### BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. OFF OF THE SECRETARY In the matter ofthe ) ) 

### Intra-Alaska Bush ) ; /1; ( '·· 'J



### Mail Rates ) Docket OST-2003-14694 ) 

### Request to consider removing PenAir data ) completely from the calculation for Bush 135 ) Line haul Rates )

# ~----------------------------)

Comments regarding removing ALL PenAir data from the calculation ofthe Bush 135 Line haul rate 

## I. POSITION ...........................................................................................................2 

## II. BACKGROUND
.................................................................................................. 

## 2 A. General
......................................................................................................................2 B. PenAirT100Data
...................................................................................................3 C. AlaskaDispatchArticle;
.......................................................................................4 D. CorrectiontoKevin'snotes;MikeBrownworksforRyanAir
................5 E. EXCERPTS FROM DOT ORDER2003-10-10,Issue 5 andIssue6
............ 5 1. Issue 5: PreferentialTender
......................................................................................5 2. Issue 6: Bush PassengerCarrier
..............................................................................8 F. § 

### 5402.Contractsfortransportationofmailbyair- Definitionof BushPassengerCarrier
.......................................................................................9 G. ApplicableExc::erptfrom; 39 

## usc Sec. 5402
....

### Error!Bookmarknot defined. H. LettersubmittedbyFrontierregardingexclusionofMetro data- for referenceonly
.......................................................................................................10 

### III. 

## Conclusion.......................................................................................................14 Communications with respect to this document should be addressed to: Bob Hajdukovich Era AlaskA 4700 Old International Airport Road Anchorage, Alaska 99502 Office (907) 266-8310 Fax (907) 266-8401 Email bob@frontierflyinq.com March 2, 2013 1 of 14

### I. 

## POSITION
PenAir no longertransports any passengers on Bush 135 Passenger aircraft and therefore should be excluded from the rate pool for Bush 135 linehaul calculations.


## II. BACKGROUND A. General Ever since RSIA was enacted, the DOT has determined that Air Carriers such as Ryan Air and Alaska Central Express were to be excluded from the rate making pool by virtue ofthe fact they did not meetthe definition ofthe requirements referenced in USC 39 5402 (see below) ofwhat is a "Bush passenger carrier". This was confirmed during the Alaska Air Carriers Convention in Anchorage on February 12, 2013 when the DOT specifically mentioned that Arctic Circle Airwas included into the rate making calculations inasmuch as theytransported a small amount of passengertraffic while Ryan did not. Otherthan the small passenger component ofArctic Circle Air, the two carriers were otherwise quite similar in focus and operation. The question that was raised on the second day of Mr. Kevin Adams' (herein: Kevin) meeting atthe AACA convention on February 12-13, 2013 was that since PenAir no longer flies any passengers on any Part 135 aircraftthat PenAir should also be excluded from the rate making process for Part 135 Bush linehaul rates. Without such a determination to exclude PenAir's data, then Ryan Air and Alaska Central Express's operations and cost must be included in the rate making process. This would directly contradict the language in RSIA (see below). Below is an excerptfrom 39 USC 5402: 

### (C) The Secretaryshallestablish a bush rate basedon data collected undersubsection (k) from 135 bush passengercarriers. 

### Such rates shallbe paid to allbush passengercarriers operating on bush citypair routes in the State of Alaska where no 121 bush passengercarrieris tenderednon prioritybypass mail." (5) theterm "bushpassengercarrier" means a passengercarrierthat meets the requirements ofsubsection (g)(l)(A)(iv)(I) and provides passenger service on a citypairroute; What was specifically addressed in Issues 5 and 6 oforder 2003-10-10 was NOT this issue. PenAir' representative clearly stated that PenAir does not currently operate aircraft in theirfleet that operate under Part 135 while and/or capable ofcarrying passengers. The only aircraft operated under Part 135 by PenAir are cargo certificated aircraft that are not capable oftransporting passengers. PenAir's Part 135 passenger operations (with the exclusion of 1 EAS village, see below, "Alaska Dispatch" article) were terminated in 2012. While the exclusion of Part 135 Saab 340 data on the basis offlying a preponderance of mainline mail on bush aircraft has been addressed in the past by DOT, this new exclusion issue has not been examined. Era Aviation believes the DOT has consistently weighed in specifically on why Ryan Air and Alaska Central are excluded from the rate making process for Bush 135 linehaul. Era 

