Order 2014-8-13

Served: August 14, 2014

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 14th of August, 2014

Essential Air Service at

ATKA, ALASKA 

NIKOLSKI, ALASKA

Under 49 U.S.C. § 41731 et seq. 

DOCKET DOT-OST-1995-363

ORDER RESELECTING CARRIER

Summary

By this Order, the Department is reselecting Grant Aviation, Inc., (Grant) to provide Essential 

Air Service (EAS) at Atka and Nikolski, Alaska, at a combined annual subsidy rate of 

$1,352,284 ($1,031,793 at Atka and $320,491 at Nikolski) for the period from October 1, 2014 

through September 30, 2016.1

Background

By Order 2012-5-20, issued May 23, 2012, we selected Grant to provide EAS at Atka and 

Nikolski through September 30, 2014. Under that contract, Grant provides Atka with three 

weekly nonstop round trips to Dutch Harbor for an annual subsidy in the first year of $842,574, 

and $822,445 in the second year. At Nikolski, Grant provides two weekly nonstop round trips to 

Dutch Harbor for an annual subsidy in the first year of $331,431, and $324,998 in the second 

year. All service is provided with nine-seat, twin-engine Beech King Air 200 aircraft. 

In anticipation of the end of the current contract, on April 8, 2014 we issued Order 2014-4-7,

requesting proposals from carriers interested in providing EAS at the communities for a new 

contract period, beginning October 1, 2014. We received two proposals, from Grant, the 

incumbent, and Servant Air, Inc. (Servant).

 1 Such subsidy is calculated on a fiscal year basis, subject to the availability of funds.
-2-

The carriers’ complete proposals and community comments may be accessed online at 

www.regulations.gov by entering “DOT-OST-1995-363” in the search box. Therefore, we will 

only briefly summarize the proposals and comments below.

Proposal of Grant

Grant’s proposal included only one service option, to continue its existing service, consisting of 

three nonstop round trips per week between Atka and Dutch Harbor, and two nonstop round trips 

per week between Nikolski and Dutch Harbor. Service will be provided on Beech King Air 200 

aircraft with two engines and nine passenger seats. For this service, Grant will require an annual 

subsidy of $1,031,793 at Atka and $320,491 at Nikolski.2

Proposal of Servant

Servant also proposes to provide three weekly nonstop round trips between Atka and Dutch 

Harbor, and two weekly round trips between Nikolski and Dutch Harbor. Servant would also 

utilize twin-engine, nine-passenger Beech King Air 200 aircraft. For its proposed service, 

Servant would require a combined annual subsidy of $1,978,103. 

Community Comments

On May 15, 2014, we requested comments from the community and state regarding this carrier 

selection case. On May 22, 2014, we received comments from the City of Atka. While noting 

some operational issues, the City expressed support for the continuation of air service from 

Grant. We did not receive any community comments from Nikolski.

Decision

The carrier selection decision in this case is straightforward. When selecting a carrier to provide 

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 carrier at the hub; (3) interline 

arrangements with a larger carrier at the hub; (4) community views; (5) the carrier’s plan to 

market its service to the community; and (6) the experience of the applicant in providing 

scheduled air service or significant patterns of non-scheduled air service. In addition, the 

Continuing Appropriations Act, 2014, Public Law No. 113-46, 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. 

Grant proposal requires significantly less subsidy ($625,819 per year) than Servant’s proposal for 

the same level of service. Additionally, Grant received the support of the City of Atka. Given 

these factors, and the demonstrated ability of Grant to provide reliable EAS at these communities 

for the past two years, we will select Grant’s proposal.

 2 We have allocated the total annual subsidy request to each community based on each 

community’s share of total block hours.
-3-

Carrier Fitness

49 U.S.C. §§ 41737(b) and 41738 require that DOT find an air carrier fit, willing, and able to 

provide reliable service before DOT may subsidize it to provide Essential Air Service. Grant is 

subject to the Department’s continuing fitness requirements, and no information has come to our 

attention that would cause us to question the carrier’s fitness at this time. DOT has contacted the 

Federal Aviation Administration, and it has raised no concerns that would negatively affect our 

fitness findings. DOT therefore concludes that the carrier remains fit to conduct the operations 

proposed here.

