Order 2014-10-7 Served: October 14, 2014



### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION 

### OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on the 14 th of October, 2014

INTRA ALASKA BUSH MAIL RATES

Under 49 U.S. C. 41901 et seq. Docket OST-2003-14694

Bush Quarterly Fuel Adjustment
Summary By this Order, the Department is making its regular quarterly adjustments to the IntraAlaska bush mail rates, Part 121, Part 135, a nd Seaplane, to reflect the most recent quarterly fuel costs. The new rates are to be effective on the sec ond Saturday after the issuance of this Order, and reflect fuel e xpenses for the quarter ended June 30, 2014.

Background Order 2013-7-25, July 31, 2013, made final th e conclusions of Order 2013-6-5, June 6, 2013, along with the nonfuel-linehaul and term inal rates therein. That Order also delegated to the Director, Offi ce of Aviation Analysis, the aut hority to determine the final rates contemplated in Order 2013-7-25, adjust ed for the most recent quarterly fuel expenses.
Order 2013-12-9, December 19, 2013, made the anti cipated quarterly fuel adjustments to the Part 121, Part 135, and Seaplane rates, re flecting fuel expenses for the quarter ended September 30, 2013, the most recent fuel expenses available at the time. This Order is updating all three of those bush ma il classes to reflect fuel ex penses for the quarter ended June 30, 2014. The Department has stated that we would continue quarterly fuel updates until further notice. Since the carriers’ traffic and financial data are reported 45 days after- 2 -

the end of each quarter, our intent and pract ice has been to make quarterly adjustments with a one-quarter lag from the end of the reporting period until the beginning of the next quarter. Due to unforeseen circumstances, th e Department was not able to release an update until now. The table below shows both the current and new mail rates.

As shown in the chart above, for the Part 121 class, Line 1, Column F, there is a 4.84% decrease in the rate; for the Part 135 class, Line 2, a 1.27% decrease; and for the Seaplane, Line 3, a 0.51% increase; and for the terminal no change. All of these changes are driven solely by changes in fuel. Since the terminal is unaffected by fuel, there is no change in that class, which is included onl y for the sake of convenience.

Discussion As stated earlier, our goal is to have mail ra tes in place approximately one quarter after the end of the reporting period. This did not ha ppen due to unforeseen circumstances within the Department which prevented a timely upda te. We anticipate th at future updates will occur in a timely manner.
In the last update, there was significant discussion regarding the timeliness and accuracy of reporting data to BTS to ensure the accuracy of the rates put forth in this order. While timeliness seems to have improved, we still fi nd there to be problems with the accuracy of some data. Specifically, in the Part 135 class, Grant Aviation shows 15.07% of Total Block Hours on the Cessna 207 were non-revenue. While this is well outside the norm, when looking at the overall share of mail carried on this aircraft by Grant, it does not significantly skew the fuel calculation with a ny significance. We ask that Grant review its block hours for the quarter ending June 30, 2014, and work with BTS to ensure accurate data is submitted in the future.
Similarly, Bering shows 22.03% of Total Block Hours on the Casa 212 were non-revenue. Similar to Grant, Bering’s share of the mail carried does not significantly impact the overall rate change, but we ask that Bering review its bl ock hours for the quarter ending June 30, 2014, and work with BTS to ensure a ccurate data is submitted in the future.

In the Part 121 class, the cal culation of PenAir’s Part 121 ex pense requires the carrier to submit a special traffic report each quarte r, which supplements the carrier’s T-100 Segment report. The T-100 report is not sufficiently detailed; it does not break out-A- -B- -C- -D- -E- -FRate Per Less Old Fuel Add Fuel per Order in Order the Appendices Percentage Class Rate 2013-12-9 2013-12-9 to this Order Final Rate Change 1. Part 121 $5.7480 $1.4876 $1.2093 $5.4697 -4.84% 2. Part 135 $14.9341 $4.5191 $4.3297 $14.7447 -1.27% 3. Seaplane $32.5983 $6.3505 $6.5156 $32.7634 0.51% 4. Terminal $850.03 NA NA $850.03 0.00%- 3 -

whether a particular segment operated as mainli ne, Part 121, or Part 135. PenAir’s Saab 340B is unique because some segments are op erated as mainline, some as Part 121, and some as Part 135. PenAir’s special report prov ides the necessary detail for us to calculate the Part 121 mail rate, the only rate in this Order affected by PenAir’s data.

