Order: 2012

- 7

- 28

Serve d: July 25 , 2012



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 25 th day of July

, 20 1 2

Essential Air Serv ice at

GULKANA, ALASKA

MAY CREEK, ALASKA

MCCARTHY, ALASKA DOCKET DOT

- OST

- 1995

- 492

under 49 U.S.C. § 41731 et seq.



### ORDER REQUESTING PROPOSALS

Summary

By this O rder, the Department is requesting proposals from ca rriers interested in providing

E ssential A ir S ervice (EAS) at Gulkana

, May Creek, and McCarthy, Alaska

, for a new

contract p eriod beginning February 1, 201 3

, with or without subsidy

. Proposals are due no

later than August 28

, 201 2

. (See Appendix A for a map.)

Background

By Order 20 1 0

- 12

- 8 (December 6, 2010), the Department selected Ellis Air T axi, Inc.

d/b/a Copp er Valley Air Service (Copper V alley ), to continue providing EAS at Gulkana,

May Creek, and McCarthy, Alaska, for the two

- year period ending January 31, 201 3

, for a

combined annual subsidy rate of $4 38

, 912

. Gulkana currently receives two nonstop round

trips per week to Anchorage with six

- seat Piper PA

- 31 aircraft; May Creek and McCarthy

both receive two nonstop or one

- stop round trips per week to Gulkana using three

- seat

Cess na 185 aircraft during winter months and four

- seat Cessna 206 aircraft during summer

months.- 2

-

Request for Proposals

As the end of the current rate term approaches, we are here requesting proposals from

carriers interested in providing EAS at Gulkana, Ma y Creek, and McCarthy, Alaska with or

without subsidy, for a new contract period beginning February 1, 2013. Carriers should

file their proposals no later than August 28 , 2012. Staff will then docket the proposals,

thereby making them public, and direct each carrier to serve a copy of its proposal on the

civic parties and other applicants. Shortly afterwards, we will provide a summary of the

proposals to the communities and ask them t o submit their final comments. We will give

full consideration to all proposals that are timely filed. 1

Interested carriers should prepare their proposals with every expectation that their initial

proposals will represent their final and only proposals. However, we retain the discretion

to negotiate proposals with carrier s when we deem it desirable. We also retain the

discretion to reject outright all unreasonable or unrealistic proposals and re

- solicit a new

round of proposals. However, negotiation and rejection are only occasional exceptions to

the rule.

We are here p roviding 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 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 pro jected block

hours, revenues and expenses. We strongly encourage clear, well

- documented proposals

that will facilitate their evaluation by the affected communities and the Department. 2

With specific respect to the se communities, carriers should provide sufficient capacity to

accommodate historical leve ls of traffic. For Gulkana

, we are re questing proposals for two

nonstop round trips to Anchorage each week with aircraft having a capacity of four to six

seats

. At May Creek and McCarthy , we expect propos als consis ting of two round trips

each week over a Gulkana

- McCarthy

- May Creek

- Gul kana routing with aircraft having a

capacity of at least three seats during the six

- month winter season, and four seats during

1 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 reliably provided witho ut 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.

2 In selecting a carrier to provide subsidized EAS in Alaska , 49 U.S.C. § 41733(c )(1) directs us to consider

five factors: (1) scheduled service reliability; (2) contractual and marketing arrangements with a larger carrier

to ensure service beyond the hub; (3) interline arrangements that the applicant has made with a larger carrier

at the hub; (4) co mmunity views, giving substantial weight to the views of the elected o fficials representing

the users; and (5) the experience of the applicant in providing, i n Alaska, scheduled air service. In addition,

the Consolidated and Further Continuing Appropriati ons Act, 2012, Public Law 112

- 55 , provides that when

selecting a carrier to provide EAS, the Department may consider the relative subsidy requirements of the

carriers , thus codifying a factor that we have considered since the inception of the program. Int erested

carriers should also be aware that our general provisions governing EAS wil l be included in the selection

O rder as part of our authorization of subsidy for the selecte d service. Appendix C of this O rder contains

those general provisions.- 3

-

the six

- month summer season. Such service is co nsistent with what the communities

currently rece ive, and fully satisfies their EAS requirements. 3 As always, we will formally

solicit the communities’ views on any service options we receive before making a long

term carrier se lection decision. The comm unities and air carriers are encouraged to work

together in advance of the due date for proposals to craft a service pattern that is desirable

to the community and meets the operational needs of the airline interested in submitting a

proposal.

