### To:

From: United States of America Department of Transportation Office of the Secretary Washington D.C. Servant Air, Inc 1 619 Airport Way Kodiak State Airport Kodiak, Alaska 996 15 Essential Air Service at: ATKA , ALASKA and NIKOLSKI, ALASKA under 49 U.S.C.
Summary 

### DOT-OST-1995-363 May 12, 2014

Under Order 2014-4-7, The Department of Transportation has requested proposals for essential service air transportation at Atka and Nikolsk i , Alaska
. Please acce pt this proposal as submitted by Servant Air Inc. of Kodiak , Alaska to provide such service
. History 

### Servant Air, Inc. , is an air carrier wi th interstate transportation authority and 401 certification. This entity has been operationa lly based in Kodiak Alaska since 2004, and has undergone DOT fitness review last fa ll. Servant Air ' s pilots are a ll qualified, conscientious, and well-established in Alaskan aviation. Mission It 

### is the mission of Servant Air, Inc. to provide safe, reliable , affordable transportation around the entire State of Alaska, with emphasis on the coastal region of this state. Primar y offices are located at the Kodiak State Airport. Servant Air, Inc. takes pride in the service it currently provides to the Kodiak Is land District. However, Servant Air, Inc. w ishe s to expand its opera ti ons to encompass more of the coastal region. Therefore, it is Servant Air ' s intent to bid this essential air serv ic e outlined above. Aircraft 

### To ac complish this goal of the Departments request , Servant A ir , Inc. has purcha sed and will use a Beechcraft King Air B-200. This aircraft is capable of carrying a two pilot crew with a maximum of 9 pass e ngers. It cruises at 250 knots and performs exceptionally well in short /soft
Page 1 of 4

### field operations. Servant Air's King Air flight crews consist of former Coast Guard pilots w ith exten s ive trainin g and experience in coastal Alaskan aviation , and the challenging weather encountered in this region. 

### Proposed Scheduling The Ex hibit "A " , attached , i s a financial spreadsheet showi ng the calculations for Servant Air's propo sed subsidy request to provide the following service: Flight 101 Total fli g ht time per route = 3.3 (hours) Dutch Harbor**~** 

### Atka**~** 

### Dutch Harb o r Monday , Wednesday , Friday Flight 102 Total fli g ht time per ro ute= 1
. 1 (hours) Dutch Harbor**~** 

### N ikol sk i**~** 

### Dutch H arbo r Monday, Friday Upon award of any s ubsidy contract , Servant Air w ill wo rk wi th the destination communities to further refine the above schedule to best meet the needs of these communities. These final schedules will be publish ed in the Official Airline Guide (OAG). Servant A ir will al so offe r flag s top serv ice to 

### I fro m Nikolski on all Atka flights as may be nec essary to serve these communities in the best manner possible. 

### Operations Logistics Operations oversight will be conducted from Servant Air's flight coordination office at Kodi ak. The aircraft will begin and terminate these fli g ht operations at Dutch Harbor's airpo rt terminal , and all fl ights w ill be monitored VIA GPS trac king system cu rrently in place. 

### Compensation Co ntr act compensation i s expected as outline in Exhibit "A" with a fixed cost allocatio n of $74 , 666.67 b e ing paid monthl y , in addition to a variabl e component paid based on departures comp leted. ie: Variable cost Subsidy request divided in to departures, for an additional monthly compensation equal to $2,080.96 per departure ($ 1 ,082, 102 .9 8 div id ed by 520 departures per year). This equates to a total s ub si dy request of $1 , 978 , 1 02.98 per year fo r a two year term . It 

### i s also understood that only completed fli ghts w ill be eligible for Variabl e Cost co mp ensati o n .

Page 2 of 4Exibit "A " Servant Air Inc. 1619 Airport Way Kodiak Alaska 99615 E sse nt ia l s e rv i ce su bsid y reques t At Atka and Nikolski Alaska Total est imated flight t ime ( H ours) Fl ig h t 10 1 M ,W, F Fli g ht 102 M , F P lus 1 0% rou te weather deviatio n f acto r Esti mated fli ght time per year Revenues : See Exibit "B" Hrs Per T rip 3
. 3 1
. 1

Direct Operating Expenses Pe r F light P il ot Co-P ilot Fu el Mechanic T raining Ma in te na nce Reserves ( P rop and Engin e ) I nsurance Aircraft H ull P asse n ge r Li a bi li ty T hird Party Liability Aircraft Lease Hanger Faci lity Crew housi n g Agent An n ual 5 1 4
. 8 1 1 4 .4 63.36 696
. 96

Per Fit Hr $ 1 4 3 .4 8 $ 14 3 .4 8 $ 700. 0 0 $ 107.61 $ 43
. 04 $ 4 50
. 0 0 $ 329.00 

