## Order 2012

- 2

- 8 Served: February 10, 2012



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

Issued by the Department of Transportation on the 10 th 

## of February, 2012
Essential Air Service at
A DAK , ALASKA A T KA , ALASKA NIKOLSKI , ALASKA
Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 2000

- 8556 DOCKET DOT

- OST

- 1995

- 363 DOCKET DOT

- OST

- 1995

- 363

ORDER REQUESTING PROPOSALS Summary By this Order , the Department is requesting proposals by March 9 , 2012 , from carrie rs interested in providing Essential Air Service (EAS) at Adak , Atka , and /or Nikolski , Alaska , for the two

- year period beginning July 1 , 201 2 , with or without subsidy. Background By Order 20 10

- 7

- 9 the Department selected Alaska Airlines, Inc., to provid e EAS at Adak and Peninsula Airways, Inc. (PenAir) at Atka and Nikolsk i through June 30, 2012. Annual subsidy and service levels were established as follows: Adak , $1,675,703 for two nonstop or one

- stop round trips per week to Anchorage with Boeing 737

- 40 0 aircraft; Atka , $290,780 for three nonstop round trips per week to Dutch Harbor with eight

- seat Metro III aircraft; 1 

## and Nikolski , $639,008 for two nonstop round trips per week to Dutch Harbor with nine

- seat Grumman Goose aircraft. Request for Proposa ls As the end of the current rate term s approach, we are requesting proposals from carriers int erested in providing service at Adak , Atka, and/or Nikolski , with or without subsidy, for the two

- year period beginning July 1 , 201 2 . Carriers should file their proposals by March 9 , 2012

. S taff will then docket the proposals, thereby making them public. Shortly afterwards, we will provide a summary of the proposals to the communit ies and S tate and as k them to submit their final comments. We will give full con sideration to all proposals filed in a timely manner. 2

1 

### A Metro III is typically configured for 19 seats. PenAir removed seats to afford more c argo capacity. 

## Interested carriers should prepare their proposals with every expectation that their initial proposals will also be their final and only proposals. We retain the discretion to negotiate proposals wit h carriers when we deem it

2 

### Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to provide Essential Air Service without subsidy and we determine that service can be reliably provided without such compensation, we typi cally do not proceed with the carrier

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

- free service as proposed.

## - 2

-
desirable. We also retain the discretion to reject outright all unreasonable or unrealistic proposals and , if necessary, solicit a new round of proposals. However, we anticipate that negotiation or rejection will remain only oc casional exceptions to the rule.
We are here providing interested carriers with some basic information to serve as guidance when they prepare their proposals, but we will not prescribe a precise format for their proposals. We expect proposals to adequate ly describe the service being proposed and the annual amount of subsidy being requested. The applicants can make their own judgments as to the level of detail they wish to present; however, they might want to include proposed schedules as well as supporti ng data for their subsidy requests, such as projected block hours, revenues , and expenses. We strongly encourage clear, well

documented proposals that will facilitate their evaluation by the affected communities and the Department. We anticipate applying our usual carrier

- selection criteria and the general provisions governing subsidy payments for Essential Air Service

. 3



## At Adak , during the prior bid process two years ago , PenAir proposed service consisting of five one

- stop round trips per week to Anch orage with 34

- seat Saab 340 aircraft for $849,435 annual subsidy. We did not select that proposal, largely at the behest of the state of Alaska , which preferred Alaska Airlines’ jet proposal at that time

. However, on February 6 , 2012, the State of Alas ka submitted a letter re

- evaluating its earlier positions favoring jet service. The State still sees EAS as a lifeline for Adak, but is fully aware of the nationwide budgetary pressures on the program. Specifically, the letter states:

“ However, the tim e has come for all of us to consider afresh what would be the most cost

- effective and appropriate options, which may no lo n ger include jet service. ”