### 2 of 15

### Aviation does concur that PenAir data belongs in the rate making process for both Bush 121 and Mainline, as they currently transport passengers under both Part 121 and Part 121 mainline. While Era Aviation believes that calculating a class rate for Bush 135 linehaul, using aircraft that transport over 85% (By AI Ort's estimates) mainline mail and the rest non-mainline AND zero passengers defies our sense ofcompensatory logic, the DOT has in fact weighed in that as long as they are included in the class that all relevant data must be included and not "selectively" excluded. Whereas PenAir is no longer participating in ANY transportation of passengers in Bush aircraft, the proposed exclusion of PenAir data in the Bush135 linehaul rate making process will help avoid a statutory conflict. Era Aviation believes thatthe DOT must give serious and immediate attention to resolve this and any future potential statutory conflicts. While the DOT has used rate impacting data that does not apply to current operations, ie, 2011-6-14 whereby non-operating metro data was used to set a rate that we are still bound to, underthe premise that it would be unfairto the Postal Service. The DOT should now endeavorto issue a new rate that is compensatory to current cost operations by carriers that are indeed considered to be in operation underthe guidelines outlined in RSIA and intended to be included in the rate making process. 

## B. PenAirTlOO Data
PenAir 2012 summary data from TlOO Segment TypeAC Month ASMs Pax Frt Mail ATMs RTMs CARAVAN 1 3,510 1,098 -45,488 211,022 45,029 8,921 2 2,367 756 27,941 168,!H7 39,719 B,MS 3 2,790 949 39,706 206,579 40,917 9,408 4 3,951 1,283 54,581 271,695 56,926 12,815 5 6,147 2,417 69,650 267,060 96,860 13,354 

### ' 7,380 2,893 189,583 240,762 99,396 14,363 7 4,806 2,267 54,493 124,515 73,046 8,642 8 3,276 1,609 38,3011 140,617 60,682 8,688 9 2,160 950 2.2,076 85,843 42,279 5,857 10 90 34 1728 4461 1512 226 caravan discontinued 10/12

36477 J4258 543 554 l72l471 556 369 90972 GOOSE 1 396 103 1,457 11,423 1,906 247 2 486 178 2,841 10,658 2,221 347 3 324 102 2,797 13,101 1,279 321 4 396 113 1,920 12,285 2,052 320 5 594 238 4,747 9,643 2,745 361 

### ' 736 311 3,200 15,067 3,418 351 7 

### '" 277 5,706 11,319 3,146 370 8 400 169 2,973 11,522 2,329 310 9 560 207 3,021 18,037 2,192 349 10 272 104 1842 6190 1071 140 Goose Disconintuesl0/12 4860 l802 30504 119245 22 361 3l2l PA·32 1 2,395 635 15,740 69,319 12,793 2,159 2 3,185 856 17,558 113,002 17,252 3,235 3 3,605 

### "' 22,860 147,863 20,332 4,461 4 3,405 1,035 18,337 89,439 17,938 2.,636 5 5,240 1,475 25,042 135,459 27,703 3,933 ' 6,980 2,252 92,941 114,344 33,292 4,392 7 5,630 1,941 50,595 94,292 29,356 3,310 8 3,345 1,127 30,374 76,230 16,822 2,261 9 1,475 490 16,362 35,525 6,078 974 10 1,460 501 18,660 30,013 5,434 867 11 1,105 397 9,076 29,098 4,169 621 12 1215 344 9478 32.015 3932 678P A·32 forced to stay thru 12 due to EAS constraints 39060 .1.:1925 327023 966 599 1951l5 29532 SF-340/A 1 191,034 444,791 285,486 144,205 2 178,632 517,107 246,994 148,987 3 60 95,007 524,489 264,321 126,909 4 84,762 569,017 280,905 132,198 5 84,009 520,154 274,538 111,915 

### ' 136,852 621,792 341,432 146,027 7 85,851 494,653 259,225 114,617 8 60 85,813 394,468 219,705 102,286 9 58,710 386,488 206,158 91,065 10 69,399 346,587 207,193 89,557 11 72,011 368,352 196,923 93,856 12 34718 489420 241659 100462 340A Nevertransportany passengers 120 ll76 998 56773l8 3024546 l 02110 SF-340/8 1 33,048 19,418 141,133 244,309 1,596,402 91,824 2 22,310 11,429 73,654 328,126 1,034,000 75,974 3 25,506 13,643 47,739 319,630 1,285,315 67,824 4 24,808 13,599 37,297 249,727 1,359,826 53,667 5 28,986 17,513 56,4-iO 264,131 1,425,351 57,149 ' 43,072 25,076 139,172 297,611 1,971,251 73,711 7 38,888 24,628 63,794 317,659 1,643,834 63,916 

### • 32,430 21,626 53,515 280,906 1,477,837 58,222 9 26,982 17,060 59,452 288,107 1,301,465 62,887 10 23,522 13,115 52,498 295,519 1,223,029 62,735 11 21,158 11,106 29,121 229,066 1,211,266 48,412 12 20 940 11762 26005 183476 1081064 37455 340Bs thatdo transport Pax are ALL 121 or Mainline

