Order 2011-9-6 

Served: September 13, 2011 

UNITED STATES OF AMERICA 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

Issued by the Department of Transportation 

on the 13* of September, 2011 

INTRA-ALASKA MAINLINE 

SERVICE M4IL RATES 

Docket OST-2003-14695 

(Docket OST-95-429) 

ORDER TO SHOW CAUSE ESTABLISHING NEW 

MAINLINE SERVICE MAIL RATES 

Summary 

By this order, the Department proposes to establish new intra-Alaska mainline mail rates 

for the next annual period, beginning on or about October 1, 2011. The rates that are 

currently in effect were established by Order 2010-9-7, most recently adjusted by 

Order 2011|6-21 for first quarter 2011 fuel costs. The cost pool comprises the bulk of 

mainline cairier operations in Alaska, and consists of Alaska Airlines (AS), Lynden Air 

Cargo (LAG), Northern Air Cargo (NAC), and Tatonduk Outfitters, Ltd., d/b/a Everts Air 

Cargo (TOL).l In addition, we propose adding Peninsula Airways, Inc. (KS)2 to the 

mainline cost pool. Also, we propose using Schedule P12 to calculate fuel expense, where 

feasible. 

Background 

Because malil rates are made effective on a final, prospective basis, but are based on 

historical costs, we add an inflation factor based on a ten-year trend to those historical 

costs. Unti^ issuing Order 2004-8-26, we had estimated the long-term cost trend based on a 

ten-year meting average that included only NAC and AS, the only two carriers for which 

we, at that time, had ten years of data.3 Order 2004-8-26 changed that by calculating the 

^ Era Aviation, Ltd., also provides service witii mainline equipment, but is excluded from the cost pool 

because it transported less than 1 percent of the total mail volumes. 

2 Mainline aircraft are defined as those having more than 7,500 pounds payload. KS has operated Saab 340 

aircraft for a number of years, and the payload of those aircraft has always been very close to 7,500 pounds. 

In some segments those aircraft have more than 7,500 pounds payload, and in others less. PenAir has 

provided us d^ta showing which segments its Saab 340s operate as mainline aircraft; the Postal Service has 

begun tenderiiig PenAir mainline mail to those aircraft; and we will treat them accordingly. 

3 Although PefiAir would be a new carrier in the cost pool, we propose to not develop a separate ten-year 

trend based on data excluding PenAir, as we did when we added LAC and TOL, because PenAir transports 

such a small portion of intra-Alaska mainline mail, around three percent of both the linehaul and terminal 

elements, that its effects would be de minimis. 
-2-

long-term trend based on the most recent period for which we had data for all of the 

mainline carriers, which was a five-year period at the time. Since then, six additional years 

of data havfc become available, so, as contemplated by Order 2004-8-26, we propose to 

drop the data for the year ended March 31, 2001, and use the most recent ten years of data 

to determine the long-term trend. 

The proposed rates, contained in Appendix A, reflect the application of cost adjustment 

factors, developed in Appendix B, to the basic mail rate structure established by the Civil 

Aeronautics Board in Order 82-11-23. We have used the carriers' reported operating 

expenses arid traffic for the year ended March 31, 2011, and fuel costs for the quarter ended 

March 31, 2011, and have increased their non-fuel unit costs, both terminal and linehaul, to 

the mid-point of the new rate period based on the long-term (ten-year) average aimual 

changes in ^i t costs for all of the carriers .^ 

Results of the Updated Data 

The proposed rates, including fuel, differ from the rates currently in effect by the amounts 

shown in the following table: 

Line haul, $/RTM 6 

Terminal, $/P0und Enplaned 

\ 

Priority 

Nonpriority 

Priority 

Nonpriority 

Order 2011-6-21 

$3.4674 

$2.0992 

$.3617 

$.3108 

Proposed 

$3.4351 

$2.0796 

$.3456 

$.2970 

Percentase Increase ^ 

-0.93 

-0.93 

-4.45 

-4.44 

These rates Reflect a combination of changes in most recent unit costs, and appUcation of 

the long-terpi trend to those unit costs. As shown in the table, there was a slight decrease in 

the line haul, which includes fuel, but a larger decrease in the terminal rate. The 

combination of those changes in the rates produces proposed rates that are 2.09 percent 

lower than those in effect for the current period for a 427-mile ^ average length of haul. 

