BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

In the matter of 

Essential Air Service at 

HYDABURG, ALASKA 

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

SERVICE PROPOSAL OF 

PACIFIC AIRWAYS, INC. 

DOCKET OST-1999-6245 

Communications with respect to this document should be addressed to: 

StephenS. Montanus 

Pacific Airways, Inc. 

P.O. Box 5158 

Ketchikan, AK 99901 

smontanus@ flvoacificairways.com 

May20, 2015 
BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

In the matter of 

Essential Air Service at 

HYDABURG, ALASKA 

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

SERVICE PROPOSAL OF 

PACIFIC AIRWAYS, INC. 

DOCKET OST-1999-6245 

Pacific Airways, Inc. herein submits its proposal to provide Essential Air Service at 

Hydaburg, Alaska pursuant to Order 2015-4-9 requesting proposals. Pacific Airways is 

an established carrier with a sound track record of providing safe and reliable air 

transportation to communities in the same region and with the same requirements and 

expectations as the community of Hydaburg. 

This proposal utilizes Department traffic data from the previous three years and, for 

consistency with the proposal term, expenses and revenues are based on a twelve-month 

period ending October 31st. 

1 
Pacific Airways proposes a level rate for either the two-year term or the four-year term. 

The justification for this level rate is the delay in mail rate calculations catching up with 

actual operating expenses, as has been pointed out in previous year's proposals. 

Service and Reliability 

Pacific Airways has been in operation since April of 2000 and a Certificated Air Carrier 

since December of 2007. Over the last fifteen years the company has operated scheduled 

and on demand services throughout southern Southeast Alaska. This has included 

uninterrupted year-round service to the communities of Craig, Hollis, Thome Bay, and 

Metlakatla. Additionally, we are the sole airline servicing the communities of Meyers 

Chuck and Kasaan. Unlike our competitors, our primary business focus is on providing 

safe reliable transportation for passengers, freight, and mail, rather than cruise line 

focused tour operations. Pacific's operation is based in Ketchikan, Alaska and we are the 

only carrier in the market that provides fully staffed year round stations at all our primary 

destinations. We are also the only air service that maintains fully staffed facilities at both 

the Ketchikan International Airport and the Ketchikan Waterfront. 

Since its inception Pacific Airways has demonstrated an average on-time performance 

ratio of over 93%, excluding weather delays, and an average dispatch reliability of over 

95%, excluding weather cancellations. 

Our service is provided using a fleet of four DeHavilland DHC-2 Beavers on floats. 

These aircraft provide a seating capacity of six and are ideally suited for the destinations 

2 
we serve. The majority of our stations provide courtesy van service for delivery of freight 

and mail as well as passenger drop off and pick up. 

We are an active participant in the Medallion Safety Program and the FAA Capstone 

Program and were a founding participant in both programs. 

Hub Interline Arrangements 

Pacific is the only carrier based in Ketchikan with a fully staffed year-round office and 

counter located at the Ketchikan International Airport. We have built a strong partner 

relationship with Alaska Airlines which includes direct coordination when either carrier 

is experiencing delays or cancellations, contract maintenance services for Alaska 

Airlines, and baggage expediting. We also maintain a through freight agreement with 

Alaska Airlines for point-to-point freight transportation utilizing both carriers. Delta 

Airlines has recently inaugurated service into Ketchikan and we have established the 

same passenger, freight, and baggage arrangements with them as well. Currently, no 

carrier in the Ketchikan market provides a through ticketing arrangement with Alaska 

Airlines or Delta Airlines. 

Community Marketing 

Pacific Airway's fifteen years of scheduled service to communities throughout Prince of 

Wales Island means that most of the residents of Hydaburg are already familiar with our 

operation. Many of the businesses and residents of Hydaburg already utilize our service 

out of other communities such as Craig and Hollis. This existing familiarity makes the 

3 
introduction of our service a relatively simple matter. Marketing of our service would 

include the traditional routes of radio and newspaper. Additionally, service would be 

marketed through our website and social media sites. Pacific Airways maintains existing 

advertising accounts with the local newspaper as well as local radio stations. These 

existing accounts would allow for quick and simple announcement of inaugural service as 

well as ongoing marketing of the service. 

