## UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued b y the Department of Transportation on the 27 th 

### day

of September, 20 10

Essential Air Service at GULKANA, ALASKA MAY CREEK, ALASKA MCCARTHY, ALASKA DOCKET OST
- 1995 -492
under 49 U.S.C. 41731 et seq.



## ORDER REQUESTING PROPOSALS Summary By this order, the Department is requesting proposals from carriers interested in providing essential air service (EAS) at Gulkana , May Creek, and McCarthy, Alaska , for the two

ye ar p eriod beginning February 1, 2011 , with or without subsidy

. Proposals are due b y October 25 , 2010

. (See Appendix A f or a map.) Background By Order 2008

- 12

- 19 , the Department selected Ellis Air T axi, Inc. d/b/a Copper Valley Air Service (Ellis Air), to continue providing EAS at Gulkana, May Creek, and McCarthy, Alaska, for the two
- ye ar period ending January 31, 2011 , for a combined annual subsidy rate of $424,652. Gulkana currently receives two round trips per week to Anchorage with six

- seat Piper PA

- 31 aircraft; May Creek and McCarthy

both receive two nonstop or one

stop round trips per week to Gulkana using three

- seat Cessna 185 aircraft during winter months and four

- seat Cessna 206 aircraft during summer months. Request for Proposals As the end of the current contract appro aches, we are here requesting proposals for a new two
- ye ar period beginning February 1. Intere sted carriers should prepare their proposals Order: 2010

- 9

- 27 Served: September 27, 2010

### - 2

-

with every

expectation that their initial proposals will represent their final and only proposals. However, we retain the discretion to negotiate proposals with carriers when we deem it desirable. We also retain the discretion to reject outright all unreasonable or unrealistic proposals and resolicit a new round of proposals. However, we anticipate that negotiation or rejection will remain only occasional exceptions to the rule. Shortly after October 25 , we will provide a summary o f the proposals to the communities and ask them to submit their final comments. We will give full consideration to all proposals that are timely filed. 1 

### We are here providing interested carriers with some basic information to assist them as they prepare their proposals, but we will not prescribe a precise format for their preparation. We expect proposals to adequately describe the service being proposed and the annual amount of subsidy being requested. Applicants can make their own judgments as to the level of detail they wish to present; however, they might want to include proposed schedules, as well as supporting data for their subsidy requests, such as projected block hours, revenues, and expenses. We strongl y encourage clear, well

- documented proposals that will facilitate their evaluation by the community

and the Department. 2 

### With specific respect to the se communities, carriers should provide sufficient capacity to accommodate historical leve ls of traffic. In that regard, as is ty pically the case in Alaska, significantly more freight and mail flow from the hub to EAS communities than from the EAS communities to the hub. For Gulkana , we are re questing proposals for two nonstop round trips to Anchorage each week with aircraft having a capacity of four to six seats

. At May Creek and McCarthy, we expect proposals consisting of two round trips each week over a Gulkana

- McCarthy

- May Creek

- Gulkana routing with aircraft having a capacity of at least three seats during the six

-month winter season, and four seats during the six

-month summer season. Such service is consistent with what the communities currently receive, and fully satisfies their essential air service requirements. 3 

### As always, we will formally solicit the communities’ vi ews on any service options we receive before making a long

term carrier se lection decision. The communities and air carriers are encouraged to work together in advance of the due date for proposals to craft a service pattern that is desirable

1 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to provide essential air service without subsidy and we determine that service can be reliably provided without such compensation, we do not proceed with the carrier

- selection case. Instead we simply rely on that carrier’s subsidy

- free service as proposed. 2 In selecting a carrier to provide subsidized es sential air service in Alaska , 49 U.S.C. 41733(c )(1) directs us to consider five factors: (1) scheduled service reliability; (2) contractual and marketing arrangements with a larger carrier to ensure service beyond the hub; (3) interline arrangements that the applicant has made with a larger carrier at the hub; (4) community views, giving substantial weight to the views of the elected o fficials representing the users; and (5) the experience of the applicant in providing, in Alaska, scheduled air service. In addition, the Consolidated Appropriations Act, 2008, Public Law 110

- 161, provides that when selecting a carrier to provide EAS, the Department may consider the relative subsidy requirements, thus codifying a factor that we have considered since the incep tion of the program. Interested carriers should also be aware that our general provisions governing essential air service will be included in the selection order as part of our authorization of subsidy for the selected service. Appendix C of this order c ontains those general provisions. 3 Carriers are free to set their peak

-period service at different periods based on the peak traffic demand as shown in Appendix B.

