### O rder: 2012

- 7

- 11

Served: July 10 , 2012



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 10 th 

### day of July , 20 1 2

ORDER REQUESTING PROPOSALS

Summary

By this O rder, the Department is requesting proposals from ca rriers interested in

providing Essential Air S ervice (EAS) at Chatham and Funter Bay , Alaska , for a new

contract period

, beginning October 1, 20 12

, with or without subsidy. (See Appendix A for

a map). Carriers should file their proposals no later than August 8

, 20 12

.

Background

By Order 20 10

- 5

- 11

, May 11 , 20 10 , the Department re

- selected Ward Air, Inc. (Ward) , to

provide subsidized EAS at Chatham and Funter Bay , Alaska, through September 30

, 20 1 2 . Under that O rder, Ward provide s one round trip per month between Chatham and

Juneau; and one round trip per week between Funter Bay and Juneau. All of the service is

provided o n DeHavilland Beaver , Cessna 185, or Cessna 206 aircraft, for a total

combined annual subsidy rate of $19,584.

Request for Proposals

As the end of the current rate term approaches, we are here requesting proposals from

carriers interested in providing ser vice at Chatham and Funter Bay

, Alaska

, with or

without subsidy, for a new contract period beginning October 1 , 20 1 2

. Carriers should

file their proposals no later than August 8

, 2012 . Staff will then docket the proposals,

thereby making them public, and direct each carrier to serve a copy of its proposal on the

civic parties and other applicants. Shortly afterwards, we will provide a summary of the

proposals to the communit ies and ask them to submit their final comments. We will give

full consideration to all proposals that are timely filed. 1

1 Carriers shou ld not expect the Department to accept late fillings. In cases where a carrier proposes to

provide EAS without subsidy and we determine that service can be reliably provided without such

compensation, we typically do not proceed with the carrier

- selection case. Instead, we simply rely on that

carrier’s subsidy

- free service as proposed. 

### Essential Air Service at

C HATHAM , ALASKA

FUNTER BAY , ALASKA

Under 49 U.S.C. § 4173 1 et seq

. DOCKET DOT

- OST

- 1997

- 3134

### 2

Interested carriers should prepare their proposals with every expectation that their initial

proposals will represent their final and only proposals. However, we retain the discretion

to negotiate proposals with carriers when we deem it desirable. We also retain the

discretion to reject outright all unreasonable or unrealistic proposals and re

- solicit a new

round of proposals. However, negotiation and rejection are only occasional exceptions to

the rule.

We are here providing interested carriers 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

a nd the annual amount of subsidy being requested. 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 affected communities and

the Department. 2



### With specific respect to Chatham and Funter Bay , we expect p rop osals consisting of

service to Juneau with one round trip per month from Chatham, and one round trip per

week from Funter Bay, all with small aircraft. We encourage proposals that meet the se

requirements in an efficient manner. Carriers are also welcome t o propose more than one

service option, if they choose; they need not limit themselves to those requirements if

they envision other, potentially more attr active service possibilities (e.g. different hubs or

length of contract ) with subsidy requirements tha t remain competitive. We encourage

carriers to work with the communities as they prepare their proposals in order to craft

them to best meet the communities’ needs. As always, we will fully consider the

communities’ views before making a long

- term carrier decision.

New Filing Procedures

Carrier proposals should be submitted to the Department with all materials compiled into

a single document. In addition, because the document will be published on

http://www.regulat ions.gov/ , each page should be formatted to be viewed online and for

easy printing.

Service and Traffic History

In order to assist carriers in making their traffic and revenue projections, we have

included historical traffic data in Appendix B. As is ty pically the case in Alaska,

2 In selecting a carrier to provide subsidized EAS in Alaska , 49 U.S.C. § 41733(c )(1) directs us to consider

five factors: (1) scheduled service reliability; (2) contractua l and marketing arrangements with a larger

carrier to ensure service beyond the hub; (3) interline arrangements that the applicant has made with a larger

carrier at the hub; (4) community views, giving substantial weight to the views of the elected o fficia ls

representing the users; and (5) the experience of the applicant in providing, i n Alaska, scheduled air service.

In addition, the Consolidated and Further Continuing Appropriations Act, 2012, Public Law 112

- 55

, provides that when selecting a carrier to provide EAS, the Department may consider the relative subsidy

requirements of the carriers , thus codifying a factor that we have considered since the inception of the

program. Interested carriers should also be aware that our general provisions governing EAS wil l be

included in the selection O rder as part of our authorization of subsidy for the selecte d service. Appendix C

of this O rder contains those general provisions.

### 3

significantly more freight and mail flow from the hub to the EAS communities than from

the EAS communities to the h ub.

