Order 2013-2-20

Served: February 21, 2013

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 21st of February, 2013

Air Service at

DIOMEDE, ALASKA

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

DOCKET DOT-OST-2009-0260

ORDER REQUESTING PROPOSALS

Summary

By this Order, the Department is requesting proposals by March 21, 2013, from carriers 

interested in providing air service to Diomede, Alaska, for the two-year period July 1, 

2013, through June 30, 2015. The service is requested under 49 U.S.C § 41736, Air 

Transportation to Non-eligible Places (ATNEP).1 

Background

By letter dated June 20, 2012, the Alaska Department of Commerce, Community, and 

Economic Development, on behalf of Kawerak, Inc. (“Kawerak”),2 proposed to the Secretary 

of Transportation that air compensation be provided to an air carrier as part of ATNEP. By 

Order 2012-9-25, the Department selected Evergreen Helicopters, Inc., to provide ATNEP to 

Diomede, Alaska, through June 30, 2013.3 The rate was set at $377,520 from the start of 

service through June 30, 2013,4 with half of that amount, $188,760, funded by the Department 

and the other half by Kawerak through funding from the State of Alaska. The level of service 

was set at one nonstop round trip per week to Nome and one nonstop round trip per week to 

Wales, Alaska, with 4-seat, BO-105 twin-engine helicopters. The subsidized service was only 

to be provided during the warmer months of the year when the ocean near Diomede did not 

freeze. For some periods of time during the coldest months of the year an ice runway forms, 

 1 A State or local government may propose to the Secretary that compensation be provided to an air carrier 

to provide air transportation to a place not eligible to receive Essential Air Service (aka ATNEP). ATNEP 

provides that the Department will pay its share of the subsidy only so long as the State or local government 

or a person is willing and able to pay 50 percent of the compensation. The subsidized carrier may end, 

suspend, or reduce its service by filing a 30-day notice. 2 Kawerak is a non-profit tribal consortium authorized to make compacts and provide services on behalf of 

20 tribes in the Bering Strait Region of Alaska. The funding ultimately comes from the State of Alaska, but 

passes through to Kawerak which is the local partner matching the Department’s subsidy payments.

3 The State’s annual fiscal periods end on June 30 of each year.

4 The $377,520 level of subsidy was assumed to be required for one year of service, but Evergreen did not 

begin subsidized operations until November 26, 2012. While Order 2012-9-25 contemplated one 

subsidized round trip per week, it did not preclude Evergreen from providing additional service each week, 

up to the $377,520 ceiling. It was unclear when Evergreen would be able to start the subsidized service,

and the very difficult operating conditions at Diomede facing Evergreen make weekly subsidy ceilings 

problematic.
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allowing fixed-wing aircraft to land at Diomede and making the subsidized service 

unnecessary. 

Because we are nearing the end of the current contract on June 30, 2013, and because 

State funding is a prerequisite to our paying compensation, we contacted the State of 

Alaska to ask if funding would be available in future years for Alaska/Kawerak to 

continue payment of its 50 percent share of the costs to provide ATNEP at Diomede. On 

February 4, 2013, we received an email from Scott Ruby, Director of Community and 

Regional Affairs for the State of Alaska. Mr. Ruby indicates that:

“The [State’s contribution for Diomede] is funded through General funds and is 

embedded in our operating budget. This means that unless the legislature 

specifically removed it, it will continue to be available. The Governor’s budget 

kept the Division’s GF budget at status quo. I do not anticipate that this funding 

will be an issue.”

Based on the above, it appears that continued state funding will be available, and we will 

accordingly request proposals for ATNEP at Diomede.

Request for Proposals

As the end of the current rate term approaches, we are requesting proposals from carriers 

interested in providing ATNEP at Diomede under 49 U.S.C. § 41736(c)(2)5 for the twoyear period beginning July 1, 2013. Carriers should file their proposals by March 21, 

2013. Staff will then docket the proposals, thereby making them public. Shortly 

afterwards, we will provide a summary of the proposals to the community and State and 

ask them to submit their final comments. We will give full consideration to all proposals 

filed in a timely manner. Interested carriers should prepare their proposals with every 

expectation that their initial proposals will also be their final and only proposals. We 

retain the discretion to negotiate proposals with carriers when we deem it desirable. We 

also retain the discretion to reject outright all unreasonable or unrealistic proposals and, if 

necessary, solicit a new round of proposals. However, we anticipate that negotiation or 

rejection will remain only occasional exceptions to the rule.

