Docket2003-14694 

Notes of Kevin Adams to AACA Meeting on February 13 and 14, 2013 

1. The carriers requested a list of our edit checks to their data. We will look into providing that 

check list. 

2. Kevin expressed concern that carriers were "picking and choosing" which reports they would 

submit on a reliable and timely basis. Specifically, the weekly T-100 Market report was 

invariably reliable and on time because carriers recognized they would be automatically 

"dinged" by USPS if the data were late or unreliable. However, that was not the case for 

monthly T-100 Segment and quarterly Schedule F-1 and F-2 reporting. Nevertheless, the 

carriers should provide equal attention to all ofthese reports because all are used for DOT 

ratemaking and to gauge the reliability ofthe T-100 Market reports. Also, late or bad reporting 

by one carrier of any ofthese reports impinges on the integrity ofthe bypass mail program, 

hurting other carriers in the cost pool as well as USPS by causing delay in the issuance of mail 

rates. Kevin argued for introducing to all of the reports the automatic yet gradual enforcement 

mechanism that applies to the weekly T-100 Market report. [Since USPS relies on an annual 

accumulation of weekly T-100 traffic data to determine carriers eligible for tender, withholding 

one week at a time is gradual.] Namely, if the other reports of a particular carrier were not 

reported or were found to be unreliable, then the weekly T-100 market report for that carrier · 

would be withheld until that data was reported appropriately. The alternative mechanism to 

ensure data quality and timeliness- an enforcement proceeding --is costly, burdensome, and 

delayed. Because all of the carriers' data are used for mail ratemaking, those other carriers 

suffer the consequences of the lack of compliance by a single non-compliant carrier. Another 

weakness of relying on enforcement proceedings is that carrier reporting which is not fully 

compliant is difficult to discourage because it may never quite rise to the threshold of requiring 

an enforcement proceeding. 

Jennifer Rodes was concerned that the automatic enforcement would occur to quickly, 

that there should be some grace period provided. The length of a grace period is, of course, 

open to discussion. Steve Deaton felt that DOT had it within its authority to withhold the weekly 

T-100 reporting from USPS without relying on USPS to exclude the offending carrier's weekly 

T-100 Market report, which does not counteract the basic thrust of the proposal. 

3. Kevin expressed concern when T-100 revenue block hours exactly equaled Schedule F-2 

revenue+nonr.evenue block hours, and certainly when F-2 hours were shown to be LESS than 

T-100 block hours. It was argued that in Alaska there could be fewer non-revenue check rides 

than elsewhere, because the pilots often performed their check rides during revenue 

operations. However, that doesn't explain the absence of ANY non-revenue hours for 

EXTENDED periods of time from a carrier's reports. Also, it should be noted that some Alaska 

carriers have very LARGE percentages of non-revenue block hours. 

4. PenAir and PMAir, which provide significant operations outside of Alaska, submit Alaska-only 

Schedule F-1 and Schedule F-2 reports. [This creates no problem with T-100 Segment or Market 

Reports because each entry indicates whether it was operated inside Alaska or not.] Those two 

carriers would supplement that information by emailing spreadsheets of their entire operations 

to BTS that would be kept internally and not published. For consistency, starting with QE 

12/31/12, Seaport would begin following the same reporting procedures. 
5. DOT fully recognizes that the issuance of an annual mail rate update is delayed. There is 

concern that when the next show cause order issues, that a lengthy period of objections and 

discussion could occur. Kevin indicated that DOT could, under those circumstances, finalize that 

show cause order on a temporary basis before resolving all of the comments and objections. 

6. Steve Deaton wondered what caused the bad data since the carriers have been reporting that 

data for several years. However, that is not the case because the Alaska Reporting Directive 

issued in December 2011 clarified that beginning with QE 3-31-12 revenue~ non-revenue 

block hours would be reported on Schedule F-2. Kevin indicated that he had not doublechecked the data as it came in each quarter as he would have liked, especially in view of the 

new reporting directive, because he had been too busy with Delta's drop notice at 24 

communities. Also, the large variance in fuel burn per block hour for the same aircraft types 

operated by different carriers suggests that revenue block hours may be understated, or, in the 

alternative, that gallons may be overstated. 

7. The carriers asserted that if EPA required non-leaded fuel, that the traffic transported by private 

aircraft operators would not added to the level of commercial air traffic, thereby enhancing the 

carriers' bottom lines. Rather, because that type of private flying is typically operated into nondesignated fishing or hunting camps, the traffic on those flights would simply disappear without 

contributing to the carriers' bottom lines. 

8. Second Day- A great deal of time was spent arguing that fhe data for PenAir's Saab 340-A AllCargo operations should be excluded, contrary to the finding in Order 2011-10-3. The 

arguments largely reiterated those found in that Order and in Order 2011-6-14, which led to 

DOT re-introducing a taper. Kevin argued that whatever the Postal Service and the Carriers 

unanimously desired, DOT would find very difficult to disagree with. It should be noted that 

Danny Seybert indicated that PenAir would no longer object to the Part 135 Taper. A new 

consideration was brought up by Mike Brown of ERA, who indicated that because PenAir no 

longer conducted any Part 135 operations in scheduled passenger service, its data should be 

excluded. It appears that this issue was addressed in Order 2003-10-10, issues 5 and 6. 

9. Kevin reminded the carriers that although a subsidy contract might expire on a specific date, 

that such expiration did NOT mean that a carrier could leave the subsidized community without 

DOT permission. Essential Air Service requires that DOT make every effort to find a replacement 

for a carrier being forced against its will to provide EAS. However, DOT would still pay the 

carrier reasonable compensation if held in beyond the expiration date of the contract--

although not a level of subsidy dictated by the carrier-- if it could not find a replacement carrier 

at the end of the contract. 

10. Kevin reminded the carriers that the recently concluded case of Diomede, Alaska, 

Order 2012-9-25, Docket 2009-0260, was unique. Not only was it the first time DOT had 

selected a helicopter to provide EAS in Alaska. Perhaps more importantly, Evergreen was not 

selected to provide Essential Air Service (49 U.S.C., Section 41731) but rather Alternative Service 

to Non-Eligible Places (ATNEP) under 49 U.S.C. Section 41736. The Order also noted that DOT 

had found that we could not subsidize any mode of transportation other than aircraft. 

11. Postal Service indicates that it spends $165 million a year for intra-Alaska air transportation of 

the mail, $105 million for bypass; generates$31 million of postage for bypass, and thus loses 

$74 million a year on bypass mail.