UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

__________________________________________

)

In the matter of the )

)

INTRA-ALASKA BUSH MAIL RATES ) Docket OST-2003-14694

)

__________________________________________)

ANSWER OF THE CONSOLIDATED CARRIERS

TO ORDER 2011-6-14

Communications with respect to this document should be addressed to:

Hank Myers

MTC

P.O. Box 7142

Bellevue, WA 98008-1142

(425) 830-4265 (office)

hank@mtcworld.com

July 18, 2011
UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

__________________________________________

)

In the matter of the )

)

INTRA-ALASKA BUSH MAIL RATES ) Docket OST-2003-14694

)

__________________________________________)

ANSWER OF THE CONSOLIDATED CARRIERS

TO ORDER 2011-6-14

The Consolidated Carriers hereby submit its Answer to Order 2011-6-14. This Answer 

was filed before midnight, July 18 PDT, but was filed after 5:00 PM EDT. The delay

was caused when it was discovered in comparing the outcome of all proposed and 

considered rates as applied to the mail market traffic as reported by the carriers T-100 

market reports for YE March 31, 2011 that the rate proposed in Order 2011-6-14 appears 

to underpay the industry by a significant amount. Additional research was need to 

confirm this fact, and recheck all calculations. The discrepancy in the Ordered rate is 

explained below. Submitter has not read any other submission in this docket, and all 

material is original by the submitter. The Consolidated Carriers pray that its answer be 

accepted as filed.
The Problems with the Proposed Regression Based Mail Rate

In Order 2011-6-14, the Department tried a new technique to accommodate the practice 

of Peninsula Airways to operate large aircraft under FAR 135. While this practice will be 

analyzed more thoroughly below, the result of Order 2010-12-28 was an undeserved 

windfall for Penair by including its large aircraft, long haul service with the small 

aircraft, short haul operations of historic part 135 operations. The regression based rate 

structure (Order 2011-6-14) has the salutary benefit of reducing Penair’s windfall 

substantially. At the same time it greatly distorts the pay rates for the remaining 135 

operators across Alaska. For example, in the shortest bush mail market (BethelNapaskiak, 6 miles) the Order 2011-6-14 rate is $0.188365 per pound compared to 

$0.039768 per pound in Order 2010-12-28. The new rate increases the previous rate by 

430%. For the long haul Anchorage-Dutch Harbor market, the rate is reduced 41%. The 

pivot point where increases from Order 12-28 go to decreases is between 63 and 64 

miles. Interestingly, this is substantially lower than the average mail haul for bush mail.

The most significant fact about the 6-14 rate is that is would pay the bush industry

$10,299,152 less for linehaul costs alone compared to Order 2010-12-28.
Table 1

Change in Revenue by Carrier

CARR $ TOTAL

2E $11,785.45

3Z -$86,421.02

4E $17,056.89

4W -$601,333.02

4Y -$35,423.52

7H -$2,698,431.75

7S -$625,303.17

8E -$776,752.77

8V -$543,458.86

ELL -$2,587.44

GV -$286,512.73

HB $11,744.63

K5 $2,243.87

KO -$1,142,766.74

KS -$4,739,224.28

Q5 -$740.36

SNK -$243.02

V8 $43,327.69

X4 $11,121.91

TOTAL -$10,299,151.51

The amounts for each carrier compare the revenue for linehaul charges for bush mail 

carried in Order 2011-6-14 to the rates in Order 2010-12-28. When all carriers, including 

the most minor carriers, are included the total reduction in revenue is $10,971,719.65 (a 

reduction from $50,218,917.25 to$39,247,197.60), or a 21.9% decrease. Clearly the rate 

proposed in Order 2011-6-14 is not compensatory for the industry as a whole, a 

requirement of law.

Because developing a segment based regression requires using T-100 segment data, loads 

are weighted toward the entry segment, and do not reflect the split between actual

markets. While the regression is good for establishing cost trends related to length of 
segment distance, it must be compared to the actual market traffic carried over the 

various segments as a whole.

The comparison of the results from the regression based rate in 6-14 not only show that 

carrier are unequally affected in the relation to their size, different hubs are affect 

unequally depending on the average market distance.

Table 2

Affect of 6-14 Rates by Hub

Mail Lbs. Outbound from Hub Only

ORI CITY MAIL $ TOTAL WTD $ per lb

ANIAK 3043503 $80,339.22 $0.026397

BETHEL 14478279 -$1,701,995.11 -$0.117555

BARROW 2310741 -$277,385.14 -$0.120042

CORDOVA 52627 -$1,249.34 -$0.023739

DILLINGHAM 3189142 $83,822.80 $0.026284

EMMONAK 2083131 $253,647.58 $0.121763

FAIRBANKS 4332095 -$1,931,995.82 -$0.445973

GALENA 671941 $2,446.78 $0.003641

HOMER 160547 $20,063.30 $0.124968

ILIAMNA 367170 $40,814.85 $0.111161

JUNEAU 1047662 -$2,631.68 -$0.002512

ST. MARY'S 2414464 $341,433.93 $0.141412

MCGRATH 167317 $16,313.10 $0.097498

NOME 6490852 -$1,193,041.18 -$0.183803

KOTZEBUE 9030370 -$724,733.43 -$0.080255

DEADHORSE 994335 -$49,687.00 -$0.049970

UNALAKLEET 2921681 $96,638.55 $0.033076

If a rate were truly compensatory and equitable, we would not see variations of from 

+$0.141412 per pound (St. Mary’s) to -$0.445973 per pound (Fairbanks). Even nearby

hubs in the same area served by the same carriers show markedly different results. Nome 

markets go down by an average of $0.183803 per pound while Kotzebue goes down by 

less than half that amount.
The primary reason why any regression based rate or even an all-inclusive rate based on 

historic standards is doomed to fail is because of the distinct difference in aircraft types 

and market conditions affecting what had previously been categorized as Part 135 and 

Part 121 operations. The table below shows the length of haul for the 20 markets 

currently served by aircraft certificated for at least 19 passenger seats; those aircraft 

previously categorized under Part 121 ratemaking (minimum of 500 lbs. per day). 