General Matters 

As indicated, when Order 2004-8-26 issued we only had five years of data for all four 

carriers, but we anticipated adding additional years to the trend line until we had ten years 

of data. The prior armual update was the first with a full ten years of data, and so going 

forward we must begin dropping off the data for the oldest year as we add the newest year 

for determining the long-term trend. In the past year, six carriers operated mainline aircraft 

in Alaska - AS, KS, LAC, NAC, and TOL that we have included in the cost pool - and 

Era Aviation, Inc. Appendix E shows all of the mail transported by the six carriers 

currently operating mainline equipment in Alaska. We have tentatively excluded from the 

4 We have continued our practice of updating fuel expenses on a quarterly basis, and have relied on fiiel 

expenses for the quarter ended March 31,20II, the most recent quarterly data available. We will update the 

rate final rate for QE 6/30/11 fuel data when those become available. 

^ Any difference between Priority and Nonpriority is due to rounding. 

" The proposed line haul rates above are the sum of non-fuel line haul expense, with a lO-year average 

inflation factor applied, plus the most recent fuel expense unadjusted for inflation. 

"7 22,975,028 RTMs of mail divided by 53,802 tons enplaned of mail from Appendix D-1. 
-3-

linehaul calculation the data of those aircraft types transporting less than one percent of 

revenue ton miles of mail, and from the terminal calculation the data of those carriers 

enplaning Ijess than one per cent of mail tons enplaned. Because Era Aviation did not meet 

the one perjcent threshold in either case, it is not part of the cost pool for either the line haul 

or terminal. 

To determine the long-term trend in non-fuel line haul and terminal expenses, we propose 

to continue our practice of separately regressing those expenses agamst time ~ in this 

instance, the ten aimual periods from the years ended March 31, 2002, through March 31, 

2011. The results of both regressions are shown in Appendix C. 

Nonfuel Line Haul Results 

As shown in Appendix C (Line Haul), the regression calculated an average annual increase 

of 2.76 percent in unit costs over the ten-year period, with a strong T-Value of 4.49, 

indicating that there is a consistent upward trend in the non-fiiel line haul costs. Those unit 

costs increased from $0.61927 per available ton mile for the year ended March 31, 2010, to 

$0.62396 for the year ended March 31, 2011, or 0.76 percent. The average annual increase 

in the long-term trend has increased from 2.53 percent per Order 2010-8-7, to 2.76 percent 

this year. 8 The fact that total Imehaul costs have slightly decreased, although nonfuel 

linehaul costs slightly increased reflects the slight decrease in fuel expenses, from $0.51429 

per ATM in Order 2011-6-21 to $.49645 in Appendix D-2 to this order. 

While the average for all of the carriers in the cost pool shows little change, there were 

significant but offsetting changes among the different carriers. The non-fuel linehaul costs 

for AS and TOL decreased by 13.91 and 16.41 percent respectively, while they increased by 

36.02 and 4.55 percent for LAC and NAC, respectively. The increase in costs for LAC 

seems to be driven by the significant decrease in airborne hours it operated. Those hours 

decreased % 41 percent, from 11,590 to 6,893 per the carrier's Form 41, Schedule P5.1, 

while corresponding direct expenses, which are often driven by airborne hours, did not 

decrease as significantly. The resulting increase in unit costs reflects management's decision 

not to trim back persoimel and other expenses commensurately with the decrease in hours. 

