Order 2015

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- 9

Served: March 23 , 2015



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 23 rd day of March , 2015

Air Service at

DIOMEDE , ALASKA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 200 9

- 0260

ORDER REQUESTING PROPOSALS

Summary By this Order , the Department is requesting proposals by April 13 , 2015

, from carriers interested in providing helicopter air service to Diomede

, Alaska

, for the one

- year period July 1, 201 5 , through June 30, 201 6

. 1 The service is requested under 49 U.S.C § 41736, Air Transportation to Non

- eligible Places (ATNEP). 2

Background By letter dated June 20, 2012, the Alaska Department of Commerce, Community, and Economic Development, on behalf of Kawerak , Inc., 3 proposed to the Secretary of Transportation that air compensation be provided to an air carrier as part of ATNEP. By

Order 2012

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- 25

, the Department selected Evergre en Helicopters, Inc. (Erickson) 4 to provide

ATNEP t o Diomede, Alaska, through June 30, 2013. 5 Since then, Erickson has been selected each year to provide ATNEP at Diomede

.

The latest rat e was set at $ 377,520 from July 1, 2014, through June 30, 201 5

. 6 The level of service was set at one round trip per week on a Nome

- Diomede

- Wales

- Diomede

- Nome routing

, utilizing 4

- seat

, BO

- 105 twin

- engine helicopters. Erickson has also r ecently used 9

- seat twin

- engine helicopters. The subsidized service was only to be provided for 44

- weeks,

1 A map of the area is provided in Appendix A.

2 A State or local government may propose to the Secretary that compensation be provided to an air carrier to provide air transportation to a place not eligible to rec eive Essential Air Service (aka ATNEP)

. ATNEP provides that the Department will pay its share of the subsidy only so long as a State or local government or a person is willing and able to pay 50 percent of the compensation . T he subsidized carrier may end, suspend

, or reduce its service by filing a 30

- day notice.

3 Kawerak is a non

- profit tribal consortium authorized to make compact s and provide services on behalf of

20 tribes in the B ering Strait Region of Alaska. The funding ultimately comes from the State of Alaska, but passes through to Kawerak which is the local partner matching the Department’s subsidy payments.

4 Evergreen Helicopters was later acquired by Erickson Air

- Crane Inc orporated, which renamed the operation to Erickson Helicopters, Inc.

5 The State’s fiscal year end s on June 30 each year

, th us necessitating annual contracts in order to obtain annual designated legislative grants from the State

. 6 See Order 2014

- 7

- 4, issued July 8, 2014. The amount paid by the Department is not to exceed $188,760.- 2

-

during the warmer months of the year when the ocean near Diomede typically does not freeze

. Historically, f or some periods of time during the coldest months of the year

, an ice runway

has form ed , allowing fixed

- wing aircraft to land at Diomede

, making the subsidized helicopter service unnecessary

.

Kawerak has again requested funding from the State and at this point it appears that

continued state funding will be available. As such, the Department is request in g propos als

for ATNEP at Diomede for a new contract period

.

Request for Proposals

As the end of the current contract approach es , we are requesting proposals from c arriers interested in providing ATNEP at Diomede under 49 U.S.C. § 41736(c)(2) 7 for the one

year period beginning July 1, 201 5 , through June 30, 2016

. Carriers should file their proposals by April 13 , 2015 . Staff will then docket the proposals, thereby making them public. Shortly afterwards, we will provide a summary of the proposals to the

st akeholders and ask them to submit their final comments. We will give full

c onsideration to all proposals filed in a timely manner. Interested carriers should prepare their proposals with every expectation that their initial proposals will also be their f inal

and only proposals. We retain the discretion to negotiate proposals with carriers when we deem it desirable. We also retain the discretion to reject outright all unresponsive, unreasonable or unrealistic proposals and, if necessary, solicit a new round of proposals.

We are here providing interested c arriers 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. 8 The applicants can make their own judgments as to the level of detail they wish to present; however, they might want to include proposed schedules as well as supporting data for their subsidy requests, such as projected block hours, revenues, and expenses. We strongly encourage clear, well

documented proposals that will facilitate their evaluation by the com munity , State and the Department.

As always, we will formally solicit the community ’ s views on any service options we

re ceive before making a carrier

- selection decision. The community and air c arriers are encouraged to work together in advance of the due date for proposals to craft a service pattern that is both desirable to the community and meets the operational needs of the airlines, as c arriers cannot amend their proposal after the due date.

We encourage proposals that meet the community ’ s 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 the current service pattern if they envision other, potentially more attractive service possibilitie s that remain competitive and remain within the budget jointly provided by Kawerak and the Department.

7 In determining whether to approve a proposal, the Secretary shall consider, among other factors, (A) the

factors listed in 49 U.S.C. § 4173 3(c) (1), and (B) the views of the state or local government or person agreeing to pay compensation for the transportation.

