Order 2012-5-24

Served: May 24, 2012

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 24th of May, 2012

Essential Air Service at: 

Adak, Alaska

under 49 U.S.C. 41731 et seq. 

DOCKET DOT-OST-2000-8556

ORDER RE-SOLICITING PROPOSALS 

Summary

By this Order, the Department is re-soliciting proposals from all interested carriers to provide 

subsidized Essential Air Service (EAS) at Adak, Alaska. Proposals are due by June 26, 2012. 

(See Appendix A for a map.)

Background

By Order 2010-7-9, July 15, 2010, the Department selected Alaska Airlines, Inc. to provide two 

nonstop or one-stop round trips per week between Adak and Anchorage with Boeing 737-400 

aircraft for $1,675,703 annually through June 30, 2012. The Order also selected Peninsula 

Airways, Inc., (PenAir) at Atka and Nikolski, Alaska, for $290,780 and $639,008 annually, 

respectively. 

As the end of the current rate term was approaching, by Order 2012-2-8, February 10, 2012, we 

requested proposals from carriers interested in providing service at all three communities no later 

than March 9, 2012. On March 1, 2012, PenAir requested a two-week extension, until March 23, 

2012, to submit proposals, and by notice dated March 2, 2012, we granted that request. On 

March 21, 2012, Grant Aviation, Inc., requested a one-week extension to March 30, 2012. By notice 

dated March 22, 2012, we granted that request. 

On March 30, 2012, we received proposals at all three communities. At Adak, we received a 

proposal from only one carrier, PenAir. PenAir requests $3,440,097 annual subsidy to provide 

four nonstop round trips per week between Adak and Anchorage with a 34-seat Saab 340 

aircraft. PenAir’s proposal contemplates a stop at Cold Bay, not to pick up any additional traffic,

but for the purpose of fueling the aircraft required by the long haul between Adak and 
-2-

Anchorage. At Atka and Nikolski, Order 2012-5-20, May 23, 2012, selected Grant Aviation to 

serve those communities. This Order addresses Adak only.1

Community Comments

We received comments from the City of Adak on May 11, 2012. The city indicates the 

following:

“The cargo capacity of Pen Air's aircraft, the Saab 340, is substantially smaller 

than what is available with our current carrier and causes the most concern 

regarding this proposal. With the reopening of the local fish processing plant by 

Icicle Seafoods, we have seen firsthand the increased needs and capacity 

utilization by the community. In January 2012, the community saw an influx of 

approximately 150 personnel for the fish plant. With the Saab 340's capacity of

30 passengers per flight, a minimum of five flights would be booked with no 

mail and freight on the flights during this time period. With the proposed 

schedule, the community could realistically encounter a situation of having no 

mail and freight for at least a week. If we multiplied this several times during 

the year, the effects seen would be severe. 

It should also be noted that Adak Island does not have regular barge service and 

the community is entirely dependent on air service for all items, including but 

not limited to, dry goods, groceries, medicine, perishable and other timesensitive goods. 

The community is furthermore concerned with the ability of PenAir to complete 

its proposed schedule. It is no secret that the weather on Adak is fluid at best 

and for all intents and purposes unpredictable. We are concerned that the actual 

completion percentage will be similar to Atka (approximately 65%). As a result, 

the community is concerned that flight cancellations will result in similar

situations experienced in Dutch Harbor and Cold Bay with long standby lists 

and the unexpected financial costs travelers will incur.”

Decision

The community is concerned that the level of service proposed by PenAir is inferior to what 

Adak currently receives, and that sufficient cargo capacity will not always be available.2 

However, PenAir’s proposal meets the statutory provisions of 49 U.S.C. §41731 et seq, for 

providing basic EAS. We believe many of the community’s concerns with PenAir’s proposed 

service are misplaced. Much of the feared unreliability and insufficiency of PenAir’s proposal 

relate to PenAir’s performance at nearby Atka and Nikolski, where we have confirmed that 

PenAir completes approximately two thirds of its scheduled flights. PenAir’s proposal would 

 1 While Alaska Airlines chose not to submit a notice to suspend service, under our rules, incumbent 

carriers are eligible for compensation after the end of the contract until we find a replacement carrier. We 

anticipate issuing an order setting a final rate for Alaska Airlines service for their service for the period 

from July 1, 2012, until further notice. Only after we select a carrier and it actually begins the replacement 

service, the incumbent carrier’s obligation to provide EAS at the community ends.

