Order: 2014

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- 16

Served: September 24 , 2014



### U NITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 24 th day of September , 2014

ORDER RE SELECTING CARRIER Summary By this Order, the Department reselects Grant Aviation, Inc. (Grant) to provide Essential Air Service (EAS) at Akutan, Alaska, for a new contract period from October 1, 2014

, through September 30, 2016, at an annual subsidy rate of $831,115

. (See Appendix A for a map.)

Background By Order 2012

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- 15, November 16, 2012, the Department selected Grant to provide EAS at

Akutan for an initial annual subsidy rate of $724,025 for the first six months of service, and $579,220 annually for the remainder of the contract term ( through September 30, 2014). Under that contract, Akutan receives 12 nonstop round trips per week to Dutch H arbor with 9

- seat Piper

PA

- 31 Navajo aircraft. Grant began service to the community on November 28, 2012.

In anticipation of the end of the current contract period, w e issued Order 2014

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- 3 on

June 6, 2014, requesting proposals from carriers interested in providing EAS at Akutan for a new contract period. In response to our request we received only one proposal, from Grant, the

incumbent carrier.

The carrier ’ s complete proposal and community comments can be accessed online at www.regulations.gov by entering “DOT

- OST

- 2000

- 7068” in the search box. Therefore, we will only briefly summarize the proposals and comments below.

Unique Situation at Akutan

EAS at Akut an had traditionally been provided via the Akutan S eaplane B ase. For years , that service was operated by Peninsula Airways, Inc. (PenAir) using a Grumman Goose aircraft, which was particularly suited to land on waters that are typical for the Aleutians that were too rough for other seaplanes to land on. However, the aircraft was very old with no suitable replacement , and, thus, its retirement was forthcoming. 1

1 PenAir retired the aircraft in November 2012. Essential Air Service at

AKUTAN, ALASKA

Under 49 U.S.C. §41731 et seq

. DOT

- OST

- 2000

- 7068- 2

-

In September 2012, the Alaska Department of Transportation and Public Facilities commissione d a new airport (7AK) with a paved 4,500 foot runway, on Akun Island, about 7 miles from

Akutan. Prior to the last EAS carrier

- selection case, both the State and community indicated that they would prefer service to the new airport rather than the seaplan e base at Akutan. Under the current EAS contract, Grant provides service between Dutch Harbor and 7AK. Initially, the Aleutians East Borough subsidized a hovercraft operation to transport passengers, cargo, and

mail between 7AK and Akutan. This service proved to be financially unsustainable. Currently, the community has contracted with a helicopter service to provide a link between 7AK and

Akutan. While helicopter service has proven more reliable, it still presents a significant financial

burden for th e community. Under either scenario, passengers are required to buy a separate ticket, in addition to the EAS service, for passage between 7AK and Akutan.

Proposal of Grant

Grant’s proposal contained one service option, to continue provid ing twelve (12) weekly nonstop roundtrips between 7AK and Dutch Harbor. Grant will utilize either Beech Kingair 200 or Piper

PA

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- 350 aircraft. Both aircraft have nine passenger seats and are equipped with twin

- engines. In order to provide this service, G rant requires an annual subsidy of $831,115. The proposal made no provision to transport persons or cargo from 7AK over to Akutan.

Community Comments On July 15, 2014, we solicited comments from the community of Akutan regarding the air

carrier selection case. On August 13, 2014, we received comments from the Aleutians East Borough and the City of Akutan . The Borough indicated that it supports Grant’s proposal, but would like to see a different flight schedule adopted by the carrier. The City similarly supported Grant’s proposal but also would like to see an adjustment to their flight schedule.

Decision The decision in this case is straightforward. Grant was the only applicant, it has been providing

reliable servic e at Akutan, and it has receive d the support of the community. We note, however,

that while we find Grant’s service level and subsidy request to be reasonable , its subsidy requirement has increased significantly since the last carrier

- selection case . We note that the community request ed that Grant modify its flight schedule from what it has historically operated. While we guarantee a minimum service level (in this case, twelve weekly roundtrips), we do not prescribe a specific schedule that the carrier must operate. However, we encou rage Grant and the community to work together in order to develop a mutually agreeable schedule w hich satisfies the communities needs and the commercial and operational requirements of the carrier.

Carrier Fitness

49 U.S.C. §§ 41737(b) and 41738 require that DOT find an air carrier fit, willing, and able to provide reliable service before DOT may subsidize it to provide Essential Air Service. Grant is subject to the Department’s continuing fitness requirements, and no information has come to our

attentio n that would cause us to question the carrier’s fitness at this time. DOT has contacted the Federal Aviation Administration, and it has raised no concerns that would negatively affect our fitness findings. DOT therefore concludes that the carrier remains fit to conduct the operations proposed here.

This O rder is issued under authority delegated in 49 CFR Part 1.25a(b).- 3

-

ACCORDINGLY

, 1. We reselect Grant Aviation, Inc., to provide Essential Air Service at Akutan , Alaska, as described in Appendix C;

2. We direct Grant Aviation, Inc., to retain all books, records, and other source and summary documentation to support claims for payment, and to preserve and maintain such documentation in a manner that readily permits its audit and examination by repres entatives of the Department. Such documentation shall be retained for seven years from the date of service of this Order, or until the Department indicates that the records may be destroyed, whichever comes first. Copies of flight logs for aircraft sold or disposed of must be retained. The carrier may forfeit its compensation for any claim that is not supported under the terms of this Order;

3. We find that Grant Aviation, Inc., continues to be fit, willing and able to operate as

certificated air carrie r and capable of providing reliable Essential Air Service at Akutan , Alaska;

4. This docket will remain open until further order of the Department; and

5. We will serve copies of this Order on the Aleutians East Borough, the City of Atka, the

Division of Statewide Aviation of the Alaska Department of Transportation and Public Facilities,

and Grant Aviation, Inc.

By:

SUSAN L. KURLAND Assistant Secretary for Aviation

and International Affairs

(SEAL)

An electronic version of this document is available at http://www.regulations.govAPPENDIX A Page 1 of 2

AREA MAPAPPENDIX A Page 2 of 2APPENDIX BAPPENDIX C 

### Grant Aviation , Inc., Essential Air Service to be Provided to

Akutan , Alaska, Docket: OST

- 2000

- 7068

Effective Period : October 1, 2014, through September 30, 2016

Scheduled Service : Twelve weekly nonstop roundtrips to Dutch Harbor (7AK to DUT)

Aircraft : Twin

- engine, nine

- passenger Beech Kingair B

- 200 or Piper PA

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- 350 Annual Subsidy: 2 $831,115 Annual Flights: 3 1,248 Rate per flight: 4 $666 Weekly Ceiling: 5 $15,984

Note: 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 cancellatio ns, 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 ensure d 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 o f 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 a ir transportation system provided to the community.

If the Department unilaterally, either partially or complete, 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 r eference, 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 may not be available for performance under this Order beyond September 30, 2014. The Government’s obligation for performance under this Order beyond September 30, 2014, is subject to the availability of 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 September 30, 2014, until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond September 30, 2014, the Department will provide notice in writing to the carrier.

All claims for payment, including any amended claims, must be submitted within 90 days of the last day of the month for which compensation is being claimed. For example, claims for serv ice provided in July must be filed by October 31 st ; August claims must be submitted by November 30 th , and so on.

2 See Appendix B.

3 12 roundtrips per week x 2 directions x 52 weeks = 1,248

4 Annual subsidy divided by annual flights.

5 Rate per flight x weekly flights.