Other Carrier Requirements

The Department is responsible for implementing various Federal statutes governi ng

lobbying activities, drug

- free workplaces, and nondiscrimination. 3 

### Consequently, all

carriers receiving Federal subsidy for EAS must certify that they are in compliance with

Department regulations regarding drug

- free workplaces and nondiscrimination, a nd 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 from paying subsidy to carriers that do not submit these

documents, all carriers that plan to submit proposals involving subsidy should be aware

that the selected carrier will be required to complete the required certifications. Interested

carriers requiring more detailed information regarding these requirements should contact

the Office of Aviation Analysis at (202) 366

- 5903. 4



### Community and State Comments

The communit ies and State are welcome to submit comments at any time. As noted

earlier, we will provide a copy of the proposals to the civ ic parties and ask them to submit

their final comments shortly after August 1 , the due date for proposals.

This O rder is issued under authority delegated in 49 CFR 1.56a(f) and re

- delegated to the

Director, Office of Aviation Analysis.

3 The regulations applicable to these areas are: (1) 49 CFR Part 20

-- New restrictio ns on lobbying;

(2) 49 CFR Part 21

-- Nondiscrimination in federally

- assisted programs of the Department of

Transportation

-- Effectuation of title VI of the Civil Rights Act of 1964; 49 CFR Part 27

-- Nondiscrimination on the basis of disability in progr ams and activities receiving or benefiting from Federal

financial assistance; and 14 CFR Part 382

-- Nondiscrimination on the basis of disability in air travel; and

(3) 49 CFR Part 29

-- Government

- wide debarment and suspension (non

- procurement) and govern ment

wide requirements for drug

- free workplace (grants).

4 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.

### 4

ACCORDINGLY,

1. We request that carriers interested in providing EAS at Chatham and Funter Bay

, Alaska , submit their proposals, with or without subsidy requests, no later than August 8

, 20 12

. The proposals should be e

- mailed to: EAS@do t.gov with the title “Proposal to

Provide Essential Air Service at Chatham and Funter Bay, Alaska , Docket DOT

- OST

199 7

- 3134 ” ; 5



### 2. This docket will remain open u ntil further o rder of the Department; and

3. We will serve copies of this O rder on the part ies listed in Appendix D

.

Persons entitled to petition the Department for review of this O rder under the

Department’s Regulations, 14 CFR 385.3 0, must file such petitions within ten (10) days

aft er the date of service of this O rder.

This O rder will be ef fective 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.regualtions.gov

5 Questions regarding filings in response to this Order may be directed to A.J. Muldoon at (202) 366

- 1058

or albert.muldoon@dot.gov

.

### APPENDIX A

Great Circle Miles

Chatham to Juneau 60

Funter Bay to Juneau 14

Chatham to Funter Bay 51

### APPENDIX B

Historical Traffic at Chatham and Funter Bay, Alaska 6



## Chatham

Origin Destination Total

Passengers Freight (lbs.) Mail (lbs.) Passengers Freight (lbs.) Mail (lbs.) Passengers Freight (lbs.) Mail (lbs.)

2008 1Q 0 0 3 0 0 51 0 0 54

2Q 1 0 37 4 0 35 5 0 72

3Q 4 0 26 5 0 54 9 0 80

4Q 3 0 44 0 414 100 3 414 144

2008 Total 8 0 110 9 414 240 17 414 350

2009 1Q 0 0 56 0 647 106 0 647 162

2Q 1 0 78 3 0 126 4 0 204

3Q 1 0 54 3 0 170 4 0 224

4Q 1 0 117 1 0 147 2 0 264

2009 Total 3 0 305 7 647 549 10 647 854

2010 1Q 0 0 18 0 456 8 0 456 26

2Q 3 0 27 2 0 58 5 0 85

3Q 4 0 23 2 0 41 6 0 64

4Q 1 0 15 1 65 20 2 65 35

2010 Total 8 0 83 5 521 127 13 521 210

2011 1Q 0 0 31 0 705 57 0 705 88

2Q 4 0 30 2 0 27 6 0 57

3Q 3 0 30 1 0 45 4 0 75

4Q 1 0 17 2 135 55 3 135 72

2011 Total 8 0 108 5 840 184 13 840 292

6 Source: Bureau of Transportation Statistics; Form 41, Schedule T

- 100.

### APPENDIX B

Historical Traffic at Chatham and Funt er Bay, Alaska



## Funter Bay

Origin Destination Total

Passengers Freight (lbs.) Mail (lbs.) Passengers Freight (lbs.) Mail (lbs.) Passengers Freight (lbs.) Mail (lbs.)

2008 1Q 1 0 205 7 0 568 8 0 773

2Q 2 94 215 10 0 413 12 94 628

3Q 9 0 157 16 0 27 0 25 0 427

4Q 4 0 159 13 0 295 17 0 454

2008 Total 16 94 736 46 0 1,546 62 94 2,282

2009 1Q 0 0 162 5 0 324 5 0 486

2Q 9 0 117 12 0 161 21 0 278

3Q 3 0 233 9 180 287 12 180 520

4Q 0 0 306 14 0 309 14 0 615

2009 Total 12 0 818 40 180 1,081 52 180 1,8 99

2010 1Q 6 0 146 1 0 286 7 0 432

2Q 3 0 90 13 0 250 16 0 340

3Q 0 0 111 7 0 181 7 0 292

4Q 2 0 123 9 0 183 11 0 306

2010 Total 11 0 470 30 0 900 41 0 1,370

2011 1Q 3 0 86 2 0 152 5 0 238

2Q 2 0 95 4 0 177 6 0 272

3Q 8 0 93 9 0 143 17 0 236

4Q 2 0 115 5 0 182 7 0 297

2011 Total 15 0 389 20 0 654 35 0 1,043

### APPENDIX C

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 th e terms and stipulations of the rate O rder, including the

service plans outlined in the O rder and any other significant elements of the required

service, without prior approval. The carrier understands that an aircraft take

- off and

landing at its schedule d 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 flight s in full conformance with the