Fuel Expei^se 

This order proposes to revise the way we determine fuel expense. Traditionally, we have 

taken NAC's and TOL's fuel expense from the Form 41, Schedule P5.1, and AS's from 

Form 41, Schedule P5.2, and LAC's from a special internal report of that carrier. We are 

proposing this time to rely on Schedule PI2 where feasible. As detailed in Appendix D-2, 

we determine fuel bum per block hour for AS, LAC, and NAC, and then the price of fuel for 

those carriers by dividing scheduled intra-Alaska fuel expenses by scheduled intra-Alaska 

gallons in Schedule P12. This proposed change was precipitated by NAC indicating that it 

would be operating increasing amounts of service outside of Alaska, and that those fuel 

expenses could differ significantly from its scheduled intra-Alaska service because some of 

° The most recent year-over-year increase of 0.76 percent was less than the long-term trend but the addition of 

this year's results marginally increased the ten-year trend from 2.53 percent to 2.76 percent. This counterintuitive result is due to the dropping of the 2001 results because they are now beyond the ten years of the 

trend. 
-4-

the fuel expense would be paid for by the party that chartered the aircraft.^ The relative 

weakness of Schedule PI2 is that it does not distinguish between fuel expenses by aircraft 

type. This is a major weakness for TOL, which operates some aircraft types which bum 

expensive Avgas and others less expensive Jet A. For TOL, we propose to continue to rely 

on the Form 41, Schedule P5.1. We believe this reliance on Schedule P12 will produce more 

accurate mail rates than the current methodology. Also, LAC will no longer have to submit a 

special report to the Department to determine mtra-Alaska fuel expense. Finally, PenAir 

does not report Schedule P12, so we propose to use the fuel expense it reports on 

Schedule F2. 

Terminal Results 

As shown in Appendix C-Terminal, the regression calculated an average armual increase of 

3.80 percent in unit costs over the ten-year period, with a strong T-Value of 7.27, indicating 

that there is a consistent upward trend in terminal costs. The most recent annual termmal 

costs have decreased significantly, from $384.09 in 2010 to $368.85 in 2011, or 4.0 percent, 

as shown in Appendix C, Terminal. This decrease in cost, combined with a decrease in the 

long term trend from 4.14 percent to 3.80 percent results in the decrease in terminal 

expenses of 4.45 percent. Among the carriers, AS, LAC, and NAC showed year-over-year 

decreases from the prior year of 5.92,4.11, and 5.20 percent, respectively, but those 

decreases were offset by TOL's increase of 1 percent. The addition of KS slightly 

increased terminal costs because that carrier's average of $458.47 per ton enplaned 

significantly exceeded the intra-Alaska average of $368.85. Of course, that effect was 

limited by the fact that KS enplaned less than three percent of intra-Alaska mail. 

ACCORDINGLY, 

1. We direct all interested persons to show cause, no later than twenty (20) days after the 

date of service of this order, why the Department should not adopt the foregoing tentative 

findings and, conclusions and fix, determine and publish the proposed final aimual rates 

specified in Appendix A, to be effective on or about October 1, 2011, subject to the 

quarterly fuel adjustment, as discussed. Vague or unsupported Answers that do not include 

all proposed adjustments and backup data will not be accepted; 

2. If no objection is filed within the designated time, or if no timely-filed objection raises 

material issues of fact, we hereby delegate authority to the Director, Office of Aviation 

Analysis, to make the above rates final; 

3. This docket shall remain open until further order of the Department; and 

^ Form 41, Schedule P5.1 only reports total fuel expense. It does not distinguish those expenses that are 

picked up directly by charter customers. As such, the scheduled fuel expense reported on Schedule P12 is 

superior because virtually all of the intra-Alaska mail moves on scheduled service, and scheduled customers 

do not pick up the cost of fuel. 
-5-

4. We will serve this order upon all parties on the Service List for this Docket. 

By: 

Susan L. Kurland 

Assistant Secretary for 

Aviation and Intemational Affairs 

(SEAL) 

An electronic version of this document is available on the World Wide Web at 

http://www.regulations. gov 
Intra-Alaska Class Service Mail Rates 

Appendix A 

Effective: On or abbut October 1, 2011 

Column (1) (2) (3) (4) (5) 

Base Year 

Rates 1/ 

Adjustment 

Factors 2/ 

Proposed 

Final Rates 3/ 

Current Rate, 

Order 2011-6-21 

Change from 

Prior Rate 4/ 

Linehaul Charge per Billing Ton-Mile 

Priority 

Non-priority 

$1.1969 

$Q.7246 

187.00% 

187.00% 

$3.4351 

$2.0796 

$3.4674 

$2.0992 

-0.93% 

-0.93% 

Terminal Charge per Pound Originated 

Priority 

Non-priority 

$0.1697 

$0.1458 

103.68% 

103.68% 

$.3456 

$.2970 

$.3617 

$.3108 

-4.45% 

-4.44% 

1/Per Order 82-11-23. 

