AI R EXCURSIONS , LL C •'-'-. , ESSENTIALAI R SERVICE BI D JUNEAU-KAK E DOCKETOST-2008-021 7 Ma y18 , 201 0

Ai rExcursions , LL

C hereb ysubmit s it s bi d t o provid e Essentia l Ai rServic e betwee n Kake , AKan d i thu b o fJuneau , AK

. Ai rExcursion s hold s a certificat e o fpubli cconvenienc e an d necessityt o provid e schedule d transportatio n o fpassengers , propert yan d mail , an d has operate d schedule d servic e t o point s aroun d Junea u sinc e March , 2010

. Ai rExcursion s propose s t o provid e 1 4 roun d trip s pe rwee k durin g th e 2 1 wee k

pea k summe rperiod , an d 7 roun d trip s pe rwee k durin g th e 3 1 wee k

off-pea k period

. Thi s i s th e sam e schedul e a

s propose d b yWing s i n 2008 , an d operate d now

. Th e aircraf t t o b e use d i s a nin e passenge rPipe rPA-3 1 Navaj o currentl yowne d b yAi rExcursion s an d bein g place d int o servic e fo rth e summer

. Ai rExcursion s shoul d b e selecte d t o provid e th e Kak e EA S fo rthre e reasons

. Th e servic e proposa l usin g th e multi-engin e Navaj o i s superio rt o th e singl e engin e Caravan

. Th e Navaj o i s full yIF

R an d ca n fl yove rth e weathe ran d descen d o n approve d IF R fligh t plans

. Additionally , th e Navaj o i s certifie d fo rknow n icin g condition s an d no tal l Wing s Caravan s hav e th e necessar yde-icin g equipment

. Whil e th e Carava n doe s hav e a highe r payloa d fo rfreight , 80 % o fth e PEQ' s i n th e marke tar e passengers , an d averag e less tha n 3 passengers pe rflight

. Base d o n histori ctraffic , th e Navaj o has plent yo fcapacit y eve n fo rth e large rload s experienced

. Th e Navaj o i s somewha t faste rtha n th e single

engin e Caravan , whic h furthe rreduce s th e fligh t tim e an d operatin g expens e fo rth e aircraft

.

Th e secon d reaso n t o choos e Ai rExcursion s i s tha ti t i s locall yowne d an d managed , an d 100 % o fit s servic e i s i n th e Junea u area

. Ai rExcursion s has bee n i n busines s fo rove r2 0 years , an d has bee n locall yowne d fo rit s entir e existence

. I t hire s loca l pilots , an d maintain s office s an d maintenanc e facilitie s i n bot h Junea u an d Gustavus

. Ai rExcursion s wil l provid e stabl e an d consisten tai rservice , an d th e Kak e operatio n wil l b e a muc h mor e significan t par to fit s busines s tha n fo ran ycertificate d competitor

.

Th e thir d reaso n t o choos e Ai rExcursion s i s tha t it s subsid ynee d i s lowe rbase d o n th e lowe roperatin g cost s o fth e Navaj o an d alternativel yth e Pipe rCheroke e 6

. Eve n thoug h th e Navaj o i s faste rtha n th e curren tCarava n o n th e route , i thas a muc h lowe r capita l cos t an d has lowe rtota l operatin g cost s pe rhour

. Th e faste rfligh tspeed s reduc e cost s pe rtri p eve n more

. I n keepin g wit h th e curren t practic e o fWings , Ai r Excursion s propose s t o substitut e a smaller , singl e engin e aircraf twhe n th e load s an d operatin g condition s d o no t requir e th e us e o fth e Navajo

. Currently , Wing s use s thei r smalle raircraft , a Cessn a 207 , abou t hal fth e time

. Th e us e o fth e eve n lowe rcos t 5

- passenge rCheroke e 6 woul d reduc e th e tota l subsid ypayment s substantially

.

Th e purpos e o fth e pea k an d off-pea k

servic e requiremen ti s t o recogniz e th e nee d t o encourag e traffi can d economi cdevelopmen ti n th e are a throug h hig h qualit yai r service

. Th e Ai rExcursion s proposa l provide s faster , multi-engin e an d icin g approve d aircraf t wit h plent yo fcapacity

. Loca l ownershi p an d contro l assure s responsiv e management , an d ther e i s a stron g futur e commitmen t o fa locall yowne d carrier

. Appendi xAdetail s th e bi d whic h assume s commercia l revenu e o f$478,38 5 i n th e firs t yea ran d tota l operatin g expense s an d retur n o f$691,79 0 i n th e firs t year

. Th e subsid y nee d o f$213,40 5 i n th e firs t yea ri s 32 % les s tha n th e curren tcontract , an d coul d b e reduce d furthe rthroug h substitutio n o faircraf ta s appropriate

. Th e secon d yea r revenu e an d expense s assum e 5 % increas e i n expense s an d yields

.

