AIR EXCURSIONS, LLC •'-'-., 

ESSENTIAL AIR SERVICE BID 

JUNEAU-KAKE 

DOCKET OST-2008-0217 

May 18, 2010 

Air Excursions, LLC hereby submits its bid to provide Essential Air Service between Kake, 

AK and it hub of Juneau, AK. Air Excursions holds a certificate of public convenience and 

necessity to provide scheduled transportation of passengers, property and mail, and has 

operated scheduled service to points around Juneau since March, 2010. 

Air Excursions proposes to provide 14 round trips per week during the 21 week peak 

summer period, and 7 round trips per week during the 31 week off-peak period. This is 

the same schedule as proposed by Wings in 2008, and operated now. The aircraft to be 

used is a nine passenger Piper PA-31 Navajo currently owned by Air Excursions and 

being placed into service for the summer. 

Air Excursions should be selected to provide the Kake EAS for three reasons. The service 

proposal using the multi-engine Navajo is superior to the single engine Caravan. The 

Navajo is fully IFR and can fly over the weather and descend on approved IFR flight 

plans. Additionally, the Navajo is certified for known icing conditions and not all Wings 

Caravans have the necessary de-icing equipment. While the Caravan does have a higher 

payload for freight, 80% of the PEQ's in the market are passengers, and average less 

than 3 passengers per flight. Based on historic traffic, the Navajo has plenty of capacity 

even for the larger loads experienced. The Navajo is somewhat faster than the singleengine Caravan, which further reduces the flight time and operating expense for the 

aircraft. 

The second reason to choose Air Excursions is that it is locally owned and managed, and 

100% of its service is in the Juneau area. Air Excursions has been in business for over 20 

years, and has been locally owned for its entire existence. It hires local pilots, and 

maintains offices and maintenance facilities in both Juneau and Gustavus. Air 
Excursions will provide stable and consistent air service, and the Kake operation will be 

a much more significant part of its business than for any certificated competitor. 

The third reason to choose Air Excursions is that its subsidy need is lower based on the 

lower operating costs of the Navajo and alternatively the Piper Cherokee 6. Even 

though the Navajo is faster than the current Caravan on the route, it has a much lower 

capital cost and has lower total operating costs per hour. The faster flight speeds 

reduce costs per trip even more. In keeping with the current practice of Wings, Air 

Excursions proposes to substitute a smaller, single engine aircraft when the loads and 

operating conditions do not require the use of the Navajo. Currently, Wings uses their 

smaller aircraft, a Cessna 207, about half the time. The use of the even lower cost 5-

passenger Cherokee 6 would reduce the total subsidy payments substantially. 

The purpose of the peak and off-peak service requirement is to recognize the need to 

encourage traffic and economic development in the area through high quality air 

service. The Air Excursions proposal provides faster, multi-engine and icing approved 

aircraft with plenty of capacity. Local ownership and control assures responsive 

management, and there is a strong future commitment of a locally owned carrier. 

Appendix A details the bid which assumes commercial revenue of $478,385 in the first 

year and total operating expenses and return of $691,790 in the first year. The subsidy 

need of $213,405 in the first year is 32% less than the current contract, and could be 

reduced further through substitution of aircraft as appropriate. The second year 

revenue and expenses assume 5% increase in expenses and yields. 

Respectfully submitted, 

Mike Loverink, owner 

Air Excursions, LLC 

May 18, 2010 
Appendix A 

Page 1 of 1 

COMPUTATION OF SUBSIDY NEED 

TRAFFIC AND REVENUE PROJECTIONS 

YR 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

2009 

MO 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

OR! 

JNU 

JNU 

JNU 

JNU 

JNU 

JNU 

JNU 

JNU 

JNU 

JNU 

JNU 

JNU 

KAE 

KAE 

KAE 

KAE 

KAE 

KAE 

KAE 

KAE 

KAE 

KAE 

KAE 

KAE 

ORI 

CITY 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

KAKE 

KAKE 

KAKE 

KAKE 

KAKE 

KAKE 

KAKE 

KAKE 

KAKE 

KAKE 

KAKE 

KAKE 

DEST 

KAE 

KAE 

KAE 

KAE 

KAE 

KAE 

KAE 

KAE 

KAE 

KAE 

KAE 

KAE 

JNU 

JNU 

JNU 

JNU 

JNU 

JNU 

JNU 

JNU 

JNU 

JNU 

JNU 

JNU 

DEST CITY 

KAKE 

KAKE 

KAKE 

KAKE 

KAKE 

KAKE 

KAKE 

KAKE 

KAKE 

KAKE 

KAKE 

KAKE 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

JUNEAU 

AVERAGE FARE/RATE 

CARR 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

K5 

COMMERCIAL REVENUE YEAR 1 

COMMERCIAL REVENUE YEAR 2 

PAX 

37 

69 

53 

111 

116 

169 

142 

124 

107 

117 

56 

46 

31 

54 

67 

118 

142 

145 

132 

119 

105 

132 

108 

43 

2343 

$134.88 

$316,024 

$331,825 

FRT 

2715 

4099 

3169 

4558 

4084 

5200 

4634 

3885 

4458 

5104 

3185 

5877 

670 

612 

559 

864 

4350 

6297 

3322 

2937 

3567 

6396 

2962 

1645 

85149 

$0.65 

$55,347 

$58,114 

MAIL 

5082 

7497 

7031 

6507 

7655 

6568 

8016 

7072 

7103 

8695 

6239 

9658 

860 

896 

1553 

1083 

1311 

1333 

1727 

1329 

1473 

1264 

1109 

2540 

103601 

1.03294 

$107,014 

$107,014 

Source - BTS T-lOO Traffic Reports, Wings Airways yields 
COMPUTATION OF SUBSIDY NEED 

OPERATIONS 

JNU-KAE Average Block Time 1 way 

Total Annual Block Time 

48 minutes 

817.6 hours 1/ 

Appendix A 

Page 2 of 2 

EXPENSE AND SUBSIDY NEED 

ITEM YEAR 1 YEAR 2 

Estimated Direct Expense for PA-31 (S)$480/BH $ 392,448 $ 412,070 

Estimated Indirect Expense @ 68% of Directs $ 266,685 $ 280,208 

Return on Investment (5% of total expense above) $ 32,657 $ 34,614 

TOTAL EXPENSE AND RETURN $ 691.790 S 726.892 

COMMERCIAL REVENUE $ 478,385 $ 496,953 

SUBSIDY NEED, TOTAL S 213.405 S 229.939 

SCHEDULED DEPARTURES 1,022 1,022 

SUBSIDY NEED PER PA-31 DEPARTURE $ 208.81 $ 224.99 

SUBSIDY NEED PER PA-32 DEPARTURE $ 154.52 $ 166.49 

SUBSIDY CEILING PER WEEK - PEAK $ 5,846.68 $ 6,299.72 

SUBSIDY CEILING PER WEEK - OFF-PEAK $ 2,923.34 $ 3,149.86 

1 / 100% completion at with PA-31 Navajo aircraft