This order is issued under authority delegated in 49 CFR Part 1.25a(b).

ACCORDINGLY,

1. We reselect Grant Aviation, Inc., to provide Essential Air Service at Atka and Nikolski, 

Alaska, as described in Appendix C;

2. We direct Grant Aviation, Inc., to retain all books, records, and other source and summary 

documentation to support claims for payment, and to preserve and maintain such documentation 

in a manner that readily permits its audit and examination by representatives of the Department. 

Such documentation shall be retained for seven years from the date of service of this Order, or 

until the Department indicates that the records may be destroyed, whichever comes first. Copies 

of flight logs for aircraft sold or disposed of must be retained. The carrier may forfeit its 

compensation for any claim that is not supported under the terms of this Order;

3. We find that Grant Aviation, Inc., continues to be fit, willing and able to operate as a 

certificated air carrier and capable of providing reliable Essential Air Service at Atka and 

Nikolski, Alaska; 

4. This docket will remain open until further order of the Department; and
-4-

5. We will serve copies of this Order on the Division of Statewide Aviation of the Alaska 

Department of Transportation, the civic parties of Atka and Nikolski, Alaska, Grant Aviation, 

Inc. and Servant Air, Inc.

By:

SUSAN L. KURLAND

Assistant Secretary for Aviation

and International Affairs

(SEAL)

An electronic version of this document is available at

http://www.regulations.gov
APPENDIX A

SERVICE AREA MAP
APPENDIX B

Page 1 of 2
APPENDIX B

Page 2 of 2
APPENDIX C

Page 1 of 2

Grant Aviation, Inc.

Essential Air Service to be Provided at Atka, Alaska

DOT-OST-1995-363

Effective Period: October 1, 2014, through September 30, 2016

Scheduled Service: Three weekly nonstop round trips to Dutch Harbor

Aircraft type: Nine-seat Beech King Air 200

Annual Subsidy:1 $1,031,793

Annual Flights:2 312

Subsidy per Flight:3 $3,307

Weekly Ceiling:4 $19,842

Note: The carrier understands 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 

service, 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 as 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 subsidy 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 for performance under this Order beyond September 30, 2014. The Government’s obligation for 

performance under this Order beyond September 30, 2014, 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 

September 30, 2014, until funds are made available to the Department for performance. If sufficient funds are not made available for 

performance beyond September 30, 2014, the Department will provide notice in writing 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 to 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 filed by October 31st; August claims must be 

submitted by November 30th, and so on.

 1 See Appendix B. Annual subsidy of $1,352,284 allocated 76.3% to Atka based on block hours.

2 3 round trips per week x 2 directions x 52 weeks = 316.

3 Annual subsidy divided by annual flights.

4 Subsidy per flight x weekly flights.
APPENDIX C

Page 2 of 2

Grant Aviation, Inc.

Essential Air Service to be Provided at Nikolski, Alaska

DOT-OST-1995-363

Effective Period: October 1, 2014, through September 30, 2016

Scheduled Service: Two weekly nonstop round trips to Dutch Harbor

Aircraft type: Nine-seat Beech King Air 200

Annual Subsidy:1 $320,491

Annual Flights:2 208

Subsidy per Flight:3 $1,541

Weekly Ceiling:4 $6,164

Note: The carrier understands 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 

service, 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 as 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 subsidy 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 for performance under this Order beyond September 30, 2014. The Government’s obligation for 

performance under this Order beyond September 30, 2014, 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 

September 30, 2014, until funds are made available to the Department for performance. If sufficient funds are not made available for 

performance beyond September 30, 2014, the Department will provide notice in writing 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 to 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 filed by October 31st; August claims must be 

submitted by November 30th, and so on.

 1 See Appendix B. Annual subsidy of $1,352,284 allocated 23.7% to Nikolski based on block hours.

2 2 round trips per week x 2 directions x 52 weeks = 208.

3 Annual subsidy divided by annual flights.

4 Subsidy per flight x weekly flights.