# Order: 201 4

- 4

- 7 Served: April 8 , 201 4 

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

Issued by the Department of Transportation on th e 8 th 

# day of April , 20 1 4

ORDER REQUESTING PROPOSALS Summary By this O rder, the Department is requesting proposals from ca rriers interested in providing Essential Air S ervice (EAS) at Atka and /or Nikolski , Alaska , for a new contract period , begi nning October 1, 20 1 4 , with or without subsidy. (See Appendix A for a map). Carriers should file their proposals no later than May 13 , 2014

. Background By Order 20 1 2

- 5

- 2 0 , May 23 , 2012 , the Department selected Grant Aviation, Inc. ( Grant ) , to provide sub sidized EAS at Atka and Nikolski , Alaska, through September 30 , 20 1 4

. Under that O rder, Grant provide s Atka with three nonstop round trip s per week to Dutch Harbor, and provides Nikolski with two nonstop round trips per week to Dutch Harbor

. S ervice is p rovided on nine

- passenger Beech King Air 200 aircraft , for a total combined annual subsidy rate of $ 1,174,005 in the first year ($842,574 for Atka and $331,431 for Nikolski) and $ 1,147,443 in the second year ($822,445 for Atka and $324,998 for Nikolski)

. Request for Proposals As the end of the current rate term approaches, we are here requesting proposals from carriers interested in providing EAS at Atka and Nikolski , Alaska , with or without subsidy, for a new contract period beginning October 1 , 20 1 4

. Ca rriers should file their proposals no later than May 13 , 2014 . Staff will then docket the proposals, thereby making them public, and direct each carrier to serve a copy of its proposal on the civic parties and other applicants. Shortly afterwards, we wil l provide a summary of the proposals to the communit ies and the State and ask them to submit their final comments. We will give full consideration to all proposals that are timely filed. 1

1 

## Carriers should not expect the Department to accept late fillings. In cases where a carrier proposes to provide EAS without subsidy and we determine that service can be re liably provided without such 

# Essential Air Service at

ATKA , ALASKA NIKOLSKI , ALASKA

Under 49 U.S.C. § 41731 e t seq

. DOCKET DOT
- OST
- 1995
- 363

# - 2

-

Interested carriers should prepare their proposals with every expe ctation that their initial proposals will represent their final and only proposals. However, we retain the discretion to negotiate proposals with carriers when we deem it desirable. We also retain the discretion to reject outright all unreasonable or unr ealistic proposals and re

- solicit a new round of proposals. However, negotiation and rejection are only occasional exceptions to the rule.
We are here providing interested 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 proposals 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 proposed schedules and projected block hours. In addition, applicants are urged to provide financial data supporting their subsidy requests, including information on their projected expenses and revenues. We strongly encourage clear, well

- documented proposals that will facilitate their evaluation by the affected communities and the Department. 2


# With specific respect to Atka and Nikolski , we expect p roposals consistin g of service consistent with what the communities currently receive, namely three and two nonstop round trips (respectively) per week to Dutch Harbor with small aircraft. We encourage proposals that meet the se requirements in an efficient manner. Carriers are also welcome to propose more than one service option, if they choose; they need not limit themselves to those requirements if they envision other, potentially more attr active service possibilities (e.g. , a different length of contract ) with subsidy re quirements that remain competitive. We encourage carriers to work with the communities as they prepare their proposals in order to craft them to best meet the communities’ needs. As always, we will fully consider the communities’ views before making a long

- term carrier decision. Filing Procedures Carrier proposals should be submitted to the Department with all materials compiled into a single document. In addition, because the document will be published on http://w ww.regulations.gov/ , each page should be formatted to be viewed online and for easy printing.

compensation, we typically do not proceed with the carrier

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

- free service as proposed. 2 

## In selecting a carrier to provide subsidized EAS for an eligible place in Alaska, 49 U.S.C. § 41733(c)(1) directs us to consider six factors: (a) service reliability; (b) contractual and marketing arrangements with a larger carrier at the hub; (c) interline arrangements with a larger carrier at the hub; (d) community views, gi ving substantial weight to the views of the elected officials representing the users; and (e) whether the carrier has included a plan in its proposal to market its service to the community , and ; (f) the experience of the applicant in providing, in Alaska, scheduled air service or significant non

- scheduled service

. In addition, the Consolidated Appropriations Act, 2014, Public Law No. 113

- 76, 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 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

-

Service and Traffic History In order to assist carriers in making their traffic and revenue projections, we have included historical traffic data in Appendix B. For the year ended February 28, 2014, the most recent annual period for which data are available, Atka generated approximately 5.2 origin and destination passengers per week as well as approximately 1,121 weekly pounds of freight and mail. For the same period, Nikolski averaged 3 passengers per week and 653 pounds of freight and mail. Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug

