Order: 2014

- 1

- 12
Served January 16, 2014

U N I T E D S

T A T E S O F A

M E R I C A D E P A R T M E N T O F T R A N S P O R T A T

I O N UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation
on the 16 th day of January , 20 1 4

Essential Air Service at

CHISANA, ALASKA HEALY LAKE, ALASKA

Under 4 9 U.S. C. § 47131 et seq. DOCKET DOT

- OST

- 1998

- 4574 DOCKET DOT

- OST

- 1998

- 3546



### ORDER REQUESTING PROPOSALS

Summary By this Order, the Department is requesting proposals from air carriers interested in providing Essential Air Service (“EAS”) at C hisana and Healy Lake, Alaska

, with or without subsidy support , beginning June 1, 2014 . Proposals are due February 18 , 201 4

. (See Appendix A for a

map. )

B a c k g r o un d By Order 2012

- 6

- 18, issued on June 22, 2012

, the Department re

- selected 40

- Mile Air, Inc

., (“40

- Mile Air”) to provide subsidized EAS at Chisana with two trips per week to Tok , Alaska, using 3

- seat Cessna 185 or 4

- seat Cessna 206

- 207 aircraft

, and at Healy Lake with two round trips per week to Fairbanks using 5

- seat Cessna 206 or 207 aircraft

, for the period of
June 1, 2012, through May 31

, 2014 , at a nnual subsidy rate s of $ 81,040 (Chisana) and $104,703 (Healy Lake)

. That Order, as well as the complete public file for EAS at Chisana and Healy
Lake

, may be accessed online through the Federal Docket Management System at http://www.regulations.gov , by entering “DOT

- OST

- 1998

- 4574 ” for Chisana and “DOT

- OST

1998

- 3546” for Healy Lake in the “ SEARCH for: Rules, Comments, Adjudications or Supporting Documents :” field.

Request for Proposals
As the end of the current rate term approaches, we are here requesting proposals from air carriers interested in providing EAS at Chisana and /or Healy Lake

, with or without subsidy support , for
the two

- year period beginnin g June 1, 2014. Air carriers should file their proposals no later than February 18 , 2014. After that date, our staff will docket the proposals, thereby making them public. Additionally, we request each air carrier serve a copy of its proposal on the civ ic parties

at Chisana and Healy Lake and on the other applicants. Shortly afterwards, we will provide a2

s ummary of the proposals to the community and ask them to submit any formal comments on
this carrier

- selection case. We will give full consideration t o all proposals that are timely filed. 1

We are here providing interested air carriers with some basic information to serve as guidance when they prepare their proposals, but we will not prescribe a precise format for their proposals. We expect proposal s 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, we recommend they include information concerning pro posed schedules and projected block hours. In addition, applicants are encouraged to provide financial data supporting their subsidy requests, including information on their projected expenses and revenues. We strongly encourage clear, well

- documented

pr oposals that will facilitate their evalua tion by the affected communities and the Department. 2

Proposals should provide sufficient capacity to accommodate historical levels. Specifically, we request proposals for two nonstop round trips a week between Chi sana and Tok , or another suitable airport, and two nonstop round trips a week between Healy Lake and Fairbanks, or another suitable hub, with small aircraft (10 seats or less). In order to assist air carriers in making traffic and revenue forecasts, we hav e included historical traffic in Appendix B. Typically in Alaska, mail and freight flows are asymmetrical, with up to 90% of total mail and freight flowing outbound from the hub to the EAS communities. Historical traffic data (Appendix B) show that two rou nd trips a week is sufficient to fulfill the EAS needs of Chisana and Healy Lake.

Interested air carriers should prepare their propo s al with every expectation that their initial proposal will also be their final and only proposal. We retain the discreti on to negotiate proposals with air carriers when we deem it desirable; in such cases we will give all applicants the same opportuni t y. We also retain the discretion to reject outright all
unreasonab l e or unrealistic proposals and solicit a new round of pr oposals. However, we anticipate that negotiation or rejection will remain on l y occasional exceptions to the rule.

