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us . Deportman t o f Ttansportotio n Offic e o fth e Secretar

y o fTransportatio n Steve n D
. Hatte r Deput y Commissioner , Aviatio n 411 1 Aviatio nAvenu e POBo x 19690 0 Anchorage , A K

99519-690 0 , \•'•. : 1 4 1 20 0 Ne wJerse yAvenue , S E Washington , D C 2059 0 Marc h2 , 201 1

Dea r Mr
. Hatter : A s yo u know , Peninsul aAirways , Inc
. (PenAir) , provide s subsidize dai r servic e unde r

th e essentia l ai r servic e (EAS ) progra mat Akiitan , Alaska
. B y Orde r 2010-11- 3 th e Departmen t requeste d"bes t an dfinal " proposal s t o serv e Akutan , an dPeiiAi r wa s th e onl y carrie r

t o apply
. Th e Department' s cuiren t contrac t wit hth e carrie r

call s fo r

servic e wit h9-sea t

Gmmma nGoos e aircraf t at a nannua l subsid y o f

$654,964
. Unde r

th e curren t

contract , whic hexpire s Apri l 30
. Akuta nwa s t o receiv e eleve nnonsto p roun dtrip s pe r wee k yea r round
. PenAi r propose s t o exten dth e curren t leve l o f service , fro mMa y 1 , 2011 , throug hApri l 30 , 2013 , bu t request s S710,15 7 annua l subsidy'
. Th e calculation s ar e attached
. Pleas e not e tha t th e averag e passenge r

far e reflecte di nAppendi x A doe s no t necessaril y reflec t

th e averag e loca l far e passenger s woul dpay , bu t

rathe r reflec t th e prorate dportio no f th e tota l ticke t

price , e.g. , th e Akuta n- Dutc h Harbo r portio no f

a nAkutan-Dutc hHarbor-Anchorag e ticke t tha t th e carrie r

woul drealize
. Also , th e implici t averag e fare , a s reflecte di ntha t Appendix , i s ne t

o f certai ncharge s suc ha s federa l transportatio nsecurit y fees , excis e an dticke t taxes , an dpassenge r

facilit y charges
. O f

course , carrier s hav e th e discretio nt o charg e fare s the y dee mappropriate , an dth e passenge r fare s implici t

i n Appendi x A wer e develope dfo r subsid y rat e calculation s only
. PenAi r woul dhav e t o realiz e passenge r

fare s comparabl e t o th e averag e show ni nit s proposa l i norde r t o achiev e break-eve no r profitabl e operation s eve nwit hsubsidy
. M y purpos e i nwritin g yo u a t thi s tim e i s t o inforn i yo u o f th e result s o f

th e carrier' s servic e an d subsid y proposa l befor e w e submi t arecommendatio no nth e carrie r selectio nissu e t o th e Assistan t Secretar y fo r

Aviatio nan dInternationa l Affair s fo r decision
. Sinc e ther e ar e n o othe r option s befor e th e Departmen t

at thi s time , yo u nee dno t respon dt o thi s letter
. However , w e wante dt o giv e yo u th e opportunit y t o submi t

an y comments , o nth e record , i f yo u wish
. W e kno w thi s matte r i s importan t

t o yo u an dw e wil l ac t

a s quickl y a s possibl e upo nreceip t o f you r letter
. I norde r

t o expedit e th e case , pleas e submi t

you r comment s b y emai l t o Kevin.Adams@dot.go v b y Marc h17
. I f yo u hav e an y question s o r

nee dadditiona l time , pleas e contac t Kevi nAdam s a t

(202 ) 366-1047
. Sincerely ,
^ Denni s J
. DeVan y Chief, Essentia l Ai r

Servic e Divisio n Offic e o f

Aviatio nAnalysi s
Th e carrie r initiall y requested$874,88 7 th

e first yea r an d$918,63 1 th

e secon dyea r fo r thi s service
.Appendi x A

PenAir , Revise dProposa l at Akutan , Alaska , Docke t 2000-706 8 Akutan
. Alask a Tim e Perio d Aircraf t Type : Departure s Bloc k Hour s Passenger s Mai l Pound s Freigh t Pound s Passenge r Revenu e Mai l Revenu e Freigh t Revenu e Total Revenu e Flyin g Operation s Fuel/Oi l Insuranc e Maintenanc e Depreciation/Ren t Tota l Direct s TRa s % of

Revenu e DRpe r Wtd
. Departur e CRnerWtd
. Bloc k

Hou r Tota l Indiereci s Operatin g Expens e Profi t @ 5 % Interes t @ 2.3 % Economi c Cos t Ma y l,20ll,t l Grumma nGo o 1,14 4 1/ 47 7 1 / 3,00 0 125,00 0 46,60 0 $369,00 0 $124,87 5 $23,76 6 5517,64 1 $303,58 2 $143,62 5 S82.36 0 $378,18 9 $26,67 5 $934,43 1 $46,78 2 $134,97 8 $28,07 5 $209,83 5 $1,144,26 6 $57,21 3 $26,31 8 $1,227,79 8 Annua ) Subsid y $710,15 7
1/ 2 2 flighis/week

* 5 2 week s Bik
. Min./FIighi Blk
. Hrs
. 1,14 4 2 5 47 7