### 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 5 th 

### 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 , 201 1

, with or without subsidy.

Background By Order 200 9

- 5

- 4

, May 5 , 2009 , the Department selected Peninsula Airways, Inc.

, (PenAir) to provide subsidized EAS to Akutan

, Alaska

, through April 30 , 201 1

. 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 Proposa ls As the end of the current rate term approach es , we are here by requesting proposals from carriers interested in providing service at Akutan

, with or without subsidy, for the two

- year period beginning May 1 , 201 1 . Carriers should file their proposals by December 7

. S taff will then docket the proposals, thereby making them public. Shortly afterwards, we will provide a summary of the proposals to the community and S tate and as k them to submit their final comments. We will give full consideration to all p roposals 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 w e 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 exceptio ns 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 wit hout 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.

### - 2

-
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 s ervice 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, well

documented proposals that will facilitate their evaluation by the affected community and the Department. We do not anticipate any change in our se lection 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 trip s per week to Akutan with seaplanes or helicopters capable of landi ng at Akutan, which has no landing strip

. However, w e 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 subsi dy requir e ments 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 provi de subsidized essential air service in Alaska , 49 U.S.C. 41733(c) (1) directs us to consider f ive factors. (1) service reliability; (2) contractual and marketing arrangements with a larger carrier at the hub; (3) interline arrangements with a larger carrie r 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 go verning 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 Akuta n, 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.

### - 3

-

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 nondis crimination, 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 ca rriers 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, sho uld 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 proposa ls 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 Directo r, 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

- OST

2000

- 7068

. ” Questions regarding filings may be directed to Kevin Adams at 2 02

- 366

- 1047 or Kevin.Adams@dot.gov ;

2

. Th is D ocket will remain open until further order of the Department; and

3 . We will serve this order on the s ervice l ist for th is Docket.

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

### - 4

-

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.govAppendix 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 ® AirVision TM 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 i t 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 airc raft 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 consider ed 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 circums tances 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 th e 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 Depa rtment 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 Depar tment 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 Depar tment.

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