2/ See Appendix B. 

3/ Column (I) increased by Column (2). 

4/ Any differences due to rounding. 
Intra-Alaska Class Service Mail Rates Cost Adjustment Factors 

Appendix B 

(1) (2) (3) (4) (5) (6) 

Base Year 

Ended 

9/30/80 1/ 

Year Ended 

3/31/112/ 

Average Annual 

Change 

YE 3/31/02 

to YE 3/31/113/ 

Midpoint to 

Midpoint 

Change 4/ 

Estimated 

Unit Cost at 

4/1/12 5/ 

Percent 

Change 1980 

Base Year to 

4/1/12 6/ 

Unit Cost per Available Ton-Mile 

Fuel 

Nonfuel 

Total $0.399469 

$0.49645 

$0.62396 

$1.12041 

na 

2.76% 

na 

4.18% 

$0.496450 

$0.650042 

$1.146492 187.00% 

Unit Cost per Ton Enplaned $191.54 $368.85 4.14% 5.77% $390.13 103.68% 

1/ Per Order 82-11-23, updated inost recently in Order 97-12-24. 

2/ See Appendix D. For nonfuel, we used YE March 31, 2011; for fuel expense, we used QE March 31, 2011, Appendix D-2. 

3/ See the regression results in Appendix C. 

4/ Reflects the fact that from the mid point of the reporting period to the midpoint of the prospective rate is 1 and 1/2 years. 

1.0276 X 1.0138, where 1.0138 Is the average annual unit cost increase projected for a 6-month period. 

1.0380 X 1.0190 where 1.0190 i$ the average annual unit cost increase projected for a 6-month period. 

5/ Column (2) multiplied by colijinm (4), except for fuel. As indicated in Order 97-9-37, we will rely on the 

most recent fuel costs, with no inflation factor. Fuel for the QE 3/31/11 is the most recent available at this time, 

but we anticipate in the final order adding fuel for the QE 6/30/11. 

6/ $ 1.146492 in preceding colurtm divided by $.399469 in the base period, and $390.13 in the 

preceeding column divided by $191.54 in the base period. 
Order 

Number 

2004-8-26 

2004-8-26 

2004-8-26 

2005-9-16 

2006-9-23 

2007-8-26 

2008-9-3 

2009-9-1 

2010-8-7 

New 

ANOVA 

Regression 

Residual 

Total 

Intercept 

X Variable 1 

Appendix C 

Linehaul 

Page I of 2 

Calpulation of the Linehaul Portion of the 10-Year Trend: TOL. LAC. NAC, PenAir. and Alaska 

YE|3/31/ 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

df 

1 

8 

Co< 

9 

ifficients 

-:^5.16192 

0.0271794 

Regression Statistics 

Multiple R 0.8463574 

R Square 0.7163208 

Adj. R Square 0.6808609 

Standard Erroi 0.0549265 

Observations 10 

Actual Y 

Natural Log 

$/ATM $/ATM 

Non-Fuel 

Linehaul 

0.4869 

0.4697 

0.5225 

0.5312 

0.5312 

0.4924 

0.51562 

0.57542 

0.61927 

0.62396 

SS 

0.0609445 

0.0241354 

0.0850799 

Std. Error 

12.133742 

0.0060472 

Non-Fuel 

Linehaul Predicted Y 

-0.719697 

-0.755661 

-0.649130 

-0.632617 

-0.632617 

-0.708464 

-0.662385 

-0.552655 

-0.479214 

-0.471669 

MS 

0.0609445 

0.0030169 

tStat 

-4.546159 

4.4945378 

-0.748718 

-0.721539 

-0.694359 

-0.66718 

-0.640001 

-0.612821 

-0.585642 

-0.558462 

-0.531283 

-0.504104 

F 

20.20087 

P-value 

0.0018839 

0.0020166 

Residuals 

0.029021316 

-0.034122105 

0.045229474 

0.034563053 

0.007383632 

-0.095642789 

-0.076743429 

0.005807299 

0.052069034 

0.032434512 

Significance F 

0.002016606 

Lower 95% 

-83.14237909 

0.013234526 

EXP(Y). 

