Order 2012-12-22

Served: December 28, 2012

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 28th day of December, 2012

Essential Air Service at

EXCURSION INLET, ALASKA

KAKE, ALASKA

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

DOCKET DOT-OST-2002-12014

DOCKET DOT-OST-2008-0217

 

ORDER GRANTING MOTION TO FILE AND DENYING PETITION FOR 

REVIEW OF STAFF ACTION

Summary

By this Order, the Department is granting the Petition for Reconsideration of SeaPort Airlines, 

Inc. dba Wings of Alaska (SeaPort), of Order 2012-9-8, September 10, 2012, and, upon review, 

denying their Petition.

Background

By Order 2010-8-9, August 17, 2010, the Department selected Air Excursions, LLC (Air 

Excursions) to provide Essential Air Service (EAS) at Kake, Alaska, for a first-year subsidy rate 

of $213,405 and a second-year subsidy rate of $229,939 for the two-year period ending

August 31, 2012. At Excursion Inlet, Alaska Juneau Aeronautics, Inc. dba Wings of Alaska, 

later merged with SeaPort Airlines, Inc. (SeaPort), was selected to provide EAS for an annual 

subsidy rate of $33,919. 

As the end of the contracts were approaching, we issued Order 2012-4-13, April 10, 2012, 

requesting proposals from air carriers interested in providing EAS at the communities for a new 

term beginning September 1, 2012. In response to that Order, we received proposals from Air 

Excursions, SeaPort, and Ward Air Inc. (Ward Air).
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By Order 2012-9-8, September 10, 2012, the Department re-selected Air Excursions to provide 

EAS at Kake for a first-year annual subsidy of $163,621 and a second-year annual subsidy of 

$177,574. The airline provides 14 weekly nonstop round trips to Juneau during the 21-week 

peak season and 7 weekly nonstop round trips during the 31-week off-peak season using 9-

passenger Piper PA-31 Navajo aircraft. 

In addition, we selected Air Excursions over SeaPort and Ward Air to provide EAS at Excursion 

Inlet for a first-year annual subsidy of $27,111 and a second-year annual subsidy of $28,835. 

The airline began EAS on September 15, 2012, and provides three weekly nonstop round trips a 

week to Juneau during the 21-week peak season with PA-32 Cherokee 6 aircraft, and one weekly 

nonstop round trip during the 31-week off-peak using the Cessna 206 aircraft.

Petition for Reconsideration of SeaPort

On September 21, 2012, SeaPort filed a Petition for Reconsideration of Order 2012-9-8, as well 

as a supplement to that petition. In addition, the Department received a response from Air 

Excursions regarding SeaPort’s petition. SeaPort alleges that the Department included facts in 

four different areas that were incorrect, incomplete, or mischaracterized, as summarized below.

First, SeaPort maintains that the Department mischaracterized an event on August 2, 2012, 

involving the destruction of Air Excursions’ aircraft and subsequent death of its pilot (the only 

occupant of the aircraft). Specifically, the selection order referred to that event as an “incident” 

when it should have been referred to as an “accident.”1 

Second, SeaPort asserts that the majority of comments received from the community of Kake 

favored the selection of SeaPort, contrary to what the selection order says. By SeaPort’s 

calculations, 7 of 14 commenters favor SeaPort, 5 favored Air Excursions, and 2 did not specify

a carrier of choice.

Third, SeaPort questions Air Excursions’ reliability and says the Department “glosses over the 

high number of flights the airline flies with small aircraft.” SeaPort states that during the last 

contract term, Air Excursions used the proposed 9-passenger Piper PA-31 Navajo twin-engine

aircraft only 12 percent of the time. 

Finally, since Air Excursions was recently acquired by a company owned by Mr. Kent Craford, 

who resides in Portland, Oregon, it is not a locally owned Alaska airline as stated in the Order. 

Additionally, SeaPort later filed a Supplement requesting that the two communities be given the 

opportunity to submit additional comments on the selection of Air Excursions. SeaPort’s basis 

for this request is that SeaPort anticipated finalizing an interline agreement with Alaska Airlines 

by the end of October 2012. SeaPort also notes that no additional subsidy would be required as a 

result of the new agreement.

