### 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 20 th 

### 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 2 011

- 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) dur ing
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.

### - 2

-

Propos al 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 se rvice 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. Isl and 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 I sland 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 Serv ice 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 contact ed the Federal Aviation Administration, and it has raised n o concerns that would negatively affect our fitness finding s

. We therefore conclude that the carrier remain s fit to conduct the operations proposed here.

This Order is issued under authority delega ted in 49 CFR Part 1. 25 a(b)

.

ACCORDINGLY,

1. We re

- se lect Redemption Inc., d/b/a Island Air Service,

, to provide Essential Air Service at Kodiak 11

, Alaska , as described in Appendix C ;

### - 3

-

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 t his Order ;

3 . We find that Redemption Inc., d/b/a Island Air Service,

, continue s 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 . Th is docket will rema in open until further Order of the Department; and

5 . We will serve copi es 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 Peri od : November 1, 20 13 , through October 31, 201 5

Scheduled Service : 18

- week peak period

, 21

- week shoulder, 13

- week off

- peak 1



### Aircraft : DHC

- 2, Beaver, 6 seats Rate per Eligible One

- Way Flight: $ 84 2

Weekly Ceiling Peak 3 Shoulder 4 Off

- Peak 5

ALZ, Alitak

, $ 3 36 $1 68 $1 68 AOS, Amook Bay $3 36 $1 68 $1 68 KKB, Kitoi Bay $3 36 $1 68 $1 68 KMY, Moser Bay $3 36 $1 68 0 KOY, Olga Bay $3 36 $1 68 0 KPR, Port Williams $3 36 $1 68 $1 68 KPY, Port Bailey $3 36 $1 68 $1 68 SYB, Seal Bay $3 36 $1 68 $1 68 UGI, U ganik $3 36 $1 68 $1 68 KWP, West Point $3 36 $1 68 $1 68 KZB, Zachar Bay $3 36 $1 68 $1 68

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 2 1 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 Comm unities 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 , 201 4 , thru September 2 0 , 201 4 ; and May 1 7 , 201 5 , thru September 19 , 201 5 ;

Off

- Peak: January 5 , 201 3 , thru April 5 , 201 4 ; December 28 , 201 4 , thru March 28 , 201 5 ;

Shoulder: November 1, 201 3 , thru January 4 , 201 4 ; April 6 , 201 4 , thru May 1 7 , 201 4 ; September 2 1 , 201 4 , t hru December 2 7 , 201 4 ; March 29 , 201 5 , thru May 1 6 , 201 5 ; September 2 0 , 201 5 , thru October 31, 201 5

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 t he 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 schedul ed 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, i f 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 unilateral ly, 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 stipulate d 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 a greed 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 f rom 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.

Al l 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.