- free workplaces, and nondiscriminati on. 3 

# Consequently, all carriers receiving Federal subsidy for EAS must certify that they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimination, and those carriers whose subsidies exceed $100,000 over the life o f the rate

- term must also certify that they are in compliance with the regulations governing lobbying activities. Because the Department is prohibited from paying subsidy to carriers that do not submit these documents, all carriers that plan to submit pro posals involving subsidy should be aware that the selected carrier will be required to complete the required certifications. Interested carriers requiring more detailed information regarding these requirements should contact the Office of Aviation Analysi s at (202) 366

- 5903. 4 

# Community and State Comments The communit ies and State are welcome to submit comments at any time. As noted earlier, we will provide a copy of the proposals to the civic parties and ask them to submit their final comments shortly af ter May 13 , 2014 , the due date for proposals.

This O rder is issued under a uthority delegated in 49 CFR 1.25 a( b ) and re

- delegated to the Director, Office of Aviation Analysis.
ACCORDINGLY, 1. We request that carriers interested in providing EAS at Atka a nd /or Nikolski , Alaska , submit their proposals, with or without subsidy requests, no later than May 13 , 2014. The proposals should be e

- mailed to: EAS@dot.gov with the title “Proposal to Provide Essential Air Service a t Atka and /or Nikolski , Alaska , Docket DOT

- OST

- 1995

- 363 ” ; 5



# 2. This docket will remain open u ntil further o rder of the Department; and

3 

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

-- New restrictions on lobbying; (2) 49 CFR Part 21

-- Nondiscrimination in federally

- ass isted 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 activities receiving or benefiting from Federal financial assista nce; 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 requirements for drug

- free workplace (grants). 4 

## The certificat ions are also available on the web at http://www.dot.gov/policy/aviation

- policy/small

community

- rural

- air

- service/essential

- air

- service

. 5 

## Qu estions regarding filings in response to this Order may be directed to A.J. Muldoon at (202) 366

- 1058
or albert.muldoon@dot.gov

.

# - 4

-

3. We will serve copies of this O rder on the communities of Atka and Nikolski , Alaska, the Alaska Department of Transp ortation and the service list for this docket

. Persons entitled to petition the Department for review of this O rder under the Department’s Regulations, 14 CFR 385.3 1(a) , must file such petitions within seven ( 7 ) days aft er the date of service of this O rde r.
This O rder will be effective immediately, and the filing of a petition for review shall not preclude its effectiveness.
By:

TODD M. HOMAN Director Office of Aviation Analysis
(SEAL)
An electronic version of this document is available at http://www.regualtions.gov

# APPENDIX A

SERVICE AREA MAP

# APPENDIX B Page 1 of 2

Historical Traffic at Atka , Alaska 6

Pax Freight (lbs.) Mail (lbs.) Pax Freight (lbs.) Mail (lbs.) Pax Freight (lbs.) Mail (lbs.) 2010 2010 2010

1 12 0 332 1 14 1,608 3,105 1 26 1,608 3,437 2 33 890 297 2 23 1,905 11,482 2 56 2,795 11,779 3 5 190 230 3 21 2,917 4,100 3 26 3,107 4,330 4 35 0 439 4 35 8,572 12,088 4 70 8,572 12,527 5 32 0 331 5 33 5,190 10,000 5 65 5,190 10,331 6 12 1,880 377 6 19 2,902 5,642 6 31 4,782 6,019 7 20 1,740 282 7 13 525 10,012 7 33 2,265 10,294 8 32 1,905 602 8 32 3,526 14,129 8 64 5,431 14,731 9 34 1,123 423 9 35 3,365 9,982 9 69 4,488 10,405 10 34 0 515 10 19 4,789 10,395 10 53 4,789 10,910 11 19 184 213 11 15 2,195 7,035 11 34 2,379 7,248 12 18 102 196 12 27 3,725 8,118 12 45 3,827 8,314 2010 Total 286 8,014 4,237 2010 Total 286 41,219 106,088 2010 Total 572 49,233 110,325 2011 2,011 2,011

