AIR EXCURSIONS, LLC

ESSENTIAL AIR SERVICE BID

JUNEAU-KAKE

JUNEAU-EXCURSION INLET

DOCKET 0ST-2008-0217

May 8, 2012

Air Excursions, LLC hereby submits its bid to provide Essential Air Service between Kake, 

AK and its hub of Juneau, AK, and additionally between Excursion Inlet and its hub of 

Juneau, AK. Air Excursions holds a certificate of public convenience and necessity to 

provide scheduled transportation of passengers, property and mail, and has operated 

scheduled service to five points around Juneau since March, 2010.

At Kake Air Excursions proposes to provide 14 round trips per week during the 21 week 

peak summer period, and 7 round trips per week during the 31 week off-peak period. 

This is the same schedule as proposed by Wings in 2008, and operated for the last two 

years by Air Excursions. The aircraft to be used is a nine passenger all-weather aircraft. 

When loads or weather do not require, Air Excursions will use a five passenger aircraft 

at a lower subsidy need per flight.

Under the service pattern provided by Air Excursions, total traffic in the market has 

increased to its highest levels since compensated Essential Service began. Air Excursions 

recognized that a full service offering including school charters and other non-scheduled 

service would stimulate market growth. It now offers over 30% more flights than Wings 

of Alaska did in calendar year 2009.
Air Excursions is locally owned and managed, and 100% of its service is in the Juneau 

area. Air Excursions has been in business for over 22 years, and has been locally owned 

for its entire existence. It hires local pilots, and maintains offices and maintenance 

facilities in both Juneau and Gustavus. Air Excursions will provide stable and consistent 

air service, and the Kake and Excursion Inlet operation will be a much more significant 

part of its business than for any certificated competitor.

The key reason to choose Air Excursions is that its subsidy need is lower based on the 

lower operating costs of the Navajo and alternatively the Piper Cherokee 6. Even 

though the Navajo is faster than the Caravan on the route, it has a much lower capital 

cost and has lower total operating costs per hour. The faster flight speeds reduce costs 

per trip even more. In keeping with the current practice of Wings, Air Excursions 

proposes to substitute a smaller, single engine aircraft when the loads and operating 

conditions do not require the use of the Navajo. Experience over the route has resulted 

in reduced flight times compared to the 2010 bid. Air Excursions expects to save 5 

minutes per roundtrip, or slightly over 5% of the total block time estimated in 2010.

The purpose of the peak and off-peak service requirement is to recognize the need to 

encourage traffic and economic development in the area through high quality air 

service. The Air Excursions proposal provides faster, multi-engine and icing approved 

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Flights/Passengers

KAKE PASSENGERS

& DEPARTURES

Departures

Passengers
aircraft with plenty of capacity. Local ownership and control assures responsive 

management, and there is a strong future commitment of a locally owned carrier.

Appendix A details the bid which assumes Kake commercial revenue of $413,543 in the 

first year and total operating expenses and return of $577,164 in the first year (YE June, 

2013). In its previous bid, Air Excursions used the proposed charter rate for the Navajo 

Chieftain plus an estimated indirect expense of 68% of the charter rate. This yielded a 

total $726,892 for the year ended June, 2012 (second year of bid). Using experienced

unit costs for the Navajo and computed indirect and G&A expenses, Air Excursions 

estimates the YE June, 2013 expense total is $577,164, and overall reduction of 

$149,728 compared to the YE June, 2012 estimated expenses.

Air Excursions’ efficiency would carry over to the Excursion Inlet route. During the 

summer, flights to Excursion Inlet land in the heart of the village. During the winter, 

when that runway is unavailable, service has been provided by a float plane which docks 

at the loading pier. Wings does not have any float aircraft in its fleet and has had to 

charter aircraft for the service. Air Excursions proposes to service the community with a 

Cherokee 6 during the longer 21 week summer period and with a Cessna 206 on floats 

(as necessary) during the winter. Air Excursions has the float aircraft in its fleet now and 

will be in complete operational control of the service year around.

The subsidy need of $163,621 for YE June 2013 at Kake is 29% less than the current 

contract for YE June, 2012, and could be reduced further through substitution of aircraft 

as appropriate. The Excursion Inlet bid is 20% lower than the current contract despite 

assuming a longer peak period (21 weeks). Air Excursions believes that it has shown 

that it is uniquely capable of providing a high level of service and customer satisfaction 

with a lower subsidy need, and has proposed a four year contract for service to Kake 

and Excursion Inlet as well as the two year period requested by the Department.

