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 11 th of February, 2013

Essential Air Service at

CORDOVA, GUSTAVU S, PETERSBURG, WRANGELL, AND

YAKUTAT
, ALASKA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 199 8

- 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

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- 1, February 1, 2011, the Department r e

- 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

- Wran gell

- 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 commun ities 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

.

Propos al of Alaska Airlines Only Alaska Airlines submitted a proposal, and it submitted only one option. The carrier proposes to continue to provide the same l evel 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

, a s 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 Peters burg 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 Requ ired 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 im pact 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 sub mitted 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 app ears 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 encourage d 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 41 738 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 informatio n has come to our attention that would cause us to question the carrier’s fitness at this time. DOT has

contact ed the Federal Aviation Administration, and it has raised no concerns that would negatively affect our fitness finding s

. We therefore conclude that the carrier remain s fit to conduct the operations proposed here.

This Order is issued under authority delega ted in 49 CFR Part 1.56a(f).- 3

-

ACCORDINGLY,

1. We re

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

Pet ersburg, 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, which ever 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., continue s to b e fit, willing and able to operate as a certificated carrier and capable of providing reliable Essential Air Service at the these

communities

4 . Th is docket will remain open until further Order of the Department; and

5 . We will serve copies of this Or der on the Mayor s 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 o n the World Wide Web at http://www.regulations.govAppendix A

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Nonstop, G reat Circle Miles, North to South Anchorage to Cordova, 160 Cordova to Yakutat, 213 Yakutat to Juneau, 199 Gustavus to Juneau, 41Appendix A

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Nonstop, Great Circle Miles, North to South Juneau to Petersburg, 123 Petersburg to Wrangell, 31 Wrangell to Ketchikan, 82 Ketchikan to Seattle, 680Appendix C

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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 (Ya kutat) 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 ANC 1 Weekly Ceiling 2

Cordova $1,595 $44,660 3

Yakutat $1,595 $44,660

Gustavus $1,595 $22,330 4

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 air craft 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 cert ain weather cancellations, only completed flights are conside red 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 compensatio n. Should circumst ances 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 co mpensated. In

d etermining 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 Depar tment does make payments in the stipulated amounts or at the stipulated service levels, the carrier may cease to provide service to that spec ific location without regard to any requirement for notice of such cessation. Those adjustments in the levels of s ubsidy 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 pa yment.

Subsidy contract are subject to, and incorporate by reference, relevant statutes and Departm ent regulations, as they may be amended from time to time. However, any such statutes, regulations, or amendments thereto shall not operate to controvert th e 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 fo r 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.

A ll 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 eac h direction x 2 communities (CDV and YA K) 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 pe r 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

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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 ( Peter sburg ) trips/week to Juneau

. Aircraft : B

- 737

- 400

$/Flight, JNU or KTN 1 Weekly Ceiling 2
Petersburg $1, 221 $ 34,188 3 Wrangell $1, 221 $ 34,188

Note: The carrier understands that it may forfeit its compensation for any flights that it does not op erate 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 t he 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 cert ain weather cancellations, only completed flights are considered eligible f or 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 perio d in question. If the carrier contemplates any such chan ges 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 compensatio n. 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 co mpensated. In determining whe ther 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.

I f 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 do es mak e payments in the stipulated amounts or at the stipulated service levels, the carrier may cease to provide service to that spec ific 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 pa yment.

Subsidy contract are subject to, and incorporate by reference, relevant statutes and Department regulation s, as they may be amended from time to time. However, any such statutes, regulations, or amendments thereto shall not operate to controvert th e foregoing paragraph. Funds may not be available for performance under this order beyond March 27, 2013. The G overnment’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 eligibl e 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

c alculating both calendar weeks pe r month and the monthly compensation.

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

.