Order 20 10

- 9

- 21

Served: September 22 , 20 10



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 17 th day of Sep t ember , 20 10

ORDER RE

- SELECTING CARRIER AND SETTING FINAL SUBSIDY RATE

Summary By this order, the Department is re

- selecting Alsek Air Service, Inc

. ( Alsek )

, to provide

subsidized essential air service (EAS) at Cape Yakataga and Icy Bay, Alaska , at an annual subsidy rate of $ 91 ,000 for the period of November 1, 20 10 , through October 31, 2012

. (See Appendix A for a map .)

Background By Order 2008

- 7

- 28, July 30, 2008, the Department re

- selected Alsek Air Service, Inc

. (Alsek), to provide subsidized EAS at Cape Yakataga and Icy Bay , through October 31, 2010. Under that order, Alsek provides three round trips each week to Yakutat from May through October, and two round trips each week from November through April, with an intermediate stop at the East Icy Bay, utilizing 4

- seat Cessna aircraft, for an annual subsidy rate for both communities of $ 78,000.

In anticipation of t he end of the rate term, the Department issued Order 20 10

- 6

- 15 on June 11, 2010 , soliciting proposals to provide efficient EAS, with subsidy support if

necessary, at both communities.

Based on historical traffic and service levels, proposals were expected to consist of service with small aircraft (e.g., those with 3

- 5 seats) and offering each community three round trips

Essential Air Service at

CAPE YAKATAGA, ALASKA ICY BAY, ALASKA

Under 49 U.S.C. 41731 et seq

. Docket DOT

- OST

- 199 6

- 2009- 2

-

a week during the peak season and two weekly round trips during the off

- peak season to

Yakutat or any other suitable hub, such as Cordova

.

Such service is generally co nsistent with what the communities currently receive, and fully

satisfies their essential air service requirements. The Department encouraged proposals that

met th o se requirements in an efficient manner.

Proposal In response to Order 20 10

- 6

- 15

, Alsek was the only air carrier to submit a proposal. The carrier’s proposal may be accessed online through the Federal Docket Management System (FDMS) at: http://www.regulations.gov by doing a document s earch on Docket ID : DOT

OST

- 1996

- 2009

.

Alsek submitted a proposal to continue to provide three round trips each week to Yakutat from May through October, and two round trips each week from November through April, with an intermediate stop at East Icy Bay, utilizing 4

- seat or 5

- seat Cessna aircraft, for an annual subsidy rate for both communities of $91,000 , an increase of $ 13, 00 0 t he existing

EAS contract

.

Community Comments The Department’s usual practice before selecting a carrier is to request comments from the State and community on the carrier

- selection decision. On July 16 , the Department sent correspondence to the Alaska Department of Transportation & Public F acilities (DOT & PF) and request ed their comments on the carrier selection decision.

T he Alaska DOT & PF did not provide comments relative to the specific service proposal;

however , they emphasize d the importance of EAS in Alaska by stating that the progr am is

critical to its rural communities

, as affordable air transportation provides access to medical

and other life/health services

. In addition, the Department also received a letter from local residents of Cape Yakataga and Icy Bay support ing the selection of Alsek.

Decision on Carrier Selection

After careful consideration of this matter , including the comments of local official s, the Department has decided to re

- select Alsek to provid e EAS at Cape Yakataga and Icy Bay

. Alsek ’ s proposal would provide three round trips each week to Yakutat from May through October, and two round trips each week from November through April, with an intermediate stop at the East Icy Bay, utilizing 4

- seat or 5

- seat Cessna aircraft, for an annual subsidy rate for both communities of $ 91 ,000

.

Th is case is very straightforward; Alsek was the only carrier to submit a proposal . Alsek is

an established carrier and it has proposed to continue the service it has successfully provided

for al most four years. Despite the increase in the subsidy rate, we find that both the service and subsidy levels are reasonable.

