Order 2013-9-12

Served: September 20, 2013

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 20th of September, 2013

Essential Air Service at

Alitak, Amook Bay, Kitoi Bay, Moser 

Bay, Olga Bay, Port Bailey, Port 

Williams, Seal Bay, Uganik, West Point, 

and Zachar Bay, Alaska

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

 DOCKET DOT-OST-2000-6945

ORDER RE-SELECTING CARRIER

Summary

By this Order, the Department is re-selecting Redemption Inc., d/b/a Island Air Service, (Island 

Air) to provide Essential Air Service (EAS) at the above captioned communities (Kodiak 11), for 

$124,663 annual subsidy from November 1, 2013, through October 31, 2015.1

Background

By Order 2011-7-6, July 19, 2011, the Department selected Island Air to provide EAS at the 

Kodiak 11 at the combined annual subsidy of $144,972, from November 1, 2011, through 

October 31, 2013. Service levels were set at two round trips per week to Kodiak (ADQ) during 

the 18-weak peak season and one round trip per week during the remainder of the year, all with 

DHC-2 Beaver aircraft.2 As the current contract was nearing its expiration, we issued Order 

2013-7-6, July 8, 2013, requesting proposals for EAS to begin on November 1, 2013. 

 

1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds.

2 At Olga Bay and Moser Bay, no service is required during the off-peak, the first three months of the year.
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Proposal of Island Air

Only Island Air submitted a proposal, and it submitted only one option. The carrier proposes to 

continue to provide the same level of service described above, and requests $124,663 annual 

subsidy at the Kodiak 11. 

Community Comments

We received comments from several civic parties and local citizens. State Representative Alan 

Austerman endorsed Island Air because of their “experience and dedication” in meeting the 

terms of the contract and because of their service at Kodiak for over 30 years. Seal Bay’s 

Afognak Wilderness Lodge submitted a letter signed by eight residents, indicating the following:

“This has been a year-round habitation since 1964 plus a reputable year-round wilderness lodge 

since 1974. Island Air has provided excellent professional on-time service and their staff 

consistently goes above and beyond their duty to meet whatever needs for any given situation. 

They are an integral part of our island community. Throughout the past five decades, no one has 

compared to the high quality of service that Island Air has provided and we highly recommend 

that you renew their Essential Air Service Contract.”

We also received support letters from Ocean Beauty Seafoods – Alitak Facility – and residents at

Amook Bay, Moser Bay, Olga Bay, West Point, and Zachar Bay. 

Decision

The decision is straightforward. Island Air Service proposes to continue the current service level 

and requests a decrease in subsidy, from $144,972 to $124,663 per year. Island Air Service is the 

only carrier to submit a proposal, and it submitted only one option. As shown in Appendix B, 

the level of subsidy has decreased from the prior year due to a combination of more revenue and 

reduced expenses. Moreover, the carrier received strong support from the communities.

Carrier Fitness

49 U.S.C. §§ 41737(b) and 41738 require that the Department find an air carrier fit, willing, and 

able to provide reliable service before the Department may subsidize it to provide EAS. Island 

Air Service is subject to the Department’s continuing fitness requirements, and no information 

has come to our attention that would cause us to question the carrier’s fitness at this time. DOT 

has contacted the Federal Aviation Administration, and it has raised no concerns that would 

negatively affect our fitness findings. We therefore conclude that the carrier remains fit to 

conduct the operations proposed here.

This Order is issued under authority delegated in 49 CFR Part 1.25 a(b).

ACCORDINGLY,

1. We re-select Redemption Inc., d/b/a Island Air Service,, to provide Essential Air Service at 

Kodiak 11, Alaska, as described in Appendix C;
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2. We direct Island Air Service, to retain all books, records, and other source and summary 

documentation to support claims for payment, and to preserve and maintain such documentation 

in a manner that readily permits its audit and examination by representatives of the Department. 

Such documentation shall be retained for seven years from the service date of the Order or until

the Department indicates that the records may be destroyed, whichever comes first. Copies of 

flight logs for aircraft sold or disposed of must be retained. The carrier may forfeit its 

compensation for any claim that is not supported under the terms of this Order;

3. We find that Redemption Inc., d/b/a Island Air Service,, continues to be fit, willing and able 

to operate as a certificated carrier and capable of providing reliable Essential Air Service at the 

these communities;

4. This docket will remain open until further Order of the Department; and

5. We will serve copies of this Order on the civic officials of Alitak, Amook Bay, Kitoi Bay, 

Moser Bay, Olga Bay, Port Bailey, Port Williams, Seal Bay, Uganik, West Point, and Zachar 

Bay, Alaska, on the state of Alaska, and on Redemption Inc., d/b/a Island Air Service.