### - 3

-

to the community

and meets the operational needs of the airline interested in submitting a proposal. We encourage proposals that meet those requirements in an efficient manner. Carriers are also welcome to propose more than one service option, if they choose; they

need not limit themselves to those requirements if they envision other, potentially more attractive service possibilities

-- different hubs, for example

-- with subsidy requirements that remain competitive. New Filing Procedures Carrier proposals should be submitted to the Department with all materials merged into a single document. In addition, because the document will be published on Regulations.gov, each page should be formatted to be viewed online

. 

### Historical Traffic In order to assist prospective applicants in making traffic and rev enue forecasts, we have included historical traffic for each community in Appendix B

. Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug

- free workplaces, and nondiscrimination. 4 

### Consequently, all carriers receiving Federal subsidy for essential air service must certify that they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimination, and those c arriers whose subsidies exceed $100,000 over the life of the rate term must also certify that they are in compliance with the regulations governing lobbying activities. Because the Department is prohibited from paying subsidy to carriers that do not submit these documents, all carriers that plan to submit proposals involving subsidy should be aware that the selected carrier will be expected to complete the required certifications. Interested carriers requiring more detailed information regarding these requirements as well as copies of the certifications should contact the Office of Aviation Analysis at (202) 366

- 5903. 5 

### Community and State Comments The communities and the state are welcome to submit comments at any time. We encourage prospective applicants to contact the community before they

submit their proposals in order to tailor them to the community ’s needs. As noted earlier, we will provide a cop y of the proposals to the civic parties and ask them to submit their final comments shortly

after October 25 , the deadline for filing carrier proposals.
4 The regulations applicable to these areas are: (1) 49 CFR Part 20

-- New restrictions on lobbying; (2) 49 CFR Part 21

-- Nondiscrimination in federally

- assisted programs of the Department of Transportation

-

- Effectuation of title VI of the Civil Rights Act of 1964; 49 CFR Part 27

-- Nondiscrimination on the basis of disability in programs and activities receiving or benefiting from Federal financial assistance; and 14 CFR Part 382

-- Nondiscrimination on the basis of disability in air travel; and (3) 49 CFR Part 29

-- Government

- wide debarment and suspension (non

-procurement) and government

- wide requirements for drug

- free workplace (grants). 5 The certifications are also available on the World Wide Web athttp://ostpxweb.dot.gov/aviation/index.html

.

### - 4

-

This order is issued under authority delegated in 49 CFR 1.56a(f) and re

- delegated to the Director, Office of Aviation Analysis. AC CORDINGLY, 1. We request that carriers interested in providing essential air service at Gulkana , May Creek, and McCarthy, Alaska , submit their proposals, with or without subsidy requests, no later than October 25 , 2010 . The proposals should be e -mailed to EAS@dot.gov , with the title: “Proposal to Provide Essential Air Service at Gulkana , May Creek, and McCarthy, Alaska, Docket DOT

- OST

- 1995

- 492”; 2. This docket will remain open until further order of the Department; and 3. We will serve copies of this order on the parties listed in Appendix D. Persons entitled to petition the Department for review of this order under the Department’s Regulations, 14 CFR Part 385.50, must file such petitions within ten (10) days after the date of service of this order. This order will be effective immediately, and the filing of a petition for review shall not preclude its effectiveness. By :

TODD M. HOMAN Director Office of Aviation Analysis (SEAL) An electronic version of this document is ava ilable on the World W ide Web at http://www.regulations.gov

### Appendix A

### Appendix B Page 1 of 3
Historical Traffic - Gulkana, May Creek, and McCarthy, Alaska
Gulkana Origination Destination Origin and Destination
Year Quarter Pax Freight PEQ Mail PEQ Total Pax Freight PEQ Mai l PEQ Total Pax Freight PEQ Mail