In the month prior to beginning service, in addition to the marketing routes described 

above, Pacific would launch a direct mail campaign to all the residents of Hydaburg as 

well as the residents of Craig, Hollis, and Ketchikan. During this time period 

management and operations staff would schedule community meetings to answer 

residents questions and address the community's specific needs. 

Qualifications 

Pacific Airways is fit, willing, and able to provide the service outlined in this proposal. 

Since receiving certification by the Department in 2007 as an Air Carrier, Pacific has 

been current and timely in all required reporting. There has been no change in key 

personnel and no substantial changes in the company since the last fitness review. Pacific 

is in full compliance with all federal statutes relating to a drug free workplace, antidiscrimination, and lobbying activities and required Department certifications can be 

found in Appendix B. 

4 
Methodology 

Financial projections found in Appendix A were computed utilizing normalized traffic 

data from the previous three years. This data indicates that traffic volumes into and out of 

Hydaburg, Alaska have remained generally stable in recent years. There appears to be 

nothing foreseeable that would alter this level. Therefore a statistical average was used as 

a baseline to calculate traffic. This baseline traffic was then applied to a three roundtrip 

per week schedule pattern to compute projected revenues and expenses. 

2014 traffic statistics for Hydaburg, as filed by the currently selected carrier, include 

passenger and freight traffic traveling between Hydaburg and the Phoenix Logging camp 

in Grace Harbor. This camp is due to close in the next several months. Therefore, this 

traffic was removed when calculating the initial traffic baseline. 

Operating expenses were calculated using the Department's methodology for determining 

mail rates. Direct operating expenses were calculated based on forecasted block hours, 

traffic and departure related expenses were calculated based on forecasted departures, and 

capacity related expenses were calculated using a ratio of all other expenses. The capacity 

related expense ratio is the average historic ratio experienced by Pacific Airways. The 

revenue and expense projections were increased by a rate of 5% per annum for the entire 

four-year forecast period. 

5 
WHEREFORE: Pacific Airways, Inc. proposes to provide Essential Air Service to the 

community of Hydaburg, Alaska at a frequency of 3 roundtrips per week at an annual 

subsidy rate of $85,226 per annum on a two-year term or $93,952 per annum on a fouryear term. This service would be provided using our fleet of four DeHavilland DHC-2 

Beaver seaplanes. Pacific Airways would support either a two-year or four-year term for 

the subsidy, both options of which have been supported by the Department in the past. 

Respectfully submitted by, 

Pacific Airways, Inc. 

~Montanus 

~/~ 

President 

Pacific Airways, Inc. 

May20, 2015 

6 
__ j__ __________ ______!_ ---- ------- ---

Pacific Airways, Inc. 

Proposal - Essential Air Service at Hydaburg, Alaska 

Requested and Proposed Operations (Three Round-Trip Flights per Week.) 

Ketchikan to Hydabut·g 

Hydaburg to Ketchikan 

Total 

DIRECT EXPEi">l"SES 

.Pilot and Copilot 

Aircraft Fuel & Oil 

Hllll and Liability Insurance 

---l Maintenance ofFlig1ltE'qjuipment 

Depreciation/Rental ofHigltd Equipment 

TOH.L DIRECT EXPENSES 

INDIRECT EXPENSES 

l'riilffic Related 

Depa.rtu.re/Statien 

CapacityJAElnisi:ram·e 

TOT.>\L INDIRECT L'iil':E!\TSES 

TOBL OPERlt.TING EXE'fNSES 

PROFIT AT 5% i\t..!!.RGIN 

TOTiil. EJll'L'"I.iSES 

Annwtl. Avg. Block per Total Block Total Block 

Depllrtures Segment (min) Time {min) Hours 

156 

156 

312 

Block 

Hours 

182 

182 

1&2 

1&2 

182 

Deparrures 

312 

311 

.,., "~ 35 

70 

5460 

5460 

1092tl 

91 

91 

1'82. 

