### Order 2013

- 6

- 5 Served: June 6, 2013 

## UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION 

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

Issued by the Department of Transportation on the 6th 

### day of June, 2013

INTRA ALASKA BUSH MAIL RATES Under 49 U.S.C § 41901 et seq Docket OST -2003 - 14694

SHOW CAUSE ORDER PROPOSING UPDATED MAIL RATES Summary By this Order, the Department directs all interested parties to show

-cause why the proposed Intra

-Alaska bush service mail rates set forth below should not be made final. The rates currently in effect were tentatively set by Order 2011

- 6

- 14 , made final by Order 20 11

- 10

- 3 , and updated for changes in quarterly fuel prices mo st recently by Order 2012

- 8

- 35. Linehaul Rates per Revenue Ton Mile (RTM) and Terminal per Ton Enplaned 1 

### Part 121, per RTM Part 135, per RTM Seaplane, per RTM Terminal, Per Ton Enplaned Proposed $ 5.7792 $1 4. 8403 $3 3.4689 $ 8 50.03 Current, Order 20 12

- 8

- 35 $ 6
. 0747 $ 1 2.0763 $3 7.2295 $7 16. 16 Percentage Increase <4.86> 22.89 < 10.10> 18.69 Based on average eligible stage lengths of 3 75 miles for the Part 121 operators, 73 for the Part 135 operators, and 37 miles for Seaplane operators, these linehaul and terminal changes would have a net effect on each class as follows: Part 121 [linehaul class rate], 0.7 8 percent; Part 135 [linehaul class rate], 21. 02 percent; and Seaplane [linehaul class rate], <0.24> percent. 1 The proposed rates are based on those shown in the appendices to this Order, including fuel and non

-fuel linehaul expenses for the YE 9

- 30

- 12. When the final Order is issued, we will adjust the fuel portion of the rate shown in the appendices to the most recent quarterly fuel expenses available at the time, and will continue our practice of issuing quarterly fuel surcharges as more recent data become available.

### - 2

-
Background Order 2009

- 11

- 19 set final rates , based on data for the year ended June 30, 2009, that were effective January 2, 2010, until on or about December 31, 2010, when it was anticipated the next annual update would be finalized. As anticipated, Order 2010

- 10

- 28 directed parties to show cause why we should not finalize the Part 121, Part 135, Seaplane, and Terminal Rates it proposed, effective on or about January 1, 2011

. Although Order 2010

- 12

- 28 continued the historical approach of preceding orders to updating the various class rates, the carriers’ underlying Part 135 operations changed significantly from prior periods because Peninsula Airways, Inc., (PenAir) began operating a number of its Metro aircraft under Part 135 . Previously all of those operations had been conducted under Part 121. Accordingly, Order 2010

- 12

- 28 tentatively assigned three

-quarters of those Metro operations to the Part 135 cost pool rather than the Part 121 cost pool where they had previously been assigned, thereby increasing PenAir’s share of the overall Part 135 mail volumes from 7 to 27 percent. The increased volume of PenAir’s new Part 135 operations with Metro aircraft, coupled with the much lower unit costs of those operations , produced a significant drop in the rates tentatively set by Order 2010

- 12

-28. However, after Order 2010

- 12

-28 issued, the carriers recognized the impact of PenAir’s operational changes and our proposed decision, and we received a request for extension to file comments and subsequently a number of comments and objections. In response to those objections, we chose not to finalize the tentative rates . The rates set by Order 2009

- 11

- 19 , due to expire on December 31, 2010 , remained in effect. S ix months later, on June 10, 2011, we issued Order 2011

- 6

- 14. That Order proposed making significant changes to the structure of the Part 135 rate, namely adding a mileage taper to the Part 135 rate tentatively proposed by Order 201 0

- 12

-28 . Because the taper represented a significant methodological change, we issued Order 2011

- 6

- 14 on a show

-cause basis

. 2 3 

### We received several objections and late

-filed responses to Order 2011

- 6

- 14. Nevertheless, Order 2011

- 1 0

- 3 finalized the mail rates tentatively proposed in Order 2011

- 6

- 14 , and stated that: “We are concerned with the delay in finalizing these rates. As a result of the delays, the current Part 135 rate (about ten percent higher than the rates we are setting here) will have been in place for about a year and nine months rather than the typical one

- year period. The delay in setting a final rate in this case due to the

2 See Order 2011

- 6

- 14 for a full discussion. The Order introduced a mileage

-taper to the Part 135 rate, recognizing that part of the reason that PenAir’s Metro’s enjoyed such a cost advantage over the other Part 135 operations was the fact that PenAir’s Metros had a 515

-mile average length of haul compared to the average for the other carriers of less than 70 miles. Introducing a mileage taper recognized PenAir’s advantage and adjusted the Part 135 rate accordingly

. 3 Order 2011

- 6

- 14 finalized the Seaplane and terminal rates, effective June 18, 2011, because there had been no objections to those rates. Because the Part 121 and Part 135 rates received objections, we did not finalize those two rates.

### - 3

- numerous pleadings has cost the Postal Service a significant amount of money. The Department’s policy is to make all rates final and not provide for retroactive adjustment to rates, and we find that that continues to be the appropriate policy. However, we cannot ignore the losses incurred by the Postal Service due to the delay in setting a final rate. ... Consistent with our earlier approach when we eliminated retroactively adjustable rates, we will extend these lower rates [set by Order 2011

- 10

- 3 and implemented by Order 2011

- 10

-4] for an annual period [thru December 31, 2012, rather than the two months thru December 31, 2011] while we discuss with all of the parties the best way to address the outstanding issues [that were not fully put to bed by Orders 2011

- 6

- 14 and 2011

- 10

- 3]. ” Staff met with the carriers and the Postal Service in Alaska on December 1

- 2 , 2011, and again on February 12

- 13 , 2013. At the later meeting, PenAir indicated that it no longer objected to the mileage taper, notwithstanding its earlier strong opposition. PenAir indicated that since that time its operations had changed again and it no longer received compensation under the Part 135 rate, even though it continued to operate Saab 340A aircraft in an all

-cargo configuration under Part 135. 4 

### At the same February 2013 meeting , representatives of Era Aviation argued orally that all of PenAir’s historical Part 135 operations should be excluded from the next update because PenAir was no longer a Part 135 bush passenger carrier. On March 2, 2013, Era Aviation filed a document to that effect

. In its filing Era notes that the Rural Service Improvement Act of 2002 (RSIA), 39 U.S .C. 5402(h)(6)(C) requires that: “The Secretary shall establish a bush rate based on data collected under subsection (k) from [Part] 135 bush passenger carriers [emphasis added] . Such rates shall be paid to all bush passenger carriers operating on bush city pair routes in the State of Alaska where no 121 bush passenger carrier is tendered nonpriority bypass mail.” Tentative Decision Excluding PenAir’s Data We agree with Era that, as a statutory matter, the Part 135 rate must be based on the costs of bush carriers operating under Part 135 and that those carriers must transport at least some passengers. S ince 2003 , when RSIA was established, we have excluded all of the operations of two large bush carriers that would otherwise be included in the calculation of the mail rate

-- Alaska Central Express, Inc., and Arctic Transportation Services, Inc.

-- because they are not bush passenger carriers.

4 Under mail rate equalization, for markets served by aircraft in different rate categories (Part 121, Part 135, Seaplane, or mainline) the Postal Service pays the lowest applicable rate to all carriers in a market. Because PenAir operates its Saab 340A’s in markets where it has equalized to the much lower mainline mail rate, it is not affected by the level of the Part 135 rate. However, the Department has never excluded a carrier’s operations from a specific class rate on the basis of the rate paid to the carrier, although it has been argued at times that that adjustment should be made. There can thus be the apparent anomaly of a rate class being based on operations that were not compensated under that rate class.

### - 4

- PenAir indicated at the meeting in February 2013 that it had recently discontinued all of its Part 135 operations except those operations provided by its Saab 340A aircraft, all of which operated in an all

- cargo configuration. The carrier’ s T

- 100 Segment report for the month of February 2013 confirms this, showing that the carrier operated a total of two aircraft types, Saab 340A and Saab 340B. All of PenAir’s Saab 340B aircraft are classif ied as either mainline or bush Part 121; while all of its Saab 340A aircraft operate in an all

-cargo configuration with no passenger service, so it is clear that since that time PenAir has not operated as a Part 135 bush passenger carrier. Nevertheless, this fact by itself is not dispositive as to whether we include or exclude PenAir’s results from the proposed rate , because PenAir did, in fact, operate as a bush passenger carrier for all of the time period on which the proposed rate would be based, namely the year ended September 30, 2012. Since PenAir only discontinued its Part 135 bush passenger operation s in January 2013 , the threshold issue is whether we should maintain the results of the historical period intact for the Part 135 class , or we should adjust those results to reflect changed conditions that we know will prevail during the effective period of the rate by excluding PenAir

. There is no hard and fast precedent regarding how we should handle such circumstances

. As Order 2007

- 6

- 17 indicated : “Thus, there are instances, both recent and distant, where we have either included or excluded the data of non

-operating carriers based on the particular facts at the time. We have never enunciated a policy of either including or excluding the data of carriers that no longer operate, but have decided this issue on a case

-by

- case basis.” We believe there are good reasons to maintain our policy of resolving this type of issue on a case-by

-case basis. 5 

### In this instance, we find it appropriate to exclude PenAir’s data from the calculation of the Part 135 rate. First, we must recognize that our fundamental aim is to set a mail rate that reflects the costs of transporting the mail in the prospective period. Second, as we recognized in Order 2011

- 6

- 14 , adding PenAir’s Metro costs to the Part 135 class rate produced a very significant change in the level of that rate. 6 

### Indeed, that was the underlying issue that caused nine months of objections and comments, and ultimately led the Department to construct a mileage taper as a means to ameliorate the anomalous and highly significant impact of adding PenAir’s long

-haul, low

-cost operations to the short

-haul, high

-cost operations of the typical Part 135 operator. 7 

### On that basis, we propose to exclude PenAir’ s expenses from the prospective rate.

5 The issue is whether we include the expenses of a carrier that operated during some or all of the base period but whose operations will be absent during the period when the rate will be in place. 6 For many years we included the costs of those Metro aircraft in the Part 121 cost pool because PenAir operated them under Part 121. When PenAir began to operate those aircraft under Part 135, we assigned them to the Part 135. 7 See also Order 2008

- 12

-28, which stated we would make adjustments to the historical results “if there have been anomalous, demonstrable, and highly significant changes in the industry structure.”

### - 5

- Adjusting the Time Periods For many years , the annual updates have been based on data for the annual periods ending on June 30. Because of the delay in setting this rate, which we had planned to finalize on or about January 1, 2013, we propose to base this and subsequent prospective updates on data for the year ended September 30. The cause of the delay was data issues. “As most of the carriers are aware, we have recently worked intensively with the Department’s Bureau of Transportation Statistics and the bush carriers to improve the accuracy, reliability, and timeliness of the carrier’s data, especially their reported expenses on Schedule F

-2. As a result, the carriers have implemented web

-based reporting of Schedule F

-2 that they intend to continue to employ. Web

-based reporting automatically corrects several encoding problems which some of the carriers had been making. Those mistakes delayed the mail rate review by OST staff. (Response on December 31, 2012, of Kevin Adams, OST staff, to inquiry by Mr. Steve Deaton.) Thus we anticipate having the annual rates based on data for the year ended September 30, 2013, in place on or about April 1 , 2014

. Likewise, our goal is to have quarterly fuel updates based on data for the quarter ended March 31, 2013, in place on or about July 1, 2013. Obviously this goal is subject to the Department’s Bureau of Transportation Statistics having the requisite data available. Discarding the Mileage Taper Excluding PenAir’s Part 135 operations removes the underlying reason we introduced the Mileage Taper in the last annual update . At that time, support among the parties for the Mileage Taper was only seen as a way to ameliorate the impact of adding the data for PenAir’s long

-haul, low

-cost Metro’s to the other short

-haul, high

-cost Part 135 operators. We will therefore tentatively discard the application of the Mileage Taper. We have only included PenAir’s data in the Part 121 linehaul class rate, where it continues to transport the bulk of the mail , and a pro rata portion of its operations in the terminal class rate. Reasonableness and Data Reliability We have carefully reviewed the bush carriers’ data, as shown in the attachments. We continue our longstanding policy of only including the operations of carriers that transported more than one percent of the mail. 8 

### We note that there is a substantial increase in the Part 135 and Terminal rates from those currently in effect, as shown in the right

-hand column below.

8 Frontier Flying Service, like PenAir, is no longer a Part 135 bush passenger carrier. We exclude its results because it does not meet our one

-percent standard. Likewise, Arctic Circle and Wings of Alaska have dropped out of the annual update from the prior period.

