BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

WASHINGTON, D.C. 

OFF OF THE SECRETARY 

In the matter of the ) 

) 

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 

of the Bush 135 Line haul rate 

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

II. BACKGROUND .................................................................................................. 2 

A. General ...................................................................................................................... 2 

B. PenAir T100 Data ................................................................................................... 3 

C. Alaska Dispatch Article; ....................................................................................... 4 

D. Correction to Kevin's notes; Mike Brown works for Ryan Air ................ 5 

E. EXCERPTS FROM DOT ORDER 2003-10-10, Issue 5 and Issue 6 ............ 5 

1. Issue 5: Preferential Tender ...................................................................................... 5 

2. Issue 6: Bush Passenger Carrier .............................................................................. 8 

F. § 5402. Contracts for transportation of mail by air- Definition of 

Bush Passenger Carrier ....................................................................................... 9 

G. ApplicableExc::erptfrom; 39 usc Sec. 5402 .... Error!Bookmarknot 

defined. 

H. Letter submitted by Frontier regarding exclusion of Metro data- for 

reference only ....................................................................................................... 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 

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I. POSITION 

PenAir no longer transports 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 of the 

fact they did not meet the definition of the requirements referenced in USC 39 5402 (see 

below) of what 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 Air was included into the rate making calculations inasmuch as 

they transported a small amount of passenger traffic while Ryan did not. Other than the 

small passenger component of Arctic 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 at the AACA convention on February 12-13, 2013 was that since PenAir no longer 

flies any passengers on any Part 135 aircraft that 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 excerpt from 39 USC 5402: 

(C) The Secretary shall establish a bush rate based on data collected 

under subsection (k) from 135 bush passenger carriers. Such rates 

shall be paid to all bush passenger carriers operating on bush city pair 

routes in the State of Alaska where no 121 bush passenger carrier is 

tendered non priority bypass mail." 

(5) the term "bush passenger carrier" means a passenger carrier that 

meets the requirements of subsection (g)(l)(A)(iv)(I) and provides 

passenger service on a city pair route; 

What was specifically addressed in Issues 5 and 6 of order 2003-10-10 was NOT this 

issue. PenAir' representative clearly stated that PenAir does not currently operate aircraft 

in their fleet that operate under Part 135 while and/or capable of carrying passengers. The 

only aircraft operated under Part 135 by PenAir are cargo certificated aircraft that are not 

capable of transporting 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 of flying 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 

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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 of compensatory 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 

Bush 135 linehaul rate making process will help avoid a statutory conflict. Era Aviation 

believes that the 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, under the premise that it would be unfair to the Postal Service. The DOT should now 

endeavor to issue a new rate that is compensatory to current cost operations by carriers 

that are indeed considered to be in operation under the guidelines outlined in RSIA and 

intended to be included in the rate making process. 

B. PenAir TlOO 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 c aravan 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 G oose Disconintuesl0/12 

4860 l802 30504 119 245 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 3 40A Never transport any 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 3 40Bs that do 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 

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C. Alaska Dispatch Article (for reference only); 

of 

transition ts completed. that leaves the 

Sif/Jat!On, ··Stathis 

False 

small planes 

ir; the oast. the atrlFne would bring u1 a t1ifferenr airoiane to tnfu:J the place of the one in the 

maintenance shop But now there isn'r am; baciwp. added; 

fron7 

S8J(i 

A\llation 

especially the ttUsV fishing 

PeteY seafood plant tn 

shop the maintenance 

is having avtation-refated 

nt?VV airpcrt on the island 

of Akun. 

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. Correction to Kevin's notes; Mike Brown works for Ryan 

Air. 

8 FROIV! AACA 

E. EXCERPTS FROM DOT ORDER 2003-10-10, Issue 5 and 

Issue 6 

1. Issue 5: Preferential Tender 

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·135 bush 

all bush passenger carriers 

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 14 
reason 

F. § 5402. Contracts for transportation of mail by air -

Definition of Bush Passenger Carrier 

ln 

(I) !he term mean c. 

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

9 of 14 
I 

I 

-~ 

I 

G. § 5402. Contracts for transportation of mail by airGeneral Qualification Requirement 

H. Letter submitted by Frontier regarding exclusion of Metro 

data- for reference only 

10 of 14 
In the of the 

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: 

P er:.-t\i r 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 14 
an fiies; 

77 ~<:: of Just 

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 

attempt to 

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 of this consideration is that the DOT has had a rate in place 

since October 2011 under the premise that it would issue a new rate in 

October 2012. 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 of compensatory 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. 

Frontier Flying Service, Inc. 

Hageland Aviation Services, Inc. 

db a 

EraAiaska 

4 700 Old International Airport Road 

Anchorage, Alaska 99502 

907-266-831 0 

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