Table 3

Large Aircraft Bush Markets

ORIGIN DESTINATION DISTANCE

ANCHORAGE COLD BAY 620

ANCHORAGE DUTCH HARBOR 792

ANCHORAGE SANDPOINT 557

ANCHORAGE ST. PAUL 767

BARROW WAINWRIGHT 87

BARROW NUIQSUT 151

BETHEL HOOPER BAY 153

DEADHORSE BARTER ISLAND 115

DEADHORSE NUIQSUT 60

DILLINGHAM ST. PAUL 448

DILLINGHAM ST. GEORGE ISLAND 441

DUTCH HARBOR ATKA 340

FAIRBANKS BARTER ISLAND 386

FAIRBANKS FORT YUKON 144

FAIRBANKS GALENA 268

KING SALMON DUTCH HARBOR 503

KOTZEBUE POINT HOPE 150

NOME GAMBELL 197

NOME SHISHMAREF 122

NOME SAVOONGA 162

The distances range from 60 miles to nearly 800 miles. Three aircraft types are used in 

the scheduled passenger service, the Beechcraft 1900, the Swearingen Metroliner, and the 

SAAB 340. Scheduled passenger service with large aircraft is offered by only five air 
carriers, Penair, ERA (the Frontier group), Bering Air, Grant Aviation and Warbelow’s. 

In comparison, small aircraft (less than 9 certificated passenger seats) service is provided 

by 20 carriers using 14 different aircraft types. Small aircraft markets range in distance 

from 6 miles (Bethel-Napaskiak) to 325 miles (Fairbanks to Kaltag).

The r2 of less than 75% explains about half of the cost variance in relation to the average 

cost line, and is indicative of the difficulties faced in the analysis. A multi-linear 

regression using both distance and aircraft payload created an r2 of 99% with a standard 

error of less than a quarter of the distance only regression. Such a regression, while 

presenting the ultimate in correlation cannot be used here because it sets different rates in 

the same market depending on aircraft type. For small aircraft operations, there has to be 

a different answer.

While the regression model fails to meet the basic requirements for a mail rate, it is very

illustrative of the problems associated with using such a disparate group of carriers, 

aircraft and markets.

The Intent of the Rural Service Improvement Act

The RSIA had one major goal for service, and that was to encourage the use of aircraft 

certificated for at least 19 passenger seats. These aircraft were operated under Part 121, 

and were considered safer and more reliable. As far as rates were concerned, the RSIA 

required a seaplane rate to compensate the operators adequately. It required rates for Part 
121 operations; again stressing passenger service with 19 seat or great aircraft by 

including only those aircraft in the rate making pool. Finally, Part 135 operations 

operated under Part 135 to points that could accommodate wheeled aircraft had a separate 

rate.

At the time the RSIA was first written, all aircraft having a maximum certificated seating 

capacity of at least 19 were operated by three carriers, ERA, Peninsula Airways, and 

Frontier Flying Service. All service with these aircraft by these carriers was operated 

under Part 121 rules.

Ultimately, the Department established four different bush rates. The Part 135 Wheel 

Rater and the Part 134 Seaplane rate included all operations by aircraft operated under 

Part 135 with wheels or floats. Separate rates were set for Part 121 operators of aircraft 

capable of landing on runways less than 4,000’ long (STOL), and those that required the 

longer runways. The STOL aircraft had significantly higher costs per ton mile. The 

Department concluded that if it did not set a compensatory rate for these aircraft (which 

operated primarily at Bethel), the RSIA goal of encouraging Part 121 service could not be 

met. Despite this logic, Peninsula Airways opposed the separate rates and tried to have 

ERA’s higher costs included with its own Metroliner and SAAB 340 aircraft. 

The separate Part 121 rates are important today because it established the legal precedent 

to set more than one mail rate for carrier operating under the same FAR’s based on 

distinct operating costs and capabilities. The division of the two Part 121 rates used a 
balanced runway length requirement of 4,000’ at Maximum Takeoff or Landing Gross 

Weight as the distinction between the two classes.

Recent Actions by Peninsula Airways and Frontier Flying Group (Era)

About two years ago, both Peninsula Airways and Frontier Flying Group began to 

operate the 19+ seat aircraft with fewer than 10 seats in some markets. In that time, 

Penair has pursued inclusion of its large aircraft operated with 9 or fewer installed seats 

in the 135 Wheel rate pool. At the same time, it has bifurcated its operation in two. It 

has reduced operations with is Metroliners, and operates the vast majority of segments 

using these aircraft in al all cargo configuration. For the Metro I’s (Type 455) in the 12 

months ended March 31, 2011 (latest data available), Penair operated 56% of its 

segments with ZERO passenger seats installed. For its Metro II’s, it operated 88.7% of 

its segments with ZERO passengers seats installed, 7.4% of its segments with 9 seats 

installed, and only 3.9% of its segments with the full seating compliment.

It operated its SAAB 340 aircraft (30 seat maximum) in every bush market it serves, as 

well as a number of mainline markets where it provides monopoly passenger service. For 

the SAAB’s, it operated 207 segments (1.5%) with no seats installed, and 13,365 

segments (98.5%) with 20 or more seats installed.
This bifurcations allows Penair to carry the majority of its mail on its all-cargo aircraft. 

While 14.2% of its capacity (ATM’s) was on 0-9seat aircraft, 60% of its mail was carried 

over bush segment on these aircraft. The table below summarizes the data

Table 4

Mail Traffic by Aircraft Capacity

DEPS SEATS/DEP

MAIL 

RTM's RTM % ATM's ATM % MAIL LF

1290 0 483215.442 58.28% 1613696 14.17% 29.94%

177 9 11493.473 1.39% 117801.4 1.03% 9.76%

5690 19+ 334460.29 40.34% 9660586 84.80% 3.46%

TOTAL 829169.204 11392083

While on the 0-seat aircraft, mail took up 29.9% of the capacity, on the Part 121 aircraft 

mail represented only a 3.46% of the capacity. In other words, on the all-cargo aircraft, 

mail takes up 9 times as much of the capacity as it does on the Part 121 aircraft. 

By bifurcating its operation between passenger and cargo service, Penair fills its 

scheduled aircraft with passengers and baggage first. Of the 5,690 Part 121 departures in 

bush markets, only 73 had fewer than 27 of the maximum 30 seats installed. It fills up 

the remaining space with cargo as available. All remaining cargo is transported on Part 

135 operations using exactly the same aircraft types as it uses in its Part 121 service in 

these markets. Essentially Penair runs an all-cargo operation along side its passenger 

service.

