Order 2010-9-21

Served: September 22, 2010

 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 September, 2010

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, 2010, 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 the end of the rate term, the Department issued Order 2010-6-15 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-1996-2009
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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 consistent with what the communities currently receive, and fully 

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

met those requirements in an efficient manner.

Proposal

In response to Order 2010-6-15, 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 search on Docket ID: DOTOST-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 $13,000 the 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 Facilities (DOT & PF) 

and requested their comments on the carrier selection decision.

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

however, they emphasized the importance of EAS in Alaska by stating that the program 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 supporting the selection of Alsek.

Decision on Carrier Selection

After careful consideration of this matter, including the comments of local officials, the 

Department has decided to re-select Alsek to provide 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.

This 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 almost 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 
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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 fit, 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 has come to our 

attention that would cause us to question the 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) and re-delegated to the 

Director, Office of Aviation Analysis.

ACCORDINGLY,

1. We reselect 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, for the period 

from November 1, 2010, through October 31, 2012;

2. The Department directs Alsek Air Service, 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 carrier may forfeit 

its compensation for any claim that is not supported under the terms of this order;

3. We find that 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. This 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.
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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.gov
Appendix A

SERVICE AREA MAP
Appendix 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 $120.00
Appendix C

Page 1 of 2

Alsek Air Service, Inc.

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

Effective Period: November 1, 2010 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 make up for 

service shortfalls in another week.

Subsidy Rate per Flight: $175.001

Weekly Compensation 

Ceiling

per arrival from or departure to Yakutat

2

$2,100.00 peak season

: $1,400.00 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 ($175.00) 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 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 

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 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.

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