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Before the 

Department of Transportation 

Washington, D.C. 

Office of the Secretary 

"•'••/•RTMENTOF 

- : cc;; . o ;D 1: 13 

In the Matter of 

ESSENTIAL AIR SERVICE AT 

PELICAN & ELFIN COVE, AK 

Docket DOT-OST-2002-11586 

SERVICE PROPOSAL OF 

ALASKA SEAPLANE SERVICE, LLC. 

Communications with respect to this document should be addressed to: 

Hank Myers 

MTC 

PC Box 7142 

Bellevue, WA 98008 

425-830-4265 

hank@mtcworld.com 

Craig Loken 

Alaska Seaplane Service, LLC 

1873 Yandukin Drive 

Juneau, AK 99801 

907-789-3331 

aral@alaska.com 

February 7, 2011 
Before the 

Department of Transportation 

Washington, D.C. 

Office of the Secretary 

In the Matter of 

ESSENTIAL AIR SERVICE AT 

PELICAN & ELFIN COVE, AK 

Docket DOT-OST-2002-11586 

SERVICE PROPOSAL OF 

ALASKA SEAPLANE SERVICE, LLC. 

Alaska Seaplane Service, LLC (Seaplanes) hereby submits its proposal to provide 

Essential Air Service to the points Pelican and Elfin Cove, Alaska. The attached proposal 

is stated in terms of subsidy need per year for either two years or through January 31, 

2015. Consistent with Department preference, the subsidy need is quoted at a level rate 

for each year. Consistent with the request for proposals. Seaplanes proposes to serve 

Pelican six days a week year around, while Elfin Cove will be served five days a week 

during a shortened peak summer season, and twice a week during the off-season. 

HISTORY OF SERVICE 

Seaplanes has been providing Essential Air Service to Pelican and Elfin Cove since its 

familial predecessor carrier, Channel Flying Service, was certificated thirty years ago. 

Both Pelican and Elfin Cove were significant fishing ports, and Pelican had the largest 
cold storage facility in the area complete with fish buyers and processors. In 2002 there 

was a significant downturn in local fishing, and the occurrence of the first closure of 

Pelican Coid Storage. Alaska Seaplanes filed its 90-day notice to eliminate service at the 

two points, and was held in pending an Essential Service review in May, 2002. 

Subsequently the permanent reduction in commercial fishing in the area was enacted into 

Federal law with the closure of the Glacier Bay fishing grounds. While there have been 

sporadic attempts to reopen the cold storage plant, all were unsuccessful and the plant 

remains closed today. 

During the six month winter period, service is provided using deHavilland Beaver aircraft 

on amphibious floats. The Juneau Airport float pond is frozen in the winter, necessitating 

using wheeled operations at Juneau and sea landings at Pelican and Elfin Cove. During 

the summer season the float pond allows service with straight float aircraft. These 

aircraft have about 500 lbs. greater payload, and are slightly faster than the amphibious 

float aircraft. 

Seaplanes has consistently reinvested in its fleet and facilities. Five years ago it added a 

second set of amphibious floats to assure backup coverage for its Pelican/Elfin Cove 

service. In 2009 it added a third set of amphibious floats to assure that its entire fleet of 

Beavers would be available year around. This winter a privately owned four-wheeler 

driving on the boarding dock at Pelican accidentally ran across the front of the floats of 

the seaplane and heavily damaged the nose landing gears which were in the retracted 

position for water landing. Because the Hoat pond at Juneau was closed, the aircraft had 
to be ferried to land on the riverfront in Juneau, then hauled out and taken to the 

Seaplanes hangar for three weeks of repairs. There was no interruption of service at any 

of the four Essential Service points served by Seaplanes because of the added investment 

in amphibious floats. 

Service during the winter is problematic because challenging weather in the air and on 

the water, hi a typical winter there will be about three times when service cannot be 

provided for more than a week. With the limited payload of amphibious aircraft, extra 

sections with no return traffic invariably lose money regardless of the load. With fewer 

flights and less payload available to transport the backlog. Seaplanes is regularly required 

to operate flights at a loss that exceed that week's subsidized flight limit, h is estimated 

that on average five additional flights are operated three times a winter to transport mail 

and freight backlogged due to weather to Pelican, and six additional flight is total to Elfin 

Cove. 

While no other air carriers operate during the winter months, during recent summers 

single pilot operators ha\e offered "regular" service to and from Pelican. One carrier in 

particular established a base in Pelican, advertised and published locally a regular 

schedule of departures, and organized a campaign to oppose designation of Seaplanes to 

provide Essential Service. While local residents retracted support after the intent of the 

petitions became known, the cream skimming significantly reduced passenger and freight 

traffic during the peak summer months. Complaints to the DOT and FAA did not result 

in any enforcement action, hi 2010 there were no unlawful "scheduled" operations by 
these single pilot operations, as reflected in the higher traffic numbers after the third 

quarter of 2009. The attached traffic projections assume no unlawful competition during 

the projected period, however Seaplanes will seek enforcement action against any carrier 

providing commuter ser\'ice that has not been found fit by the Department. Ironically, 

the unlawful scheduled services have only been offered by single pilot operators which 

can not qualify for a fitness finding. Because the third quarter generates the only 

profitable operations during the year. Seaplanes will rely on the good offices of the 

Department to enforce its fitness regulations. 