Respectfull ysubmitted ,

Mik e Loverink , owne r Ai rExcursions , LL

C
Ma y18 , 201 0Appendi xA Pag e 1 o f1

COMPUTATIO N O F SUBSID YNEE D
TRAFFI C AN D REVENU E PROJECTION S

Y R 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 M O

1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 OR ! JN U JN U JN U JN U JN U JN U JN U JN U JN U JN U JN U JN U KA E KA E KA E KA E KA E KA E KA E KA E KA E KA E KA E KA E OR I CIT Y JUNEA U JUNEA U JUNEA U JUNEA U JUNEA U JUNEA U JUNEA U JUNEA U JUNEA U JUNEA U JUNEA U JUNEA U KAK E KAK E KAK E KAK E KAK E KAK E KAK E KAK E KAK E KAK E KAK E KAK E DES T

KA E KA E KA E KA E KA E KA E KA E KA E KA E KA E KA E KA E JN U JN U JN U JN U JN U JN U JN U JN U JN U JN U JN U JN U DES TCIT Y

KAK E KAK E KAK E KAK E KAK E KAK E KAK E KAK E KAK E KAK E KAK E KAK E JUNEA U JUNEA U JUNEA U JUNEA U JUNEA U JUNEA U JUNEA U JUNEA U JUNEA U JUNEA U JUNEA U JUNEA U
AVERAG E FARE/RAT E CAR R K5 K5 K5 K5 K5 K5 K 5 K5 K5 K5 K5 K5 K5 K5 K5 K5 K5 K5 K5 K5 K 5 K5 K5 K5

COMMERCIA LREVENU E YEA R 1 COMMERCIA LREVENU E YEA R 2 PAX 3 7 6 9 5 3 11 1 11 6 16 9 14 2 12 4 10 7 11 7 5 6 4 6 3 1 5 4 6 7 11 8 14 2 14 5 13 2 11 9 10 5 13 2 10 8 4 3 234 3 $134.8 8 $316,02 4 $331,82 5 FR T

271 5 409 9 316 9 455 8 408 4 520 0 463 4 388 5 445 8 510 4 318 5 587 7 67 0 61 2 55 9 86 4 435 0 629 7 332 2 293 7 356 7 639 6 296 2 164 5 8514 9 $0.6 5 $55,34 7 $58,11 4 MAI L

508 2 749 7 703 1 650 7 765 5 656 8 801 6 707 2 710 3 869 5 623 9 965 8 86 0 89 6 155 3 108 3 131 1 133 3 172 7 132 9 147 3 126 4 110 9 254 0 10360 1 1.0329 4 $107,01 4 $107,01 4

Sourc e - BT

S T-lO O Traffi cReports , Wing s Airway s yield sCOMPUTATIO N O F SUBSID YNEE D
OPERATION S
JNU-KA E Averag e Bloc k Tim e 1 wa y Tota l Annua l Bloc k

Tim e 4 8 minute s 817. 6 hour s 1 / Appendi xA Pag e 2 o f2

EXPENS E AN D SUBSID

YNEE D
ITE M YEA R 1 YEA

R 2
Estimate d Direc t Expens e fo rPA-3 1 (S)$480/B H $ 392,44 8 $ 412,07 0
Estimate d Indirec t Expens e @ 68 % o fDirect s $ 266,68 5 $ 280,20 8
Retur n o n Investmen t (5 % o ftota l expens e above ) $ 32,65 7 $ 34,61 4
TOTA LEXPENS E AN D RETUR N $ 691.79 0 S 726.89 2
COMMERCIA LREVENU E $ 478,38 5 $ 496,95 3
SUBSID YNEED , TOTA LS 213.40 5 S 229.93 9
SCHEDULE D DEPARTURE S 1,02 2 1,02 2
SUBSID YNEE D PE R PA-3 1 DEPARTUR E $ 208.8 1 $ 224.9 9
SUBSID YNEE D PE R PA-3 2 DEPARTUR E $ 154.5 2 $ 166.4 9
SUBSID YCEILIN G PE R WEE K- PEAK$ 5,846.6 8 $ 6,299.7 2
SUBSID YCEILIN G PE R WEE K- OFF-PEAK$ 2,923.3 4 $ 3,149.8 6

1 / 100 % completio n a t wit h PA-3 1 Navaj o aircraf t