### - 6

-

Intra

-Alaska Inflation Trends in Select Mail Rate Classes 9 10



### We have closely scrutinized those results for reasonableness and for data integrity . For both the Part 135 and the Terminal, the percentage increases shown in the right

-hand column 11 

### above are for more than two years, not for the typical annual period

. The large 11.07 percent is compared to the “trend” level in that chart, and we believe that comparison is a better measure of the inflation over the two

- year period, because it excludes PenAir’s anomalous low

-cost, long

-haul operations from both periods

. Adjustments to the Calculation of the Terminal Rate Analysis of the Terminal Cost Trends for Three Commonly

-Owned Carriers

9 These results are different from those shown on page 1 of this Order, because they compare the unit costs underlying the proposed rates before a long

-term trend is added. 10 Order 2011

- 6

- 14 recognized the impact of including PenAir's long

-haul, low

-cost aircraft. We ameliorated the impact on the short

-haul Part 135 operators by introducing the taper. For purposes of determining the trend, that Order excluded PenAir's long

-haul, low

-cost aircraft. 11 For example, the 11.07% result is $10.1679 ÷ $9.1547 less one for the linehaul as are the 1.15% and negative 9.84%, and $12.53 ÷ $10.62 less one for the terminal

. Increase Over Classification Total Fuel Nonfuel Row 1 (One) Part 135 Class Rate, $/RTM Before Long Term Trend 8 Total Fuel Total -Fuel 1

. Order 2011-6-14, "Trend" $12.3313 $3.1766 $9.1547

------ 2

. Order 2011-6-14, "Actual" $11.0571 $2.8032 $8.2539 -9.84% 3

. If PenAir Were Included $13.2897 $4.0300 $9.2597 1.15% 4

. Proposed, Sans PenAir $14.5932 $4.4253 $10.1679 11.07% Terminal Class Rate, $/Wtd. Departure Before Long Term Trend 8 1

. Order 2010-12-28 $10.62

------ 2

. Proposed $12.53 17.98%

Year-- 2010 2010 2011 2011 2011 2012 2012 2012 Carrier Quarter-- 3 4 2 3 4 1 2 3 Era Aviation Expense $2,137,874 $2,965,841 $2,775,475 $3,514,870 $1,947,299 $1,501,161 $1,615,891 $1,688,087 $/Wtd. Dep $11.99 $18.82 $15.39 $17.19 $11.13 $9.16 $8.85 $8.42 Frontier Expense $448,176 $454,575 $110,035 $33,999 $14,812 $1,952 $1,172 $2,171 $/Wtd. Dep $15.80 $26.30 $24.33 $8.03 $4.94 $0.80 $0.81 $0.48 Hageland Expense $1,772,654 $1,574,029 $2,826,408 $2,276,960 $2,942,336 $2,884,723 $2,842,413 $3,242,847 $/Wtd. Dep $9.29 $8.33 $15.10 $11.04 $14.60 $14.18 $14.20 $15.38 Grand Total Expense $4,358,704 $4,994,445 $5,711,918 $5,825,829 $4,904,447 $4,387,836 $4,459,476 $4,933,105 $/Wtd. Dep $10.80 $13.66 $15.27 $13.97 $12.86 $11.80 $11.55 $11.80 Note: We do not show QE 3-31-11 because those data are not available.

### - 7

- On the terminal side, we have adjusted the results for Hageland Aviation Services, Inc., Era Aviation, Inc., and Frontier Flying Service, Inc. 12 

### As shown above, Frontier’s unit costs per weighted departure decreased from $15.80 to $0.48 between the first and last quarter, a thirty

- fold decrease; Hageland’s increased from $9.29 to $15.38; and the unit costs for Era steadily decreased from $11.99 to $8.42 . Based on that information, we infer that some of the departure

-related expenses of those three carriers have been commingled. This has a significant effect because most of Era’s weighted departures are provided with mainline equipment and thus excluded from calculating the rate, while all of Hageland’s operations are with bush equipment. Without any such adjustment, we would allocate away a significant portion of Era Aviation’s low

-cost operations while retaining all of Hageland’s high

-cost operations. To correct for this, we combined all of the costs and all of the weighted departures of the three entities, and allocated away a prorated portion of the combined entity based on the combined weighted departures of Era’s ineligible mainline equipment and Frontier’s ineligible all

-cargo service, as shown in Attachment D, Appendix D

- 1

. As shown in Attachment D, Appendices D

- 1 and D

- 2 , with that adjustment, the unit cost per weighted departure is $12.5 3 rather than $13.0 6 , and the increase in the unit terminal costs of $10.62 in 2010 decreases from 22.98 to the 17.98 percent. Long-term Inflation Factor As a general rate matter, we use the most recent base period of financial and traffic data (year ended September 30, 201 2 , in this case) to establish rates for a future annual period. Because prospective rates are final but based on past

-period data a methodology for projecting costs is required. That methodology projects costs from the midpoint of the base period to the midpoint of the future rate period. We have separately applied a long

term trend in unit costs for each of the three rate classes and for the terminal element based on eight years of data using the years ended June 30, 2004 , through June 30, 20 10 , and for September 30, 2012

. 13 

### We will use a ten

- year moving average for calculating the trend once we have accumulated ten years of data. 14

12 HoTH, Inc., a/k/a Era Alaska, is a regional airline holding company whose wholly

-owned sub sidiaries include Era Aviation, Inc., Hageland Aviation Service, Inc., and Frontier Flying Service, Inc. Those three subsidiaries operate as independent carriers throughout the state of Alaska. Era Aviation, Inc., operates entirely under Part 121, while Hageland and Frontier operate entirely under Part 135. Frontier bought Cape Smythe Assets (not the company) in August of 2005 , Hageland combined with Frontier to form HoTH in March 2008 , HoTH bought Era in March of 2009 , HoTH bought Arctic Circle in October of 2009 . Arctic Circle now operates as Frontier. Integration of the carriers’ operations would have taken some time. 13 After objections by the parties, Order 200 8

- 12

-28 excised the first year of data, YE June 30, 2003, because it was not reflective of continuing operations , similar to our exclusion of PenAir’s Part 135 data in this case

. 14 RSIA required the carriers to supply additional data.

### - 8

-
ACCORDINGLY, 1. We direct all interested persons to show cause, no later than twenty (20) days after the date of service of this order, why the Department should not adopt the foregoing tentative findings and conclusions and set mail rates as follows: Part 121 linehaul class rate, $ 5.7792 per mail revenue ton mile (RTM); Part 135 linehaul class rate, $1 4. 8043 per RTM; Seaplane linehaul class rate, $3 3.4689 per RTM; and Terminal class rate, $ 8 50.03 per mail ton enplaned. These rates would be final (subject to quarterly fuel updates), until the next annual update, which we anticipate would occur approximately nine months from when these rates are finalized. Vague or unsupported objections that do not include all proposed adjustments and backup data will not be accepted; 2. If no objection is filed within the designated time, or if no timely

-filed objection raises material issues of fact, we hereby delegate authority to the Director, Office of Aviation Analysis, to make the above rates final; 3. This docket shall remain open until further order of the Department; and 4. We will serve this order upon all parties on the Service List for these Dockets . By:
Susan 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.govAttachment A Linehaul, Part 121 Appendix A Calculation of the Linehaul, Part 121, YE 9-30-12
(1) (2) (3) (4) (5) (6) Avg. Annual Change, Midpoint to Estimated Year Ended YE 6/30/04 Midpoint Unit Cost at Current Rate Change from 9/30/2012 1/ to YE 9/30/12 2/ Change 3/ 10/1/2013 4/ Order 2012-8-35 Current 5/ Unit Cost per Revenue Ton-Mile Fuel $1.5192 0 0 $1.5192 $1.3608 11.64% Nonfuel $4.0649 3.17% 4.81% $4.26 $4.7139 -9.63% $5.5841 $5.7792 $6.0747 -4.86%
1/ Fuel, Appendix C2; Nonfuel, Appendix C-1. 2/ We assume fuel increases will b ezero. For nonfuel, see "predicted annual increased" in Appendix B, Page 1. 3/ Reflects the fact that from the midpoint of the reporting period to the midpoint of ther prospective rate is 1 and 1/2 years. 1.0317 x 1.01585 = 1.0481, where 1.585 is the average annual unit cost increase projected for a 6-month period. 4/ Fuel reflects YE 9-30-12, Appendix C-2. Nonfuel is column (1) mulitplied by Column (3). The total is the sum of the two. The final order will reflect the most recent quarterly fuel costs available at the time. 5/ Column 4 ÷ Column 5 less 1.

### Attachment A Linehaul, Part 121 Appendix B Page 1 of 2 Actual Y Natural Log $/RTM $/RTM Predicted Non-Fuel Non-Fuel Annual Linehaul Linehaul 1/ Predicted Y Residuals EXP (Y) Increase 6/30/2004 $3.4924 1.250589 1.234255397 0.016334 3.435819 3.17% 6/30/2005 $3.4511 1.238693 1.26545821 -0.026765 3.544717 6/30/2006 $3.4450 1.236924 1.296661022 -0.059737 3.657065 6/30/2007 $3.6835 1.303863 1.327863835 -0.024001 3.772975 6/30/2008 $4.1265 1.417430 1.359152135 0.058278 3.892891 6/30/2009 $4.1315 1.418641 1.390354948 0.028286 4.016275 6/30/2010 $4.5669 1.518835 1.421557761 0.097277 4.143570 9/30/2012 $4.0649 1.402389 1.491913692 -0.089672 4.445595

ANOVA df SS MS F Significance F Regression 1 0.05083105 0.050831051 11.36821 0.015011299 Residual 6 0.026828 0.004471333 Total 7 0.07765905 Coefficients Std. Error T Stat P-value Lower 95% Upper 95% Intercept -2.02862 1.00186367 -2.024844818 0.089299 -4.480090558 0.422854 X Variable 1 8.55E-05 2.5354E-05 3.37167751 0.015011 2.3447E-05 0.000148 Regression Statistics Multiple R 0.809037 R Square 0.654541 Adj. R Square 0.596965 Standard Error 0.066868 Observations 8
1/ For 2004 through 2010, see Order 2011-6-14, made final by Order 2011-10-3. For YE 9-30-12, see Appendix C of this order: $5.5841 total linehaul expense per RTM, Appendix C-1, less $1.5192 per RTM, Appendix C-2.

### Attachment A Linehaul, Part 121 Appendix B Page 2 of 2

y = 9E

-05x

- 2.03 R2 = 0.655

1.20 1.25 1.30 1.35 1.40 1.45 1.50 1.55

1/14/04 5/28/05 10/10/06 2/22/08 7/6/09 11/18/10 4/1/12 8/14/13Unit Cost per RTM, Natural Log

Years Ended June 30, 2004, through September 30, 2012 

# Nonfuel Linehaul, Unit Cost per RTM, Actual vs. PredictedAttachment A Linehaul, Part 121 Appendix C-1 Page 1 of 1 Year Ended September 30, 2012 System Parameters for Each Carrier Total Era Aviation PenAir PenAir 1

. Capacity Related Expense (CR) $8,974,385 $6,637,362 2

. Direct Expense, Includes Fuel $45,390,073 $50,585,461 3

. Indirect Expense $24,449,572 $22,349,749 4

. CR Markup 14.74% 10.01% 5

. Return and Tax Markup 9.46% 9.46% 6
. T-100 Seg. Mail RTMs 443,234 1,849,288 7
. T-100 Mkt. Mail RTMs 450,188 1,745,914 8

. Circuity Markup -1.54% 5.92% By Aircraft Type B-1900 Saab 340B Saab 340A Aircraft Code Total 405 456 459 9
. Direct Expense, Includes Fuel $60,267,763 $16,148,863 $38,102,880 $6,016,020 10

. Less Psgr. Liability Insurance $1,022,200 $188,757 $833,441 $2 11

. Linehaul Expense Allocable to Mail $59,245,563 $15,960,106 $37,269,439 $6,016,018 12

. Cost per Block Hour (R11÷ R18) $1,618.78 $1,308.31 $1,779.06 $1,743.27 13

. Marked Up Costs (R11*R4*R5*R8) $59,245,563 $19,736,307 $47,535,540 $6,016,018 14

. Eligible Expense (R13*R32÷R18) $11,106,418 $3,368,390 $10,844,066 $0 15

. Eligible Cost per RTM (R14÷R36) $4.2726 $7.0665 $5.1084 $0.0000 16

. Percentage of Eligible Mail RTMs 100.00% 24.29% 75.71% 0.00% 17

. Cost Wtd. By Mail RTMs (R15*R16) $5.5841 $1.7165 $3.8676 $0.0000 Scheduled + Nonscheduled Traffic 18

. Block Hours, T-100 36,599 12,199 20,949 3,451 19

. Pax RTMs 10,982,805 2,323,367 8,659,438 0 20

. Frt RTMs Wtd. @ 0.75 412,286 42,840 139,236 230,210 21

. Mail RTMs 1,800,781 81,047 643,965 1,075,769 22

. Total RTMs 13,195,872 2,447,254 9,442,639 1,305,979 23

. Aircraft Miles 8,110,616 2,245,239 5,061,168 804,209 24

. Available Ton Miles (ATMs) 24,028,388 3,816,203 17,196,803 3,015,382 25

. Departures Performed 27,185 13,463 11,911 1,811 26

. Wtd. Deps. (GTOW) 624,116 226,178 345,419 52,519 27

. Ton Load Factor 54.92% 64.13% 54.91% 43.31% 28

. Stage Length 298 167 425 444 29

. ATMs per Mile 2.96 1.70 3.40 3.75 30

. RTMs per Mile 1.63 1.09 1.87 1.62 31

. RTMs per Hour 361 201 451 378 Eligible Traffic 32

. Block Hours, T-100 6,861 2,082 4,779 0 33

. Pax RTMs 2,405,353 430,285 1,975,068 0 34

. Frt RTMs Wtd. @ 0.75 33,647 7,405 26,242 0 35

. Mail RTMs 160,473 38,981 121,492 0 36

. Total RTMs 2,599,473 476,671 2,122,802 0 37

. Aircraft Miles 1,607,899 439,988 1,167,911 0 38

. Available Ton Miles (ATMs) 4,460,427 743,199 3,717,228 0 39

. Departures Performed 4,288 1,760 2,528 0 40

. Wtd. Deps. (GTOW) 102,880 29,568 73,312 0 41

. Ton Load Factor 58.28% 64.14% 57.11% 0 42

. Stage Length 375 250 462 0 43

. ATMs per Mile 2.77 1.69 3.18 0 44

. RTMs per Mile 1.62 1.08 1.82 0 45

. RTMs per Hour 379 229 444 0Attachment A Linehaul, Part 121 Appendix C-2 Page 1 of 1 Year Ended September 30, 2012, Fuel Expense

Carrier Era Aviation PenAir PenAir By Aircraft Type B-1900 Saab 340B Saab 340A Aircraft Code Total 405 456 459 1

. Total Fuel Expense $5,918,064 $12,346,477 $1,912,058 2

. Total Gallons Issued 1,617,372 2,893,458 450,444 3 Total Block Hours, Schedule F-2 12,751 21,592 3,499 4

. Total Block Hours, T-100 Segment 12,199 20,949 3,451 5

. Eligible Block Hours, , T-100 Segment 2,082 4,779 0 6
. Eligible Mail RTMs, T-100 Segment 160,473 38,981 121,492 0 7
. Subtotal, Total Eligible RTMs, T-100 Segment 476,671 2,122,802 0 8

. Price per Gallon $3.66 $4.27 $4.24 9
. Burn per Revenue Block Hour 133 138 131 10

. Costs per Hour $485.13 $589.36 $554.06 11

. Eligible Fuel Expense $1,010,034 $2,816,546 $0 12

. Cost per Eligible RTM $2.1189 $1.3268 $0.0000 13

. Mail RTMs, Percentage 100.00% 24.29% 75.71% 0.00% 14

. Cost/RTM, Wtd. By Mail RTMs $1.5192 $0.5147 $1.0045 $0.0000

### Attachment A Linehaul, Part 121 Appendix D

Determination of Which Carriers are Included in the Part 121 Class Rate One Percent Rule Eligible Cumulative Carrier 2-Ltr. A/C Type Mail RTMs Percent Percent PenAir KS 456 121,492 75.71% 75.71% Era 7H 405 38,981 24.29% 100.00% 160,473 100.00%
Note: We have relied on a special report prepared by PenAir which shows whether a particular segment operated as Mainline, Part 121, or Part 135. The above reflects Part 121 operations only.

