## Order: 2010

- 4

- 6 Served: April 9, 2010



# UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on the 9th d ay of April , 20 10

Essential Air Service at

EXCURSION INLET, ALASKA KAKE, ALASKA Docket DOT

- OST

- 2002

- 12014 Docket DOT

- OST

- 2008

- 0217

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



# ORDER REQUESTING PROPOSALS

Summary By this order, the Department is requesting pr oposals from carriers interested in providing essential air service (EAS) at Excursion Inlet and Kake, Alaska
, for the two

- year p eriod beginning September 1, 2010
, with or without subsidy

. Proposals are due by May 18
, 2010

. (See Appendix A for a map.)

B ackground By Order 2008

- 8

- 16, the Department selected Alaska Juneau Aeronautics, Inc., d/b/a Wings of Alaska, Inc. (Wings), to provide EAS at E xcursion Inlet and Kake, at annual subsidy rates of $34,659 at Excursion Inlet and $314,302 at Kake, for the two

- year period ending August 31, 2010. Excursion Inlet currently receives three round trips per week in the 16

- week peak season and one round trip per week in the 36 remaining weeks of the year to Juneau with 5

- seat Cessna 206/207 aircraft. Kake currently r eceives 14 round trips per week in the 21

- week peak season and seven round trips per week in the 31 remaining weeks of the year to Juneau usi ng 9

- seat Cessna 208 Caravans.
Request for Proposals As the end of the curre nt contract appro aches, we are here re questing proposals for a new two

- year period beginning September 1. Interested carriers should prepare their proposals

## - 2

-

with every expectation that their initial proposals will represent their final and only proposals. However, we retain the discretion to negotiate proposals with ca rriers when we deem it desirable. We also retain the discretion to reject outright all unreasonable or unrealistic proposals and resolicit a new round of proposals. However, we anticipate that negotiation or rejection will rem ain only occasional exceptions to the rule. Shortly after May 18 , we will provide a summary o f the proposals to the communities and ask them to submit their final comments. We will give full consideration to all proposals that are timely filed. 1



## We are here providing interested carriers with some basic information to assist them as they prepare their proposals, but we will not prescribe a precise format for their preparation. We expect proposals to adequately describe the service being proposed and the annual amount of subsidy being requested. 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 projec ted block hours, revenues, and expenses. We strongly encourage clear, well

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



## With specific respect to the se communities, carriers should provide sufficient ca pacity to accommodate historical leve ls of traffic. In that regard, as is typically the case in Alaska, significantly more freight and mail flow from the hub to EAS communities than from th e EAS comm unities to the hub. For Excursion Inlet
, we are re questi ng proposals for three round trips a week to Juneau during peak season and one round trip a week during off

- peak season with 10

- seat or less aircraft. For Kake
, we are requesting 14 round trips per week to Juneau during peak season and 7 round trips a wee k during off

- peak season us ing 10

- seat or less aircraft. 3 

## As always, we will formally solicit the communities’ views on any service options we receive before making a long

- term carrier se lection decision. The communities and air carriers are encouraged t o work together in advance of the due date for proposals to craft a service pattern that is desirable to the community and meets the operational needs of the airline interested in submitting a proposal.

1 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to provide essential air service without subsidy and we determine that service can be reliably provided without such compensation, we do not proceed with the carrier

- selection case. Instead we simply rely on that carrier’s subsidy

- free service as proposed. 2 In selecting a carrier to provide subsidized essential air service in Alask a , 49 U.S.C. 41733(c )(1) directs us to consider five factors: (1) scheduled service reliability; (2) contractual and marketing arrangements with a larger carrier to ensure service beyond the hub; (3) interline arrangements that the applicant has made with a larger carrier at the hub; (4) community views, giving substantial weight to the views of the elected o fficials representing the users; and (5) the experience of the applicant in providing, i n Alaska, scheduled air service. In addition, the Consolidated Appropriations Act, 2008, Public Law 110

- 161, 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. Intere sted 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 provis ions. 3 

### Carriers are free to set their peak

- period service at different periods based on the peak traffic demand as shown in Appendix B.

## - 3

-

We encourage proposals that meet those requirements in an efficient manner. Carriers are also welcome to propose more than one service option, if they choose; they need not limit themselves to those requirements if they envision other, potentially more attractive service possibilities

-- different hubs, fo r example

-- with subsidy requirements that remain competitive.

New Filing Procedures 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 Regula tions.gov, each page should be formatted to be viewed online

.



