Order 201 2

- 11

- 34 Served: November 30 , 20 1 2


### UNITED STA

**TES OF A MERICA**  **DEPA RTMENT OF TRA**  **NSPORTA TION**  **OFFICE OF THE SECRETA RY**  **WA SHINGTON, D.C.**  Is sued by the Department of Transportation on the 30 th of November , 2012

**ORDER RE**  **- SELECTING CA**  **RRIER AN**  **D ESTA BLISHING SUBSIDY RA**  **TE S**  **Summary** By this O rder, the Department is re - select ing Copp er Valley Air Service (Copper Valley ) , to provid e subsidized E ssential Air S ervice (EAS) at Gulkana , May Creek, and McCarthy , Alaska, for the two
- ye ar period beginning February 1, 20 1 3 , at the annual subs idy rate s of $ 26 9 , 189 for Gulkana, and $ 20 6 , 198 for both May Creek and McCarthy

. 1 (See Ap pendix A for a map of the service area

. ) **Background** By Order 2010

- 12

- 8 (December 6, 2010) , the Department selected Copper Valley to continue providing EAS at Gulkana, May Creek, and McCarthy , Alaska, for the two

- ye ar period ending January 31, 2013 , for a combined annual subsidy rate of $ 438,912

. Gulkana currently receives two nonstop round trips per week to Anchorage with six

- seat Piper PA

- 31 aircraft; May Creek and McCarthy

each receive two nonstop or one

- stop round trips per week to Gulkana using three

- seat Cessna 185 aircraft during winter months and four

- seat Cessna 206 aircraft during summer months.

1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds. Essential Air Service at **GULKANA, ALA SKA**  **MAY CREEK, ALASKA MCCARTHY, ALASKA** 
Under 49 U.S.C. § 41731 et seq
. **DOCKET OST -**  **1995 -**  **492**- 2

-

With the end of the contract approaching , the Department issued Order 20 1 2

- 7

- 2 8 (July 25, 2012) , requesting proposals from carriers int erested in providing EAS at the communit ies , w ith or without subsidy , for a new contract period beginning February 1, 201 3

. Inrespon se, only the incumbent carrier submitted a proposal. **Carrier Proposal** Copper Valley proposed one serv ice option to continue providing its historical service levels at the communities. At Gulkana , it would use six

- seat twin engine Piper PA

- 31 aircraft and operate two nonstop round trips each week year - round to Anchorage for an annual subsidy of $269 , 189

. 2 At May

Creek and McCarthy, Copper V alley proposed to provide two nonstop or one - stop round trips per week to Gulkana using three

- seat Cessna 185 aircraft during winter months and four

- seat Cessna 206 aircraft during summer months for an annual subsidy of $ 206,198

. 3 **Community**

**Comments** On Au gust 30, 2012 , we requested community comments regarding the carrier

- selection decision at the three communities. Inresponse, we received a letter from the State of Alaska, Department of Transportation and Public Facilities. The State expressed its stro ng support for the continuation of EAS at these communities, citing the communities’ dependence on reliable air service for basic necessities, mail service and access to medical care.
**Decision** The carrier

- selection decision is straightforward

. Copper Val ley is the only appl icant and they meet all of the required selection criteria

. We find the service and subsidy levels proposed by Copper Valley to be reasonable. W e shall make this selection contingent upon the Department’s receiving properly executed c ertifications from Copper Valley that it is in compliance with the Department’s regulations regarding drug

- free workplaces and nondiscrimination, as well as the regulations governing lobby ing activities. **Carrier Fitness** 49 U.S.C. §§ 417 37(b) and 41738 require that we find an air carrier fit, willing, and able to provide reliable service before we may subsidize it to provide essential air service. Copper Valley is subject to the Department’s continuing fitness requirements, and no information has come to o ur attention that would cause us to question the carrier's fitness at this time. We have contacted the Federal Aviation Administration, and it has raised no concerns that would negatively

affect our fitness finding. We therefore conclude that the carrier remains fit to conduct the operations proposed here. This O rder is issued under authority delegated in 49 CFR Part 1.56a(f).