While the Frontier group has not sought 135 listing for its Beechcraft 1900’s in previous 

rate making cases, it has announced that it will also bifurcate its service in the future.
The Clear Solution

Examination of Penair’s linehaul costs for its 19 seat or greater capacity aircraft shows 

that there is no significant difference between the operations under Part 121 and Part 135. 

Simply put, there is no reason to differentiate between the two operations based on costs. 

This was one of the options suggested by the Consolidated Carriers in its Answer to 

Order 2010-12-28. The Department found that combining costs for the same aircraft and 

carrier from Parts 121 and 135 is contrary to the Rural Service Improvement Act. That 

led to the current Order which seeks to redress the undeserved windfall that would be 

reaped by Penair under a single Part 135 rate.

While the regression model has failed in its primary goal, it has served as a clear example 

of the difference in aircraft operating costs, and the difficulty of setting a rate with such 

disparate aircraft types and operations.

This recalls a second option offered by the Consolidated Carriers in its previous Answer 

when it proposed to have two Part 135 rates. The first rate, which is the historic Part 135 

rate adjusted for current costs, includes all aircraft certificated for 9 or fewer passenger 

seats. This was attached as Attachment B, Appendices C-1 and C-2, which are 

duplicated in this filing. It would set the Part 135 Small Aircraft linehaul rate at 

$12.2338 for non-fuel expenses and $3.1987 for fuel related expenses. The fuel expenses 

would need to updated as no quarterly updates have been issued on that rate. All of the 
aircraft included in the Part 135 Small Aircraft rate have a maximum certificated seating 

capacity of 9 or fewer seats. All aircraft included in the Part 135 Small Aircraft rate can 

takeoff and land at runways shorter than 3,000’ with a maximum takeoff or landing 

weight as appropriate.

The Part 135 Large Aircraft linehaul rate may best be set using the regression 

methodology proposed by the Department in Order 2011-6-14. For large aircraft 

operations the number of aircraft used is only three, and only five carriers in total operate 

them. A total of SEVEN aircraft/carrier combinations need to be analyzed in a Large 

Aircraft regression. Using the data in Appendix B of Order 2011-6-14, a regression of 33 

distinct entries was performed. The table below shows the particulars.
Table 5

Large Aircraft Cost Regression

SUMMARY OUTPUT

Regression Statistics

Multiple R 0.92535

R Square 0.856273

Adjusted R 

Square 0.851636

Standard Error 384.4973

Observations 33

ANOVA

df SS MS F Significance F

Regression 1 27303695 27303695 184.6863 1.34E-14

Residual 31 4582984 147838.2

Total 32 31886680

Coefficients Standard Error t Stat P-value

Intercept 954.5335 102.9102 9.275407 1.87E-10

X Variable 1 4.258594 0.313364 13.58993 1.34E-14

As an alternative, the Part 135 Large Aircraft rate could be set using only the cost data for 

the aircraft with a certificated seating capacity of 19 or more. This would be a subset of 

the data shown in the Consolidated Carriers Answer to Order 2010-12-28 to exclude the 

Part 121 operations.

Summary

The regression proposed to set Part 135 mail rates fails to set a compensatory level for the 

industry, and to provide equitable treatment for carriers individually or service hubs. 
Even if the rate were to compensate the industry as a whole adequately, inequities among 

operations and hubs would disqualify the rate. A different solution must be found.

The only fair, equitable and compensatory mail rate methodology is two set two Part 135 

rates, and the Department did previously for Part 121 operations. The demarcation 

between Small Aircraft and Large Aircraft is distinct not only in certificated seating 

capacity, but also for runway length requirements. All aircraft herein defined as Part 135 

Small Aircraft have a maximum certificated seating capacity of 9 or less and can operate 

into and out of runways of 3,000’ or less with a full payload. All aircraft defined herein 

as Part 135 Large Aircraft have a maximum certificated seating capacity of 19 or more, 

and require runways longer than 3,000’ for full payload operations.

This solution is the only one based on rate making precedent, and does not create new 

operating problems for the carriers or the Postal Service. For those markets where Part 

121 service is scheduled at the minimum frequency, all operations in that market would 

be paid at the 121 rate. For all markets where Part 135 Large Aircraft are scheduled, all 

service would be paid at the Large Aircraft Rate. For all other service the Part 135 Small 

Aircraft rate would apply.

The bifurcation of 135 rates would be applied exactly the same as the bifurcated 121 rate 

was. If a STOL aircraft was used to serve a market with a runway of 4,000’ or more, it 

was paid at the standard Part 121 rate. If a standard Part 121 aircraft was used at a STOL 

airport, the wreckage could be retrieved at the end of the runway.
WHEREFORE, the Consolidated Carriers respectfully request that the Part 135 rate 

structure be divided into Large Aircraft and Small Aircraft service. Large Aircraft 

operations are those scheduled with aircraft having a maximum certificated seating 

capacity of 19 or more seats. Small aircraft are all other aircraft operated under Part 135. 

The Consolidated Carriers further request that the Part 135 Small Aircraft linehaul rate be 

set at $12.2338 for non-fuel expenses plus a fuel related expenses level of $3.1987 

adjusted for the most current fuel costs. The Large Aircraft linehaul rate could be set on 

the basis of a regression for those aircraft using data relied upon by the Department in 

Order 2011-6-14 ($954.5335/enplaned ton + $4.258594/revenue ton mile), or through use 

of the reports for the five carrier/aircraft combinations used for Large Aircraft in Part 134 

service updated for the most current fuel related expenses.

Respectfully submitted,

The Consolidated Carriers

By

____________________

Hank Myers

July 18, 2011
CERTIFICATE OF SERVICE

I hereby certify that I have this date served a copy of the Answer of the Consolidated 

Carriers to Order 2011-6-14 upon all parties to Dockett DOT-OST-2003-14694 by

electronic mail.

