Order 2013-12-9

Served: December 19, 2013

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 19th of December, 2013

INTRA ALASKA BUSH MAIL RATES

Under 49 U.S. C. 41901 et seq.

Docket OST-2003-14694

Bush Quarterly Fuel Adjustment

Summary

By this Order, the Department is making its regular quarterly adjustments to the IntraAlaska bush mail rates, Part 121, Part 135, and Seaplane, to reflect the most recent 

quarterly fuel costs. The new rates are to be effective on the second Saturday after the 

issuance of this Order, and reflect fuel expenses for the quarter ended June 30, 2013. 

Background

Order 2013-7-25, July 31, 2013, made final the conclusions of Order 2013-6-5, June 6, 

2013, along with the nonfuel-linehaul and terminal rates therein. That Order also 

delegated to the Director, Office of Aviation Analysis the authority to determine the final 

rates contemplated in Order 2013-7-25, adjusted for the most recent quarterly fuel 

expenses. 

Order 2013-7-26, July 31, 2013, made the anticipated quarterly fuel adjustments to the 

Part 121, Part 135, and Seaplane rates, reflecting fuel expenses for the quarter ended 

March 31, 2013, the most recent fuel expenses available at the time. This Order is 

updating all three of those bush mail classes to reflect fuel expenses for the quarter ended 

June 30, 2013. The Department has stated that we would continue quarterly fuel updates

until further notice. Since the carriers’ traffic and financial data are reported 45 days after 
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the end of each quarter, our intent and practice has been to make quarterly adjustments 

with a one-quarter lag from the end of the reporting period until the beginning of the next 

quarter.1 The table below shows both the current and new mail rates.

As shown in the chart above, for the Part 121 class, Line 1, Column F, there is a 0.72% 

increase in the rate; for the Part 135 class, Line 2, a 0.74% increase; and for the Seaplane, 

Line 3, a 1.54% decrease; and for the terminal no change. All of these changes are driven 

solely by changes in fuel. Since the terminal is unaffected by fuel, there is no change in 

that class, which is included only for the sake of convenience. 

Discussion

As stated earlier, our goal is to have mail rates in place approximately one quarter after the 

end of the reporting period. This did not happen this quarter for any class. There are data 

issues with specific carriers in each of the three classes that have delayed our process.

In the Part 121 class, we have concerns with PenAir’s data. The calculation of PenAir’s 

Part 121 expense requires the carrier to submit a special traffic report each quarter, which 

supplements the carrier’s T-100 Segment report. The T-100 report is not sufficiently 

detailed; it does not break out whether a particular segment operated as mainline, Part 121, 

or Part 135. PenAir’s Saab 340B is unique because it does in fact operate as all three on 

different segments. PenAir’s special report provides the necessary detail for us to calculate 

the Part 121 mail rate, the only rate in this Order affected by PenAir’s data. However, as 

footnote two in Appendix A indicates, there is a difference between Revenue Block Hours

(Mainline, Part 121, and Part 135) as shown on PenAir’s Special Report and the Revenue 

Block Hours on its T-100 Segment Report. We have made PenAir aware of this problem 

and it is reviewing it. We expect the carrier to resolve the issue before the next quarterly 

fuel update. 

We have relied on the Revenue Block Hours reported on PenAir’s T-100 Segment report –

row four in Appendix A. Unlike its special report, PenAir filed the T-100 for a number of 

years before it began operating mainline service, so we believe the T-100 is more reliable. 

 

1 As discussed later, there has been more than a one-quarter lag in this instance because of delay in receiving 

accurate, reliable carrier data. 

-A- -B- -C- -D- -E- -FRate per Less Old Fuel Add Fuel per

Order in Order the Appendices Percentage

Class Rate 2013-7-26 2013-7-26 to this Order Final Rate Change

1 . Part 121 $5.7066 $1.4466 $1.4876 $5.7476 0.72%

2 . Part 135 $14.8239 $4.4089 $4.5191 $14.9341 0.74%

3 . Seaplane $33.1091 $6.8613 $6.3505 $32.5983 -1.54%

4 . Terminal $850.03 N A N A $850.03 0.00%
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For the Part 135 class, the data provided by Grant Aviation, Inc, as shown in Appendix B, 

is wrong. Row five of Appendix B shows that Grant reported significantly more Revenue 

Block Hours on its T-100 report than Total Block Hours (revenue plus non-revenue block 

hours) on its Schedule F-2, which is not possible. In addition, as shown on row 13 of 

Appendix B, the fuel cost that Grant reports for its Navajo aircraft is double that of its 

other aircraft and for other Part 135 carriers. We will therefore exclude Grant’s data from 

the calculation of the Part 135 Rate. We have made Grant aware of this problem and it is 

reviewing it. We expect the carrier to resolve the issue before the next quarterly fuel 

update.