## Historical Traffic In order to assist prospective applicants in making traffic and rev enue forecasts, Appendix B shows historical traffic data from 2006

- 2009
, by quarter and direction so that

c arriers can tailor their proposals to meet peak demands. Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug

- free workplaces, and nondiscrimination. 4 Consequently, all

carriers receiving Federal subsidy for 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 rat e term must also certify that they are in compliance with the regulations governing lobbying activities. Because the Department is prohibited from paying subsidy to carriers that do not submit these documents, all carriers that plan to submit proposals in volving subsidy should be aware that the selected carrier will be expected to complete the required certifications. Interested carriers requiring more detailed information regarding these requirements as well as copies of the certifications should contact the Office of Aviation Analysis at (202) 366

- 5903. 5



## Community and State Comments The communit ies and the state are welcome to submit comments at any time. We encourage prospective applicants to contact the community before they submit their proposals in order to tailor them to the community’s needs. As noted earlier, we will provide a copy of the proposals to the civic parties and ask them to submit their final comments shortly after May 18 , the deadline for filing carrier proposals.

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

-- New restrictions on lobbying; (2) 49 CFR Part 2 1

-- 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 be nefiting from Federal financial assistance; and 14 CFR Part 382

-- Nondiscrimination on the basis of disability in air travel; and (3) 49 CFR Part 29

-- Government

- wide debarment and suspension (non

- procurement) and government

- wide requirements for drug

- fr ee workplace (grants). 5 The certifications are also ava ilable on the World Wide Web at http://ostpxweb.dot.gov/aviation/index.html

.

## - 4

-

This order is issu ed under authority delegated in 49 CFR 1.56a(f) a n d re

- delegated to the Director, Office of Aviation Analysis.
ACCORDINGLY, 1. We request that carriers interested in providing essential air service at Excursion Inlet and Kake, Alaska , submit their proposa ls, with or without subsidy requests, no later than May 18
, 2010 . The proposals should be e

- mailed to EAS@dot.gov , with the title: “Proposal to Provide Essential Air Service at Excursion Inlet and /or Kake, Alaska
, Docket OST

- 2002

- 12014 and DOT

- OST

- 2008

- 02 17 ”; 6

2. Th ese docket s will remain open until further order of the Department; and
3. 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 Reg ulations, 14 CFR Part 385.50, must file such petitions within ten (10) days after the date of service of this order.
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 ava ilable on the World Wide Web at http://www.regulations.gov

6 Questions regarding filings in response to this order may be directed to Michael Martin at (202) 366

- 6494, and proposals should be emailed to EAS@dot.gov, no later than May 18, 2010.

## Appendix A



# AREA MAP

## Appendix B Page 1 of 2

Year Quarter Pax Freight PEQ Mail PEQ Total Pax Freight PEQ Mail PEQ Total Pax Freight PEQ Mail PEQ Total 2006 1 411 26 23 460 460 30 139 629 871 56 162 1089 2006 2 356 77 19 452 396 75 114 585 752 152 133 1037 2006 3 1,032 172 29 1233 844 165 150 1159 1876 337 179 2392 2006 4 319 38 30 387 239 31 127 397 558 69 157 784 Total 2118 313 101 2532 1939 301 530 2770 4057 614 631 5302

2007 1 179 2 23 204 214 3 81 298 393 5 104 502 2007 2 580 78 29 687 589 24 167 780 1169 102 196 1467 2007 3 898 90 25 1013 788 63 115 966 1686 153 140 1979 2007 4 446 56 30 532 348 76 152 576 794 132 182 1108 Total 2103 226 107 2436 1939 166 515 2620 4042 392 622 5056

2008 1 272 6 23 301 241 34 118 393 513 40 141 694 2008 2 582 22 36 640 593 24 78 695 1175 46 114 1335 2008 3 317 29 10 356 293 45 103 441 610 74 113 797 2008 4 363 24 25 412 252 68 136 456 615 92 161 868 Total 1534 81 94 1709 1379 171 435 1985 2913 252 529 3694

2009 1 152 9 17 178 159 50 98 307 311 59 115 485 2009 2 405 58 19 482 396 69 104 569 801 127 123 1051 2009 3 356 49 23 428 373 65 111 549 729 114 134 977 2009 4 283 55 25 363 219 71 123 413 502 126 148 776 Total 1196 171 84 1451 1147 255 436 1838 2343 426 520 3289

Year Quarter Pax Freight PEQ Mail PEQ Total Pax Freight PEQ Mail PEQ Total Pax Freight PEQ Mail PEQ Total 2006 1 7 0 1 8 5 1 2 8 12 12 29 53 2006 2 5 1 1 7 4 8 10 22 9 10 34 53 2006 3 13 2 10 25 28 3 12 43 41 11 42 94 2006 4 1 0 0 1 2 0 2 4 3 8 38 49 Total 26 3 12 41 39 12 26 77 65 41 143 249

