Order : 2010-4-1 5 Served : Apri l 23 , 201 0

*~' ^ UNITE D STATE S O F AMERIC A i0WK ^

DEPARTMEN T O F TRANSPORTATIO N "SmM f OFFIC E O F TH E SECRETAR Y ^^^5 ^ WASHINGTON , D.C

.

Issue d b y th e Departmen t of Transportatio n o n th e 23"

^ da y o f April , 201 0 Essentia l Ai rServic

e a t CHISANA , ALASK

A HEAL Y LAKE , ALASK

A Unde r4 9 U.S.C

. 4173 1 etseq
. DOCKE T OST-1998-457 4 DOCKE T OST-1998-354 6

ORDE R SELECTIN G CARRIE R AN D ESTABLISHIN G SUBSID Y RATE S Summar y B y thi s order , th e Departmen t i s (a) selectin g 40-Mil e Air , Inc. , t o continu e providin g essential ai r

servic e (EAS ) at

Chisan aan d Heal y Lake , Alaska , an d (b ) establishin g annual subsidy rate s o f

$74,34 5 an d$98,915 , respectively , fo r ane w two-yea

r period , throug h Ma y 31 , 2012. ' (Se e Appendi x A fo r ma p o f th e servic e area. ) Backgroun d B y Orde r 2008-4-41 , issue dApri l 29 , 2008 , th e Department selecte d 40-Mil e Air , Inc
. (40

- Mil e Air) , to continu e providin g subsidize d EA S a t Chisan aan d Heal y Lak

e fo r th e two-yea

r perio dthroug h May 31,2010
. Tha t order establishe d a

n annua l subsidy rat e o f

$65,54 6 fo

r tw o nonsto p roun dtrip s pe r week betwee n Chisan aan d To k wit h 3-sea t Cessn a18 5 o r

4-sea t Cessn a206-20 7 aircraft ; an d$77,68 3 fo r tw o nonsto p roun d trip s pe r week betwee n Heal y Lak e an dFairbank s wit

h 5-sea t Cessn a20 6 o r

20 7 aircraft
. Chisan aan dHeal y Lak

e are guarantee d to receiv e a t leas t aminimu mleve l o f

ai r servic e under th e EA S programb y virtu e o f th e fact tha t th e communitie s appeare d o n acertificate d carrier' s Civi l Aeronautic s Board-issue d certificate o n October 24 , 1978 , th e date th e Airlin e Deregulatio n Ac t

o f 197 8 wa s signe d into law
. (Se e 4 9 U.S.C
. 41731-4174 4 fo r th e EA S program' s governin g statutes. ) In keepin g wit h ou r norma l procedure , in anticipatio n o f th e en d o f th e rate term , th e Department issue d Orde r

2010-1-18 , Januar

y 26 , 2010 , requestin g proposal s fro

mcarrier s intereste din providin g replacemen t servic e a t th e communities , wit

h subsidy suppor

t i f necessary , fo

r ane w two-yea

r perio d beginnin g Jun e 1 , 2010
.

' Such subsidy i s calculate dan d distribute d on afiscal yea r basis , subjec t

to th e availabilit

y o f appropriate d fiinds.Carrie rProposal s

I n respons e t o our

request , 40-Mil e Ai r

(th e onl y carrier

t o respond ) submitte d aproposal , offerin g to continu e t o provid e th e same leve l o f servic e i t currentl y operates , consistin g o f tw o nonsto p roun dtrip s per week betwee n Chisan aan d To k wit h 3-sea t Cessn a18 5 or

4-sea t Cessn a206-20 7 aircraft ; an dtw o nonsto p roun d trip s betwee n Heal y Lak e an d Fairbank s wit

h 5-sea t Cessn a20 6 o r

20 7 aircraft
. Th e carrier

propose s t o provid e thi s servic e a t th e aimua l subsid y rate s o f $74,34 5 fo

r Chisan aan d $98,91 5 fo

r Heal y Lake
. Communit y Comment s In respons e t o our

reques t fo r comments , w e receive d severa l letter s fi-ommember s o f

bot h communities
. Generally , the y expres s th e importanc e o f thi s ai r service , notin g tha

t sinc e there i s n o roadaccess , it

i s th e onl y mean s o f

transportatio n t o an d fi-omChisan aand Heal y Lake
. I n addition , the y note tha t the y rel y on thi s ai r

servic e to sen d an d receiv e mail , get grocerie s an dgai n acces s to medical appointments , supplie s and prescriptions
. Finally , member s o f

bot h communitie s expres s suppor t an d satisfactio n wit

h th e servic e provide d b y 40-Mil e Air
. Decisio n W e hav e decide dt o selec t

