BEFORE THE DEPARTMENTOF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, DC In the matterof Essential Air Service at ) 

### ) HYDABURG,ALASKA } 

### ) Under49 U.S.C. § 41731

### etseq. ) 

# ____________ ) Service Proposal ofTaquan Air Docket DOT-OST-1999-6245

In response to Order2015-4-9 requesting proposals to provide Essential Air Service to Hydaburg,Alaska, Venture Travel, Inc. d/b/aTaquan Air herebysubmits its proposal. Taquan Airand its predecessor carriers have provided Essential Air Service at Hydaburg since the beginning ofthe EAS program in 1978. Atthattime, Prince ofWales Island had extensive lumberand fishing industries. As the economy has changed, Taquan has remained committed to serving Hydaburgfor its economic, civic and school needs. Hydaburg is the most isolated EAS village on Prince ofWales Island. There is no convenientwheel runway offerry service, and the limited road requires approximatelyfive hourstotravel to Hollis, walk on the one ferry a day and arrive in Ketchikan. Taquan, and its corporate predecessor Ketchikan AirService, have served Prince ofWales Island since the 1960's. During this period, service was provided using Cessna 180/185 and 206 aircraft as well as the deHavilland Beaverthat has provided the bulk ofthe floatplance service in southeastern Alaska. Ketchikan Air introduced the firstturbine powered float service in southeastern using a DHC-2 Beaver fitted with a Pratt 

### & Whitney PT-6 engine. Atthattime,the highly seasonal operation did not provide the opportunityforyear around utilization needed to offsetthevery high conversion costs. These aircraft continue to be used in less seasonal operations in the lower48. Taquan has been committed to advancing airsafety in the challenging conditions in southeastern Alaska. Taquan and its predecessorwas afounder oftheAlaska Air CarriersAssociation, and has served on its Board. Itwas one ofthe initial signators tothe formation ofthe Medallion Foundation which established rigid requirements forthe awardingofstars in five safety categories. In 2008 Taquan was awarded the Medallion Shield for having completed all five starqualifications. Taquan is the only scheduled air carrier in Ketchikan withthe Medallion Shield status. Just as the Cessna's beforethem, the Beavers are nearingthe end oftheir economic life as the backbone offloat service. While ownership costs are declining, the maintenance costs are increasing. The aircraft cannot be used in instrumentflight conditions, which commonly affect Ketchikan to Prince ofWales operations year around. The Beavers will continue in service foryears ahead, particularlyfor flightseeing which onlyoperates in visual conditions duringthe summer.

### Taquan is proposing to use the Cessna Caravan (C-208) on amphibious floats as its primary aircraft on the route. Taquan has this aircraft in service now, and it is certified forflight in instrumentconditions. Amphibious aircraft are required at Hydaburg, which has no land runway. The amphibious aircraft can notonly land at eitherthe land runway orfloatplane facility at Ketchikan, but can be used for charters or team travel between Hydaburg and points served by runways such as Wrangell, Petersburg, and Juneau. In 2014, the aircraftwas used extensivelyfortesting, training and certification flights, and the unitcosts reflected on the F-2 reports. Projected expenses are based on current experience for pilot costs, fuel, insurance and ownership amortized overthe normalyear ofutilization. Maintenance is based other Alaska carrier costs, with adjustmentsto reflect higher unit costs for seaplane service. Indirectcosts are Taquan experience for2014 projected ahead. Capacity related expense is Taquan's current experience per F-2 reports. While the Caravan will be the primary aircraft used, Taquan anticipatesthat itwill still use the deHavilland Beaver aircraftwhen the load is appropriate, and has submitted a bid to show costs per departureforthe Beaver. All Beaver costs are derived for2014 actual expenses. SUMMARY Despite the highly competitive nature ofcertificated air service in Ketchikan, Taquan is the only carrier to served Hydaburg on ascheduled basis, and the only carrierto offerto provide Essential Air Service. Taquan continuesto enjoystrong community support, and has an agent with office and vehicle on site. Recognizing the greater utilityand assured operatingfuture ofthe Caravan, Taquan offersservice for terms up tofive years. Given the consistent nature ofrevenue and expenses increases, Taquan will accept the arithmetic mean ofthe rates perdeparture and year forwhateverterm the Department determines. The five yearterm has the advantage ofamortizing fixed expenses over a longer period. Taquan remains committed to serving Hydaburg and other points outofKetchikan. Taquan is the only multi-generational scheduled air carrier in Ketchikan, having begun air service in 1971, and has pioneered flightseeing and othertourist related services duringthe summerto offsetthe seasonal demand for airservice. Respectfully submitted,
Brien Salazar Chief Executive Officer

