Order 2010

- 7
- 11 Served: July

15, 2010 

### DELTA STATES OF AMERICA DEPARTMENT OF TRANSPORTATION 

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

Is sued by the Department of Transportation on the 15 th of July , 2010 Essential Air Service at CHATHAM, ALASKA, AND FUN TER BAY , ALASKA Under 49 U.S.C. 41731 et seq
. DOCKET OST - 1997 - 3134 DOCKET OST - 1997 - 3134

ORDER RESELECTING CARRIER Summary By this order , the Department is reselecting Ward Air , Inc., to provide essential air service (EAS) at Chatham and Funter Bay, A laska , at annual subsidy rate s of $ 6,311 at Chatham and $13,273 at Funter Bay , from October 1, 2010, through September 30, 2012

. 1 Background Order 2008

- 6

- 27 selected Ward Air to provide Chatham with one one

- stop round trip per month to Juneau and Funter Bay with one nonstop round trip per week to Juneau, except that once a month an intermediate stop would be allowed. All the service was to be with single

- engine piston aircraft for $17,280 annual subsidy

. Inanticipation of the end of the current contrac t, by Order 2010

- 5
- 11 we requested proposals for replacement service. We received a proposal from only one carrier, Ward Air , and requested comments from the communities and state

. On June 25 we received comments from the state , and the issue is ripe for decision. Carrier Proposal Ward Air was the only

carrier to submit a proposal, and its prop osal included only one option for the same service as currently selected, as follows:

1 $6,311 at Chatham and $13 ,273 at Funter Bay. Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds.- 2

-

Chatham O ne one - stop round trip per month to Juneau for $6,311 annual subs idy . All of the service would be operated with single

- engine piston aircraft, either DeHavilland Beaver, Cessna 185, or Cessna 206 aircraft. Funter Bay O ne nonstop round trip per week to Juneau for $13,273 annual subsidy . All of the service would be op erated with single

- engine piston aircraft, either DeHavilland Beaver, Cessna 185, or Cessna 206 aircraft. Community Comments As neither community

has elected or appointed local officials, we solicited comments from the State of Alaska’s O ffice of Statewid e Aviation. W e have received their comment s , and the state supports the continuation of EAS at these communities

. “Due to the isolated location of these communities and the complete lack of any road

system connection, this subsidized air service is their only form of scheduled transportation. The communities of Chath am and Funter Bay depend on scheduled air freight, passenger, and mail service for basic necessities, routine medical and health services, and economic welfare.” Decision Ward Air is the o nly

carrier to submit a proposal, it submitted only one option, and w e have decided to select it for a new, two
- ye ar term beginning October 1, 20 10

. We find that the carrier’s proposed service and subsidy level s are reasonable , and we are not aware of any reason why we should not re

- select the carrier to provide the proposed level of service. We shall make the selection of Ward Air contingent upon the Department’s receiving properly executed certifications from the carrier that it continues to comply with the Department’s regulations regarding drug

- free workplaces and non - discrimination. Carrier Fitness 49 U.S.C. 41737(b) and 41738 requires that DOT find an air carrier fit, willing, and able to provide reliable service before DOT may subsidize it to provi de essential air service. Ward Air , In c. 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 Aviati on Administration, and it has raised no concerns that would negatively affect our fitness finding s . DOT therefore concludes that the carrier s remain fit to conduct the operations proposed here. This order is issued under authority delegated in 49 CFR 1.5 6a(f) and re

- delegated to the Directo r, Office of Aviation Analysis. ACCORDINGLY, 1. We re select Ward Air , In c., to provide essential air service at Chatham and Funter Bay, Alaska , as described in Appendix C ;- 3

-

2 . We direct Ward Air , In c., to retain all books, records, and other source and summary documentation to support claims for pay ment, 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 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 Ward Air , In c., continue s to be fit, willing and able to operate as a certificated carrier and capable of providing reliable essential air service at Chatham and Funter Bay, Alaska ; 4 . Th is docket will remain open until further order of the Department; and 5 . We will serve copies of this order on the Office of Statewide Aviation of the Alaska Department of Transportation and Public Facilities, and Ward Air, Inc. Persons entitled to petition the Department for review of this order under the Department’s Regulations, 14 CFR 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 petiti on for review shall not preclude its effectiveness. By :
TODD M. HOMAN Director Office of Aviation Analysis (SEAL) An electronic version of this document is available on the World Wide Web at http://www.regulati ons.govAppendix A