Intra-Alaska Carriers Excluded from the Bush Calculations Reason for Carriers Exclusion Alaska Airlines Mainline Only Northwest Airlines Mainline Only Alaska Central Express All-Cargo Operator Federal Express All-Cargo Operator Lynden All-Cargo Operator Northern Air Cargo All-Cargo Operator United Parcel Service All-Cargo Operator Arctic Transporation Services All-Cargo Operator Empire All-Cargo Operator 40-Mile Schedule F-2 for QE 3/31/12 and QE 9/30/12 Missing. Homer No Schedule F-2s reported for the YE 9-30-12

### Attachment A Linehaul, Part 121 Appendix E
Circuity Calculation, Intra-AK Mail Revenue Ton Miles (RTMs), YE 9-30-12
T-100 Segment T-100 Market Circuity Air Excursions X4 16,669 16,631 100.23% Alaska Seaplane J5 6,222 5,534 112.43% Bering 8E 386,286 370,399 104.29% Era 7H 443,234 450,188 98.46% Frontier Flying 2F 41,452 41,909 98.91% Grant GV 326,632 304,992 107.10% Hageland H6 1,716,988 1,525,854 112.53% Iliamna V8 5,378 4,977 108.06% Island Air 2O 5,733 4,763 120.37% Pacific Airways 3F 7,828 7,508 104.26% Peninsula KS 1,849,288 1,745,914 105.92% PM Air Z3 7,165 6,737 106.35% SeaPort Airlines K5 19,975 19,807 100.85% Servant Air 8D 2,576 2,381 108.19% Smokey Bay 2E 1,642 1,616 101.61% Spernak Airways SNK 1,309 1,245 105.14% Tanana 4E 2,765 2,707 102.14% Venture K3 28,221 26,203 107.70% Warbelow 4W 101,970 96,550 105.61% Wright 8V 199,757 185,055 107.94% Yute 4Y 119,712 113,777 105.22%

### Attachment A Appendix F Determination of Segments Ineligible for Calculating Bush Rates, Scheduled Intra-Alaska Departures Perfomred with Mainline Equipment T-100 Segment Report, QE 9-30-12, Seven or More Departures Performed 1/ Origin Dest Total Origin Dest Total ADK ANC 26 DLG AKN 44 ADQ ANC 532 DLG ANC 220 AKN ADQ 10 DLG TOG 8 AKN ANC 349 DUT ANC 21 AKN DLG 36 EMK ANC 45 ANC ADK 26 EMK KSM 8 ANC ADQ 524 ENA ANC 615 ANC AKN 359 FAI ANC 861 ANC ANC 31 FAI BRW 101 ANC ANI 139 FAI SCC 152 ANC BET 568 GAL ANC 28 ANC BRW 55 GST JNU 54 ANC CDB 7 HOM ANC 204 ANC CDV 102 ILI ANC 37 ANC DLG 239 JNU ANC 361 ANC DUT 9 JNU GST 55 ANC EMK 57 JNU KTN 96 ANC ENA 616 JNU PSG 92 ANC FAI 938 JNU SIT 299 ANC GAL 20 JNU YAK 95 ANC HOM 203 KSM ANC 108 ANC ILI 31 KTN JNU 100 ANC JNU 368 KTN SIT 210 ANC KSM 101 KTN WRG 91 ANC MCG 42 MCG ANC 55 ANC OME 287 OME ANC 319 ANC OTZ 369 OME OTZ 119 ANC SCC 87 OTZ ANC 295 ANC UNK 159 OTZ OME 168 ANC VDZ 150 PSG JNU 92 ANC YAK 10 PSG WRG 92 ANI ANC 135 SCC ANC 66 ANI MCG 12 SCC BRW 183 ANI UNK 13 SCC FAI 72 BET ANC 521 SIT JNU 299 BET ANI 8 SIT KTN 152 BET EDF 7 TOG ANC 13 BET TOG 23 UNK ANC 140 BRW ANC 167 UNK ANI 22 BRW FAI 96 UNK GAL 10 BRW SCC 75 VDZ ANC 149 CDB DUT 7 WRG KTN 91 CDV ANC 105 WRG PSG 91 CDV YAK 90 YAK CDV 92 YAK JNU 99 1/ Includes PenAir's Mainline Departures from its special report.Attachment B Linehaul, Part 135 Appendix A Calculation of the Linehaul, Part 135, YE 9-30-12
(1) (2) (3) (4) (5) (6) Avg. Annual Change, Midpoint to Estimated Year Ended YE 6/30/04 Midpoint Unit Cost at Current Rate, Change from 9/30/2012 1/ to YE 9/30/12 2/ Change 3/ 10/1/2013 4/ Order 2012-8-35 Current 5/ Unit Cost per Revenue Ton-Mile Fuel $4.4253 0 0 $4.4253 $3.7580 17.76% Nonfuel $10.1679 1.43% 2.43% $10.4150 $8.3183 25.21% Total $14.5932 $14.8403 $12.0763 22.89%
1/ Fuel, Appendix C2, Nonfuel, Appendix C-1 of this Order. 2/ We assume fuel increases will be zero. For nonfuel, see "predicted annual increased" in Appendix B, Page 1. 3/ Reflects the fact that from the midpoint of the reporting period to the midpoint of the prospective rate is 1 and 1/2 years. 1.0143 x 1.00715 = 2.16, where 0.00715 is the average annual unit cost increase projected for a 6-month period. 4/ Fuel reflects YE 9-30-12, Appendix C-2. Nonfuel is Column (1) mulitplied by Column (3). The total is the sum of the two. The final order will reflect the most recent quarterly fuel costs available at the time. 5/ Column 4 ÷ Column 5 less 1.

### Attachment B Linehaul, Part 135 Appendix B Page 1 of 2

Actual Y 1/ Natural Log $/RTM $/RTM Predicted Time Nonfuel Nonfuel Annual Period Linehaul Linehaul Predicted Y Residuals EXP(Y) Increase 6/30/2004 $9.5218 2.253584 2.154278944 0.099305056 8.621671227 1.43% 6/30/2005 $8.5699 2.148256 2.168453479 -0.020197479 8.744749637 6/30/2006 $8.4039 2.128696 2.182628014 -0.053932014 8.86958505 6/30/2007 $8.6708 2.159961 2.196802549 -0.036841549 8.996202547 6/30/2008 $8.6853 2.161632 2.211015919 -0.049383919 9.124981925 6/30/2009 $9.6160 2.263428 2.225190454 0.038237546 9.255245332 6/30/2010 $9.1547 2.214267 2.239364989 -0.025097989 9.387368311 9/30/2012 $10.1679 2.319236 2.271325653 0.047910347 9.69224085

ANOVA df SS MS F Significance F Regression 1 0.01048961 0.010489608 2.946300251 0.136888687 Residual 6 0.02136159 0.003560264 Total 7 0.03185119 Coefficients Std Error t Stat P-value Lower 95% Upper 95% Intercept 0.67205 0.89398707 0.751744371 0.480642717 -1.5154578 2.859557 X Variable 1 3.88E-05 2.2624E-05 1.716479027 0.136888687 -1.6526E-05 9.42E-05
Regression Statistics Multiple R 0.573874 R Square 0.329332 Adj. R Square 0.217554 Std Error 0.059668 Observations 8

### Attachment B Linehaul, Part 135 Appendix B Page 2 of 2

y = 4E

-05x + 0.672 R2 = 0.3293

2.10 2.15 2.20 2.25 2.30 2.35

1/14/04 5/28/05 10/10/06 2/22/08 7/6/09 11/18/10 4/1/12 8/14/13Unit Cost per RTM, Natural Log

Years Ended June 30, 2004, through September 30, 2012 

# Nonfuel Linehaul, unit Cost per RTM, Actual vs. PredictedAttachment B Linehaul, Part 135 Appendix C-1 Page 1 of 5
System Parameters for Each Carrier Total Bering Bering Bering 1

. Capacity Related Expense (CR) $1,598,796 $1,598,796 $1,598,796 2

. Direct Expense, Includes Fuel $18,260,851 $18,260,851 $18,260,851 3

. Indirect Expense $5,861,653 $5,861,653 $5,861,653 4

. CR Markup 7.10% 7.10% 7.10% 5

. Return and Tax Markup 9.46% 9.46% 9.46% 6
. T-100 Seg. Mail RTMs 386,286 386,286 386,286 7
. T-100 Mkt. Mail RTMs 370,399 370,399 370,399 8

. Circuity Markup 4.29% 4.29% 4.29% By Aircraft Type Navajo B-1900 Casa 212 Aircraft Code 194 405 412 9
. Direct Expense, Includes Fuel $2,922,904 $3,600,400 $1,066,112 10

. Less Psgr. Liability Insurance $43,363 $59,226 $14,901 11

. Linehaul Expense Allocable to Mail $2,879,541 $3,541,174 $1,051,211 12

. Cost per Block Hour (R11÷ R18) $665.33 $2,299.46 $1,318.96 13

. Marked Up Costs (R11*R4*R5*R8) $3,520,553 $4,329,471 $1,285,220 14

. Eligible Expense (R13*R32÷R18) $2,432,988 $2,895,685 $886,915 15

. Eligible Cost per RTM (R14÷R36) $13.2144 $15.7437 $12.3809 16

. Percentage of Eligible Mail RTMs 100.00% 1.764% 3.564% 2.348% 17

. Cost Wtd. By Mail RTMs (R15*R16) $14.5932 $0.2331 $0.5611 $0.2907 Scheduled + Nonscheduled Traffic 18

. Block Hours, T-100 145,011 4,328 1,540 797 19

. Pax RTMs 5,562,854 198,724 186,413 99 20

. Frt RTMs Wtd. @ 0.75 608,484 10,604 9,587 44,122 21

. Mail RTMs 40,320 81,335 53,583 22

. Total RTMs 8,984,232 249,649 277,336 97,804 23

. Aircraft Miles 18,340,944 664,662 357,285 124,389 24

. Available Ton Miles (ATMs) 24,486,310 581,579 893,213 326,521 25

. Departures Performed 242,941 8,496 2,245 1,181 26

. Wtd. Deps. (GTOW) 1,688,018 62,870 37,716 20,077 27

. Ton Load Factor 36.69% 42.93% 31.05% 29.95% 28

. Stage Length 75 78 159 105 29

. ATMs per Mile 1.34 0.87 2.50 2.62 30

. RTMs per Mile 0.49 0.38 0.78 0.79 31

. RTMs per Hour 62 58 180 123 Eligible Traffic 32

. Block Hours, T-100 117,160 2,991 1,030 550 33

. Pax RTMs 4,323,398 135,198 95,345 0 34

. Frt RTMs Wtd. @ 0.75 430,831 8,655 7,248 18,053 35

. Mail RTMs 2,282,024 40,264 81,335 53,583 36

. Total RTMs 7,036,253 184,117 183,927 71,636 37

. Aircraft Miles 14,455,868 452,953 231,751 85,726 38

. Available Ton Miles (ATMs) 18,697,125 396,334 579,378 225,031 39

. Departures Performed 199,315 6,368 1,719 884 40

. Wtd. Deps. (GTOW) 1,371,478 47,123 28,879 15,028 41

. Ton Load Factor 37.63% 46.46% 31.75% 31.83% 42

. Stage Length 73 71 135 97 43

. ATMs per Mile 1.29 0.88 2.50 2.63 44

. RTMs per Mile 0.49 0.41 0.79 0.84 45

. RTMs per Hour 60 62 179 130System Parameters for Each Carrier 1

. Capacity Related Expense (CR) 2

. Direct Expense, Includes Fuel 3

. Indirect Expense 4

. CR Markup 5

. Return and Tax Markup 6
. T-100 Seg. Mail RTMs 7
. T-100 Mkt. Mail RTMs 8

. Circuity Markup By Aircraft Type Aircraft Code 9
. Direct Expense, Includes Fuel 10