At Atka , we selected PenAir to provide three nonstop turnaround round trips per week to Dutch Harbor with Metro III aircraft. Since that time, PenAir has ceased operating that aircraft type, and beginning in May of 2011 began providing all of its service to Atka with larger Saab 340 aircraft. In view of the size of the Saab 340 aircraft, two nonstop turnarou nd round trips to Atka with would be appropriate. Of course, c arriers may propose to link Atka with nearby Adak, in which case an additional frequency at Atka may be appropriate

.
A t Nikolski

3 

### In selecting a carrier to provide subsidized Essential Air Service in Alaska , 49 U.S.C. 41733(c) (1) directs us to consider f ive fa ctors: (1) service reliability; (2) contractual and marketing arrangements with a larger carrier at the hub; (3) interline arrangements with a larger carrier at the hub; (4) community views; and 

## , a significant level of scheduled service has been provided b y Alaska Central Express , a nd we encourage that carrier to consider submitting a subsidy proposal

.

(5) experienc e of the applicant in providing, in Ala ska, scheduled air service or significant non

- scheduled air service. In addition , The Consolidated Appropriations Act, 2008, Public Law 110

- 161 , provides that when selecting a carrier to provide EAS, the Department may consider the relative subsidy requir ements, thus codifying a factor that we have considered since the inception of the program. Interested carriers should also be aware that our general provisions governing Essential Air Service will be included in the selection Order as part of our authori zation of subsidy for the selected service. Appendix C of this Order contains those general provisions.

## - 3

-
We encourage proposals that meet the communit ies ’ requirements in an efficient manner. Carriers are also welcome to propose more than one service option, if they choose; they need not limit themselves to the current service pattern if they envision other, potentially more attractive service possibilities with subsidy requirements that remain competitive

– different hubs, linking service to the hubs with ser vice to other communities, or longer terms for the contracted service.
We encourage carriers to work with the communities in advance of the due date for proposals when proposals can still be adjusted so that they can craft them to best meet the communit ie s ’ needs. In addition, carriers should be very clear as to whether a specific community’s proposal may be considered on a stand

- alone basis, or whether it should be considered as part of a larger, inseparable package with another community. Based on the State’s comments regarding Adak, we encourage proposals with turboprop aircraft. As always, we will fully consider the communit ies ’ views before making a long

- term carrier

- selection decision.
At all three of these markets, as with most of Alaska, freig ht and mail volumes on the outbound leg from the hub to the community far exceed those volumes in the other direction. Proposals at all of the communities should provide sufficient capacity so that passengers, mail, and freight can be accommodated at a re asonable load factor on the critical outbound leg.
Filing Format Carrier proposals should be submitted to the Department with all materials merged into a single document. In addition, because the document will be published on Regulations.gov, each page should be formatted to be viewed online.

Historical Traffic In order to assist carriers in making their traffic and revenue projections, we have included historical traffic for the communities in Appendix B

. For the year ended October 3 1 , 201 1 , in the c ritical outbound directions Adak generated an average of 34 passengers per week along with 42 passenger equivalents (PEQs) 4


## 14 PEQs of mail and frei ght, for a total of 19 PEQs; Nikolski generated an average of 1 passenger per week along with 9 PEQs of mail and freight, for a total of 10 PEQs

. of mail and freight, for a total of 76 PEQs; Atka generated an average of 5 passengers per week along with

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

- free workplaces , and nondiscrimination. 5

4 

### 200 pounds of mail or freight is equivalent to one PEQ. 

## Consequently, all carriers receiving Federal subsidy to support Essential Air Service must certify that they are in compliance with Department regulations regarding drug

- free workplaces an d nondiscrimination, and those carriers whose subsidies exceed $100,000 over the life of the rate term must also certify that they are in compliance with the regulations governing lobbying activities. Because the Department is prohibited from paying subsi dy to carriers that do not submit these documents, the selected carrier will be required to submit them in order to receive subsidy. Interested carriers requiring more detailed information regarding these requirements, as well as copies of

5 

### The certifications are available on the web at http://ostpxweb.dot.gov/aviation/index.html

.