O t h e r Air Ca rr i e r R e qu i reme n t s The Department is responsible for implementing various Federal statutes governing l obbying
activities , drug

- f ree workplaces and nondiscrimination

. Consequent l y, all air carriers

1 Air carriers should not expect the Department to accept late filings. In cases where a carri er proposes to provide
EAS without subsidy and we determine that service can be reliably provided without such compensation, we usually do not proceed with the carrier

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

- free service

as propo sed.
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 air carrier at the hub; (3) interline arrangem ents with a larger air carrier at the hub (4) community views; (5) the experience of the applicant in providing, in Alaska, scheduled air service or significant patterns of non

- scheduled air service; and (6) whether the air carrier has included a plan in i ts proposal to market the service. In addition , Consolidated Appropriations Act, 2012, Public Law 112

- 55, and continued by the Full

- Year Continuing Appropriations Act, 2013, Public Law
No. 113

- 6, 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 air 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

receiving Federal subsidy to support EAS must certify that they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimination, and those air

carr i ers whose subsidies exceed $100,000 over the life of the rate term must also certify that they are in compliance with the regu l ations governing lobbying activities. All air carriers that plan to submit proposals involving subsidy should submit the required c ertifications along with their proposals. Interested air carriers requiring more detailed infor m ation regarding
the s e requirements, as well as copies of the certifications, should contact the Off i ce of
Aviation Ana l ysis at (202) 366

- 5903. The Department is prohibited from paying subsidy to
air carriers that do not submit these document s

. 3

C o m m un i t y C o m m e n ts Civic officials and the State are welco m e to submit comments at any time. We encourage prospective applicants to contact the communi t ies before they submit their proposals so that they can tailor them to the communi t ie s’ needs, as they will not be ab l e to amend them after the due date. As noted earlier, we will provide a copy of the propo s als to the civic parties and
ask them to submit their final co mments short l y after February 18, 2014 , the due da t e for air

carr i er proposals.

This Order is issued under authority delegated in 49 CFR Part 1.25a(b) and re

- delegated to the Director, Office of Aviation Analysis.

ACCORDI N G L Y,

1. We request that air ca rriers interested in providing E ssential A ir S erv i ce at Chisana and Healy Lake

, Alaska, submit their proposals, with or without subsidy requests, no later than February 18, 2014 . The proposals should be emailed to: EAS@ dot.gov with the title “Proposal to Provide Essential Air Service at Chisana, Alaska ” and/or “Proposal to Provide
Essential Air Service at Healy Lake , Alaska ; ” 4

2

. Dockets DOT

- OST

- 199 8

- 4574 and DOT

- OST

- 1998

- 3546 will remain open until furt her
Order of t he Department; and

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

– New restrictions on lobbyin g; (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 activitie s receiving or benefiting 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 requireme nts for drug

- free workplace (grants). The certifications are available
on the web at http://www.dot.gov/policy/aviation

- policy/small

- community

- rural

- air

- service/essential

- air

- service

. 4 Questions regarding filings in response to this Order should be directed to Mr. Scott Faulk at scott.faulk@dot.gov or (202) 366

- 9967.4

3

. The Department will serve cop i es of this Order on the civic offic i als of Chisana and Healy Lake, Alaska

, the Alaska Department of Transportation and Public Facilities, and the service
list for this docket

.

Persons entitled to petit ion the Department for review of this Order under the Department’s Regulations, 14 CFR Part 385.31(a), must file such petitions within seven (7) days after the date
of service of this Order.

This Order will be effective immediately, and the filing of a pe tition for review shall not preclude its effectiveness.