0.4729724 

0.4860038 

0.4993942 

0.5131536 

0.5272921 

0.5418201 

0.5567484 

0.572088 

0.5878503 

0.6040468 

Upper 95% 

-27.18146 

0.0411243 

Predicted 

Annual 

Increase 

2.76% 
-0.50 

fee 

01 

o 

u 

"E 

3 

-0.65 -

-0.70 

Appendix C 

Linehaul 

Page 2 of 2 

-0.45 

20 D2 

Nonfuel Linehaul, Unit Cost per ATM, Actual vs. Predicted 

2003 2004 2005 2006 2007 2008 2009 2010 2(^1 

60 

o 

-0.55 

y = 0.0272x-55.162 

R^ = 0.7163 

-0.80 

Years Ended March 31,2002, through March 31, 2011 
Calculation of the Terminal Portion of the 10-Year Trend: TOL. LAC. NAC. PenAir. and Alaska 

Order 

Number 

2004-8-26 

2004-8-26 

2004-8-26 

2005-9-16 

2006-9-23 

2007-8-26 

2008-9-3 

2009-9-1 

2010-8-7 

New 

ANOVA 

YE 3/31 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

df 

Actual Y 

Natural Log 

$/Ton Enp. 

Terminal 

$278.34 

$299.92 

$302.64 

$304.91 

$318.30 

$368.53 

$363.29 

$386.29 

$384.09 

$368.85 

SS 

$/Ton Enp. 

Terminal Predicted Y 

5.628843 

5.703516 

5.712544 

5.720017 

5.762994 

5.909522 

5.895201 

5.956588 

5.950877 

5.910390 

MS 

5.6471106 

5.6844303 

5.72175 

5.7590697 

5.7963894 

5.833709 

5.8710287 

5.9083484 

5.9456681 

5.9829878 

Residuals 

-0.018267564 

0.019085739 

-0.009205958 

-0.039052655 

-0.033395352 

0.075812952 

0.024172255 

0.048239558 

0.005208861 

-0.072597836 

F Significance F 

EXP(Y) 

283.4712 

294.2502 

305.4390 

317.0532 

329.1091 

341.6234 

354.6136 

368.0977 

382.0946 

396.6236 

appendix C 

Terminal 

Page 1 of 2 

I 

Annual 

Increase 

3.80% 

Regression 

Residual 

Total 

Intercept 

X Variable 

1 

8 

9 

Coefficients 

-69.06692 

0.0373197 

0.1149027 

0.0173796 

0.1322823 

Std Error 

10.296454 

0.0051315 

0.1149027 

0.0021725 

tStat 

-6.707836 

7.2726055 

52.89079 

P-value 

0.0001515 

8.614E-05 

8.61425E-05 

Lower 95% 

-92.81058858 

0.025486335 

Upper 95% 

-45.32326 

0.0491531 

Regression Statistics 

Multiple R 0.9319964 

R Square 0.8686172 

Adjusted R, 0.8521944 

Standard Eri 0.0466096 

Observation 10 
Appendix C 

Terminal 

Page 2 of 2 

6.05 -

6.00 -

Zt 5.95 -

2 

3 

1 5.90 -

0) 

^ 5.85 -

a 

c 

UJ 

g 5.80 -

5 

•| 5.70 -

3 

5.65 1 

i 

<; fin . 

r^ 

• 

D.DU 

2002 

Terminal, Unit Cost per Ton Enplaned, Actual vs. Predicted 

• J 

y = 0.0373X - 69.067 # ^^"' ^ 

R^ = 0.8686 M T 

W ^ # 

.-W • 

1 ^ ^ 

I B 

r^ 

• 

E t ! • ' 1 1 1 1 1 

2003 2004 2005 2006 2007 2008 2009 2010 2011 

Years Ended March 31,2002, through March 31, 2011 
Appendix D-1 

Operating Expenses, Alaska Airlines, Northern Air Cargo, Lynden Air Cargo, and Tatonduk Outfitters, Ltd. 

