KALININ AVIATION , LLC
d / b / a
ALASKA SEAPLANES

ESSENTIAL AIR SERVICE BID

JUNEAU

- KAKE

JUNEAU

- EXCURSION INLET

DOCKET 0ST

- 2008

- 0217 April 28, 2014

Pursuant to the Department’s call for bids for Essential Air Service at Kake and Excursion Inlet, Kalinin Aviation LLC dba “ Alaska Seaplane s” submits the following bid.

Kake Summary:

Alaska Seaplanes propose s a four

- year program for Kake with the following components:

 Cessna “Supervan” Caravan and Piper Navajo Chieftain platforms, complete with full de

ice equipment for safer long

- distance flying

 Instrument Flight Rules (IFR) operating authority

 2 direct roundtrips, 1 one

- stop (thru Sitka) roundtrip per day in summer

 1 direct roundtrip, 1 one

- stop (thru Sitka) roundtrip per day in winter

Excursion Inlet Summary:

Alaska Seaplanes proposes a four

- year program with the same service pattern as is currently operated on Cessna 206/207 and Piper Cherokee platforms

.Details of Kake proposal

Service to Kake has been operated using aircraft owned by Air Excursions (PA

- 32 Navajo Chieftain) and also by Alaska Seaplanes (Cessna Caravan) under contract. This bid allows for consolidation of services under Alaska Seaplanes.

Over the last four years Air Excursions, and then Alaska Seaplanes , made substa ntial improvements in the provision of Essential Air Service at Kake.

When the owners of Alaska Seaplanes acquired Air Excursions in May of 2012, they made four commitments to the people of Kake: 1. Lower fare avail ability through online booking 2. More frequent use of larger aircraft on the Kake route 3. The acquisition of a de

- ice booted Cessna 208B Caravan with greater haul ing capability 4. Instrument Flight Rules (IFR) operating authority.

Alaska Seaplanes has fulfilled all of those commitm ents.

Alaska Seaplanes increased the frequency of larger

- sized aircraft by first operating their Piper Navajo Chieftain on more flights. Then, in the Spring of 2013, they introduced their Cessna 208B “Supervan” Caravan, with full de

- ice capability and a larger 900h.p. engine which increases the aircraft’s operating payload. Both aircraft are ce rtified for instrument (IFR)

o perations. At the same time, Alaska Seaplanes developed a new online reservation and ticketing program with lower fares, and did all of this with reduced subsidy need.

Alaska Seaplanes has seen Kake traffic grow steadi ly. Passenger traffic is now reaching levels

n ot seen since 2008 when L.A.B. F lying ceased operations to Kake.

Alaska Seaplanes has also partnered with the Cities of Kake, Angoon, Tenakee Springs, Pelican and Elfin Cove and in 2013 helped them secure a Small Community Air Service Development (SCASD) grant to improve the marketing of air service to the five communities. Work on the marketing program is just getting un derway, with a new branded website being developed for use as a booking portal for flights, lodging and activity packages.

Increased Kake ridership has been accomplished despite uncertificated scheduled service between Kake and Sitk a, the site of a Sout heast Alaska Regional Health Co nsortium hospital. Previous to this service, patients of the SEARHC program either used the hospital in Juneau, or flew to Sitka via Juneau. To regain the lost traffic, Seaplanes will add flights between Kake andSitka and then continuing to Juneau next month

. Alaska Seaplanes expects the Sitka service to

be self

- sustaining and those flights between Kake and Sitka, and Sitka and Juneau, are not contemplated in the Kake

- Juneau EAS proposal or subsidy request.

As reported earlier to DO T, errors related to new software implementation significantly understated all traffic types for Kake in the summer of 2013. The chart below reflects the correct data submitted to DO T earlier this year, and the growth in Kake traffic since Air Excursions/Alaska Seaplanes took over Essential Air Service from Wings of Alaska in 2010.

Wings of Alaska takes over EAS in 2Q2008 Air Excursions/Alaska Seaplanes takes over EAS in 3Q2010

Service for a four year period ( October 1, 2014

– September 30, 2018) is proposed using nine

seat Cessna Caravan and Piper Navajo aircraft, equipped and authorized for operation under Instrum ent Flight Rules.