BASIS OF PROPOSAL 

Having just concluded the Essential Service selection for Angoon and Tenakee, the same 

cost per hour developed in that case has been used here ($785.15). Traffic is based on the 

year ended June, 2010. Over the last four years, traffic at both Pelican and Elfin Cove 

has declined, and traffic today is over 30% below CY 2000 levels. None-the-less, in the 

last year one market has actually gained traffic slightly while the other has declined by a 

similar amount compared to 2009. This is similar to the projection used in the 

Angoon/Tenakee case. Total revenue is based on current yields times current traffic. It 

is expected that commercial revenue will remain level for the period of the offer, with 

fares and rates rising to keep abreast of expense escalation. 

In addition to traffic declining since the beginning of subsidized service, reductions in 

total service, and increases in passenger fares and freight rates. Seaplanes proposed to 
reduce the peak period service for Elfin Cove to 18 weeks from 26 weeks. This reduces 

the peak period operations by over 25%. Seaplanes proposes 312 roundtrips between 

Juneau and Pelican (52 * 6), and 158 roundtrips between Juneau and Elfin Cover (5 * 18 

plus 2 * 34). The cost per hour is $785.15, as approved in the Angoon and Tenakee EAS 

contract. Because of inclement weather during the 34 week winter period. Seaplanes is 

unable to serve Pelican and Elfin Cove for over a week at a time for typically three times 

a year. The subsidy payment per departure performed in the reporting week is adjusted to 

allow for the additional makeup flights needed to move backlog freight and mail traffic 

which could not be made up during the actual week of inclement weather. 

As noted above, the Department has requested offers for the standard two year period. 

Seaplanes is proposing a longer period as well. While the Department can choose the 

length of the contract period. Seaplanes encourages the Department to adopt a contract 

through January 31, 2015. The longer period has promoted stable operations, 

reinvestment of returns into the operation, and a closer relation with the communities 

served. January 31, 2015 is the expiry date of the Angoon/Tenakee contract, so in the 

future all four points could be bid together. This is the most efficient proposal for all 

parties, and minimizes the expense of both filing and adjudicating the proposals. 

Alaska Seaplane Service is the only fit and certificated air carrier operating scheduled 

service in amphibious aircraft in Juneau. It has provided reliable and cost effective 

service in these markets for nine years, and has continued to take steps to provide the 

most cost effective service possible. Even when faced with unlawful competition, 
Seaplanes continued to offer full Essential Service, and has never requested a rate 

adjustment. Seaplanes is the only carrier with ground facilities at both Juneau and 

Pelican, and the only cartier with full time agents at all three points. Seaplanes maintains 

an up to date website with the ability to book and pay for seats at a discounted rate. 

WHEREFORE, Alaska Seaplane Service, LLC respectfully requests that it be 

designated the Essential Air Service contractor for Pelican and Elfin Cove, Alaska 

through January 31, 2015 at the rates described in Appendices A through C. 

Respectfully submitted, 

Alaska Seaplane Service, LLC 

By Hank Myers 

February 7, 2011 
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Appendix B 

Page 1 of 1 

PROJECTED REVENUE, PEC/ELV EAS 2011-2014 

TOTAL MARKET TRAFFIC 

TRAFFIC # 

Passengers 537 

Freight 86,640 

Mail 49,466 

Passengers 554 

Freight 23,033 

Mall 11,684 

MARKET 

Juneau-Pellcan 

Pelican-Juneau 

Juneau-Elfin Cove 

Elfin Cove-Juneau 

Passengers 

Freight 

Mail 

Passengers 

Freight 

Mail 

288 

18,267 

26,112 

268 

6,142 

7,294 

ESSENTIAL SERVICE TRAFFIC 

MARKET 

Juneau-Pellcan 

Pelican-Juneau 

TRAFFIC 

Passengers 

Freight 

Mail 

Passengers 

Freight 

Mail 

514 

82,980 

47,376 

531 

22,060 

11,190 

PROJ. YIELD 

$132.00 

$0.55 

$1.49 

$132.00 

$0.55 

$1.49 

REVENUE 

$67,889.44 

$45,638.89 

$70,686.33 

$70,038.64 

$12,132.97 

$16,696.30 

£283.082.56 

Juneau-Elfin Cove 

Elfin Cove-Juneau 

Passengers 

Freight 

Mail 

Passengers 

Freight 

Mail 

270 

17,137 

24,496 

251 

5,762 

6,843 

$132.00 

$0.55 

$1.44 

$132.00 

$0.55 

$1.44 

$35,663.72 

$9,425.19 

$35,321.20 

$33,187.07 

$3,169.08 

$9,866.45 

$126,632.72 
Appendix C 

Page 1 of 1 

PEC & ELV SUBSIDY NEED CALCULATION 

PELICAN 

TOTAL COMMERCIAL REVENUE $283,082.56 

TOTAL ECONOMIC EXPENSE $468,803.13 

BASIC SUBSIDY NEED PER YEAR $185.720.57 

TOTAL DEPARTURES (RT * 2) 624 

SUBSIDY NEED PER SCHEDULED DEPARTURE $297.63 

WEEKLY CEILING - YEAR AROUND $3,571.55 

ELFIN COVE 

TOTAL COMMERCIAL REVENUE $126,632.72 

TOTAL ECONOMIC EXPENSE $202,022.54 

BASIC SUBSIDY NEED PER YEAR $75.389.82 

TOTAL DEPARTURES (RT * 2) 316 

SUBSIDY NEED PER SCHEDULED DEPARTURE $238.58 

WEEKLY CEILING - 18 WEEK PEAK $2,385.75 

WEEKLY CEILING - 34 WEEK OFF-PEAK $954.30