## - 4

-

the certificati ons, should contact the Office of Aviation Analysis at (202) 366

- 5903 . The Department is prohibited from paying subsidy to carriers that do not submit these documents.
Community Comments Civic officials and the State are welcome to submit comments on the proposals at any time. As we noted, the state says that it is open to service at Adak with non

- jet aircraft, which it has in the past rejected. W e will provide a summary of the proposals to the civic parties and ask them to submit their final comments s hortly after March 9 , the due date for carrier proposals.

This Order is issued under authority delegated in 49 CFR 1.56a(f) and re

- delegated to the Directo r, Office of Aviation Analysis.
ACCORDINGLY,

1

. The Department requests proposals from carriers in terested in providing Essential Air Service at Adak , Atka , and Nikolski , Alaska . Carriers should submit their proposals, with subsidy if necessary, by March 9 , 2012 . Proposals should be emailed to EAS@dot.gov, with the title “Proposal to Provide Essentia l Air Service at Adak , Atka, and /or Nikolski , Docket s DOT

- OST

- 200 0

- 8556 and/or 1995

- 363

. ” Questions regarding filings may be directed to Kevin Adams at 202

- 366

- 1047 or Kevin.Adams@dot.gov ;

2

. Th ese D ocket s will remain open until further Order of the De partment; and

3 . We will serve this Order on the s ervice l ist for th ese Docket s

. Persons entitled to petition the Department for review of this Order under the Department’s Regulations, 14 CFR 385.50, must file such petitions within ten (10) days after t he date of service of this Order

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

TODD M. HOMAN Director Office of Aviation Analysis (SEAL)

An electronic version of this document is available on the World Wide Web at http://www.regulations.gov

## Appendix A

Nonstop Great Circle Miles from Anchorage (ANC) ) Adak (ADK) 1,192 Atka (AKB) 1,100 Nikolski (IKO) 905 Dutch Harbor (DUT) 791 Cold Bay (CDB) 620
Other Nonstop Great Circle Miles ADK

- AKB 107 AKB

- IKO 231 IKO

- DUT 116 ADK

- DUT 445 AKB

- DUT 339Appendix B-1
Origin of Adak (ADK) Destination of Adak (ADK) Origin and Dest. of Adak (ADK)

Year Month Pax. Frt. Mail ∑ PEQs Pax. Frt. Mail ∑ PEQs Pax. Frt. Mail ∑ PEQs 2008 11 130 54.4 4.7 189.1 105 99.6 121.1 325.7 235 154.0 125.8 514.8 2008 12 95 14.6 4.4 114.0 90 90.7 40.7 221.4 185 105.3 45.1 335.4 2009 1 78 18.2 6.6 102.9 159 174.7 75.2 408.9 237 192.9 81.8 511.7 2009 2 79 14.6 5.8 99.4 122 327.0 110.6 559.5 201 341.6 116.3 658.9 2009 3 159 33.2 6.2 198.4 184 460.2 83.9 728.1 343 493.4 90.1 926.5 2009 4 260 3.2 6.9 270.1 135 168.4 96.3 399.7 395 171.6 103.3 669.8 2009 5 112 14.3 3.8 130.2 176 134.1 111.2 421.3 288 148.4 115.1 551.5 2009 6 135 95.5 2.9 233.4 145 125.0 92.3 362.3 280 220.5 95.2 595.7 2009 7 173 63.1 9.1 245.2 228 223.9 107.8 559.7 401 287.0 116.9 804.9 2009 8 230 82.6 5.3 317.9 200 173.4 104.5 477.9 430 256.0 109.8 795.9 2009 9 198 56.5 15.1 269.6 130 135.3 153.5 418.7 328 191.8 168.6 688.4 2009 10 228 60.4 14.0 302.4 200 232.3 48.9 481.2 428 292.8 62.9 783.6 YE 10/31/09 1,877 510.8 84.9 2,472.7 1,874 2,344.4 1,146.0 5,364.5 3,751 2,855.2 1,230.9 7,837.1

