Order 2015-1-23

Served: January 29, 2015

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 29th of January, 2015

ORDER SELECTING CARRIERS

AND ESTABLISHING SUBSIDY RATES

Summary

By this Order, the Department is reselecting Copper Valley Air Service (Copper Valley), to 

provide subsidized Essential Air Service (EAS) at May Creek, and McCarthy, Alaska, for the

two-year period beginning February 1, 2015, through January 31, 2017 at the combined annual 

subsidy rate of $206,198 for both May Creek and McCarthy. The Department is also selecting 

Reeve Air Alaska, LLC (Reeve) to provide subsidized EAS at Gulkana, Alaska, for the two 

year period beginning February 1, 2015 through January 31, 2017, at an annual subsidy rate of 

$223,298.1 (See Appendix A for a map of the service area.)

Background

By Order 2012-11-34 (November 30, 2012), the Department reselected Copper Valley to 

continue providing EAS at Gulkana, May Creek, and McCarthy, Alaska, for the two-year 

period from February 1, 2013, through January 31, 2015, for a combined annual subsidy rate of 

$475,387 ($269,189 at Gulkana and $206,198 combined at May Creek and McCarthy). Under 

that Order, Gulkana currently receives two nonstop round trips per week to Anchorage with sixseat Piper PA-31 aircraft; May Creek and McCarthy each receive two nonstop or one-stop 

 1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds.

Essential Air Service at

GULKANA, ALASKA

MAY CREEK, ALASKA

MCCARTHY, ALASKA

Under 49 U.S.C. § 41731 et seq.

DOCKET DOT-OST-1995-492
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round trips per week to Gulkana using three-seat Cessna 185 aircraft during winter months and 

four-seat Cessna 206 aircraft during summer months.

With the end of the contract approaching, the Department issued Order 2014-10-3

(October 9, 2014), requesting proposals from carriers interested in providing EAS at the 

communities, with or without subsidy, for a new contract period beginning February 1, 2015. 

In response, the Department received two proposals. Copper Valley submitted a proposal to 

continue its existing service at the three communities. Additionally, Reeve submitted a 

proposal to provide EAS at Gulkana only. The proposals are summarized below. The complete 

proposals of both carriers, along with all public comments received, can be accessed online at 

www.regulations.gov by searching for docket DOT-OST-1995-492.

Copper Valley

Copper Valley proposed one service option to continue providing its existing 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 

$294,278.2 At May Creek and McCarthy, Copper Valley proposes 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 

$256,847.3

Reeve

Reeve submitted a proposal to provide EAS at Gulkana only. Under its proposal, Reeve would 

provide two weekly nonstop round trips to Anchorage using Piper PA-31 Navajo aircraft with 

up to seven passenger seats. Reeve would require an annual subsidy of $223,298.

Community Comments

On November 17, 2014, the Department requested community comments regarding the carrierselection decision at the three communities. In response, we received several comments in 

support of Reeve’s selection at Gulkana. All of the commenters noted that Reeve has a record 

of safe, reliable air service and excellent customer service.

Decision

Based on the above, the Department is reselecting Copper Valley to provide subsidized EAS at 

May Creek and McCarthy and selecting Reeve to provide subsidized EAS at Gulkana. At May

Creek and McCarthy, the carrier selection decision is straightforward. Copper Valley was the 

only applicant and it meets all of the required selection criteria. The Department finds the 

service and subsidy levels proposed by Copper Valley to be reasonable. 

 2 Copper Valley wet leases a PA-31-350 from Security Aviation. Copper Valley may substitute a nine-passenger 

Cessna 441Conquest as a backup aircraft or to accommodate increased passenger demand.

3 Copper Valley may substitute a six-passenger DHC-2 Beaver as a backup aircraft or to accommodate increased 

passenger demand.
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At Gulkana, the Department must look to the statutory carrier selection criteria contained in 49 

U.S.C. § 41733(c)(1).4 When applying those criteria, the Department finds that Reeve has 

provided reliable service both in its unsubsidized operations, as well as under the EAS program. 

Additionally, Reeve received unanimous support from those who submitted comments on the 

decision and requires an annual subsidy that is $70,980 less than Copper Valley for the same 

level of service.