We are here providing interested carriers with some basic information to serve as 

guidance when they prepare their proposals, but we will not prescribe a precise format for 

their proposals. We expect proposals to adequately describe the service being proposed 

and the annual amount of subsidy being requested.6 The applicants can make their own 

judgments as to the level of detail they wish to present; however, they might want to 

include proposed schedules as well as supporting data for their subsidy requests, such as 

projected block hours, revenues, and expenses. We strongly encourage clear, welldocumented proposals that will facilitate their evaluation by the affected community and 

the Department.

As always, we will formally solicit the community’s views on any service options we 

receive before making a long-term carrier-selection decision. The community and air 

carriers are encouraged to work together in advance of the due date for proposals to craft 

 5 In determining whether to approve a proposal, the Secretary shall consider, among other factors, (A) the 

factors listed in 49 U.S.C. § 41733(c)(1), and (B) the views of the state or local government or person 

agreeing to pay compensation for the transportation.

6 We note that the amount of subsidy available will be limited by the amount of subsidy made available by 

the State to Kawerak. 
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a service pattern that is both desirable to the community and meets the operational needs 

of the airlines, as carriers cannot amend their proposal after the due date. 

We encourage proposals that meet the community’s requirements in an efficient manner. 

Carriers are also welcome to propose more than one service option, if they choose; they

need not limit themselves to the current service pattern if they envision other, potentially

more attractive service possibilities – different hubs, or longer terms for the contracted

service – with subsidy requirements that remain competitive and remain within the 

budget jointly provided by Kawerak and the Department.

With specific respect to Diomede, we expect proposals that request no more than 

$380,9527 annual subsidy -- the same level as the current year. Carriers are free to 

request less subsidy for a given service level. As the State has indicated, one round trip 

per week connecting the community to the national transportation system during the icefree months of the year is the goal, but carriers are free to offer more than one-round trip 

per week or less than that level of service. In any event, the ceiling level of 

compensation will be dictated by the State’s funding level.8 Consistent with the State’s 

email, a typical two-year contract may be proposed, with service in both years contingent 

on funding being available from the State.9

Assuming that we approve a proposal for air service, we would then intend to enter into a 

contract with a carrier and the applicable non-Federal party or parties (i.e., Kawerak, a 

relevant State of Alaska government entity, etc.) responsible for payment of its 

50 percent share to ensure funding for ATNEP at Diomede based on 49 U.S.C. §

41736(a)(1)(B), in which the Department will only pay 50 percent of each monthly bill 

from the carrier after the applicable non-Federal party or parties directly pays the carrier

the remaining 50 percent. The Department will continue to pay its 50 percent share as 

long as the carrier maintains the established level of air transportation, Kawerak 

continues to pay its 50 percent share, and the Secretary of Transportation decides that the 

Department's 50 percent compensation is necessary to maintain transportation at 

Diomede.10

Filing Format

Carrier proposals should be submitted to the Department with all materials merged into a 

single document. In addition, because the document will be published on 

Regulations.gov, each page should be formatted to be viewed online.

Historical Traffic

In order to assist carriers in making their traffic and revenue projections, we have 

included historical traffic for the community in Appendices B-F for the most recent 

annual periods.

 7 Kawerak made $190,476 of funds available for Diomede through funding from the State of Alaska, but 

Evergreen requested only $188,760 from Kawerak and the Department.

8 Carriers should also recognize that in some undetermined periods of time during the winter an ice runway 

may or may not form, which would obviate the need for helicopter service. As shown in Appendix B, that 

period of time varies from year to year. 

9 If carriers wish, they can request longer contract periods than the typical two-year period.

10 49 U.S.C. § 41736(d).
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Other Carrier Requirements

The Department is responsible for implementing various Federal statutes governing lobbying 

activities, drug-free workplaces, and nondiscrimination.11 Consequently, all carriers receiving 

Federal subsidy to support EAS must certify that they are in compliance with Department 

regulations regarding drug-free workplaces and nondiscrimination, and those carriers whose 

subsidies exceed $100,000 over the life of the rate term must also certify that they are in 

compliance with the regulations governing lobbying activities. Because the Department is 

prohibited from paying subsidy to carriers that do not submit these documents, the selected 

carrier will be required to submit them in order to receive subsidy. Interested carriers

requiring more detailed information regarding these requirements, as well as copies of the 

certifications, should contact the Office of Aviation Analysis at (202) 366-5903. The 

Department is prohibited from paying subsidy to carriers that do not submit these documents.