2007 1 0 0 0 0 0 0 3 3 0 12 24 36 2007 2 9 0 1 10 11 3 14 28 20 13 13 46 2007 3 47 4 5 56 45 2 11 58 92 9 33 134 2007 4 0 0 1 1 0 2 4 6 0 7 40 47 Total 56 4 7 67 56 7 32 95 112 41 110 263

2008 1 1 0 1 2 1 2 5 8 2 12 27 41 2008 2 38 1 1 40 33 4 5 42 71 5 41 117 2008 3 14 1 7 22 21 3 17 41 35 11 55 101 2008 4 0 0 1 1 0 2 4 6 0 11 44 55 Total 53 2 10 65 55 11 31 97 108 39 167 314

2009 1 0 0 1 1 3 0 3 6 3 0 4 7 2009 2 7 0 1 8 3 10 16 29 10 10 17 37 2009 3 14 0 9 23 7 7 4 18 21 7 13 41 2009 4 0 0 0 0 0 1 2 3 0 1 2 3 21 0 11 32 13 18 25 56 34 18 36 88

Source: US DOT Bureau of Transportation Statistics, Form T-100 for Warbelows Note: PEQs indicates passenger equivalents. 200 lbs. of mail/freight is equivalent to one PEQ Historical Traffic at Kake and Excursion Inlet, Source T-100 Market Report

KAE-JNU JNU-KAE Origin & Destination Totals

EXI-JNU JNU-EXI Origin & Destination Totals

## Appendix B Page 2 of 2

Year Quarter Pax Freight Lbs. Mail Lbs. Total Pax Freight Lbs. Mail Lbs. Total Pax Freight Lbs. Mail Lbs. Total 2006 1 411 5,248 4,504 10163 460 5,913 27,765 34138 871 11161 32269 44301 2006 2 356 15,467 3,860 19683 396 15,068 22,697 38161 752 30535 26557 57844 2006 3 1,032 34,468 5,800 41300 844 32,926 30,057 63827 1876 67394 35857 105127 2006 4 319 7,669 5,961 13949 239 6,136 25,359 31734 558 13805 31320 45683 Total 2118 62852 20125 85095 1939 60043 105878 167860 4057 122895 126003 252955

2007 1 179 470 4,678 5327 214 500 16,269 16983 393 970 20947 22310 2007 2 580 15,623 5,796 21999 589 4,714 33,405 38708 1169 20337 39201 60707 2007 3 898 18,070 4,967 23935 788 12,509 22,896 36193 1686 30579 27863 60128 2007 4 446 11,226 6,069 17741 348 15,194 30,340 45882 794 26420 36409 63623 Total 2103 45389 21510 69002 1939 32917 102910 137766 4042 78306 124420 206768

2008 1 272 1,139 4,647 6058 241 6,823 23,601 30665 513 7962 28248 36723 2008 2 582 4,456 7,184 12222 593 4,741 15,637 20971 1175 9197 22821 33193 2008 3 317 5,739 2,046 8102 293 8,891 20,680 29864 610 14630 22726 37966 2008 4 363 4,877 5,036 10276 252 13,621 27,235 41108 615 18498 32271 51384 Total 1534 16211 18913 36658 1379 34076 87153 122608 2913 50287 106066 159266

2009 1 152 1,841 3,309 5302 159 19,610 19,610 39379 311 21451 22919 44681 2009 2 405 11,511 3,727 15643 396 20,730 20,730 41856 801 32241 24457 57499 2009 3 356 9,826 4,529 14711 373 22,191 22,191 44755 729 32017 26720 59466 2009 4 283 11,003 4,913 16199 219 24,592 24,592 49403 502 35595 29505 65602 1196 34181 16478 51855 1147 87123 87123 175393 2343 121304 103601 227248

Year Quarter Pax Freight Lbs. Mail Lbs. Total Pax Freight Lbs. Mail Lbs. Total Pax Freight Lbs. Mail Lbs. Total 2006 1 7 14 205 226 5 250 298 553 12 264 503 779 2006 2 5 140 137 282 4 1,490 2,006 3500 9 1630 2143 3782 2006 3 13 483 2,018 2514 28 660 2,461 3149 41 1143 4479 5663 2006 4 1 50 67 118 2 0 323 325 3 50 390 443 Total 26 687 2427 3140 39 2400 5088 7527 65 3087 7515 10667

2007 1 0 0 46 46 0 0 537 537 0 0 583 583 2007 2 9 73 157 239 11 707 2,857 3575 20 780 3014 3814 2007 3 47 786 1,005 1838 45 482 2,182 2709 92 1268 3187 4547 2007 4 0 5 285 290 0 410 863 1273 0 415 1148 1563 Total 56 864 1493 2413 56 1599 6439 8094 112 2463 7932 10507