PEQ Total 2007 1 14 1 36 51 5 0 4 9 19 1 40 60 2007 2 49 5 45 99 49 1 4 54 98 6 49 153 2007 3 49 4 36 89 52 1 6 59 101 5 42 148 2007 4 7 2 30 39 6 0 3 9 13 2 33 48 Total 119 12 147 278 106 2 17 125 225 14 1 64 403
2008 1 12 1 32 45 12 2 4 18 24 3 36 63 2008 2 28 6 48 82 26 2 4 32 54 8 52 114 2008 3 57 4 42 103 50 2 7 59 107 6 49 162 2008 4 18 1 28 47 14 0 5 19 32 1 33 66 Total 115 12 150 277 102 6 20 128 217 18 170 405
2009 1 11 2 25 38 11 0 4 15 22 2 29 53 2009 2 34 3 50 87 33 0 6 39 67 3 56 126 2009 3 58 7 34 99 59 8 10 77 117 15 44 176 2009 4 10 0 21 31 7 0 4 11 17 0 25 42 Total 113 12 130 255 110 8 24 142 223 20 154 397
201 0 1 15 1 22 38 13 0 2 15 28 1 24 53 2010 2 42 6 34 82 34 3 3 40 76 9 37 122 Total 57 7 56 120 47 3 5 55 104 10 61 175

### Appendix B Page 2 of 3
Historical Traffic - Gulkana, May Creek, and McCarthy, Alaska May Creek Origination Destination Origin and Destination
Year Quarter Pax Freight PEQ Mail PEQ Total Pax Freight PEQ Mail PEQ Total Pax Freight PEQ Mail

PEQ Total 2007 1 1 0 1 2 2 0 8 10 3 0 9 12 2007 2 2 0 0 2 6 0 4 10 8 0 4 12 2007 3 2 0 0 2 4 0 7 11 6 0 7 13 2 007 4 1 0 0 1 1 0 4 5 2 0 4 6 Total 6 0 1 7 12 0 23 35 18 0 24 42
2008 1 1 0 1 2 1 0 7 8 2 0 8 10 2008 2 22 0 0 22 21 2 23 46 43 2 23 68 2008 3 3 0 0 3 6 0 1 7 9 0 1 10 2008 4 2 0 0 2 2 0 4 6 4 0 4 8 Total 28 0 1 29 30 2 35 67 58 2 36 96
2009 1 0 0 0 0 0 0 7 7 0 0 7 7 2009 2 3 0 1 4 1 0 0 1 4 0 1 5 2009 3 13 1 0 14 12 1 1 14 25 2 1 28 2009 4 1 0 0 1 1 0 2 3 2 0 2 4 Total 17 1 1 19 14 1 10 25 31 2 11 44
2010 1 1 0 0 1 1 0 9 10 2 0 9 11 2010 2 0 0 0 0 10 0 0 10 10 0 0 10 Total 1 0 0 1 11 0 9 20 12 0 9 21

### Appendix B Page 3 of 3 Historical Traffic - Gulkana, May Creek, and McCarthy, Alaska McCarthy Origination Destination Origin and Destina tion Year Quarter Pax Freight PEQ Mail PEQ Total Pax Freight PEQ Mail PEQ Total Pax Freight PEQ Mail

PEQ Total 2007 1 1 0 3 4 8 1 28 37 9 1 31 41 2007 2 25 0 4 29 27 5 43 75 52 5 47 104 2007 3 44 0 6 50 30 4 36 70 74 4 42 120 2007 4 0 0 3 3 4 2 26 32 4 2 29 35 Total 70 0 16 86 65 12 133 210 135 12 149 296
2008 1 4 2 3 9 3 1 25 29 7 3 28 38 2008 2 7 1 4 12 10 5 47 62 17 6 51 74 2008 3 26 1 7 34 29 4 41 74 55 5 48 108 2008 4 7 0 5 12 4 1 24 29 11 1 29 41 Total 44 4 19 67 46 11 137 194 90 15 156 261
2009 1 2 0 3 5 3 2 18 23 5 2 21 28 2009 2 14 0 5 19 14 3 50 67 28 3 55 86 2009 3 24 3 10 37 31 5 33 69 55 8 43 106 2009 4 3 0 4 7 4 0 20 24 7 0 24 31 Total 43 3 22 68 52 10 121 183 95 13 143 251
2010 1 7 0 2 9 7 1 13 21 14 1 15 30 2010 2 13 0 3 16 25 6 34 65 38 6 37 81 Total 20 0 5 25 32 7 47 86 52 7 52 111

