recent annual period for which data are avai lable, Adak generated 4,057 passengers, as well as 579
, 480 pounds of freight and 141,411 pounds of mail.

Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug

- free workplaces , and nondiscrimination. 3 

### Consequently, all carriers receiving Federal subsidy for EAS must certify that they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimination, and those carriers whose subsidies exceed $10 0,000 over the life of the rate

- term must also certify that they are in compliance with the regulations governing lobbying activities. Because the Department is prohibited from paying subsidy to carriers that do not submit these documents, all carriers th at plan to submit proposals involving subsidy should be aware that the selected carrier will be required to complete the required certifications. Interested carriers requiring more detailed information regarding these requirements should contact the Offic e of Aviation Analysis at (202) 366

- 5903. 4



### Community and State Comments The communit y and State are welcome to submit comments at any time. As noted earlier, the Department will provide a copy of the proposals to the civic parties and ask them to submit their final comments shortly after February 1 1 , 2015 , the due date for proposals.

This O rder is issued under a uthority delegated in 49 CFR 1.25 a( b ) and re

- delegated to the Director, Office of Aviation Analysis.

3 The regulations applicable to these areas are: (1) 49 CFR Part 20

-- New restrictions on lobbying; (2) 49 CFR Part 21

-- Nondiscrimination in federally

- assisted programs of the Department of Transportation

-- Effectuation of title VI of the Civil Rights Act of 1964; (3) 49 CFR Part 27

-- Nondiscrimination on the basis of disab ility in programs and activities receiving Federal financial assistance; (4) 14 CFR Part 382

-- Nondiscrimination on the basis of disability in air travel; ( 5) 2 CFR Part s 180 and 1200

-- Government

- wide debarment and suspension (non

- procurement) ; and (6) 49 CFR Part 32

-- G overnment

- wide requirements for drug

- free workplace ( financial assistance ).
4 The certifications are also available on the web at http://www.dot.gov/policy/aviation

- policy/small

community

- rural

- air

- service/essential

- air

- service

.

### - 4

-
ACCORDINGLY, 1. The Department requests t hat carriers interested in providing EAS at Adak , Alaska
, submit their proposals, with or without subsidy requests, no later than February 1 1 , 2015

. The proposals should be e

- mailed to: EAS@dot.gov with the title “Prop osal to Provide Essential Air Service at Adak , Alaska , Docket DOT

- OST

- 2000

- 8556 ” ; 5



### 2. This docket will remain open u ntil further o rder of the Department; and

3. The Department will serve copies of this O rder on the communit y of Adak , Alaska, the Alaska Department of Transportation and Public Facilities, and the service list for this docket

. Persons entitled to petition the Department for review of this O rder under the Department’s Regulations, 14 CFR 385.3 1(a) , must file such petitions within seven ( 7 ) days aft er the date of service of this O rder.

This O rder will be effective immediately, and the filing of a petition for review shall not preclude its effectiveness.

By:

TODD M. HOMAN Director Office of Aviation Analysis

(SEAL)

An electronic vers ion of this document is available
at http://www.regualtions.gov

5 Questions regarding filings in response to this Order may be directed to A.J. Muldoon at (202) 366

- 1058

or albert.muldoon@dot.gov

.