Respectfully submitted,

Mike Loverink, owner

Air Excursions, LLC
Appendix A

Page 1 of 3

PROJECTED OPERATING REVENUE

KAKE

Traffic Type 2011 EAS Yield 2011 Rev. YE 6/13 YE 6/14 YE 6/15 YE 6/16

Passengers 2,044 $130.00 $265,720 $279,006 $292,956 $307,604 $322,984 

Freight 76,694 $0.6000 $ 47,216 $ 49,577 $ 52,056 $ 54,659 $ 57,392

Mail 84,596 $0.9565 $ 80,914 $ 84,960 $ 89,208 $ 93,668 $ 98,351

TOTAL $393,850 $413,543 $434,220 $455,931 $478,727

EXCURSION INLET

Traffic Type 2011 EAS Yield 2011 Rev. YE 6/13 YE 6/14 YE 6/15 YE 6/16

Passengers 30 $ 55.20 $ 1,656 $ 1,739 $ 1,826 $ 1,917 $ 2,013 

Freight 2,763 $0.5000 $ 1,381 $ 1,451 $ 1,523 $ 1,599 $ 1,679

Mail 9,114 $0.6892 $ 6,282 $ 6,596 $ 6,925 $ 7,272 $ 7,635

TOTAL $ 9,319 $ 9,786 $ 10,274 $ 10,788 $ 11,328

ASSUMPTIONS:

1. All traffic based on EAS flights operated, excluding charters

2. Yields based on market experience

3. 2011 estimated revenue increased by 5% per year for YE 6/13-YE6/16
Appendix A

Page 2 of 3

COMPUTATION OF SUBSIDY NEED

KAKE SERVICE

OPERATIONS

JNU-KAE Average Block Time 1 way 45.5 minutes

Total Annual Block Time 775.02 hours 1/

EXPENSE AND SUBSIDY NEED

ITEM YE 6/13 YE 6/14 YE 6/15 YE 6/16

Direct Expense PA-31 @$324.60 $264,149 $279,998 $296,797 $314,606

Indirect Expense $234,246 $248,301 $263,199 $278,991

G&A @ 10.29% $ 51,285 $ 54,362 $ 57,624 $ 61,081

TOTAL EXPENSE $549,680 $582,661 $617,620 $654,678

Profit Margin (5%) $ 27,484 $ 29,133 $ 30,881 $ 32,734

TOTAL INCLUDING R.O.I. $577,164 $611,794 $648,501 $687,412

COMMERCIAL REVENUE $413,543 $434,220 $455,931 $478,727

SUBSIDY NEED, TOTAL $163,621 $177,574 $192,570 $208,685

SCHEDULED DEPARTURES 1,022 1,022 1,022 1,022

SUBSIDY PER PA-31 DEPARTURE $ 160.10 $ 173.75 $ 188.42 $ 204.19

SUBSIDY PER PA-32 DEPARTURE $ 143.57 $ 156.23 $ 169.85 $ 184.51

CEILING PER WEEK – PEAK $4,482.80 $4,865.00 $5,275.76 $5,717.32

CEILING PER WEEK – OFF-PEAK $2,241.40 $2,432.50 $2,637.88 $2,858.66

_______________________________________________

1/ 100% completion at with PA-31 Navajo aircraft
Appendix A

Page 3 of 3

COMPUTATION OF SUBSIDY NEED

EXCURSION INLET SERVICE

OPERATIONS

JNU-EXI Average Block Time 1 way 25 minutes

Total Annual Block Time 78.33 hours 1/

EXPENSE AND SUBSIDY NEED

ITEM YE 6/13 YE 6/14 YE 6/15 YE 6/16

Direct Expense PA-32 @$244.25 $ 19,132 $ 20,280 $ 21,497 $ 22,786

Indirect Expense $ 12,729 $ 13,492 $ 14,302 $ 15,160

G&A @ 10.29% $ 3,278 $ 3,475 $ 3,684 $ 3,905 

TOTAL EXPENSE $ 35,139 $ 37,247 $ 39,483 $ 41,851

Profit Margin (5%) $ 1,757 $ 1,862 $ 1,974 $ 2,093

TOTAL INCLUDING R.O.I. $ 36,896 $ 39,109 $ 41,457 $ 43,944

COMMERCIAL REVENUE $ 9,785 $ 10,274 $ 10,788 $ 11,327

SUBSIDY NEED, TOTAL $ 27,111 $ 28,835 $ 30,669 $ 32,617

SCHEDULED DEPARTURES 188 188 188 188

SUBSIDY PER PA-32 DEPARTURE $ 144.21 $ 153.38 $ 163.13 $ 173.49

CEILING PER WEEK – PEAK $ 432.63 $ 460.14 $ 489.39 $ 520.47

CEILING PER WEEK – OFF-PEAK $ 144.21 $ 153.38 $ 163.13 $ 173.49

__________________________________________________

1/ 100% completion at with PA-32 Cherokee Six aircraft, 21 week peak season