Order 2011

- 3

- 31 Served: March 25, 2011



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION


### OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 25 th of March, 2011

Essential Air Service at

AKUTAN , ALASKA

Under 49 U.S.C. 41731 et seq

. DOCKET OST

- 200 0

- 7068

ORDER RESELECTING CARRIER Summary By this order

, the Department is reselecting Peninsula Airways, Inc

. , (PenAir) to provide

essential air service (EAS) at Akutan

, Alaska , at annual subsidy rate of $7 10,157 , from May 1,

2011 , through April 30, 2013

. 1

Background

Order 200 9

- 5

- 4 selected PenAir to provide service with 9

- seat Grumman Goose aircraft at an annual subsidy of $ 654,964 from May 1 , 200 9 , through April 30 , 2011 . Under th at contract

, Akutan receive s e leven nonstop round trip s per week year round to Dutch Harbor

. In anticipation of the end of the current contract, by Order 2010

- 11

- 3 we requested proposals for replacement service. We received a proposal from only one carrier, PenAir

, and requested

comm ents from the communit ies and state

. W e received comment s from the state , and the issue is ripe for decision.

Pen Air proposes to continue the current level of service, from May 1, 2011, through April 30, 2013 and requests $710,157 annual subsidy. 2 All of the service would continue to be operated

with Grumman Goose aircraft

.

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

2 The carrier initially requested $874,887 the first year and $918,631 the second year for this service.- 2

-

Community Comments

The communit y and state continue to support the EAS provided by PenAir , and the state

indicates that :

“Due to the isolated location of these communities [such as Akutan] and the complete lack of any road

- system connection, this subsidized air service is their only form of scheduled transportation. The communities of Akutan depend on scheduled air freight, passenger, and mail service for basic necessities, routi ne medical and health services,
and economic welfare.”

Decision

PenAir is the only carrier to submit a proposal, it submitted only one option, and w e have

decided to select it for the two

- year period it proposed

, May 1, 2011, through April 30 , 201 3

. We find that t he carrier’s proposed service and subsidy level s are reasonable

, and we are not aware of any reason why we should not re

- select the carrier to provide the proposed level of

service.

The Department shall make this selection contingent upon ou r receiving properly executed certifications from the carrier that it is in compliance with the regulations regarding drug

- free workplaces and nondiscrimination, as well as the regulations governing lobbying activities.

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. Pen Air 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. DOT has contacted the Federal Aviation Administration, and it has raised no concerns that would negatively affect our fitness finding s . DOT therefore concludes that the carrier remain s fit to conduct the operations proposed

here.

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

ACCORDINGLY,

1. We re select Peninsula Airways, Inc

. , to provide essential air service at Akutan

, Alaska , as described i n Appendix C ;

2 . We direct Peninsula Airways, 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 exa mination 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

-

3 . We find that Peninsula Airways, Inc

. , continue s to be fit, willing and able to operate as a certificated carrier and capable of pro viding reliable essential air service at Akutan

, Alaska ;

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

5 . We will serve copies of this order on the Office of Statewide Aviation of the Alaska Department of Transportation and Public Facilities, and Peninsula Airways, Inc

.

By:

Susan L. Kurland Assistant Secretary for

Aviation and International Affairs (SEAL)

An electronic version of this document is available on the World Wide Web at http://www.regulations.govAppendix A

Nonstop, Great Circle Miles Akutan (KQA) to Dutch Harbor (DUT) 35 Akutan to Nikolski (IKO) 151 Dutch Harbor to Anchorage (ANC) 792 Akutan to Anchorage 759 Akutan to Atka (AKB) 374

Th is map is provided by Planet Profitability Forecasting System and is being used with express permission of the copyright holder, Sabre Airline Solutions®.Appendix C

Peninsula Airways, Inc ., Essential Air Serv ice to be Provided to

Akutan

, Alaska , Docket OST

- 200 0

- 7068

Effective Period : May 1, 2011 , through April 30 , 201 3

. Scheduled Service : 11 nonstop round trip s per week to Dutch Harbor

. Aircraft : 9

- seat Grumman Goose Rate per Eligible Flight: $ 621 1
Weekly C eiling : $ 13,662 2

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 fl ight 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 this rate, it must first notify the Office of Aviation Analysis in

wr iting 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 goal s 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 complete ly , terminates or reduces payments for service or changes service requiremen ts 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 loc ation 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 cessatio n of payment.

Subsidy contract 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 contr overt the foregoing paragraph.

Funds are not currently available for performance under this order beyond April 8 , 2011 . The Government’s obligation for performance under this order beyond April 8 , 2011 , is subject to the availability of appropriated fund s 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 April 8 , 2011 , until funds are made available to the Department for performance. If funds ar e not made available for performance beyond April 8 , 2011 , the Department will provide notice in writing to the carrier.

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

1 $7 10

, 157 annual subsidy ÷ divided by 1,144 annual fl ights, calculated as follows: 11 round trips * 2 directions * 52 weeks

. 2 22 flights x $ 621 = $ 13,662.