Before the 

• J

EAS & Domestic Analysis Division, X-53 — 

Office of Aviation Analysis, Room 6401 

Department of Transportation 

400 7th Street, S.W. 

Washington, D.C. 20590 

In the Matter of: 

ESSENTIAL AIR SERVICE AT 

MINTO AND MANLEY, ALASKA Docket OST 2004-17563 

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

Proposal to Provide Essential Air Service at Minto and Manley Hot 

Springs, Alaska 

Warbelow's herby submits its proposal to continue subsidized service to Manly and 

Minto, Alaska beginning September 1, 2010. 

Because of the runway conditions at Manley and Minto, service has historically been 

provided with single engine aircraft. Since the last subsidy proposal in 2008, the Minto runway 

has been rebuilt, and can now easily support larger aircraft, however there is still no IFR 

approach. The Manley runway we expect will be rebuilt in the next 1-4 years, but is continues to 

be most suitable for single engine aircraft. Warbelow's is currently providing service with 

Cessna 206 aircraft, and bases this proposal on three days per week service with single engine 

aircraft with four insured passenger seats, with the balance of the capacity reserved for mail and 

freight. 

Revenue projections are based on the lagging four quarters of data through December 31, 

2009, as we expect similar traffic over the proposed subsidy period. Our cost data is based on 

our historical costs over the previous year. We have made no adjustments for inflation. 
Rates 

Order 2010-3-18 set new mail rates that we have used to calculate mail revenue over the 

subsidy period: 

RTM $$13.4782 

Terminal/Ton Enplaned $745.01 

Fairbanks-Manley 83 miles 

Fairbanks-Minto 50 miles 

Therefore the P-135 rate for Manley will be $0.94/pound and for Minto $0.71/pound. 

Current passenger fares and cargo rates are used in these calculations. These reflect no 

change over the current subsidy period. 

Schedule 

The following schedule has been published in the OAG and is currently being operated. 

We propose to continue this schedule as it serves the villages well. During the winter months, 

service must be provided mid day when light permits as these are both VFR only destinations. 

Arrive 

Depart 

Fairbanks 

0945 

Block Time 

Total Time 

Manley 

1025 

1030 

50 m in 

Minto 

11:25 

11:35 

30 min 

Fairbanks 

12:05 

32 min 

1.9 

Flight times have been updated based on our actual experience over previous years. Over 

the two year analysis period, estimated hours then are: 

52 weeks x 3 flights per week x 1.9 hours per flight = 296.4 hours 

Projected Demand 

Passenger, cargo and mail traffic is based on our actual reported volumes for 2009, which 

vary somewhat from the historic numbers provided in the Order Requesting Proposals. We 

cannot explain the differences, but believe the numbers presented here reflect accurately the 

numbers we have previously reported to DOT on our TlOO and F2 reports. 

Continued migration of Native people to the urban centers of Fairbanks and Anchorage 

have limited mail and passenger traffic. We have projected passenger revenue to remain 

constant. We have no basis for projecting continued growth in the market, as high energy costs, 

poor salmon runs on the Yukon and declines in federal spending have put a substantial damper 

on economic activity in rural villages, and even driven a population decline as residents move to 

Anchorage and Fairbanks. 
Projected Revenue 

Passenqer Revenue 

Manley 

Minto 

Less Passenger Tax 7.5% 

Passenger Total 

Cargo Revenue 

Manley 

Minto 

Cargo 

Total 

Mail 

Revenue 

Manley 

Minto 

Mail Total 

Total Revenue 

Pax 

32 

210 

Pounds 

1535 

2757 

Pounds 

27970 

23056 

Rate 

0.94 

0.71 

Fare 

85.00 

79.00 

Rate 

0.49 

0.40 

Totals 

2,720.00 

16,590.00 

1,347.21 

17,962.79 

752.15 

1.102.80 

1,854.95 

26,291.80 

16.369.76 

42,661.56 

$62,479.30 

Projected Expenses 

Most costs have continued to increase over the last two years, with the exception of hull and 

liability insurance which is at the bottom of a soft market. Fuel costs have been on an upward trend over 

the past year, and we expect may continue to increase as the economy recovers from recession. We have 

not projected any fuel cost increases. 

Allocated Block Hours 

Direct Expense 

Pilot & Co-pilot 

Fuel & Oil 

Other 

Maintenance 

Depreciation/Rental 

Total Direct Expense 

Indirect Expense 

296.4 hr@ $135.51 

Total Operating Cost 

Profit Element of TOC= 

Total Economic Cost 

296.4 

prhr 

0.10 

69.54 

51.77 

16.25 

131.41 

80.00 

20611.66 

15344.63 

4816.50 

38949.92 

23712.00 

$103,434.71 

40165.16 

143599.87 

14359.99 

$157,959.86 
Subsidy Request 

Total Operating Cost $143,599.87 

Profit Element @ 10% of TOC 14,359.99 

Total Economic Cost $157,959.86 

Projected Revenue $62,479.30 

Subsidy need at 100% Completion $95,480.56 

Subsidy on an annual basis $95,480.56 

The total subsidy request then is $190,961,12 over a two year period. Over the 2008-2010 

subsidy period, this represents a modest cost decrease as well as a slightly larger demand 

decrease. 

Thank you for your consideration of this proposal. 

Sincerely, 

Warbelow's Air Ventures, Inc. 

3758 University Avenue South 

Fairbanks, Alaska 

Arthur Warbelow, President 

ai1@warbelows.com 

(907) 378-7203