We e ncourag e proposals that meet the se 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 those requirements if they envision other, potentially more attractive se rvice

possibilities (e.g. different hubs or length of contract) with subsidy requirements that

remain competitive.

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

www.regulations.gov

, each page should be formatted to be viewed online and for easy

printing

.

Historical Traffic

In order to assist prospective applicants in making tra ffic and rev enue forecasts, we have

included historical traffic data for each community in Appendix B

. From 2008 t hrough

2011, Gulka na averaged 315 O&D passengers and 35,511 pounds of freight and mail per

year ; May Creek averaged 35 O&D passengers and 4,5 57 pounds of freight and mail ; and

McCarthy averaged 111 O&D passengers and 32,324 pounds of freight and mail. 4

Other Carrier Requirements

The Department is responsible for implementing various Federal statutes governing

lobbying activities, drug

- free wo rkplaces, and nondiscrimination. 5 Consequently, all

carriers receiving Federal subsidy for EAS must certify that they are in compliance with

Department regulations regarding drug

- free workplaces and nondiscrimination, and those

carriers whose subsidies ex ceed $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 subsidy to carriers that do not submit these

3 Carrier s are free to set their peak

- period service at different periods based on the peak traffic demand as

shown in Appendix B.

4 Carriers should refer to Appendix B for more detail. All three communities have varying traffic profiles

with significant peaks and directionality

. 5 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 t ravel; and (3) 49 CFR Part 29

--

Government

- wide debarment and suspension (non

- procurement) and government

- wide requirements for

drug

- free workplace (grants).- 4

-

documents, all car riers that plan to submit proposals involving subsidy should be aware

that the selected carrier will be required to complete the required certifications. Interested

carriers requiring more detailed information regarding these requirements should contact

t he Office of Aviation Analysis at (202) 366

- 5903. 6

Community and State Comments

The communit ies and the state are welcome to submit comments at any time. We

encourage prospective applicants to contact the communit ies before they submit their

proposals in order t o tailor them to the communities’ needs. As noted earlier, we will

provide a copy of the proposals to the civic parties and ask them to submit their final

comments shortly after August 28, 2012, the deadline for filing carrier proposals.

This ord er is issued under authority delegated in 49 CFR Part 1.56a(f) a n d re

- delegated to

the Director, Office of Aviation Analysis.

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

.- 5

-

ACCORDINGLY,

1. We request that ca rriers interested in providing WAS at Gulkana

, May Creek, and

McCarthy, Alaska , submit thei r proposals, with or without subsidy requests, no later than

August 28

, 201 2 . The proposals should be e

- mailed to EAS@dot.gov , with the title:

“Proposal to Provide Essential Air Service at Gulkana

, May Creek, and McCarthy , Alaska,

Docket DOT

- OST

- 1995

- 492”; 7

2. Th is docket will remain open until further o rder of the Department; and

3

. We will serve copies of this O rder on the communities of Gulkana, May Creek, and

McCarthy, Alaska, the State of Alaska Department of Tra nsportation and the service list

for this docket

.

Persons entitled to petition the Department for review of this O rder under the Department’s

Regulations, 14 CFR Part 385.50, must file such petitions within ten (10) days after the

date of service of this order.

This O rder 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 ava ilable on th e World Wide Web at

http://www.regulations.gov

7 Questions regarding filings in response to this Order may be directed to A.J. Muldoon at (202) 366

- 1058 or

albert.muldoon@dot.gov

.Appendix AA ppendix B

Page 1 of 3



### Gulkana

Origin Destination Total

Pax Freight (lbs.) Mail (lbs.) Pax Freight (lbs.) Mail (lbs.) Pax Freight (lbs.) Mail (lbs.)

