UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 17th day of August, 2010

Essential Air Service at

EXCURSION INLET, ALASKA

KAKE, ALASKA

Docket DOT-OST-2002-12014

Docket DOT-OST-2008-0217

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

ORDER SELECTING CARRIERS

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-year subsidy rate of $213,405 and a second-year of $229,939 for the twoyear period from September 1, 2010 to August 31, 2012.

1

Background

By Order 2008-8-16, the Department selected Wings to provide EAS at Excursion Inlet 

and Kake, at annual subsidy rates of $34,659 at Excursion Inlet and $314,302 at Kake, for 

the two-year period ending August 31, 2010. Excursion Inlet currently receives three 

round trips per week to Juneau in the 16-week peak season and one round trip per week in 

the 36 remaining weeks of the year with 5-seat Cessna 206/207 aircraft. Kake currently 

receives 14 round trips per week to Juneau in the 21-week peak season and seven round 

trips per week in the 31 remaining weeks of the year to Juneau using 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 appropriated 

funds.

Order 2010-8-9

Served: August 17, 2010
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2010, requesting proposals to serve Excursion Inlet and Kake for a new, two-year 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 only 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 year, 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 weekly nonstop round trips to Juneau during the 16-

week peak season and one weekly nonstop round trip during the remaining 36-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 daily round trip (7 a week) during the 31-week off-peak 

season using Cessna 208 aircraft for an annual subsidy of $438,627. In addition Wings 

proposed to substitute Cessna 207 aircraft 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 operated 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 

Excursion Inlet and Kake. On July 29, we received a joint letter from the City of Kake and 

the Organized Village of Kake (the federally recognized tribal government), 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 dropoff 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, Deputy 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 entirely dependent on the scheduled air service to provide basic necessities, routine 

medical and health services. No comments were received from Excursion Inlet.
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Decision

The decisions for both communities are straightforward. At Kake, the community fully

supports Air Excursions and that carrier requires significantly less subsidy 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 Excursion Inlet are reasonable.

We shall make these selections of Air Excursions and Wings contingent upon the 

Department receiving properly executed certifications from the carriers 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) 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 subject to the Department’s continuing fitness requirements, 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 finding. 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).

ACCORDINGLY,

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 year at Kake, for the provision of essential air 

service as described in Appendix C;

3. We direct both Air Excursions LLC and Alaska Juneau Aeronautics, 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 carriers may forfeit their compensation for any claim 

that is not supported under the terms of this order;

 

2

The difference in subsidy is not as dramatic as the $213,405 vs. $438,627 that it would appear at first blush

because Wings would sometimes use the smaller and less expensive aircraft at a lower subsidy rate. 

Nonetheless, the difference remains substantial.
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4. We find that Air Excursion LLC and Alaska Juneau Aeronautics, Inc. continue to be fit, 

willing and able to operate as a certificated carriers and capable of providing reliable 

essential air service at Excursion Inlet and Kake, respectively;

5. Dockets DOT-OST-2008-0217 and DOT-OST-2002-12014 will remain open pending 

further Department action; and

6. We will serve copies 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 available on the World Wide Web at

http://www.regulations.gov
Appendix 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) 234

 
Appendix 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 hours1

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 aircraft
Appendix B

Page 2 of 2
Appendix 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 year: $209; Second year: $2251

Weekly Ceiling: First year peak: $5,852; Off-peak, $2,926;

Second year peak $6,300, Off-peak, $3,1502

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, 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 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 $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 week 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 Provided at Excursion Inlet, Alaska

Effective Period: September 1, 2010 through August 31, 2012

Scheduled Service: Three weekly 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: $2023

Weekly Ceiling: Peak: $1,212; Off-peak, $4044

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, 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 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.

 

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 weeks = 84 flights in 

each direction multiplied by 2 = 168.

4

Peak: 6 flights multiplied by $202; and off-peak, 2 flight multiplied by $202.