2 Capacity levels should reasonably accommodate historical traffic, but need not ensure that there never be 

insufficient lift to accommodate unusual fluctuations.
-3-

bypass Dutch Harbor altogether and instead land at Cold Bay, where PenAir’s completion factor 

is much better. 

We have decided to re-bid proposals for Adak. While both the community and Department are 

dissatisfied with the current options before us, we wish to highlight the fact that the sources of 

our dissatisfactions are different. We are concerned that the level of subsidy PenAir requests is 

very high -- more than twice the level we have been paying Alaska Airlines for its current

contract provided with full-sized jet aircraft. Based on all of the above, we have decided that the 

best option is to re-solicit proposals.3

Request for Proposals 

Carriers interested in filing proposals for Adak -- with or without subsidy -- should 

e-mail them to our staff at EAS@dot.gov, no later than June 26, 2011. Our staff will then docket 

the proposals, thereby making them public, and we suggest that each applicant serve a copy of its 

proposal on the civic parties and other applicants. Shortly thereafter we will provide a summary 

of the proposals to the community officials and ask them to submit their final comments two 

weeks later. We will give full consideration to all proposals filed in a timely manner.4 

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 with carriers when we deem it desirable. In such cases, of course, we will give all 

applicants the same opportunity. We also retain the discretion to reject outright all unreasonable 

or unrealistic proposals and solicit a new round of proposals. 

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. We expect proposals to 

adequately 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 supporting 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 

community and the Department. We do not anticipate any change in our selection criteria, or in 

the general provisions governing subsidy payments for Essential Air Service.5 

 3 49 U.S.C. §41734(f) directs the Department, when prohibiting a carrier from terminating service, “to 

make every effort to find another carrier” to provide basic EAS as quickly as possible.

4 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to provide 

EAS without subsidy and we determine that service can be provided reliably without such compensation, we

typically do not proceed with the carrier-selection case. Instead, we simply rely on that carrier’s subsidy-free 

service as proposed.

5 In selecting a carrier to provide subsidized Essential Air Service in Alaska, 49 U.S.C. 41733(c) (1) directs us to 

consider five factors. (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 (5) experience of the 

applicant in providing, in Alaska, 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 requirements, 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 authorization of subsidy for 

the selected service. Appendix C of this Order contains those general provisions.
-4-

With specific respect to Adak, Alaska Airlines provides service consisting of two nonstop 

round trips per week, but with very large Boeing 737-400 aircraft, and that level of 

service appears to have exceeded the amount of capacity reasonably required to 

accommodate traffic. We expect proposals consisting of a minimum of three round trips 

per week for nonstop service with smaller aircraft than the jet equipment operated by 

Alaska Airlines, with sufficient capacity to reasonably accommodate the historical traffic 

deplaning at Adak,6 as shown in Appendix B.7 We encourage proposals that meet the 

community’s 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 – different hubs, or longer terms for the contracted service – with subsidy 

requirements that remain competitive.8

We encourage carriers to work with the community in advance of the due date for 

proposals when proposals can still be adjusted so that they can craft them to best meet the 

community’s needs. As always, we will fully consider the community’s views before 

making a long-term carrier-selection decision. 

Notwithstanding some concern about relying on Dutch Harbor, we will not dismiss 

proposals involving Dutch Harbor, either as an intermediate stop or as a connecting hub, 

that provides reasonable access to the national air transportation system.

However, we would not dismiss any proposal out of hand without first consulting with 

community officials. We encourage any proposal that would simultaneously satisfy the 

community’s needs and minimize taxpayer expenditures. 

In order to assist carriers in making their passenger and revenue forecasts, we have 

included historical passenger, mail, and freight data in Appendix B. We note that Adak is 

a reasonably strong traffic generator for the EAS program in Alaska, although its level of 

subsidy is far above the average in Alaska. 

New Filing Procedures

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.

 6 As shown in Appendix B, outbound traffic, Anchorage to Adak, has historically exceeded inbound traffic, 

Adak to Anchorage, because of the directional imbalance of mail and freight. 

