Order 2013-2-10

Served: February 11, 2013

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 11th of February, 2013

Essential Air Service at

CORDOVA, GUSTAVUS, 

PETERSBURG, WRANGELL, AND 

YAKUTAT, ALASKA

Under 49 U.S.C. 41731 et seq. 

 DOCKET DOT-OST-1998-4899

ORDER RE-SELECTING CARRIER

Summary

By this Order, the Department is re-selecting Alaska Airlines, Inc., to provide Essential Air 

Service (EAS) at Cordova, Gustavus, and Yakutat, Alaska, for $4,827,052 annual subsidy and at 

Petersburg and Wrangell at an annual subsidy rate of $3,476,579, from May 1, 2013, through 

April 30, 2015. 1

Background

By Order 2011-2-1, February 1, 2011, the Department re-selected Alaska Airlines, Inc. to provide 

subsidized EAS at Cordova, Gustavus, Petersburg, Wrangell, and Yakutat, Alaska, through 

April 30, 2013. Under that Order, Alaska Airlines provides service to Petersburg and Wrangell 

over a Juneau-Petersburg-Wrangell-Ketchikan routing for an annual subsidy of $3,415,987; and 

to Cordova and Yakutat over an Anchorage-Cordova-Yakutat-Juneau routing; and nonstop 

turnaround service between Gustavus and Juneau for a total annual subsidy of $4,846,951. All of 

the communities receive seven round trips a week with B-737 equipment year round except 

Gustavus, which receives subsidized service for only a 13-week summer period.2

 

1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds.

2 During the remainder of the year, Gustavus’s EAS is provided on a subsidy-free basis by other airlines with small 

aircraft.
- 2 -

As the end of the current contract on April 30, 2013, was approaching, we issued Order 2012-10-24,

October 26, 2012, requesting EAS proposals for a new contract period beginning May 1, 2013. 

Proposal of Alaska Airlines

Only Alaska Airlines 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 

$4,827,052 annual subsidy at Cordova, Gustavus, and Yakutat, and $3,476,579 at Petersburg and 

Wrangell. 

Community Comments

We received comments from the city officials of Cordova, Petersburg, and Wrangell, as well as 

from Icicle Seafoods, Inc., Cruise Line Agencies of Alaska, the University of Alaska Southeast, 

the Juneau Chamber of Commerce, and numerous comments from other local parties. All 

expressed strong support for Alaska Airlines. The City of Petersburg indicated that Alaska 

Airlines’ service provides single-plane, nonstop or multi-stop access to Anchorage, Juneau, 

Ketchikan, and Seattle, all key communities of interest. The City of Cordova indicates that 

Alaska Airlines’ jets are equipped with Required Navigation Performance Technology, enabling 

reliable access during inclement weather. The City of Wrangell indicates that “Alaska’s jet 

service is critical to the economic well-being of not only our community, but the entire region.” 

The regional impact is attested to by the interest of the Juneau Chamber of Commerce.

Decision

Alaska Airlines proposes to continue the current service level but requests a slight increase in 

subsidy. Alaska Airlines is the only carrier to submit a proposal, and it submitted only one 

option. Compared to the subsidy rates set by Order 2011-2-1, the currently effective Order, 

revenue has increased by 22 percent, offset largely by a corresponding increase in fuel expense. 

Based upon our review, the level of subsidy appears reasonable, and as noted there is strong 

community support for the proposal of Alaska Airlines. Its service to Anchorage, Juneau, and 

Ketchikan will provide the communities with access to the national air transportation system. 

We are also encouraged that the level of subsidy has remained essentially flat from the prior 

period. Based on all of the above, we will re-select Alaska Airlines to provide the communites’ 

EAS for an additional two-year period. 

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. Alaska 

Airlines 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. We therefore conclude that the carrier remains fit to 

conduct the operations proposed here.

This Order is issued under authority delegated in 49 CFR Part 1.56a(f).
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ACCORDINGLY,

1. We re-select Alaska Airlines, Inc., to provide Essential Air Service at Cordova, Gustavus, 

Petersburg, Wrangell, and Yakutat, Alaska, as described in Appendix C;

2. We direct Alaska Airlines, 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 this Order;

3. We find that Alaska Airlines, Inc., continues 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. This docket will remain open until further Order of the Department; and

5. We will serve copies of this Order on the Mayors of Cordova, Gustavus, Petersburg, 

Wrangell, and Yakutat, Alaska, and on Alaska Airlines, Inc.

