Order 2010-11-3

Served: November 5, 2010

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 5th of November, 2010

Essential Air Service at

AKUTAN, ALASKA

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

DOCKET OST-2000-7068

ORDER REQUESTING PROPOSALS

Summary

By this order, the Department is requesting proposals by December 7, 2010, from carriers 

interested in providing essential air service (EAS) at Akutan, Alaska, for a new two-year 

period, beginning May 1, 2011, with or without subsidy. 

Background

By Order 2009-5-4, May 5, 2009, the Department selected Peninsula Airways, Inc., (PenAir) 

to provide subsidized EAS to Akutan, Alaska, through April 30, 2011. Under that order, the 

Department authorized subsidy for PenAir consisting of eleven nonstop round trips per week 

to Dutch Harbor. All of the service was to be provided with 9-seat Grumman Goose aircraft 

for a total annual subsidy of $654,964. 

Request for Proposals

As the end of the current rate term approaches, we are hereby requesting proposals from 

carriers interested in providing service at Akutan, with or without subsidy, for the two-year 

period beginning May 1, 2011. Carriers should file their proposals by December 7. Staff will 

then docket the proposals, thereby making them public. Shortly afterwards, we will provide a 

summary of the proposals to the community and State and ask them to submit their final 

comments. We will give full consideration to all proposals filed in a timely manner.1 

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 the discretion to reject 

outright all unreasonable or unrealistic proposals and, if necessary, solicit a new round of 

proposals. However, we anticipate that negotiation or rejection will remain only 

occasional exceptions to the rule.

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

provide essential air service without subsidy and we determine that service can be reliably provided without 

such compensation, we do not proceed with the carrier-selection case. Instead, we simply rely on that 

carrier’s subsidy-free service as proposed.
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We are 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 for 

their proposals. We expect proposals to adequately describe the service being proposed 

and the annual amount 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, welldocumented proposals that will facilitate their evaluation by the affected community and 

the Department. We do not anticipate any change in our selection criteria, or in the 

general provisions governing subsidy payments for essential air service.2 

With specific respect to Akutan, we expect proposals consisting of eleven round trips per 

week to Akutan with seaplanes or helicopters capable of landing at Akutan, which has no 

landing strip. However, we would not dismiss any proposal out of hand without first 

consulting with the community officials. 

We encourage proposals that meet the community’s requirements in an efficient manner. 

Carriers are also welcome to propose more than one service option, if they choose; they

need not limit themselves to the current service pattern if they envision other, potentially

more attractive service possibilities – different hubs, or seasonal service – with subsidy

requirements that remain competitive.

We encourage carriers to work with the community as they are preparing their proposals 

so that they can craft them to best meet the community’s needs. As always, we will fully 

consider the community’s views before making a long-term carrier-selection decision. 

New Filing Procedures

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

single document. In addition, because the document will be published on 

Regulations.gov, each page should be formatted to be viewed online.

Historical Traffic

In order to assist carriers in making their traffic and revenue projections, we have 

included historical traffic for the community in Appendix B. For the year ended 

September 30, 2010, the most recent annual period, Akutan generated an average of 

155.4 deplaned passenger equivalents per month, with a peak of 308.3 in June.3

 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) service reliability; (2) contractual and marketing arrangements with a larger 

carrier at the hub; (3) interline arrangements with a larger carrier at the hub; (4) community views; and 

(5) experience of the applicant in providing, in Alaska, scheduled air service or significant non-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 essential 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 We have used deplanements, because deplanements at Akutan, as is typical of bush Alaska, exceed 

enplanements. Also, we have used passenger equivalents, where 200 pounds of mail or freight is one 

passenger equivalent, to reflect the importance of mail and freight in Alaska.
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Other Carrier 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 essential air service must certify that they 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 governing lobbying activities. Because the 

Department is prohibited from paying subsidy to carriers that do not submit these documents, 

the selected carrier will be required to submit them in order to receive subsidy. 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.

Community Comments

Civic officials and the State 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 December 7, the due date for carrier 

proposals.

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

Director, Office of Aviation Analysis.

ACCORDINGLY,

1. The Department requests proposals from carriers interested in providing essential air 

service at Akutan, Alaska. Carriers should submit their proposals, with subsidy if 

necessary, by December 7, 2010. Proposals should be emailed to EAS@dot.gov, with the 

title “Proposal to Provide Essential Air Service at Akutan, Alaska, Docket DOT-OST2000-7068.” Questions regarding filings may be directed to Kevin Adams at 202-366-1047

or Kevin.Adams@dot.gov;

2. This Docket will remain open until further order of the Department; and

3. We will serve this order on the service list for this Docket.

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

Department’s Regulations, 14 CFR 385.50, must file such petitions within ten (10) days 

after the date of service of this order.