Intra-Alaska Class Service Mail Rates-Year Ended March 31, 2011 

Total 

Alaska Airlines 

rAS) 

#617 

B-737-400 

Lynden 

Air Cargo 

(LAC)" 

#556 

Hercules 

Northern 

Air Cargo 

(NAC) 

#620 

737-200 

Tatonduk Outfitters 

(TOP (TOP 

#218 #461 

DC-6 Brasilia 

PenAir PenAir 

456 459 

Saab 340 Saab 340 

Domestic Fuel 1/ 

Dom.N-Fuel 2/ 

Total 

Intra-AK Skd. BIk. Hrs. 3/ 

Domestic Total 4/ 

Intra-AK N-Fuel 

Intra-AK Skd. ATMs 3/ 

$/ATM, N-Fuel 

Intra-AK Skd. Mail RTMs 3/ 

RTM% of Total 

$/ATM, N-Fuel 

Terminal Expense 5/ 

System Tons Enplaned 6/ 

Intra-AK Skd. Svc. 7/ 

Intra-AK Skd. Svc. Tons 8/ 

$/Ton Enplaned 

AK Mail Tons Enplaned 9/ 

Mail Tons % of Total 

Wtd. $/Ton Enplaned 

45,058 

133,554 

$110,191,981 

192,350,893 

$0.572870 

22,975,028 

99.99% 

$0.623960 

Total 

53,802 

100.00% 

$368.85 

$167,613,000 

$240,736,000 

$408,349,000 

25,504 

86,310 

$71,135,801 

133,088,509 

$0.534500 

6,591,512 

28.69% 

$0.15335 

AS 

$49,373,399 

149,141 

$331.05 

14,448 

26.85% 

$88.89 

$15,609,574 

$38,395,694 

$54,005,268 

1,585 

7,529 

$8,083,036 

10,095,107 

$0.800688 

3,586,546 

15.61% 

$0.12499 

LAC 

$4,613,395 

11,294 

$408.48 

7,414 

13.78% 

$56.29 

$15,976,963 

$16,526,027 

$32,502,990 

5,069 

6,546 

$12,797,194 

25,559,044 

$0.500691 

5,248,404 

22.84% 

$0.11436 

NAC 

$15,256,982 

33,361 

$13,827,826 

30,236 

$457.33 

13,803 

25.66% 

$117.35 

$12,357,200 

$12,109,487 

$24,466,687 

5,904 

7,182 

$9,954,666 

17,639,281 

$0.564346 

6,423,390 

27.96% 

$0.15779 

TOL 

$10,536,057 

34,682 

$7,989,686 

26,300 

$303.79 

16,775 

31.18% 

$94.72 

$593,440 

$1,945,099 

$2,538,539 

1,139 

1,230 

$1,801,193 

983,837 

$1.830784 

400,049 

1.74% 

$0.03186 

$10,372,276 

$25,101,328 

$35,473,604 

4,918 

22,989 

$5,369,887 

4,216,953 

$1.273405 

356,587 

1.55% 

$0.01974 

PenAir 

$13,741,212 

29,972 

$13,552,782 

29,561 

$458.47 

1,362 

2.53% 

$11.60 

$828,285 

$1,977,380 

$2,805,665 

939 

1,768 

$1,050,204 

768,162 

$1.367165 

368,540 

1.60% 

$0.02187 

1/ Alaska Airlines, Schedule P5.02, l#5145.1; PenAir, Schedule F2, Line #2. LAC, NAC, TOL are from P5.1, Line #40. 

II Sources have same schedules as dbove. For PenAir, we have excluded Passenger Liability Insurance, Line #5. 

