### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.
Issued b y the Department of Transportation on the 17 th day

of August , 20 10
Essential Air Service at EXCURSION INLET, ALASKA KAKE, ALASKA Docket DOT - OST - 200 2 - 12014 Docket DOT - OST - 2008 - 0217 under 49 U.S.C. 41731 et seq.



### ORDER SELECTING CARRIER S Summary By this order, the Department is selecting Alaska Juneau Aeronautics, Inc. , d/b/a Wings of Alaska, Inc. (Wings), to provide essential air service (EAS) at Excursion Inlet , Alaska , for an annual subsidy rate of $33,919, and Air Excursions LLC (Air Excursions) at Kake, Alaska, for a first - ye ar subsidy rate of $213,405 and a second - ye ar of $229,939 f or the two ye ar period from September 1 , 2010 to August 31, 201 2 . 1 Background By Order 2008 - 8 - 16, the Department selected Wings to provide EAS at E xcursion Inlet and Kake, at annual subsidy rates of $34,659 at Excursion Inlet and $314,302 at Kake, for the two - ye ar period ending August 31, 2010. Excursion Inlet currently receives three round trips per week to Juneau in the 1 6 - week peak season and one round trip per week in the 36 remai ning weeks of the year with 5 - seat Cessna 206/207 aircraft. Kake currentl y receives 14 round trips per week to Juneau in the 21 - week peak season and seven round trips per week in the 31 remaini ng weeks of the ye ar to Juneau usi ng 9 - seat Cessna 208 Caravans. As the end of the contact was approaching, we issued Order 2010 - 4 - 6, April 9, 1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropri ated funds. Order 2010 - 8 - 9 Served: August 17, 2010- 2 -

2010, requesting proposals to serve Excursion Inlet and Kake for a new, two - ye ar term. In response, we received proposals from Air Excursions to serve Kake and Wings to maintain status - quo service at Excursion Inlet and Kake. Each carrier’s complete proposals may be accessed online at http://www.regulations.gov/ by entering DOT - OST - 2002 - 12014 for Excursion Inlet and DOT - OST - 2008 - 0217 for Kake in the search block. Proposal of Air Excursions Air Excursions proposed to serve onl y Kake using 9 - seat Piper PA - 31 Navajo aircraft operating two round trips each day (14 a week) to Juneau during the 21 - week peak summer period and one round trip each day (7 a week) for an annual subsidy of $213,405 for the first ye ar, and $229,939 for the second year. Proposal of Wings Wings proposed one service option for Excursion Inlet and Kake. The service to Excursion Inlet would provide three weekl y nonstop round trips to Juneau during the 16 - week peak season and one weekl y nonstop round trip during the r emaining 3 6 - week offpeak season using Cessna 207 aircraft for an annual subsidy of $33,919. The service to Kake would be two daily round trips (14 a week) to Juneau during the 21 - week peak season (April - September) and one dail y round trip (7 a week) duri ng the 3 1 - week off - peak season using Cessna 208 aircraft for an annual subsidy of $438,627. In addition Wings propose d to substitute Cessna 207 airc raft on the Kake - Juneau route when weather and loads allow, which would result in a reduction of subsidy by 45 percent for each Cessna 207 flight. (During 2009, Wings oper ated approximately 53 percent of the Kake flights with the Cessna 207 aircraft.) Community Comments On May 27 , 2010 , we requested community comments regarding the carrier selection at Excurs ion Inlet and Kake . On July 29 , we received a joint letter from the City of Kake and the Organized Village of Kake (the federall y recognized tribal g overnment), stating that the consensus was to support the proposal submitted by Air Excursions. The letter noted that both Air Excursions’ and Wings’ proposals offered very similar service; however, the deciding factor was Air Excursions’ commitment to provide passenger pick - up and drop off from travelers’ homes . This difference, the letter states, is an important advantage given that ground transportation to the airport is not readily available for much of the community . We also received a letter from Marc Luiken, Deput y Commissioner of Aviation for the State of Alaska, expressing support for the EAS program at Excursion Inlet and Kake. Mr. Luiken states that both communities lack any road infrastructure and are entirel y dependent on the scheduled air service to provide basic necessities, routine medical and h ealth services. No comments were received from Excursion Inlet.- 3 -

