August 8, 2013 Department ofTransportation .-.".:""' '**"'-~** : .**~ ~...**  . J Kodiak 11 Water Stop Proposal Kitoi, Seal bay, PortWilliams, Port bailey, Uganik, West Point ,Zachar Bay, Amook, Moser Bay, Olga Bay, Alitak / Docket DOT-OST-2000-6945

The following proposal comprisesthe Kodiak 11 subsidy request and bid for Redemption Inc dba Island Air Service. The bid is for a DHC-2 Beaver as previous bid cycles and experience has clearly shown that aircraft smallerthan the Beaver simplywill not meetthe PEQ requirements ofthis contract. Enclosed is the PEQ growth ofthe Kodiak 11from 572 PEQ'S in 2008to 785 PEQ'S in the most recent 12 month cycle. Additionally, Island Air has retained three departures perweekto Alitak in orderto meetthe customer requirements and timeliness of mail deliveries tothisfishing communityduring peak operations. This third trip toAlitak and all extra sections to again meetcustomer desires have been in addition to all contract requirements. Island Air has maintained high service reliabilityto ourcommunities by meetingthe customer needs. In addition tothe extratrip tothe south end and all extra sectionsflown, Island Air added a High Gross Beaver in the spring of2012 which further increasesthe maximum PEQ'S available from 450 on the previous bid duringthe peak season to 504. This extra room and weight carrying ability has been sorely needed. The continual growth in these marketswe believe, clearly show the service reliability in this contract. Island Air is the ownerof Kodiak Adventures Unlimited a booking and marketing supplierfor Kodiak destination tourism. It provides destination tourism booking capabilities forthe Kodiak Island archipelago for all tourism venues and astrong source ofcustomer referralsfor incoming tourism requests. Island Air has interline arrangementswith Alaska Airlines and ERA airlinesto provide lost baggage delivery on next available scheduled flights. This is even more difficultwhen you consider many clients are not on normal scheduled runs and outsidethe boxthinking is needed. Island air is located nextto both carriers at Kodiak State Airport. Overthe lasttwo years we have invested in warm and drywaitingand storage facilities in Trident Basin- the departure pointforthese trips. In addition we have added the necessary hotwater de-icing systems sorely needed in ourwinterfloat environments.The communitiesviews are a matter of record over previous bid cycles and the growth ofour loads during difficult economictimes have shown our abilityto adapt and provide flexibilityto ourcustomers' needs. Island air has been operatingcontinually since 1980 underthe same managementwith an experience and reliability record to keep itthe longest running scheduled carrier in Kodiak today.

Sincerely Redemption Inc Island AirService Robert GStanford Stanford@alaska.com 9075391182Proposal to Provide Essential Air Service at Alitak, Amook Bay, Kitoi Bay Moser Bay, Olga Bay, Port Bailey, PortWilliams,Seal Bay, West Point Uganik, Zachar Bay Bid DHC-2 2013 Total block hours AircraftType: DHC-2 Beaver Departures REVENUE Passenger Cargo Mail Total Operating Revenue

DIRECT OPERATING EXPENSES Pilot Fuel &Oil Maintenance Aircraft Insurance Total Direct Operating Expenses Indirect Operating Expenses Traffic Related departure Related Capacity Related Total Indirect Operating Expenses TOTAL OPERATING EXPENSES Operating Loss 75 152

49 81 54 ph ph ph ph ph

7.2% of Revenues 33.93 per Depart 12.6% of Revenues

Profit element@ 5 percent ofTotal Operating Expense Compensation Requirement 402 1011

72950 14950 19279 107179

30142 61188 19693 32553 21702 165277

7717 34303 13505 55525 220801 113622.43

11040.07 124662.50

### 2008 Alitak 249.4 Moser Bay 15.1 Olga Bay 52 TOTAL PEQ'S 316.5 Amook 38.2 Zachar Bay 9.6 TOTAL PEQ'S 47.8 Kitoi Bay 91.8 Seal Bay 26.2 PortWilliams 6.4 TOTAL PEQ'S 124.4 Port Bailey 3.7 Uganik 16.9 West Point 62.9 TOTAL PEQ'S 83.5

