### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issuedbythe Department ofTransportation

on the 5th day ofJuly, 2012

Essential Air Service at Order 2012-7-4 Served: July 5, 2012

CAPE YAKATAGA, ALASKA ICY BAY, ALASKA DOCKET DOT-OST-1996-2009

Under49 U.S.C. §41731 

### etseq.

ORDER REQUESTING PROPOSALS

Summary Bythis Order, the Departmentis requesting proposals from carriers interested inproviding Essential Air Service (EAS) at Cape Yakataga and Icy Bay, Alaska, for a new contract period, beginningNovember 1, 2012, with orwithout subsidy. (See Appendix A for a map). Carriers should file theirproposals no later than August 7, 2012.
Background ByOrder 2010-9-21, September 17, 2010, the Department re-selected Alsek Air Service, Inc. (Alsek), to provide subsidized EAS at Cape Yakataga and Icy Bay, Alaska, through October 31, 2012. Under that Order, Alsekprovides three round trips each weektoYakutat from May through October, and two round trips each week from Novemberthrough April, with an intermediate stop at Icy Bay, utilizing four-seat Cessna aircraft, at an annual subsidyrate for both communities of$91,000.

Request for Proposals As the end ofthe current rate term approaches, we are here requesting proposals from carriers interested inproviding service at Cape Yakataga and IcyBay, Alaska with orwithout subsidy, for a new contractperiodbeginningNovember 1, 2012. Carriers should file their proposals

no laterthan August 7, 2012. Staffwill then docket the proposals, therebymakingthem public, and direct each carrierto serve a copy ofits proposal on the civicparties and other applicants. Shortly afterwards, we will provide a summary ofthe proposals to the- 2-

communities and ask them to submit their final comments. We will give full consideration to all proposals that are timely filed. I ' Interested carriers should prepare their proposals with every expectation that their initial proposals will represent their final and only proposals. However, weretain the discretion to negotiate proposals with carriers when we deem it desirable. We also retain the discretion to reject outright all unreasonable orunrealistic proposals andre-solicit a new round of proposals. However, negotiation and rejection are only occasional exceptions to the rule.

We are hereproviding interested carriers with somebasic information to serve as guidance whentheyprepare theirproposals, but we will not prescribe a precise format for their proposals. We expect proposals to adequately describe the servicebeing proposed and the annual amount ofsubsidybeing requested. The applicants can make their ownjudgments as to the level ofdetail they wish to present; however, theymight want to includeproposed schedules as well as supporting data for their subsidy**request~,** such as projectedblockhours,

revenues and expenses. We strongly encourage clear, well-documented proposals that will facilitate their evaluationbythe affected communities and the Department.2

.
With specific respect to Cape Yakataga and Icy Bay, we expectproposals consisting ofservice with small aircraft (e.g., those with 3-5 seats) and offering each communitythree round trips a week during the peak season and two weeklyround trips during the off-peak season to Yakutat or any other suitablehub, such as Cordova. In that regard, ourunderstanding is that weather conditions have typically allowed for a higherpercentage ofcompleted flights to Yakutat, so we encourage carriers to give consideration to providing service to Yakutat, at least as one option. Further, flights meeting EAS guidelines atAlaskan communities should provide sufficient capacityto accommodate passenger, freight and mail demand. Such service is generally consistent with what the communities currentlyreceive, and fully satisfies their EAS requirements. We encourageproposals that meet those requirements in an efficient

manner. Carriers are also welcome to propose more than one service option, ifthey choose; they need not limit themselves to those requirements ifthey envision other, potentiallymore attractive servicepossibilities (e.g. different hubs or length ofcontract) with subsidy requirements thatremain competitive.