____________________

Hank Myers

July 18, 2011
Attachment B

Linehaul, Part 135

Appendix C-1

Page 1 of 7

System Parameters for Each Carrier "Actual" 

1 . Capacity Related Expense (CR)

2 . Direct Expense, Include Fuel

3 . Indirect Expense

4 . CR Markup 

5 . Return and Tax Markup 

6 . T-100 Mail RTMs, Segment, F & G

7 . T-100 Mail RTMs, Mkt., F&G

8 . Circuity Markup

Aircraft Type

Aircraft Code

9 . Direct Expenses, Includes Fuel

10 . Less Passenger Liability Insurance

11 . Linehaul Expense Allocable to Mail 

12 . Cost per Block Hour (R11÷R18)

13 . Marked Up Costs (R11*R4*R5*R8)

14 . Eligible Expense (R13*R32÷R18)

15 . Cost per RTM (R14÷R36)

"Trend"

16a . Percentage of Eligible Mail RTMs

17a Cost, Wtd. by Mail RTMs, Includes Fuel (R15*R16a)

"Actual"

16b Percentage of Eligible Mail RTMs 99.99%

17b . Cost, Wtd. by Mail RTMs, Includes Fuel (R15*R16b) $12.2325

Scheduled + Nonscheduled

18 . System Blk. Hrs., T-100 Segment

19 . Pax. RTMs

20 . Freight RTMs Wtd. @ 0.75

21 . Mail RTMs

22 . Total RTMs

23 . Aircraft Miles

24 . Available Ton Miles (ATMs)

25 . Departures Performed

26 . Wtd. Departures (GTOW)

27 . Ton Load Factor

28 . Stage Length

29 . ATMs per Mile

30 . RTMs per Mile

31 . RTMs per Hour

32 . Eligible Block Hours

33 Pax. RTM

34 . Freight RTM, Wtd. @ .75

35 . Eligible Mail RTM 1,909,462

36 . Total RTM

37 . Aircraft Miles

38 . Available Ton Miles (ATMs)

39 . Departures Performed

40 Wtd. Departures (GTOW)

41 . Ton Load Factor 

42 . Avg. Stage Length 

43 . ATMs per Mile
44 RTMs per Mile

45 RTMs per Hour
Attachment B

Linehaul, Part 135

Appendix C-1

Page 2 of 7

System Parameters for Each Carrier Bering Bering

1 . Capacity Related Expense (CR) $1,349,823

2 . Direct Expense, Include Fuel $34,186,727

3 . Indirect Expense $5,189,612

4 . CR Markup 103.55% 103.55%

5 . Return and Tax Markup 109.46% 109.46%

6 . T-100 Mail RTMs, Segment, F & G 375,332

7 . T-100 Mail RTMs, Mkt., F&G 357,158

8 . Circuity Markup 105.09% 105.09%

Aircraft Type Navajo Caravan

Aircraft Code 194 416

9 . Direct Expenses, Includes Fuel $2,723,914 $6,690,454

10 . Less Passenger Liability Insurance $54,442 $127,464

11 . Linehaul Expense Allocable to Mail $2,669,472 $6,562,990

12 . Cost per Block Hour (R11÷R18) $621.39 $827.20

13 . Marked Up Costs (R11*R4*R5*R8) $3,179,745 $7,817,514

14 . Eligible Expense (R13*R32÷R18) $2,124,271 $6,662,721

15 . Cost per RTM (R14÷R36) $11.5646 $11.9485

"Trend"

16a . Percentage of Eligible Mail RTMs 2.229% 10.603%

17a Cost, Wtd. by Mail RTMs, Includes Fuel (R15*R16a) $0.2578 $1.2669

"Actual"

16b Percentage of Eligible Mail RTMs 2.255% 10.730%

17b . Cost, Wtd. by Mail RTMs, Includes Fuel (R15*R16b) $0.2608 $1.2821

Scheduled + Nonscheduled

18 . System Blk. Hrs., T-100 Segment 4,296 7,934

19 . Pax. RTMs 200,101 375,786

20 . Freight RTMs Wtd. @ 0.75 9,532 34,812

21 . Mail RTMs 43,164 205,086

22 . Total RTMs 252,797 615,684

23 . Aircraft Miles 674,302 1,144,983

24 . Available Ton Miles (ATMs) 590,014 1,662,691

25 . Departures Performed 8,385 16,142

26 . Wtd. Departures (GTOW) 62,049 143,664

27 . Ton Load Factor 42.85% 37.03%

28 . Stage Length 80 71

29 . ATMs per Mile 0.87 1.45

30 . RTMs per Mile 0.37 0.54

31 . RTMs per Hour 58.84 77.60

32 . Eligible Block Hours 2,870 6,762

33 Pax. RTM 133,556 324,406

34 . Freight RTM, Wtd. @ .75 7,065 28,337

35 . Eligible Mail RTM 43,067 204,879

36 . Total RTM 183,688 557,622

37 . Aircraft Miles 442,801 967,579

38 . Available Ton Miles (ATMs) 387,451 1,404,815

39 . Departures Performed 6,163 14,553

40 Wtd. Departures (GTOW) 45,606 129,522

41 . Ton Load Factor 47.41% 39.69%

42 . Avg. Stage Length 72 66

43 . ATMs per Mile 0.88 1.45
44 RTMs per Mile 0.41 0.58

45 RTMs per Hour 64.00 82.46
Attachment B

Linehaul, Part 135

Appendix C-1

Page 3 of 7

System Parameters for Each Carrier Frontier Grant Grant

1 . Capacity Related Expense (CR) $1,621,209 $2,794,865

2 . Direct Expense, Include Fuel $32,954,543 $32,165,830

3 . Indirect Expense $6,100,819 $6,634,803

4 . CR Markup 104.33% 107.76% 107.76%

5 . Return and Tax Markup 109.46% 109.46% 109.46%

6 . T-100 Mail RTMs, Segment, F & G 374,607 275,755

7 . T-100 Mail RTMs, Mkt., F&G 356,583 259,325

8 . Circuity Markup 105.05% 106.34% 106.34%

Aircraft Type Navajo C-206 Navajo

Aircraft Code 194 35 194

9 . Direct Expenses, Includes Fuel $1,441,814 $4,993,058 $4,168,544

10 . Less Passenger Liability Insurance $56,589 $210,812 $112,896

11 . Linehaul Expense Allocable to Mail $1,385,225 $4,782,246 $4,055,648

12 . Cost per Block Hour (R11÷R18) $932.18 $460.94 $728.91

13 . Marked Up Costs (R11*R4*R5*R8) $1,661,809 $5,998,485 $5,087,096

14 . Eligible Expense (R13*R32÷R18) $1,535,440 $5,053,182 $4,013,722

15 . Cost per RTM (R14÷R36) $18.9828 $19.4391 $10.7938

"Trend"