Decision The decisions for both communities are straightforward. At Kake, the community fully supports Air Excursions and that carrier requires significantl y less subsid y than Wings. 2 At Excursion Inlet, Wings is the only applicant. We find that the service and subsidy levels of Air Excursions for Kake and Wings for E xcursion Inlet are reasonable. We shall make the s e selection s of Air Excursions and Wings contingent upon the Department receiving properly executed certifications from the carrier s that it is in compliance with the Department’s regulations regarding drug - free workplaces and nondiscrimination, as well as the regulations concerning lobb yi ng activities. Carrier Fitness 49 U.S.C. 41737(b) requires that we find an air carrier fit, willing, and able to provide reliable service before we may subsidize it to provide essential air service . Air Excursions and Wings are subj ect to the Department’s continuing fitness req uirements, and no information has come to our attention that would cause us to question either carrier's fitness at this time. We have contacted the Federal Aviation Administration, and it has raised no concerns that would negatively affect our fitness fi nding. We therefore conclude that the carrier remains fit to conduct the operations proposed here. This order is issued under authority delegated in 49 CFR 1.56a(f). AC CORDINGLY, 1. We select Alaska Juneau Aeronautics, Inc. and Air Excursions LLC , to provide essential air service at Excursion Inlet and Kake , Alaska, respectively ; 2. We set the final rate of compensation at $33,919 for Excursion Inlet and $ 213,405 for a first year subsidy

and $229,939 for a second y ear at Kake, for the provision of e ssential air service as described in Appendix C; 3. We direct both Air Excursions LL C and Alaska Juneau Aeronautics, Inc . to retain all books, records, and other source and summary documentation to support claims for pay ment, and to preserve and mai ntain such documentation in a manner that readil y permits its audit and examination by representatives of the Department. Such documentation shall be retained for seven ye ars or until the Department indicates that the records may

be destroy ed, whichever c omes first. Copies of flight logs for aircraft sold or disposed of must be retained. The carrier s may forfeit their compensation for any claim that is not supported under the terms of this order;

2 T he difference in subsidy is not as dramatic as the $213,405 vs. $438,627 that it w ould appear at first blush because Wings would sometimes use the smaller and less expensive aircraft at a lower subsidy rate. Nonetheless, the difference rema ins substantial.- 4 -

4. We f i nd that Air Excursion LLC and Alaska Juneau Aer onautics, Inc. continue to be fit, willing and able to operate as a certificated carrier s and capable of providing re liable essential air service at Excursion Inlet and Kake , respectivel y ; 5 . Docket s DOT - OST - 2008 - 0217 and DOT - OST - 2002 - 12014 will remain open pending further Department action ; and 6. We will serve cop ies of this order on the community of Excursion Inlet , the City of Kake, the Organized Village of Kake, the State of Alaska Department of Transportation, Air Excursions LLC, and Alaska Juneau Aeronautics, Inc. By :

SUSAN L. KURLAND Assistant Secretary for Aviation and International Affairs (SEAL) An electronic version of this document is ava ilable on the World W ide Web at http://www.regulations.govAppendix A 

