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### BEFOR ETH E^ .K^ T OPERAIiON S DEPARTMEN T O FTRANSPORTATIO N OFFIC EO FTH ESECRETAR Y /?ri v \U A ^ : 1} 5 WASHINGTON , D.C .

Notic e o f Alask aSeaplan e Service , LL C Unde r 4 9 U.S.C . 4173 4 an dC.F.R . Part 32 3 o f inten t t o terminat e Essentia l Ai r Servic e a t Angoo n an dTenakee , Alask a Docke t OST-2006-2554 2

ESSENTIA LSERVIC EBI D O F ALASK A SEAPLAN ESERVICE , LL C T O PROVID EESSENTIA LAI RSERVIC E A T ANGOO N AN D TENAKEE , ALASK A

Communication s wit

hRespec t t o Thi s Documen t

Shoul dB e Addresse dto : Crai g Loken , Genera l Manage r Hank Myer s Alask aSeaplan e Service , LL C MT C 187 3 Shel l Simmon s Drive , Suit e 11 0 P.O . Bo x 714 2 Juneau , A K

9980 1 Bellevue , WA 9800 8 (907 ) 789-333 1 (425 ) 830-426 5 akseaplane s @ alaska.co mhank@mtcworld.co m Octobe r 13 , 201 0BEFOR ETH E DEPARTMEN T O FTRANSPORTATIO N OFFIC EO FTH ESECRETAR Y WASHINGTON , D.C . Notic e o f Alask aSeaplan e Service , LL C Unde r 4 9 U.S.C . 4173 4 an dC.F.R . Part 32 3 of inten t t o terminat e Essentia l Ai r Servic e a t Angoo n an dTenakee , Alask a Docke t OST-2006-2554 2

ESSENTIA LSERVIC EBI D O F ALASK A SEAPLAN ESERVICE , LL C T O PROVID EESSENTIA LAI RSERVIC E A T ANGOO N AN D TENAKEE , ALASK A Alask aSeaplan e Service , LL C (Seaplanes ) hereb y submit s it s bi dt o provid e Essentia l Ai r Servic e t o Angoo n an dTenake e a s requeste di n Orde r 2010-9-16 . Seaplane s becam e th e essentia l servic e carrie r a t Angoo n an dTenake e i n 200 6 whe n Wing s o f Alask a withdre w it s servic e fro mthos e points , an dbega n providin g Essentia l Servic e at th e tw o point s i n 2009 . Traffi c i n th e market s ha dbee n declinin g for severa l year s a s th e resourc e base deconom y i n southeaster n Alask adeclined . Ther e ha dbee n earlier growth relativ e t o 197 6 i n th e market s a s aresul t of th e Alask aNativ e Claim s Settlemen t Ac t a s wel l a s developmen t

of fishin g an dtouris mi n th e area . Sinc e Seaplane s bega n Essentia l Service , traffi c continue s asligh t decline , probabl y affecte db y th e nationa l economi c picture s a s wel l a s lac k of resourc e basedjob s i n th e area . Th e traffi c forecas t

b y Seaplane s i s remarkabl y clos e t o experience . Fo r C Y 2010 , Seaplane s predicte d3,06 3 i n th e JUN-AG N market , an dth e lates t twelv e month s experienc e i s 3,09 4 (1 % more) . In th e JNU-TK Emarket . Seaplane s projecte d1,18 5 passengers , an dth e actua l traffi c was 1,05 3 (11 % less) . In total , passenge r traffi c an d revenu e wer e 2.4 % unde r projections . Offsettin g thi s declin e i n passenge r traffi c wa s a

n increas e in freight

traffic . Som e o f

thi s i s relate dt o one-tim e projec t a t Angoon . Additionally , Seaplane s ha s raise dit s freigh t rate s b y 10% . What ha s no t happened , othe r

tha n withfreight

rates , ha s bee n increase s i n yield s for passenger s an dmail . Whil e operatin g cost s ar e u p 8 % compare dt o ayea r ago , passenge r fare s ar e th e same , an dane w onlin e bookin g fare i s lowe r tha n th e yiel dprojected . Mai l rate s ar e stable , withasligh t declin e i n rate s relate dt o lowe r industry fuel rates . Insummary . Seaplanes'ha s accepte dth e curren t traffi c level s a s abase , but doe s not se e an y increas e i n tota l traffi c o r yield s ove r

