Order 2014-1-2

Served: January 6, 2014

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 6th day of January, 2014

Essential Air Service at

PORT ALEXANDER, ALASKA DOCKET DOT-OST-1999-6244

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

ORDER RE-SELECTING CARRIER

AND ESTABLISHING SUBSIDY RATES

Summary

By this Order, the Department is re-selecting Harris Aircraft Services, Inc. (“Harris Air”),

to provide Essential Air Service (“EAS”) at Port Alexander, Alaska, at an annual subsidy

rate of $80,647.

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 The service to be provided will be two nonstop round trips per week to 

Sitka, Alaska, using 3-seat Cessna 185 aircraft, for the two-year period from March 1, 

2014, through February 28, 2016.

Background

By Order 2012-2-15, issued on February 21, 2012, the Department re-selected Harris Air to 

provide subsidized EAS consisting of two nonstop round trips per week to Sitka, using 

3-seat Cessna 185 aircraft, for the two-year period ending February 28, 2014, at an annual 

subsidy rate of $75,293. 

 1

 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds.
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In anticipation of the end of the current rate term, the Department issued Order 2013-9-6, 

on September 9, 2013, soliciting proposals to provide EAS, with or without subsidy 

support, at Port Alexander for a new two-year term. In response to that Order, Harris Air 

(the incumbent and only air carrier to respond) submitted a proposal offering to continue to 

provide the same level of service it currently operates, consisting of two nonstop round 

trips each week to Sitka with 3-seat Cessna 185 aircraft. 

That proposal, as well as the complete public file for EAS at Port Alexander, may be 

accessed online through the Federal Dockets Management System at: 

http://www.regulations.gov by entering “DOT-OST-1999-6244” in the “SEARCH for: 

Rules, Comments, Adjudications or Supporting Documents:” field. 

Community Comments

On October 18, 2013, the Department requested community comments regarding this 

carrier-selection case. In response, by letter dated November 7, 2013, Debra Rose Gifford, 

Mayor of Port Alexander, submitted a letter stating “Harris Aircraft has done a fine job in 

the past and we are in support of them serving our community again.”

Decision

The decision is straightforward and clearly points to the re-selection of Harris Air to 

continue to provide EAS at Port Alexander for the period of March 1, 2014, through 

February 28, 2016, at an annual subsidy rate of $80,647. The air carrier will maintain its 

current level of service, consisting of two nonstop round trips per week to Sitka, utilizing 

3-seat Cessna 185 aircraft. We find that the subsidy rate is reasonable, and the air carrier’s 

performance continues to be satisfactory. 

Air Carrier Fitness

On April 16, 2013, Harris Air submitted an application for the determination of its fitness 

to conduct commuter operations. That application is currently pending before the 

Department’s Air Carrier Fitness division. However, no information has come to our 

attention that would cause us to question the ability of Harris Air to conduct EAS at Port 

Alexander. Additionally, we have contacted the Federal Aviation Administration, and it 

has raised no concerns regarding Harris Air’s current operations as an air taxi. 

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

ACCORDINGLY,

1. The Department re-selects Harris Aircraft Services, Inc., at Port Alexander, Alaska, and 

establishes the subsidy rate, as detailed in Appendix B;

2. We direct Harris Aircraft Services, 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 
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must be retained. The air carrier may forfeit its compensation for any claim that is not 

supported under the terms of this Order;

3. We find that Harris Aircraft Services, Inc. is fit, willing and able to operate as an air 

taxi, and capable of providing reliable Essential Air Service at Port Alexander, Alaska;

4. Docket DOT-OST-1999-6244 will remain open pending further Department action; and

5. We will serve copies of this Order on the Mayor and Airport Manager of Port 

Alexander, the Alaska Department of Transportation and Public Facilities, and Harris 

Aircraft Services, Inc.

By:

SUSAN L. KURLAND

 Assistant Secretary for

 Aviation and International Affairs

(SEAL)

An electronic version of this document is available at

http://www.regulations.gov
Appendix A

ANNUAL COMPENSATION REQUIREMENT FOR

ESSENTIAL AIR SERVICE AT 

PORT ALEXANDER, ALASKA

EAS with Cessna 185; Two Round Trips/Week at 52 Weeks per year with a Seat Fare $130.23

Aircraft type Cessna 185

Block Hours 153

Revenues

Passenger $ 41,022

Mail $ -

Cargo $ 1,500 

 Total Revenue $ 42,522

Flying operations $ 29,920

Fuel &Oil $ 20,262

Insurance $ 7,248

Maintenance $ 14,313

Depreciation $ 6,460

Direct Expenses Total $ 78,203

Indirect expenses =50% of

Direct $ 39,101

Total Operating Expense $ 117,304

Return at 5% $ 5,865

Total Economic Cost $ 123,169

Total Revenue $ 42,522

Annual subsidy need at 100% 

completion $ 80,647

Notes

1. 40 minutes per flight x 4 flights/week x 52 weeks x 1.1 weather turn around= 153 153.00 Block hours

2. Number of passengers per year 315 x $ 130.23 /passenger =$ 41,022.45 Pax Revenue

3. No mail. It is presumed the Eyak will carry all of the mail 0.00 Mail Revenue

4. Minimal freight. It is presumed the Eyak will carry the bulk of freight 1500.00 Freight Revenue

5. Flying operations $ 105,600/year divided by 540 flight hours=$ 195.56 Flying Ops cost

6. 16 GPH x $ 6.97/gal plus oil = $/hour 132.43 fuel/Oil

7. Insurance Liability $8,900+ $13,680+3rd PL $3,000 = 25,580 divided by 540 47.37 Insurance

8. Depreciation $22,800/year divided by 540 hours=$/hr 42.22 depreciation

9. Maintenance expenses divided by flight hours= 50,517 93.55 Maintenance

Parts 19,517

Labor 31,000

Total 50,517
 Appendix B

Harris Aircraft Services, Inc.

Essential Air Service to be Provided at Port Alexander, Alaska

Effective Period: March 1, 2014, through February 28, 2016

Scheduled Service: Two nonstop round trips per week to Sitka

Aircraft: 3-Seat Cessna 185

Annual Compensation: $80,647

Rate per Eligible Flight: $3881

Weekly Ceiling for each community: $1,5522

Note: The air 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 air 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 air 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 air 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 circumstances warrant, the Department 

may locate and select a replacement air carrier to provide service on these routes. The air 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 amounts or at the stipulated service levels, the air 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 air 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 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 January 15, 2014. The Government’s 

obligation for performance under this Order beyond January 15, 2014, 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 January 15, 2014, until funds are made available to the Department for 

performance. If sufficient funds are not made available for performance beyond January 15, 2014, 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 31st; August claims must be submitted by November 30th, and so on.

 1 Annual compensation of $80,647 divided by 208 annual departures: 4 flights per week x 52 weeks. 2 4 arrivals and departures per week multiplied by $388 per flight.