Order: 2015-2-5 

Served: February 12, 2015 

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 12th of February, 2015 

ORDER RE-SELECTING AIR CARRIER

Summary

By this Order, the Department is re-selecting Alaska Airlines, Inc. (“Alaska”) to provide Essential 

Air Service (EAS) at Cordova, Gustavus,1 Petersburg, Wrangell, and Yakutat, Alaska, for the twoyear term from May 1, 2015, through April 30, 2017. The combined annual subsidy rate will be 

$7,853,1472, utilizing Boeing 737-400 (B-737) aircraft, with service to Alaska Airlines’ hubs and 

major airports, including Anchorage and Juneau, which will continue to give these communities 

access to the national air transportation system. 

 

1 Gustavus receives subsidized service for a 13-week period during the summer. During the remainder of the year, 

Gustavus’s EAS is provided on a subsidy-free basis by other airlines with small aircraft. 2 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds.

Essential Air Service at

CORDOVA, ALASKA

GUSTAVUS, ALASKA

PETERSBURG, ALASKA

WRANGELL, ALASKA

YAKUTAT, ALASKA

Under 49 U.S.C. 41731 et seq.

DOT-OST-1998-4899 
- 2 - 

Background 

By Order 2013-2-10 (February 11, 2013), the Department re-selected Alaska Airlines, to provide 

EAS at the above communities for a combined annual subsidy of $8,303,631, from May 1, 2013, 

through April 30, 2015, with the same aircraft type and service pattern that Alaska Airlines had 

served the communities with for several years.

Proposal of Alaska Airlines 

Only Alaska Airlines submitted a proposal with one option. The carrier proposed to continue to 

provide the same level of service described above, and requested $4,609,687 annual subsidy at 

Cordova, Yakutat, and Gustavus, and $3,243,460 at Petersburg and Wrangell, for a total combined 

annual subsidy of $7,853,147. 

Community Comments

On December 2, 2014, the Department solicited comments from the communities and the State of 

Alaska regarding this air carrier-selection case. 

The Mayors of the cities of Cordova, Petersburg, and Yakutat, the Borough Manager of Wrangell, 

other civic officials, multiple businesses and private citizens, strongly support the incumbent, 

Alaska Airlines. Cordova Mayor Jim Kacsh stated, “Alaska Air service connects passengers in 

rural communities to one or more major cities either inside the state or thru Seattle. From these 

hubs, Cordovans can access the airline’s extensive route system and benefit from its marketing 

relationship with other carriers”. Petersburg Mayor Mark Jensen stated, “The passenger and cargo 

aircraft, which Alaska Airlines proposes to continue using on this route, provides freight, mail and 

cargo capacity that other carriers simply cannot provide”. The State of Alaska did not submit any 

comments in response to the Department’s request.

 

Decision

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 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. 

Only Alaska Airlines proposed to serve these communities and it proposed $450,484 less than the 

previous annual rate of $8,303,631. The Department finds the subsidy amount reasonable and

there is continued strong community support for Alaska Airline’s proposal where Alaska has 

provided reliable service at these five communities for many years. Alaska’s service will continue 

to provide the communities with access to the national air transportation system. Based on all of 

the above, we will re-select Alaska Airlines to provide EAS for a new two-year period at Cordova, 

Gustavus, Petersburg, Wrangell, and Yakutat. 
- 3 - 

Carrier Fitness

49 U.S.C. §§ 41737(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 EAS. Alaska Airlines is subject to the 

Department’s continuing fitness requirements, and no information has come to our attention that 

would cause us to question the air 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 

findings. We therefore conclude that Alaska Airlines is reliable and fit to conduct the operations 

proposed here. 

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

ACCORDINGLY,

1. The Department selects Alaska Airlines, Inc. to provide Essential Air Service at Cordova, 

Gustavus, Petersburg, Wrangell, and Yakutat, Alaska, and establish the annual subsidy rates as 

described in Appendix C. 

2. The Department directs Alaska Airlines, Inc. 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 service date 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 Order; 

3. The Department finds that Alaska Airlines, Inc. is fit, willing and able to operate as a 

certificated air carrier, and capable of providing reliable Essential Air Service at Cordova, 

Gustavus, Petersburg, Wrangell, and Yakutat; 

4. This docket will remain open pending further Department action; and 

5. The Department will serve a copy of this Order on the Alaska Department of Transportation & 

Public Facilites, the Mayors of Cordova, Gustavus, Petersburg, Wrangell, and Yakutat, and Alaska 

Airlines, Inc. 

By:

BRANDON M. BELFORD

Deputy Assistant Secretary for

Aviation and International Affairs 

(SEAL)

An electronic version of this document is available at 

http://www.regulations.gov
Appendix A 

AREA MAP

Maps generated by the Great Circle Mapper - copyright © Karl L. Swartz
Appendix B 

Alaska Airlines Proposal for EAS at Cordova, Gustavus, Petersburg, Wrangell, 

and Yakutat 
Appendix C 

Page 1 of 2 

Alaska Airlines, Inc.

Essential Air Service to be provided at Cordova, Yakutat, and Gustavus, Alaska

Docket DOT-OST-1998-4899 

Effective Period: May 1, 2015, through April 30, 2017 

Aircraft: B-737-400 

Scheduled Service: 

Cordova: 7 weekly nonstop round trips to Anchorage, and 7 weekly one-stop (via Yakutat) round trips to 

Juneau

Yakutat: 7 weekly nonstop round trips to Juneau and 7 weekly one-stop (via Cordova) round trips to 

Anchorage 

Gustavus: 7 weekly nonstop round trips to Juneau, for the two peak summer seasons – 

June 7, 2015, thru August 22, 2015, and June 5, 2016, thru August 20, 2016. 

Subsidy Rate per Eligible Flight

1

 Weekly Ceiling

Cordova (CDV) $1,534 $42,9522

Yakutat (YAK) $1,534 $42,952 

Gustavus (GST) $1,534 $21,4763

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 this rate, 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, then, at the end of the period for which the 

department does make payments in the stipulated service levels, the carrier may cease to provide service to that 

specific location without regards 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 contract 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 31; August 

claims must be submitted by November 30, and so on.

 

1 $4,609,687 annual compensation ÷ 3,005 annual flights (28 flights x 2 communities x 52 weeks x 98% completion = 2,854 

flights at CDV and YAK plus 2 flights per day x 77 days x 98% = 151 flights at GST). 2 28 weekly flights x $1,534. 3 14 weekly flights x $1,534. 
Appendix C 

Page 2 of 2 

Alaska Airlines, Inc.

Essential Air Service to be provided at Petersburg and Wrangell, Alaska

Docket DOT-OST-1998-4899 

Effective Period: May 1, 2015, through April 30, 2017 

Aircraft: B-737-400 

Scheduled Service: 

Petersburg: 7 nonstop round trips/week to Juneau and 7 one-stop (Wrangell) trips/week to Ketchikan

Wrangell: 7 nonstop round trips/week to Ketchikan and 7 one-stop (Petersburg) trips/week to Juneau

Subsidy Rate per Eligible Flight4 Weekly Ceiling5

Petersburg (PSG) $1,137 $31,836 

Wrangell (WRG) $1,137 $31,836 

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 this rate, 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, then, at the end of the period for which the 

department does make payments in the stipulated service levels, the carrier may cease to provide service to that 

specific location without regards 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 contract 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 31; August claims must be submitted by November 30, and so on.

 

4 $3,243,460 annual compensation ÷ 2,854annual flights (28 flights x 2 communities x 52 weeks x 98% completion) 

= 2,854 flights at PSG and WRG.

5 28 weekly flights x $1,137.