th e nex t four years . A s noted , operatin g uni t

cost s ar e u p 8 % ove r

2009 . Mos t

o f thes e cost s ar e for

item s beyon dth e contro l of

Seaplanes , bu t

wage s als o continu e t o increas e slightly . Indirec t cost s remai n stabl e a s apercentag e o f direc t costs , an dadministrativ e expens e ar e als o consistent . Th e Crai g an dAra l Loke n bothwork i n th e operation , but

don' t tak e salaries . Th e owne r

labo r allowanc e reflect s th e level s agree dt o i n 200 8 projecte dforward . Th e lates t mai l rat e fuel cos t

adjustmen t

reflec t som e softenin g i n cos t

increase s overall . Seaplane s assume s mor e moderat e cos t increase s ove r

th e nex t four years . 201 1 i s projecte da

t a3 % increas e ove r

2010 , withsubsequen t

increase s at

4% , 5 % an d6 % respectivel y for

subsequen t

years . Th e standar d5 % of operatin g expense s i s assume dfo r interes t an dreturn . Al l unit s for servic e are use dfro mth e 200 8 bid . Subsid y Nee d Appendi x C compute s th e subsid y nee dfor th e propose dservic e level . Subsid y nee d increase s ove r

th e four year requeste dterm , reflectin g leve l traffi c an drevenu e combine d withslightl y increasin g operatin g costs . Th e cos t pe r departur e range s fro m$248.0 0 t o $336.10
. Fou r Yea r Ter m Alask aSeaplan e Servic e request s afou r year ter mfor th e subsid y contract , a s i t currentl y ha s a t Pelica n an dElfi n Cove . Whil e operation s los t mone y after

subsid y thi s yea

r i n thos e markets , part

of th e los s wa s du e t o continue dtraffi c poachin g fro manon certificate dai r

tax i operato r

wh o temporaril y relocate dt o Pelica n fro mSitk adurin g th e summe r peak season . Th e overal l benefi t of havin g areliabl e sourc e o f operatin g revenu e for

a n extende dperio dha s bee n realized . Whil e thi s bi di s consisten t withth e reques t for tw o year service , al l revenue , expens e an dsubsid y nee dcalculation s throug h 201 4 are listed . Seaplane s strongl y urge s th e Departmen t t o provid e th e stability th e marke t need s i n thi s perio do f

challeng e b y awardin g afour year termfor th e contract . Alask aSeaplane s ha s an unbroke n recor dof providin g reliabl e Essentia l Servic e from Juneau throug hcontinua l traffi c declines , advers e cos t situations an dadifficul t

operatin g environmen t

withou t requestin g subsid y leve l adjustmen t o r servic e reductions . Loke n famil y owne dai r

carrier s hav e serve dJunea u for 6 0 year s throug htw o generations . Sinc e 2008 , Seaplane s ha s improve dit s equipmen t an dfacilities . I

t no w operate s thre e fully amphibiou s deHavilan dBeaver s an daCessn a180 . Al l aircraf t ar e Capston e syste m equipped . Summar y Seaplane s no w provide s ahig hleve l o f schedule dan dextra-sectio n servic e that exceed s previou s singl e carrie r

levels . I t ha s lowe r

uni t cost s than competin g carriers , an drun s asmalle r groun doperation . Th e efficiencie s Seaplane s bring s t o thi s operatio n result s i n lowe r subsid y need s an dmor e flexibl e service . Respectfull y submitted ,

Alask aSeaplan e Service , LL C Crai g Loken , Membe r Octobe r 13 , 201 0CERTIFICAT EO FSERVIC E

I hereb y attes t

that I hav e thi s day serve dacop y o f th e foregoin g Bi do f

Alask aSeaplan e Service , LL C upo n th e followin g person s b y firs t clas s mail : Mayo r (b y registere dmail ) Angoon , A K

9982 0 Mayo r (b y registere dmail ) Tenakee , A K

9982 5 Honorabl e Sea n Pamel l (b y registere dmail ) Governo r Stat e of Alask a P.O.Bo x 11000 1 Juneau , A K

99811-000 1 Postmaste r

Genera l attn : Assistan t

Genera l Counsel , Transportatio n U.S . Posta l Servic e 47 5 L'Enfan t

Plaz aWest , S W Washington , D.C . 2026 0

Hank Myer s Octobe r 13 , 201 0< r -

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