1 Carriers should not expect the Department to accept late fillings. In cases where a carrierproposes to provide EAS without subsidy and we determine that service canbe reliablyprovided without such compensation, we typically do not proceed with the carrier-selection case. Instead, we simplyrely on that carrier's subsidy-free service as proposed. 2 In selecting a carrier to provide subsidized EAS in Alaska, 49 U.S.C. §41733(c)(1) directs us to consider five factors: (1) scheduled service reliability; (2) contractual and marketing arrangements with a larger carrier to

ensure service beyond the hub; (3) interline arrangements that the applicant has made with a larger carrier at the hub; (4) community views, giving substantial weight to the views ofthe elected officials representing the users; and (5) the experience ofthe applicant inproviding, in Alaska, scheduled air service. In addition, the Consolidated and Further Continuing Appropriations Act, 2012, Public Law 112-55, provides that when selecting

a carrierto provide EAS, the Department may consider the relative subsidyrequirements ofthe carriers, thus codifying a factor that we have considered since the inception ofthe program. Interested carriers should also be

aware that our general provisions governing EAS will be included in the selection Order as part ofour authorization ofsubsidy for the selected service. Appendix C ofthis Order contains those general provisions.- 3-'

New Filing Procedures Carrierproposals shouldbe submitted to the Department with all materials compiled into a single document. In addition, because the document will bepublished on http://www.regulations.gov/, eachpage shouldbe formatted to beviewed online and for easy printing.

Service and Traffic History Alsekhas served Cape Yakataga and Icy Bay since fall 2006. In orderto assist carriers in makingtheir traffic and revenue projections, we have includedhistorical traffic data, as providedbyAlsek in Appendix B. As is typicallythe case in Alaska, significantlymore freight and mail flow from the hub to the EAS communities than from the EAS communities to the hub. In addition, the data show that there is some seasonal peaking oftraffic. Proposals should accommodateboth ofthese factors.

Other Carrier Requirements The Department is responsible for implementing various Federal statutes governingJobbying activities, drug-free workplaces, and nondiscrimination.3 Consequently, all carriers receiving Federal subsidy for EAS must certifythat they are incompliance with Department regulations regarding drug-free workplaces and nondiscrimination, and those carriers whose subsidies exceed $100,000 overthe life ofthe rate-term must also certify that they are in compliance with the regulations governing lobbying activities. Because the Department is prohibited from paying subsidyto carriers that do not submit these documents, all carriers that planto submit proposals involving subsidy shouldbe aware that the selected carrier will berequired to complete the required certifications. Interested carriers requiring more detailed information regarding theserequirements should contact the Office ofAviation Analysis at (202) 366- 5903.4
Community and State Comments The communities and State are welcome to submit comments at any time. We encourage prospective applicants to contact the communities before they submit their proposals so that they can tailor them to the communities' needs, as theywill notbe able to amend them after the due date. As noted earlier, we will provide a copy ofthe proposals to the civicparties and ask them to submit their final comments shortly after August 7, the due date for proposals.

This Order is issued under authority delegated in49 CFR 1.56a(f) andre-delegated to the Director, Office ofAviation Analysis.

3 The regulations applicable to these areas are: (1) 49.CFRPart 20 --Newrestrictions on lobbying; (2) 49 CFRPart 21 --Nondiscrimination in federally-assisted programs ofthe Department ofTransportation-- Effectuation oftitle VI ofthe Civil Rights Act of 1964; 49 CFRPart 27 --Nondiscrimination onthe basis of disability inprograms and activities receiving orbenefiting from Federal financial assistance; and 14 CFRPart 382 --Nondiscrimination on the basis ofdisability in air travel; and (3) 49 CFRPart 29

-- Government-wide debarment and suspension (non-procurement) and government-wide requirements for drugfree workplace (grants).
4 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.- 4-

ACCORDINGLY, 1. Werequest that carriers interested in**provi~ing** EAS at Cape Yakataga and Icy Bay, Alaska, submit their proposals, with orwithout subsidyrequests, no later than August 1, 2012. Theproposals shouldbe e-mailed to:- EAS@dot.gov with the title "Proposal to Provide Essential Air Service at CapeYakataga and Icy Bay, Docket DOT-OST-1996-2009";5

2. This docket will remain openuntil further order ofthe Department; and

3. We will serve copies ofthis Order onthe parties listed inAppendix D.

Persons entitled to petition the Department for review ofthis Order under the Department's Regulations, 14 CFR 385.30, must file such petitions within ten (10) days after the date of service ofthis Order.

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

By:

(SEAL). 