16a . Percentage of Eligible Mail RTMs 1.560% 4.189% 3.279%

17a Cost, Wtd. by Mail RTMs, Includes Fuel (R15*R16a) $0.2961 $0.8143 $0.3539

"Actual"

16b Percentage of Eligible Mail RTMs 1.579% 4.239% 3.318%

17b . Cost, Wtd. by Mail RTMs, Includes Fuel (R15*R16b) $0.2997 $0.8240 $0.3581

Scheduled + Nonscheduled

18 . System Blk. Hrs., T-100 Segment 1,486 10,375 5,564

19 . Pax. RTMs 52,384 197,974 372,637

20 . Freight RTMs Wtd. @ 0.75 3,500 6,817 7,758

21 . Mail RTMs 30,171 82,400 64,340

22 . Total RTMs 86,055 287,191 444,735

23 . Aircraft Miles 202,884 1,144,105 964,289

24 . Available Ton Miles (ATMs) 134,929 686,547 867,864

25 . Departures Performed 1,510 24,970 10,107

26 . Wtd. Departures (GTOW) 11,174 92,389 74,792

27 . Ton Load Factor 63.78% 41.83% 51.24%

28 . Stage Length 134 46 95

29 . ATMs per Mile 0.67 0.60 0.90

30 . RTMs per Mile 0.42 0.25 0.46

31 . RTMs per Hour 57.91 27.68 79.93

32 . Eligible Block Hours 1,373 8,740 4,390

33 Pax. RTM 48,127 172,599 301,449

34 . Freight RTM, Wtd. @ .75 2,614 6,411 7,043

35 . Eligible Mail RTM 30,145 80,940 63,361

36 . Total RTM 80,886 259,950 371,853

37 . Aircraft Miles 186,797 985,968 756,300

38 . Available Ton Miles (ATMs) 125,634 591,664 680,674

39 . Departures Performed 1,397 21,216 7,987

40 Wtd. Departures (GTOW) 10,338 78,499 59,104

41 . Ton Load Factor 64.38% 43.94% 54.63%

42 . Avg. Stage Length 134 46 95

43 . ATMs per Mile 0.67 0.60 0.90
44 RTMs per Mile 0.43 0.26 0.49

45 RTMs per Hour 58.91 29.74 84.70
Attachment B

Linehaul, Part 135

Appendix C-1

Page 4 of 7

System Parameters for Each Carrier Grant Hageland Hageland

1 . Capacity Related Expense (CR) $2,264,323

2 . Direct Expense, Include Fuel $63,938,147

3 . Indirect Expense $12,294,723

4 . CR Markup 107.76% 103.06% 103.06%

5 . Return and Tax Markup 109.46% 109.46% 109.46%

6 . T-100 Mail RTMs, Segment, F & G 1,067,309

7 . T-100 Mail RTMs, Mkt., F&G 1,009,922

8 . Circuity Markup 106.34% 105.68% 105.68%

Aircraft Type Caravan C-206 Navajo

Aircraft Code 416 35 194

9 . Direct Expenses, Includes Fuel $6,217,262 $6,162,243 $3,149,200

10 . Less Passenger Liability Insurance $180,719 $352,867 $118,018

11 . Linehaul Expense Allocable to Mail $6,036,543 $5,809,376 $3,031,182

12 . Cost per Block Hour (R11÷R18) $636.03 $243.49 $562.89

13 . Marked Up Costs (R11*R4*R5*R8) $7,571,780 $6,925,767 $3,613,686

14 . Eligible Expense (R13*R32÷R18) $3,786,289 $5,412,833 $3,194,270

15 . Cost per RTM (R14÷R36) $11.5366 $14.9474 $13.5496

"Trend"

16a . Percentage of Eligible Mail RTMs 6.793% 5.631% 3.959%

17a Cost, Wtd. by Mail RTMs, Includes Fuel (R15*R16a) $0.7837 $0.8417 $0.5364

"Actual"