2009 11 122 26.6 8.5 157.2 104 108.0 50.6 262.6 226 134.7 59.1 419.8 2009 12 82 19.0 4.2 105.2 88 70.5 77.1 235.6 170 89.5 81.3 340.8 2010 1 151 29.0 6.3 186.3 163 156.4 96.5 415.9 314 185.4 102.8 602.2 2010 2 80 7.8 6.1 93.9 107 94.6 73.8 275.4 187 102.5 79.9 369.3 2010 3 208 2.5 6.7 217.2 163 109.7 99.9 372.6 371 112.3 106.6 589.8 2010 4 143 1.2 15.8 159.9 101 133.6 62.7 297.4 244 134.8 78.5 457.3 2010 5 131 24.3 6.8 162.1 182 146.5 78.8 407.3 313 170.8 85.5 569.4 2010 6 153 154.1 4.1 311.2 141 125.1 108.2 374.3 294 279.1 112.3 685.5 2010 7 155 144.3 3.4 302.7 155 174.3 67.3 396.6 310 318.6 70.7 699.3 2010 8 240 160.8 8.0 408.8 239 151.4 110.7 501.1 479 312.1 118.7 909.8 2010 9 253 101.0 15.1 369.2 197 196.6 67.0 460.6 450 297.6 82.2 829.8 2010 10 266 82.9 5.3 354.2 235 102.8 104.2 442.1 501 185.7 109.5 796.2 YE 10/31/10 1,984 753.6 90.2 2,827.7 1,875 1,569.5 997.0 4,441.4 3,859 2,323.0 1,087.2 7,269.2

2010 11 161 57.3 5.3 223.6 142 71.7 75.6 289.3 303 129.1 80.9 513.0 2010 12 130 21.5 6.8 158.3 117 56.3 49.0 222.3 247 77.8 55.8 380.6 2011 1 89 14.9 2.7 106.7 97 68.8 36.9 202.7 186 83.8 39.7 309.4 2011 2 85 17.2 4.4 106.6 84 68.7 69.4 222.1 169 85.9 73.8 328.7 2011 3 121 104.6 3.9 229.6 114 84.1 68.2 266.3 235 188.7 72.2 495.9 2011 4 88 74.7 1.0 163.7 102 101.2 44.8 248.0 190 175.9 45.8 411.7 2011 5 146 61.5 5.4 212.9 146 173.4 75.7 395.0 292 234.9 81.1 608.0 2011 6 139 77.5 12.8 229.4 177 140.3 47.3 364.6 316 217.8 60.2 594.0 2011 7 176 238.7 11.3 426.0 190 263.1 58.3 511.4 366 501.9 69.5 937.4 2011 8 234 15.1 4.4 253.5 187 135.9 129.9 452.8 421 151.0 134.3 706.3 2011 9 176 96.1 6.7 278.8 188 137.1 60.1 385.2 364 233.2 66.8 664.0 2011 10 230 93.4 4.0 327.4 240 122.0 60.7 422.6 470 215.4 64.6 750.0 YE 10/31/11 1,775 872.6 68.9 2,716.5 1,784 1,422.7 775.8 3,982.5 3,559 2,295.3 844.7 6,699.0

Note: 200 pounds of mail or freight is one passegner equivalent (PEQ).Appendix B-2
Origin of Atka (AKB) Destination of Atka (AKB) Origin and Dest. of Atka (AKB)