As these three communities have traditionally been served by the same carrier, the Department

expects that Reeve and Copper Valley will work together in order to provide service which is 

well-timed to allow connections at Gulkana for May Creek and McCarthy passengers to access

Anchorage.

The Department shall make this selection contingent upon the Department’s receiving properly 

executed certifications from Reeve and Copper Valley that they are in compliance with the 

Department’s regulations regarding drug-free workplaces and nondiscrimination, as well as the 

regulations governing lobbying activities.

Service Transition

We expect Reeve and Copper Valley to work together to make a smooth transition at Gulkana. 

In that regard, before Copper Valley suspends its service at Gulkana, they must notify any 

passengers holding reservations for travel after the suspension date, and assist those passengers 

in making alternate air transportation arrangements, or provide a refund of the ticket price, 

without penalty, if requested.

Copper Valley’s current EAS contract at Gulkana expires on January 31, 2015, and Reeve may 

not be able to inaugurate service by then. In that event, consistent with established program 

policy, we typically use the incumbent air carrier’s prospective proposal that was submitted 

during the competitive bid process to establish a bridge rate until the new air carrier inaugurates 

service. After reviewing Copper Valley’s proposed rate for Gulkana, we find that they appear 

reasonable for the proposed service levels. We will therefore establish those rates as the final 

rates for the air carrier’s service at Gulkana for the period from February 1, 2015, until Reeve

inaugurates full EAS, but no later than April 30, 2015.

Carrier Fitness

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

able to provide reliable service before the Department may subsidize it to provide EAS.

Copper Valley and Reeve are registered air taxis operating under 14 CFR Part 298 of the 

 4 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 Alaska. In addition, the Consolidated Appropriations Act, 2012, Public Law 112-55, 

and continued by the Consolidated and Further Continuing Appropriations Act, 2015, Public Law No. 113-235, 

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.
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Department’s regulations and hold Part 135 operating certificates from the FAA. The 

Department has contacted the Federal Aviation Administration, and it has confirmed the two 

carrier’s air taxi registrations and relevant operating certificates.

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

ACCORDINGLY,

1. The Department selects Copper Valley Air Service, to continue to provide EAS at May 

Creek and McCarthy, Alaska, at the service and subsidy levels detailed in Appendix C, for the 

two-year period beginning February 1, 2015, through January 31, 2017;

2. The Department selects Reeve Air Alaska, LLC to provide EAS at Gulkana, Alaska, at the 

service and subsidy levels detailed in Appendix C, for the two-year period beginning 

February 1, 2015, through January 31, 2017;

3. If Reeve Air Alaska, LLC is not able to begin full Essential Air Service at Gulkana, AK, by 

February 1, 2015, the Department will continue to provide subsidy to Copper Valley Air 

Service at the rates described in Appendix C, until such time as Reeve Air Alaska, LLC 

inaugurates full Essential Air Service, but no later than April 30, 2015;

4. The Department directs Reeve Air Alaska, LLC and Copper Valley Air Service 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 carriers may forfeit their compensation for any claim that is 

not supported under the terms of this Order;

5. The Department finds that Reeve Air Alaska, LLC and Copper Valley Air Service are 

registered air taxis operating under 14 CFR Part 298 of the Department’s regulations and hold 

Part 135 operating certificates from the FAA, and are capable of providing reliable EAS at 

Gulkana, May Creek, and McCarthy, Alaska;

6. Docket OST-1995-492 will remain open until further Order of the Department; and
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7. The Department will serve a copy of this Order on the communities of Gulkana, May Creek, 

and McCarthy, Alaska, Reeve Air Alaska, LLC, Copper Valley Air Service, and the State of 

Alaska Department of Transportation and Public Facilities.

By:

BRANDON M. BELFORD

Deputy Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available online at

www.regulations.gov
Appendix A
Appendix B

Page 1 of 5

Copper Valley Air Service
Appendix B

Page 2 of 5
Appendix B

Page 3 of 5
Appendix B

Page 4 of 5
Appendix B

Page 5 of 5
Appendix C

Page 1 of 4

Copper Valley Air Service

Essential Air Service to be Provided at May Creek, Alaska

Effective Period: February 1, 2015, through January 31, 2017

Scheduled Service: 2 nonstop or one-stop round trips per week to Gulkana

Aircraft: 3-seat Cessna 185 (winter months)

4-seat Cessna 206 (summer months)

Annual Subsidy: $128,4241

Rate per Eligible Flight: $6172

Weekly Ceiling: $2,4683

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. 