3/ Per T-100 Segment Report, except for PenAir. We relied on a special internal report of PenAir, because the T-100 report 

does not distinguish between service with mainline and bush aircraft with any precision. 

4/ Per T-100 Segment Report. 

5/ Form 41, #6900 account for NAG and TOL. For PenAir, we rely on Schedule F2, Departure Related Expense and 

Capacity Related Expense, Line #13 and #14. 

6/ Per T-100 Market Report for NAC and TOL and PenAir. 

II For AS and LAC, the sources are special internal reports. For NAC, TOL, and PenAir, it's allocated based on the data shown. 

8/ For LAC, the data is based on a special internal report. For the others, the data is from the T-lOO Market Report. 

9/ T-lOO Market Report, with those results for TOL and PenAir adjusted by payload to estimate the mainline portion, as follows: 

TOL: 17,017* 103,717,189 mainline payload -r 105,215,289 sytem payload, T-lOO Segment Report. 

PenAir: 6,126*32,275,100 mainline payload -rl45,140,803 system payload, T-lOO Segment Report. 
operating Expenses, Alaska Airlines, Northern Air Cargo, Lynden Air Cargo, and Tatonduk Outfitters, Ltd. 

Intra-Alaska Class Service Mail Rates-Quarter Ended March 31, 2011 

Appendix D-2 

Skd. PI2, Skd. Intra-AK Gallons 

Skd. P. 12, Skd. Intra-AK Cost 

Cost per Gallon 

Total 

F-41, Fuel Expense, #40 

F-41, 'Gallons, Z9210, Domestic 

T-lOO, Block Hours, Domestic 

Gallons per Hour 

S/Gallon 

Fuel 

Inn-a-AK Skd. BIk. Hrs. 

Total Block Hours 

Total 

$5,612,037 

10J497 

29J859 

Alaska 

(AS) 1/ 

4,716,670 

$13,615,431 

$2.89 

Alaska Airlines 

(AS) 

#617 

B-737-400 

45,603,000 

16,302,000 

19.991 

815 

$2.80 

Alaska 

(AS) 

#617 

B-737-400 

6,077 

19,991 

Lynden 

Air Cargo 

(LAC) 1/ 

267,181 

$841,312 

$3.15 

Lynden 

Air Cargo 

(LAC) 

#556 

Hercules 

3,794,010 

1,125,353 

1,746 

645 

$3.37 

Lynden 

Air Cargo 

(LAC)~ 

#556 

Hercules 

375 

1,746 

Northern 

Air Cargo 

NACl/ 

1,026,989 

$3,141,635 

$3.06 

Northern 

Air Cargo 

NAC 

#620 

737-200 

3,560,956 

1,105,531 

1,275 

867 

$3.22 

Northern 

Air Cargo 

NAC 

#620 

737-200 

1,189 

1,275 

Tatonduk 

Outfitters. Ltd. 

(TOL) 

577,961 

S2.457.872 

$4.25 

Tatonduk 

Outfitters 

(TOL) 

#218 

DC-6 

2,813,039 

585,075 

1,539 

380 

$4.81 

Tatonduk 

Outfitters 

(TOL) 

#461 

Brasilia 

143,740 

41,012 

255 

161 

$3.50 

Tatonduk Outfitters Ltd. 

(TOL) (TOL) 

#218 

DC-6 

$2,813,039 

1,354 

1,539 

#461 

Brasilia 

$143,740 

240 

255 

Peninsula 

(KS) 

456 2/ 

Saab 340 

$2,655,258 

1,262 

5,053 

Airways 

(KS) 

459 2/ 

Saab 340 

$356,474 

153 

678 

Intra-AK Fuel Expense $21,503,141 $14,313,462 $761,906 $3,154,441 $2,474,889 $135,285 $663,158 $80,443 