Projected Costs -12 Months Ending 10/31 

Cost!Hr 2016 211Jl7 2018 

ll:Ol 24.371.56 

)6_91 28.567.25 

0.8t'i 8.547.90 

i{l_27 21.682.78 

fU3 11,698.19 

-- - ---- -- 

Costn>epartnre=======================================================

1&.55 5,181.60 6,076.98 6,380.83 

6159 19,528.08 20_54:14.4'8 21_529.71 

20~·'0 2.2;112..69 23~&6..33 24:355J)4 

41,58%:37 49,%1:79 52,4%.18 

ll33,636.Jl5 

6,@l .. Sll 

l4llil',3ll7 .. 96 

ll41{!!,3 ].7 .. 9>6 

i',IB,ll5 .. ~{!' ]47,333 .. 8:6 

147,333.86 

7,34!6.69 

]54,700.55 
00 

Pacific Airways, Inc. 

Pmposal - Essential Air Service at Hydaburg, Alaska 

Requested and Proposed Operations (fhree Round-Trip Flights per Week.) 

TRAFFIC 

Passengers 

Freigltt 

Mail 

Total 

Per Unit KetChikan tt~ Rate Hydaburg 

130.00 15 

0.85 3900 

1.19 36000 

Hydaburg fj) 

Ketclllkan 

11 

T Gtal R

6

400 3

5500 49

59,

Projected Revenues -12 Mont11s Emling 10131 

OPER.-\TING REVE:."'\'lJES 

Passeagers 

Fr-eight 

llaU 

TOTAL OPERATING REVE""'Ill.J"ES 

TOTAL EXPENSES 

PROPOSED Sl...lBSID~ 

ROLl\i"D TRll'' DiEF~-'rn:.IlJRES 

PR.OPOS:En SUBSffitY PER Dfll~.lffi.Th'RE 

2016 .2017 2618 

6,110.00 6,415.50 6,736.28 

3,655J)Q 3"!'837.75 4,019.64 

49,385.00 51,854.25 54,446.96 

59,150.00 62,l07.5J!lt 65.2 u.s:s 

l4Ml7.% 147 ,333.86· 154,700.55 

81,167.96 85,2.26.36 8:9•,4-87.68 

156 156 156 

520.31 54-6 • .32 573.641 

7

4

:5

68:

162,

9!3
Appendix B - Compliance Certifications 

Page Intentionally 

Left Blank 

9 
UNITED STATES OF AMERICA 

DEPART:.\IENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

OFFICE OF AVIATIOI\ ANALYSIS 

TITLE VI ASSURANCE 

(Implementing Title VI ofthe Civil Rights Act of1964, as amended) 

ASSURA!'ICE CONCERNING NONDISCRIMINATION ON THE 

BASIS OF DISABILITY II" FEDERALLY-ASSISTED PROGRAMS 

AND ACTIVITIES RECEIVING OR BENEFITING FROM 

FEDERAL FINANCIAL ASSISTANCE 

(Implementing the Rehabilitation Act of 1973, as amended, and the 

Air Carrier Access Act of 1986) 

49 CFR Parts 21 and 27 and 14 CFR Parts 271, and 382 

PfiC-lfl(. A JfJ..dfiY::,; J)Jl:., (the Recipient) HEREBY AGREES THAT. 

(Name of Recipient) 1 

" 

I. As a condition to receiving any Federal tlnancial assistance from the 

Department of Transportation. it \~>,:ill comply: \\ith Title VI of the CiYil Rights Act of 196-L 

as amended. 42 U.S.C. 2000d--42 U.S.C. 2000d-4; all requirements imposed by or pursuant 

to: Title 49, Code of Federal Regulations. Pan 21. Nondiscrimination in Federally-Assisted 

Programs of the Department of Transportation--Effectuation of Title VI of the Ci\il Rights 

Act of 1964: and other pertinent directives so that no person in the United States shall. on the 

grounds of race. color. or national origin. be e:-;.cluded tl·om participation in. be denied the 

benetits of or be otherwise subjected to discrimination under any program or activity tbr 

which the Recipient receives Federal tinancial assistance from the Department of 

Transportation. -ll1is assurance is required by Title 49. Code of Federal Regulations. section 

2l.7(a) and Title 14. Code of Federal Regulations. section 271.9tc). 