By:

TODD M. HOMAN
Director Office of Aviation Analysis

An electronic version of this document is available
online at www.regulations.gov.Appendix A 1 of 2



### A R E A M AP OF CHISANA, ALASKA

M ap s g ene r a t e d b y t h e G r eat Ci r cle M appe r

- c op y r i g h t © Ka r l L. S w a r t z

.Appendix A 2 of 2

AREA MAP OF HEALY LAKE , ALASKA

Maps generated by the Great Circle Mapper

- copyright © Karl L. Swartz

.Appendix B
1 of 2



### Chisana, Alaska 1

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

2010 4 8 4 1 13 2010 4 10 41 7 58 2010 4 18 45 7 70

2011 1 17 5 1 23 2011 1 11 42 5 58 2011 1 28 47 6 81

2011 2 13 4 1 18 2011 2 12 31 12 55 2011 2 25 35 13 73

2011 3 12 2 1 15 2011 3 26 22 12 60 2011 3 38 23 13 74

50 15 4 69 59 136 36 231 109 150 39 298

2011 4 11 8 3 22 2011 4 9 50 3 62 2011 4 20 58 6 84

2012 1 9 4 1 14 2012 1 11 57 6 74 2012 1 20 61 7 88

2012 2 7 3 1 11 2012 2 19 17 10 46 2012 2 26 20 11 57

2012 3 18 13 2 33 2012 3 26 43 9 78 2012 3 44 55 11 110

45 28 7 80 65 167 28 260 110 194 35 339

2012 4 19 8 2 29 2012 4 14 42 4 60 2012 4 33 50 6 89

2013 1 9 9 1 19 2013 1 9 98 8 115 2013 1 18 107 9 134

2013 2 12 3 1 16 2013 2 19 86 7 112 2013 2 31 89 8 128

2013 3 47 17 1 65 2013 3 45 79 13 137 2013 3 92 96 14 202

87 37 5 129 87 305 32 424 174 342 37 553 Destination Origination Origin and Destination

1 Source: Bureau of Transportati on Statistics; Schedule T

- 100. PEQs: Passenger Equivalents. Every 200 pounds of freight or mail is the equivalent of one passenger.Appendix B 2 of 2



### Healy Lake, Alaska 1

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

2010 4 1 1 0 2 2010 4 15 7 1 23 2010 4 16 8 1 25

2011 1 0 0 0 0 2011 1 3 4 1 8 2011 1 3 4 1 8

2011 2 0 0 0 0 2011 2 4 5 1 10 2011 2 4 5 1 10

2011 3 5 2 0 7 2011 3 13 6 1 20 2011 3 18 8 1 27

Total 6 3 0 9 35 22 4 61 41 25 4 70

2011 4 0 0 0 0 2011 4 8 8 1 17 2011 4 8 8 1 17

2012 1 0 1 0 1 2012 1 7 5 2 14 2012 1 7 6 2 15

2012 2 8 4 0 12 2012 2 27 12 1 40 2012 2 35 16 1 52

2012 3 10 2 1 13 2012 3 27 10 1 38 2012 3 37 12 2 51

Total 18 7 1 26 69 35 5 109 87 42 6 135

2012 4 2 0 0 2 2012 4 5 3 1 9 2012 4 7 3 1 11

2013 1 7 1 1 9 2013 1 3 1 1 5 2013 1 10 2 2 14

2013 2 30 5 1 36 2013 2 45 27 1 73 2013 2 75 32 2 109

2013 3 5 2 0 7 2013 3 34 5 1 40 2013 3 39 7 1 47

Total 44 8 2 54 87 36 4 127 131 44 6 181 Origination Origin and Destination Destination

1 Source: Bureau of Transportation Statistics; Schedule T

- 100. PEQs: Passenger Equivalents. Every 200 pounds of freigh t or mail is the equivalent of one passenger.Append ix C

Example of General Terms and Conditions for Eassential Air Service

The air c a rr i e r un d er st a nds t h a t it m a y f o rfe it its c omp e ns a tion f or a n y f li g hts th a t it do e s not

op era te in c o n f o r m a n c e with the t er ms a nd stipul a tions of the ra te Order

, i n c luding the s er vi c e pl a ns outlin e d in the Order a nd a n y ot h e r s i g ni f i c a nt e l e m e nts of the re qui re d s er vi ce , without

p r ior a p p r ov a l. The air c arr i e r und e r st a nds th a t a n a i r cr a f t t a k e