By:

Susan L. Kurland

Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available on the World Wide Web at

http://www.regulations.gov
Appendix A

Nonstop, Great Circle Mileages to Kodiak (ADQ) 

Kodiak Island 

ALZ, Lazy Bay, 89 

KMY, Moser Bay, 80 

KOY, Olga Bay, 77 

AOS, Amook Bay, 54 

KZB, Zachar Bay, 49 

KWP, West Point, 39 

UGI, Uganik, 31 

KPY, Port Bailey, 24 

Afognak Island (Northeast of Kodiak Island) 

KPR, Port Williams, 47 

SYB, Seal Bay, 44 

KKB, Kitoi Bay, 31 
Appendix B

Proposal to Provide Essential Air Service at Alitak, Amook Bay, Kitoi Bay

Moser Bay, Olga Bay, Port Bialey, port Williams, Seal Bay, West Point, 

Uganik, and Zachar Bay, Docket 2000-6945

Order 

2011-7-6 Proposed

Aircraft DHC-2 Beaver DHC-2 Beaver

Block Hours 402 402

Passenger Revenue $61,873 $72,950

Cargo Revenue $7,076 $14,950

Mail Revenue $30,570 $19,279

Total Revenue $99,519 $107,179

Pilot $30,141 $30,141

Fuel & Oil $68,723 $61,188

Maintenance $21,702 $19,693

Aircraft $34,161 $32,553

Insurance $24,113 $21,702

Total Directs $178,840 $165,277

Traffic Related $7,167 $7,717

Departure Related $34,303 $34,303

Capacity Related $12,539 $13,505

Total Indirects $54,009 $55,525

Total Operating $232,849 $220,802

Profit @ 5% $11,642 $11,040

Economic Cost $244,491 $231,842

Annual Subsidy $144,972 $124,663
Appendix C

Page 1 of 2

Redemption Inc., d/b/a Island Air Service, Inc., Inc., Essential Air Service 

to be Provided to the Kodiak 11, Docket DOT-OST-2000-6945

Effective Period: November 1, 2013, through October 31, 2015

Scheduled Service: 18-week peak period, 21-week shoulder, 13-week off-peak1

Aircraft: DHC-2, Beaver, 6 seats

Rate per Eligible One-Way Flight: $84 2

Weekly Ceiling Peak 3 Shoulder 4 Off-Peak5

ALZ, Alitak, $336 $168 $168

AOS, Amook Bay $336 $168 $168

KKB, Kitoi Bay $336 $168 $168

KMY, Moser Bay $336 $168 0

KOY, Olga Bay $336 $168 0

KPR, Port Williams $336 $168 $168

KPY, Port Bailey $336 $168 $168

SYB, Seal Bay $336 $168 $168

UGI, Uganik $336 $168 $168

KWP, West Point $336 $168 $168

KZB, Zachar Bay $336 $168 $168

Shoulder, 11 Communities One-Way Flights for Each Community Flights

ADQ-KOY-KMY-ALZ-ADQ 21 weeks*2 directions*1 trips*3 Communities = 126

ADQ-KKB-SYB-KPR-ADQ 21 weeks*2 directions*1 trips*3 Communities = 126

ADQ-KZB-AOS-ADQ 21 weeks*2 directions*1 trips*2 Communities = 84

ADQ-KPY-UGI-KWP-ADQ 21 weeks*2 directions*1 trips*3 Communities = 126

Peak, 11 Communities

ADQ-KOY-KMY-ALZ-ADQ 18 weeks*2 directions*2 trips*3 Communities = 216

ADQ-KKB-SYB-KPR-ADQ 18 weeks*2 directions*2 trips*3 Communities = 216

ADQ-KZB-AOS-ADQ 18 weeks*2 directions*2 trips*2 Communities = 144

ADQ-KPY-UGI-KWP-ADQ 18 weeks*2 directions*2 trips*3 Communities = 216

Off-Peak, 9 Communities

ADQ-KZB-AOS-ALZ-ADQ 13 weeks*2 directions*1 trip*3 Communities = 78

ADQ-KKB-SYB-KPR-ADQ 13 weeks*2 directions*1 trip*3 Communities = 78

ADQ-KPY-UGI-KWP-ADQ 13 weeks*2 directions*1 trip*3 Communities = 78

1,488

Peak: May 18, 2014, thru September 20, 2014; and May 17, 2015, thru September19, 2015;

Off-Peak: January 5, 2013, thru April 5, 2014; December 28, 2014, thru March 28, 2015;

Shoulder: November 1, 2013, thru January 4, 2014; April 6, 2014, thru May 17, 2014;

September 21, 2014, thru December 27, 2014; March 29, 2015, thru May 16, 2015;

September 20, 2015, thru October 31, 2015

 

1 During the off-peak, service to Olga Bay and Moser Bay is not required.

2 Annual compensation of $124,663 ÷ 1,488 annual flights, calculated above = $84.

3 2 round trips/week * 2 directions * $84.

4 1 round trip/week * 2 directions * $84.

5 1 round trip/week * 2 directions * $84.
Appendix C

Page 2 of 2

Note: 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 this rate, 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 contract 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 may not be available for performance under this order beyond September 30, 2013. The 

Government’s obligation for performance under this order beyond September 30, 2013, is subject to 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 September 

30, 2013, until funds are made available to the Department for performance. If sufficient funds are not 

made available for performance beyond September 30, 2013, the Department will provide notice in 

writing to the carrier.

All claims for payment, including any amended claims, must be submitted within 90 days of the last day 

of the month for which compensation is being claimed. For example, claims for service provided in July 

must be filed by October 31; August claims must be submitted by November 30, and so on.