### Appendix C
Example of General Terms and Conditions for Essential Air Service 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 these rates, 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 pay ment 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 acces s to the national air transportation system provided to the community

. If the Department unilaterally, either partially or completely, terminates or reduces pay ments for service or changes service requirements at a specific location provided for under thi s order, then, at the end of the period for which the Department does make pay ments 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 noti ce 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 pay ment. Funds are not currently

available for performance under this solicitation beyond [DATE] . The Department’s obligation for performance under this solicitation beyond [DATE] , is contingent upon the availability

of appropriated funds from which pay ment for services can be made. No legal lia bility on the part of the Department for any pay ment may arise for performance under this order beyond [DATE] , until funds are made available to the Department for performance. If funds are not made available for performance beyond [DATE] , the carrier wil l receive notice in writing b y the Department. Subsidy contracts 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. All claims for pay

ment must be submitted within 60 days of the last day of service provided under this order

.

### Appendix D

SERVICE LIST
Aero Twin, AACA, Tony Cestnik Northern Air Cargo, Keven Schlo sstein Alaska Air Carriers Association, Joy Journeay Pacific Airways, Steve Montanus Alaska Airlines, Joe Sprague PenAir Consultant, Patrick Rizzi Alaska Airlines, Sandy Sinick PenAir, Betty Gonzalez Alaska Central Express, John Seamon PenAir, Danny Seybert Alaska Central Express, Mike Bergt PenAir, Orin Seybert Alaska Central Express, Steve Endlich PenAir, Robert Cohn Alaska DOT, Christine Klein PenAir, Scott Bloomquist Alaska DOT, Rebecca Cronkhite PM, Air, d/b/a Promech, Marc Sessoms Alaska DOT

- Medicaid Passenger Fares RITA, Bernard Stankus Alaska Seaplanes, Craig Loken Servant Air, Wes Osowski Alsek Air, Les and Debra Hartley Skagway, Ben Lingle Arctic Circle, Donald Singsass Smokey Bay Air, Claire McCann Arctic Circle, Kelly Harris Spernak Airways, Mike Spernak Arctic Transportation Services (ATS), Wilfred Ryan Tanana Air Service, Brian Martin Arctic Transporation Services, (ATS), Jim Hjelm Taquan Air Service, Brian Salazaar Baker Aviation, Marjorie Baker Taquan, Beckie Allen Bering Air , Allen Haddadi Tatonduk, Controller, Tina Paylor Bering Air, Jim Rowe Tatonduk, Marketing, Robert Ragar Congressional, Murkowski, Arne Fuglvog Tatonduk, Owner, Robert Everts Congressional, Young, Jeremy Price USPS, Greg Garcia Consultant, Hank Myers U SPS, Joel Rosen Consultant, Ken Acton USPS, Mary Tobias Consultant, Norm Israelson USPS, Meredith Chavez, Consultant Ellis Air Taxi, Lynn Ellis USPS, Steve Deaton Era Aviation, Mike Lenorman USPS, Mary T. Taylor ERA, David M. Richards USPS, Tina Campb ell Frontier Flying, Bob Haiducovich USPS, William Jones Grant Aviation, Bruce McGlasson Warbelow’s Air Ventures, Arthur Warbelow Hageland, Mike Hageland Ward Air, Kiesel Hageland, Patrick Thurston Wings of Alaska, Bob Jacobsen Hageland, Steve Wahrnke Wings of Alaska, Michelle Donahue Harris Air, Fly Hackett Wright Air Service, Bob Bursiel Harris Air, Scott Harris Yute, Tim Vottis Homeland Security, David Bernier Homeland Security, William Ragan Homer Air, Andy Smircich Il iamna Air, Tim LaPorte Inland Aviation, Stephen Hill Island Air Service, Bob Stanford Katmai Air, Sonny Peterson