40-Mil e Ai r

t o continu e t o provid e servic e a t Chisan aan d Heal y Lak e fo r th e two-yea

r perio dthroug h Ma

y 31 , 2012 , a

t th e annual subsidy rate s o f $74,34 5 and $98,915 , respectively
. Th e carrier wil l continu e t o provid e it s current leve l o f service , consistin g o f

tw o nonsto p roun dtrip s pe r week betwee n Chisan aan d To k wit h 3-sea t Cessn a18 5 or

4-sea t Cessn a206-20 7 aircraft ; and tw o nonsto p roun d trip s betwee n Heal y Lak e an dFairbank s wit

h 5-sea t Cessn a20 6 or

20 7 aircraft
. We findtha

t th e propose d rate s ar e reasonabl e an dth e carrier' s performanc e continue s to b e satisfactory
. Carrie rFitnes s 4 9 U.S.C
. 41737(b ) require s tha t w e find a n ai r carrier fit, willing , an d abl e t o provid e reliabl e servic e befor

e w e ma y subsidiz e it

t o provid e essential ai r

service
. 40-Mil e Ai r

i s subjec t t o th e Department' s continuin g fitnes s requirements , an d n o informatio n ha s come t o our attentio n tha

t woul dcaus e u s t o questio n th e carrier' s fitness a t thi s time
. We hav e contacte d th e Federal Aviatio n Administration , an d i t ha s raise d n o concern s tha t woul d negativel y affect our fitnes s finding. We therefore conclud e tha t th e carrier

remain s fit

t o conduc t

th e operation s propose dhere
. Thi s order i s issue dunder

authorit y delegate d in 4 9 CF

R1.56a(f)
. ACCORDINGLY , 1
. Th e Department

select s 40-Mil e Air , Inc. , to continu e t o provid e subsidize d essential ai r servic e a t Chisan aan dHeal y Lake , Alaska , a s describe din Appendi x C , fo r ane w two-yea

r term , throug h May 31 , 2012 ; 2 2
. Th e Department

finds tha t 40-Mil e Ai r

i s fit, willin g an d abl e t o operate a s acertificate d air carrier an dcapabl e o f

providin g reliabl e essential ai r servic e a t Chisan aan d Heal y Lake , Alaska ;

2 Se e Appendi x C fo

r th e calculatio n o f

th e subsidy rates , whic h assume s th e us e o f th e aircraf

t designated
. If th e carrier report s asignificant

number o f aircraf t substitutions , arevisio n o f thi s rate ma

y b e required
.3
. We direc t 40-Mil e Ai r

t o retai n al l books , records , an d other sourc e an d summar

y documentatio n t o suppor

t claim s fo r payment , an d t o preserv e an d maintai n suc h documentatio n in amanner

tha t readil y permit s it s audi t

an d examinatio n b y representative s o f th e Department
. Such documentatio n shal l b e retaine d fo r seve n year s o r

unti l th e Departmen t

indicate s tha

t th e record s ma

y b e destroyed , whichever come s first. Copie s o f

flight log s fo r aircraf t sol d or dispose do f

mus t b e retained
. Th e carrie r

ma y forfeit it s compensatio n fo

r an y clai mtha

t i s no t supporte dunder

th e term s o f

thi s order ; an d 4
. Docket s DOT-OST-1998-457 4 an d DOT-OST-1998-354 6 wil l remai n open und l fiirther order o f th e Department ; an d 5
. Th e Department

wil l serv e acop y o f

thi s orde r on th e Alask aDepartmen t o f Transportatio n and Publi c Facilitie s an d40-Mil e Air , Inc
. By :

SUSA N L

. KURLAN D Assistan t Secretar

y fo rAviatio n an d Internationa l Affair s (SEAL ) A n electroni c versio n o f

thi s document

i s availabl e on th e World Wid e We b a t www, regulations , go v

### ARE A MA P Appendi x A



# AJuAOlv A

mai m .etchika nAppendi x B Pag e 1 of 2 40-MILE AIR , INC
. A>fNUA L COMPENSATIO N REQUIREMEN T FO RESSENTL\ L AI RSERVIC E A T

CHISANA , ALASK

A

Rout e TKJ-C2N-TK

J Frequency : 2 Roun d Trip s pe rWee k Aircraf t Type : Cessn a 185( 3 seats)

. 20 6 o r207( 4 seats ) Annua l Bloc k

Hour s 1 190. 7 Revenu e Passenge r Carg o Space Availabl e Carg o Mai l Tota l Operatin g Revenu e Direc t Ooerati M EKDense s Pilo t & Copilo t Fue l & Oi l Maintenanc e Depreciatio n insuranc e Agen t fe e Tota l Direc t Operatin g Expense s IndlrK t Ooeratln s Exoens M 1 9 40 % Tota l Operatin g ExDense s SfltritiCULiffi f Rat e $105.0 0 S .3 5 $ .1 8 $ .94146 5
Uni t cos t $91.0 0 pe rB H $94.0 0 pe rB H $93.0 0 pe rB H $22.8 5 pe rB H $57.1 4 pe rB H Antt/ib$

.

