UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 15th day of September, 2011

Essential Air Service at

CENTRAL, ALASKA

CIRCLE, ALASKA

DOCKET DOT-OST-1998-3621

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

ORDER RE-SELECTING CARRIER

Summary

By this order, the Department is re-selecting Warbelow’s Air Ventures, Inc. (Warbelow’s), to 

provide essential air service (EAS) at Central and Circle, Alaska, for a combined annual subsidy

of $275,598 ($137,799 for each community). Warbelow’s will provide five weekly round trips 

over a Fairbanks-Central-Circle-Fairbanks routing from December 1, 2011, through 

November 30, 2013.1 Warbelow’s will use 8-seat Piper PA31-350 aircraft but will gradually 

phase in 9-seat Cessna 208B aircraft as the carrier retires the PA31-350.

Background

By Order 2009-9-17, September 25, 2009, the Department selected Warbelow’s to provide EAS 

at Central and Circle for the contract period from December 1, 2009, through 

November 30, 2011, for an annual subsidy of $203,360 ($101,680 for each community) for five

weekly round trips over a Fairbanks-Central-Circle-Fairbanks routing using 8-seat Piper Navajo 

aircraft.

As the end of the contract was approaching, we issued Order 2011-5-14, May 17, 2011,

requesting proposals from carriers interested in providing EAS at the communities, for a term

 

1

Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds.

 Order: 2011-9-11

 Served: September 15, 2011
- 2 -

beginning December 1, 2011. In response to that order, we received a proposal from only the 

incumbent carrier, Warbelow’s.

The carrier’s complete proposal and community comments may be accessed online at 

http://www.regulations.gov/ by entering Docket number DOT-OST-1998-3621 in the search 

block, so we will only briefly summarize the proposal below. 

Proposal of Warbelow’s

Warbelow’s proposed two options at Central and Circle. The first option is status-quo service of 

five weekly round trips five days a week over a Fairbanks-Central-Circle-Fairbanks routing for

an annual subsidy of $275,598, using either 8-seat Piper PA31-350 aircraft or 9-seat Cessna 

208B aircraft. 

The second option will provide five weekly round trips over a four-day period for an annual 

subsidy of $335,991. For three days a week Warbelow’s would provide one round trip each of 

the three days over a Fairbanks-Central-Circle-Fairbanks routing, and one day a week it would 

provide two round trips over a Fairbanks-Fort Yukon-Central-Circle-Fort Yukon-Fairbanks 

routing.

Community Comments

The Department solicited comments from the community leaders of Central and Circle, as well 

as the Alaska Department of Transportation. On August 4, Stephen D. Hatter, Deputy 

Commissioner – Aviation with the Alaska DOT, expressed support for the continuation of EAS 

in Alaska. No comments were received by officials from either Central or Circle.

Decision

Warbelow’s was the only carrier to submit a proposal to provide EAS at Central and Circle. 

Warbelow’s has served Central and Circle reliably for a number of years and it is an established 

EAS carrier. As between Warbelow’s Option 1 or Option 2, the Department is unable to select 

the carrier’s second option. The only difference in service between the two options is that 

Option 2 would serve Fort Yukon – the frequencies and aircraft type would be the same. 

Because Option 2 requires more subsidy than Option 1, we would effectively be subsidizing 

service at Fort Yukon, which already receives its EAS on a subsidy-free basis. The Department 

is prohibited from subsidizing service at a community already receiving subsidy-free EAS. We 

find the subsidy and service levels proposed by Warbelow’s Option 1 to be reasonable. 

We shall make this selection of Warbelow’s at Central and Circle contingent upon the 

Department’s receiving properly executed certifications from the carrier that it is in compliance 

with the Department’s regulations regarding drug-free workplaces and nondiscrimination, as 

well as the regulations concerning lobbying activities.

Carrier Fitness

49 U.S.C. 41737(b) and 41738 require that we find an air carrier fit, willing, and able to provide 

reliable service before we may subsidize it to provide essential air service. Warbelow’s is

subject to the Department’s continuing fitness requirements, and no information has come to our 

attention that would cause us to question the carrier's fitness at this time. We have contacted the 

Federal Aviation Administration, and it has raised no concerns that would negatively affect our 
- 3 -

fitness findings. We therefore conclude that the carrier is reliable and remains fit to conduct the 

operations proposed here.