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 may not be available for performance under this Order beyond February 14, 2015. The Government’s 

obligation for performance under this Order beyond February 14, 2015, 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 February 14, 2015, until funds are made available to the 

Department for performance. If sufficient funds are not made available for performance beyond February 14, 2015, 

the Department will provide notice in writing to the carrier. 

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 compensation of $256,847 divided by 2 = $128,424.

2 Annual compensation divided by annual flights ($128,424 divided by 2 weekly trips X 2 directions X 52 weeks).

3 Rate per flight multiplied by weekly flights ($617 X 4).
Appendix C

Page 2 of 4

Copper Valley Air Service

Essential Air Service to be Provided at McCarthy, Alaska

Effective Period: February 1, 2015, through January 31, 2017

Scheduled Service: 2 nonstop or one-stop round trips per week to Gulkana

Aircraft: 3-seat Cessna 185 (winter months)

4-seat Cessna 206 (summer months)

Annual Subsidy: $128,4244

Rate per Eligible Flight: $6175

Weekly Ceiling: $2,4686

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. 

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 may not be available for performance under this Order beyond February 14, 2015. The Government’s 

obligation for performance under this Order beyond February 14, 2015, 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 February 14, 2015, until funds are made available to the 

Department for performance. If sufficient funds are not made available for performance beyond February 14, 2015, 

the Department will provide notice in writing to the carrier. 

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.

 4 See Appendix B. Annual compensation of $256,847 divided by 2 = $128,424.

5 Annual compensation divided by annual flights ($128,424 divided by 2 weekly trips X 2 directions X 52 weeks).

6 Rate per flight X weekly flights ($617 X 4).
Appendix C

Page 3 of 4

Reeve Air Alaska, LLC

Essential Air Service to be Provided at Gulkana, Alaska

Effective Period: February 1, 2015, through January 31, 2017

Scheduled Service: 2 nonstop round trips per week to Anchorage

Aircraft: 7-seat Piper PA-31 Navajo or 9-seat Cessna 441 Conquest

Annual Subsidy: $223,2987

Rate per Eligible Flight: $1,0748

Weekly Ceiling: $4,2969

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. 

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 may not be available for performance under this Order beyond February 14, 2015. The Government’s 

obligation for performance under this Order beyond February 14, 2015, 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 February 14, 2015, until funds are made available to the 

Department for performance. If sufficient funds are not made available for performance beyond February 14, 2015, 

the Department will provide notice in writing to the carrier. 

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.

 7 See Appendix B.

8 Annual compensation divided by annual flights ($223,298 divided by 2 weekly trips X 2 directions X 52 weeks).

9 Rate per flight X weekly flights ($1,074 X 4).
Appendix C

Page 4 of 4

Copper Valley Air Service

Essential Air Service to be Provided at Gulkana, Alaska – Bridge Rate

Effective Period: February 1, 2015, through no later than April 30, 201510

Scheduled Service: 2 nonstop round trips per week to Anchorage

Aircraft: 6-seat twin engine Piper PA-31 Navajo

Annual Subsidy: $289,19011

Rate per Eligible Flight: $1,39012

Weekly Ceiling: $5,56013

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. 

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 may not be available for performance under this Order beyond February 14, 2015. The Government’s 

obligation for performance under this Order beyond February 14, 2015, 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 February 14, 2015, until funds are made available to the 

Department for performance. If sufficient funds are not made available for performance beyond February 14, 2015, 

the Department will provide notice in writing to the carrier. 

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.

 10 Subsidy for Copper Valley’s Gulkana-Anchorage service will terminate when Reeve begins service.

11 See Appendix B.

12 Annual compensation divided by annual flights ($223,298 divided by 2 weekly trips X 2 directions X 52 weeks).

13 Rate per flight X weekly flights ($1,390 X 4).