### O rder 2012

- 4

- 13

Served: April 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 April , 2012

Essential Air Service at

EXCURSION INLET, ALASKA

KAKE, ALASKA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 2002

- 12014

DOCKET DOT

- OST

- 2008

- 0217



## ORDER REQUESTING PROPOSALS

Summary

By this O rder, the Departme nt is requesting proposals from airlines interested in providing

Essential Air S ervice (EAS) at Excursion Inlet and Kake

, Alaska

, for a new rate term beginning

September 1, 2012 , with or without subsidy. Pr oposals are due by May 8

, 2012 . (See

Appendix A for a map.)

Background

By Order 200 10

- 8

- 9

, August 17

, 2010, the Department selected Alaska Juneau Aeronautics,

Inc.

, operating as Wings of Alaska, Inc. (Wings ), to provide EAS at Excursion Inlet for an

annual subsidy rate of $33,919, and Air Excur sions LLC (Air Excursions) at Kak e for a first

year subsidy rate of $213,405 and a second

- year subsidy rate of $229,939 for the two

- year

period from September 1, 2010

, through August 31, 2012.

Request for Proposals

As the end of the current rate term approaches, we are here requesting pro posals from air

ca rriers interested in providing EAS at Excursion Inlet and Kake

, with or without subsidy

support, for a new rate term beginning September 1, 2012

. Airlines should file their proposals

no later than May 8, 2012 . After that date, our staff will docket proposals, thereby making

them public, and shortly afterwards will provide a summary of the proposals to the

communities and ask them for their final comments. We will give full consideration to all

proposals filed in a timely manner. 1

1 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to provide

Essential Air S ervice without subsidy and we determine that service can be reliably provided without such

### - 2

-

We ar e 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. We expect

proposals to adequately describe the service being proposed and the annual amoun t 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 community and the Department. 2



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

proposals will also be their final and only proposals. We retain the discretion to negotiate

proposals with carriers when we deem it desirable. We also retain th e discretion to reject

outright all unreasonable or unrealistic proposals and solicit a new round of proposals.

Carrier proposals should be submitted to the Department with all materials merged into a single

document. In addition, because the document wi ll be published on Regulations.gov, each page

should be formatted to be viewed online.

With specific respect to these communities

, air carriers should provide sufficient capacity to

accommodate historical levels of traffic

. In order to help carriers make traffic and revenue

projections, we have included historical traffic in Appendix B. During the third quarter of

2011 , the p eak quarter for both communities , Wings generated the equivalent of 64 inbound

passengers (including freight and mail) to Excursion Inlet , and Air Excursions g enerated the

equivalent of 663 inbound passengers (including freight and mail) to Kake

. For Excursion

Inlet, we are requesting proposals for status

- quo service of three round trips a week to Juneau

during the peak season and one round trip a week during off

- peak season with 10

- passenger or

less aircraft , or comparable capacity levels

. For Kake, we are requesting status

- quo service of

14 round trips per week to Juneau during peak season and 7 round trips a week during off

- peak

season using 10

- se at or less aircraft , or comparable capacity levels. 3 

### As always, we will

formally solicit the communities ’ views on any service options we receive before making a

long

- term carrier se le ction decision. The community and air carriers are encouraged to work

together in advance of the due date for proposals to craft a service pattern that is desirable to

the community and meets the operational needs of the airline interested in submitting a

proposal.

compensation, we typically do not proceed with the carrier

- selection case. Instead we simply rely on that carrier’s

su bsidy

- free service as proposed.

2 In selecting a carrier to provide subsidized Essential Air Service in Alaska , 49 U.S.C. 41733(c )(1) directs us to

consider five factors: (1) scheduled service reliability; (2) contractual 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 fficials

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

addition, the Consolidated Appropriations Act, 2008, Public Law 110

- 161, 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. Interested carriers should also be aware that our general

provisions governing Ess ential Air Service will be included in the selection Order as part of our authorization of

subsidy for the selected service. Appendix C of this Order contains those general provisions.

3 Carriers are free to set their peak

- period service at different peri ods based on the peak traffic demand as shown in

Appendix B.

### - 3

-

Other Car rier Requirements

The Department is responsible for implementing various Federal statutes governing lobbying

activities, drug

- free workplaces and nondiscrimination. 4 

### Consequently, all carriers receiving

Federal subsidy to support EAS must certify that the y are in compliance with Department

regulations regarding drug

- free workplaces and nondiscrimination, and 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 gover ning lobbying activities. All carriers that plan to submit

proposals involving subsidy should submit the required certifications along with their

proposals. Interested carriers requiring more detailed information regarding these

requirements, as well as copies of the certifications, should contact the Office of Aviation

Analysis at (202) 366

- 5903. The Department is prohibited from paying subsidy to carriers that

do not submit these documents. 5



### Community and State Comments

Civic officials are welcome to submit comments on the proposals at any time. As noted earlier,

we will provide a summary of the proposals to the civic parties and ask them to submit their

final comments shortly after May 8, 2012 , the due date for carrier proposals.

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

- delegated to the

Director, Office of Aviation Analysis.