Intra-AK Skd. ATMs 2/ 

Unit Cost/ATM, Fuel 

Inn-a-AK Mail RTMs 2/ 

RTM Percent of Total 

Wtd. Cost/ATM, Fuel 

45,019.540 

$0.477640 

5,576,809 

100.00% 

$0.49645 

31,328,069 

$0.456889 

1,521,225 

27.28% 

$0.12464 

2,435,564 

$0.312825 

887,274 

15.91% 

$0.04977 

5,933,481 

$0.531634 

1,402,282 

25.14% 

$0.13365 

4,046,042 

$0.611681 

1,540,356 

27.62% 

$0.16895 

203,509 

$0.664762 

84,459 

1.51% 

$0.01004 

1,072,875 

$0.618113 

84,694 

1.52% 

$0.00940 

119,301 

$0.674286 

56,519 

1.01% 

$0.00681 

1/ Fuel costs for Alaska Airlines, Lynden and Northern Air Cargo is calculated by fu^st determining the intra-Alaska cost for per gallon for those 

carriers from Schedule PI2, secondly determining the fuel bum per block hour. Tatonduk is not calculated this way, because its DC-6 aircraft 

bums expensive Avgas while its turboprop Brasilia bums less expensive Jet A, and Schedule P12 does not break down intra-Alaska 

expenses into those two categories. PenAir does not report schedule F12, and so we have relied on Schedule F-2. 

expenses into those two categories. PenAir does not report schedule PI 2, and so we have relied on Schedule F-2. 

2/ For PenAir, the first and third rows reflect the totals for diat aircraft, the intra-Alaska scheduled block hours, ATMs, and Mail RTMs 

reflect the mainline portion of PenAir's fleet, i.e., those operations who average payload per departure is 7,500 lbs. or more. 
Appendix E 

Exclude Operations Below the One Percent Threshold. YE 3-31-10 

Carrier 

Alaska Airlines Inc. 

Tatonduk Outfitters 

Northern Air Cargo Inc. 

Lynden Air Cargo Airlines 

Tatonduk Outfitters 

Peninsula Airways 

Peninsula Airways 

Tatonduk Outfitters 

Era Aviation, Inc. 

Alaska Airlines Inc. 

Alaska Airlines Inc. 

Alaska Airlines Inc. 

Grand Total 

T-100 Segment, 

Aircrafttvpe 

#617, B-737-400 

#218, DC-6 

#620, B-737-200 

#556, Hercules 

#461, Brasilia 

#459 (Mainline Only) 

#456 (Mainline Only) 

#150,C-46 

#483, Dash 8-100 

#614,B-737-800 

#612,3-737-700 

#634, B-737-900 

Linehaul Results 

Intra-Alaska 

RTMs of Mail 

6,591,512 

6,423,390 

5,248,432 

3,586,546 

400,049 

368,843 

356,658 

195,887 

84,452 

72,681 

26,015 

7.453 

23,361,918 

Percent 

28.21% 

27.50% 

22.47% 

15.35% 

1.71% 

1.58% 

1.53% 

0.84% 

0.36% 

0.31% 

0.11% 

0.03% 

100.00% 

Note: Exclude 258,118 Mail RTMs of Alaska Airlines for Aircraft Type #619. NAC operated this 

airraft for only part of one quarter and since discontinued it. 

T-lOO Market, Terminal Results 

Uniguecarriem^me 

Tatonduk Outfitters 1/ 

Northern Air Cargo Inc. 

Alaska Airlines Inc. 

Lynden Air Cargo Airlines 

PenAir 2/ 

Era Aviation 

Grand Total 

Intra-Alaska 

Mail Tons Enplaned 

17,017 

13,803 

14,448 

7,414 

6,126 

390 

59,198 

Adj. For Mainline 

Mail Tons Enplaned 

16,775 

13,803 

14,448 

7,414 

1,362 

390 

54,192 

Percent 

30.95% 

25.47% 

26.66% 

13.68% 

2.51% 

0.72% 

99.99% 

Cumulative 

Percent 

30.95% 

56.42% 

83.08% 

96.76% 

99.27% 

99.99% 

1/ Tatonduk: 17,017 *103,717,189 mainline payload H- 105,215,289 system payload per T-lOO Segment Report. 

PenAir: 6,126 * 32,275,100 mainline payload •=• 145,140,803 system payload, per special internal report.