16b Percentage of Eligible Mail RTMs 6.874% 5.698% 4.006%

17b . Cost, Wtd. by Mail RTMs, Includes Fuel (R15*R16b) $0.7930 $0.8517 $0.5428

Scheduled + Nonscheduled

18 . System Blk. Hrs., T-100 Segment 9,491 23,859 5,385

19 . Pax. RTMs 484,016 307,294 175,728

20 . Freight RTMs Wtd. @ 0.75 11,492 13,252 6,979

21 . Mail RTMs 133,410 108,808 76,634

22 . Total RTMs 628,918 429,354 259,341

23 . Aircraft Miles 1,231,716 1,836,099 672,069

24 . Available Ton Miles (ATMs) 1,724,402 1,038,899 455,606

25 . Departures Performed 18,427 38,936 7,446

26 . Wtd. Departures (GTOW) 164,000 144,063 55,100

27 . Ton Load Factor 36.47% 41.33% 56.92%

28 . Stage Length 67 47 90

29 . ATMs per Mile 1.40 0.57 0.68

30 . RTMs per Mile 0.51 0.23 0.39

31 . RTMs per Hour 66.26 18.00 48.16

32 . Eligible Block Hours 4,746 18,647 4,760

33 Pax. RTM 187,513 244,580 152,785

34 . Freight RTM, Wtd. @ .75 9,438 8,738 6,462

35 . Eligible Mail RTM 131,248 108,808 76,499

36 . Total RTM 328,199 362,126 235,746

37 . Aircraft Miles 617,052 1,413,544 582,278

38 . Available Ton Miles (ATMs) 863,873 795,357 396,102

39 . Departures Performed 9,386 31,403 6,685

40 Wtd. Departures (GTOW) 83,535 116,191 49,469

41 . Ton Load Factor 37.99% 45.53% 59.52%

42 . Avg. Stage Length 66 45 87

43 . ATMs per Mile 1.40 0.56 0.68
44 RTMs per Mile 0.53 0.26 0.40

45 RTMs per Hour 69.15 19.42 49.53
Attachment B

Linehaul, Part 135

Appendix C-1

Page 5 of 7

System Parameters for Each Carrier Hageland Hageland PenAir

1 . Capacity Related Expense (CR) $6,301,705

2 . Direct Expense, Include Fuel $97,788,036

3 . Indirect Expense $21,300,124

4 . CR Markup 103.06% 103.06% 105.59%

5 . Return and Tax Markup 109.46% 109.46% 109.46%

6 . T-100 Mail RTMs, Segment, F & G 2,088,410

7 . T-100 Mail RTMs, Mkt., F&G 1,915,429

8 . Circuity Markup 105.68% 105.68% 109.03%

Aircraft Type Caravan C-406 PA-32

Aircraft Code 416 417 79

9 . Direct Expenses, Includes Fuel $15,202,127 $5,183,706 $2,475,229

10 . Less Passenger Liability Insurance $400,117 $110,143 $138,401

11 . Linehaul Expense Allocable to Mail $14,802,010 $5,073,563 $2,336,828

12 . Cost per Block Hour (R11÷R18) $572.21 $951.89 $470.66

13 . Marked Up Costs (R11*R4*R5*R8) $17,646,520 $6,048,552 $2,944,767

14 . Eligible Expense (R13*R32÷R18) $15,737,110 $4,963,671 $2,600,173

15 . Cost per RTM (R14÷R36) $10.4458 $14.9436 $24.6989

"Trend"

16a . Percentage of Eligible Mail RTMs 28.881% 6.634% 1.658%

17a Cost, Wtd. by Mail RTMs, Includes Fuel (R15*R16a) $3.0169 $0.9914 $0.4095

"Actual"

16b Percentage of Eligible Mail RTMs 29.225% 6.713% 1.677%

17b . Cost, Wtd. by Mail RTMs, Includes Fuel (R15*R16b) $3.0528 $1.0032 $0.4142

Scheduled + Nonscheduled

18 . System Blk. Hrs., T-100 Segment 25,868 5,330 4,965

19 . Pax. RTMs 996,629 259,585 76,039

20 . Freight RTMs Wtd. @ 0.75 70,487 9,283 7,071

21 . Mail RTMs 558,142 128,196 32,240

22 . Total RTMs 1,625,258 397,064 115,350

23 . Aircraft Miles 2,918,802 812,841 527,392

24 . Available Ton Miles (ATMs) 3,748,851 1,195,977 288,220

25 . Departures Performed 375,556 7,898 12,216

26 . Wtd. Departures (GTOW) 334,248 78,190 43,978

27 . Ton Load Factor 43.35% 33.20% 40.02%

28 . Stage Length 8 103 43

29 . ATMs per Mile 1.28 1.47 0.55

30 . RTMs per Mile 0.56 0.49 0.22

31 . RTMs per Hour 62.83 74.50 23.23

32 . Eligible Block Hours 23,069 4,374 4,384

33 Pax. RTM 888,031 195,169 66,664

34 . Freight RTM, Wtd. @ .75 60,481 8,806 6,581

35 . Eligible Mail RTM 558,040 128,186 32,030

36 . Total RTM 1,506,552 332,161 105,275

37 . Aircraft Miles 2,593,487 653,929 464,998

38 . Available Ton Miles (ATMs) 3,330,781 963,222 254,121

39 . Departures Performed 33,849 6,404 11,193

40 Wtd. Departures (GTOW) 301,256 63,400 40,295

41 . Ton Load Factor 45.23% 34.48% 41.43%

42 . Avg. Stage Length 77 102 42

43 . ATMs per Mile 1.28 1.47 0.55
44 RTMs per Mile 0.58 0.51 0.23

45 RTMs per Hour 65.31 75.94 24.01
Attachment B

Linehaul, Part 

135

Appendix C-1

Page 6 of 7

System Parameters for Each Carrier PenAir Warbelow Warbelow

1 . Capacity Related Expense (CR) $781,563

2 . Direct Expense, Include Fuel $17,041,166

3 . Indirect Expense $2,207,318

4 . CR Markup 105.59% 104.23% 104.23%

5 . Return and Tax Markup 109.46% 109.46% 109.46%

6 . T-100 Mail RTMs, Segment, F & G 157,868

7 . T-100 Mail RTMs, Mkt., F&G 141,598

8 . Circuity Markup 109.03% 111.49% 111.49%

Aircraft Type Caravan Navajo Caravan

Aircraft Code 416 194 416

9 . Direct Expenses, Includes Fuel $3,920,642 $5,410,155 $894,229

10 . Less Passenger Liability Insurance $135,392 $90,468 $11,700

11 . Linehaul Expense Allocable to Mail $3,785,250 $5,319,687 $882,529

12 . Cost per Block Hour (R11÷R18) $936.25 $460.10 $618.02

13 . Marked Up Costs (R11*R4*R5*R8) $4,770,005 $6,766,595 $1,122,569

14 . Eligible Expense (R13*R32÷R18) $4,267,402 $6,491,530 $1,072,258

15 . Cost per RTM (R14÷R36) $13.3817 $9.7595 $10.4520

"Trend"

16a . Percentage of Eligible Mail RTMs 6.311% 4.936% 1.178%

17a Cost, Wtd. by Mail RTMs, Includes Fuel (R15*R16a) $0.8445 $0.4817 $0.1231

"Actual"