By:

Susan 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-1

Nonstop, Great Circle Miles, North to South

Anchorage to Cordova, 160

Cordova to Yakutat, 213

Yakutat to Juneau, 199

Gustavus to Juneau, 41
Appendix A-2

Nonstop, Great Circle Miles, North to South

Juneau to Petersburg, 123

Petersburg to Wrangell, 31

Wrangell to Ketchikan, 82

Ketchikan to Seattle, 680
Appendix B

Alaska Airlines, Inc., Essential Air Service at 

Cordova, Gustavus, Petersburg, Wrangell, and Yakutat, Alaska

Cordova, Gustavus, Petersburg

and Yakutat & Wrangell

Passenger Revenue $7,069,763 $7,618,183

Freight/Mail $2,235,579 $1,200,444

Excess Baggage $136,094 $73,852

Trans. Related and Other $1,481,652 $1,790,525

Total Revenue $10,923,088 $10,683,004

Flying Operations $2,532,580 $2,276,823

Fuel $4,226,224 $3,799,430

Maintenance $722,319 $649,374

Ownership $1,989,325 $1,788,430

Total Indirect $9,470,448 $8,514,057

Flight Attendant $255,638 $229,822

Selling/Advertising $867,428 $779,830

Station $3,340,887 $3,003,501

Overhead $1,065,732 $958,107

Total Indirect $5,529,685 $4,971,260

Total Operating $15,000,133 $13,485,317

Return @ 5% $750,007 $674,266

Economic Costs $15,750,140 $14,159,583

Compensation 1 / $4,827,052 $3,476,579

1/ The subtotals for the two proposals reflect the sum of the individual line

elements but are different than Alaska Airlines initially proposed. However,

the combined total of $8,303,631 ($4,827,052 + $3,476,579) is the same

as the carrier proposed.
Appendix C-1

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

Cordova, Gustavus, and Yakutat, Alaska, Docket 1998-4899

Effective Period: May 1, 2013, through April 30, 2015

Aircraft: B-737-400

Scheduled Service:

 Cordova, 7 nonstop round trips/week to Anchorage, and 7 one-stop (Yakutat) trips/week to Juneau

 Yakutat, 7 nonstop round trips/week to Juneau and 7 one-stop (Cordova) trips/week to Juneau

 Gustavus: 7 nonstop round trips/week to Juneau, for the two 13-week peak summer seasons –

May 26, 2013, thru August 24, 2013, and June 1, 2014, thru August 30, 2014.

$/Flight, JNU or ANC1 Weekly Ceiling 2

Cordova $1,595 $44,6603

Yakutat $1,595 $44,660

Gustavus $1,595 $22,3304

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 may not be available for performance under this order beyond March 27, 2013. The Government’s 

obligation for performance under this order beyond March 27, 2013, is subject to the availability of 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 March 27, 2013, until funds are made available to the Department for performance. If funds are not made available 

for performance beyond March 27, 2013, 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 $4,827,052 annual compensation ÷ 3,026 annual flights at the eligible points and their hubs, calculated as follows: 

52 weeks 28 flights in each direction x 2 communities (CDV and YAK) x 0.978 = 2,848; 

13 weeks x 1 community (GST) x 14 flights in each direction x .978 = 178

2 Calendar weeks that fall into separate calendar months will be treated as part of the later month for the purpose of 

calculating both calendar weeks per month and the monthly compensation.

3 28 departures/arrivals per week between each point and Anchorage/Juneau x $1,595.

4 14 departures/arrivals per week between Gustavus and Juneau x $1,595.
Appendix C-2

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

Cordova, Gustavus, and Yakutat, Alaska, Docket 1998-4899

Effective Period: May 1, 2013, through April 30, 2015

Scheduled Service :

 Petersburg, 7 nonstop round trips/week to Juneau and 7 one-stop (Wrangell) trips/week to Ketchikan.

 Wrangell, 7 nonstop round trips/week to Ketchikan and 7 one-stop (Petersburg) trips/week to Juneau.

Aircraft: B-737-400

$/Flight, JNU or KTN1 Weekly Ceiling 2

Petersburg $1,221 $34,1883

Wrangell $1,221 $34,188

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 may not be available for performance under this order beyond March 27, 2013. The Government’s 

obligation for performance under this order beyond March 27, 2013, is subject to the availability of 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 March 27, 2013, until funds are made available to the Department for performance. If funds are not made available 

for performance beyond March 27, 2013, 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 $3,476,579 annual compensation ÷ 2,848 annual flights at the eligible points and their hubs, calculated as follows: 

52 weeks x 28 flights in each direction x 2 communities (PSG and WRG) x 0.978 = 2,848.

2 Calendar weeks that fall into separate calendar months will be treated as part of the later month for the purpose of 

calculating both calendar weeks per month and the monthly compensation.

3 28 departures/arrivals per week between each point and Juneau/Ketchikan x $1,221.