 4 The certifications are available on the web at http://ostpxweb.dot.gov/aviation/index.html.
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This 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 the World Wide Web at

http://www.regulations.gov
Appendix A

Nonstop Great Circle Miles from Akutan (KQA)

Dutch Harbor, DUT, 35

Anchorage, (ANC), 759

Nikolski, (IKO) 151

Atka, (AKB) 374

Adak, (ADK) 478

St. George, (STG) 226

St. Paul , (SNP 272

This map is provided by Sabre® AirVisionTM Profit Essentials and is being used with express permission of the 

copyright holder, Sabre Airline Solutions®.
Appendix B

Historical Traffic at Akutan, Soutrce T-100 Market Report

Origin of Akutan (KQA) Dest of Akutan (KQA) Origin & Dest of Akutan (KQA)

Year Month Pax. Frt. Mail ∑ PEQs Pax. Frt. Mail ∑ PEQs Pax. Frt. Mail ∑ PEQs

2007 10 117 1.5 6.3 124.8 129 41.0 37.9 207.9 246 42.5 44.2 332.7

2007 11 425 0.2 6.1 431.2 112 37.2 46.6 195.8 537 37.4 52.7 627.0

2007 12 123 2.3 6.5 131.8 149 32.6 50.6 232.2 272 34.9 57.1 364.0

2008 1 61 19.8 10.8 91.6 273 17.8 46.6 337.4 334 37.6 57.4 429.0

2008 2 74 6.4 9.5 89.9 89 24.5 52.7 166.2 163 30.9 62.2 256.1

2008 3 46 3.8 10.1 60.0 48 18.0 54.6 120.6 94 21.8 64.7 180.6

2008 4 133 0.5 3.6 137.1 54 5.9 29.1 89.0 187 6.4 32.7 226.1

2008 5 117 0.3 7.2 124.5 126 19.1 36.2 181.3 243 19.4 43.4 305.8

2008 6 65 3.5 7.3 75.8 233 8.4 41.3 282.7 298 11.9 48.6 358.5

2008 7 91 2.0 9.2 102.2 115 38.4 47.8 201.2 206 40.4 57.0 303.4

2008 8 61 3.3 4.4 68.7 67 14.6 47.7 129.3 128 17.9 52.1 198.0

2008 9 140 1.9 9.1 151.1 107 19.0 50.2 176.2 247 20.9 59.3 327.3

1,453 45.5 90.1 1,588.7 1,502 276.5 541.3 2,319.8 2,955 322 631.4 3,908.5

2008 10 116 6.6 10.1 132.7 145 17.8 45.3 208.1 261 24.4 55.4 340.8

2008 11 376 2.6 5.3 383.9 66 22.8 42.4 131.1 442 25.4 47.7 515.0

2008 12 63 0.1 5.3 68.4 117 11.8 39.4 168.2 180 11.9 44.7 236.6

2009 1 56 0.3 6.1 62.4 314 11.6 34.3 359.9 370 11.9 40.4 422.3

2009 2 69 3.2 7.6 79.8 59 16.0 52.7 127.7 128 19.2 60.3 207.5

2009 3 90 9.9 6.8 106.6 35 9.2 31.1 75.3 125 19.1 37.9 181.9

2009 4 209 3.1 5.7 217.8 26 9.1 23.8 58.8 235 12.2 29.5 276.6

2009 5 56 0.5 8.1 64.6 126 22.3 23.2 171.5 182 22.8 31.3 236.1

2009 6 59 0.5 11.4 70.9 206 15.5 42.4 263.9 265 16.0 53.8 334.8

2009 7 109 2.1 18.2 129.3 98 20.2 55.3 173.5 207 22.3 73.5 302.8

2009 8 76 7.0 10.0 93.0 82 10.2 46.6 138.8 158 17.2 56.6 231.8

2009 9 108 4.8 7.1 119.9 80 20.0 56.9 156.8 188 24.8 64.0 276.7

1,387 40.7 101.7 1,529.3 1,354 186.5 493.4 2,033.6 2,741 227.2 595.1 3,562.9

2009 10 294 2.7 14.3 311.0 105 13.9 36.6 155.5 399 16.6 50.9 466.5

2009 11 36 0.0 5.5 41.5 23 4.0 24.9 51.9 59 4.0 30.4 93.4

2009 12 38 0.9 4.7 43.6 92 10.0 46.1 148.1 130 10.9 50.8 191.7

2010 1 32 0.2 4.3 36.4 169 8.3 36.4 213.7 201 8.5 40.7 250.1

2010 2 74 29.3 6.0 109.2 77 19.7 39.9 136.6 151 49.0 45.9 245.8

2010 3 72 12.1 13.6 97.7 60 13.3 45.3 118.6 132 25.4 58.9 216.3

2010 4 150 0.2 11.3 161.5 34 5.3 36.6 76.0 184 5.5 47.9 237.5

2010 5 286 1.2 11.3 298.5 121 22.9 40.2 184.0 407 24.1 51.5 482.5

2010 6 61 0.2 5.2 66.4 243 14.4 50.9 308.3 304 14.6 56.1 374.7

2010 7 95 0.3 10.0 105.3 107 42.2 51.4 200.6 202 42.5 61.4 305.9

2010 8 57 0.0 11.3 68.3 70 15.8 70.3 156.1 127 15.8 81.6 224.4

2010 9 58 0.0 7.4 65.4 56 16.1 43.0 115.1 114 16.1 50.4 180.5

1,253 47.1 104.9 1,404.8 1,157 185.9 521.6 1,864.5 2,410 233 626.5 3,269.3

Note: 200 pounds of mail or freight is one passenger equivalent (PEQ).
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 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 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 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 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 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 

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 solicitation beyond 

[DATE]. The Department’s obligation for performance under this solicitation 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 for 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 

Department.

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

provided under this order