# V^opp^^\o 5 Aw^ ui:^-v..- r



# ^^/a^hi^^^r/Zm/ ^ Mega n Lawrenc e Managin g Director , Governmen t an d CommunityRelation s



### Januar y 11 , 201 1

Mr
. Denni s DeVan y Chief , EA S an dDomesti c Analysi s Offic eo f Aviatio nAnalysi s U.S
. Departmen t

o f Transportatio n 120 0 Ne w Jerse y Avenue , S.E
. Washington , D.C
. 2059 0 Subject : Proposa l t o Provid eEssentia l Ai r Servic e a t

Cordova , Gustavus , Petersburg , Wrangel l an dYakutat , Alaska , Docke t OST-1998-489 9 Dear Mr
. DeVany : Pleas e se eth eattache dproposa l fro mAlask aAirlines , Inc
. t o provid e essentia l ai r servic et o th ecommunitie s o f Cordova , Gustavus , Petersburg , Wrangel l an d Yakutat , Alaska
. Th eproposa l include s asubsid y reques t t o provid e thi s service
. Als o attache dar eth ecertification s pertainin g t o complianc e wit hadrug-fre e workplace , nondiscriminatio nan dlobbyin g regulations
. Pleas e contac t

m ei f yo u nee dadditiona l information
. Sincerely , - •
• *

••v j 

### "p" o l,j j . '•'^::_':. ?

' • • .-.'> • -^ } r"-iJ~x ^ -••oOs i 

### q^li.^-^ ' '^2r,= H 

# m ^

0 3



### Attachment s

• ft O X6 S 9 0 0 8 P
. ATT1
. I- , WA9 8 I6 8 - 0 9 C 0 / 2 0 6 - 4 5 i - ? 2 0 0

### Pag e 1 o f1 Alaska Airlines , Inc

. Compensatio n Requiremen t Essentia l Ai rServic e t o Cordova , Gustavus , Petersburg , Wrangel l an d Yakuta t

Exhibi t AS- 1 AS- 2 AS- 3 Inde xo fExhibit s Titl e Narrativ e Statemen t Subsid yRequest Schedul e Page s 1 1 1AS- 1 Pag e 1 of1 Alask a Airlines , Inc

. Compensatio n Requiremen t Essentia l Ai rServic e t o Cordova , Gustavus , Petersburg , Wrangel l an d Yakutat
Narrativ e Statemen t Alask a Airlines , Inc

. ("Alaska " o r"company" ) i s pleased , i n respons e t o Orde r2010-11-26 , t o submi t it s integrate d Southeas t Alaska EA S proposa l fo rservic e t o Cordova , Gustavus , Petersburg , Wrangel l an d Yakutat

. Alask a request s a n EA S compensatio n leve l o f$8,262,93 8 fo rit s aggregate d proposa l ~ $4,846,95 1 fo rCordova , Yakuta t an d Gustavu s an d $3,415,98 7 fo rPetersburg an d Wrangell

. Th e compensatio n reques t represent s a 16 % reductio n i n th e company' s actua l result s fo rth e 12-mont h perio d ende d Septembe r30 , 201 0 an d provide s fo ra 5 % margin , base d o n substantiall ylowe radjuste d rathe rtha n actua l costs
. Alaska i s voluntaril yofferin g thi s "substantiall ylowe rtha n actua l cost " proposal , i n larg e part , because , Alask a believe s i t ha s a specia l obligatio n t o continu e its longstandin g rol e a s th e vita l transportatio n lin k fo reac h of thes e fiv e Southeas t Alaska communitie s t o hub s withi n an d beyon d th e stat e ofAlaska

. I n formulatin g it s proposal , Alaska ha s assume d fla t revenue , base d o n actua l financia l result s fo rth e 12-mont h perio d ende d Septembe r30 , 2010

. Wit h respect t o direct expenses , th e sol e adjustmen t Alask a ha s mad e t o it s actua l Septembe r30 , 201 0 result s i s t o increas e it s projecte d fue l costs
. Alaska project s averag e fue l cost s fo rth e tw o yea rperio d beginnin g Ma y 1 , 201 1 of$9 0 pe rbarrel