### TODD M. HOMAN Director Office ofAviation Analysis

An electronic version of this document is available

on the World Wide Web at http://www.regualtions.gov

5 Questions regarding filings in response to this Ordermaybe directed to A.J. Muldoon at (202) 366-1058 or albert.muldoon@dot.gov. Proposals should also be e-mailed to albert.muldoon@dot.gov and dennis.devany@dot.gov.Appendix A

SERVICE AREA MAP



# Icy Bay



# ALASKAAppendix 

### B
Aviation activity at Cape Yakataga and Icy Bay, Alaska

MonthNear · Passengers Mail (lbs.) Freight (lbs.)

November, 2006 8 20 300 December, 2006 2 0 0

January, 2007 0 29 1133 February, 2007 0 22 405 March, 2007 11 70 3072

April, 2007 18 249 3400

May, 2007 35 233 3747 June,2007 29 103 4920 July, 2007 32 320 4234 August, 2007 26 254 2346 September, 2007 20 62 1099 October, 2007 16 117 857 November, 2007 3 115 442 December, 2007 2 60 1165

January, 2008 4 25 434 February, 2008 3 11 450

. March, 2008 1 60 959 November, 2008 19 90 2264 December, 2008 3 1403 1071

January,2009 4 3 417 February, 2009 2 7 76 March, 2009 5 915 48

April, 2009 9 173 180 May, 2009 32 266 2413 June,2009 15 587 796 July, 2009 8 1918 1067 August, 2009 25 518 1018 September, 2009 45 1273 4635 October, 2009 12 263 2608 November, 2009 3 140 355 December, 2009 0 145 155

January,2010 2 245 36 February,2010 4 667 803Appendix D

MonthNear Passengers Mail (lbs.) Freight (lbs.)

March, 2010 4 95 1276

April, 2010 9 152 2514

May,2010 46 389 6043 June,2010 6 217 705 July, 2010 2 0 1515 August, 2010 16 0 500 September, 2010 16 5 98 October, 2010 22 0 1457 November, 2010 0 20 467 December, 2010 0 0 165

January, 2011 10 195 2700 February, 2011 0 102 1608 March, 2011 4 343 272

April, 2011 6 259 2300 May, 2011 12 10 262 June, 2011 37 263 254 July, 2011 19 74 2838 August, 2011 12 37 206 September, 2011 17 88 3093 October, 2011 12 26 378 November, 2011 4 505 255 December, 2011 0 65 88

January, 2012 2 246 378 February, 2012 0 403 432 March, 2012 1 279 590

April, 2012 3 145 225

Source: AlsekAir Service, Inc.Appendix C

Example of General Terms and Conditions for Essential Air Service

The carrierunderstands that it may forfeit its compensation for any flights that it does not operate in conformance with the terms and stipulations ofthe rate order, including the service plans outlined in the order and any other significant elements ofthe required service, without prior approval. The carrierunderstands that an aircraft take-offand landing at its scheduled destination constitutes a completed flight; absent an explanation supporting subsidy eligibility for a flight that has notbeen completed, such as certain weather cancellations, only completed flights are considered eligible for subsidy. In addition, ifthe carrier does not schedule oroperate its flights in full conformance with the order for a significant period, it mayjeopardizeits entire subsidy claim for the period in question. Ifthe carrier contemplates any such changes beyond the scope ofthe order during the applicable period oftheserates, it must first notify the Office ofAviation Analysis in writing and receive written approval from the Department to be ensured offull compensation. Should circumstances warrant, the Departmentmay locate and select a replacement carrierto provide service on these routes. The carrier must complete all flights that canbe safely operated; flights that overflypoints for lack oftraffic will notbe compensated. In determining whether subsidypayment for a deviating flight should be adjusted or disallowed, the Department will consider the extent to which the goals oftheprogram are met and the extent ofaccess to the national air transportation system provided to the community.

Ifthe Departmentunilaterally, eitherpartially or completely, terminates orreduces payments for service or changes servi'ce requirements at a specific locationprovided for underthis order, then, at the end ofthe period for which the Department does makepayments in the stipulated amounts or at the stipulated service levels, the carrier may cease to provide service to that specific location without regard to anyrequirement for notice ofsuch cessation. Those adjustments inthe levels ofsubsidy and/or service that are mutually agreed to in writingbythe Department and carrier do not constitute a total orpartial reduction or cessation ofpayment.
Subsidy contracts are subject to, and incorporatebyreference, relevant statutes and Department regulations, as theymaybeamended from time to time. However, any such statutes, regulations, or amendments thereto shall not operate to controvert the foregoing paragraph.