O rder 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 O rder

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 unilatera lly, either partially or completely, terminates or reduces

payments for service or changes service requirements at a specific lo cation provided for

under this O rder, then, at the end of the period for which the Department does make

payments in the stipulat ed 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 availa ble for performance under this O rder beyond [DATE]. The

Department’s obligat ion for performance under this O rder beyond [DATE], is subject to

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 ar ise for performance

under this O rder beyo nd [DATE], until funds are made available to the Department for

performance. If funds are not made available for performance beyond [DATE], the

Department will provide notice in writing to the carrier.

All claims for payment must be submitted within 60 d ays of the last day of service

provided under this O rder.

### APPENDIX D

Service List

40

- Mile Air, Leif Wilson

40

- Mile Air, Vanessa Thompson

Aero Twin, AACA, Tony Cestnik

Air Excursions, Marion Broughton

Air Excursions, Mike Loverink

Alaska Air Carriers Association, Joy

Journeay

Alaska Airlines, Jeff Munro

Alaska Airlines, Joe Sprague

Alaska Airlines, Sandy Sinick

Alaska Airlines, Torque Zubeck

Alaska Central Express, John Seamon

Alaska Central Express, Mike Bergt

Alaska Central Express, Steve Deaton

Alaska Central Express, Steve Endlich

Alaska DOT, Linda Bustamante

Alaska DOT, Rebecca Cronkhite

Alaska DOT, Steven D. Hatter

Alaska DOT

- Medicaid Passenger Fares

Alaska Seap lane, Kent Craford

Alsek Air, Les and Debra Hartley

Arctic Circle, Donald Singsaas

Arctic Transportation Services (ATS),

Wilfred Ryan

Arctic Transportation Services, (ATS), Jim

Hjelm

Bering Air, David Ol sen

Bering Air, Jim Rowe

Congressional, Begich, James Feldman

Congressional, Begich, Schawna Thomas

Congressional, Murkowski, Jeremy Price

Congressional, Murkowski, Karen McCarthy

Congressional, Murkowski, Warren Wright

Consultant, Hank Myers

Consultant, Ken Acton

Consultant, Norm Israelson

Copper Valley Air, Dave Parmenter

Copper Valley Air, Todd Hand

Dorato Jets, Mark McKenna

DOT, Richard Sewell

ERA Aviation, Lori Goodman

Era Aviation, Walter Dallis

Frontier Flying, Paul Hendrickson

Frontier/ERA/Hagelan d, Bob Hajducovich

Grant Aviation, Bruce McGlasson

Hageland, Mike Hageland

Hageland, Patrick Thurston

Harris Air, Fly Hackett

Harris Air, Scott Harris

Homeland Security, David Bernier

Homeland Security, Michael Duffy

Homeland Security, Ragan, William Homer Air, Andy Smircich

Iliamna Air, Tim LaPorte

Inland Aviation, Stephen Hill

Island Air, Bob Stanford

Island Air, Jennifer Stanford

Katmai Air, Sonny Peterson

LAB Flying Service, Eric Bennett

Larrys Flying, Jean Chenaille

Northern Air Cargo, Dave Squier

Northern Air Cargo, David Karp

Northern Air Cargo, Eric Van Andel

Pacific Airways, Steve Montanus

PenAir, Danny Seybert

PenAir, Kim Kawaguchi

PenAir, Patrick Rizzi

PenAir, Scott Bloomquist

ProMech, Mark Sessoms

Sea port, EAS Mailbox

Seaport, Rob McKinney

Servant Air, Terry Cratty

Servant Air, Wes Osowski

Smokey Bay Air, Claire McCann

Spernak Airways, Mike Spernak

Tanana Air Service, Brian Martin

Taquan Air Service, Brien Salazaar

Taquan, Beckie Allen

Tatonduk, Cont roller, Tina Paylor

Tatonduk, Robert Everts

Tatonduk, Robert Ragar

USDOT, Dennis DeVany

USDOT, Jennifer Thibodeau

USDOT, Kevin Schlemmer

USDOT, Richard Leonard

USPS, Greg Garcia

USPS, Joseph Anzalone

USP S, Joy Doby

USPS, Kevin Hartner

USPS, Leonard Kilburn

USPS, Mary Taylor

Ward Air, Ed Kiesel

Ward Air, Tom Williams

Wings Airline Services, Bob Jacobsen

Wings Airline Services, Holly Johnson

Wright Air Service, Bob Bursiel

Yute, Tim Vottis