16b Percentage of Eligible Mail RTMs 6.386% 4.995%

17b . Cost, Wtd. by Mail RTMs, Includes Fuel (R15*R16b) $0.8546 $0.4875

Scheduled + Nonscheduled

18 . System Blk. Hrs., T-100 Segment 4,043 11,562 1,428

19 . Pax. RTMs 198,492 550,177 75,677

20 . Freight RTMs Wtd. @ 0.75 22,027 35,583 7,698

21 . Mail RTMs 122,117 95,382 22,763

22 . Total RTMs 342,636 681,142 106,138

23 . Aircraft Miles 530,648 1,657,555 204,844

24 . Available Ton Miles (ATMs) 954,904 1,388,184 240,270

25 . Departures Performed 7,255 13,076 1,530

26 . Wtd. Departures (GTOW) 64,570 96,762 13,617

27 . Ton Load Factor 35.88% 49.07% 44.17%

28 . Stage Length 73 127 134

29 . ATMs per Mile 1.80 0.84 1.17

30 . RTMs per Mile 0.65 0.41 0.52

31 . RTMs per Hour 84.75 58.91 74.33

32 . Eligible Block Hours 3,617 11,092 1,364

33 Pax. RTM 176,822 535,304 73,156

34 . Freight RTM, Wtd. @ .75 20,142 34,461 6,670

35 . Eligible Mail RTM 121,935 95,382 22,763

36 . Total RTM 318,899 665,147 102,589

37 . Aircraft Miles 473,756 1,596,013 195,345

38 . Available Ton Miles (ATMs) 851,170 1,338,270 228,265

39 . Departures Performed 6,696 12,636 1,465

40 Wtd. Departures (GTOW) 59,594 93,506 13,039

41 . Ton Load Factor 37.47% 49.70% 44.94%

42 . Avg. Stage Length 71 126 133

43 . ATMs per Mile 1.80 0.84 1.17
44 RTMs per Mile 0.67 0.42 0.53

45 RTMs per Hour 88.17 59.97 75.21
Attachment B

Linehaul, Part 135

Appendix C-1

Page 7 of 7

Wings Wright Yute

$2,182,560 $757,426 $452,094

$24,121,552 $12,553,940 $8,199,900

$5,805,234 $2,111,525 $1,667,873

107.87% 105.45% 104.80%

109.46% 109.46% 109.46%

38,223 126,188 83,374

37,311 116,397 78,471

102.44% 108.41% 106.25%

C-208 Caravan C-206

416 416 35

$1,921,863 $4,422,505 $4,099,950

$21,425 $133,863 $120,749

$1,900,438 $4,288,642 $3,979,201

$610.09 $441.99 $299.53

$2,298,685 $5,366,500 $4,849,998

$2,151,097 $4,583,897 $4,450,973

$10.3852 $6.6441 $14.3108

1.486% 6.351% 4.315%

$0.1543 $0.4220 $0.6175

1.504% 6.427% 4.366%

$0.1562 $0.4270 $0.6248

3,115 9,703 13,285

170,541 493,235 219,836

16,252 159,081 22,145

28,983 123,090 83,374

215,776 775,406 325,355

376,641 1,436,615 1,243,082

564,962 2,155,122 734,424

6,282 10,389 33,201

55,910 92,462 122,844

38.19% 35.98% 44.30%

60 138 37

1.50 1.50 0.59

0.57 0.54 0.26

69.27 79.91 24.49

2,915 8,288 12,192

163,961 453,917 206,615

14,461 113,284 21,032

28,710 122,718 83,374

207,132 689,919 311,021

354,998 1,221,608 1,149,753

532,497 1,832,611 683,037

5,836 9,225 30,295

51,940 82,102 112,092

38.90% 37.65% 45.54%

61 132 38

1.50 1.50 0.59
0.58 0.56 0.27

71.06 83.24 25.51

Attachment B

Linehaul, Part 135 

Appendix C-2

Page 1 of 4

Carrier Bering Bering Frontier

Aircraft Code Navajo Caravan Navajo

Scheduled + Nonscheduled "Actual" Total 1/

"Trend" Total 

1/ 194 416 194

1 . Total Fuel Expense $1,089,271 $2,167,648 $292,184

2 . Total Gallons Issued 185,289 442,537 70,872

3 . Total Block Hours 4,296 7,934 1,486

4 Eligible Block Hours 2,870 6,762 1,373

5 . Eligible Mail RTMs 1,909,322 1,932,085 43,067 204,879 30,145

6 . Total Eligible RTMs 183,688 557,622 80,886

7 . Price per Gallon $5.88 $4.90 $4.12

8 . Burn per Hour 43.1 55.8 47.7

9 . Costs per Block Hour $253.55 $273.21 $196.62

10 Eligible Fuel Expense $727,702 $1,847,446 $269,965

11 . Cost per Eligible RTM $3.9616 $3.3131 $3.3376

"Trend"

12a Mail RTMs Percentage 100.00% 2.229% 10.604% 1.560%

13a . Cost/RTM, Wtd. By Mail RTMs $3.1825 $0.0883 $0.3513 $0.0521

"Actual"

12b Mail RTMs Percentage 100.02% 2.26% 10.73% 1.58%

13b . Cost/RTM, Wtd. By Mail RTMs $3.1987 $0.0895 $0.3555 $0.0527

Bering Bering Frontier

Aircraft Name Navajo Caravan Navajo

Aircraft Code 194 416 194

1 . Total Fuel Expense $309,913 $454,678 $3,896

2 . Total Gallons Issued 52,097 105,235 1,188

3 . Total Block Hours 1,231 2,026 21

4 Eligible Block Hours 821 1,729 7

5 . Eligible Mail RTMs 12,914 52,730 111

6 . Total Eligible RTMs 52,550 143,275 351

7 . Price per Gallon $5.95 $4.32 $3.28

8 . Burn per Hour 42 52 57

9 . Costs per Block Hour $251.76 $224.42 $185.52

10 Eligible Fuel Expense $206,693 $388,025 $1,299

11 . Cost per Eligible RTM $3.9333 $2.7083 $3.7009
Attachment B

Linehaul, Part 135 

Appendix C-2

Page 2 of 4

Carrier Grant Grant Grant Hageland Hageland Hageland

Aircraft Code C-206 Navajo Caravan C-206 Navajo Caravan

Scheduled + Nonscheduled 35 194 416 35 194 416

1 . Total Fuel Expense $1,180,639 $1,702,463 $2,185,009 $1,647,696 $978,731 $5,440,824

2 . Total Gallons Issued 219,232 309,529 390,547 295,754 176,952 1,040,534

3 . Total Block Hours 10,375 5,564 9,491 23,859 5,385 25,868

4 Eligible Block Hours 8,740 4,390 4,746 18,647 4,760 23,069

5 . Eligible Mail RTMs 80,940 63,361 131,248 108,808 76,499 558,040

6 . Total Eligible RTMs 259,950 371,853 328,199 362,126 235,746 1,506,551

7 . Price per Gallon $5.39 $5.50 $5.59 $5.57 $5.53 $5.23

8 . Burn per Hour 21.1 55.6 41.1 12.4 32.9 40.2

9 . Costs per Block Hour $113.80 $305.98 $230.22 $69.06 $181.75 $210.33

10 Eligible Fuel Expense $994,582 $1,343,245 $1,092,620 $1,287,757 $865,136 $4,852,110

11 . Cost per Eligible RTM $3.8261 $3.6123 $3.3291 $3.5561 $3.6698 $3.2207

"Trend"

12a Mail RTMs Percentage 4.189% 3.279% 6.793% 5.632% 3.959% 28.883%

13a . Cost/RTM, Wtd. By Mail RTMs $0.1603 $0.1184 $0.2261 $0.2003 $0.1453 $0.9302

"Actual"