II. As a condition to receiving any Federal financial assistance from the 

Department of Transportation, it will comply \\ith: section 504 of the Rehabilitation Act of 

1973. as amended (29 U.S.C. 794); the Air Carrier Access Act of 1986 (49 U.S.C. 1374(c)): 

and all requirements imposed by or pursuant to Title 49. Code of Federal Regulations, Part 

27. ~ondiscrimination on the Basis of Handicap in Programs and Activities Receiving or 

Benefitting from Federal Financial Assistance. Title 14. Code of Federal Regulations. Part 

382. "\iondiscrimination on the Basis of Handicap in Air Travel: and other pertinent directives 
so that no otherwise qualitied person \Vith a disability. be excluded trom participation in. be 

denied the benefits ot~ be discriminated against by reason of such handicap in the provision 

of air transportation. or otherwise be subjected to discrimination under any program for 

\\hich the Recipient receives Federal financial assistance from the Department of 

Transportation. This assurance is required b) Title 49. Code of Federal Regulations. section 

:27.9 and Title 14. Code of Federal Regulations. sections 271.9(c) and 38:2.9. 

II J. It will promptly take any meaures necessary to etTecruate this agreement. The 

Recipient further agrees that it shall take reasonable actions to guarantee that it. its 

contractors and subcontractors subject to the Department of Transportation regulations cited 

above. transferees. and successors in interest\\ ill comply v. ith all requirements imposed or 

pursuant to the statutes and Depat1ment of Transportation regulations cited abme. other 

pertinent directives. and the above assurances. 

IV. These assurances obligate the Recipient for the period during which Federal 

tinancial assistance is extended. The Recipient agrees that the Lnited States has a right to 

seek judicial enforcement \Vith regard to an: matter arising under the statutes and Department 

of Transportation regulations cited above. other pe11inem directives. and the al:x.J\'e 

assurances. 

V. These assurances are given for the purpose of obtaining Federal subsidy 

under the Essential Air Service Program and are binding on the Recipient. contractors. 

subcontractors. transferees. successors in interest. and all other participants receiving Federal 

subsidy in the Essential Air Service Program. The person or persons whose signatures 

appear below are authorized to sign this agreement on behalf of the Recipient. 

VI. In addition to these assurances. the Recipient agrees to llle: a summw·y 'of all 

complaints tiled against it within the past year that allege violation(Sl by the Recipient of 

Title Vl of the Civil Rights Act of 1964, as amended. section 504 ofthe Rehabilitation Act of 

1973. as amended. or the Air Carrier Access Act of 1986: or a statement that there have been 

no complaints filed against it. The summaf) should include the date the complaint was filed. 

the nature of the complaint. the statu:-. or outcome of the complaint! i.e .. \\hether it is still 

pending or hov .. it was resolved). 

--- ;;j;qj; 5 ··--·--- Date 

F lr C l f; c fl; f.-Aif{Y-!1 11._~c- Legal Name of Recipient 

By: #2='/}~ Signature of Authorized Official 
L':\"ITED STATES OF AMERICA 

DEPARTMENT OF TR;\NSPORTATION 

OFFICE OF THE SECRETARY 

OFFICE OF AVIATION Ai~AL YSIS 

CERTIFICATION REGARDING DRl:G-FREE WORKPLACE REQCIREME~TS 

IN THE PERFORMA:.'\fCE OF St:BSIDIZED ESSENTIAL AIR SERVICE 

A. The subsidized essential air service carrier certifies that it will. or will continue. to provide a drugfree workplace by: 

(a) Publishing a statement notit)ring emplo~ ees that the unlawfulmanutacture. distribution. 

dispensing. possession or use of a controlled substance is prohibited in the can·ier's \\ orkplace. and 

spec it) ing the actions that will be taken against employees for violation of such prohibition: 

(b) Establishing an ongoing drug-free a\\areness program to inform emplo; ees about--

( l) The dangers of drug abuse in the \\ orkplace: 

!2) The grantee's policy of maintaining a drug-free workplace: 

(3) An: available drug counseling. rehabilitation. and employee assistance programs: and 

(4) The penalties that ma) be imposed upon employees for drug abuse violations 

occurring in the workplace: 

(C) Making it a requirement that each employee to be engaged in the performance ofwork 

supported by the subsidy be given a copy of the statement required by paragraph (a): 

(dl Notit)·ing the employee in the statement required by paragraph (a) that. as a condition of 

employment supported by the subsid;. the employee will--

( 1) Abide by the tenm of the statement: and 

( 2) Not it~ the employer in vuiting of his or her conviction for a violation of a criminal 

drug: statute occurring in the \\ orkplace no later than tive calendar days atl:er such 

conviction: 

(e) Notif)'ing the agency in writing. within ten calendar days after receiving notice under 

paragraph 1 d 1(2) from an employee or otherwise receiYing actual notice of com iction. 