Year Month Pax. Frt. Mail ∑ PEQs Pax. Frt. Mail ∑ PEQs Pax. Frt. Mail ∑ PEQs 2008 11 32 29.0 2.9 63.9 25 35.4 48.0 108.4 57 64.4 50.9 172.4 2008 12 30 0.0 3.6 33.6 23 11.9 64.5 99.3 53 11.9 68.1 133.0 2009 1 11 0.1 2.0 13.0 13 8.0 46.6 67.6 24 8.1 48.5 80.6 2009 2 18 4.8 1.8 24.6 21 11.2 39.1 71.3 39 15.9 40.9 95.8 2009 3 18 3.2 2.0 23.2 31 10.6 29.2 70.8 49 13.8 31.1 93.9 2009 4 36 3.0 2.6 41.6 35 106.9 77.5 219.4 71 109.9 80.1 261.0 2009 5 43 1.1 4.3 48.4 49 71.6 34.0 154.6 92 72.7 38.3 203.0 2009 6 29 4.8 3.4 37.2 26 30.9 59.8 116.8 55 35.7 63.2 153.9 2009 7 57 3.5 1.9 62.4 50 60.4 54.7 165.1 107 63.9 56.6 227.4 2009 8 32 3.1 0.0 35.1 32 46.2 28.4 106.7 64 49.3 28.4 141.8 2009 9 42 19.1 2.2 63.3 42 40.6 86.2 168.8 84 59.7 88.4 232.1 2009 10 35 1.6 5.7 42.3 29 29.5 18.7 77.2 64 31.1 24.4 119.5 YE 10/31/09 383 73.2 32.3 488.5 376 463.2 586.7 1,426.0 759 536.4 619.0 1,914.4

2009 11 22 1.1 1.4 24.4 22 11.8 53.8 87.6 44 12.9 55.2 112.1 2009 12 19 1.6 1.1 21.7 18 14.6 52.1 84.7 37 16.3 53.2 106.5 2010 1 12 0.0 1.7 13.7 14 8.0 15.5 37.6 26 8.0 17.2 51.2 2010 2 33 4.5 1.5 38.9 23 9.5 57.4 89.9 56 14.0 58.9 128.9 2010 3 8 1.0 1.3 10.3 21 14.3 11.1 46.4 29 15.3 12.5 56.8 2010 4 35 0.0 2.2 37.2 35 42.9 60.4 138.3 70 42.9 62.6 175.5 2010 5 32 5.8 1.7 39.4 33 59.5 50.0 142.5 65 65.3 51.7 181.9 2010 6 12 9.4 1.9 23.3 19 15.3 28.2 62.5 31 24.7 30.1 85.8 2010 7 20 8.7 1.4 30.1 13 2.6 50.1 65.7 33 11.3 51.5 95.8 2010 8 32 9.5 3.0 44.5 32 32.1 70.6 134.7 64 41.6 73.7 179.3 2010 9 34 5.6 2.1 41.7 35 21.0 49.9 106.0 69 26.7 52.0 147.7 2010 10 34 0.0 2.6 36.6 19 44.6 52.0 115.6 53 44.6 54.6 152.2 YE 10/31/10 293 47.2 21.8 361.9 284 276.3 551.3 1,111.6 577 323.5 573.0 1,473.5

2010 11 19 0.9 1.1 21.0 15 11.0 35.2 61.2 34 11.9 36.2 82.1 2010 12 18 0.5 1.5 20.0 27 18.3 40.3 85.6 45 18.8 41.8 105.6 2011 1 16 0.0 0.3 16.3 9 18.4 21.8 49.2 25 18.4 22.2 65.6 2011 2 18 0.3 1.3 19.6 17 17.1 32.7 66.8 35 17.4 34.0 86.4 2011 3 30 0.2 0.9 31.1 32 16.8 48.5 97.3 62 17.0 49.4 128.4 2011 4 20 0.2 1.4 21.6 18 12.3 32.6 62.9 38 12.5 34.0 84.5 2011 5 30 4.5 3.1 37.6 28 15.8 16.8 60.6 58 20.3 19.9 98.2 2011 6 11 7.4 0.7 19.1 17 29.8 56.7 103.4 28 37.2 57.3 122.5 2011 7 9 0.0 0.8 9.8 11 23.2 38.3 72.6 20 23.2 39.2 82.4 2011 8 32 0.1 1.8 33.9 40 26.5 47.6 114.1 72 26.6 49.4 147.9 2011 9 23 5.4 0.9 29.2 24 24.7 66.3 115.0 47 30.0 67.2 144.2 2011 10 22 0.8 0.8 23.6 25 15.1 47.3 87.4 47 16.0 48.1 111.0 YE 10/31/11 248 20.2 14.5 282.7 263 229.0 484.1 976.1 511 249.3 498.6 1,258.8
Note: 200 pounds of mail or freight is one passegner equivalent (PEQ).Appendix B-3
Origin of Nikolski (IKO) Destination of Nikolski (IK0) Origin and Dest. of Nikolski (IKO)

