Order 2010

- 7

- 14 Served: July 16, 2010



### DELTA STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION


### OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 16 th of July, 2010

Essential Air Service at

LAKE MINCHUMINA , ALASKA

Under 49 U.S.C. 41731 et seq

. DOCKET OST

- 2008

- 02 37

ORDER RESELECTING CARRIER Summary By this order, the Department is selecting Warbelow’s Air Ventures, Inc., to provide essential air

service (EAS) at Lake Minchumina

, Alaska , at an annual subsidy rat e of $ 62,400

. 1 The selection

extends from November 1, 2010, through October 31 , 2012

.

Background

Order 2008

- 9

- 2 1 selected Tatonduk Outfitters, Ltd., d/b/a Everts Air Cargo (Everts) to provide

Lake Minchumina with one nonstop round trip per week to Fairba nks for 26 weeks with IFR

equipped 9

- seat Cessna 208 Caravan aircraft, and one round trip per week for 26 weeks with

5

- seat Piper PA

- 32 aircraft that are not so equipped, at an annual subsidy of $42,560

. 2 In anticipation of the end of the current contra ct, by Order 2010

- 5

- 13 we requested proposals for replacement service, as follows:

“ For the most recent annual period, Lake Minchumina generated an average of 4.3 deplaned passenger equivalents per week. In view of this level of traffic, we would also entertain proposals having two round trips per week with smaller, single

- engine piston

aircraft such as the PA

- 32 or one round trip per week with larger IFR

- equipped aircraft

such as the 9

- seat Cessna 208. ”

1 Such subsidy is calculated and distributed on a fiscal year basis, s ubject to the availability of appropriated funds.

2 Instrument Flight Rule (IFR)

- equipped aircraft can safely operate in weather conditions that aircraft limited to visual flight rule (VFR) conditions cannot.- 2

-

We received proposal s from three carriers, Ever ts

-- the incumbent

– Warbelow ’ s, and Wright Air Service, Inc.

, and requested comments from the community and state , with comments due July 1

. O n June 29 we received a request from the community for an extension of the comment period until July 10 . We ha ve received comments , and the issue is ripe for decision.

Carrier Proposal s Each of the carriers proposes nonstop service between Lake Minchumina and Fairbanks for a

two

- year period. Each of t he carrier ’ s single

- engine Cessna 208 Caravan turboprops and twin

engine piston Piper Navajo PA

- 31 aircraft would be IFR equipped; all of the remaining single

engine piston aircraft are not so equipped.

Everts Air Cargo Everts proposes to provide, for the same weekly subsidy, either one round trip per week with a C essna Caravan or, in the alternative, two round trips per week with a Piper PA

- 32 Lance, for an annual subsidy of $74,928

Warbelow’s Air Ventures Option 1 26 weeks of peak and off

- peak service. For the off

- peak period, Warbelow’s would provide one round trip per week with a Cessna 206 aircraft, and during the peak period one round trip per week with either a Cessna Caravan or Piper Navajo. Warbelow’s requests $39,000 annual subsidy for this level of service.

O p tion 2 A n annual total of 78 annual round trips, 39 with a Cessna 206 and 39 with either a Cessna Caravan or Piper Navajo. Warbelow’s requests $58,500 annual subsidy for this level of

service.

Option 3 T wo round trips per week with a Cessna 206 aircraft. Warbelow’s requests $62,400

annual subsi dy for this level of service.

Option 4 O ne round trip per week with a Cessna Caravan aircraft. Warbelow’s requests $46,800 annual subsidy for this level of service.

Wright Air Service Option 1 O ne round trip per week with either a Cessna Caravan or Pipe r Navajo. Wright requests $67,600 annual subsidy for this level of service

.

Option 2 T he service in Option 1 would be supplemented with a Cessna 206 aircraft operating once a week. In other words, the community would receive a total of two round trips each week,

one with IFR

- equipped aircraft and one with single

- engine piston aircraft. Wright request s $93,080 annual subsidy for this service.- 3

-

Community Comment s We solicited comments from the Lake Minchumina Homeowner’s Association and State of

Alas ka’s office of Statewide Aviation. The State of Alaska did not favor a particular carrier, but expressed its support for the E AS program.

We received comments on July 6 from two Lake Minchumina residents, Mr. Dennis Hannan and Ms. Lisa Griffiths, favor ing Wright Air Service and specifically Wright Option 2, two round trips a week for $93,080 annual subsidy.

“And based on our personal experience with all three bidding airlines, Wrights, in our opinion, is far and away the most reputable, reliable, fri endly and accommodating. Wrights also knows the community well. Based on past transactions, as well as word of mouth, we harbor the upmost confidence in their commitment to customer satisfaction. Likewise, we also favor the 2 day a week option believing th at the community's economic viability will improve significantly with more frequent (and reliable) mail and travel opportunities.”

We received initial comments on June 28 from Mr. Thomas Green, Vice President of the Lake
Minchumina Homeowner’s Association support ing the selection of Wright Air Service and Wright’s Option 2. However, a t the request of Mr. Green , we issued a notice extending the

deadline for comments until July 10. We received additional comments f ro m Mr. Green on July 11. In its latest c omments, t he community reversed its earlier recommen d ation to now favor

Warbelow ’ s, either Option 2 or 3.