. Less Psgr. Liability Insurance 11

. Linehaul Expense Allocable to Mail 12

. Cost per Block Hour (R11÷ R18) 13

. Marked Up Costs (R11*R4*R5*R8) 14

. Eligible Expense (R13*R32÷R18) 15

. Eligible Cost per RTM (R14÷R36) 16

. Percentage of Eligible Mail RTMs 17

. Cost Wtd. By Mail RTMs (R15*R16) Scheduled + Nonscheduled Traffic 18

. Block Hours, T-100 19

. Pax RTMs 20

. Frt RTMs Wtd. @ 0.75 21

. Mail RTMs 22

. Total RTMs 23

. Aircraft Miles 24

. Available Ton Miles (ATMs) 25

. Departures Performed 26

. Wtd. Deps. (GTOW) 27

. Ton Load Factor 28

. Stage Length 29

. ATMs per Mile 30

. RTMs per Mile 31

. RTMs per Hour Eligible Traffic 32

. Block Hours, T-100 33

. Pax RTMs 34

. Frt RTMs Wtd. @ 0.75 35

. Mail RTMs 36

. Total RTMs 37

. Aircraft Miles 38

. Available Ton Miles (ATMs) 39

. Departures Performed 40

. Wtd. Deps. (GTOW) 41

. Ton Load Factor 42

. Stage Length 43

. ATMs per Mile 44

. RTMs per Mile 45

. RTMs per Hour Attachment B Linehaul, Part 135 Appendix C-1 Page 2 of 5
Bering Grant Grant Grant $1,598,796 $2,330,173 $2,330,173 $2,330,173 $18,260,851 $17,954,163 $17,954,163 $17,954,163

$5,861,653 $8,218,660 $8,218,660 $8,218,660 7.10% 9.77% 9.77% 9.77% 9.46% 9.46% 9.46% 9.46% 386,286 326,632 326,632 326,632 370,399 304,992 304,992 304,992

4.29% 7.10% 7.10% 7.10% Caravan C-207 Navajo Caravan 416 35 194 416 $7,582,189 $4,460,061 $4,286,505 $5,084,650

$118,577 $81,502 $61,328 $341,272 $7,463,612 $4,378,559 $4,225,177 $4,743,378 $946.68 $453.60 $770.74 $596.80 $9,125,079 $5,634,557 $5,437,177 $6,104,025 $8,096,135 $5,282,580 $4,375,926 $2,959,085

$14.1480 $22.4199 $12.5905 $9.7474

8.767% 3.165% 3.483% 6.325% $1.2404 $0.7096 $0.4385 $0.6165

7,884 9,653 5,482 7,948 376,207 166,476 340,590 456,708

40,277 6,104 6,838 12,245 200,136 80,430 97,581 148,611 616,620 253,011 445,009 617,564 1,121,409 1,030,642 955,872 1,080,599 1,630,384 618,461 861,412 1,513,272 16,323 23,390 8,759 14,286 145,275 86,543 64,817 127,145 37.82% 40.91% 51.66% 40.81% 69 44 109 76 1.45 0.60 0.90 1.40 0.55 0.25 0.47 0.57

78 26 81 78 6,995 9,050 4,412 3,853 337,389 158,084 262,671 152,015

34,781 5,310 5,395 7,234 200,075 72,226 79,492 144,328 572,245 235,620 347,558 303,577 985,802 961,372 766,288 539,127 1,433,155 576,892 690,774 755,206 14,999 21,909 6,905 5,110 133,491 81,063 51,097 45,479 39.93% 40.84% 50.31% 40.20% 66 44 111 106 1.45 0.60 0.90 1.40 0.58 0.25 0.45 0.56

82 26 79 79System Parameters for Each Carrier 1

. Capacity Related Expense (CR) 2

. Direct Expense, Includes Fuel 3

. Indirect Expense 4

. CR Markup 5

. Return and Tax Markup 6
. T-100 Seg. Mail RTMs 7
. T-100 Mkt. Mail RTMs 8

. Circuity Markup By Aircraft Type Aircraft Code 9
. Direct Expense, Includes Fuel 10

. Less Psgr. Liability Insurance 11

. Linehaul Expense Allocable to Mail 12

. Cost per Block Hour (R11÷ R18) 13

. Marked Up Costs (R11*R4*R5*R8) 14

. Eligible Expense (R13*R32÷R18) 15

. Eligible Cost per RTM (R14÷R36) 16

. Percentage of Eligible Mail RTMs 17

. Cost Wtd. By Mail RTMs (R15*R16) Scheduled + Nonscheduled Traffic 18

. Block Hours, T-100 19

. Pax RTMs 20

. Frt RTMs Wtd. @ 0.75 21

. Mail RTMs 22

. Total RTMs 23

. Aircraft Miles 24

. Available Ton Miles (ATMs) 25

. Departures Performed 26

. Wtd. Deps. (GTOW) 27

. Ton Load Factor 28

. Stage Length 29

. ATMs per Mile 30

. RTMs per Mile 31

. RTMs per Hour Eligible Traffic 32

. Block Hours, T-100 33

. Pax RTMs 34

. Frt RTMs Wtd. @ 0.75 35

. Mail RTMs 36

. Total RTMs 37

. Aircraft Miles 38

. Available Ton Miles (ATMs) 39

. Departures Performed 40

. Wtd. Deps. (GTOW) 41

. Ton Load Factor 42

. Stage Length 43

. ATMs per Mile 44

. RTMs per Mile 45

. RTMs per Hour Attachment B Linehaul, Part 135 Appendix C-1 Page 3 of 5
Hageland Hageland Hageland Hageland $6,045,146 $6,045,146 $6,045,146 $6,045,146 $52,845,640 $52,845,640 $52,845,640 $52,845,640 $19,842,508 $19,842,508 $19,842,508 $19,842,508 9.07% 9.07% 9.07% 9.07% 9.46% 9.46% 9.46% 9.46% 1,716,988 1,716,988 1,716,988 1,716,988 1,525,854 1,525,854 1,525,854 1,525,854

12.53% 12.53% 12.53% 12.53%

C-207 Navajo B-1900 Caravan 35 194 405 416 $7,438,201 $5,099,266 $14,673,140 $21,878,794

$221,748 $96,984 $179,797 $284,136 $7,216,453 $5,002,282 $14,493,343 $21,594,658 $326.36 $678.00 $1,570.58 $800.42 $9,695,113 $6,720,433 $19,471,421 $29,011,849 $7,700,582 $5,776,767 $13,331,213 $25,651,382

$20.4960 $18.4590 $15.3274 $15.2894

4.129% 4.027% 19.820% 22.680% $0.8463 $0.7433 $3.0379 $3.4676

22,112 7,378 9,228 26,979 339,120 252,640 418,575 1,224,035

12,615 9,210 147,991 76,729 94,618 98,795 923,491 538,735 446,354 360,645 1,490,057 1,839,500 1,797,253 975,037 1,869,219 3,168,629 1,213,189 1,167,256 4,901,586 5,386,694 40,124 10,645 9,954 42,388 148,459 78,773 167,227 377,253 36.79% 30.90% 30.40% 34.15% 45 92 188 75 0.68 1.20 2.62 1.70 0.25 0.37 0.80 0.58

20 49 161 68 17,563 6,342 6,318 23,854 271,749 212,936 333,503 1,093,376 9,748 8,108 83,965 66,776 94,215 91,907 452,295 517,567 375,712 312,951 869,763 1,677,719 1,398,252 823,647 1,210,558 2,768,525

943,863 987,210 3,019,123 4,706,517

32,399 9,103 7,938 37,767 119,876 67,362 133,358 336,126 39.81% 31.70% 28.81% 35.65% 43 90 153 73 0.68 1.20 2.49 1.70 0.27 0.38 0.72 0.61

21 49 138 70System Parameters for Each Carrier 1

. Capacity Related Expense (CR) 2

. Direct Expense, Includes Fuel 3

. Indirect Expense 4

. CR Markup 5

. Return and Tax Markup 6
. T-100 Seg. Mail RTMs 7
. T-100 Mkt. Mail RTMs 8

. Circuity Markup By Aircraft Type Aircraft Code 9
. Direct Expense, Includes Fuel 10

. Less Psgr. Liability Insurance 11

. Linehaul Expense Allocable to Mail 12

. Cost per Block Hour (R11÷ R18) 13

. Marked Up Costs (R11*R4*R5*R8) 14

. Eligible Expense (R13*R32÷R18) 15

. Eligible Cost per RTM (R14÷R36) 16

. Percentage of Eligible Mail RTMs 17

. Cost Wtd. By Mail RTMs (R15*R16) Scheduled + Nonscheduled Traffic 18

. Block Hours, T-100 19

. Pax RTMs 20

. Frt RTMs Wtd. @ 0.75 21

. Mail RTMs 22

. Total RTMs 23

. Aircraft Miles 24

. Available Ton Miles (ATMs) 25

. Departures Performed 26

. Wtd. Deps. (GTOW) 27

. Ton Load Factor 28

. Stage Length 29

. ATMs per Mile 30

. RTMs per Mile 31

. RTMs per Hour Eligible Traffic 32

. Block Hours, T-100 33

. Pax RTMs 34

. Frt RTMs Wtd. @ 0.75 35

. Mail RTMs 36

. Total RTMs 37

. Aircraft Miles 38

. Available Ton Miles (ATMs) 39

. Departures Performed 40

. Wtd. Deps. (GTOW) 41

. Ton Load Factor 42

. Stage Length 43

. ATMs per Mile 44

. RTMs per Mile 45

. RTMs per Hour Attachment B Linehaul, Part 135 Appendix C-1 Page 4 of 5
Hageland Warbelow Wright Yute $6,045,146 $444,358 $1,098,573 $503,712 $52,845,640 $7,251,601 $8,738,071 $4,627,661 $19,842,508 $1,511,701 $3,116,887 $2,183,384 9.07% 5.34% 10.21% 7.99% 9.46% 9.46% 9.46% 9.46% 1,716,988 101,970 199,757 119,712 1,525,854 96,550 185,055 113,777

12.53% 5.61% 7.94% 5.22%

C-406 Navajo Caravan C-207

417 194 416 35 $3,488,385 $5,996,509 $6,695,062 $4,627,661 $39,504 $63,240 $93,480 $116,410 $3,448,881 $5,933,269 $6,601,582 $4,511,251

$1,219.55 $546.85 $541.42 $285.32 $4,633,480 $7,225,166 $8,596,207 $5,610,923 $3,966,639 $5,394,569 $7,296,166 $4,730,834

$18.7090 $11.5491 $7.8969 $15.8549

2.681% 3.484% 8.516% 5.246% $0.5016 $0.4024 $0.6725 $0.8317

2,828 10,850 12,193 15,811 178,747 565,075 662,234 197,211

4,419 23,972 191,453 12,318 61,190 79,527 194,826 119,712 244,356 668,573 1,048,513 329,241 448,614 1,536,527 1,807,456 1,403,351 672,945 1,365,103 2,541,194 813,501

4,441 11,214 11,881 37,614 43,966 82,984 105,741 139,172 36.31% 48.98% 41.26% 40.47% 101 137 152 37 1.50 0.89 1.41 0.58 0.54 0.44 0.58 0.23

86 62 86 21 2,421 8,101 10,349 13,331 146,575 364,852 591,625 168,080

4,271 22,730 137,966 10,591 61,172 79,516 194,337 119,712 212,018 467,098 923,929 298,383 372,902 1,140,316 1,512,167 1,206,482 559,377 976,099 2,139,387 708,779 3,840 8,986 10,567 30,821 38,016 66,496 94,046 114,038 37.90% 47.85% 43.19% 42.10% 97 127 143 39 1.50 0.86 1.41 0.59 0.57 0.41 0.61 0.25

88 58 89 22System Parameters for Each Carrier 1

. Capacity Related Expense (CR) 2

. Direct Expense, Includes Fuel 3

. Indirect Expense 4

. CR Markup 5

. Return and Tax Markup 6
. T-100 Seg. Mail RTMs 7
. T-100 Mkt. Mail RTMs 8

. Circuity Markup By Aircraft Type Aircraft Code 9
. Direct Expense, Includes Fuel 10

. Less Psgr. Liability Insurance 11

. Linehaul Expense Allocable to Mail 12

. Cost per Block Hour (R11÷ R18) 13

. Marked Up Costs (R11*R4*R5*R8) 14

. Eligible Expense (R13*R32÷R18) 15

. Eligible Cost per RTM (R14÷R36) 16

. Percentage of Eligible Mail RTMs 17

. Cost Wtd. By Mail RTMs (R15*R16) Scheduled + Nonscheduled Traffic 18

. Block Hours, T-100 19

. Pax RTMs 20

. Frt RTMs Wtd. @ 0.75 21

. Mail RTMs 22

. Total RTMs 23

. Aircraft Miles 24

. Available Ton Miles (ATMs) 25

. Departures Performed 26

. Wtd. Deps. (GTOW) 27

. Ton Load Factor 28

. Stage Length 29

. ATMs per Mile 30

. RTMs per Mile 31

. RTMs per Hour Eligible Traffic 32

. Block Hours, T-100 33

. Pax RTMs 34

. Frt RTMs Wtd. @ 0.75 35

. Mail RTMs 36

. Total RTMs 37

. Aircraft Miles 38

. Available Ton Miles (ATMs) 39

. Departures Performed 40

. Wtd. Deps. (GTOW) 41

. Ton Load Factor 42

. Stage Length 43

. ATMs per Mile 44

. RTMs per Mile 45

. RTMs per Hour Attachment B Linehaul, Part 135 Appendix C-1 Page 5 of 5 Exclude from Totals, Only Shown for Reference PenAir PenAir Frontier $6,637,362 $6,637,362 $55,099 $50,585,461 $50,585,461 $1,379,204 $22,349,749 $22,349,749 $76,796 10.01% 10.01% 3.93%

9.46% 9.46% 9.46% 1,849,288 1,849,288 41,452 1,745,914 1,745,914 41,909 5.92% 5.92% -1.09% Caravan Saab 340A SD-330 416 459 487 $3,446,309 $6,016,020 $1,379,204