### $ $ 5 7 .39 50.22 $ 17.22 $ 516
. 53

D utch Harbor Ra m p Services $ Acco untin g I Admin 300.00 Per Turn Fligh t fo ll owi n g I Com muni cati ons Total Operating Expenses $2,557 .97 Net Operating Loss T arget profi t ma rgin (5% of ope r ating ex p enses) Subsidy Requested Payment Allocation : *T o ta l F i xed Costs * Fi xed Cost M o nth l y Payment E xpectation : Variable Cost A ll ocatio n : N otes : $ 223,204.00

$ 74,666.67 An nuall y $ 1 00,00 0 .00 * $ 1 00,00 0. 0 0 * $ 4 87 , 8 72 .00 $ 75 , 000.00 * $ 30 , 000
. 00 * $ 3 1 3,63 2
. 00 $ 229,299
. 84 $ $ $ $ $ $ $ $ $ $ 40,000.00 * 35, 00 0. 0 0 * 12 , 000.00 * 360,000
. 00 *

48,000.00 * 4 8,000
. 00 * 48,000
. 00 * 78,000.00 4 0 , 000.00 5 1 ,679.00 $ 2 , 096,482.84 $ ( 1 ,87 3 , 278.84) $ 104 , 824
. 14 $ 1 ,978, 1 02.98 $ 896,000
. 00 $ 2,080 .96 P e r Departure 1) Fl ag stops a re a ut hori zed ; however, r evenu e ge n erated f ro m s ai d sto ps wi ll of f s et addi t i o na l cos ts associa ted wit h the se stops
. This reve nu e I ex pe nse is not re f lected above
. 2) All flig hts will be t imed to ensure h ighest leve l of commun ity satisfact io n . Page 3 of 4

### Exhibit "B" Revenue Projections Servant Air Inc. 1619 Airport Way Kodiak Alaska 99615 Essentia l service subsidy request At Atka and Nikolski Alaska
Location Passengers Pass Revenue Dutch Harbor- Atka 21 3 $ 64 ,965
. 00 

### Atka

- Dutch Harbor 1 8 3 $ 55 , 815
. 00 

### Dutch Harbot- Nikolski 44 $ 8,800.00 

### Niko lski

- Dutch Harbor 29 $ 5 ,8 00
. 00 $ 1 3 5 ,380
. 00


### Location Passengers Pass Revenue Dutch Harbor

- Atka 1 72 $ 52 ,460
. 0 0 

### Atka

- Dutch Harbor 102 $ 3 1 , 110
. 00 

### Dutch Harbot- Niko lski 1 06 $ 21 ,200
. 00 

### Nikolski

- Dutch Harbor 4 8 $ 9, 600 .0 0 $ 114 ,37 0 .00 

### 2012 Freight# Freight Rev

38978 $ 76 ,78 6.66 4955 $ 9 ,7 61 .3 5 2 655 $ 3,4 5 1
.50

0 $ 

## - $ 8 9 , 999.5 1 

### 2013 Freight# Freight Rev 10 643 $ 20 , 966.71

20 $ 39 .4 0 1 5 514 $ 2 0 , 1 68.20 4 00 $ 5 20
.0 0 $ 4 1,69 4.3 1 

### 2014 ProForma (10% Decline expected) Location Pa ss engers Pass Revenue Freight# Fre ight R ev Dutch Harbor- Atka 1 55 $ 4 7,2 14 .00 957 9 $ 1 8,8 7 0
.04 

### Atka

- Dutch Ha1·bor 92 $ 27, 9 9 9
.00 1 8 $ 35 .46 

### Dutch Harbot- Niko lski 95 $ 19 , 080.00 1 3 96 3 $ 1 8, 1 5 1 .38 

### Nikol s ki- Dutch Harbor 43 $ 8 ,6 40
. 0 0 36 0 $ 4 68
.00 $ 1 02 , 9 33.0 0 $ 37,524
. 88 P age 4 o f 4 

### Mail# Mai l Rev Total PEQ Total Revenue 7893 5 $ 155 , 50 1.95 8 03 252 2 $ 4 ,9 68
. 3 4 220 11403 $ 14 , 82 3.90 114

61 6 $ 800
. 80 32 $ 1 76,09 4 .99 1 1 69 $ 401,4 74
. 5 0


### Mail# Mai l Rev Tota l Revenue 3 77 62 $ 74 , 391. 1 4 414

1 677 $ 3 , 3 03 .69 1 1 0 10 79 6 $ 14 ,0 34
. 80 238

1 62 $ 21 0 .60 5 1 $ 91,94 0
. 23 8 1 3 $ 24 8,004.5 4


### Mail# Mail Rev Tota l R eve nu e 33986 $ 66 , 952.03 373

1 5 0 9 $ 2, 9 73.32 9 9 9716 $ 1 2 ,6 3 1 .32 214 1 4 6 $ 1 8 9
. 54 46 $ 82,7 4 6.21 732 $ 223 , 20 4
. 09