We shall make this selection at Cape Yakataga and Icy Bay contingent upon the Department’s receiving properly executed certifications from Alsek that it is in compliance- 3

-

with the Department’s regulations regarding drug

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

Carrier Fitness 49 U.S.C. 41737(b) requires that we find an air carrier fi t, willing, and able to provide reliable service before we may subsidize it to provide essential air service. Alsek is subject to the Department’s continuing fitness requirements, and no information ha s come to our attention that would cause us to question the car rier's fitne ss 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 th e carrier remains fit to conduct the operations proposed here.

This orde r is issued under authority delegated in 49 CFR 1.56a(f) and re

- delegated to the Director, Office of A viation Analysis

.

ACCORDINGLY,

1. We re select Alsek Air Service, Inc

. , to provide essential air service at Cape Yakataga and Icy Bay , Alaska

, and establish the subsidy rates

, as described in Appendix C , f or the period

from November 1, 2010 , through October 31, 20 12 ;

2 . The Department directs Alsek Air Service, Inc

. , to retain all books, records, and other source and summary documentation to suppor t 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 t hat 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 tha t Alsek Air Service, Inc

. , continues to be fit, willing and able to operate as a

commuter air carrier and capable of providing reliable essential air service at Cape Yakataga and Icy Bay , 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 parties listed in Appendix D

.

Persons entitled to petition the Department for review of this order under the Department’s Regulations, 14 CFR 385.50, must file such petitions within ten (10) days after the date of

service of this order.- 4

-

This order will be effective immediately, and the filing of a petition for review shall not preclude its effectiveness.

By:

TODD M. HOMAN

Director Office of Aviation Analysis

(SEAL)

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

SERVICE AREA MAPAppendix B

Alsek Air Service, Inc.
Provision of Essential Air Service at Cape Yakataga and Icy Bay, Alaska Calculation of Compensation Requirement

Fare at East or West Icy Bay $90.00

Freight Rate above 50 lbs. per

passenger $0.45

Total Annual Cost of Operation $97,500.00

Total Annual Subsidy Required $91,000.00 Fare at Cape Yakataga $120.00Appendix C Page 1 of 2

Alsek Air Service, Inc.
Essential Air Service To Be Provided at Cape Yakataga and Icy Bay, Alaska

Effective Period Novem ber 1, 20 10 through October 31 , 2012

. : Scheduled Service From Yakutat: three round trips each week to Cape Yakataga and Icy Bay from May through October (peak

- season), and two round trips each week from November through April (off

- peak season). :

Intermediate stops and upline

service : A year

- round intermediate stop at East Icy Bay is permitted.

Aircraft type: 4

- seat or 5

- seat Cessna Timing of flights: Flights must be well

- timed and well

- spaced in order to ensure full compensation. Annual compensation: $ 91 ,000 A compensation ceiling is to be applied per calendar week such that service above that ceiling in one week cannot ma ke up for

service shortfalls in another week. Subsidy Rate per Flight : $ 1 75 .0 0 1 Weekly Compensation Ceiling per arrival from or departure to Yakutat

2 $ 2

, 1 00.00 peak season

: $ 1,4 00.00 off

- peak season

1 $ 91 ,000 divided by 520 arrivals and departures: (peak season: 4 arrivals/departures per round trip x 3 round trips per week x 26 weeks = 312 + off

- peak season: 4 arrivals/departures per round trip x 2 round trips per week x 26 weeks = 208)

2 The subsidy rate for each arrival/departure ($1 75 .00) multiplied by the number of scheduled subsidy

- eligible flights per week during the peak season (12) or during the off

- peak season (8).Appendix C Page 2 of 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 flight that has not been completed, such as certain weather cancellatio ns, 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 ensure d 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 o f 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 a ir 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 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 cessati on. 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 cessation of payment.

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.

Funds are not currently availabl e 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 leg al 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 Septe mber 30, 2010, 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 service provided

under this order.Appendix D

SERVICE LIST

Ms. Rebecca Cronkhite

Statewide Aviation Planner Alaska Department of Transportation & Public Facilities

P.O. Box 196900 Anchorage, Alaska 99519

Mr. Les C. Hartley

Alsek Air Service, Inc.

PO Box 489 Yakutat, Alaska 99689