For the Seaplane rate, we have concerns with Island Air’s data. Row five of Appendix C 

shows that Island Air’s Total Block Hours exceed its Revenue Block Hours by a factor of 

29.49%. This result indicates that almost a third of that carrier’s flying is required for nonrevenue purposes – which would be a very significant drain on any carrier’s bottom line. 

However, the volume of mail transported by Island Air (2.7 percent of total mail per

row 14 of Appendix C), makes it very difficult for Island Air’s results to have a significant 

effect on the Seaplane mail rate because class rates are calculated on the basis of carrier 

unit costs weighted by amount of mail carried. We will therefore accept Island Air’s data 

for the calculation of the Seaplane Rate. We have made Island Air aware of this problem 

and it is reviewing it. We expect it to resolve the issue before the next quarterly fuel 

update.

Other Matters Related to Unreliable Data2

We have included as an attachment to this Order a letter sent by the Office of Airline 

Information to the bush carriers. As the letter indicates, the carriers’ reporting of T-100 

Market data has a direct effect on the volume of mail a carrier is tendered by the Postal 

Service, and that data has been very reliable and timely. However, the carrier’s reporting 

of its Schedule F- 2 has been less so, as substantiated by the results above. As the letter 

indicates, the Department wants to encourage the carriers to focus on correctly reporting all 

of its data. 

In brief, as soon as it becomes clear that a carrier’s financial or traffic data is unreliable, 

OAI will make the carrier aware of that determination. If the monthly deadline for 

releasing the T-100 Market data to the Postal Service has been reached and the data for any 

of the carrier’s reports is unreliable, OAI will exclude the most recent month of unreliable 

data and only forward eleven months of data to the Postal Service. If the issue has not 

been resolved by the next monthly release data, OAI will then only forward ten months of 

data to the Postal Service, and so on. Gradually the incentive for the carrier to report 

reliable data increases as the delay in it meeting its regulatory obligation increases. When 

reliable data is ultimately submitted, the carrier will not retroactively recover the mail it 

would otherwise have received, but the missing months of data will be added to the next 

data release to the Postal Service going forward.

 

2 As discussed on page three of Order 2012-8-35. “It is now almost two months after July 1, 2012, the date 

when rates based on data for the quarter ended March 31, 212, should have been issued. It is our policy to 

make all rates final, but that policy is predicated on our having reliable data. Having unreliable data from the 

carriers endangers the premise of having final rates in place, and, indeed, of the entire class rate system.”
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ACCORDINGLY,

1. We fix, determine and publish the Part 121 rate to be $5.7476 per mail revenue ton mile, 

to be effective on the second Saturday after the service date of this Order; 

2. We fix, determine and publish the Part 135 rate to be $14.9341 per mail revenue ton 

mile to be effective on the second Saturday after the service date of this Order; 

3. We fix, determine and publish the Seaplane rate to be $32.5983 per mail revenue ton 

mile, to be effective on the second Saturday after the service date of this Order; 

4. The terminal rate will remain fixed at $850.03 per mail ton enplaned;

5. This docket shall remain open until further Order of the Department; and

6. We will serve this Order upon all parties on the service list for this Docket;

Persons entitled to petition the Department for review of this Order under the Department’s 

regulations, 14 CFR 385.30, must file such petitions within ten (10) days after the date of 

service of this Order. The filing of a petition for review shall not stay 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.gov
Appendix A

