Order 2010-7-11

Served: July 15, 2010

DELTA STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 15th of July, 2010

Essential Air Service at

CHATHAM, ALASKA, AND 

FUNTER 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, Alaska, at annual subsidy rates 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. In anticipation of the end of the current contract, 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 proposal 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 One one-stop round trip per month to Juneau for $6,311 annual subsidy. All of the 

service would be operated with single-engine piston aircraft, either DeHavilland Beaver, 

Cessna 185, or Cessna 206 aircraft.

Funter Bay One nonstop round trip per week to Juneau for $13,273 annual subsidy. All of the 

service would be operated 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 Office of Statewide Aviation. We have received their comments, 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 roadsystem connection, this subsidized air service is their only form of scheduled 

transportation. The communities of Chatham 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 only carrier to submit a proposal, it submitted only one option, and we have 

decided to select it for a new, two-year term beginning October 1, 2010. We find that the 

carrier’s proposed service and subsidy levels 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 provide essential air service. Ward Air, 

Inc. 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. DOT therefore concludes that the carriers remain fit to conduct the 

operations proposed here.

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

Director, Office of Aviation Analysis.

ACCORDINGLY,

1. We reselect Ward Air, Inc., to provide essential air service at Chatham and Funter Bay, 

Alaska, as described in Appendix C;
- 3 -

2. We direct Ward Air, Inc., 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 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, Inc., continues 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. This 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 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 available on the World Wide Web at

http://www.regulations.gov
Appendix A

Great Circle Miles

Chatham to Juneau 60

Funter Bay to Juneau 14

Chatham to Funter Bay 51
Appendix 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 hours
Appendix C-1

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

Chatham, Alaska, Dockets OST-1997-3134

Effective Period: October 1, 2010, 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, Cessna 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 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 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/month x 12 months = 24 total.

2 2 flights/month 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.

Scheduled 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 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 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 $13,273 divided by the estimated annual completed departures and arrivals: 

2 flights/week x 52 weeks = 104 total.

2 2 flights/week x $128.