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

ACCORDINGLY,

1. We select Warbelow’s Air Ventures, Inc. to provide essential air service at Central and Circle,

Alaska, and establish a combined annual subsidy rate of $275,598, as described in Appendix C; 

2. We direct Warbelow’s Air Ventures, 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 representatives of 

the Department. Such documentation shall be retained for seven years 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 Warbelows’s Air Service, continues to be fit, willing and able to operate as a

certificated carrier, and capable of providing reliable essential air service at Central and Circle;

4. This docket will remain open pending further Department action; and

5. We will serve copies of this order on the Alaska Department of Transportation, the 

community leaders of Central and Circle, and Warbelow’s Air Ventures, 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.gov
 

AREA MAP

Appendix A
Appendix B

Page 1 of 2

Direct Expense 1Q 2009 2Q 2009 3Q 2009 4Q 2009

Pilot/Co-pilot 259225 242598 253560 256248

Fuel/Oil 274526 420740 499485 390165

Other 40066 37638 37638 37638

Maintenance 436700 610021 588454 929451

Deprec/Rental 38388 44688 47913 42678

Total Direct Exp 1048905 1355685 1427050 1656180

Hours Flown 2607 3042 3240 2731

Cost per hour 402 446 440 606

Indirect Expense 1Q 2009 2Q 2009 3Q 2009 4Q 2009

Traffic Related 82549 93015 234775 125617

Departure 

Related 195907 194421 204000 236797

Capacity Related 155395 170168 187232 249826

Total Indirect Exp 433851 457604 626007 612240

Hours Flown 3229 4159 4358 3983

Cost per hour 134 110 144 154

Direct Expense 1Q 2010 2Q 2010 3Q 2010 4Q 2010

Adjusted 

Average 

Per Hour

Historica

l Data

Pilot/Co-pilot 248675 281741 277451 278865 89.95

Fuel/Oil 354299 461998 512658 456643 199.72 144.49

Other 36509 34250 34250 34250 12.53

Maintenance 409055 421867 552077 810947 203.99

Deprec/Rental 37566 40965 43905 39969 47.00 14.41

Total Direct Exp 1086104 1240821 1420341 1620674 553.20

Hours Flown 2663 2869 3176 2999 23327.00

Cost per hour 408 432 447 540

Indirect Expense 1Q 2010 2Q 2010 3Q 2010 4Q 2010

Average 

Per Hour

Traffic Related 103626 120459 205180 195498 34.07

Departure 

Related 196964 203518 224325 222681 52.84

Capacity Related 171552 172953 188208 126546 48.49

Total Indirect Exp 472142 496930 617713 544725

129.75

Hours Flown 3798 4300 4861 4153 15729

Cost per hour 124 116 127 131 129.98
Appendix B

Page 2 of 2

Revenue Data 2009 - 2010

Passenger Revenue Pax Fare Totals

Central 40 97.00 3,880.00

Circle 877 99.00 86,823.00

Passenger Total 90,703.00

Cargo Revenue Pounds Rate

Central 8600 0.45 3,870.00

Circle 17000 0.51 8,670.00

Cargo Total 12,540.00

Mail Revenue Pounds Rate

Central 72400 1/ 67,797.44

Circle 54600 1/ 59,321.65

Mail Total 127,119.09

Total Revenue $230,362.09

1/ Mail Revenue:

Central: (72400/2000) x 104 miles = 3765 ton miles

Circle: (54600/2000) x 131 miles = 3576 ton miles

Central: Weight Rate

Terminal charge 72400 0.35808 25924.99

Ton-mile mileage charge 3765 11.1215 41872.45

67797.44

Circle: Weight Rate

Terminal charge 54600 0.35808 19551.17

Ton-mile mileage charge 3576 11.1215 39770.48

59321.65

Subsidy Calculation 2011 - 2013

Total Direct Expense $575,328

Total Indirect Expense $135,179

===========

Total Operating Cost $710,507

Profit Element @ 10% of TOC $71,051

===========

Total Economic Cost $781,558

Total Revenue $230,362

Subsidy need at 100% Completion 2 yr subsidy $551,196

1 yr subsidy $275,598
 Appendix C

Warbelow’s Air Ventures, Inc.

Essential Air Service to be Provided at Central and Circle, Alaska

Effective Period: December 1, 2011, through November 30, 2013

Scheduled Service: Five weekly round trips over a Fairbanks-Central-Circle-Fairbanks routing

Aircraft: 8-seat Piper PA31-350 or 9-seat Cessna 208B

Rate per Eligible Flight: $265;

1

Weekly Ceiling: $2,650

2

for each community

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 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 community.

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 the 

carrier do not constitute a total or partial reduction or cessation of payment.

Funds are not currently available for performance under this order beyond September 30, 2011. The Department’s 

obligation for performance under this order beyond September 30, 2011, is subject to 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 September 30, 2011, until funds are made available to 

the Department for performance. If funds are not made available for performance beyond September 30, 2011, the 

Department will provide notice in writing to the carrier.

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.

All claims for payment must be submitted within 60 days of the last day of service provided under this order.

 

1 Annual compensation of $275,598 divided by 1,040 annual departures (10 weekly departures x 2 communities x 52 

weeks x 100 percent completion).

2

10 arrivals and departures per week multiplied by $265 per flight.