. I n fact , Alaska' s $9 0 pe rbarre l assumptio n i s almos t identica l t o what Alask a i s currentl ypayin g -and , b yan yobjectiv e measure , $9 0 represent s a conservativ e fue l cos t estimate

. Insofa ra s indirect expense s are concerned , Alask a reduce d it s actua l Septembe r30 , 201 0 expense s i n al l bu t tw o subaccount s t o th e sam e leve l Alaska propose d i n it s 200 9 Southeas t Alask a submissio n t o th e Department

. Th e othe rtw o indirect expens e subaccounts , fligh t attendan t an d groun d maintenanc e expenses , wer e kep t at th e sam e leve l tha t Alask a experience d fo rth e twelv e month s ende d Septembe r30 , 2010

. Th e ne t effect ofthes e indirect expens e adjustment s lower s thos e indirect cost s bymore tha n $ 2 millio n belo wAlaska' s most recen t actua l cos t levels

. Alaska propose s t o continu e its establishe d patter n ofdail yB-737-40 0 combinatio n ("combi" ) passenge ran d carg o service , wit h eac h fligh t offerin g passengers fro m al l ofth e affecte d Southeas t Alask a communitie s (excep t fo rAlaska' s summer-onl yGustavu s service ) single
plan e sen/ic e t o Junea u as wel l as t o Alaska' s Anchorag e an d Seattl e hubs

. Alaska' s specially
configure d 737-40 0 aircraft provid e enhance d carg o capacitywhic h i s criticall yimportan t t o thes e isolate d communities

. Thes e aircraft are als o equippe d wit h th e lates t Require d Navigatio n Performanc e (RNP ) technology , whic h enable s th e airlin e t o reliabl yacces s th e weather-sensitiv e airport s i n Southeas t Alask a an d t o maintai n a hig h completio n factor

. Alask a ha s provide d servic e t o Southeas t Alaska unde rth e EAS progra m fo rmore tha n 3 0 years an d i s committe d t o continuin g t o serv e thi s criticall yimportan t transportatio n function , connectin g thes e remote , wholl yaviation-dependen t communitie s t o point s withi n an d beyon d Alaska

.Subsid yReques t Alask a Airlines , In c Annua l Compensatio n Requiremen t Essentia l Ai rServic e at Cordova

. Gustavus

. Petersburg

. Wrangel l an d Yakuta t May1 , 201 1 an d Forward Base d o n Nee d fo rYea rEnde d Septembe r30 , 201 0

Actual s AS- 2 Pag e 1 o f1

0p?ratln q Revenu e Passenge r U.S

. Mai l Freigh t Exces s Baggag e Charte r Trans

. Relate d & Othe r1 / Operatin g Expens e Direct Flyin g Operatio n 3/ Maintenanc e - Fligh t Depreciatio n - Fligh t Indirect Maintenanc e - Groun d Fligh t Attendan t othe rPassenge rSvc

. 4/ Aircraft & Traffi cSvc

. 4 / Promotio n & Sale s 4 / Genera l & Admin

. 4 / Depreciatio n - Groun d Transpor t Relate d 4 / Cordova Yakuta t Gustsvy ?
5,750,00 6 404,37 4 1,655,26 4 139,74 8 0 913,02 3 $ 8,862,41 5 i
5,614,21 0 1.648,31 8 411,53 9 $ 7,674,06 7 1

4,05 8 548,82 1 26,86 2 3,609,39 3 453,24 5 1,422,09 9 665,45 4 1,121,39 8 Petersbur g

Wranqel l
6,232,40 4 394,28 1 959,18 2 74,46 8 0 1,248,57 7 8,908,91 2 $
3,827.81 0 1,128,85 4 279,47 3 5,236,13 8 $ 2,81 9 377,45 3 10,78 8 2,481,02 5 595,98 6 1.101,31 5 629,62 6 790,55 0 Consolidate d