### APPENDIX A

SERVICE AREA MAP

### APPENDIX B Page 1 of 2

Historical Traffic at Adak , Alaska 6

Year Month Passengers Freight Mail Passengers Freight Mail Passengers Freight Mail
2011 1 89 2,984 548 97 13,766 7,383 186 16,750 7,931
2011 2 85 3,435 880 84 13,748 13,879 169 17,183 14,759
2011 3 121 20,929 789 114 16,818 13,648 235 37,747 14,437
2011 4 88 14,941 203 102 20,239 8,955 190 35,180 9,158
2011 5 146 12,301 1,084 146 34,674 15,132 292 46,975 16,216
2011 6 139 15,505 2,569 177 28,062 9,462 316 43,567 12,031
2011 7 176 47,748 2,250 190 52,626 11,657 366 100,374 13,907
2011 8 232 3,013 885 187 27,185 25,982 419 30,198 26,867
2011 9 176 19,223 1,346 188 27,414 12,017 364 46,637 13,363
2011 10 230 18,682 796 240 24,393 12,131 470 43,075 12,927
2011 11 180 3,348 574 157 18,927 16,104 337 22,275 16,678
2011 12 183 4,387 831 174 15,472 10,340 357 19,859 11,171 Total 2011 1,845 166,496 12,755 1,856 293,324 156,690 3,701 459,820 169,445
2012 1 131 10,428 1,012 129 28,844 14,400 260 39,272 15,412
2012 2 101 12,431 747 266 23,929 10,138 367 36,360 10,885
2012 3 187 47,493 1,054 181 29,730 14,085 368 77,223 15,139
2012 4 268 8,779 2,020 116 34,949 18,939 384 43,728 20,959
2012 5 172 42,627 3,560 182 36,814 10,749 354 79,441 14,309
2012 6 223 67,141 614 234 27,898 13,383 457 95,039 13,997
2012 7 190 72,208 596 175 34,772 16,683 365 106,980 17,279
2012 8 215 38,070 1,221 243 36,932 12,282 458 75,002 13,503
2012 9 161 45,548 538 133 21,422 17,604 294 66,970 18,142
2012 10 146 19,622 484 150 15,385 8,849 296 35,007 9,333
2012 11 204 14,764 1,050 190 14,250 10,642 394 29,014 11,692
2012 12 197 2,509 585 197 15,021 14,633 394 17,530 15,218 Total 2012 2,195 381,620 13,481 2,196 319,946 162,387 4,391 701,566 175,868 Adak to Anchorage Anhorage to Adak Total O&D

6 Source: Bureau of Transportation Statistics; Form 41, Schedule T

- 100 Report

.

### APPENDIX B Page 2 of 2

Year Month Passengers Freight Mail Passengers Freight Mail Passengers Freight Mail
2013 1 103 4,036 658 129 14,539 8,990 232 18,575 9,648 2013 2 66 13,677 926 154 21,281 11,183 220 34,958 12,109 2013 3 102 30,177 1,364 110 31,972 13,112 212 62,149 14,476 2013 4 209 30,341 788 167 30,133 15,160 376 60,474 15,948 2013 5 141 14,163 806 172 30,327 16,383 313 44,490 17,189 2013 6 186 16,972 1,258 193 34,484 14,315 379 51,456 15,573 2013 7 170 44,658 1,347 174 46,624 12,792 344 91,282 14,139 2013 8 224 70,789 1,667 195 38,334 14,401 419 109,123 16,068 2013 9 183 43,345 4,215 122 23,094 12,415 305 66,439 16,630 2013 10 187 19,522 2,567 148 22,642 12,499 335 42,164 15,066 2013 11 137 2,553 1,289 130 9,232 6,441 267 11,785 7,730 2013 12 165 206 539 188 14,698 7,728 353 14,904 8,267 Total 2013 1,873 290,439 17,424 1,882 317,360 145,419 3,755 607,799 162,843
2014 1 155 1,513 1,164 239 31,412 9,180 394 32,925 10,344 2014 2 100 2,086 843 252 38,113 9,612 352 40,199 10,455 2014 3 238 1,416 962 123 29,120 10,102 361 30,536 11,064 2014 4 184 5,608 1,077 135 27,431 15,706 319 33,039 16,783 2014 5 180 57,143 1,397 183 21,999 10,594 363 79,142 11,991 2014 6 156 32,929 1,825 145 29,320 9,445 301 62,249 11,270 2014 7 126 67,881 926 138 26,735 12,228 264 94,616 13,154 2014 8 257 72,839 1,813 214 35,523 15,083 471 108,362 16,896 2014 9 153 18,844 2,160 124 10,715 6,231 277 29,559 8,391 Total YTD-2014 1,549 260,259 12,167 1,553 250,368 98,181 3,102 510,627 110,348 Adak to Anchorage Anhorage to Adak Total O&D

### APPE NDIX C

Example of General Terms and Conditions for Essential Air Service

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 su bsidy claim for the period in question. If the carrier contemplates any such changes beyond the scope of the Order during the applicable period of these rates, it must first notify the Office of Aviation Analysis in writing and receive written approval fro m 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 tha t 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 o f access to the national air transportation system provided to the community.

If the Department unilaterally, either partially or complete, terminates or reduces payments for service or changes service requirements at a specific location provided for und er 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 fo r 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.

Funds may not be available for performance under this Order beyond [DATE]. The Government’s obligation for performance under this Order beyond [DATE], is subject to the availability of funds from which payment for services can be made. No legal liability on the part of the Governmen t for any payment may arise for performance under this Order beyond [DATE], until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond [DATE], the Department will provide notice in wr iting to the carrier.

Subsidy contracts 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.

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