 1 According to the National Transportation Safety Board (NTSB), an accident is defined as an occurrence associated 

with the operation of an aircraft that takes place between the time any person boards the aircraft with the intention of 

flight and all such persons have disembarked, and in which any person suffers death or serious injury, or in which 

the aircraft receives substantial damage. An incident is defined as an occurrence other than an accident that affects 

or could affect the safety of operations.
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Response from Air Excursions

On October 1, 2012, Air Excursions filed an Answer to SeaPort’s Petition addressing some of 

SeaPort’s assertions. First, Air Excursions states that there are no disqualifying safety issues at 

the airline and that subsequent National Transportation Safety Board (NTSB) and Federal 

Aviation Administration (FAA) investigations into recent incidents and accidents have not 

revealed any operational deficiency on the part of the company. 

Second, Air Excursions refutes SeaPort’s claim that the airline is not a locally owned airline. Air 

Excursions states that it has operated from bases in Juneau, where it serves more communities 

than any other scheduled airline, and Gustavus for over twenty years and the airline’s only 

operation is in Southeast Alaska. Air Excursions also states that Mr. Mike Steadman, the coowner with Mr. Craford, was born in Sitka and has lived in Juneau for the last 24 years. 

Decision

We have decided to grant SeaPort’s Petition for Reconsideration and, upon review, we affirm the 

decision to select Air Excursions to provide EAS at Kake and Excursion Inlet. We will address 

SeaPort’s Petition point by point.

First, before issuing any selection order, 49 U.S.C. §§ 41737(b) and 41738 require that we find 

an air carrier fit, willing, and able to provide reliable service before we may subsidize it to 

provide EAS. It is standard practice for EAS staff to verify that an air carrier has been found fit 

to: 1) operate by the Department and 2) operate safely by the FAA. In this selection case, the 

Department’s obligation to verify the air carrier’s fitness was satisfied. With respect to the air 

carrier’s safety, we specifically asked the FAA if it is taking what is called “certificated action” 

against an air carrier; in other words, is the FAA taking steps to revoke an air carrier’s 

certification to operate as a result of safety violations? Prior to selecting Air Excursions, EAS 

staff inquired with the FAA if any certificated action was being taken against the air carrier, 

especially in light of an air crash on August 2, 2012. At the time of our inquiry, the FAA stated 

that, while an investigation was being conducted by the NTSB into the cause of the crash, the 

FAA was not taking any certificate action against Air Excursions. Furthermore, the FAA stated

no facts at that time had come to light that would negatively affect the air carrier’s safety that

would prevent us from selecting Air Excursions to provide EAS at Excursion Inlet. While the 

Order did incorrectly refer to the August 2, 2012, accident as an “incident,” that does not

automatically invalidate the Department’s decision to select Air Excursions. In addition, a 

subsequent inquiry with the FAA regarding Air Excursions’ status has presented no facts that 

would negatively affect our previous fitness finding. Lastly, SeaPort contends that the 

Department failed to mention in the selection order an earlier accident, as well as an incident that 

involved Air Excursions. Per the above referenced governing statutes, the Department is not 

required nor is it the practice of EAS staff to detail all incidents or accidents in a selection order. 

Second, SeaPort contends that the order incorrectly stated that the majority of the comments 

from Kake supported their proposal over Air Excursions’. We did, in fact, receive a number of 

letters (seven) from private citizens who expressed their support for SeaPort’s proposal. The 

concerns of these citizens were given due consideration as part of the Department’s analysis of 

which air carrier to select. In addition, 49 U.S.C. §41733(c)(d) states that in selecting an air 

carrier to provide EAS, the Department shall consider “...the preferences of the actual and 

potential users of air transportation at the eligible place, giving substantial weight to the views of 

the elected officials representing the users.” In the case of Kake, the two elected bodies 
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representing the community, the City of Kake and the Organized Village of Kake (OVK) 

submitted conflicting support letters. The City of Kake supported the proposal put forth by 

SeaPort, but the OVK supported Air Excursions’ proposal. As mentioned in the Order selecting 

Air Excursions, a letter dated June 14, 2012, from Mayor John Janik of the City of Kake 

acknowledged the two groups’ difference in opinion. Mayor Janik also stated that Air 