$106,676 $2 $0 $3,339,633 $6,016,018 $1,379,204 $990.40 $1,743.27 $2,377.94 $4,259,556 $7,673,168 $1,551,905 $3,557,209 $1,938,859 $920,440

$14.3343 $7.4617 $15.8743 1.26% $0.2000 3,372 3,451 580 170,159 0 0

21,529 230,210 49,147 101,537 1,075,769 41,452 293,226 1,305,979 90,599 442,605 804,209 95,728 791,923 3,015,382 311,116 5,810 1,811 498 51,709 52,519 11,404 37.03% 43.31% 29.12% 76 444 192 1.79 3.75 3.25 0.66 1.62 0.95

87 378 156 2,816 872 344 146,562 0 0

17,955 35,998 28,964 83,643 223,843 29,019 248,160 259,841 57,983 370,475 208,208 56,768 661,268 780,676 184,496

5,006 439 306 44,553 12,731 7,007 37.53% 33.28% 31.43% 74 474 186 1.78 3.75 3.25 0.67 1.25 1.02

88 298 169Attachment B Linehaul, Part 135 Appendix C-2 Page 1 of 5 Year Ended September 30, 2012

Carrier Bering Bering Bering Bering By Aircraft Type Navajo B-1900 Casa 212 Caravan Aircraft Code Total 194 405 412 416 1

. Total Fuel Expense $1,322,144 $1,578,381 $440,448 $2,939,791 2

. Total Gallons Issued 184,635 257,213 71,684 482,318 3 Total Block Hours, Schedule F-2 4,337 1,548 798 7,897 4

. Total Block Hours, T-100 Segment 4,328 1,540 797 7,884 5

. Eligible Block Hours, , T-100 Segment 2,991 1,030 550 6,995 6
. Eligible Mail RTMs, T-100 Segment 2,282,024 40,264 81,335 53,583 200,075 7
. Subtotal, Total Eligible RTMs, T-100 Segment 184,117 183,927 71,636 572,245 8

. Price per Gallon $7.16 $6.14 $6.14 $6.10 9
. Burn per Revenue Block Hour 43 167 90 61 10

. Costs per Hour $305.49 $1,024.92 $552.63 $372.88 11

. Eligible Fuel Expense $913,709 $1,055,670 $303,948 $2,608,300 12

. Cost per Eligible RTM $4.9627 $5.7396 $4.2430 $4.5580 13

. Mail RTMs, Percentage 100.00% 1.764% 3.564% 2.348% 8.767% 14

. Cost/RTM, Wtd. By Mail RTMs $4.4253 $0.0875 $0.2046 $0.0996 $0.3996

Note: Total excludes PenAir and Frontier.Carrier By Aircraft Type Aircraft Code 1

. Total Fuel Expense 2

. Total Gallons Issued 3 Total Block Hours, Schedule F-2 4

. Total Block Hours, T-100 Segment 5

. Eligible Block Hours, , T-100 Segment 6
. Eligible Mail RTMs, T-100 Segment 7
. Subtotal, Total Eligible RTMs, T-100 Segment 8

. Price per Gallon 9
. Burn per Revenue Block Hour 10

. Costs per Hour 11

. Eligible Fuel Expense 12

. Cost per Eligible RTM 13

. Mail RTMs, Percentage 14

. Cost/RTM, Wtd. By Mail RTMs Attachment B Linehaul, Part 135 Appendix C-2 Page 2 of 5 Year Ended September 30, 2012

Grant Grant Grant Hageland Hageland C-207 Navajo Caravan C-207 Navajo 35 194 416 35 194 $1,067,601 $1,802,599 $1,483,472 $2,409,307 $1,983,622 177,811 305,495 366,891 339,769 280,507

10,458 6,499 7,584 22,336 7,455

9,653 5,482 7,948 22,112 7,378 9,050 4,412 3,853 17,563 6,342 72,226 79,492 144,328 94,215 91,907 235,620 347,558 303,577 375,712 312,951 $6.00 $5.90 $4.04 $7.09 $7.07 18 56 46 15 38 $110.60 $328.82 $186.65 $108.96 $268.86 $1,000,910 $1,450,760 $719,152 $1,913,651 $1,705,087 $4.2480 $4.1742 $2.3689 $5.0934 $5.4484 3.165% 3.483% 6.325% 4.129% 4.027% $0.1344 $0.1454 $0.1498 $0.2103 $0.2194Carrier By Aircraft Type Aircraft Code 1

. Total Fuel Expense 2

. Total Gallons Issued 3 Total Block Hours, Schedule F-2 4

. Total Block Hours, T-100 Segment 5

. Eligible Block Hours, , T-100 Segment 6
. Eligible Mail RTMs, T-100 Segment 7
. Subtotal, Total Eligible RTMs, T-100 Segment 8

. Price per Gallon 9
. Burn per Revenue Block Hour 10

. Costs per Hour 11

. Eligible Fuel Expense 12

. Cost per Eligible RTM 13

. Mail RTMs, Percentage 14

. Cost/RTM, Wtd. By Mail RTMs Attachment B Linehaul, Part 135 Appendix C-2 Page 3 of 5 Year Ended September 30, 2012

Hageland Hageland Hageland Warbelow

B-1900 Caravan C-406 Navajo 405 416 417 194 $7,157,973 $8,333,838 $1,623,195 $2,176,016

1,235,658 1,423,469 277,164 417,426 9,932 27,249 2,856 10,843 9,228 26,979 2,828 10,850 6,318 23,854 2,421 8,101 452,295 517,567 61,172 79,516 869,763 1,677,719 212,018 467,098

$5.79 $5.85 $5.86 $5.21

134 53 98 38 $775.68 $308.90 $573.97 $200.55 $4,900,745 $7,368,523 $1,389,588 $1,624,692 $5.6346 $4.3920 $6.5541 $3.4783 19.820% 22.680% 2.681% 3.484% $1.1168 $0.9961 $0.1757 $0.1212Carrier By Aircraft Type Aircraft Code 1

. Total Fuel Expense 2

. Total Gallons Issued 3 Total Block Hours, Schedule F-2 4

. Total Block Hours, T-100 Segment 5

. Eligible Block Hours, , T-100 Segment 6
. Eligible Mail RTMs, T-100 Segment 7
. Subtotal, Total Eligible RTMs, T-100 Segment 8

. Price per Gallon 9
. Burn per Revenue Block Hour 10

. Costs per Hour 11

. Eligible Fuel Expense 12

. Cost per Eligible RTM 13

. Mail RTMs, Percentage 14

. Cost/RTM, Wtd. By Mail RTMs Attachment B Linehaul, Part 135 Appendix C-2 Page 4 of 5 Year Ended September 30, 2012

Wright Yute Caravan C-207 416 35 $2,115,949 $1,345,162 654,582 201,262

12,221 20,082 12,193 15,811 10,349 13,331 194,337 119,712 923,929 298,383 $3.23 $6.68 54 13 $173.54 $85.08 $1,795,945 $1,134,170 $1.9438 $3.8011 8.516% 5.246% $0.1655 $0.1994Carrier By Aircraft Type Aircraft Code 1

. Total Fuel Expense 2

. Total Gallons Issued 3 Total Block Hours, Schedule F-2 4

. Total Block Hours, T-100 Segment 5

. Eligible Block Hours, , T-100 Segment 6
. Eligible Mail RTMs, T-100 Segment 7
. Subtotal, Total Eligible RTMs, T-100 Segment 8

. Price per Gallon 9
. Burn per Revenue Block Hour 10

. Costs per Hour 11

. Eligible Fuel Expense 12

. Cost per Eligible RTM 13

. Mail RTMs, Percentage 14

. Cost/RTM, Wtd. By Mail RTMs Attachment B Linehaul, Part 135 Appendix C-2 Page 5 of 5 Year Ended September 30, 2012 Exclude, Only Shown for Reference PenAir PenAir Frontier Caravan Saab 340A SD-330 416 459 487 $771,602 $1,912,058 $414,287

189,830 450,444 111,446

3,438 3,499 722 3,372 3,451 580 2,816 872 344 83,643 223,843 29,019 248,160 259,841 57,983 $4.06 $4.24 $3.72 56 131 192 $228.83 $554.06 $714.29 $644,375 $483,140 $245,715

$2.5966 $1.8594 $4.2377

3.67% 9.81% 1.27% $0.0953 $0.1824 $0.0538Arttachment B Appendix D One Percent Rule, Determination of Which Carriers are Included in the Part 135 Class Rate Carrier 2-Ltr. A/C Type Mail RTMs Percent Cumulative Percent Hageland H6 416 517,567 21.58% 21.58% Hageland H6 405 452,295 18.86% 40.44% Bering 8E 416 200,075 8.34% 48.78% Wright 8V 416 194,337 8.10% 56.88% Grant GV 416 144,328 6.02% 62.90% Yute 4Y 35 119,712 4.99% 67.89% Hageland H6 35 94,215 3.93% 71.82% Hageland H6 194 91,907 3.83% 75.65% Bering 8E 405 81,335 3.39% 79.04% Warbelow 4W 194 79,516 3.32% 82.36% Grant GV 194 79,492 3.32% 85.68% Grant GV 35 72,226 3.01% 88.69% Hageland H6 417 61,172 2.55% 91.24% Bering 8E 412 53,583 2.23% 93.47% Bering 8E 194 40,264 1.68% 95.15% Tatonduk 3Z 416 16,246 0.68% 95.83% Wings/Seaport K5 416 13,374 0.56% 96.39% Warbelow 4W 405 12,175 0.51% 96.90% Air Exc. X4 79 11,528 0.48% 97.38% Bering 8E 406 9,678 0.40% 97.78% Warbelow 4W 416 8,530 0.36% 98.14% Tatonduk 3Z 79 7,389 0.31% 98.45% Tatonduk 3Z 479 5,346 0.22% 98.67% Iliamna V8 35 4,898 0.20% 98.87% Wright 8V 194 4,317 0.18% 99.05% Air Exc. X4 194 3,254 0.14% 99.19% Island 2O 131 2,682 0.11% 99.30% Wings/Seaport K5 35 2,144 0.09% 99.39% Servant 8D 35 2,084 0.09% 99.48% Island 2O 79 2,072 0.09% 99.57% Tanana 4E 35 1,762 0.07% 99.64% Warbelow 4W 35 1,739 0.07% 99.71% Smokey 2E 35 1,642 0.07% 99.78% Bering 8E 35 1,234 0.05% 99.83% 40-Mile Q5 35 888 0.04% 99.87% Tanana 4E 79 841 0.04% 99.91% Air Exc. X4 35 471 0.02% 99.93% Wright 8V 35 423 0.02% 99.95% Iliamna V8 479 406 0.02% 99.97% Servant 8D 79 192 0.01% 99.98% Wright 8V 10 169 0.01% 99.99% Hageland H6 30 158 0.01% 100.00% Tanana 4E 33 123 0.01% 100.01% Tanana 4E 195 37 0.00% 100.01% Iliamna V8 10 21 0.00% 100.01% Iliamna V8 117 11 0.00% 100.01% Tanana 4E 30 1 0.00% 100.01% Grant GV 406 0 0.00% 100.01% Wright 8V 34 0 0.00% 100.01% 2,397,859 100.00% Exclude PenAir and Frotnier, Which no Longer Operate as Part 135 Bush Passenger Carriers PenAir KS 459 223,843 PenAir KS 416 83,643 PenAir KS 79 22,369 Frontier 2F 487 29,019

### Attachment B Appendix E
Circuity Calculation, Intra-AK Mail Revenue Ton Miles (RTMs), YE 9-30-12
T-100 Segment T-100 Market Circuity Air Excursions X4 16,669 16,631 100.23% Alaska Seaplane J5 6,222 5,534 112.43% Bering 8E 386,286 370,399 104.29% Era 7H 443,234 450,188 98.46% Frontier Flying 2F 41,452 41,909 98.91% Grant GV 326,632 304,992 107.10% Hageland H6 1,716,988 1,525,854 112.53% Iliamna V8 5,378 4,977 108.06% Island Air 2O 5,733 4,763 120.37% Pacific Airways 3F 7,828 7,508 104.26% Peninsula KS 1,849,288 1,745,914 105.92% PM Air Z3 7,165 6,737 106.35% SeaPort Airlines K5 19,975 19,807 100.85% Servant Air 8D 2,576 2,381 108.19% Smokey Bay 2E 1,642 1,616 101.61% Spernak Airways SNK 1,309 1,245 105.14% Tanana 4E 2,765 2,707 102.14% Venture K3 28,221 26,203 107.70% Warbelow 4W 101,970 96,550 105.61% Wright 8V 199,757 185,055 107.94% Yute 4Y 119,712 113,777 105.22%

### Attachment B Appendix F Determination of Segments Ineligible for Calculating Bush Rates, Scheduled Intra-Alaska Departures Perfomred with Mainline Equipment T-100 Segment Report, QE 9-30-12, Seven or More Departures Performed 1/ Origin Dest Total Origin Dest Total ADK ANC 26 DLG AKN 44 ADQ ANC 532 DLG ANC 220 AKN ADQ 10 DLG TOG 8 AKN ANC 349 DUT ANC 21 AKN DLG 36 EMK ANC 45 ANC ADK 26 EMK KSM 8 ANC ADQ 524 ENA ANC 615 ANC AKN 359 FAI ANC 861 ANC ANC 31 FAI BRW 101 ANC ANI 139 FAI SCC 152 ANC BET 568 GAL ANC 28 ANC BRW 55 GST JNU 54 ANC CDB 7 HOM ANC 204 ANC CDV 102 ILI ANC 37 ANC DLG 239 JNU ANC 361 ANC DUT 9 JNU GST 55 ANC EMK 57 JNU KTN 96 ANC ENA 616 JNU PSG 92 ANC FAI 938 JNU SIT 299 ANC GAL 20 JNU YAK 95 ANC HOM 203 KSM ANC 108 ANC ILI 31 KTN JNU 100 ANC JNU 368 KTN SIT 210 ANC KSM 101 KTN WRG 91 ANC MCG 42 MCG ANC 55 ANC OME 287 OME ANC 319 ANC OTZ 369 OME OTZ 119 ANC SCC 87 OTZ ANC 295 ANC UNK 159 OTZ OME 168 ANC VDZ 150 PSG JNU 92 ANC YAK 10 PSG WRG 92 ANI ANC 135 SCC ANC 66 ANI MCG 12 SCC BRW 183 ANI UNK 13 SCC FAI 72 BET ANC 521 SIT JNU 299 BET ANI 8 SIT KTN 152 BET EDF 7 TOG ANC 13 BET TOG 23 UNK ANC 140 BRW ANC 167 UNK ANI 22 BRW FAI 96 UNK GAL 10 BRW SCC 75 VDZ ANC 149 CDB DUT 7 WRG KTN 91 CDV ANC 105 WRG PSG 91 CDV YAK 90 YAK CDV 92 YAK JNU 99 