2008 1 1 0 275 276 1 294 909 1204 2 294 1184 1480 2008 2 38 279 254 571 33 791 1,075 1899 71 1070 1329 2470 2008 3 14 130 1,417 1561 21 425 3,396 3842 35 555 4813 5403 2008 4 0 0 202 202 0 346 825 1171 0 346 1027 1373 Total 53 409 2148 2610 55 1856 6205 8116 108 2265 8353 10726

2009 1 0 0 94 94 3 68 601 672 3 68 695 766 2009 2 7 12 195 214 3 2,088 3,218 5309 10 2100 3413 5523 2009 3 14 0 1,756 1770 7 1,291 859 2157 21 1291 2615 3927 2009 4 0 56 67 123 0 182 463 645 0 238 530 768 Total 21 68 2112 2201 13 3629 5141 8783 34 3697 7253 10984

Source: US DOT Bureau of Transportation Statistics, Form T-100 for Warbelows Note: PEQs indicates passenger equivalents. 200 lbs. of mail/freight is equivalent to one PEQ. Historical Traffic at Kake and Excursion Inlet, Source T-100 Market Report

Origin & Destination Totals KAE-JNU JNU-KAE Origin & Destination Totals

EXI-JNU JNU-EXI

## Appendix C

Example of General Terms and Conditions for Essential Air Service
The carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance with the terms and stipulatio ns 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 constitu tes 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 appli cable 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 replacem ent 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 shou ld 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 s tipulated 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 b y the Department and carrier do not constitute a total or partial reduction or cessation of payment.
Funds are not currently available for performance under this solicitation beyond September 30, 2010 . The Department’s obligation for perform ance under th is solicitation beyond September 30, 2010 , is contingent upon the availability of appropriated funds from which payment for services can be made. No legal liability on the part of the Department for any payment may arise for performance under this order b eyond 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 carrier will receive notice in writing by the Department.
Subsidy contracts are sub ject 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.

All cla ims for payment must be submitted within 60 days of the last day of service provided under this order

.

## Appendix D

SERVICE LIST

Aero Twin, AACA, Tony Cestnik Northern Air Cargo, John Eckles Alaska Air Carriers Association, Joy Journeay Northern Air Cargo, Keven Schlosstein Alaska Airlines, Joe Sprague Pacific Airways, Steve Montanus Alaska Airlines, Sandy Sini ck PenAir Consultant, Patrick Rizzi Alaska Central Express, John Seamon PenAir, Betty Gonzalez Alaska Central Express, Mike Bergt PenAir, Danny Seybert Alaska Central Express, Steve Endlich PenAir, Orin Seybert Alaska DOT, Christine Klein PenAir, Robert Cohn Alaska DOT, Rebecca Cronkhite PenAir, Scott Bloomquist Alaska DOT

- Medicaid Passenger Fares PM, Air, d/b/a Promech, Marc Sessoms Alaska Seaplan es, Craig Loken RITA, Bernard Stankus Alsek Air, Les and Debra Hartley Servant Air, Wes Osowski Arctic Circle, Donald Singsass Skagway, Ben Lingle Arctic Circle, Kelly Harris Smokey Bay Air, Claire McCann Arctic Transportation Services (ATS), Wilfred R yan Spernak Airways, Mike Spernak Arctic Transporation Services, (ATS), Jim Hjelm Tanana Air Service, Brian Martin Baker Aviation, Marjorie Baker Taquan Air Service, Brian Salazaar Bering Air, Allen Haddadi Taquan, Beckie Allen Bering Air, Jim Rowe Tat onduk, Controller, Tina Paylor Congressional, Murkowski, Arne Fuglvog Tatonduk, Marketing, Robert Ragar Congressional, Young, Jeremy Price Tatonduk, Owner, Robert Everts Consultant, Hank Myers USPS, Greg Garcia Consultant, Ken Acton USPS, Joel Rosen C onsultant, Norm Israelson USPS, Mary Tobias Ellis Air Taxi, Lynn Ellis USPS, Meredith Chavez, Consultant Era Aviation, Mike Lenorman USPS, Steve Deaton ERA, David M. Richards USPS, Mary T. Taylor Frontier Flying, Bob Haiducovich USPS, Tina Campbell Gr ant Aviation, Bruce McGlasson USPS, William Jones Hageland, Mike Hageland Warbelow’s Air Ventures, Arthur Warbelow Hageland, Patrick Thurston Ward Air, Kiesel Hageland, Steve Wahrnke Wings of Alaska, Bob Jacobsen Harris Air, Fly Hackett Wings of Alaska , Michelle Donahue Harris Air, Scott Harris Wright Air Service, Bob Bursiel Homeland Security, David Bernier Yute, Tim Vottis Homeland Security, William Ragan Homer Air, Andy Smircich Iliamna Air, Tim LaPorte Inland Aviation, Stephen Hill Island Air Service, Bob Stanford Katmai Air, Sonny Peterson