May 21,2015ESSENTIAL AIR SERVICE AT HYDABURG, AK OPERATIONS MARKET WFB-HYG HYG-WFB TOTAL EXPENSES Item Pilot & CoPilot Fuel & Oil All Insurance Maintenance Depreciation TOTAL DIRECTS Traffic Related Departure Related TOTAL INDIRECTS SUBTOTAL CAPACITY RELATED TOTAL SYSTEM Specific Ground Support Vehicle Insurance Vehicle Maintenance Vehicle Fuel City Center Station TOTAL HYG VEHICLE TOTAL OP. EXPENSES PROFIT@ 5% MARKUP TOTAL ALL EXPENSES TOTAL BLOCK DEPS/YEAR AVG BLOCK 156 27 4212

156 312 Units 140.4 140.4 140.4 140.4 140.4 312 312 27 Block Hours 4212 8424 140.4

CY 2014 Unit Costs 2016 Unit Costs $198.00 $162.00 $50.48 $300.00 $200.00 $910.48 $62.10 $84.43 $146.53 11.96% $1,650.00 $3,400.00 $3,300.00 $6,000.00 $14,350.00 $213.84 $174.96 $54.52 $324.00 $216.00 $983.32 $67.07 $91.18 $158.25 ESSENTIAL AIR SERVICE AT HYDABURG, AK
TRAFFIC per Blk Hr Sched Traffic 2016 Proj. Yield PASSENGERS 0.1506 47 $130.50
FREIGHT 14.4231 4500 $0.88

MAIL 112.1795 35000 $1.13

TOTAL SUBSIDY NEED SUBSIDY NEED/DEPARTURE CARAVAN SERVICE 2016 Costs $30,023.14 $24,564.38 $7,654.38 $45,489.60 $30,326.40 $138,057.90 $20,925.22 $28,449.53 $49,374.75 $187,432.65 $22,416.95 $209,849.60 $1,782.00 $3,672.00 $3,564.00 $6,480.00 $15,498.00 $225,347.60 $11,267.38 **~236,614.98** 2016 Revenue $6,133.50 $3,960.00 $39,480.00 $49,573.50 $187,041 $599.49 2017 Costs $31,224.06 $25,546.96 $7,960.56 $47,309.18 $31,539.46 $143,580.22 $21,762.22 $29,587.51 $51,349.74 $194,929.96 $23,313.62 $218,243.58 $1,853.28 $3,818.88 $3,706.56 $6,739.20 $16,117.92 $234,361.50 $11,718.08 **~246,079.58** 2017 Revenue $6,378.84 $4,039.20 $39,480.00 $49,898.04 $196,182 $628.79 2018 Costs $32,473.02 $26,568.84 $8,278.98 $49,201.55 $32,801.03 $149,323.43 $22,632.71 $30,771.01 $53,403.73 $202,727.16 $24,246.17 $226,973.32 $1,927.41 $3,971.64 $3,854.82 $7,008.77 $16,762.64 $243,735.96 $12,186.80 **~255,922.** 76 2018 Revenue $6,633.99 $4,119.98 $39,480.00 $50,233.98 $205,689 $659.26 2019 Costs $33,771.94 $27,631.59 $8,610.14 $51' 169.61 $34,113.08 $155,296.37 $23,538.02 $32,001.86 $55,539.88 $210,836.24 $25,216.01 $236,052.26 $2,004.51 $4,130.50 $4,009.02 $7,289.12 $17,433.14 $253,485.40 $12,674.27 **~266,159.67** 2019 Revenue $6,899.35 $4,202.38 $39,480.00 $50,581.74 $215,578 $690.95 Appendix A Page 1 of 4 2020 Costs $35,122.82 $28,736.85 $8,954.55 $53,216.40 $35,477.60 $161,508.22 $24,479.54 $33,281.93 $57,761.47 $219,269.69 $26,224.66 $245,494.35 $2,084.69 $4,295.72 $4,169.38 $7,580.68 $18,130.47 $263,624.82 $13,181.24 **~276,806.06** Appendix A Page 2 of 4 2020 Revenue $7,175.33 $4,286.43 $39,480.00 $50,941.76 $225,864 $723.92--- ------ -- ESSENTIAL AIR SERVICE AT HYDABURG, AK OPERATIONS BEAVER SERVICE Appendix A Page 3 of4

