Order 2010-6-24 

Served: June 29, 2010 

Jtt ^jg%g ^ UNITED STATES OF AMERICA 

lUr As DEPARTMENT OF TRANSPORTATION 

"OAM ^ OFFICE OF THE SECRETARY 

^^S5 ^ WASfflNGTON, D.C. 

Issued by the Department of Transportation 

on the 29* of June, 2010 

INTRA-ALASKA MAINLINE 

SERVICE MAIL RATES Dockets OST-2003-14695 

Mainline Quarterly Fuel Adjustment 

Summary 

By this order, the Department is making its regular quarterly adjustments to Intra-Alaska 

Mainline mail rates to reflect the most recent quarterly fuel costs. The new rates are to be 

effective on July 3, 2010, and reflect fuel expenses for the quarter ended March 31, 2010. 

Background 

Order 2009-9-1 tentatively established final annual Intra-Alaska mainline mail rates. After 

no objections were received. Order 2009-9-14 finalized those annual rates, and also updated 

the annual rates in the show-cause order to reflect fuel expenses for the quarter ended 

June 30,2009, the most recent fuel expenses available at that time. We have indicated that 

we will continue to make regular quarterly fuel updates. Since then, we issued 

Order 2010-3-4 which updated those rates for fuel expenses reported for the quarter ended 

December 31, 2009. 

This order updates the rates in Order 2009-12-14 to reflect fuel costs for the quarter ended 

March 31, 2010, the most recent data available. The next quarterly fuel update, based on 

data for the quarter ended June 30, 2010, will be effective on or about October 1, 2010. The 

terminal portion of the mail rate is unchanged from that in Order 2009-12-14, but we have 

included those numbers for the sake of convenience. 

The table below shows an 8.12 percent increase in the linehaul mail rate, driven by a 

20 percent increase in unit fuel cost per ATM. This fuel increase, in turn, is driven by a 

three-fold increase in Lynden Air Cargo's unit fuel cost per ATM. In response to our 

inquiries, by letter dated June 21, Lynden indicates that it had understated its fuel costs for 

2009, and only discovered that error when it conducted a year-end internal audit. Lynden 

indicates it will undertake procedures to prevent this from happening again. We will 
- 2 -

accordingly update the rate based on Lynden's reported costs for the quarter ended 

March 31,2010. 

Payment Parameter 

Linehaul, $/RTM 

Linehaul, $/RTM 

Terminal, $/Lb. Enplaned 

Terminal, $/Lb. Enplaned 

Service 

Class 

Priority 

Nonpriority 

Priority 

Nonpriority 

Current Rates, 

Order 2010-3-4 

$2.9635 

$1.7941 

$0.3620 

$0.3110 

Update for 

OE 3-31-10 Fuel 

$3.2041 

$1.9398 

$0.3620 

$0.3110 

Percentage 

8.12% 

8.12% 

0% 

0% 

ACCORDINGLY, 

1. We make final the rates set forth in Appendix A, effective July 3, 2010, imtil further 

Department action; 

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

3. We will serve this order upon all parties on the Service List for this Docket. 

Persons entitled to petition the Department for review of this order under the Department's 

Regulations, 14 CFR 385.30, must file such petitions within ten (ten) days after the date of 

service of this order. The filing of a petition for review shall not stay its effectiveness. 

By: 

TODD M. HOMAN 

Director 

Office of Aviation Analysis 

(SEAL) 

An electronic version of this document is available on the World Wide Web at 

http://www.regulations.gov 
Appendix A 

INTRA-ALASKA MAINLINE CLASS SERVICE MAIL RATES 

(1) 

Base Year 

Rates 1/ 

(2) 

Adjustment 

Factors 2/ 

(3) 

Proposed 

Final Rates 3/ 

(4) (5) 

Change from 

Current Rate 4/ Current Rate 5/ 

Linehaul Charge per Billing Ton-Mile 

Priority 

Non-priority 

$1.1969 

$0.7246 

167.70% 

167.70% 

$3.2041 

$1.9398 

$2.9635 

$1.7941 

8.12% 

8.12% 

Terminal Charge per Pound Originated 

Priority 

Non-priority 

$0.1697 

$0.1458 

113.31 

113.31 

$.3620 

$.3110 

$.3620 

$.3110 

1/Per Order 82-11-23. 

2/ See Appendix B of this order for the linehaul. The terminal charge, per Order 2009-9-1, does not change, 

but is included for convenient reference. 

3/ Column (1) increased by Column (2). 

4/Per Order 2010-3-4. 

5/ Any differences between priority and nonpriority elements are due to rounding. 

0.00% 

0.00% 
Appendix B 

INTRA-ALASKA MAINLINE CLASS SERVICE MAIL RATES COST ADJUSTMENT FACTORS 

ise Year 

Ended 

9/30/80 

Unit Costs 

Based on 

OE 12-31-09 

Unit Costs 

Based on 

OE 3-31-10 

Unit Cost per Available Ton-Mile 

Fuel 1/ 

Nonfuel 2/ 

Total $0.399469 3/ 

$0.38948 

$0.59959 

$0.98907 

$0.46978 

$0.59959 

$1.06937 

Percentage Change from Base Year 147.60% 4/ 167.70% 5/ 

1/ Appendix C of this order for QE 3-31-10 result, and 

Appendix C of Order 2010-3-4 QE 12-31-09 result. 

2/ Appendix B of Order 2009-9-1. 

3/ Order 82-11-23, updated most recently in Order 97-12-24. 

4/ ($0.98907/$0.399469)-l. 

5/($1.06937/$0.399469)-l. 
Appendix C 

Fuel 1/ 

Intra-Alaska Mainline Mail Costs - Quarter Ended March 31, 2010 

Alaska Lynden Northern 

Airlines Air Air Cargo 

AS LAC NAC 

Everts Air Cargo 

EACGrand #617 #556 #620 #150 #218 #461 

Total 737-400 Hercules B-737-200 C-46 DC-6 Brasilia 

$40,946,588 $33,531,588 $1,890,717 $2,942,742 $98,315 $2,383,499 $99,727 

Intra-AK Skd. Blk. Hrs. 2/ 

Total Block Hours 2/ 

9,423 

23,792 

6,185 

20,133 

383 

476 

1,141 

1,379 

143 

157 

1,333 

1,402 

238 

245 

Intra-AK Fuel Expense $16,709,931 $10,301,141 $1,521,312 $2,434,858 $89,548 $2,266,194 $96,878 

Intra-AK Skd. ATMs 2/ 44,161,398 31,602,080 2,481,859 5,675,268 151,063 4,045,686 205,442 

Unit Cost/ATM, Fuel $0.378383 $0.325964 $0.612973 $0.429030 $0.592786 $0.560151 $0.471559 

Intra-AK Mail RTMs 2/ 

RTM Percent of Total 

Wtd. Cost/ATM, Fuel 

5,397,040 

100.00% 

$0.46978 

1,542,938 

28.59% 

$0.09319 

922,547 

17.09% 

$0.10476 

1,294,658 

23.99% 

$0.10292 

45,082 

0.84% 

$0.00498 

1,511,450 

28.01% 

$0.15690 

80,365 

1.49% 

$0.00703 

1/ Per Form 41 reports, except for Lynden, whose fuel expense is from a special internal report of Lynden. 

2/ Per the T-lOO Segment report and carrier submissions. Northern Air, Lynden, and Everts data are for their system. 

For Alaska Airlines, it is for the carrier's domestic operation only, i.e., the carrier's Latin American Division is excluded. 

Lynden is per the carrier's special report.