Order 2015

- 1

- 3 Served: January 6, 2015



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 6th day of January , 20 15

Essential Air Service at

ALEKNAGIK, ALASKA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 2014

- 0219



### ORDER PROHIBITING TERMINATION OF SERVICE AND REQUESTING PROPOSALS

Summary By this O rder, the Departme nt is (a) prohibiting Grant Aviation, Inc. (Grant Aviation) from terminating its unsubsidized service at Aleknagik, Alaska, and requiring that it continue its

current service u ntil conclusion of this Essential Air Service (EAS) case and (b) requesting proposals from airlines interested in p roviding EAS at Aleknagik with or without subsidy.

Pr oposals are due by February 10

, 2015.

Background and Eli gibility

On December 5, 2014, Grant Aviation filed a 90

- notice of its intent to terminate service effective March 5, 2015.

Aleknagik is an EAS community by virtue of its being listed on a certificated airline ’s

certificate on October 24, 1978, the date of enactment of the Airline Deregulation Act. In the FAA Modernization and Reform Act of 2012, Pub. L. 112

- 95 (Feb. 14, 2012), Congress amended 49 U.S.C. § 41731(a)(1)(B) to change the definition of “eligible place” for the purpose of recei ving EAS. Under the amendment, eligible communities are those that (among other things), at any time during the period between September 30, 2010, and September 30, 2011, inclusive

— (i) received Essential Air S ervice for which compensation was provided to an air carrier under this subchapter; or (ii) received a 90

- day notice of intent to terminate Essential

Air S ervice and the Secretary required the air carrier to continue to provide such service to the community.- 2

-

49 U.S.C. § 41731(c) states that subparagraphs (B), (C), and (D), of subsection (a)(1) shall not apply with respect to locations in the State of Alaska or the State of Hawaii. Thus, Aleknagik

is an eligible place for the purposes of receiving EAS.

Aleknagik’s EAS d etermination (Order 80

- 1

- 167) guarantees the community a minimum of two round trips per week. Currently, Grant Aviation operates three weekly round trips to Dillingham on 6

- passenger Cessna 207.

Hold

- In Aleknagik is guaranteed by the Department a minimum of two round trips to Dillingham or other suitable hub. Grant Aviation’s proposed termination of service would cause Aleknagik to be left with no air service and, therefore, the Department is required by law to prohibit Grant Aviation from terminating suc h service at the end of its 90

- day notice, i.e., March 5, 2015. As such, the Department will require Grant Aviation to continue to maintain its current level of service at the community for successive 30

- day periods until the Department has completed

proc essing the air carrier

- replacement case and the selected air carrier has initiated service. 1

Request for Proposals Carriers should file their proposals no later than February 10, 2015 . After that date, our staff will docket proposals, thereby making them public, and shortly afterwards will provide a summary of the proposals to the community and ask them for their final comments. We will give full consideration to all proposals filed in a timely manner.

We are here providing interested carriers with some basic information to serve as guidance when they prepare their proposals, but we will not prescribe a precise format. We expect proposals to adequately describe the service being proposed and the annual amount of subsidy being requested. The applicants can make their own judgments as to the level of detail they wish to present; however, they might want to include proposed schedules as well as supporting data for their subsidy requests, such as projected block hours, revenues and expenses. We strongly encourage clear, well

- documented proposals that will facilitate their evaluation by the affected community and the Department. 2

Carriers are also welcome to propose more than one option, if they choose; they need not limit themselves to those requirements if they envision other, potentially more attrac tive service possibilities

-- different hubs, frequency or equipment, for example

-- with subsidy requirements that remain competitive. The community and air carriers are encouraged to work

1 In accordance with 49 U.S.C. 41734(c), the Department will extend Grant Aviation’s service obligation for

successive 30

- day periods as necessary until replacement service begins.

2 In selecting a carrier to provide subsidized EAS in Alaska, 49 U.S.C. § 41733(c ) (1) directs us to consider six factors: (1) service reliability; (2) contractual and marketing arrangements with a larger carrier at the hub; (3) interline arrangements with a larger carrier at the hub; (4) community views; (5) the experience of the appl icant in providing, in Alaska, scheduled air service or significant patterns of non

- scheduled air service; and (6) whether the carrier has included a plan in its proposal to market the service. In addition

, the Consolidated Appropriations Act, 2012, Publi c Law 112

- 55, and continued by the Consolidated and Further Continuing Appropriations Act, 2015,

Public Law No. 113

- 235, provides that when selecting a carrier to provide EAS, the Department may consider the relative subsidy requirements, thus codifying a factor that we have considered since the inception of the program. Interested carriers should also be aware that our general provisions governing Essential Air Service will be included in the selection Order as part of our authorization of subsidy for the selected service. Appendix C of this Order contains those general provisions.- 3

-

together in advance of the due date for proposals to craft a serv ice pattern that is desirable to

the communit y and meets the operational needs of the airline s

.

Carrier proposals should be submitted to the Department with all materials merged into a single document. In addition, because the document will be published on Regulations.gov, each page

should be formatted to be viewed online.

Interested carriers should prepare their proposals with every expectation that their initial proposals will also be their final and only proposals. We retain the discretion to negoti ate proposals with carriers when we deem it desirable. We also retain the discretion to reject outright all unreasonable or unrealistic proposals and solicit a new round of proposals. As always, we will formally solicit the community’s views on any servi ce options we receive before making a long

- term carrier selection decision.