2008

1 Q 51 303 6,342 47 451 732 98 754 7,074

2Q 48 1,152 9,560 39 333 823 87 1,485 10,383

3Q 87 828 8,346 68 351 1,462 155 1,179 9,808

4Q 18 283 5,598 14 6 1,021 32 289 6,619

2008 Total 204 2,566 29,846 168 1,141 4,038 372 3,707 33,884

2009

1Q 30 402 4,991 30 57 729 60 459 5,720

2Q 38 653 9,993 36 26 1,099 74 679 11,092

3Q 96 6,515 6,860 90 6,551 1,944 186 13,066 8,804

4Q 23 40 4,282 19 25 760 42 65 5,042

2009 Total 187 7,610 26,126 175 6,659 4,532 362 14,269 30,658

2010

1Q 16 112 4,392 13

- 335 29 112 4,727

2Q 49 1,428 6,870 36 775 683 85 2,203 7,553

3Q 68 1,276 5,806 66 940 2,120 134 2,216 7,926

4Q 8 280 4,385 10 351 562 18 631 4,947

2010 Total 141 3,096 21,453 125 2,066 3,700 266 5,162 25,153

2 011

1Q 12 330 4,421 8 110 507 20 440 4,928

2Q 22 853 4,252 26 1,073 838 48 1,926 5,090

3Q 91 727 7,421 80 110 1,163 171 837 8,584

4Q 11 375 6,233 8 370 425 19 745 6,658

2011 Total 136 2,285 22,327 122 1,663 2,933 258 3,948 25,260A ppendix B

Page 2 of 3



### May Cre ek

Origin Destination Total

Pax Freight (lbs.) Mail (lbs.) Pax Freight (lbs.) Mail (lbs.) Pax Freight (lbs.) Mail (lbs.)

2008

1Q 1

- 161 1

- 1,324 2

- 1,485

2Q 22

- 55 21 446 4,580 43 446 4,635

3Q 3

- 21 6

- 161 9

- 182

4Q 2

- 53 2

- 795 4

- 848

2008 Total 28

- 290 30 446 6,860 58 446 7,150

2009

1Q

- - 67

- 12 1,411

- 12 1,478

2Q 3

- 103 1

- 80 4

- 183

3Q 14 145 34 12 152 213 26 297 247

4Q 1

- 45 1

- 351 2

- 396

2009 Total 18 145 249 14 164 2,055 32 309 2,304

2010

1Q 1

- 43 1

- 1,754 2

- 1,797

2Q

- - 50 10

- 50 10

- 100

3Q 4

- 40 3

- 116 7

- 156

4Q 3 10 54 1 10 1,189 4 20 1,243

2010 Total 8 10 187 15 10 3,109 23 20 3,296

2011

1Q 1 30 72 1

- 1,493 2 30 1,565

2Q 3 275 30 4 302 91 7 577 121

3Q 7 15 32 5 47 160 12 62 192

4Q 4

- 39 2 87 2,029 6 87 2,068

2011 Total 15 320 173 12 436 3,773 27 756 3,946A ppendix B

Page 3 of 3



### McCarthy

Origin Destination Total

Pax Freight (lbs.) Mail (lbs.) Pax Freight (lbs.) Mail (lbs.) Pax Freight (lbs.) Mail (lbs.)

2008

1Q 4 300 571 3 188 5,018 7 488 5,589

2Q 7 214 768 10 1,059 9,314 17 1,273 10,082

3Q 30 110 1,441 33 784 8,185 63 894 9,626

4Q 7

- 968 4 263 4,803 11 263 5,771

2008 Total 48 624 3,748 50 2,294 27,320 98 2,918 31, 068

2009

1Q 2 10 662 3 355 3,580 5 365 4,242

2Q 15 167 996 15 759 9,913 30 926 10,909

3Q 45 622 1,925 36 16,201 6,629 81 16,823 8,554

4Q 3

- 715 4 40 3,931 7 40 4,646

2009 Total 65 799 4,298 58 17,355 24,053 123 18,154 28,351

2010

1Q 8

- 292 7 105 2,638 15 105 2,930

2Q 13 35 633 25 1,163 6,807 38 1,198 7,440

3Q 28 445 2,080 28 816 5,690 56 1,261 7,770

4Q 5 310 508 7 218 3,196 12 528 3,704

2010 Total 54 790 3,513 67 2,302 18,331 121 3,092 21,844

2011

1Q 3 40 435 7 268 2,928 10 308 3,363

2Q 9 40 808 3 545 4,161 12 585 4,969

3Q 36

- 1,131 39 655 7,261 75 655 8,392

4 Q 2 170 386 4 317 4,721 6 487 5,107

2011 Total 50 250 2,760 53 1,785 19,071 103 2,035 21,831Appendix 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 stip ulations 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

co nstitutes 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 doe s 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 re placement

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 fligh t 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 community.

If the Department unilaterally, either part ially 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 wri ting by the Department and carrier do not

constitute a total or partial reduction or cessation of payment.

Funds are not currently available for performance under this solicitation beyond [DATE] . The

Department’s obligation for performance under this sol icitation 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 Department for any payment may arise for performance under this

order beyond [DATE] , unti l 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.

Subsidy contracts are subject to, and incorporate by reference, rel evant 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.

All claims for payment must be submitted within 6 0 days of the last day of service provided under

this order.