Part 121

Quarter Ended June 30, 2013, Fuel

Carrier Era PenAir

Carrier Code 7 H KS

Aircraft Name Beech 1900 Saab 340B

Aircraft Code Total 405 456

Fuel Expense

1 . F-2, Total Fuel Expense $5,172,540 $1,402,234 $3,770,306

2 . F-2, Total Gallons Issued 1,292,548 369,007 923,541

3 . F-2, Total Block Hours 10,033 2,863 7,170

4 . T-100 Revenue Block Hours 9,811 2,779 7,032 2 /

5 . #3 ÷ #4 less 1. 3.02% 1.96%

6 . Eligible Block Hours 1 / 1,583 485 1,098

7 . Eligible Mail RTMs 1 / 25,945 7,675 18,270

8 . Total Eligible RTMs 1 / 599,795 114,205 485,590

9 . Price per Gallon (R1÷R2) $4.00 $3.80 $4.08

1 0 . Burn per Hour (R2÷R4) 132.8 131.3

1 1 . Costs per Block Hour (R1÷R4) $504.58 $536.16

1 2 . Eligible Fuel Expense (R1*R6÷R4) $833,430 $244,722 $588,708

1 3 . Cost per Eligible RTM (R12÷R8) $1.3895 $2.1428 $1.2124

1 4 . Mail RTMs Percentage 100.00% 29.582% 70.418%

1 5 . Cost/RTM, Wtd. By Mail RTMs $1.4876 $0.6339 $0.8537

1/ Era's data is from the T-100, PenAir's from a special PenAir report. PenAir submits that report because the T-100

does not differentiate between mainline and bush aircraft, and PenAir's Saab 340B operates as both. Mainline aircraft

have a payload of more than 7,500 pounds, and bush aircraft have less. We note that the configuration of the 

aircraft and the length of the haul affects the aircraft's payload.

2/ PenAir's special report shows 6,742 block hours.

Note: ERA and PenAir have service outside of Alaska, and eligible figures exclude any traffic outside of Alaska.
Appendix B

Part 135

Page 1 of 3

Quarter Ended June 30, 2013

Carrier Bering Bering Bering Bering Hageland

Carrier Code

Aircraft Type Navajo B-1900 Casa 212 Caravan C-207

Aircraft Code Total 1/ 194 405 412 416 3 5

1 . F-2, Total Fuel Expense $8,231,694 $271,646 $350,174 $121,654 $711,320 $610,452

2 . F-2, Total Gallons Issued 1,394,676 36,466 52,748 18,325 107,148 85,735

3 . F-2, Total Block Hours 30,643 963 367 153 1,988 5,302

4 . T-100 Revenue Block Hours 29,646 929 342 126 1,959 5,120

5 . #3 ÷ #4 less 1. 3.66% 7.31% 21.43% 1.48% 3.55%

6 . Eligible Block Hours 1 / 24,761 716 270 7 9 1,789 4,504

7 . Eligible Mail RTMs 1 / 450,620 9,159 19,772 7,809 50,709 26,457

8 . Total Eligible RTMs 1 / 1,590,792 39,172 49,001 10,296 140,398 113,515

9 . Price per Gallon (R1÷R2) $5.90 $7.45 $6.64 $6.64 $6.64 $7.12

1 0 . Burn per Hour (R2÷R4) 39.3 154.2 145.4 54.7 16.7

1 1 . Costs per Block Hour (R1÷R4) $292.41 $1,023.90 $965.51 $363.10 $119.23

1 2 . Eligible Fuel Expense (R1*R6÷R4) $6,753,556 $209,363 $276,453 $76,275 $649,592 $537,007

1 3 . Cost per Eligible RTM (R12÷R8) $4.2454 $5.3447 $5.6418 $7.4082 $4.6268 $4.7307

1 4 . Mail RTMs Percentage 100.00% 2.033% 4.388% 1.733% 11.253% 5.871%

1 5 . Cost/RTM, Wtd. By Mail RTMs $4.5191 $0.1087 $0.2476 $0.1284 $0.5207 $0.2777

Note: Bering has service outside of Alaska, which is not eligible.
Appendix B

Part 135

Page 2 of 3

Quarter Ended June 30, 2013

Carrier Hageland Hageland Hageland Hageland Warbelow Wright

Carrier Code

Aircraft Type Navajo B-1900 Caravan C-406 Navajo Caravan

Aircraft Code 194 405 416 417 194 416

1 . F-2, Total Fuel Expense $469,495 $1,536,380 $2,259,171 $359,961 $552,944 $586,190

2 . F-2, Total Gallons Issued 65,684 275,533 345,045 54,070 117,119 178,135

3 . F-2, Total Block Hours 1,825 2,169 6,333 612 3,091 3,563

4 . T-100 Revenue Block Hours 1,760 2,058 6,113 590 2,983 3,501

5 . #3 ÷ #4 less 1. 3.69% 5.39% 3.60% 3.73% 3.62% 1.77%

6 . Eligible Block Hours 1 / 1,581 1,322 5,625 571 1,810 2,911

7 . Eligible Mail RTMs 1 / 20,468 88,141 132,449 13,951 16,197 47,839

8 . Total Eligible RTMs 1 / 86,261 197,385 455,776 58,989 109,815 264,691

9 . Price per Gallon (R1÷R2) $7.15 $5.58 $6.55 $6.66 $4.72 $3.29

1 0 . Burn per Hour (R2÷R4) 37.3 133.9 56.4 91.6 39.3 50.9

1 1 . Costs per Block Hour (R1÷R4) $266.76 $746.54 $369.57 $610.10 $185.37 $167.44