“Warbelow ’ s came out after we held a community meeting and we were impressed with their detailed submission and options and their interest in helpi ng the community with ideas to help with employment and growth if it so desired. Art was also informative about what they did in other communities and the EAS workings, though recognizing each community is different. We also especially appreciated facts right away about their proposed lower air fares and freight costs as these are a prime consideration for us here trying to survive as 3rd generation Minchuminites with a cabin rental business. Costs are a major factor as well as dependability, safety, and times that fit peoples travel schedules as well as hauling our mail in a timely manner. The awareness of what customer service means is essential. ...on a second call [to Wrights] I was given detailed fare and freight rates by Bob Bursiel that were later f axed to us during our meeting and that were also lower than Everts but higher than Warbelow ’ s, though we understand all [ of the carriers ’ fares] can change as they see fit.

After reviewing the information we feel Warbelow ’ s option #2 or 3 is our first cho ice to meet our needs and Wrights #1 as a second choice since you requested different carriers. We feel lower fares and working with our businesses are critical to increased traffic and a sustainable business and played a huge part in our move to charter more over the past two years as a community. The next option we need is the availability of occasional IFR aircraft as weather indicates to keep people moving... . ”- 4

-

Decision
The selection of Warbelow’s is straightforward. While t here is some community su pport for Warbelow’s and some for Wright Air Service, the support for Warbelow’s is from the Homeowner’s Association, 3 while the support for Wright is from two individual residents. Moreover, either of Warbelow’s two options favored by the homeowner’s ass ociation is less expensive than either of Wright’s Option s.

Between those two Warbelow’s options, w e will select Warbelow’s Option 3 : two round trips per

week , 104 round trips per year, with a Cessna 206 aircraft for $62,400 annual subsidy. This option i s slightly more expensive than the equally favored Option 3, 78 round trips per year, 39

weeks each year with an IFR aircraft and 39 with a VFR aircraft

. 4

We will select Option 3, which entails slightly more subsidy. Option 2 contemplates a 13

- week

per iod each year when there would only be one round trip per week with a VFR aircraft. Option 3 , on the other hand, will provide the greater reliability of two round trips a week year

round. In addition, w e will permit Warbelow’s to substitute

, as necessary
, a single round trip

with an IFR

- equipped aircraft (Piper Navajo or a Cessna Caravan) for two round trips with a

Cessna 206 and receive the same level of compensation, further enhanc ing the reliability of th is option

.

Carrier Fitness

49 U.S.C. 41737(b) r equires that DOT find an air carrier fit, willing, and able to provide reliable service before DOT may subsidize it to provide essential air service. Warbelow’s Air Ventures,
Inc., is subject to the Department’s continuing fitness requirements, and no inf ormation has come to our attention that would cause us to question the carrier ’ s fitness at this time. DOT has contacted the Federal Aviation Administration, and it has raised no concerns that would negatively affect our fitness finding s . DOT therefore c oncludes that the carrier remain s fit to conduct the operations proposed here.

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

- delegated to the

Directo r, Office of Aviation Analysis.

ACCORDINGLY,

1. We select Warbelow’s Air Ven tures, Inc., to provide essential air service at Lake

Minchumina

, Alaska , as described in Appendix B ;

3 It appears that the community support is due , in part, to promises from Warbelow’s that it will offer low fares. However, the community recognizes, consistent with our request for comment, that such promises can only be tentative, and that the Department can not require the carrier to maintain any s pecified fare level.

4 In other words, there would be three levels of service during each annual period: a peak period of two round trips per week, one with IFR aircraft and one with VFR aircraft; a shoulder period with IFR

- only aircraft; and an off

- peak

p eriod of VFR

- only aircraft.- 5

-

2 . We direct Warbelow’s Air Ventures

, 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 or until the Department indicates that the records may be des troyed, 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 . We find that Warbelow’s Air Ventures

, Inc., continue s to be fit, willing and able to operate as a certificated carrier and capable of providing reliable essential air service at Lake Minchumina

, Alaska ;

4 . Th is docket will remain open until further order of the Department; and

5 . We will serve copies of this order on the Office of Statewide Aviation of the Alaska Department of Transportation and Public Facilities, Everts Air Cargo, Inc., Wright Air Service, inc., and Warbelow’s Air Ventures , Inc. , and the community of Lake Minchumina.

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.govAppendix A

Distance to Fairbanks LMA, Lake Minchumina 148 MNT, Minto 50 MLY, Manley Hot Springs 83
RMP, Lake Minchumina 82 CEM, Central 104 IRC, Circle 131 SVS, Stevens Village 90 ANC, Anchorage 261

This map is provided by Sabre ® AirVision TM Profit Essentials and is being used with express permission of the copyright holder,

Sabre Airline Solutions®.Appendix B

Wright Airlines , Inc., Essential Air Service to be Provided to

Lake Minchumina
, Alaska , Dockets OST

- 2008

- 02 37

Effectiv e Period : October 1 , 20 1 0 , through September 30, 2012

. Scheduled Service : Two nonstop round trip s per week to Fairbanks

. Aircraft : 4

- seat Cessna 206 1
Rate per Eligible Flight: $ 300 2
Weekly Ceiling : $ 1, 200 3

Note: The carrier understands that it may forfe it 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 significan t elements of the required service, without prior appro val. 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 cancella tions, 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 per iod, 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 ensur ed 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 ly , 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 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 cessati on. 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 are not currently available for performance under this order beyond September 30, 2010 . The Government’s obligation for performance under this order beyond September 30, 2010 , 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 arise for performance under this order beyond September 30, 2010 , until funds are made available to the Department for performance. If funds are not made available for performance beyond Septemb er 30, 2010 , the Department will provide notice in writing to the carrier.

All claims for payment must be submitted within 60 days of the last day of service provided under this order.

1 For payout purposes, we will assign 9 seats to Piper Navajo or Cessna 208 aircraft.

2 Annual compensation of $62,400 divided by the estimated annual completed departures and arrivals: 4 flights/week x 52 weeks = 208 total.

3 4 flights/week x $ 300

.