## AREA MAP

Nonstop Miles , Great Circle Miles Excursion Inlet (EXI) to Juneau (JNU) 32 Excursion Inlet (EXI) to Kake (KAE) 115 Kake (KAE) to Juneau (JNU) 98 Kake (KAE) to Ketchikan (KTN) 234Appendix B Page 1 of 2 AIR EXCURSIONS LLC COMPUTATION OF SUBSIDY NEED OPERATIONS JNU - KAE Average Block Time 1 way 48 minutes Total Annual Block Time 817.6 hours 1 EXPENSE AND SUBSIDY NEED ITEM YEAR 1 YEAR 2 Estimated Direct Expense for PA - 31 @$480/BH $ 392,448 $ 412,070 Estimated Indirect Expense @ 68% of Directs $ 266,685 $ 280,208 Return on Investment (5% of total expense above) $ 32,657 $ 34,614 TOTAL EXPENSE AND RETURN $ 691,790 $ 726,892 COMMERCIAL REVENUE $ 478,385 $ 496,953 SUBSIDY NEED, TOTAL $ 213,405 $ 229,939 SCHEDULED DEPARTURES 1,022 1,022 SUBSIDY NEED PER PA - 31 DEPARTURE $ 208.81 $ 224.99 SUBSIDY NEED PER PA - 32 DEPARTURE $ 154 .52 $ 166.49 SUBSIDY CEILING PER WEEK
– PEAK $ 5,846.68 $ 6,299.72 SUBSIDY CEILING PER WEEK
– OFF - PEAK $ 2,923.34 $ 3,149.86

1 100% completion at with PA - 31 Navajo aircraftAppendix B Page 2 of 2Appendix C Page 1 of 2 Air Excursions LLC Essential Air Service to be Provided at Kake, Alaska Effective Period : September 1, 2010 through August 31, 2012 Scheduled Service : Two round trips each day to Juneau in the 21 - week peak and one round trip each day in the 31 - week off

- peak; Aircraft : Piper PA - 31 Navajo aircraft Rate per Eligible Flight: First y ear: $ 209; Second year: $225 1 Weekly Ceiling : First ye ar peak: $ 5,852; Off - peak, $2,926; Second year peak $6,300, Off - peak, $3,150 2 Note: The carrier understands that it may forfeit its com pensation 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. T he 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 ques tion. 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 tr affic will not be compensated. In determining whether subsidy payment for a deviating flight should be adjusted or disallow ed, 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 complete ly , terminates or reduces payments for service or changes service requirements at a specific location provided for under this order, then, at the e nd 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 w riting 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 un der this order beyond September 30, 2010 . The Department’s obligation for performance under this order beyond September 30, 2010 , 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, 2010 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30, 2010 , the D epartment will provide notice in w riting 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 $213,405 for the first year, and $229,939 for the second year, divided by the estimated annual completed departures and arrivals: Peak: 14 flights per w eek multiplied by 21 weeks; off peak: 7 flights per week multiplied by 31 weeks = 511 flights in each direction multiplied by 2 = 1,022 . 2 Peak: 14 flights multiplied by $209 for the first year, and $225 for the second year; off - peak, 14 flights multiplied by $209 for the first year, and $225 for the second year .Appendix C Page 2 of 2 Alaska Juneau Aeronautics, Inc. Essential Air Service to be Provide d at Excursion Inlet, Alaska Effective Period : September 1, 2010 through August 31, 2012 Scheduled Service : Three weekl y nonstop round trips to Juneau in the 16 - week peak and one nonstop round trip per week to Juneau in the 36 - week off - peak Aircraft : Cessna 207 aircraft Rate per Eligible Flight: $ 202 3 Weekly Ceiling : Peak: $ 1,212; Off - peak, $404 4 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 com pleted 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 c arrier 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 disallow ed, 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 co mp lete ly , 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 stipul ated 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 w riting 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, 2010 . The Department’s obligation for performance under this order beyond September 30, 2010 , 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, 2010 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30, 2010 , the Department will provide notice in w riting 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 payme nt must be submitted within 60 days of the last day of se rvice provided under this order.

3 Annual compensation of $33,919 divided by the estimated annual completed departures and arrivals: Peak: 3 flights per week multiplied by 16 weeks; off peak: 1 flight per week multiplied by 36 w eeks = 84 flight s in each direction multiplied by 2 = 168. 4 Peak: 6 flights multiplied by $202; and off - peak, 2 flight multiplied by $202 .