1 2 . Eligible Fuel Expense (R1*R6÷R4) $421,745 $986,926 $2,078,822 $348,369 $335,511 $487,403

1 3 . Cost per Eligible RTM (R12÷R8) $4.8892 $5.0000 $4.5611 $5.9057 $3.0552 $1.8414

1 4 . Mail RTMs Percentage 4.542% 19.560% 29.393% 3.096% 3.594% 10.616%

1 5 . Cost/RTM, Wtd. By Mail RTMs $0.2221 $0.9780 $1.3406 $0.1828 $0.1098 $0.1955
Appendix B

Part 135

Page 3 of 3

Carrier Yute Grant Grant Grant

Carrier Code

Aircraft Type C-207 C-207 Navajo Caravan

Aircraft Code 3 5 3 5 194 416

1 . F-2, Total Fuel Expense $402,307 $137,424 $97,113 $1,128,711

2 . F-2, Total Gallons Issued 58,668 22,050 15,582 181,102

3 . F-2, Total Block Hours 4,277 416 294 3,417

4 . T-100 Revenue Block Hours 4,165 1,708 372 5,218

5 . #3 ÷ #4 less 1. 2.69% -75.64% -20.97% -34.52%

6 . Eligible Block Hours 1 / 3,583 1,538 359 3,397

7 . Eligible Mail RTMs 1 / 17,669 8,549 1,701 58,742

8 . Total Eligible RTMs 1 / 65,493 29,447 8,497 146,050

9 . Price per Gallon (R1÷R2) $6.86 $6.23 $6.23 $6.23

1 0 . Burn per Hour (R2÷R4) 14.1 12.9 41.9 34.7

1 1 . Costs per Block Hour (R1÷R4) $96.59 $80.46 $261.06 $216.31

1 2 . Eligible Fuel Expense (R1*R6÷R4) $346,090 $123,746 $93,719 $734,809

1 3 . Cost per Eligible RTM (R12÷R8) $5.2844 $4.2023 $11.0297 $5.0312

1 4 . Mail RTMs Percentage 3.921% 1.897% 0.377% 13.036%

1 5 . Cost/RTM, Wtd. By Mail RTMs $0.2072 $0.0797 $0.0416 $0.6559
Appendix C

Seaplane

Quarter Ended June 30, 2013

Carrier A.Seaplane Pacific PM Air PM Air Venture Island Air

Aircraft Name Beaver Beaver Beaver Otter Beaver Beaver

Aircraft Code Totals 4 0 4 0 4 0 4 2 4 0 4 0

1 . F-2, Total Fuel Expense $1,008,721 $79,207 $114,655 $172,232 $301,989 $289,891 $50,747

2 . F-2, Total Gallons Issued 194,357 18,421 21,180 31,840 62,855 52,996 7,065

3 . F-2, Total Block Hours 6,739 825 1,059 1,324 1,233 1,995 303

4 . T-100 Revenue Block Hours 6,507 823 1,049 1,281 1,175 1,945 234

5 . #3 ÷ #4 less 1. 0.24% 0.95% 3.36% 4.94% 2.57% 29.49%

6 . Eligible Block Hours 1 / 3,059 758 870 661 4 0 539 191

7 . Eligible Mail RTMs 1 / 12,703 1,477 1,924 1,575 5 4 7,334 339

8 . Total Eligible RTMs 1 / 61,575 15,868 16,711 11,831 1,924 11,595 3,646

9 . Price per Gallon (R1÷R2) $5.19 $4.30 $5.41 $5.41 $4.80 $5.47 $7.18

1 0 . Burn per Hour (R2÷R4) 22.4 20.2 24.9 53.5 27.2 30.2

1 1 . Costs per Block Hour (R1÷R4) $96.24 $109.30 $134.45 $257.01 $149.04 $216.87

1 2 Eligible Fuel Expense (R1*R6÷R4) $388,950 $72,951 $95,090 $88,872 $10,280 $80,335 $41,422

1 3 . Cost per Eligible RTM (R12÷R8) $6.3167 $4.5974 $5.6903 $7.5118 $5.3430 $6.9284 $11.3609

1 4 Mail RTMs Percentage 100.00% 11.627% 15.146% 12.399% 0.425% 57.734% 2.669%

1 5 . Cost/RTM, Wtd. By Mail RTMs $6.3505 $0.5345 $0.8619 $0.9314 $0.0227 $4.0000 $0.3032

Note: PM Air has service outside of Alaska. Eligible figures exclude any traffic outside of Alaska.