Great Circle Miles Chatham to Juneau 60 Funter Bay

to Juneau 14 Chatham to Funter Bay 51Appendix B Annual Compensation Projection for Essential Air Service at Chatham and Funter Bay, Alaska, Docket OST-1997-3134 Funter Bay Chatham Passengers 56 10 Passenger Fare $77 $155 Passenger Revenue $4,312 $1,550 Cargo Pounds 0 639 Cargo Rate $0.20 $0.40 Cargo Revenue $0 $256 Total Revenue $4,312 $1,806 Block Hours 26 1/ 12 1/ $/Hour Pilot $134.30 $3,492 $1,612 Fuel & Oil $112.05 $2,913 $1,345 Insurance $64.22 $1,670 $771 Maintenance $93.86 $2,440 $1,126 Depreciation $17.41 $453 $209 Total Direct Expenses $421.84 $10,968 $5,063 Indirects $193.03 $5,018 $2,316 Total Operating Expenses $15,986 $7,379 Return @ 10 percent $1,599 $738 Total Economic Cost $17,585 $8,117 Annual Subsidy $13,273 $6,311

1/ Funter: 52 flights per year @ .5 hrs. 26 hours Chatham, 12 flights per year @ 1 hr. 12 hours 38 hoursAppendix C

- 1 Ward Air Airlines , Inc., Essential Air Service to be Provided to

Chatham , Alaska , Dockets OST - 1997 - 3134 Effective Period : October 1 , 20 1 0 , through September 30, 2012

. Scheduled Service : One round trip per calendar month to Juneau with up to one intermediate stop

. Aircraft : Single

- Engine Piston

—DeHavailland Beaver, Ce ssna 185, or Cessna 206 Rate per Eligible Flight: $ 263 1 Monthly Ceiling : $ 526 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 it s 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 r ate, 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 s ervice 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 disall owed, 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 complete ly , terminate s 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 w hich 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 car rier 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 are not currently available for performance under this order beyond September 30, 2010 . The Government’s obligation for performance under this order beyond September 30, 2010 , 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, 2010 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30, 2010 , the Department will provide notice in writing to the carrier. All claims for payment must be submitted within 60 days of the last day of service provided under this order.

1 Annual compensation of $6,311 divided by the estimated annual completed departures and arrivals: 2 flights/mo nth x 12 months = 24 total. 2 2 flights/mo nth x $ 263

.Appendix C

- 2 Ward Air Airlines, Inc., Essential Air Service to be Provided to Funter Bay, Alaska, Dockets OST - 1997 - 3134 Effective Period : October 1, 2010, through September 30, 2012. S cheduled Service : One round trip per week to Juneau with up to one intermediate stop on one round trip each month. Aircraft : Single

- Engine Piston

—DeHavailland Beaver, Cessna 185, or Cessna 206 Rate per Eligible Flight: $128 1 Weekly Ceiling : $256 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 significan t 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 c om

pleted, 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 per iod, it may jeopardiz e 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 writte n 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 complete ly , terminates or reduces payments for service or changes service requirements at a specific locatio n provided for under this order, then, at the end of the period for w hich 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 c ontract 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 para graph. Funds are not currently available for performance under this order beyond September 30, 2010 . The Government’s obligation for performance under this order beyond September 30, 2010 , is subject to the availability of appropriated funds from which p ayment 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, 2010 , until funds are made available to the Department for performance. If funds are not mad e available for performance beyond September 30, 2010 , the Department will provide notice in writing to the carrier. All claims for payment must be submitted within 60 days of the last day of service provided under this order.

1 Annual compensation of $13,273 divided by the estimated annual completed departures and arrivals: 2 flights/we ek x 52 weeks = 104 total. 2 2 flights/we ek x $ 128

.