BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, DC

____________________________________ ) In the matter of the application of ) ) WINGS AIRWAYS ) DOCKET DOT
- OST
- 2010
- 0023 ) For a certificate f publi c convenience ) And necessity under 49USC41102 ) ____________________________________)

ANSWER IN OPPOSITION OF ALASKA SEAPLANE SERVICE , LLC

Communications with respect to this document should be addressed to: Craig Loken Alaska Seaplan es Services 1873 Shell Simmons Drive Juneau, AK 99801 (907) 789

- 3338 akseaplanes@alaska.com February 16, 20101 BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, DC

_______________ _____________________ ) In the matter of the application of ) ) WINGS AIRWAYS ) DOCKET DOT
- OST
- 2010
- 0023 ) For a certificate f public convenience ) And necessity under 49 US C 41102 ) ____________________________________)

AN SWER IN OPPOSITION OF ALASKA SEAPLANE SERVICE, LLC

Alaska Seaplane Service, LLC ( Alaska Seaplanes) herein answers in opposition to the application of Wings Airways (Airways) for the certificate of public convenience and necessity. The application is fa lse and misleading, and claims assets which Airways neither owns nor controls, and does not have access to. The float equipped deHavilland
Otters aircraft it does have cannot be operated in the wheel plane markets it proposes for service. Furthermore, if one examines the assets Airways does have available, it appears that the real purpose of the application is to offer seaplane service which the applicant cannot show could be operated profitably with the aircraft on hand. For these reasons Airways cannot be found fit, willing and able to engage in scheduled interstate transportation of persons, property and mail.2

THE APPLICATION IS FALSE AND MISLEADING

In Appendix H of its Application, Airways proposes the use of Cessna Caravan and Cessna 207 aircraft f

or the provision of all service in the three wheel plane markets proposed. Only those aircraft are proposed for use, and all calculations are computed using only those aircraft (flight speed, seating capacity, payload, unit costs). Appendix F lists five Caravan or C

- 207 aircraft by actual tail number as being the fleet of aircraft to be used.

The deception is that Airways has never had access to these aircraft and will not for the foreseeable future. The five aircraft listed in Appendix F are under leas e to what would be a rival certificated air carrier, Alaska Juneau Aeronautics, Inc. d/b/a Wings of Alaska. While Airways includes an OST

- 6410 Certificate of Insurance in its application, the five aircraft proposed for service are notably absent. Appendi x H is simply a spreadsheet exercise based on phantom aircraft.

The Application fails to provide any mention of ground handling of aircraft at Juneau or any of the three destination markets. The only passenger handling facilities available to Airways is for seaplanes

- only on the waterfront in downtown Juneau near the cruise ship docking area, miles from Juneau International Airport. While this works very well for Airways’ existing business of transporting tourists during the summer, it is an
inconvenient location for local and interline connecting passenger service on a year around basis, and the waterfront location cannot handle wheel planes. Airways does not3

have a ticket counter at Juneau International Airport, and the float pond at JIA is unavailable during most of the winter when it is frozen over.

Airways claims to have a 24,000 squ are foot maintenance and cargo facility on the Juneau International Airport. In fact, Airways is simply one tenant of the facility which is owned by a principal of Alas ka Juneau Aeronautics, Inc. (AJA) which would be a direct competitor of the proposed operations, and which currently leases the five aircraft proposed for service by Airways. Seaplanes has no knowledge of what the actual relationship is among the various Wings named entities (Wings of Alaska, Wings Airways, Wings Airline Services), but clearly this Application assumes the availability of assets from all three business in order to operate as planned. The Department needs to examine the relationships among the three entities before determining that Airways , on its own , is fit, willing and able to operate the services proposed. At a minimum, the Department must request all executed leases for the five aircraft proposed for service. As noted in the applicati on, the current leases are set to expire on March 31, but Seaplanes has been told that new leases or extensions of existing leases with modifications have been agreed to. The lease covering the maintenance and cargo facility should be examined to determin e if Airways actually has access to freight and mail handling and storage facilities.

Finally, the application is deceptive and incomplete because it does not include a listing of setup and pre

- operating expenses necessary to begin service. Airways simpl y says that it has the necessary cash to cover any expenses, but that begs the question of whether4

Airways knows what it has to do. Few if any of the pilots currently employed by Airways are current in the aircraft proposed for service. The pilots they h ave on staff are employed full time during the crucial summer period. Available counter space at Juneau International Airport is extremely limited, and Airways does not even mention the myriad of startup expenses associated with scheduled service. Even i ts operations spreadsheet exercise fails to provide a detailed description of costs or the references for the costs. The economic forecasts are difficult to understand let alone refute because of the lack of underlying detail.