8 0 20O O 38,00 0 12.00 0

$20.0 0 pe rCZNdept

. 

### ^vrPirfct«^9fP (

?Ml?fH»Vl^Wtfff*P W IBfWlatfg n Revenu e $8,400.0 0 $ 700.0 0 $6,840.0 0 $11,297.5 5 $27,237.5 8 Expens e $17,353.7 0 $17,925.8 0 $17,735.1 0 $ 4,357.49 5 $10,896.6 0 $ 2.08P.O P $70,348.7 0 $26,396.4 8 $96,745.1 8 $69,507.6 0 $ 4,837.2 6 $74,344.8 6 IBIoc k hour s = (TK

J - CI N -TKJ , 1.8 3 hours ) x 2 flights/wee k x 5 2 = 190. 7 iiour sAppendi x B Pag e 2 of 2 40-MILE AIR , INC
. ANNUA L COMPENSATIO N REQUIREMENT FO RESSENTIAL AI RSERVIC E A T

HEAL Y LAKE , ALASK

A

Rout e FA I - HK

B - FA ! Frequency : 2 Roun d Trip s pe rWee k Aircraf t Type : Cessn a 20 6 o r207( 5 seats ) Annua l Bloc k

Hour s 1 20 8 Passenge r Carg o Spac e Availatil e Carg o Mai l Tota l Operatin g Revenu e Direc t Goeratin a EKoense s Pilo t 8 i Copilo t Fue l & Oi l Maintenanc e Depreciatio n Insuranc e Agen t fe e Tota l Direc t Operatin g Expense s Indirec t Ot>eratim i Exoense s O 40 M
Qpfritfngtff S Profi t Elemen t AS M o f Tota l Ooer a 

### fvt^si^Kffedffig m Rat e Amt/lbs

. $ 70.0 0 8 0 $ .4 0 6,00 0 $ .1 8 38,00 0 $ 1.06950 5 2,00 0
Uni t cos t $91.0 0 pe rB H $94.0 0 pe rB H $93.0 0 pe rB H $22.8 5 pe rB H $57.1 4 pe rB H $20.0 0 pe rCZNdept

.
1 o f Direc t Ne t o f Deoredatio n

tinslSBf^nK f Revenu e $ 5,600.0 0 $ 2,400.0 0 $ 6.840.0 0 S 2.139.0 1 $10,139.0 1 Expens e $18,928.0 0 $18,552.0 0 $19,344.0 0 $ 4,752.8 0 $11,885.1 2 $ 2.080.0 0 $75,544.9 2 $28,315.6 5 $103,860.5 7 $93,721.5 6 S 5,193.0 3 $98,914.5 9 JLBIoc k hour s ^ (FA I - HKB , 1 hour ) x 4 flights/wee k x 5 2 ^ ^ 20 8 hour sAppendi x C Pag e 1 o f 3 40-MILE AIR , INC
. ANNUAL COMPENSATIO N REQUIREMENT FO RESSENTIAL AI RSERVIC E AT CHISANA , ALASK

A
Effectiv e period : Jun e 1 , 2010 , throug h Ma y 31 , 2012
. Schedule dservice : Tw o nonsto p roun d trip s eac h wee k t o Tok
. Intermediat e stop s an duplin e N o uplin e o r intermediat e servic e i s permitte d withou t prio r Departmen t service : approval
. Aircraf t type : Cessn a18 5 ( 3 seats ) o r Cessn a206/20 7 ( 4 seats ) Timin g o f

flights : Flight s mus t b e well-time d an d well-space d i n orde r t o ensur e ful l compensation
. Annua l compensation : $74,34 5 Subsid y Rat e Pe r Arrival/Departure : $357 ' Weekl y Compensatio n Ceiling: ' $1,42 8

' Annua l compensatio n o f

$74,34 5 divide d b y 20 8 arrival s an d departures : 4 flights pe r week x 5 2 weeks
. ^ Th e subsidy rat e fo

r eac h arrival/departure ($357 ) multiplie d b y fou r (4 ) eligibl e arrival s an d departure s eac h week
.Appendi x C Pag e 2 of 3 40-MILE AIR , INC
. ANNUA L COMPENSATIO N REQUIREMEN T FO RESSENTIAL AI RSERVIC E AT

HEAL Y LAKE , ALASK

A
Effectiv e period : Jun e 1 , 2010 , throug h Ma y 31 , 2012
. Schedule d service : Tw o nonsto p roun d trip s eac h wee k t o Fairbanks
. Intermediat e stop s an d uplin e service : Aircraf t type : N o uplin e o r intermediat e servic e i s permitte d withou t prio r Departmen t approval
. Cessn a20 6 o r