ACCORDINGLY,
1. We fix, determine and publish the Part 121 ra te to be $5.4697 per mail revenue ton mile, to be effective on the second Saturday afte r the service date of this Order;
2. We fix, determine and publish the Part 135 rate to be $14.7447 per mail revenue ton mile to be effective on the second Saturday after the service date of this Order;
3. We fix, determine and publish the Seaplane rate to be $32.7634 per mail revenue ton mile, to be effective on the second Saturday after the service date of this Order;

4. The terminal rate will remain fixed at $850.03 per mail ton enplaned;

5. This docket shall remain open until further Order of the Department; and
6. We will serve this Order upon all partie s on the service list for this Docket;
Persons entitled to petition the Department for review of this Order under the Department’s regulations, 14 CFR 385.30, must file such petitions within ten (10) days after the date of service of this Order. The f iling of a petition for review shal l not stay its effectiveness.

By:

TODD M. HOMAN Director, Office of Aviation Analysis

(SEAL) An electronic version of this document is available at http://www.regulations.gov- 4 -

Appendix A Part 121

Quarter Ended June 30 , 2014

Carrier Era PenAir Carrier Code 7H KS Aircraft Name Beech 1900 Saab 340B Aircraft Code Total 405 456

Fuel Expense 1 . Total Fuel Expense $4,851,864 $930,243 $3,921,621 2 . Total Gallons Issued 1,218,040 264,791 953,249 3 . System Total Blk. Hrs. 9,089 2,028 7,061

4 . Revenue Block Hours 8,988 1,995 6,993

5 Eligible Block Hours 1/ 752 1 751 6 . Eligible Mail RTMs 1/ 10,366 0 10,366 7 . Total Eligible RTMs 1/ 348,322 58 348,264 8 . Price per Gallon (R1÷R2) $3.98 $3.51 $4.11 9 . Burn per Hour (R2÷R4) 132.7 136.3 10 . Costs per Block Hour (R1÷R3) $466.29 $560.79 11 Eligible Fuel Expense (R1*R5÷R4) $421,621 $466 $421,155 12 . Cost per Eligible RTM (R11÷R7) $1.2104 $8.0345 $1.2093 13 Mail RTMs Percentage 100.00% 0.000% 100.000% 14 . Cost/RTM, Wtd. By Mail RTMs $1.2093 $0.0000 $1.2093

1/ Era's data is from the T-100, PenAir's from a special PenAir report. PenAir submits that report because the T- 100 does not differentiate between mainline and bush aircraft, and PenAir' Saab 340B operates as both a mainline and a bush aircraft. Mainline aircraft are aircraft that have a payload of more than 7,500 pounds, and Bush aricraft are defined as those having 7, 500 pounds of payload or less. We note that the configuration of the aircraft and the length of the haul in particular city-pairs affects the available payload of an aircraft.

Eligible figures exlcude any traffic outside the state of Alaska.- 5 -

Appendix B Part 135 Page 1 of 3

Quarter Ended June 30 , 2014

Carrier Bering Bering Bering Bering Bering Grant Carrier Code Aircraft Type Navajo B-1900 BE-200 Casa 212 Caravan C-207 Aircraft Code Total 1/ 194 405 406 412 416 35 1 . F-2, Total Fuel Expense $10,174,128 $328,835 $369,118 $292,429 $121,354 $726,986 $140,302 2 . F-2, Total Gallons Issued 1,774,427 40,668 56,167 44,498 18,466 110,622 27,518 3 . F-2, Total Block Hours 38,231 1,002 365 347 144 1,917 1,619

4 . T-100 Revenue Block Hours 37,468 986 346 342 118 1,883 1,407

5 . T-100 Eligible Block Hours 29,896 770 266 89 53 1,631 1,341 6 . T-100 Eligible Mail RTMs 510,616 8,875 20,287 1,410 4,824 47,916 9,764 7 . T-100, Total Eligible RTMs 1,815,737 43,170 48,449 10,086 7,008 132,513 34,892 8 . Price per Gallon (R1÷R2) $5.73 $8.09 $6.57 $6.57 $6.57 $6.57 $5.10 9 . Burn per Hour (R2÷R4) 41.2 162.3 130.1 156.5 58.7 19.6 10 . Costs per Block Hour (R1÷R4) $333.50 $1,066.82 $855.06 $1,028.42 $386.08 $99.72 11 Eligible Fuel Expense (R1*R5÷R4) $8,118,014 $256,798 $283,773 $76,100 $54,506 $629,694 $133,721 12 . Cost per Eligible RTM (R11÷R7) $4.4709 $5.9485 $5.8571 $7.5451 $7.7777 $4.7519 $3.8324 13 Mail RTMs Percentage 100.00% 1.738% 3.973% 0.276% 0.945% 9.384% 1.912% 14 . Cost/RTM, Wtd. By Mail RTMs $4.3297 $0.1034 $0.2327 $0.0208 $0.0735 $0.4459 $0.0733

