To: 

From: 

United States of America 

Department of Transportation 

Office of the Secretary 

Washington D.C. 

Servant Air, Inc 

1619 Airport Way 

Kodiak State Airport 

Kodiak, Alaska 99615 

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 Nikolski, Alaska . Please accept this proposal as submitted 

by Servant Air Inc. of Kodiak, Alaska to provide such service. 

History 

Servant Air, Inc., is an air carrier with interstate transportation authority and 401 certification. 

This entity has been operationally based in Kodiak Alaska since 2004, and has undergone DOT 

fitness review last fall. Servant Air's pilots are all 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. Primary offices are 

located at the Kodiak State Airport. Servant Air, Inc. takes pride in the service it currently 

provides to the Kodiak Island District. However, Servant Air, Inc. wishes to expand its 

operations to encompass more of the coastal region. Therefore, it is Servant Air's intent to bid 

this essential air service outlined above. 

Aircraft 

To accomplish this goal of the Departments request, Servant Air, Inc. has purchased and will use 

a Beechcraft King Air B-200. This aircraft is capable of carrying a two pilot crew with a 

maximum of 9 passengers. 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 with 

extensive training and experience in coastal Alaskan aviation, and the challenging weather 

encountered in this region. 

Proposed Scheduling 

The Exhibit "A" , attached, is a financial spreadsheet showing the calculations for Servant Air's 

proposed subsidy request to provide the following service: 

Flight 101 Total flight time per route = 3.3 (hours) 

Dutch Harbor ~ Atka ~ Dutch Harbor 

Monday, Wednesday, Friday 

Flight 102 Total flight time per route= 1.1 (hours) 

Dutch Harbor ~ Nikolski ~ Dutch Harbor 

Monday, Friday 

Upon award of any subsidy contract, Servant Air will work with the destination communities to 

further refine the above schedule to best meet the needs of these communities. These final 

schedules will be published in the Official Airline Guide (OAG). Servant Air will also offer flag 

stop service to I from Nikolski on all Atka flights as may be necessary to serve these 

communities in the best manner possible. 

Operations Logistics 

Operations oversight will be conducted from Servant Air's flight coordination office at Kodiak. 

The aircraft will begin and terminate these flight operations at Dutch Harbor's airport terminal, 

and all flights will be monitored VIA GPS tracking system currently in place. 

Compensation 

Contract compensation is expected as outline in Exhibit "A" with a fixed cost allocation of 

$74,666.67 being paid monthly, in addition to a variable component paid based on departures 

completed. ie: Variable cost Subsidy request divided into departures, for an additional monthly 

compensation equal to $2,080.96 per departure ($ 1 ,082, 102.98 divided by 520 departures per 

year). This equates to a total subsidy request of $1 ,978,1 02.98 per year for a two year term. It is 

also understood that only completed flights will be eligible for Variable Cost compensation. 

Page 2 of 4 
Exibit "A" 

Servant Air Inc. 

1619 Airport Way 

Kodiak Alaska 99615 

Essential service subsidy request 

At Atka and Nikolski Alaska 

Total estimated flight time (Hours) 

Flight 101 M,W,F 

Flight 102 M,F 

Plus 10% route weather deviation factor 

Estimated flight time per year 

Revenues: See Exibit "B" 

Hrs Per Trip 

3.3 

1.1 

Direct Operating Expenses Per Flight 

Pilot 

Co-Pilot 

Fuel 

Mechanic 

Training 

Maintenance 

Reserves (Prop and Engine) 

Insurance 

Aircraft Hull 

Passenger Liability 

Third Party Liability 

Aircraft Lease 

Hanger Facility 

Crew housing 

Agent 

Annual 

514.8 

114.4 

63.36 

696.96 

Per Fit Hr 

$ 143.48 

$ 143.48 

$ 700.00 

$ 107.61 

$ 43.04 

$ 450.00 

$ 329.00 

$ 

$ 

57.39 

50.22 

$ 17.22 

$ 516.53 

Dutch Harbor Ramp Services $ 

Accounting I Admin 

300.00 Per Turn 

Flight following I Communications 

Total Operating Expenses $2,557.97 

Net Operating Loss 

Target profit margin (5% of operating expenses) 