With specific respect to Aleknagik, air carriers should provide sufficient capacity to

ac commodate historical levels of traffic. Further, flights meeting EAS guidelines at Alaskan communities should provide sufficient capacity to accommodate passenger, freight, and mail demand on the critical outbound segment. In that regards, as is typicall y the case in Alaska, significantly more freight and mail flow from the hub to the EAS community than from the EAS community to the hub. We therefore expect proposals consisting of three round trips a week with capacity for around six passengers , or more f requencies with smaller aircraft . In order to help air carriers make traffic and revenue projections, we have included historical traffic in Appendix B.

Carriers should also be aware that the Alaska Department of Transportation and Public Facilities (DO T&PF) is constructing a bridge over the Wood River to connect the north part of Aleknagik

, where the Aleknagik A irport is located

, to the paved road leading to Dillingham, which is about 25 miles south of Aleknagik. The bridge is currently projected to be completed by November 2015.

Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug

- free workplaces and nondiscrimination. 3 Consequently, all carriers receiving Federal subsidy to support Essential Air Service must certify that they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimination, and those carriers whose subsidies exceed $100,000 over the life of the rate term must also certify that they are in com pliance with the regulations governing lobbying activities. All carriers that plan to submit proposals involving subsidy should submit the required certifications along with their proposals. Interested carriers requiring more detailed information regardi ng these requirements, as well as copies of the certifications, should contact the Office of Aviation

3 The regulations applicable to these areas are: (1) 49 CFR Part 20

– New restrictions on lobbying; (2) 49 CFR

Part 21

– Nondiscrimination in federally

- assisted programs of the Department of Transportation

– Effectuation of

title VI of the Civil Rights Act of 1964; 49 CFR Part 27

– Nondiscrimination on the basis of disability in programs and activities receiving or benefiting from Federal financial assistance; and 14 CFR Part 382

– Nondiscrimination

on the basis of disab ility in air travel; and (3) 2 CFR Part 1200

– Government

- wide debarment and suspension (non

- procurement) and government

- wide requirements for drug

- free workplace (grants).- 4

-

Analysis at (202) 366

- 5903. The Department is prohibited from paying subsidy to carriers that

do not submit these documents. 4

Community and State Comments Civic officials are welcome to submit comments on the proposals at any time. As noted earlier, we will provide a summary of the proposals to the civic p arties and ask them to submit their final comments shortly after February 10, 2015 , the due date for carrier proposals.

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

ACCORDINGLY,

1. We prohibit Grant Aviation, Inc. from suspending service at Aleknagik, Alaska , at the end

of the 90

- day notice period, and require it to mai ntain service at the community , as set forth in Appendix D, for an initial 30

- day period through April 4, 2015 , or until a carrier capable of provid ing reliable EAS actually begins service, whichever is first;

2. We request that ca rriers interested in providing Essential Air S ervice at Aleknagik, Alaska

, submit their proposals, with or without subsidy requests, no later than F ebruary 10, 2015 . The proposals should be emailed to: michael .f.martin@dot.gov with the title “Proposal to Provide

Essential Air Service at Aleknagik, Alaska ”; 5

3

. This docket will remain open until further order of the Department; and

4

. The Department will serve a copy of this O rder on the Alaska Department of Transportation

& Public Facilities ; the civic officials of Aleknagik, Alaska; Grant Aviation, Inc.; and t he

service list for this d ocket

.

By:

BRANDON M. BELFORD Deputy Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available on line at www.regulations.gov

4 The certifications are al so available on the web at http://ostpxweb.dot.gov/aviation/index.html.

5 Questions regarding filings in response to this Order should be directed to Michael Martin at 202

- 366

- 6494, or

via email at michael.f.martin@dot.gov

.

### Appendix A



## Area Map

Source: Map Data @Google 2014

### APPENDIX B



# Historical Traffic

– Aleknagik, Alaska 1

Origination Destination Origin and Destination

Year Quarter Pax Freight PEQ Mail PEQ Pax Freight PEQ Mail PEQ Total

Pax Total Freight

PEQ Total Mail

PEQ

2012 4 3 1 2 3 6 52 6 7 54

2013 1 17 2 3 18 7 46 35 9 48

2013 2 0 0 4 3 7 50 3 7 54

2013 3 0 1 6 3 7 64 3 8 70

Total 20 3 14 27 27 212 47 30 226

2013 4 8 1 2 0 6 51 8 7 53

2014 1 5 1 8 7 7 57 12 8 64

2014 2 2 1 4 0 8 70 2 9 74

2014 3 0 1 8 0 2 18 0 3 26

Total 15 4 22 7 23 195 22 27 217

1 T100 Market Enplanement Data

### Appendix C

Example of General Terms and Conditions fo r Essential Air Service

The carrier understands that it may forfeit its compensation for any flights that it does n ot 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 tak e

- 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 eligi ble 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 w arrant, 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

determin ing 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 commun ity.

If the Department unilaterally, either partially or complete, 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 doe s 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 an d/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.

Funds may not be available for performance under this Order beyond [DATE]. The Government’s obligati on for performance under this Order beyond [DATE], is subject to the availability of 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 [DAT E], until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond [DATE], the Department will provide notice in writing to the carrier.

Subsidy contracts are subject to, and incorporat e 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.

All claims for payment, includ ing any amended claims, must be submitted within 90 days of the last day of the month for which compensation is being claimed. For example, claims for service provided in July must be filed by October 31 st ; August claims must be submitted by November

30 th , and so on.

### Appendix D

Essential Air Service to be Maintained at Aleknagik, Alaska

Effective Period : April 5 , 2015 , until further Department action

Scheduled Service : Three weekly round trips to Dillingham

Aircraft : 6

- passenger Cessna 207