20 7 ( 5 seats ) Timin g o f

flights : Flight s mus t b e well-time d an d well-space d i n orde r t o ensur e ftill compensation
. Amiua l compensation : $98,91 5 Subsid y Rat e Pe r Arrival/Departure : $476 ' Weekl y Compensatio n Ceiling: ' $1,90 4

' Aimua l compensatio n o f

$98,91 5 divide d b y 20 8 arrival s an d departures : 4 flights pe r wee k x 5 2 weeks
. ' Th e subsidy rat e fo

r eac h arrival/departure ($476 ) multiplie d b y fou r (4 ) eligibl e arrival s an d departure s eac h week
.Appendi x C Pag e 3 o f 3
Genera l Term s an d Condition s fo rEssentia l Ai rServic e Th e carrier

understand s tha

t i t ma y forfeit it s compensatio n fo

r any flight s tha

t i t doe s no t operate in conformanc e wit h th e term s an d stipulation s o f th e rate order , includin g th e servic e plan s outline din th e order an d an y other

significant

element s o f

th e require d service , withou t

prio r approval
. Th e carrier

understand s tha

t a n aircraf t take-of f and landin g a t it s schedule ddestinatio n constitute s acomplete d flight; absent a n explanatio n supportin g subsidy eligibilit y fo r afligh t tha t ha s no t bee n completed , suc h a s certai n weather cancellations , onl y complete d flights ar e considere d eligibl e fo

r subsidy
. I

n addition , if

th e carrier

doe s no t schedul e or

operat e it s flights in fiil

l conformanc e wit

h th e order fo r asignificant

period , i t ma y jeopardiz e it s entire subsidy clai mfo r th e perio d in question
. If

th e carrier

contemplate s any suc h change s beyon d th e scop e o f th e order durin g th e applicabl e perio do f thes e rates , i t

mus t first notif y th e Offic e o f

Aviatio n Analysi s in writin g an dreceiv e writte n approval fro mth e Departmen t

t o b e ensure d o f fiil l compensation
. Shoul dcircumstance s warrant , th e Department ma y locate an d selec t areplacement

carrier to provid e servic e o n thes e routes . Th e carrier mus t complete al l flights tha

t ca n b e safely operated ; flights tha t overfly point s fo

r lac k o f traffi c wil l no t

b e compensated
. I n determinin g whether subsidy paymen t

fo r adeviatin g flight

shoul d b e adjuste do r

disallowed , th e Department wil l consider

th e extent to whic h th e goal s o f

th e progra mare met an dth e exten t

o f acces s to th e national ai r

transportatio n syste m provide dt o th e community
. If th e Department

unilaterally , either

partiall y o r

completely , terminate s o r reduce s payment s fo

r servic e or

change s servic e requirement s a t aspecifi c locatio n provide d fo r under thi s order , then , a

t th e en do f

th e perio d fo

r whic h th e Department

doe s mak e payment s in th e stipulate damount s or a t th e stipulate d servic e levels , th e carrier ma y ceas e to provid e servic e t o tha t specifi c locatio n withou t

regard t o an y requirement fo r notic e o f suc h cessation
. Thos e adjustment s i n th e level s o f subsidy and/o r

servic e tha

t ar e mutuall y agree dto in writin g b y th e Departmen t an d carrier

d o no t constitut e atotal or partial reductio n o r

cessatio n o f

payment . Subsid y contract s ar

e subjec t to , an d incorporate b y reference , relevan t statute s an d Department

regulations , a s the y ma

y b e amende d fromtim e t o time
. However , an y suc h statutes , regulations , or

amendment s theret o shal l no t operate t o controver

t th e foregoin g paragraph
. Fund s are no t

currentl y availabl e fo

r performanc e under

thi s order beyon d September

30 , 2010
. Th e Government' s obligatio n fo r performanc e under

thi s order beyon d Septembe r 30 , 2010 , i s contingen t

upo n th e availabilit

y o f appropriate d fund s fro

mwhic h payment fo r service s ca

n b e made
. N o lega

l liabilit y on th e par

t o f th e Government

fo r an y paymen t ma y aris e fo r performanc e under

thi s order beyon d September

30 , 2010 , unti l fund s are mad e availabl e t o th e Department fo r performance
. If

fiind s ar e no t mad e availabl e fo

r performanc e beyon dSeptember 30 , 2010 , th e carrier

wil l receiv e notic e in writin g b y th e Department
. Al l claim s fo

r payment mus t b e submitte d withi n 6 0 day s o f th e las t da y o f servic e provide dunder

thi s order
.