Subsidy Requested 

Payment Allocation: 

*Total Fixed Costs 

*Fixed Cost Monthly Payment Expectation: 

Variable Cost Allocation: 

Notes: 

$ 223,204.00 

$ 74,666.67 

Annually 

$ 100,000.00 * 

$ 100,000.00 * 

$ 487,872.00 

$ 75,000.00 * 

$ 30,000.00 * 

$ 313,632.00 

$ 229,299.84 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

40,000.00 * 

35,000.00 * 

12,000.00 * 

360,000.00 * 

48,000.00 * 

48,000.00 * 

48,000.00 * 

78,000.00 

40,000.00 

51,679.00 

$ 2,096,482.84 

$ (1,873,278.84) 

$ 104,824.14 

$ 1 ,978, 102.98 

$ 896,000.00 

$ 2,080.96 Per Departure 

1) Flag stops are authorized; however, revenue generated from said stops will offset additional 

costs associated with these stops. This revenue I expense is not reflected above. 

2) All flights will be timed to ensure highest level of community satisfaction. 

Page 3 of 4 
Exhibit "B" Revenue Projections 

Servant Air Inc. 

1619 Airport Way 

Kodiak Alaska 99615 

Essential service subsidy request 

At Atka and Nikolski Alaska 

Location Passengers Pass Revenue 

Dutch Harbor- Atka 21 3 $ 64,965.00 

Atka - Dutch Harbor 183 $ 55,815.00 

Dutch Harbot- Nikolski 44 $ 8,800.00 

Nikolski - Dutch Harbor 29 $ 5,800.00 

$ 135,380.00 

Location Passengers Pass Revenue 

Dutch Harbor - Atka 172 $ 52,460.00 

Atka - Dutch Harbor 102 $ 31,110.00 

Dutch Harbot- Nikolski 106 $ 21 ,200.00 

Nikolski - Dutch Harbor 48 $ 9,600.00 

$ 114,370.00 

2012 

Freight# Freight Rev 

38978 $ 76,786.66 

4955 $ 9,761 .35 

2655 $ 3,451.50 

0 $ -

$ 89,999.51 

2013 

Freight# Freight Rev 

10643 $ 20,966.71 

20 $ 39.40 

15514 $ 20,168.20 

400 $ 520.00 

$ 41,694.31 

2014 ProForma (10% Decline expected) 

Location Passengers Pass Revenue Freight# Freight Rev 

Dutch Harbor- Atka 155 $ 47,214.00 9579 $ 18,870.04 

Atka - Dutch Ha1·bor 92 $ 27,999.00 18 $ 35.46 

Dutch Harbot- Nikolski 95 $ 19,080.00 13963 $ 18,151.38 

Nikolski- Dutch Harbor 43 $ 8,640.00 360 $ 468.00 

$ 102,933.00 $ 37,524.88 

Page 4 of 4 

Mail# Mail Rev Total PEQ Total Revenue 

78935 $155,501.95 803 

2522 $ 4,968.34 220 

11403 $ 14,823.90 114 

61 6 $ 800.80 32 

$ 176,094.99 1169 $ 401,474.50 

Mail# Mail Rev Total Revenue 

37762 $ 74,391.14 414 

1677 $ 3,303.69 110 

10796 $ 14,034.80 238 

162 $ 21 0.60 51 

$ 91,940.23 813 $ 248,004.54 

Mail# Mail Rev Total Revenue 

33986 $ 66,952.03 373 

1509 $ 2,973.32 99 

9716 $ 12,631.32 214 

146 $ 189.54 46 

$ 82,746.21 732 $ 223,204.09