THE APPLICATION APPEARS TO BE A BACKDOOR ATTEMPT TO PROVDE SEAPLANE SERVICE IN DIFFERENT MARKETS

If Airways was actually able to provide the service it proposes, Alaska Seaplanes would not have a competitive concern or need to question the application. Given that Airways cannot op erate the services it proposes, the question is what it will really do if it achieves certification. The only aircraft available are straight

- float (non

- amphibious) Otters and Beavers. While th ere are waterfront facilities at Hoonah, Haines and Skagway, they are inconvenient, and are subject to interference by boats and cruise ships. There are no suitable passenger handling facilities at the waterfront sites, and the operations would require more logistical support than wheel aircraft operations.

This brings us to the crux of the problem with the service proposal. Using the float planes it actually has, Airways cannot achieve either the operating results or financial5

results it proposes. The Otters and Beavers are substantially slower than the wheel aircraft they would replace, and have much higher operating costs per hour as well. These float plane services would compete with two well established wheel plane operators (AJA and Air Excursions) which can provide faster and less expensive service.
Dur ing the winter Airways could not use Juneau International Airport because the float pond freezes over, and the scale of operations would be limited by daylight. While wheel plane operators can fly both day and night operations, float planes can fly only d uring daylight hours. The proposed operations can only be provided by the aircraft Airways does not have, and would be operationally and financially impossible with aircraft it does have.

Looking at the aircraft and personnel Airways does have, and the m arket experience claimed on page 5 of the application, it appears that the only markets which could be served are Angoon, Tenakee Springs, Pelican, Elfin Cove, Cube Cove and Hobart Bay

. These markets are the heart of Alaska Seaplanes service area. Alaska Seaplanes is the Essential Air Service provider at Angoon, Tenakee, Pelican and Elfin Cove, and provides

on - demand service to northern Southeastern Alaska including Hobart Bay. In order to serve Juneau International Airport, Alaska Seaplanes has invested in a mphibious deHavilland Beavers to provide year around service at the airport. Even with subsidy, Alaska Seaplanes is marginally profitable and does not have the equity or cash of Airways. When AJA competed with Alaska Seaplanes at Angoon, Tenakee, Pe lican and Elfin Cove, both carriers lost money. AJA eventually withdrew from the markets, selling all facilities and equipment to Alaska Seaplanes.6

The current application of Airways is fatally flawed, and it cannot deliver the service it
proposes. If t he Department does issue a certificate, it must require that Airways operate the service it proposes and only the service it proposes through the one year demonstration period.

SCHEDULED FLOAT PLANE SERVICE WOULD RESULT IN SIGNIFICANT LOSES FOR AIRWAYS

C urrently Airways operates a tourist oriented service offering area flightseeing as well as day trips to Taku Glacier Lodge for a salmon bake and cultural presentation. The primary market for these services is passengers from the dozens of cruise ship arri vals in Juneau each year. In addition to pre

- sold passengers, Airways maintains its own ticketing facility to accommodate walk

- up passengers on the Juneau waterfront. By operating only during the five month tourist season, Airways avoids the inevitably m oney losing off

- peak operations. The seven month off

- peak layover also allows very efficient maintenance and refurbishment of aircraft. Airways own projections show substantial losses during the seven off

- peak months in the wheel plane markets. Alaska S eaplanes history shows consistent and sizable losses in the fourth and first calendar quarters, and consistent profits only in the third calendar quarter.

If Airways is to use the aircraft it has in the only markets where it can compete , it will be substa ntially worse off for it. First, it would have to take aircraft away from its very7

profitable core tourism service to provide scheduled service. Second, it would have to endure seven months or more of loss generating operations each year to maintain

cont inuing fitness. Third, it would have to keep pilots, additional mechanics, ground crews, ticket counters and mail facilities open year around instead of shutter ing the facilities during the winter as they now do.

THE APPLICATION IS DEFICIENT AND MUST BE DISMISSED

It is typical that an application can raise questions requiring further data or support. The Department is very patient in working with applicants who present a workable plan and apparently credible qualifications. In this case Airways propose s service using aircraft it does not have from facilities its does not possess using employees it does not employ. The service requires the cooperation of AJA, a putative competitor. The projected operating results are simply spreadsheet exercises with i nsufficient detail to support the findings or prove the competence of the applicant. The application is silent on preoperating expenses even though Airways does not have the necessary aircraft and does not service any of the terminals it proposes to use. Clearly Airways has very deep pockets for an operation this size, and apparently the shareholders are willing to pledge all of it in pursuit of this program. That alone is not sufficient to find the carrier fit, and clearly Airways is unable to provide t he service it proposes. The Department should dismiss the application outright, or allow Airways to withdraw its application and have its application fee refunded pursuant to 14 CFR 389.27.8

WHEREFORE , Alaska Seaplane Service respectfully requests that th e application for a certificate of public convenience and necessity be dismissed because it does not provide the data necessary for approval, and is deceptive and misleading.
Respectfully submitted, Alaska Seaplane Service, LLC

_______________________ __ By Craig Loken February 16, 20109 CERTIFICATE OF SERVICE

I certify that I have this day had a copy of the foregoing Answer in Opposition served upon Wing Airways and all persons listed in the Certificate of Service appended to the application by fir st class mail.

_________________________ Craig Loken February 16, 2010