7 If carriers wish, they can request longer contract than the typical two-year period.

8 We note that Adak at one time received subsidized service at the same time from two different carriers, 

Evergreen and PenAir. Evergreen, an all-cargo carrier, provided the bulk of the cargo lift, while PenAir 

provided service the passenger service. While this is highly unusual, we would not reject any proposal out 

of hand without first seeking community input.
-5-

Other Carrier Requirements

The Department is responsible for implementing various Federal statutes governing 

lobbying activities, drug-free workplaces and nondiscrimination.9 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 and 

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. All carriers that plan to submit proposals involving subsidy should 

submit the required certifications along with their proposals. Interested carriers requiring 

more detailed information regarding these requirements, as well as copies of the 

certifications, 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.10 

Community Comments

The community and the State are welcome to submit comments on the proposals at any 

time. As noted earlier, we will provide a summary of the proposals to the civic parties 

and the State and ask them to submit their final comments approximately two weeks after 

the carrier proposals are received.

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

ACCORDINGLY;

1. The Department requests proposals from carriers interested in providing Essential Air 

Service, with subsidy if necessary, by June 26. Proposals should be emailed to 

EAS@dot.gov and be entitled “Proposals to Provide Essential Air Service at Adak, 

Docket 2000-8556.” Service should be consistent with that discussed in the body of the 

Order. Questions regarding filings may be directed to Kevin Adams at 202-366-1047;

2. This docket will remain open until further Order of the Department; and

 9 The regulations applicable to these areas are: (1) 49 CFR Part 20 – New restrictions on lobbying; 

(2) 49 CFR Part 21 – Nondiscrimination in federally-assisted programs of the Department of 

Transportation – Effectuation of title VI of the Civil Rights Act of 1964; 49 CFR Part 27 –

nondiscrimination on the basis of disability in programs and activities receiving or benefiting from Federal 

financial assistance; and 14 CFR Part 382 – Nondiscrimination on the basis of disability in air travel; and 

(3) 49 CFR Part 29 – Government-wide debarment and suspension (non-procurement) and governmentwide requirements for drug-free workplace (grants).

10 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.
-6-

3. The Department will serve a copy of this Order on the mayor and airport manager of Adak, 

Alaska, Pinnacle Airlines Corporation, Gulfstream International Airlines, Inc., Intrepid 

International, and on the carriers in our service list. 

By:

TODD M. HOMAN

Director

Office of Aviation Analysis

(SEAL)

An electronic version of this document is available 

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 339

ADK-CDB 616
Appendix B

Alaska Airlines, T-100 Report, Adak, Scheduled Service

Origin of Adak Destination of Adak O&D of Adak 

Passenger Equivalents (PEQ) Passenger Equivalents (PEQ) Passenger Equivalents (PEQ)

Year Month Pax. Frt Mail Total Pax. Frt Mail Total Pax. Frt Mail Total

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 2.9 233.4 145 123.7 92.3 361.0 280 219.2 95.2 594.4

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 14.0 302.4 200 190.6 48.9 439.5 428 251.1 62.9 741.9

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 6.7 217.2 163 108.5 99.9 371.4 371 111.0 106.6 588.6

YE 3/31/2010 1,979 460.8 88.9 2,528.7 1,839 1,687.3 1,112.4 4,638.7 3,818 2,148.1 1,201.4 7,167.4

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

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

YE 3/31/2011 1,927 884.1 81.6 2,892.7 1,804 1,380.0 898.2 4,082.2 3,731 2,264.0 979.8 6,974.9

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 8 232 15.1 4.4 251.5 187 135.9 129.9 452.8 419 151.0 134.3 704.3

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

2011 11 180 16.7 2.9 199.6 157 94.6 80.5 332.2 337 111.4 83.4 531.8

2011 12 183 21.9 4.2 209.1 174 77.4 51.7 303.1 357 99.3 55.9 512.2

2012 1 131 52.1 5.1 188.2 129 144.2 72.0 345.2 260 196.4 77.1 533.4

2012 2 101 62.2 3.7 166.9 266 119.6 50.7 436.3 367 181.8 54.4 603.2

2012 3 187 237.5 5.3 429.7 181 148.7 70.4 400.1 368 386.1 75.7 829.8

YE 3/31/2011 1,969 1,047.5 66.8 3,083.3 2,137 1,657.5 802.0 4,596.5 4,106 2,705.0 868.8 7,679.7

For payload purposes, 200 lbs. of mail or freight is one passenger equivalent, PEQ.
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 cancellations, 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 period 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 be 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 for 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 national air transportation system 

provided to the communities.

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 such 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 incorporate 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 carrier 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