### 1/ Includes PenAir's Mainline Departures from its special report.Attachment C Linehaul, Seaplane Appendix A Calculation of the Linehaul, Seaplane, YE 9-30-12
(1) (2) (3) (4) (5) (6) Avg. Annual Change, Midpoint to Estimated Year Ended YE 6/30/04 Midpoint Unit Cost at Current Rate Change from 9/30/2012 1/ to YE 9/30/12 2/ Change 3/ 10/1/2013 4/ Order 2012-8-35 Current 5/ Unit Cost per Revenue Ton-Mile Fuel $7.2211 0 0 $7.2211 $10.1097 -28.57% Nonfuel $24.7248 4.05% 6.16% $26.2478 $27.1198 -3.22% $31.9459 $33.4689 $37.2295 -10.10%
1/ Fuel, Appendix C2, Nonfuel, Appendix C-1 of this Order. 2/ We assume fuel increases will be zero. For nonfuel, see "predicted annual increased" in Appendix B, Page 1. 3/ Reflects the fact that from the midpoint of the reporting period to the midpoint of the prospective rate is 1 and 1/2 years. 1.0405 x 1.02025 = 6.16, where 0.02025 is the average annual unit cost increase projected for a 6-month period. 4/ Fuel reflects YE 9-30-12, Appendix C-2. Nonfuel is column (1) mulitplied by Column (3). The total is the sum of the two. The final order will reflect the most recent quarterly fuel costs available at the time. 5/ Column 4 ÷ Column 5 less 1.

### Attachment C Linehaul, Seaplane Appendix B Page 1 of 2

Actual Y Natural Log $/RTM $/RTM Predicted Time Nonfuel Nonfuel Annual Period Linehaul 1/ Linehaul Predicted Y Residuals EXP (Y) Increase 6/30/2004 $18.8646 2.93728715 2.982294759 -0.045007609 19.73304732 4.05% 6/30/2005 $18.9961 2.944233695 3.022012177 -0.077778482 20.5325653 6/30/2006 $21.7432 3.079301065 3.061729594 0.017571471 21.3644771 6/30/2007 $22.7223 3.123346821 3.101447012 0.021899809 22.23009523 6/30/2008 $25.7084 3.246817787 3.141273244 0.105544543 23.13330246 6/30/2009 $26.1034 3.262065574 3.180990662 0.081074912 24.07058755 6/30/2010 $25.0246 3.219859341 3.220708079 -0.000848738 25.04584835 9/30/2012 $24.7248 3.207806788 3.310262695 -0.102455906 27.39232034

ANOVA df SS MS F Significance F Regression 1 0.082357584 0.082357584 13.32853314 0.010695777 Residual 6 0.03707426 0.006179043 Total 7 0.119431845 Coefficients Std Error T Stat P-value Lower 95% Upper 95% Intercept -1.17095 1.177743556 -0.994231846 0.35849935 -4.052784816 1.710884516 X Variable 1 0.000109 2.98055E-05 3.650826363 0.010695777 3.58833E-05 0.000181746

Regression Statistics Multiple R 0.830408 R Square 0.689578 Adj. R Square 0.637841 Std Error 0.078607 Observations 8 1/ Per Order 2010-12-28, and Appendix D of this attachment for the YE 9-30-12.

### Attachment C Linehaul, Seaplane Appendix B Page 2 of 2

y = 0.0001x

- 1.171 R2 = 0.6896

2.9 2.95 3 3.05

3.1 3.15

3.2 3.25

3.3 3.35

1/14/2004 5/28/2005 10/10/2006 2/22/2008 7/6/2009 11/18/2010 4/1/2012 8/14/2013Unit Cost per RTM, Natural Log

Years Ended June 30, 2004, thru September 30, 2012 

# Nonfuel Linehaul, Unit Cost per RTM, Actual vs. PredictedAttachment C Linehaul, Seaplane Appendix C-1

Page 1 of 1 Year Ended September 30, 2012 Al. Seaplane Island Pacific PM Air PM Air Venture PenAir System Parameters for Each Carrier Total J5 2O 3F Z3 Z3 K3 KS 1

. Capacity Related Expense (CR) $409,076 $392,091 $333,423 $330,165 $330,165 $589,673 $6,637,362 2

. Direct Expense, Includes Fuel $1,378,818 $1,804,083 $1,580,344 $3,421,068 $3,421,068 $2,856,521 $50,585,461 3

. Indirect Expense $900,068 $949,275 $913,630 $2,497,147 $2,497,147 $1,444,925 $22,349,749 4

. CR Markup 21.88% 16.61% 15.43% 5.91% 5.91% 15.89% 10.01% 5

. Return and Tax Markup 9.46% 9.46% 9.46% 9.46% 9.46% 9.46% 9.46% 6
. T-100 Seg. Mail RTMs 6,222 5,733 7,828 7,165 7,165 28,221 1,849,288 7
. T-100 Mkt. Mail RTMs 5,534 4,763 7,508 6,737 6,737 26,203 1,745,914 8

. Circuity Markup 12.43% 20.37% 4.26% 6.35% 6.35% 7.70% 5.92% By Aircraft Type Beaver Beaver Beaver Beaver Otter Beaver Goose Aircraft Code 40 40 40 40 42 40 170 9
. Direct Expense, Includes Fuel $1,236,525 $469,615 $1,580,344 $1,796,324 $1,624,744 $2,856,521 $1,158,492 10

. Less Psgr. Liability Insurance $19,677 $15,350 $56,257 $41,681 $79,658 $37,679 $38,266 11

. Linehaul Expense Allocable to Mail $1,216,848 $454,265 $1,524,087 $1,754,643 $1,545,086 $2,818,842 $1,120,226 12

. Cost per Block Hour (R11÷ R18) $476.08 $551.29 $402.13 $419.07 $714.66 $448.08 $3,011.36 13

. Marked Up Costs (R11*R4*R5*R8) $1,825,183 $697,941 $2,007,713 $2,163,310 $1,904,946 $3,851,127 $1,428,799 14

. Eligible Expense (R13*R32÷R18) $1,679,511 $581,900 $1,661,263 $1,104,130 $166,529 $1,475,929 $1,394,231 15

. Eligible Cost per RTM (R14÷R36) $33.1147 $54.7053 $28.1165 $27.4379 $18.7575 $33.3197 $115.2257 16

. Percentage of Eligible Mail RTMs 100.00% 11.903% 1.882% 15.592% 13.149% 1.150% 56.325% 17

. Cost Wtd. By Mail RTMs (R15*R16) $31.9459 $3.9416 $1.0296 $4.3839 $3.6078 $0.2157 $18.7673 Scheduled + Nonscheduled Traffic 18

. Block Hours, T-100 19,810 2,556 824 3,790 4,187 2,162 6,291 372 19

. Pax RTMs 287,563 42,565 12,350 64,235 55,988 74,216 38,209 8,632 20

. Frt RTMs Wtd. @ 0.75 21,755 5,384 1,413 1,922 4,865 3,791 4,380 639 21

. Mail RTMs 50,120 5,964 943 7,828 6,588 576 28,221 3,087 22

. Total RTMs 359,437 53,912 14,706 73,985 67,441 78,584 70,809 12,358 23

. Aircraft Miles 1,247,307 202,923 65,883 292,093 249,334 113,086 323,988 33,361 24

. Available Ton Miles (ATMs) 1,001,655 187,704 63,814 185,012 149,600 115,836 299,689 30,025 25

. Departures Performed 36,064 3,877 1,594 8,070 9,601 3,836 9,086 741 26

. Wtd. Deps. (GTOW) 195,051 19,773 8,129 41,157 48,965 30,688 46,339 6,595 27

. Ton Load Factor 35.88% 28.72% 23.05% 39.99% 45.08% 67.84% 23.63% 41.16% 28

. Stage Length 35 52 41 36 26 29 36 45 29

. ATMs per Mile 0.80 0.93 0.97 0.63 0.60 1.02 0.93 0.90 30

. RTMs per Mile 0.29 0.27 0.22 0.25 0.27 0.69 0.22 0.37 31

. RTMs per Hour 18 21 18 20 16 36 11 33 Eligible Traffic 32

. Block Hours, T-100 10,912 2,352 687 3,136 2,137 189 2,411 363 33

. Pax RTMs 147,457 39,373 8,329 49,401 30,960 7,682 11,712 8,393 34

. Frt RTMs Wtd. @ 0.75 16,293 5,381 1,365 1,871 2,694 619 4,363 620 35

. Mail RTMs 50,104 5,964 943 7,812 6,588 576 28,221 3,087 36

. Total RTMs 213,855 50,718 10,637 59,085 40,241 8,878 44,296 12,100 37

. Aircraft Miles 872,820 188,013 52,443 236,962 169,475 16,668 209,259 32,585 38

. Available Ton Miles (ATMs) 688,980 173,912 50,935 151,851 101,685 17,032 193,565 29,327 39

. Departures Performed 23,713 3,604 1,358 6,795 6,836 639 4,481 726 40

. Wtd. Deps. (GTOW) 122,790 18,380 6,926 34,655 34,864 5,112 22,853 6,461 41

. Ton Load Factor 31.04% 29.16% 20.88% 38.91% 39.57% 52.13% 22.88% 41.26% 42

. Stage Length 37 52 39 35 25 26 47 45 43

. ATMs per Mile 0.79 0.92 0.97 0.64 0.60 1.02 0.93 0.90 44

. RTMs per Mile 0.25 0.27 0.20 0.25 0.24 0.53 0.21 0.37 45

. RTMs per Hour 20 22 15 19 19 47 18 33 PenAir's results not included in the totals, they are shown for reference purposes only.Attachment C Linehaul, Seaplane Appendix C-2

Page 1 of 1 Year Ended September 30, 2012

Carrier Al. Seaplane Island Pacific PM Air PM Air Venture PenAir By Aircraft Type J5 2O 3F Z3 Z3 K3 KS Aircraft Code Total 40 40 40 40 42 40 170 1

. Total Fuel Expense $295,631 $132,531 $475,323 $586,567 $442,509 $886,678 $124,095 2

. Total Gallons Issued 61,994 20,795 83,477 103,897 105,142 165,526 19,239 3 Total Block Hours, Schedule F-2 2,564 944 3,814 4,201 2,150 6,157 396 4

. Total Block Hours, T-100 Segment 2,556 824 3,790 4,187 2,162 6,291 372 5

. Eligible Block Hours, , T-100 Segment 2,352 687 3,136 2,137 189 2,411 363 6
. Eligible Mail RTMs, T-100 Segment 50,104 5,964 943 7,812 6,588 576 28,221 3,087 7
. Total Eligible RTMs, T-100 Segment 50,718 10,637 59,085 40,241 8,878 44,296 12,100 8

. Price per Gallon $4.77 $6.37 $5.69 $5.65 $4.21 $5.36 $6.45 9
. Burn per Hour 24 25 22 25 49 26 52 10

. Costs per Hour $115.66 $160.84 $125.42 $140.09 $204.68 $140.94 $333.59 11

. Eligible Fuel Expense $272,036 $110,496 $393,302 $299,378 $38,684 $339,816 $121,093 12

. Cost per Eligible RTM $5.3637 $10.3879 $6.6565 $7.4396 $4.3573 $7.6715 $10.0077 13

. Mail RTMs, Percentage 100.00% 11.903% 1.882% 15.592% 13.149% 1.150% 56.325% 6.161% 14

. Cost/RTM, Wtd. By Mail RTMs $7.2211 $0.6384 $0.1955 $1.0379 $0.9782 $0.0501 $4.3210 $0.6166
PenAir's results not included in the totals. They are shown for reference purposes only.

### Attachment C Linehual, Seaplane Appendix D

Determination of Which Carriers are Included in the Class Rates, One Percent Rule Eligible Cumulative Carrier 2-Ltr. A/C Type Mail RTMs Percent Percent Taquan K3 40 28,221 55.98% 55.98% Pacific 3F 40 7,812 15.50% 71.48% PM Air Z3 40 6,588 13.07% 84.55% Al. Seaplane J5 40 5,964 11.83% 96.38% Island 2O 40 943 1.87% 98.25% PM Air Z3 42 576 1.14% 99.39% Al. Seaplane J5 30 259 0.51% 99.90% Island 2O 35 36 0.07% 99.97% Servant 8D 40 13 0.03% 100.00% 50,412 100.00% PenAir KS 170 3,087 Note: Exclude PenAir's Grumman Goose, which is no longer operating. PenAir's results shown for reference purposes only.