Funds are not currently available for performance underthis orderbeyond [DATE]. The Department's obligation for performance under this orderbeyond [DATE], is subject to the availability ofappropriated funds from which payment for services canbe made. No legal liability on the part ofthe Government for any paymentmay arise for performance underthis orderbeyond [DATE], until funds are made available to the Department for performance. If funds are not made available for performance beyond [DATE], the Department will provide notice in writing to the carrier.

All claims for paymentmustbe submitted within 60 days ofthe last day ofserviceprovided underthis order. ·Appendix D

SERVICE LIST 40-Mile Air, LeifWilson 40-Mile Air, VanessaThompson Aero Twin, AACA,TonyCestnik Air Excursions, Marion Broughton Air Excursions, Mike Loverink Alaska Air Carriers Association, Joy Journeay Alaska Airlines, JeffMunro Alaska Airlines, Joe Sprague AlaskaAirlines, Sandy Sinick AlaskaAirlines, Torque Zubeck Alaska Central Express, John Seamon

.Alaska Central Express, Mike Bergt

Alaska Central Express, Steve Deaton Alaska Central Express, Steve Endlich Alaska DOT, LindaBustamante Alaska DOT, Rebecca Cronkhite Alaska DOT, Steven D. Hatter Alaska DOT-Medicaid PassengerFares Alaska Seaplane, Kent Craford Alsek Air, Les and Debra Hartley Arctic Circle, Donald Singsaas Arctic Transportation Services, Wilfred Ryan Arctic Transportation Services, Jim Hjelm Bering Air, David Olsen Bering Air, Jim Rowe Sen. Begich, James Feldman Sen. Begich, SchawnaThomas Sen. Murkowski, Jeremy Price Sen. Murkowski, Karen McCarthy Sen. Murkowski, Warren Wright Consultant, Hank Myers Consultant, Ken Acton Consultant, Norm Israelson CopperValleyAir, Dave Parmenter CopperValleyAir, Todd Hand Dora to Jets, Mark McKenna DOT, Richard Sewell ERA Aviation, Lori Goodman

· EraAviation, Walter Dallis

Frontier Flying, Paul Hendrickson Frontier/ERA/Hageland, Bob Hajducovich ·Grant Aviation, Bruce McGlasson Hageland, Mike Hageland Hageland, PatrickThurston Harris Air, FlyHackett Harris Air, Scott Harris Homeland Security, David Bernier Homeland Security, Michael Duffy Homeland Security, Ragan, William HomerAir, Andy Smircich Iliamna Air, Tim LaPorte Inland Aviation, Stephen Hill Island Air, Bob Stanford Island Air, Jennifer Stanford Katmai Air, SonnyPeterson LAB Flying Service, Eric Bennett Larry's Flying, Jean Chenaille**North~rn** Air Cargo, Dave Squier Northern Air Cargo, David Karp Northern Air Cargo, Eric Van Andel Pacific Airways, Steve Montanus PenAir, Danny Seybert PenAir, Kim Kawaguchi PenAir, Patrick Rizzi PenAir, Scott Bloomquist ProMech, Mark Sessoms Seaport, EAS Mailbox Seaport, Rob McKinney Servant Air, Terry Cratty Servant Air, Wes Osowski SmokeyBayAir, Claire McCann Spernak Airways, Mike Spernak Tanana Air Service, Brian Martin Taquan Air Service, Brien Salazaar TaquanAir Service, Beckie Allen Tatonduk, Tina**P~ylor** Tatonduk, Robert Everts Tatonduk, Robert Ragar USDOT, Dennis DeVany USDOT, Jennifer Thibodeau USDOT, Kevin Schlemmer ·USDOT, Richard Leonard USPS, Greg Garcia USPS, Joseph Anzalone USPS, Joy Doby USPS, Kevin HartnerUSPS, Leonard Kilburn USPS, MaryTaylor Ward Air, Ed Kiesel Ward Air, Tom Williams Appendix D

Wings Airline Services, BobJacobsen Wings Airline Services, HollyJohnson Wright Air Service, Bob Bursiel Yute Air, Tim Vottis