2 Copper Valley may substitute a nine

- passenger Cessna 441Conquest as a backup aircraft or to ac commodate increased passenger demand. 3 Copper Valley may substitute a six

- passenger DHC

- 2 Beaver as a backup aircraft or to accommodate increased passenger demand.- 3

-

**AC CORDINGLY,**  1. The Department selects Copper Valley Air Service , to continue to provide EAS at Gulkana , May Creek, and McCarthy, Alaska, and establishes the subsidy rate s , as detailed in Appendix C , for the two

- ye ar period beginning February 1, 20 1 3 ; 2

. We direct Copper Valley Air Service to retain all books, records, and other source and summary documentation to support claims for pay ment, 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 O rder; 3 . The Department finds that Copper Valley Air Service continues to be fit, willing and able to operate as a certificated air carrier and capable of providing reliable EAS at Gulkana, May Creek, and McCarthy ; 4

. Docket OST

- 1995

- 492 will remain open until further order of the Department; and 5 . The Department w ill serve a copy of this O rder on the communities of Gulkana, May Creek , and McCarthy , Alaska, Copper Valley Air Service , and the State of Alaska Department of Transportation and P ublic Facilities

. By :

**SUSA N L. KURLA**  **ND** Assistant Secretary

for Aviation and International Affairs (SEAL) An electronic version of this document is available on line at www.regulations.govAppendix AAppendix B Page 1 of 3Appendix B Page 2 of 3Appendix B Page 3 of 3Appendix C Page 1 of 3 **Copper Valley Air Service Essential Air Service to be Provided at Gulkana, Alaska**  Effective Period : February 1, 201 3 , through January 31, 201 5 Scheduled Service : Two weekly nonstop round trips between Gulkana and Anchorage Aircraft : Six

- seat twin engine Piper PA

- 31 Rate per Eligible Flight: $ 1,2 94 1 Weekly Ceiling : $ 5, 176 2 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 com pletely, 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. 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. Funds are not currently available for performance under this solicitation beyond March 31, 2013 . The Department’s obligation for performance under this solicitation beyond March 31, 2013 , is contingent upon the availability of appropriated 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 ord er beyond March 31, 2013 , until funds are made available to the Department for performance. If funds are not made available for performance beyond March 31, 2013 , the carrier will receive notice in writing by the Department. All claims for payment must b e submitted within 60 days of the last day of service provided under this order.

1 Annual compensation of $269,189 divided by 208 annual departures (4 weekly departures x 5 2 weeks). 2 4 arrivals and departures per week multiplied by $1,294 per flight

.Appendix C Page 2 of 3 **Copper Valley Air Service Essential Air Service to be Provided**  **at May Creek , Alaska**  Effective Period : February 1, 2013 , through January 31, 201 5 Scheduled Service : May Creek : 2 nonstop or one

- stop round trips per week to Gulkana Aircraft : 3

- seat Cessna 185 (winter months) 4

- seat Cessna 206 (summer months) Rate per Eligible Flight: $ 4 96 1 ; Weekly Ceiling : $ 1, 984 2 Note: The carrier understands that it may f orfeit 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 a pproval. 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 canc ellations, 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 completely, terminates or reduces payments for service or changes service requirements at a specific location provided for under this order, the n, 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 c essation. 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. Subsidy contracts are subject to, and incorpo rate 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. Funds are not currently ava ilable for performance under this solicitation beyond March 31, 2013 . The Department’s obligation for performance under this solicitation beyond March 31, 2013 , is contingent upon the availability of appropriated 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 March 31, 2013 , until funds are made available to the Department for performance. If funds are not made available for performance beyond March 31, 2013 , the carrier will receive notice in writing by the Department. All claims for payment must be submitted within 60 days of the last day of service provided under this order.

1 Annual compensation of $206,198 divided by 2 = $103,099; $103,099 divided by 208 annual departures (4 we ekly departures x 52 weeks). 2 4 arrivals and departures per week multiplied by $496 per flight.Appendix C Page 3 of 3 **Copper Valley Air Service Essential Air Service to be Prov** **ided at McCarthy, Alaska** Effective Period : February 1, 201 3 , through January 31, 201 5 Scheduled Service : McCarthy : 2 nonstop or one

- stop round trips per week to Gulkana Aircraft : 3

- seat Cessna 185 (winter months) 4

- seat Cessna 206 Rate pe r Eligible Flight: $ 4 96 1 ; Weekly Ceiling : $ 1, 984 2 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 supp orting 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 conformanc e 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. T he 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 completely, 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 t otal or partial reduction or cessation of payment. 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 amendme nts thereto shall not operate to controvert the foregoing paragraph. Funds are not currently available for performance under this solicitation beyond March 31, 2013 . The Department’s obligation for performance under this solicitation beyond March 31, 201 3 , is contingent upon the availability of appropriated 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 March 31, 2013 , until funds are ma de available to the Department for performance. If funds are not made available for performance beyond March 31, 2013 , the carrier will receive notice in writing by the Department. All claims for payment must be submitted within 60 days of the last day o f service provided under this order.

1 Annual compensation of $206,198 divided by 2 = $103,099; $103,099 divided by 208 annual departures (4 we ekly departures x 52 weeks). 2 4 arrivals and departures per week multiplied by $496 per flight.