Employers of convicted employees must provide notice. including position title. to the 

Office of Aviation Anal) sis. J\otice shall include the order number of each affected 

subsidized service: 

(f) Taking one ofthe following actions. \vithin 30 days ofrecehing notice under paragraph 

(d)C). \\ ith respect to any emplo.vee who is s0 convicted--

( l) Taking appropriate personnel ::tction against such an employee. up to and including 

termination. consistent with the requirements of the Rehabilitation Act of 1973. as 

amended. or 

(2) Requiring such employee to participate satistactorily in a drug abuse assistance or 

rehabilitation program approved for such purposes by a Federal. Stare or local 

health. law enforcement. or other appropriate agency: 
i 

I 

(gl Making a good faith effort to continue to maintain a drug-free \\orkplace through 

implementation of paragraphs (a). tb). (cl. (d). (e) and (f). 

B. The subsidized essential air service carrier maL but is not required to. insert in the space prc)\'ided 

beiO\\ the site tor the performance of \\Ork done in connection'' ith the specific grant. 

Places of Perfonnance (street address. city. count). state. zip code). For the pro\ is ion of essential air 

ser\ ice. workplaces include outstations. maintenance sites. headquaners office locations. training sites 

and an:y other worksites where work is petiormed that is supponed b} the subsicl). 

IC,zi -(OtJ{rf!?S f\Vt.r JC}/1 

·¥-.f?rCJ1/¥J1tJ I A}<_ 9990 j 

Check [ ] if there are \\Orkplaces on file that are not identified here. 
UNITED STATES OF AMERICA 

DEPARTMENT OF TRA;\'SPORTA TION 

OFFICE OF THE SECRETARY 

OFFICE OF A VIA TIO:\ ~ ~AL YSIS 

CERTIFICATION REGARDNG INFLt:ENCING ACTIVITIES 

Certification for Contracts, Grants, Loans. 

and Cooperative Agreements 

The undersigned certifies, to the best of his or her knO\\ ledge and belie( that: 

( l) '\o Federal appropriated funds have been paid or \\ill be paid. b) or on behalfofthe 

undersigned. to an; person for influencing or anempting to influence an officer or emplo;.ee 

of any agency, a IV! ember of Congress. an officer or emplo_> ee of Congress. or an employee 

of a Member of Congress in connection \'l-ith the a\\arding of an) Federal contract. the 

making of any Federa.l grant, the making of an;. Federal loan. the entering into of any 

cooperative agreement. and the extension. continuation. renewal. amendment. or 

modification of any Federal contract. grant. Joan. or cooperative agreement. 

(2) If any funds other than Federal appropriated funds have been paid or will be paid to any 

person for influencing or attempting to influence an officer or employee of any agency. a 

:V1ember of Congress. an officer or emplo)ee of Congress. or an emplo: ee of a Member of 

Congress in connection \Vith this Federal contract. grant. loan. or cooperative agreement. the 

undersigned shall complete and submit Standard Form-LLL. "Disclosure Form to Report 

Influencing Acti\·ities.'' in accordance \\ ith its instructions. 

(3) The undersigned shall require that the language of this certitication be included in the 

award documents for all subavvards at all tiers 1 including subcontracts. subgrants. and 

contracts under grants. loans and cooperative agreements) and thar all subrecipients shall 

certit~ and disclose accordingly. 

This certification is a material representation oftact upon '' hich reliance \\as placed \\hen 

this transaction \\as made or entered into. Submission of this certification is a prerequisite 

for making or entering into this transaction imposed b) section 135:2. title 31. U.S. Code. 

Any person \Vho tails to file the required certitication shall be su[<ject to a civil penalty of not 

less than S I 0,000 and not more than S 100.000 tor each such failure. 

Signature 

Title 

~~ 

Date 

f'/JC/~lc f}JW/jj/5; ;J;,( _, 

Air Canier 

Essential Air Service Poihtisl To Which Ce11itication Applies