12b Mail RTMs Percentage 4.24% 3.32% 6.87% 5.70% 4.01% 29.23%

13b . Cost/RTM, Wtd. By Mail RTMs $0.1622 $0.1199 $0.2287 $0.2027 $0.1472 $0.9414

Grant Grant Grant Hageland Hageland Hageland

Aircraft Name C-206 Navajo Caravan C-206 Navajo Caravan

Aircraft Code 35 194 416 35 194 416

1 . Total Fuel Expense $330,115 $494,476 $564,120 $489,692 $293,977 $1,641,796

2 . Total Gallons Issued 65,069 79,739 85,797 78,900 49,160 274,329

3 . Total Block Hours 2,930 1,369 2,348 6,429 1,474 7,155

4 Eligible Block Hours 2,385 1,049 1,521 5,128 1,269 6,473

5 . Eligible Mail RTMs 19,174 14,760 28,368 27,792 21,311 149,672

6 . Total Eligible RTMs 71,277 85,093 95,026 99,698 61,819 419,759

7 . Price per Gallon $5.07 $6.20 $6.58 $6.21 $5.98 $5.98

8 . Burn per Hour 22 58 37 12 33 38

9 . Costs per Block Hour $112.67 $361.20 $240.26 $76.17 $199.44 $229.46

10 Eligible Fuel Expense $268,711 $378,894 $365,429 $390,596 $253,091 $1,485,303

11 . Cost per Eligible RTM $3.7700 $4.4527 $3.8456 $3.9178 $4.0941 $3.5385
Attachment B

Linehaul, Part 135 

Appendix C-2

Page 3 of 4

Carrier Hageland PenAir PenAir Warbelow Warbelow Wings Wright

Aircraft Code C-406 PA-32 Caravan Navajo Caravan C-208 Caravan

Scheduled + Nonscheduled 417 79 416 194 416 416 416

1 . Total Fuel Expense $1,794,539 $464,514 $824,745 $1,705,947 $200,224 $364,419 $1,231,643

2 . Total Gallons Issued 380,524 87,792 222,555 448,763 72,282 139,019 491,800

3 . Total Block Hours 5,330 4,965 4,043 11,562 1,428 3,115 9,703

4 Eligible Block Hours 4,374 4,384 3,617 11,092 1,364 2,915 8,288

5 . Eligible Mail RTMs 128,186 32,030 121,935 95,382 22,763 28,710 122,718

6 . Total Eligible RTMs 332,162 105,275 318,899 665,146 102,588 207,132 689,919

7 . Price per Gallon $4.72 $5.29 $3.71 $3.80 $2.77 $2.62 $2.50

8 . Burn per Hour 71.4 17.7 55.0 38.8 50.6 44.6 50.7

9 . Costs per Block Hour $336.69 $93.56 $203.99 $147.55 $140.21 $116.99 $126.93

10 Eligible Fuel Expense $1,472,667 $410,157 $737,844 $1,636,600 $191,250 $341,021 $1,052,031

11 . Cost per Eligible RTM $4.4336 $3.8961 $2.3137 $2.4605 $1.8643 $1.6464 $1.5249

"Trend"

12a Mail RTMs Percentage 6.635% 1.658% 6.311% 4.937% 1.178% 1.486% 6.352%

13a . Cost/RTM, Wtd. By Mail RTMs $0.2942 $0.0646 $0.1460 $0.1215 $0.0220 $0.0245 $0.0969

"Actual"

12b Mail RTMs Percentage 6.71% 1.68% 6.39% 5.00% 1.50% 6.43%

13b . Cost/RTM, Wtd. By Mail RTMs $0.2975 $0.0655 $0.1478 $0.1230 $0.0247 $0.0981

Hageland PenAir PenAir Warbelow Wings Wright

Aircraft Name C-406 PA-32 Caravan Navajo C-208 Caravan

Aircraft Code 417 79 416 194 416 416

1 . Total Fuel Expense $397,247 $130,920 $243,556 $461,998 $135,446 $353,217

2 . Total Gallons Issued 83,568 24,825 70,586 119,807 44,896 131,750

3 . Total Block Hours 1,240 1,378 1,261 2,974 985 2,596

4 Eligible Block Hours 1,065 1,179 1,107 2,727 911 2,085

5 . Eligible Mail RTMs 31,129 8,498 33,876 22,593 5,909 30,000

6 . Total Eligible RTMs 80,507 27,726 96,619 163,831 64,262 174,280

7 . Price per Gallon $4.75 $5.27 $3.45 $3.86 $3.02 $2.68

8 . Burn per Hour 67 18 56 40 46 51

9 . Costs per Block Hour $320.36 $95.01 $193.15 $155.35 $137.51 $136.06

10 Eligible Fuel Expense $341,184 $112,014 $213,812 $423,628 $125,270 $283,689

11 . Cost per Eligible RTM $4.2379 $4.0400 $2.2129 $2.5858 $1.9494 $1.6278
Attachment B

Linehaul, Part 

135

Appendix C-2

Page 4 of 4

Carrier Yute

Aircraft Code C-206

Scheduled + Nonscheduled 35

1 . Total Fuel Expense $1,103,194

2 . Total Gallons Issued 176,872

3 . Total Block Hours 13,285

4 Eligible Block Hours 12,192

5 . Eligible Mail RTMs 83,374

6 . Total Eligible RTMs 311,021

7 . Price per Gallon $6.24

8 . Burn per Hour 13.3

9 . Costs per Block Hour $83.04

10 Eligible Fuel Expense $1,012,431

11 . Cost per Eligible RTM $3.2552

"Trend"

12a Mail RTMs Percentage 4.315%

13a . Cost/RTM, Wtd. By Mail RTMs $0.1405

"Actual"

12b Mail RTMs Percentage 4.37%

13b . Cost/RTM, Wtd. By Mail RTMs $0.1423

Yute

Aircraft Name C-207

Aircraft Code 35

1 . Total Fuel Expense $284,324

2 . Total Gallons Issued 45,768

3 . Total Block Hours 3,518

4 Eligible Block Hours 3,154

5 . Eligible Mail RTMs 23,655

6 . Total Eligible RTMs 78,491

7 . Price per Gallon $6.21

8 . Burn per Hour 13

9 . Costs per Block Hour $80.82

10 Eligible Fuel Expense $254,906

11 . Cost per Eligible RTM $3.2476