All eligible figures exlcude any traffic outside the state of Alaska.- 6 -

Appendix B Part 135 Page 2 of 3

Quarter Ended June 30 , 2014

Grant Grant Grant Hageland Hageland Hageland Hageland

Navajo BE-200 Caravan C-207 Navajo B-1900 Caravan 194 406 416 35 194 405 416 $140,770 $296,193 $982,114 $539,485 $405,585 $1,436,272 $2,285,432

27,533 57,270 192,445 76,085 57,567 273,281 368,735 586 498 3,499 4,985 1,627 2,146 7,093

559 497 3,498 4,919 1,600 2,096 6,978

552 238 2,200 4,171 1,264 997 6,369 2,045 4,558 65,589 25,266 14,870 63,742 138,376 45,556 19,686 150,981 107,015 64,754 163,193 479,738

$5.11 $5.17 $5.10 $7.09 $7.05 $5.26 $6.20

49.3 115.2 55.0 15.5 36.0 130.4 52.8 $251.82 $595.96 $280.76 $109.67 $253.49 $685.24 $327.52 $139,007 $141,839 $617,682 $457,449 $320,412 $683,189 $2,085,973

$3.0513 $7.2051 $4.0911 $4.2746 $4.9481 $4.1864 $4.3482 0.400% 0.893% 12.845% 4.948% 2.912% 12.483% 27.100% $0.0122 $0.0643 $0.5255 $0.2115 $0.1441 $0.5226 $1.1784- 7 -

Appendix B Part 135 Page 3 of 3

Quarter Ended June 30 , 2014

Hageland Warbelow Wright Yute

C-406 Navajo Caravan C-207

417 194 416 35 $406,560 $617,192 $597,840 $487,661

60,792 123,147 170,023 69,610 715 2,968 3,495 5,225

693 2,952 3,462 5,132

634 1,703 2,879 4,739 17,029 10,110 41,710 34,245 62,733 77,480 259,036 109,447

$6.69 $5.01 $3.52 $7.01

87.7 41.7 49.1 13.6 $586.67 $209.08 $172.69 $95.02 $371,947 $356,056 $497,164 $450,317

$5.9290 $4.5955 $1.9193 $4.1145 3.335% 1.980% 8.169% 6.707% $0.1977 $0.0910 $0.1568 $0.2760- 8 -

Appendix C Seaplane

Quarter Ended June 30 , 2014

Carrier A.Seaplane Island Air Pacific PM Air PM Air Venture Aircraft Name Beaver Beaver Beaver Beaver Otter Beaver Aircraft Code Totals 40 40 40 40 42 40 1 . F-2, Total Fuel Expense $984,656 $68,680 $36,339 $129,698 $144,533 345,273 $260,133 2 . F-2, Total Gallons Issued 194,313 14,312 4,676 23,496 27,280 73,894 50,655 3 . F-2, Total Block Hours 982 258 1,068 1,121 1,475 1,974

4 . T-100 Revenue Block Hours 6,571 967 230 1,054 1,074 1,426 1,820

5 . T-100 Eligible Block Hours 3,045 877 202 902 456 63 545 6 . T-100 Eligible Mail RTMs 8,791 1,522 412 516 614 116 5,611 7 . T-100, Total Eligible RTMs 59,991 18,395 3,571 16,636 7,893 2,430 11,066 8 . Price per Gallon (R1÷R2) $5.07 $4.80 $7.77 $5.52 $5.30 $4.67 $5.14 9 . Burn per Hour (R2÷R4) 15 20 22 25 52 28 10 . Costs per Block Hour (R1÷R4) $71.02 $158.00 $123.05 $134.57 $242.13 $142.93 11 Eligible Fuel Expense (R1*R5÷R4) $359,714 $62,288 $31,915 $110,994 $61,366 $15,254 $77,897 12 . Cost per Eligible RTM (R11÷R7) $5.9961 $3.3861 $8.9373 $6.6719 $7.7747 $6.2774 $7.0393 13 Mail RTMs Percentage 100.00% 17.313% 4.687% 5.870% 6.984% 1.320% 63.827% 14 . Cost/RTM, Wtd. By Mail RTMs $6.5156 $0.5862 $0.4189 $0.3916 $0.5430 $0.0829 $4.4930

All eligible figures exlcude any traffic outside the state of Alaska.