Note: Alaska Seaplane figures include Air Excursion, as the two carriers merged.
U.S. Department 

of Transportation 

Research and 

Innovative Technology 

Administration 

Ms. Joy Journeay 

AACA Executive Director 

Alaska Air Carriers Association 

2301 Merrill Field, Drive A-3 

Anchorage, AK 99501 

Dear Ms. Journeay: 

- : . . ~ ; 

1200 New Jersey. S. E 

Washington. D.C. 20590 

December 5, 2013 

The Office of Airline Information (OAI) has received several inquiries regarding our August 6 

letter about improving both the timeliness and reliability of the carriers' financial reporting, 

specifically Schedules F-1 and F-2. The challenge oflate or inaccurate F-1 and F-2 filings 

affects all carriers through delayed or inaccurate mail rates, and also creates a burden for OAI 

staff that must then follow up on these late or inaccurate filings. Our goal is to encourage the 

carriers to give the same priority to reporting the critical financial reports that they have 

displayed in filing their T -1 00 Market reports. 

To clarify our earlier letter, I am providing the following concrete example of its 

implementation: 

Consistent with 14 CFR 298.60, the bush carriers' financial schedules for the quarter ending 

December 31,2013, are due on or before February 10, 2014; 1 while the traffic reports for the 

month of December are due on or before January 30,2014. If a particular carrier's financial and 

traffic reports are submitted on a timely basis, and if all of the data are determined by edit checks 

to be error free, OAI will continue its current practice and forward the T -100 Market data, used 

for determining mail tender, to the Postal Service on the scheduled release date: March 18, 

2014? 

1 On February 3, 2014 as under current practice, the Office of Airline Information (OAI) will email a reminder to the 

carriers about the approaching deadline. In that email OAI would reiterate the thrust of this letter- that all of the 

data must be timely and free of any edit checks for OAI to forward to the Postal Service that data without caveat 2 The 3'd Tuesday of the 3'd month following the end of the period. 
However, if any carrier does not file "error free" financial and traffic data by those respective 

due dates, OAI will only forward T-100 Market data for the 11 months through November 30, 

2013; i.e., excluding traffic for the month of December. OAI will so notify the Postal Service.3 

Thus, any carrier submitting any required data on a delayed basis or of poor quality would lose 

credit with the Postal Service for approximately one-twelfth of its annual totals of passengers and 

freight. While there might be no significant cost to the carrier after only one month, the risk 

would grow with each passing month; if all problems have not been resolved by the next 

scheduled release date, only ten months of data will be forwarded to the Postal Service. 

Carriers should recognize that the result of submitting unreliable financial or traffic data is 

equivalent to not submitting that data at all. Rather than creating an overly harsh reporting 

regime, we believe that with the advent of the 298C web-based reporting, the carriers can now 

themselves apply some of the edit checks before submitting the 298C data to OAI, thereby simplifying 

and speeding the process considerably. OAI will still subject the data to additional internal edit checks 

and will endeavor to quickly advise the carrier when edit checks produce errors or warnings- hopefully 

well before the regulatory deadline. Given this new business model, carriers are strongly encouraged to 

submit their data early to allow adequate time for OAI to process the data, and to give the carrier 

ample opportunity to reconcile any problematic data before the due date. 

In brief, while late or inaccurate reports typically involve only a few carriers, but have an adverse 

impact on the entire industry. These straightforward incentives will encourage compliant 

reporting, but the alternative of taking enforcement action will remain. 

As we indicated in our earlier letter, we are available to discuss these matters with you, the 

carriers, or the Postal Service, by phone, either individually or by conference call. 

~in~.e ly' rr\. \ ~ .'\ J \ \ ~ \ 

u. (~}U ~\~ wmiam cbadwick,n 

Director, Office of Airltrfe1nformation 

CC: 

Kevin Schlemmer, DOT/OST, Kevin Adams, DOT/OST 

Kevin Hartner, United States Postal Service 

Paul Hendrickson, The Postal Service Carriers Workgroup (PAWS) 

Jennifer Rodes, DOT/BTS/OAI, Marianne Seguin, DOT/BTS/OAI 

3 Of course, OAI cannot forward to the Postal Service data it does not have, or data that was not submitted on a 

timely basis. OAI will inform carriers if and when problems are found with the data.