- o f f a nd l a nding a t its s c h e du l e d
d e stin a tion c onstitut e s a c ompl e t e d f li g ht; a bs e nt a n e x pl a n a tion suppo r ting subsi d y e li g i b ili t y f o r

a f l i g ht th a t h a s n ot b ee n c ompl e t e d, su c h a s cer t a in w ea th e r ca n ce ll a tions, o n l y c ompl e t e d f li g hts

a r e c onsid ere d e l i g ible f or su b si d y

. I n a ddition, if the air carr i e r d o e s not s c h e dule or o p era t e its
f li g hts in f ull c on f o r m a n c e with the Order f o r a s i g ni f i ca nt p e r iod, it m a y j e op ar di z e its e nti r e subsi d y c l a im f or t he p er iod in qu e stion. I f the air c a rr i e r c ont e mpl a t e s a n y su c h c h a ng e s b e y ond
the s c ope o f the Order du r ing the a ppli ca ble p e r iod of th e se ra t e s, it must f i r st noti f y the O ff i c e of
Avi a ti on An a l y sis in w r iti n g a nd r ece ive w r itt e n a pp r o v a l f r om the D e p a r tm e nt to be e nsu re d o f
f ull c omp e ns a tion. S hould c i rc umst a n ce s w ar r a n t , the D e p ar tm e nt m a y l o c a te a nd s e l e c t a

re pl a ce m e nt air c arr i e r to p r ovide s er vi c e on th e se r out e s. The air c a rr i e r m ust c ompl e te a ll
f li g hts th a t ca n b e s a f e l y op era t e d; f l i g hts th a t ov e rf l y points f o r l ac k of t r a f f ic will not be

c omp e ns a t e d. I n d e t er m i ning wh e t h e r subsi d y p a y m e nt f o r a d e v i a ting f l i ght should be a djust e d

or dis a llow e d, t he D e p a r tm e nt will c onsid e r the e x t e nt to whi c h the g o a ls of the p r og ra m a r e m e t

a nd the e x t e nt of acce ss to the n a tion a l a ir t ra nspo r t a tion s y s t e m p r ovid e d to the c ommuni t y

.

I f the D e p ar tm e nt unil a t e ra l l y , e ith e r p a r ti a l l y or c ompl e t e l y , t er min a t e s or re du ce s p a y m e nts f or

s e r vi c e or c h a ng e s s er vi c e r e qui re m e nts a t a sp ec i f ic lo c a tion p r ovid e d f or und e r this Order, th e n,

a t the e nd of the p e r iod f or whi c h the D e p ar tm e nt d o e s m a ke p a y m e nts in the stipul a t e d a mounts

or a t the stipul a t e d s er vi c e l e v e ls, the air c a rr i e r m a y cea se to p r ovide s er v i c e t o th a t sp ec i f ic
lo c a tion without re g a r d to a n y r e qui re m e nt f or noti c e of su c h c e ss a tion. Those a djustm e nts in the
l e v e ls of subsi d y a nd/or s er vi c e th a t ar e mutu a l l y a g r ee d to in w r iting b y the D e p ar tm e nt a nd air

ca r r i e r do not c on s titute a tot a l or p ar ti a l re d u c tion or ce ss a tion of p a y m e nt.

S ubsi d y c ont r a c ts ar e su b j ec t to, a nd in c o r po r a te b y r ef e re n c e , r e l e v a nt st a t ut e s a nd D e p ar tm e nt

r e g ul a tions, a s th e y m a y be a m e nd e d fr om time to tim e . How e v er , a n y su c h st a tut e s, r e g ul a tions,

or a m e ndm e nts th ere to sh a ll not op era te to c ont r o v er t the f o r e g oi n g p ar a g r a ph.

Funds may not be available for performance under this Order beyond [DATE] . The Government’s obligation 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 [DATE] , until funds are made available to the Department for performance. If sufficient funds

a re not made available for performance beyond [DATE] , the Department will provide notice in writing to the carrier.

All claims for payment, including 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.