The Caravan was purchased and put into operation in 2013, and has generated strong approval from the com munity. The Piper Navajo was completely refurbished earlier this year, including new paint, interior, de

- ice boots, autopilot and windows

. It is now fully IFR

- capable. Alaska Seaplanes reserves the right to operate Piper Cherokee, Cessna 206/207 and DeH avilland Beaver aircraft on the route when circumstances dictate, at a 5/9 ths subsidy rate as has been past practice. 0

500 1000 1500 2000 2500 3000 3500 4000 

## KAKE PASSENGERS

PSGRSIn accordance with EAS requirements, two non
- stop round trips would be operated in the peak

period and one non
- stop roundtrip per day during the off

- peak period. The same flight frequency and operating sta tistics used in the 2012 bid are used here.

Alaska Seaplanes’ IFR

- capable Cessna “Supervan” Caravan and Piper Navajo ChieftainPassenger fares are set at the estimated average pa ssenger fare wi th the average base pre

- tax

fare of $143 .00 . Freight rates are the standard per pound rate, and the mail rates are tho se currently in effect. Revenue for passengers and freight is expected to increase 6% per year based on traffic growth. E xpenses are expec ted to increase at the rate of 4 % per year. A 4%

non
- completion rate is assumed.

Seaplanes requests a term of four years for the contract, although separate bids for each year of operation are shown. Since taking over the EAS contract at Kake, both service frequency and traffic have increased greatly. Seaplanes has continuously upgraded its service by adding refurbished, instrument equipped Piper Navajo aircraft and now a Cessna Caravan

. In 2012, Seaplanes went to a new automated onli ne reservation system which allowed for reduced passenger fares for tickets purchased online. Alaska Seaplanes has also partnered with Hahn Air to increase flight visibility through Global Distribution System (GDS) portals. Only Seaplanes can offer a ful l range of aircraft including amphibious aircraft, five seat land aircraft, nine seat multi

- engine aircraft and nine seat turbine aircraft.

Since it began its service four years ago, Seaplanes has offered the most efficient patterns of service with the lo west subsidy need of all proposals. Seaplanes has undertaken a multi

- million dollar program of aircraft and facility improvements, and a four year term will allow it to continue this effort with the confidence that the needed cash flow will be there.

Opp osing proposals in the past ha ve been “ big on promises ” which not only exceed the subsidy need substantially , but propose unsustainable fares and improvements which are illusory or inconsequential. Seaplanes has offered fares at rates comparable to non

- subsidized markets rather than propose unsustainably low fares which only increase subsidy need.

Alaska Seaplanes proposes to operate the twice

- daily peak season non
- stop roundtrips and

once daily o ff

- peak non
- stop roundtrip at an annual subsidy rate specified in the attached table. Additional indirect flight routings through Sitka will be available in both the summer and winter, but do not require subsidization.

Details of Excursion Inlet Proposal

Alaska Seaplanes is the only commuter

- certificated carrier in the Juneau market to operate both wheel planes and float planes, allowing the greatest flexibility for operating scheduled service to Excursion Inlet given the occasional closure of its runway i n the wintertime.Alaska Seaplanes proposes offering service at Excursion Inlet using Cessna 207 and Piper

Cherokee Six wheel planes, and a Cessna 206 on amphibious floats for occasions when the community is only accessible by water. Seaplanes has prov ided year

- round reliable service with this aircraft mix

.
Alaska Seaplanes proposes to operate the 3

- times weekly peak season roundtrips and once

weekly off

- peak roundtrip at an annual subsidy rate specified in the attached table.

CONCLUSION

Alaska Seaplanes has shown its dedication to reliable service with aircraft desired by the communit ies . The purpose of two year bids is to allow for the possibility of better service or lower subsidy from different carriers. Alaska Seaplanes has always been the lowest bidder, offered the largest fleet and greatest variety of aircraft, and has continuously upgraded all elements of it service.

These improvements reflect a significant capital risk that Seaplanes has undertaken willingly , and make a four

- year ter m appropriate for both markets

. A four year term of service is fully justified, and meets the conditions previously used to award contracts of this term. It is also requested that the contract to provide Essential Air Service be issued to Kalinin Aviatio n LLC dba “Alaska Seaplanes

. ”

Respectfully submitted ,

Kalinin Aviation, LLC d/b/a Alaska Seaplane Service

April 28, 2014