8 We note that the amount of subsidy available will be limited by the amount of subsidy made available by

the State to Kawerak.- 3

-

W e expect proposals that request no more than $380,952 9 annual subsidy

-- the same level as the current year

. Carriers are free to request less subsidy for a given service level. As the State has indicated, one round trip per week connecting the community to the national transportation system during the ice

- free months of the year is the goal, but

carriers are free to of fer more than one

- round trip per week or less than that level of

service

. Carriers will only be expected to provide air carrier services during times in which there is no alternative transportation to and from Diomede by fixed wing aircraft using an ice r unway. In years past

, an ice runway has formed that has allowed fixed wing aircraft to fly into and out of Diomede. However, no ice runway has been formed for the last two years. Given that this is a possibility again during the contract period, c arriers are encouraged to address in proposals the best level of service they can provide over the course of the year in the event an ice runway does not form or forms for a shorter period

than in years past.

Carriers are also encouraged to address in propos als how they can ensure that there will not be disruptions in service due to maintenance or aircraft repair

.

Assuming that the Department approve s a proposal for air service, we would then intend

to enter into a contract with a c arrier and the applicabl e non

- Federal party or parties (i.e.,

Kaw e r a k, Inc., ) responsible for payment of its 50 percent share to ensure funding for

ATNEP at Diomede based on 49 U.S.C. § 41736 (a)(1)(B), in which the Department will only pay the remaining 50 percent of each monthly bill from the carrier after the applicable non

- Federal party or parties directly pays the carrier the initial 50 percent. The Department will continue to pay its 50 percent share as long as the carrier maintains the

established level of air transportation, Kawerak continues to pay its 50 percent share, and the Secretary of Transportation decides that the Department's 50 percent compensation is necessary to maintain transportation at Diomede. 10

Filing Format Carrier proposals should be submitt ed to the Department with all materials merged into a single document. In addition, because the document will be published on Regulations.gov, each page should be formatted to be viewed online.

Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug

- free workplaces, and nondiscrimination. 11 Consequently, all carriers receiving Federal subsidy must certify that they are in compliance with Department regulations regarding drug

- fr ee workplaces and nondiscrimination, and those carriers whose subsidies exceed $100,000 over the life of the rate term must also certify that they are in compliance with the regulations governing lobbying activities. Because the Department is prohibited

f rom paying subsidy to c arriers that do not submit these documents, the selected carrier will be required to submit them in order to receive subsidy. Interested c arriers requiring more detailed information regarding these requirements, as well as copies of the certifications,

9 Kawerak would provide maximum fund ing of $190,476 and the Department would provide matching

funds of $190,476 for a total of $380,952

. 10 49 U.S.C. § 41736(d).

11 The certifications are available on the web at http://www.dot.gov/policy/aviation

- policy/small

community

- rural

- air

- service/essential

- air

- service

.- 4

-

should contact the Office of Aviation Analysis at (202) 366

- 5903. The Department is prohibited from paying subsidy to c arriers that do not submit t hese documents. 12

Additionally, in order to receive federal subsidy, a carrier must hold economic operating authority from either the Department or Federal Aviation Administration.

Community Comments

Civic officials and the State are welcome to submit co mments on the proposals at any time. As noted earlier, we will provide a summary of the proposals to the civic parties and ask them to submit their final comments shortly after April 13 , 2015

, the due date for C arrier proposals.

This Order is issued unde r authority delegated in 49 CFR 1.25a(b) and re

- delegated to the Director, Office of Aviation Analysis.

ACCORDINGLY,

1. The Department requests proposals from c arriers interested in providing ATNEP at
Diomede , Alaska. Carriers should submit their proposals b y April 13 , 2015 . Proposals should be emailed to EAS@dot.gov, with the title “Proposal to Provide ATNEP at
Diomede , Docket DOT

- OST

- 2009

- 0260 .”

2. This Docket will remain open until further Order of the Department; and

3 . We will serve this Order on the service list for this Docket.

Persons entitled to petition the Department for review of this Order under the Department’s Aviation Economic Regulations, 14 CFR 385.31(a), must file such petitions within seven (7) days aft er the date of service of this Order.

This Order 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 on the World Wide Web at http://www.regulations.gov

12 The certifications are also available on the web at http://www.dot.gov/policy/aviation

- policy/small

community

- rural

- air

- service/essential

- air

- service

.Appendix A

Nonstop Great Circle Miles Diomede (DIO) to Wales (WAA) 26 Diomede (DIO) to Nome ( OME ) 134 Nome (OME) to Wales (WAA) 109 Nome (OME) to Bethel (BET) 283 Nome (OME) to Savoonga (SVA) 163 Diomede (DIO) to Savoonga (SVA) 151Appendix B

Example of General Terms and Conditions for Essential Air Service

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 com pleted, 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 i ts 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 prov ided 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 re quirement 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 contrac ts 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 [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 liabilit y 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 Depart ment 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 J uly must be filed by October 31st; August claims must be submitted by November 30th, and so on.