Excursions had obtained additional support from the Kake Community School District. Mayor 

Janik stated, “While the mayor and city council do not wish to retract the earlier Letter of 

Support for [SeaPort], they also do not wish to see that letter take precedence over the 

recommendations by [OVK] or the school district. That said, when you review public comment 

and public recommendation, please consider the recommendations of the [OVK] and the Kake 

Community School District ahead of those of the City of Kake.” Lastly, in an e-mail dated 

October 10, 2012, the OVK affirmed their earlier decision to support the proposal put forth by 

Air Excursions. Thus, based on the statute cited above, the community, through its elected 

representatives clearly favored the selection of Air Excursions.

Third, SeaPort asserts Air Excursions is not a locally owned airline. We acknowledge that Air 

Excursions’ primary owner, Mr. Kent Craford, is located in Portland, Oregon. Nevertheless, 

nowhere in our Decision did we rely on Air Excursions’ being a locally owned airline. We state 

that the airline was selected because it was experienced in providing EAS in Alaska (a key 

criterion), and its proposal was the least expensive of the three air carriers that submitted

proposals. We noted, however, that an Excursion Inlet resident’s feedback mentioned that their 

preference was that the chosen airline be locally owned.

Fourth, SeaPort calls into question Air Excursions’ reliability as an EAS air carrier because it

failed to operate the proposed Piper 31 aircraft as detailed in Order 2010-8-9. In fact, we were 

made aware of the airline’s desire to substitute smaller aircraft when there was not demand for 

the larger aircraft. Air Excursions requested the ability to substitute the smaller aircraft at a 

lower subsidy per flight, and we approved that request by an internal e-mail dated 

February 9, 2011. In that e-mail, we detailed a payout schedule that would pay Air Excursions

substantially less when it substituted the smaller Piper Cherokee aircraft.2 Since Air Excursions

used smaller Piper 32 aircraft the majority of the time, the subsidy paid out was substantially less 

than had the air carrier flown the Piper 31 the entire time. Thus, Air Excursions was able to 

better match capacity to demand and save EAS funds.

Lastly, in its supplement to the Petition for Reconsideration, SeaPort stated that the airline would 

finalize an interline agreement with Alaska Airlines. Per 49 U.S.C. §41733(c)(1)(c) , one of the 

five factors that we consider when selecting an carrier to provide EAS is “The interline 

agreements the applicant has made with a larger carrier to allow passengers and cargo of the 

applicant at the hub airport to be transported by the larger carrier through one reservation, ticket, 

and baggage check-in.” This is a moot point because, as stated earlier, nowhere in our Decision 

did we mention that SeaPort was not selected because of a lack of an interline agreement with a 

larger airline. Air Excursions was selected because they are a reliable EAS air carrier, had the 

majority of support from community officials, and their subsidy was significantly less than

SeaPort’s proposed subsidy at both Kake and Excursion Inlet. Furthermore, even if we were to 

reconsider our decision based on SeaPort’s interline agreement with Alaska Airlines, it has been 

 2 This e-mail was added to the Docket on November 23, 2012. 
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confirmed that, as of this writing, no interline agreement has been finalized between the two 

airlines.

Based on all of the above, we affirm our decision in Order 2012-9-8 to select Air Excursions to 

provide EAS at Kake and Excursion Inlet, Alaska. 

This Order is issued under authority delegated in 49 CFR 1.56(a)(f). 

ACCORDINGLY,

1. We grant the Petition for Reconsideration of Order 2012-9-8, filed by SeaPort Airlines, Inc. 

dba Wings of Alaska and, upon reconsideration, affirm our decision in Order 2012-9-8 

selecting Air Excursions to provide EAS at Excursion Inlet and Kake, Alaska; 

2. These dockets will remain open until further order of the Department; and

3. We will serve a copy of this order on SeaPort Airlines, Inc. dba Wings of Alaska; Air 

Excursions, LLC; the City Manager of Kake; Organized Village of Kake; Excursion Inlet 

officials; Ward Air Inc.; and the State of Alaska Department of Transportation.

By:

SUSAN L. KURLAND

Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available online at

www.regulations.gov