Year Month Pax. Frt. Mail ∑ PEQs Pax. Frt. Mail ∑ PEQs Pax. Frt. Mail ∑ PEQs 2008 11 21 22.1 0.7 43.8 20 17.9 20.1 58.0 41 39.9 20.8 101.8 2008 12 11 0.0 2.8 13.8 8 19.8 25.5 53.3 19 19.8 28.3 67.1 2009 1 13 0.0 1.6 14.7 15 10.2 16.5 41.6 28 10.2 18.1 56.3 2009 2 5 0.0 1.6 6.6 3 10.3 14.6 27.9 8 10.3 16.2 34.5 2009 3 12 0.9 1.6 14.5 11 15.1 32.5 58.6 23 16.0 34.2 73.1 2009 4 8 0.0 1.3 9.3 5 4.5 14.9 24.4 13 4.5 16.2 33.7 2009 5 22 1.3 4.0 27.2 40 6.8 23.5 70.4 62 8.1 27.5 97.6 2009 6 35 0.0 10.4 45.4 23 20.1 16.6 59.8 58 20.1 27.0 105.2 2009 7 21 2.7 1.6 25.3 22 5.5 9.2 36.7 43 8.1 10.8 61.9 2009 8 12 0.0 2.3 14.3 4 6.0 9.3 19.3 16 6.0 11.5 33.6 2009 9 16 0.0 4.4 20.4 22 42.6 16.3 80.9 38 42.6 20.7 101.3 2009 10 30 0.0 3.3 33.3 33 21.6 18.4 72.9 63 21.6 21.6 106.2 YE 10/31/09 206 27.0 35.5 268.5 206 180.4 217.4 603.7 412 207.3 252.8 872.2

2009 11 5 7.5 3.4 15.9 2 47.7 7.0 56.7 7 55.2 10.4 72.5 2009 12 3 0.0 3.7 6.7 4 14.3 10.5 28.8 7 14.3 14.2 35.5 2010 1 0 3.1 0.1 3.3 1 8.6 2.8 12.4 1 11.8 2.9 15.7 2010 2 7 0.3 1.4 8.7 4 23.5 14.9 42.4 11 23.8 16.2 51.1 2010 3 2 0.0 1.0 3.0 6 18.9 3.4 28.3 8 18.9 4.4 31.3 2010 4 8 0.0 0.5 8.5 9 21.7 0.1 30.8 17 21.7 0.6 39.3 2010 5 10 2.6 2.1 14.7 17 62.6 19.2 98.7 27 65.2 21.2 113.4 2010 6 8 0.0 0.5 8.5 7 0.3 3.1 10.4 15 0.3 3.6 18.9 2010 7 8 0.0 0.9 8.9 9 103.0 8.4 120.4 17 103.0 9.3 129.3 2010 8 6 0.0 0.3 6.3 5 11.2 15.0 31.2 11 11.2 15.3 37.6 2010 9 8 3.0 1.0 12.0 13 34.8 5.7 53.5 21 37.8 6.7 65.5 2010 10 12 0.0 1.1 13.1 15 7.2 6.4 28.6 27 7.2 7.4 41.7 YE 10/31/10 77 16.6 15.8 109.4 92 353.9 96.3 542.3 169 370.5 112.1 651.6