34.t 650 l99,977 779 820 3 299 267 l6,610 644 753 782 422,167 227,962 2,857,899 11,783,900 20,409,037 2,279,520



### 3 of 15

### C. AlaskaDispatchArticle (for reference only);

of transition ts completed. that leaves the Sif/Jat!On, ··Stathis

False smallplanes

ir; the oast. the atrlFne would bring u1 a t1ifferenrairoiane to tnfu:J the place ofthe one in the maintenance shop But now there isn'r am; baciwp. added; fron7
S8J(i

A\llation especially the ttUsV fishing PeteY seafoodplanttn shop the maintenance

is having avtation-refated nt?VVairpcrt on the island ofAkun. The hovercraft is falling "'";;onun'Rrll is**no~v** consiclering a des1gned that can more frequently tnp betveeen the village Stathis



## 4 of 

## 14

### Attached below are pertinent excerpts from Kevin Adams notes and referenced DOT orders relating to DOT rate making. 

## D. Correctionto Kevin'snotes; Mike Brownworksfor Ryan Air. 8 FROIV! AACA



## E. EXCERPTSFROMDOT ORDER2003-10-10, Issue 5 and Issue 6 

## 1. Issue 5: 

## PreferentialTender

5 of 14·135 bush all bush passengercarriers Alaska 'Nhere buslJ

is



### 35 passenger passenger aircraft 

### 121 passenger aircraft



## 6 of 

## 14

### 7 of 

### 14

## 2. Issue 6: Bush Passenger Carrier

lssue 6 was



## 8 of 

## 14reason



### F. 

## § 5402. Contractsfor transportation ofmail by 

### air

- Definition ofBushPassengerCarrier ln

(I) !he term meanc.

] ()(I**~Ci!!l1Crtl** in th
...**~**


### 9 of 

### 14

# I



# I I**-~** 

### G. 

## §5402. Contractsfor transportation ofmailby airGeneralQualificationRequirement

H. LettersubmittedbyFrontierregardingexclusion ofMetro data- for reference only

10 of 

### 14In the ofthe

the

to docurnent should addressed

January 

### POSITION

Metro 

### BACKGROUND

Bush aircraft are """'"'+<r'" at reflect !lie scenario at
rates were inclusive of Mth 121 The rate rate ihat aircraft tile postal servicE:
Per:.-t\ir

### r"''"""t"'"'**Pm~** 35 mark.et. Because

35 Bush ai1·craft set expenses incuiTed classification on the classification based data for

Saab 340 and 135 rates.

:s set the lowest For

but also
vvln Bush rate be



### 11 

### of 14an fiies;

77**~<::** ofJust 100% this are PenAir's revenue because of reclassificatior1 may even \he of A.s of October
in traditional Par·t the decrease because Frontier Bush 21 rates.

PenAir attemptto 

### a

The cost data shouid not be related markets

more the data. tne Bush 35
and Metroliners

i!'mse taper the increases decreases therr revenue
not

Part
decrease as 121 rate for
bs,en compensatory,

the 135

Saab Metroiiner unless the costs are

be and PenAir's
codcYl<ont 

### to look



### 12 

### of 14

### 13 of 

### 14

### III. CONCLUSION

The urgency ofthis consideration is that the DOT has had a rate in place since October2011 under the premise that it would issue a new rate in October2012. This has not been done for a variety of reasons stated by Kevin Adams in his Notes regarding the Air Carriers Convention February 2013. Era Aviation believes it is critical that the DOT issue a new rate and set issuance ofcompensatory rate updates as a high priority. It is also critical as well that the rate be fashioned and calculated in accordance with the guidelines set out in RSIA (39 USC 5402), which clearly and consistently state that only Bush 135 carrier data that meets the requirements as spelled out for inclusion, is what is used to calculate Bush 135 linehaul mail rates. Therefore we trust that the DOT shall issue a rate utilizing current market realities and conditions utilizing the current data and following required statutory logic. The environment in Alaska "Post RSIA" has changed dramatically and the exit of PenAir from flying passengers under Part 135 is a major development that must be taken into consideration (exclusion , per RSIA) when calculating a compensatory linehaul rate for Part 135 Bush carriers. Respectfully submitted,

Robert Hajdukovich CEO, Era Alaska Era Aviation, Inc. FrontierFlying Service, Inc. HagelandAviation Services, Inc.



## db

## a EraAiaska 4700 Old International Airport Road Anchorage, Alaska 99502 907-266-8310



### 14 of 14