ACCORDINGLY,

1. We request that ca rriers interested in providing Essential Air S ervice at Excursion Inlet and

Kake

, Alaska

, submit their proposa ls, with or without subsidy requests, no later than

May 8, 2012 . The proposals should be e

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

Provide Essential Air Service at Excursion Inlet and Kake , Alaska ”; 6



### 2. These docket s will remain open until further order of the Department; and

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

– New restrictions on lobbying; (2) 49 CFR

Part 21

– Nondiscrimination in federally

- assisted programs of the Department of Tr ansportation

– Effectuation of

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

– Nondiscrimination on the basis of disability in programs

and activities receiving or benefiting from Federal financial assistance; and 14 CFR Part 382

– Nondiscrimina tion

on the basis of disability in air travel; and (3) 49 CFR Part 29

– Government

- wide debarment and suspension (non

procurement) and government

- wide requirements for drug

- free workplace (grants).

5 The certifications are also available on the web at htt p://ostpxweb.dot.gov/aviation/index.html.

6 Questions regarding filings in response to this Order should be directed to Michael Martin at 202

- 366

- 6494, or

via email at michael.f.martin@dot.gov

.

### - 4

-

3. The Department will serve a copy of this O rder on the community leaders of Excursion Inlet

and Kake , the Alaska Department of Transportation, Alaska Juneau Aeronautics, Inc.

, d/b/a

Wings of Alaska, Air Excursions LLC, and the parties listed in Appendix C

.

Persons entitled to petition the Department for review of this order under the Department’s

Aviation Economic Regulations, 14 CFR 385.50, must file such petitions within ten (10) days

after the date of service of this order.

Th is order will be effective 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 line at

www.regulations.gov

## Appendix A



# Area Map

## APPENDIX B

Page 1of 2

Historical Traffic

- Excursion Inlet, Alaska

Origination Destination Origin and Destination

Year Quarter Pax Freight

PEQ Mail PEQ Total Pax Freight

PEQ Mail PEQ Total Pax Freight

PEQ Mail

PEQ Total

2009 1 0 0 0 0 3 0 3 6 3 0 3 6

2009 2 7 0 1 8 3 10 16 29 10 10 17 37

2009 3 14 0 9 23 7 6 4 17 21 6 13 40

2009 4 0 0 0 0 0 1 2 3 0 1 2 3

Total 21 0 10 31 13 17 25 55 34 17 35 86

2010 1 6 0 0 6 4 1 3 8 10 1 3 14

2010 2 2 0 1 3 4 2 12 18 6 2 13 21

2010 3 4 0 9 13 12 6 15 33 16 6 24 46

2010 4 0 0 1 1 0 8 7 15 0 8 8 16

Total 12 0 11 23 20 17 37 74 32 17 48 97

2011 1 2 0 1 3 2 3 4 9 4 3 5 12

2011 2 2 0 1 3 7 4 13 24 9 4 14 27

2011 3 8 0 16 24 15 6 18 39 23 6 34 63

2011 4 3 0 1 4 1 1 3 5 4 1 4 9

Total 15 0 19 34 25 14 38 77 40 14 57 111

## APPENDIX B

Page 2of 2

Historical Traffic

- Kake, Alaska

Origination Destination Origin and Destination

Year Quarter Pax Freight

PEQ Mail PEQ Total Pax Freight

PEQ Mail PEQ Total Pax Freight

PEQ Mail

PEQ Total

2009 1 152 9 17 178 159 50 98 307 311 59 115 485

2009 2 405 58 19 481 396 69 104 569 801 127 122 1050

2009 3 356 49 23 428 373 65 111 549 729 114 134 977

2009 4 283 55 25 363 219 71 123 413 502 126 148 775

Total 1196 171 82 1449 1147 255 436 1837 2343 426 518 3287

2010 1 152 11 19 182 213 55 93 361 365 65 113 543

2010 2 415 49 22 485 429 73 96 598 844 122 117 1083

2010 3 402 84 15 501 395 63 74 532 797 148 89 1033

2010 4 247 37 27 311 250 73 138 461 497 110 165 772

Total 1216 180 83 1479 1287 265 401 1952 2503 445 484 3432

2011 1 176 14 22 212 248 50 114 412 424 65 136 625

2011 2 416 64 30 510 443 99 112 654 859 162 142 1163

2011 3 441 67 23 531 431 109 123 663 872 176 146 1194

2011 4 340 39 27 406 365 89 143 597 705 128 170 1003

Total 1373 185 102 1660 1487 347 492 2326 2860 531 594 3985

## 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 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 air craft 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 conside red 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 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 circum stances 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 t he 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 Dep artment 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 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 Depa rtment

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 solicitatio n beyond [DATE] . The

Department’s obligation for performance under this soli citation beyond [DATE] , is contingent

upon the availability of appropriated funds from which payment for services can be made. No

legal liability on the part of the Government fo r any payment may arise for performance under

this order beyond [DATE] , until funds are made available to the Department for performance. If

funds are not made available for performance beyond [DATE] , the carrier will receive notice in

writing by the Depa rtment.

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

under this order.