2010 11 6 2.1 0.4 8.5 5 8.6 4.1 17.7 11 10.6 4.5 26.1 2010 12 1 0.0 0.0 1.0 2 4.4 3.0 9.4 3 4.4 3.0 10.4 2011 1 4 0.0 1.3 5.3 4 27.4 6.1 37.5 8 27.4 7.4 42.8 2011 2 5 0.4 0.5 5.8 5 2.9 3.1 10.9 10 3.2 3.5 16.7 2011 3 8 3.4 0.4 11.8 5 52.1 6.9 64.0 13 55.5 7.3 75.8 2011 4 6 1.0 0.6 7.6 1 16.4 8.2 25.5 7 17.4 8.7 33.1 2011 5 7 0.0 1.0 8.0 12 7.1 4.9 24.0 19 7.1 5.9 32.0 2011 6 6 0.0 0.8 6.8 8 19.2 6.2 33.5 14 19.2 7.1 40.3 2011 7 11 0.0 0.3 11.3 8 17.5 5.0 30.5 19 17.5 5.3 41.8 2011 8 6 0.0 0.7 6.7 9 3.6 35.4 48.0 15 3.6 36.1 54.7 2011 9 3 0.0 0.0 3.0 5 27.6 4.0 36.6 8 27.6 4.0 39.6 2011 10 4 12.7 2.9 19.5 1 47.0 4.3 52.4 5 59.7 7.2 71.9 YE 10/31/11 67 19.4 8.9 95.3 65 233.7 91.1 389.8 132 253.1 100.0 485.1
Note: 200 pounds of mail or freight is one passegner equivalent (PEQ).



### Note: Traffic volumes above include a significant amount of traffic carried by Alaska Central Express in scheduled service.

## Appendix C
Example of General Terms and Conditions for Essential Air Service The carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance with the terms and stipulations of the rate Order , including the service plans outlined in the Order and any other significant elements of the required service, without prior approval. The carrier understands that an aircraft take

- off and landing at its scheduled destination constitutes a completed flight; absent an explanation supporting subsidy eligibility for a flight that has not been completed, such as certain weather can cellations, only completed flights are considered eligible for subsidy. In addition, if the carrier does not schedule or operate its flights in full conformance with the Order for a significant period, it may jeopardize its entire subsidy claim for the pe riod in question. If the carrier contemplates any such changes beyond the scope of the Order during the applicable period of these rates, it must first notify the Office of Aviation Analysis in writing and receive written approval from the Department to b e ensured of full compensation. Should circumstances warrant, the Department may locate and select a replacement carrier to provide service on these routes. The carrier must complete all flights that can be safely operated; flights that overfly points fo r lack of traffic will not be compensated. In determining whether subsidy payment for a deviating flight should be adjusted or disallowed, the Department will consider the extent to which the goals of the program are met and the extent of access to the na tional air transportation system provided to the communit ies

. If the Department unilaterally, either partially or completely, terminates or reduces payments for service or changes service requirements at a specific location provided for under this Order , then, at the end of the period for which the Department does make payments in the stipulated amounts or at the stipulated service levels, the carrier may cease to provide service to that specific location without regard to any requirement for notice of suc h cessation. Those adjustments in the levels of subsidy and/or service that are mutually agreed to in writing by the Department and carrier do not constitute a total or partial reduction or cessation of payment.
Subsidy contracts are subject to, and inco rporate by reference, relevant statutes and Department regulations, as they may be amended from time to time. However, any such statutes, regulations, or amendments thereto shall not operate to controvert the foregoing paragraph.
Funds are not currently available for performance under this solicitation beyond [DATE]. The Department’s obligation for performance under this solicitation beyond [DATE], is contingent upon the availability of appropriated funds from which payment for services can be made. No legal liability on the part of the Government for any payment may arise for performance under this Order beyond [DATE], until funds are made available to the Department for performance. If funds are not made available for performance beyond [DATE], the ca rrier will receive notice in writing by the Department.
All claims for payment must be submitted within 60 days of the last day of service provided under this Order