Community Comments

Civic officials and the State are welcome to submit comments on the proposals at any time. 

As noted earlier, we will provide a summary of the proposals to the civic parties and ask 

them to submit their final comments shortly after March 21, 2013, the due date for carrier 

proposals.

This Order is issued under authority delegated in 49 CFR Part 1.56a(f) and re-delegated 

to the Director, Office of Aviation Analysis.

ACCORDINGLY,

1. The Department requests proposals from carriers interested in providing ATNEP at 

Diomede, Alaska. Carriers should submit their proposals, with subsidy if necessary, by 

March 21, 2013. Proposals should be emailed to EAS@dot.gov, with the title “Proposal to 

Provide ATNEP at Diomede, Docket DOT-OST-2009-0260.” Questions regarding filings 

may be directed to Kevin Adams at 202-366-1047 or Kevin.Adams@dot.gov;

2. This Docket will remain open until further Order of the Department; and

3. We will serve this Order on the service list for this Docket.

Persons entitled to petition the Department for review of this staff action under the 

Department’s Regulations, 14 CFR Part 385.31(a), must file such petitions within seven 

(7) days after the date of service of this Order. 

 11 The certifications are available on the web at http://ostpxweb.dot.gov/aviation/index.html.
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This Order will be effective immediately, and the filing of a petition for the Department 

to review this staff action shall not preclude its effectiveness.

By: 

TODD M. HOMAN

Director

Office of Aviation Analysis

(SEAL)

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

http://www.regulations.gov
Appendix A

Nonstop Great Circle Miles

Diomede (DIO) to Wales (WAA) 26

Diomede (DIO) to Nome (OME) 134

Nome (OME) to Wales (WAA) 109

Nome (OME) to Bethel (BET) 283

Nome (OME) to Savoonga (SVA) 163

Diomede (DIO) to Savoonga (SVA) 151
Appendix B

Evergreen Helicopters, Inc., Monthly Traffic Report

Pax. Equivalents (PEQs) Pax. Equivalents (PEQs) Pax. Equivalents (PEQs)

Essential Air Service 

Diomede to Wales Wales to Diomede Diomede-Wales O&D

Year Month Pax. Freight Mail Total Pax. Freight Mail Total Pax. Freight Mail Total

2012 12 11 1.4 0.0 12.4 9 1.0 0.0 10.0 20 2.4 0.0 22.4

2013 1 0 0.0 0.0 0.0 9 1.1 0.0 10.1 9 1.1 0.0 10.1

Diomede to Nome Nome to Diomede Diomede-Nome O&D

2012 12 9 1.3 0.0 10.3 15 2.0 0.0 17.0 24 3.3 0.0 27.3

2013 1 6 0.8 0.0 6.8 13 1.9 0.0 14.9 19 2.6 0.0 21.6

Total EAS Outbound Total EAS Inbound Total, EAS O&D

2012 12 20 2.6 0.0 22.6 24.0 3.0 0.0 27.0 44.0 5.6 0.0 49.6

2013 12 6 0.8 0.0 6.8 22.0 3.0 0.0 25.0 28.0 3.8 0.0 31.8

Mail Runs, Postal Service

Diomede to Wales Wales to Diomede Diomede-Wales O&D

Year Month Pax. Freight Mail Total Pax. Freight Mail Total Pax. Freight Mail Total

2012 12 19 1.1 3.9 24.0 4 0.4 102.1 106.5 23 1.5 106.0 130.5

2013 1 22 0.4 1.3 23.7 4 2.0 63.0 69.0 26 2.4 64.3 92.7

Diomede to Nome Nome to Diomede Diomede-Nome O&D

2012 12 1 0.0 3.9 4.9 1 1.8 12.2 14.9 2 1.8 16.1 19.8

2013 1 9 1.1 1.0 11.1 2 0.4 13.6 16.0 11 1.5 14.6 27.1

Diomede to Nome Nome to Diomede Diomede-Nome O&D

2012 12 20 1.1 7.8 29.0 5.0 2.1 114.3 121.4 25.0 3.3 122.1 150.4

2013 12 31 1.5 2.3 34.8 6.0 2.4 76.6 85.0 37.0 3.9 78.9 119.8

Source: special report of Evergreen.
Appendix C

Example of General Terms and Conditions for Air Service

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 these rates, 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 contracts 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 [DATE]. The 

Department’s obligation for performance under this order beyond [DATE], 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 [DATE], until funds are made available to the Department for 

performance. If funds are not made available for performance beyond [DATE], 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.