1 16 0 33 1 9 3,681 4,368 1 25 3,681 4,401 2 18 57 255 2 17 3,422 6,546 2 35 3,479 6,801 3 32 34 182 3 36 3,445 10,027 3 68 3,479 10,209 4 20 37 276 4 18 2,460 6,524 4 38 2,497 6,800 5 30 444 316 5 28 3,168 3,355 5 58 3,612 3,671 6 11 0 0 6 17 6,056 11,337 6 28 6,056 11,337 7 9 0 162 7 11 4,643 7,668 7 20 4,643 7,830 8 32 15 357 8 40 5,299 9,516 8 72 5,314 9,873 9 23 1,073 173 9 24 4,932 13,260 9 47 6,005 13,433 10 22 168 160 10 25 2,918 9,450 10 47 3,086 9,610 11 29 0 390 11 16 2,402 9,217 11 45 2,402 9,607 12 17 0 723 12 14 7,832 9,545 12 31 7,832 10,268 2011 Total 259 1,828 3,027 2011 Total 255 50,258 100,813 2011 Total 514 52,086 103,840 2012 2012 2012

1 12 180 620 1 19 3,837 7,704 1 31 4,017 8,324 2 15 128 298 2 14 1,653 4,639 2 29 1,781 4,937 3 29 49 257 3 45 5,826 8,138 3 74 5,875 8,395 4 18 600 298 4 16 8,375 11,173 4 34 8,975 11,471 5 36 210 250 5 40 3,539 11,161 5 76 3,749 11,411 6 10 1,400 203 6 23 4,798 14,300 6 33 6,198 14,503 7 37 817 394 7 21 4,721 14,681 7 58 5,538 15,075 8 24 1,571 202 8 31 5,913 6,663 8 55 7,484 6,865 12 2 0 0 12 4 316 476 12 6 316 476 2012 Total 183 4,955 2,522 2012 Total 213 38,978 78,935 2012 Total 396 43,933 81,457 2013 2013 2013

1 7 20 29 1 8 967 3,405 1 15 987 3,434 2 11 0 21 2 18 3,059 1,404 2 29 3,059 1,425 3 18 0 62 3 21 759 6,267 3 39 759 6,329 4 6 0 74 4 4 219 1,136 4 10 219 1,210 5 0 0 0 5 1 694 522 5 1 694 522 6 2 0 28 6 3 0 5,065 6 5 0 5,093 7 14 0 1,431 7 13 0 0 7 27 0 1,431 8 9 0 0 8 28 0 0 8 37 0 0 9 10 0 0 9 16 0 639 9 26 0 639 10 20 0 0 10 25 2,084 4,595 10 45 2,084 4,595 11 5 0 0 11 20 1,317 4,605 11 25 1,317 4,605 12 0 0 32 12 15 1,544 10,124 12 15 1,544 10,156 2013 Total 102 20 1,677 2013 Total 172 10,643 37,762 2013 Total 274 10,663 39,439 2014 2014 2014

1 7 0 0 1 2 2,795 5,214 1 9 2,795 5,214 2 14 0 659 2 16 3,009 5,396 2 30 3,009 6,055 2014 Total 21 0 659 2014 Total 18 5,804 10,610 2014 Total 39 5,804 11,269 Origin Atka Destination Atka Total O&D Atka



### 6 

## Source: Bureau of Transportation Statistics; Form 41, Schedule T

- 100 Report

.

# APPENDIX B Page 2 of 2

Historical Traffic at Nikolski , Alaska 7

Pax Freight (lbs.) Mail (lbs.) Pax Freight (lbs.) Mail (lbs.) Pax Freight (lbs.) Mail (lbs.) 2010 2010 2010

1 0 0 27 1 1 196 552 1 1 196 579 2 7 60 275 2 4 708 2,972 2 11 768 3,247 3 2 0 201 3 6 817 670 3 8 817 871 4 8 0 95 4 9 0 19 4 17 0 114 5 10 524 416 5 17 2,395 3,832 5 27 2,919 4,248 6 8 0 91 6 7 55 624 6 15 55 715 7 8 0 175 7 9 1,046 1,678 7 17 1,046 1,853 8 6 0 68 8 5 474 1,749 8 11 474 1,817 9 8 0 195 9 13 930 1,145 9 21 930 1,340 10 12 0 211 10 15 1,061 1,275 10 27 1,061 1,486 11 6 0 83 11 5 420 819 11 11 420 902 12 1 0 0 12 2 0 596 12 3 0 596 2010 Total 76 584 1,837 2010 Total 93 8,102 15,931 2010 Total 169 8,686 17,768 2011 2011 2011

1 4 0 255 1 4 566 1,224 1 8 566 1,479 2 5 70 96 2 5 570 611 2 10 640 707 3 8 0 87 3 5 769 1,373 3 13 769 1,460 4 6 0 114 4 1 233 1,630 4 7 233 1,744 5 7 0 201 5 12 1,416 984 5 19 1,416 1,185 6 6 0 169 6 8 422 1,029 6 14 422 1,198 7 11 0 66 7 8 1,418 993 7 19 1,418 1,059 8 6 0 131 8 9 718 3,041 8 15 718 3,172 9 3 0 0 9 5 889 799 9 8 889 799 10 4 0 118 10 1 712 863 10 5 712 981 11 8 120 46 11 5 332 1,488 11 13 452 1,534 12 4 70 44 12 2 618 1,584 12 6 688 1,628 2011 Total 72 260 1,327 2011 Total 65 8,663 15,619 2011 Total 137 8,923 16,946 2012 2012 2012