### Attachment C Linehaul, Seaplane Appendix E
Circuity Calculation, Intra-AK Mail Revenue Ton Miles (RTMs), YE 9-30-12

T-100 Market T-100 Segment Circuity Air Excursions X4 16,631 16,669 100.23% Alaska Seaplane J5 5,534 6,222 112.43% Bering 8E 370,399 386,286 104.29% Era 7H 450,188 443,234 98.46% Frontier Flying 2F 41,909 41,452 98.91% Grant GV 304,992 326,632 107.10% Hageland H6 1,525,854 1,716,988 112.53% Iliamna V8 4,977 5,378 108.06% Island Air 2O 4,763 5,733 120.37% Pacific Airways 3F 7,508 7,828 104.26% Peninsula KS 1,745,914 1,849,288 105.92% PM Air Z3 6,737 7,165 106.35% SeaPort Airlines K5 19,807 19,975 100.85% Servant Air 8D 2,381 2,576 108.19% Smokey Bay 2E 1,616 1,642 101.61% Spernak Airways SNK 1,245 1,309 105.14% Tanana 4E 2,707 2,765 102.14% Venture K3 26,203 28,221 107.70% Warbelow 4W 96,550 101,970 105.61% Wright 8V 185,055 199,757 107.94% Yute 4Y 113,777 119,712 105.22%Attachment C Linehaul, Seaplane Appendix F Determination of Segments Ineligible for Calculating Bush Rates, Scheduled Intra-Alaska Departures Perfomred with Mainline Equipment T-100 Segment Report, QE 9-30-12, Seven or More Departures Performed 1/ Origin Dest Total Origin Dest Total ADK ANC 26 DLG AKN 44 ADQ ANC 532 DLG ANC 220 AKN ADQ 10 DLG TOG 8 AKN ANC 349 DUT ANC 21 AKN DLG 36 EMK ANC 45 ANC ADK 26 EMK KSM 8 ANC ADQ 524 ENA ANC 615 ANC AKN 359 FAI ANC 861 ANC ANC 31 FAI BRW 101 ANC ANI 139 FAI SCC 152 ANC BET 568 GAL ANC 28 ANC BRW 55 GST JNU 54 ANC CDB 7 HOM ANC 204 ANC CDV 102 ILI ANC 37 ANC DLG 239 JNU ANC 361 ANC DUT 9 JNU GST 55 ANC EMK 57 JNU KTN 96 ANC ENA 616 JNU PSG 92 ANC FAI 938 JNU SIT 299 ANC GAL 20 JNU YAK 95 ANC HOM 203 KSM ANC 108 ANC ILI 31 KTN JNU 100 ANC JNU 368 KTN SIT 210 ANC KSM 101 KTN WRG 91 ANC MCG 42 MCG ANC 55 ANC OME 287 OME ANC 319 ANC OTZ 369 OME OTZ 119 ANC SCC 87 OTZ ANC 295 ANC UNK 159 OTZ OME 168 ANC VDZ 150 PSG JNU 92 ANC YAK 10 PSG WRG 92 ANI ANC 135 SCC ANC 66 ANI MCG 12 SCC BRW 183 ANI UNK 13 SCC FAI 72 BET ANC 521 SIT JNU 299 BET ANI 8 SIT KTN 152 BET EDF 7 TOG ANC 13 BET TOG 23 UNK ANC 140 BRW ANC 167 UNK ANI 22 BRW FAI 96 UNK GAL 10 BRW SCC 75 VDZ ANC 149 CDB DUT 7 WRG KTN 91 CDV ANC 105 WRG PSG 91 CDV YAK 90 YAK CDV 92 YAK JNU 99 1/ Includes PenAir's Mainline Departures from its special report.

### Attachment D Terminal Appendix A Determination of Terminal Rate, Rate per Revenue Ton Enplaned

-1- -2- -3- -4- -5- Base Year Adjustment Proposed Current Rate, Change from Rates 1/ Factors 2/ Final Rates 3/ Order 2010-12-28 Prior Rate 4/ $625.85 35.82% $850.03 $716.16 18.69%

1/ Per Order 2005-1-18 2/ See Appendix B, Column 6 3/ Column (1) increased by Column (2). 4/ $850.03 ÷ $716.16.

### Attachment D Terminal Appendix B

-1- -2- -3- -4- -5- -6-

INTRA-ALASKA MAIL CLASS RATES COST ADJUSTMENT FACTORS (Expenses in Thousand of Dollars) Average Annual Percent Base Year Change Midpoint to Estimated Change 2003 Ended YE YE 6/30/04 Midpoint Unit Cost at Base Year to 6/30/2003 1/ 

### 9/30/2012 2/ 

### to YE 9/30/12 3/ 

### Change 4/ 

### 10/1/2013 5/ 

### 10/1/2013 6/ 

### Unit Cost $9.77 $12.53 3.88% 5.90% $13.27 35.82% Per Wtd. Dep.
1/ Attachment D, Appendix D, Order 2007-12-19. 2/ Appendix D to this Order, Page 1 of 2. 3/ See "predicted annual increase" in Appendix D, Page 1 of 2. 4/ Reflects the fact that from the mid-point of the reporting period to the mid-point of the prospective rate is one and one-half years. 1.0388 x 1.0194, where 0.0194 is the average annual unit cost increase projected for a six-month period. 5/ $12.53 in Column 2 increased by 5.90 percent in Column 4. 6/ $13.27 in Column 5 ÷ $9.77 in Column 1, the base period.

### Attachment D Terminal Appendix C Page 1 of 2

Actual Y Predicted Natural Log Annual Annual Period $/Wtd. Dep. $/Wtd. Dep. Predicted Y Residuals EXP (Y) Increase 6/30/2004 $8.96 2.192770227 2.19378598 -0.00102 8.969105732 3.88% 6/30/2005 $8.90 2.186051277 2.23184151 -0.04579 9.317007669 6/30/2006 $10.14 2.316487998 2.26989705 0.046591 9.678404346 6/30/2007 $10.25 2.327277706 2.30795258 0.019325 10.05381921 6/30/2008 $10.61 2.361796953 2.34611238 0.015685 10.44488496 6/30/2009 $10.90 2.388762789 2.38416792 0.004595 10.85003078 6/30/2010 $10.62 2.362739016 2.42222345 -0.05948 11.27089177 9/30/2012 $12.53 2.528125769 2.50803087 0.020095 12.28072385

ANOVA df SS MS F Significance F Regression 1 0.075609659 0.07560966 51.25339 0.00037476 Residual 6 0.008851276 0.00147521 Total 7 0.084460935 Coefficients Std Error t Stat P-value Lower 95% Upper 95% Intercept -1.78567619 0.575463046 -3.10302496 0.021035 -3.193783541 -0.377569 X Variable 1 0.000104262 1.45634E-05 7.15914756 0.000375 6.86263E-05 0.00014
Regression Statistics Multiple R 0.946151531 R Square 0.895202719 Adj R Square 0.877736505 Std Error 0.038408498 Observations 8

### Attachment D Terminal Appendix C Page 2 of 2

y = 0.0001x

- 1.7857 R2 = 0.8952

2.15 2.20 2.25 2.30 2.35 2.40 2.45 2.50 2.55

1/14/04 5/28/05 10/10/06 2/22/08 7/6/09 11/18/10 4/1/12 8/14/13Unit Cost per Wtd. Departure, Natural Log

June 30, 2004, through September 30, 2012 

# Unit Terminal Cost per Wtd. Depaerture, Actual vs. PredictedAttachment D Terminal Appendix D-1

Page 1 of 1 Schedule F-2 Expenses, Year Ended September 30, 2012 -1- -2- -3- -4- -5- -6- -7- -8- -9- -10- #1 plus #2 #3 less #4 #4 ÷ #6 #5 x #7 Oper. Less Capacity Adjusted Wtd. Carrier Directs Indirects Operating Capacity Departure Capacity Markup Departure Wtd. Deps. $/Dep. 1

. Air Excursion $1,506,360 $999,323 $2,505,683 $244,511 $703,952 $2,261,172 10.81% $780,049 46,196 $16.89 2

. Al. Seaplane $1,378,818 $900,068 $2,278,886 $409,076 $408,128 $1,869,810 21.88% $497,426 21,786 $22.83 3

. Bering $18,260,851 $5,861,653 $24,122,504 $1,598,796 $2,498,701 $22,523,708 7.10% $2,676,109 292,705 $9.14 4 Com. Owned $99,614,917 $44,368,876 $143,983,793 $15,074,540 $18,684,864 $128,909,253 11.69% $13,988,427 1,041,997 $13.42 5

. Grant $17,954,163 $8,218,660 $26,172,823 $2,330,173 $2,833,506 $23,842,650 9.77% $3,110,340 314,811 $9.88 6
. Iliamna $2,341,154 $295,174 $2,636,328 $108,420 $89,710 $2,527,908 4.29% $93,559 45,167 $2.07 7
. Island $1,804,083 $949,275 $2,753,358 $392,091 $382,809 $2,361,267 16.61% $446,394 45,974 $9.71 8

. Pacific $1,580,344 $913,630 $2,493,974 $333,423 $455,066 $2,160,551 15.43% $525,283 41,157 $12.76 PenAir $50,585,461 $22,349,749 $72,935,210 $6,637,362 $7,878,777 $66,297,848 10.01% $8,667,443 488,034 $17.76 9 PenAir Adj. 1/ $4,407,692 248,182 $17.76 10

. PM Air 2/ $3,421,068 $2,497,147 $5,918,215 $330,165 $1,533,720 $5,588,050 5.91% $1,624,363 79,653 $20.39 Wings $13,954,710 $5,087,591 $19,042,301 $1,418,500 $2,910,530 $17,623,801 8.05% $3,144,828 245,367 $12.82 11 Wings Adj. 3/ $1,064,323 83,041 $12.82 12

. Servant $1,233,817 $555,144 $1,788,961 $246,082 $303,669 $1,542,879 15.95% $352,104 23,821 $14.78 13

. Smokey $682,942 $371,174 $1,054,116 $150,356 $176,180 $903,760 16.64% $205,496 23,317 $8.81 14

. Spernak $1,128,325 $468,382 $1,596,707 $351,046 $102,329 $1,245,661 28.18% $131,165 29,686 $4.42 15

. Tanana $510,156 $157,125 $667,281 $42,023 $87,257 $625,258 6.72% $93,121 10,465 $8.90 16

. Venture $2,856,521 $1,444,925 $4,301,446 $589,673 $573,859 $3,711,773 15.89% $665,045 46,339 $14.35 17

. Warbelows $7,251,601 $1,511,701 $8,763,302 $444,358 $533,537 $8,318,944 5.34% $562,028 98,192 $5.72 18

. Wright $8,738,071 $3,116,887 $11,854,958 $1,098,573 $1,450,982 $10,756,385 10.21% $1,599,127 126,634 $12.63 19

. Yute $4,627,661 $2,183,384 $6,811,045 $503,712 $1,620,285 $6,307,333 7.99% $1,749,746 139,172 $12.57 Total $34,571,797 2,758,295 $12.53 Com.Owned Era $45,390,073 $24,449,572 $69,839,645 $8,974,385 $6,752,438 $60,865,260 14.74% $7,747,747 719,293 $10.77 Hageland $52,845,640 $19,842,508 $72,688,148 $6,045,146 $11,912,319 $66,643,002 9.07% $12,992,766 815,819 $15.93 Frontier $1,379,204 $76,796 $1,456,000 $55,099 $20,107 $1,400,901 3.93% $20,897 11,404 $1.83 $99,614,917 $44,368,876 $143,983,793 $15,074,630 $18,684,864 $128,909,163 $20,761,410 1,546,516 $13.42 Adjusted 1,041,997 $13,988,427 1,041,997 $13.42 1/ Grant's expenses and wtd. departures are for the YE 6-30-12. 2/ $8,667,443 system departure related expense x 248,182 ÷ 488,034 (bush Part 121 wtd. deps. ÷ Intra-Alaska wtd. deps., Appendix E.) PenAir's Schedule F-2 expenses reflect only their Alaska operations, as do their departures in Appendix E. We have exlcuded PenAir's Part 135 operations, because the carrier no longer operates as a Part 135 bush passenger carrier. 3/ PMAir's Schedule F-2 expenses reflect only their Intra-Alaska operations, as do their departures in Appendix E. 4/ $3,144,828 system departure related expense x 83,041 ÷ 245,367 (intra-Alaska wtd. deps. ÷ system wtd. deps., Appendix E. Seaport's Schedule F-2 expense reflect their operations both inside and outside of Alaska, and so we have prorated that on wtd. deps. Note: We excluded Alaska Central Express and Arctic Transportation Services because they are all-cargo operators, and also Homer Air and 40-Mile Air because their reported Schedule F-2s were not available.Attachment D Terminal Appendix D-2 Page 1 of 1 Schedule F-2 Expenses, Year Ended September 30, 2012 -1- -2- -3- -4- -5- -6- -7- -8- -9- -10- #1 plus #2 #3 less #4 #4 ÷ #6 #5 x #7 Oper. Less Capacity Adjusted Wtd. Carrier Directs Indirects Operating Capacity Departure Capacity Markup Departure Wtd. Deps. $/Dep. 1

. Air Excursion $1,506,360 $999,323 $2,505,683 $244,511 $703,952 $2,261,172 10.81% $780,049 46,196 $16.89 2

. Al. Seaplane $1,378,818 $900,068 $2,278,886 $409,076 $408,128 $1,869,810 21.88% $497,426 21,786 $22.83 3

. Bering $18,260,851 $5,861,653 $24,122,504 $1,598,796 $2,498,701 $22,523,708 7.10% $2,676,109 292,705 $9.14 Era Aviation $45,390,073 $24,449,572 $69,839,645 $8,974,385 $6,752,438 $60,865,260 14.74% $7,747,747 719,293 $10.77 4 Era Adj. 1/ $2,436,239 226,178 $10.77 5

. Grant 2/ $17,954,163 $8,218,660 $26,172,823 $2,330,173 $2,833,506 $23,842,650 9.77% $3,110,340 314,811 $9.88 6 Hageland $52,845,640 $19,842,508 $72,688,148 $6,045,146 $11,912,319 $66,643,002 9.07% $12,992,766 815,819 $15.93 7
. Iliamna $2,341,154 $295,174 $2,636,328 $108,420 $89,710 $2,527,908 4.29% $93,559 45,167 $2.07 8