MARKET WFB-HYG HYG-WFB TOTAL EXPENSES Item Pilot & CoPilot Fuel

& Oil All

Insurance Maintenance Depreciation TOTAL DIRECTS Traffic Related Departure

Related TOTAL

JNDIRECTS SUBTOTAL CAPACITY RELATED TOTAL SYSTEM Specific Ground Support Vehicle

Insurance Vehicle

Maintenance Vehicle

Fuel City

Center Station TOTAL

HYG VEHICLE TOTAL OP. EXPENSES PROFIT@

5% MARKUP TOTAL

ALL EXPENSES DEPSNEAR AVG BLOCK 156 156 312 Block Hours 36 36 TOTAL BLOCK 5616 5616 11232 187.2

Units CY 2014 Unit Costs 2016 Unit Costs 2016 Costs

187.2

$140.57 $151.82 $28,419.88

187.2 187.2 187.2 187.2 312 312

$132.42 $24.91 $152.16 $51.11 $501.17 $62.10 $84.43 $146.53 11.96% $1,650.00 $3,400.00 $3,300.00 $6,000.00 $14,350.00 $143.01 $26.90 $164.33 $55.20 $541.26 $67.07 $91.18 $158.25 $26,772.15 $5,036.20 $30,763.10 $10,333.22 $101,324.55 $20,925.22 $28,449.53 $49,374.75 $150,699.29 $18,023.64 $168,722.93 $1,782.00 $3,672.00 $3,564.00 $6,480.00 $15,498.00 $184,220.93 $9,211.05 **~193,431.98** 2017 Costs 2018 Costs 2019 Costs 2020 Costs $29,556.68

$30,738.94 $31,968.50 $33,247.24 $27,843.03

$28,956.75 $30,115.02 $31,319.62 $5,237.65

$5,447.16 $5,665.04 $5,891.65 $31,993.62

$33,273.37 $34,604.30 $35,988.48 $10,746.54

$11,176.41 $11,623.46 $12,088.40 $105,377.53

$109,592.63 $113,976.33 $118,535.39 $21,762.22 $22,632.71 $23,538.02 $24,479.54 $29,587.51

$30,771.01 $32,001.86 $33,281.93 $51,349.74

$53,403.73 $55,539.88 $57,761.47 $156,727.27 $162,996.36 $169,516.21 $176,296.86 $18,744.58

$19,494.36 $20,274.14 $21,085.10 $175,471.85 $182,490.72 $189,790.35 $197,381.96 $1,853.28 $1,927.41 $2,004.51 $2,084.69 $3,818.88

$3,971.64 $4,130.50 $4,295.72 $3,706.56

$3,854.82 $4,009.02 $4,169.38 $6,739.20

$7,008.77 $7,289.12 $7,580.68 $16,117.92

$16,762.64 $17,433.14 $18,130.47 $191,589.77 $199,253.36 $207,223.49 $215,512.43 $9,579.49

$9,962.67 $10,361.17 $10,775.62 **~201,169.26 ~209,216.03**  **~217** ,584.67

**~226,288.05**

ESSENTIAL AIR SERVICE AT HYDABURG, AK BEAVER SERVICE Appendix A Page 4 of4

TRAFFIC PASSENGERS FREIGHT MAIL

per Blk Hr Sched Traffic 2016 Proj. Yield 2016 Revenue 2017 Revenue 2018 Revenue 2019 Revenue 2020 Revenue

TOTAL SUBSIDY NEED 0.1506 14.4231 112.1795 SUBSIDY NEED/DEPARTURE 47 $130.50 $6,133.50 $6,378.84 $6,633.99 $6,899.35 $7,175.33

4500

$0.88 $3,960.00 $4,039.20 $4,119.98 $4,202.38 $4,286.43

35000

$1.13 $39,480.00 $39,480.00 $39,480.00 $39,480.00 $39,480.00 $49,573.50

$49,898.04 $50,233.98 $50,581.74 $50,941.76
$143,858 $461.08 $151,271 $484.84 $158,982 $509.56 $167,003 $535.27 $175,346 $562.01