2008 PEQ'S 572.2 2009 PEQ'S 622.1 2010 PEQ'S 663.9 2011 PEQ'S 684.7 2012 PEQ'S 767.0 2013 PEQ'S 785.0

7501bs Cessna 206 PEQ'S 2009 232.3 23 46.4 301.7

39.6 12.7 52.3 96.2 29.2 22.8 148.2

28.8 20.9 70.2 119.9 PEQ'S 2010 2011 194.8 171

58.1 54.1 63.1 66.9 316 292
44.4 51.2

3.1 2 47.5 53.2 133.7 142

61.4 79.4 17.8 24.3 212.9 246

21.1 22.2 12.2 11.1 54.2 60.6 87.5 93.9

14001bs Beaver PEQ'S 18 week peak - 2trips perweek 270 504 2012 2013 270.7 240.1

38.1 52.3 79.8 45.5 388.6 337.9

46.8 59.7 23.6 28.4 70.4 88.1 103.4 169.2

63.9 34.5 40.7 46.7

208 250.4 41.6 26.1 21.7 23.3 36.7 59.2

100 108.6Proposal to Provide Essential Air Service atAlitak, Amook Bay, Kitoi Bay Moser Bay, Olga Bay, Port Bailey, PortWilliams,Seal Bay, West Point Uganik, Zachar Bay 2013 Off-peak (34 weeks) MIN MIN MIN MIN TRIPS WEEKS Hours Dep./wk Total Dep. ADO-KZB-AOS-ALZ-ADO 30 6 20 45 13 21.9 4 52

ADO-KZB-AOS-ADO 30 6 36 21 25.2 3 63 ADO-KKB-SYB-KPR-ADO 20 18 12 36 34 48.7 4 136 ADO-KOY-KMY-ALZ-ADO 45 6 6 45 21 35.7 4 84 ADO-KPY-UGI-KWP-ADO 20 18 6 30 34 41.9 4 136 173.5 19.0 471.0 Peak (18 weeks) ADO-KOY-KMY-ALZ-ADO 45 6 6 45 2 18 61.2 8 144 ADO-KKB-SYB-KPR-ADO 20 18 12 36 2 18 51.6 8 144 ADO-KZB-AOS-ADO 30 6 36 2 18 43.2 6 108 ADO-KPY-UGI-KWP-ADO 20 18 6 30 2 18 44.4 8 144 200.4 30.0 540.0 Total Hours 373.9 Total Hours with weatheradjustment- see note 1. 401.89

Note 1.: An additional 7.5 percent for bad weather has been added to the calculated total to accountfor adverse weather delays
2013 traffic/Revenue PAX RATE REV CARGO RATE REV MAIL RATE REV ALZ 181 160.9 29128.33 37.1 0.7341 5447.022 22.0 1.89837 8352.828 AOS 20 97.67 1953.4 33.7 0.6118 4123.532 6.0 1.31896 1582.752 KKB 134 87.91 11779.94 8.5 0.4706 800.02 26.7 0.93821 5010.0414 KMY 45 160.9 7241.85 7.3 0.7341 1071.786 0.0 1.71 0 KOY 41 160.9 6598.13 4.5 0.7341 660.69 0.0 1.69972 0 KPR •37 112.6 4164.72 6.9 0.5647 779.286 2.8 1.20308 673.7248 SYB 18 97.67 1758.06 10.2 0.5176 1055.904 6.3 1.15342 1453.3092 KPY 17 82.79 1407.43 4.8 0.4235 406.56 4.3 0.85223 732.91952 KWP 56 87.91 4922.96 0.2 0.4706 18.824 3.0 1.07064 642.384 KZB 22 97.67 2148.74 4.1 0.6118 501.676 2.3 1.23619 568.6474 UGI 21 87.91 1846.11 0.9 0.4706 84.708 1.4 0.93821 262.6988 72949.67 14950.01 19279.305