1 8 0 54 1 4 127 373 1 12 127 427 2 0 0 92 2 4 640 2,185 2 4 640 2,277 3 5 0 79 3 0 270 715 3 5 270 794 4 1 0 123 4 8 69 2,213 4 9 69 2,336 5 2 0 54 5 5 212 2,447 5 7 212 2,501 6 4 0 0 6 3 140 1,306 6 7 140 1,306 7 5 0 0 7 4 871 926 7 9 871 926 8 4 0 214 8 13 326 1,238 8 17 326 1,452 12 0 0 0 12 3 0 0 12 3 0 0 2012 Total 29 0 616 2012 Total 44 2,655 11,403 2012 Total 73 2,655 12,019 2013 2013 2013

1 1 0 0 1 3 333 119 1 4 333 119 2 8 0 2 2 17 521 699 2 25 521 701 3 6 0 146 3 16 2,559 1,975 3 22 2,559 2,121 4 1 0 14 4 7 525 2,435 4 8 525 2,449 5 0 0 0 5 0 0 0 5 0 0 0 6 0 0 0 6 2 0 478 6 2 0 478 7 6 0 0 7 7 1,000 142 7 13 1,000 142 8 3 0 0 8 7 1,054 692 8 10 1,054 692 9 2 0 0 9 8 0 185 9 10 0 185 10 20 400 0 10 13 1,181 1,593 10 33 1,581 1,593 11 1 0 0 11 12 3,523 780 11 13 3,523 780 12 0 0 0 12 14 4,818 1,698 12 14 4,818 1,698 2013 Total 48 400 162 2013 Total 106 15,514 10,796 2013 Total 154 15,914 10,958 2014 2014 2014

1 9 0 40 1 11 3,836 850 1 20 3,836 890 2 5 0 23 2 7 2,970 1,052 2 12 2,970 1,075 2014 Total 14 0 63 2014 Total 18 6,806 1,902 2014 Total 32 6,806 1,965 Origin Nikolski Destination Nikolski Total O&D Nikolski



### 7 

## Source: Bureau of Transportation Statistics; Form 41, Schedule T

- 100 Report.

# APPENDIX C

Example of General Terms and Conditions for Essential Air Service

The carrier un derstands that it may forfeit its compensation for any flights that it does not operate in conformance with the terms and stipulations of the rate Order, including the service plans outlined in the Order and any other significant elements of the required s ervice, without prior approval. The carrier understands that an aircraft take

- off and landing at its scheduled destination constitutes a completed flight; absent an explanation supporting subsidy eligibility for a flight that has not been completed, such a s certain weather cancellations, only completed flights are considered eligible for subsidy. In addition, if the carrier does not schedule or operate its flights in full conformance with the Order for a significant period, it may jeopardize its entire subs idy claim for the period in question. If the carrier contemplates any such changes beyond the scope of the Order during the applicable period of these rates, it must first notify the Office of Aviation Analysis in writing and receive written approval from the Department to be ensured of full compensation. Should circumstances warrant, the Department may locate and select a replacement carrier to provide service on these routes. The carrier must complete all flights that can be safely operated; flights that overfly points for lack of traffic will not be compensated. In determining whether subsidy payment for a deviating flight should be adjusted or disallowed, the Department will consider the extent to which the goals of the program are met and the extent of access to the national air transportation system provided to the community.
If the Department unilaterally, either partially or complete, terminates or reduces payments for service or changes service requirements at a specific location provided for under this Order, then, at the end of the period for which the Department does make payments in the stipulated amounts or at the stipulated service levels, the carrier may cease to provide service to that specific location without regard to any requirement for notice of such cessation. Those adjustments in the levels of subsidy and/or service that are mutually agreed to in writing by the Department and carrier do not constitute a total or partial reduction or cessation of payment.
Funds may not be available fo r 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 are not made available for performance beyond [DATE], the Department will provide notice in writ ing to the carrier.
Subsidy contracts are subject to, and incorporate by reference, relevant statutes and Department regulations, as they may be amended from time to time. However, any such statutes, regulations, or amendments thereto shall not operate t o controvert the foregoing paragraph.
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 fi led by October 31st; August claims must be submitted by November 30th, and so on.