Tota l
11,982,41 0 798,65 4 2,614,44 6 214,21 7 0 2,161,59 9 17,771,32 7
9,442,02 0 2,777,17 2 691,01 3 12,910,20 5 6,87 8 926.27 4 37,65 0 6,090,41 8 1,049,23 1 2.523,41 4 1,295.08 0 1,911,94 8
Tota l Operatin g Exp

. Operatin g Profi t (Loss ) Retur n 2/ Compensatio n $ 7,850,50 1 $ 5,990,39 1 $ 13,840,39 2 $ 15,524,568

. $ 11,226,52 9 $ 26,751,09 7 $ (6,662,153 ) $ (2,317,617 ) $ (8,979,770 ) $ 776,22 8 $ 561,32 6 $ 1,337,55 5 $ 7,438,38 2 $ 2,878,94 4 | $10,317.32F~ { EA S Cos t pe rPassenge r Alaska' s proposa l offers a towEA S cos t pe rpassenger :

$8,262,93 8 Propose d EA S compensatio n 67 % Rati o o fpassenge rrevenu e t o tota l revenu e $5,571,32 9 EA S compensatio n allocate d t o passengers 209,00 0 Estimate d annua l passengers $26.6 6 Averag e EA S cos t pe rpassenge r Note s 1 / Exclude s publi cservic e revenu e 2 / 5 % ofOperatin g Expens e 3 / Fue l adjuste d t o accoun t fo rbudgete d $90/barre l oil 4 / Cost s froze n fro m las t bi d Proposa l Cordov a Yakuta t Gustavu s Petersburg

Wrangel l Consolidate d

Tota l

$ 8,862,41 5 $
5,760,77 4 1,648,31 8 411,53 9 $ 7,820,63 1 5

4,05 8 548.82 1 12,03 3 2,477,88 2 404.00 8 556,19 4 665,45 4 567,45 8 8,908.91 2 $

3.927,70 1 1,128,85 4 279,47 3 5,336,02 9 $ 2.81 9 377.45 3 14.40 1 3.336.82 5 412,33 8 807,96 3 629,62 6 820,54 5 17,771.32 7

9,688,47 5 2,777,17 2 691,01 3 13,156.66 0 6,87 8 926.27 4 26,43 5 5,814.70 7 816,34 6 1,364,15 6 1,295,08 0 1,388,00 3 $ 5.235,90 8 S 6,401,97 0 $ 11,637,87 7 $ 13,056,53 8 $ 11,737.99 9 $ 24.794,53 7 $ (4,194,124 ) $ (2,829.087 ) $ (7,023,211 ) $ 652,82 7 S 586,90 0 S 1,239,72 7 $ 4,846,95 1 $ 3,415,98 7 ] $8,262,938^ 1BA S Schedul e EAS Schedul e Time s 27Dec1 0

AS- 3 Pag e 1 o f1

Summer ^ Flt # Seattl e Ketchika n Wrange l
Petersburg
Junea u 5 5

•i

70 0 81 3 90 0 95 3 103 3 105 8 113 6 122 0 130 0 6 1

-i
75 0

92 2 101 6 6 4

t 205 3 180 2 171 3 164 0 155 7 152 8 144 8 1402 131 7 6 6

t 231 6

200 0 191 9 Flt # 6 S 4 - Seattl e 72 0 Ketchika n l ^ Wrange

. f^^ O
Petersburg J°* ^
Gustavu s 6 1 •J

75 5 7 1

4 - 141 0 7 7

4 - 6 4 t 211 6 182 5 1744 171 1 163 1 160 8 152 8 6 6

t 231 8

1739 Yakutat
Cordova Anchorag e 1449 112 1 120 1 125 3 1333 141 9 1135 183 0

1746 165 8 161 8 152 6 Junea u

Gustavu s 1202

1245 92 7

101 2 154 4

162 4 160 7

184 9 144 5

140 0 200 0

191 7 165 8
Yakuta t
Cordov a Anchorag e 143 1 110 7 114 7 123 6 131 6 140 7 203 1 121 5 183 0 175 0 170 0 162 0 152 8
Source.
- Winte r(Ja n '10 ) & Summe r(Ju l '1 1 Draft )