. Island $1,804,083 $949,275 $2,753,358 $392,091 $382,809 $2,361,267 16.61% $446,394 45,974 $9.71 9
. Pacific $1,580,344 $913,630 $2,493,974 $333,423 $455,066 $2,160,551 15.43% $525,283 41,157 $12.76 PenAir $50,585,461 $22,349,749 $72,935,210 $6,637,362 $7,878,777 $66,297,848 10.01% $8,667,443 488,034 $17.76 10 PenAir Adj. 2/ $4,407,692 248,182 $17.76 11

. PM Air 3/ $3,421,068 $2,497,147 $5,918,215 $330,165 $1,533,720 $5,588,050 5.91% $1,624,363 79,653 $20.39 Wings $13,954,710 $5,087,591 $19,042,301 $1,418,500 $2,910,530 $17,623,801 8.05% $3,144,828 245,367 $12.82 12 Wings Adj. 4/ $1,064,323 83,041 $12.82 13

. Servant $1,233,817 $555,144 $1,788,961 $246,082 $303,669 $1,542,879 15.95% $352,104 23,821 $14.78 14

. Smokey $682,942 $371,174 $1,054,116 $150,356 $176,180 $903,760 16.64% $205,496 23,317 $8.81 15

. Spernak $1,128,325 $468,382 $1,596,707 $351,046 $102,329 $1,245,661 28.18% $131,165 29,686 $4.42 16

. Tanana $510,156 $157,125 $667,281 $42,023 $87,257 $625,258 6.72% $93,121 10,465 $8.90 17

. Venture $2,856,521 $1,444,925 $4,301,446 $589,673 $573,859 $3,711,773 15.89% $665,045 46,339 $14.35 18

. Warbelows $7,251,601 $1,511,701 $8,763,302 $444,358 $533,537 $8,318,944 5.34% $562,028 98,192 $5.72 19

. Wright $8,738,071 $3,116,887 $11,854,958 $1,098,573 $1,450,982 $10,756,385 10.21% $1,599,127 126,634 $12.63 20

. Yute $4,627,661 $2,183,384 $6,811,045 $503,712 $1,620,285 $6,307,333 7.99% $1,749,746 139,172 $12.57 Total $36,012,375 2,758,295 $13.06
1/ $7,747,747 system departure related expense x 226,178 ÷ 719,293 (bush Part 121 wtd. deps. ÷ Intra-Alaska wtd. deps., Appendix E.) This excludes a pro-rata portion of Era's terminal expense with mainline aircraft. 2/ $8,667,443 system departure related expense x 248,182 ÷ 488,034 (bush Part 121 wtd. deps. ÷ Intra-Alaska wtd. deps., Appendix E.) PenAir's Schedule F-2 expenses reflect only their Alaska operations, as do their departures in Appendix E. We have exlcuded PenAir's Part 135 operations, because the carrier no longer operates as a Part 135 bush passenger carrier. 3/ PMAir's Schedule F-2 expenses reflect only their Intra-Alaska operations, as do their departures in Appendix E. 4/ $3,144,828 system departure related expense x 83,041 ÷ 245,367 (intra-Alaska wtd. deps. ÷ system wtd. deps., Appendix E. Seaport's Schedule F-2 expense reflect their operations both inside and outside of Alaska, and so we have prorated that on wtd. deps. Note: We excluded Alaska Central Express and Arctic Transportation Services because they are all-cargo operators, and also Homer Air and 40-Mile Air because their reported Schedule F-2s were not available.

### Attachment D Terminal Appendix E Page 1 of 4 Year Ended September 30, 2012, Carrier 2-Ltr. A/C Deps. GTOW Wtd. Deps 40-Mile Air Q5 35 753 3.7 2,786 (for reference purposes) Air Excursions LLC X4 35 789 3.7 2,919 Air Excursions LLC X4 79 9,793 3.6 35,255 Air Excursions LLC X4 194 1,084 7.4 8,022 46,196 Alaska Central Express KO 405 10,067 16.8 169,126 (for reference purposes) Alaska Seaplane Service J5 30 671 3.0 2,013 Alaska Seaplane Service J5 40 3,877 5.1 19,773 21,786 Arctic Transportation 7S 35 7,704 3.7 28,505 Arctic Transportation 7S 412 6,743 17.0 114,631 Arctic Transportation 7S 479 107 9.9 1,059 Arctic Transportation 7S 486 1,055 12.5 13,188 (for reference purposes) 157,383 Bering Air Inc. 8E 35 269 3.7 995 Bering Air Inc. 8E 194 8,496 7.4 62,870 Bering Air Inc. 8E 360 301 2.4 722 Bering Air Inc. 8E 405 2,245 16.8 37,716 Bering Air Inc. 8E 406 2,004 12.5 25,050 Bering Air Inc. 8E 412 1,181 17.0 20,077 Bering Air Inc. 8E 416 16,323 8.9 145,275 292,705 Era Aviation, Bush 7H 405 13,463 16.8 226,178 Era Aviation, Mainline 7H 483 14,089 35.0 493,115 719,293 Frontier Flying Service 2F 487 498 22.9 11,404 (for reference purposes)

### Attachment D Terminal Appendix E Page 2 of 4 Year Ended September 30, 2012, Carrier 2-Ltr. A/C Deps. GTOW Wtd. Deps Grant Aviation GV 35 23,390 3.7 86,543 Grant Aviation GV 194 8,759 7.4 64,817 Grant Aviation GV 406 2,905 12.5 36,313 Grant Aviation GV 416 14,286 8.9 127,145 314,818 Hageland Aviation Service H6 30 47 3.0 141 Hageland Aviation Service H6 35 40,124 3.7 148,459 Hageland Aviation Service H6 194 10,645 7.4 78,773 Hageland Aviation Service H6 405 9,954 16.8 167,227 Hageland Aviation Service H6 416 42,388 8.9 377,253 Hageland Aviation Service H6 417 4,441 9.9 43,966 815,819 Homer Air HB 35 8,272 3.7 30,606 (for reference purposes) Iliamna Air Taxi V8 10 415 3.3 1,370 Iliamna Air Taxi V8 35 2,572 3.7 9,516 Iliamna Air Taxi V8 40 528 5.1 2,693 Iliamna Air Taxi V8 117 495 5.4 2,673 Iliamna Air Taxi V8 194 5 7.4 37 Iliamna Air Taxi V8 479 2,917 9.9 28,878 45,167 Inland Aviation Services 7N 35 450 3.7 1,665 (appears carrier ceased operations) Island Air Service 2O 35 113 3.7 418 Island Air Service 2O 40 1,594 5.1 8,129 Island Air Service 2O 79 3,387 3.6 12,193 Island Air Service 2O 131 4,070 6.2 25,234 45,974 Pacific Airways, Inc. 3F 40 8,070 5.1 41,157

### Attachment D Terminal Appendix E Page 3 of 4 Year Ended September 30, 2012, Carrier 2-Ltr. A/C Deps. GTOW Wtd. Deps PenAir, Part 121 KS 456 8,558 29.0 248,182 PenAir, Part 135 KS 79 8,826 3.6 31,774 PenAir, Part 135 KS 170 741 8.9 6,595 PenAir, Part 135 KS 416 5,812 8.9 51,727 PenAir, Part 135 KS 459 1,811 29 52,519 PenAir, Mainline KS 456 3,353 29 97,237 488,034 PM Air, LLC Z3 40 9,601 5.1 48,965 PM Air, LLC Z3 42 3,836 8.0 30,688 79,653 PM Air, LLC (outside Alaska, Z3 42 636 8.0 5,088 for reference purposes) SeaPort/Wings, Intra-AK K5 35 6,313 3.7 23,358 SeaPort/Wings, Intra-AK K5 416 6,706 8.9 59,683 SeaPort/Wings, Not Intra-AK K5 416 4,617 8.9 41,091 SeaPort/Wings, Not Intra-AK K5 479 12,246 9.9 121,235 Total 245,367 Intra-AK 83,041 Servant Air Inc. 8D 35 5,669 3.7 20,975 Servant Air Inc. 8D 40 397 5.1 2,025 Servant Air Inc. 8D 79 228 3.6 821 23,821 Smokey Bay Air Inc. 2E 35 6,302 3.7 23,317 Spernak Airways Inc. SNK 35 7,734 3.7 28,616 Spernak Airways Inc. SNK 36 446 2.4 1,070 29,686 Tanana Air Service 4E 30 152 3.0 456 Tanana Air Service 4E 31 9 3.0 27 Tanana Air Service 4E 33 243 3.3 802 Tanana Air Service 4E 35 1,468 3.7 5,432 Tanana Air Service 4E 79 1,011 3.6 3,640 Tanana Air Service 4E 195 23 4.7 108 10,465

### Attachment D Terminal Appendix E Page 4 of 4 Year Ended September 30, 2012, Carrier 2-Ltr. A/C Deps. GTOW Wtd. Deps Venture K3 40 9,086 5.1 46,339 Warbelow 4W 35 518 3.7 1,917 Warbelow 4W 194 11,214 7.4 82,984 Warbelow 4W 405 504 16.8 8,467 Warbelow 4W 416 542 8.9 4,824 Warbelow 4W 476 58 9.5 551 98,743 Less #476, Medivac, no associated Dep. Rel. Exp. 98,192
Wright Air Service 8V 10 372 3.3 1,228 Wright Air Service 8V 34 1,725 3.8 6,555 Wright Air Service 8V 35 1,085 3.7 4,015 Wright Air Service 8V 194 1,229 7.4 9,095 Wright Air Service 8V 416 11,881 8.9 105,741 126,634 Yute Air Aka Flight Alaska 4Y 35 37,614 3.7 139,172Appendix F Historical Trends in Unit Costs at Era, Frontier, and Hageland, All Commonly-Owned Carriers Weighted Departures -- Departures Mutliplied by GTOW, Gross Takeoff Weight, by Quarter 2009 2010 2010 2010 2010 2011 2011 2011 2012 2012 2012 Carrier A/C GTOW 4 1 2 3 4 2 3 4 1 2 3 A. Circle 125 7.2 0 0 0 0 0 0 0 0 0 0 0 487 22.9 5,336 3,046 4,580 4,030 0 0 0 0 0 0 0 Total 7,349 5,057 6,592 6,043 2,014 2,013 2,014 2,015 2,013 2,014 2,015 Era 405 16.8 53,844 54,029 62,966 58,766 58,380 54,230 57,826 59,657 56,381 57,086 53,458 483 35.0 90,720 88,795 89,530 119,560 99,190 126,105 146,650 115,325 107,450 125,475 147,070 Total 144,564 142,824 152,496 178,326 157,570 180,335 204,476 174,982 163,831 182,561 200,528 Frontier 194 7.4 4,588 488 163 629 644 81 0 0 0 0 0 405 16.8 46,133 32,844 29,870 27,115 15,355 2,906 0 0 0 0 0 487 22.9 0 0 0 618 1,282 1,534 4,237 3,000 2,427 1,443 4,534 Total 50,721 33,332 30,033 28,362 17,281 4,521 4,237 3,000 2,427 1,443 4,534 Hageland 30 3.0 30 0 153 252 45 102 501 129 0 6 6 35 3.7 35,035 32,075 38,713 40,904 38,351 40,208 40,404 38,672 34,151 39,668 36,016 194 7.4 13,490 12,980 14,519 19,255 17,975 18,493 20,061 17,427 20,098 20,528 20,720 405 16.8 5,006 4,234 7,594 20,513 23,016 33,835 42,084 45,024 42,269 37,901 42,034 416 8.9 82,672 76,451 89,792 92,569 96,182 86,027 93,566 89,854 96,832 91,003 99,662 417 9.9 17,345 20,671 19,008 17,414 13,306 8,514 9,613 10,405 10,157 11,029 12,375 Total 153,578 146,411 169,779 190,907 188,875 187,179 206,229 201,511 203,507 200,135 210,813 Grand Total 356,212 327,624 358,900 403,638 365,740 374,048 416,956 381,508 371,778 386,153 417,890

Schedule F-2 Departure Related Expenses, and Unit Cost per Weighted Departure, By Quarter 2009 2010 2010 2010 2010 2011 2011 2011 2012 2012 2012 Carrier 4 1 2 3 4 2 3 4 1 2 3 Era Expense $3,084,351 $2,906,251 $2,033,785 $2,137,874 $2,965,841 $2,775,475 $3,514,870 $1,947,299 $1,501,161 $1,615,891 $1,688,087 $/Wtd. Dep $21.34 $20.35 $13.34 $11.99 $18.82 $15.39 $17.19 $11.13 $9.16 $8.85 $8.42 Frontier Expense $1,266,621 $749,229 $446,268 $448,176 $454,575 $110,035 $33,999 $14,812 $1,952 $1,172 $2,171 $/Wtd. Dep $24.97 $22.48 $14.86 $15.80 $26.30 $24.34 $8.02 $4.94 $0.80 $0.81 $0.48 Hageland Expense $1,428,668 $1,638,904 $1,666,884 $1,772,654 $1,574,029 $2,826,408 $2,276,960 $2,942,336 $2,884,723 $2,842,413 $3,242,847 $/Wtd. Dep $9.30 $11.19 $9.82 $9.29 $8.33 $15.10 $11.04 $14.60 $14.18 $14.20 $15.38 Grand Total Expense $5,779,640 $5,294,384 $4,146,937 $4,358,704 $4,994,445 $5,711,918 $5,825,829 $4,904,447 $4,387,836 $4,459,476 $4,933,105 $/Wtd. Dep $16.23 $16.16 $11.55 $10.80 $13.66 $15.27 $13.97 $12.86 $11.80 $11.55 $11.80 Note: We do not show QE 3-31-11 because that data is missing.