\\DC - 042333/000001 - 6161975 v3 BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Application of HARRIS AIRCRAFT SERVICES, INC. For a certificate of public convenience and necessity pursuant to 49 U.S.C. § 41102 to engage in interstate scheduled air transportation of persons, property, and mail ) ) ) ) ) ) ) ) ) Docket DOT-OST-2014-0145

MOTION OF AIR EXCURSIONS LLC TO RE-OPEN THE RECORD

Communications with respect to this document should be addressed to: Kent Craford AIR EXCURSIONS LLC 1873 Shell Simmons Dr. Suite 110 Juneau, AK 99801 Robert E. Cohn Patrick R. Rizzi HOGAN LOVELLS US LLP Columbia Square 555 Thirteenth Street, NW Washington, DC 20004 +1 202 637 4999/5659 robert.cohn@hoganlovells.com patrick.rizzi@hoganlovells.com Counsel for Air Excursions LLC

October 29, 2014\\DC - 042333/000001 - 6161975 v3 BEFORE THE DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.
Application of HARRIS AIRCRAFT SERVICES, INC. For a certificate of public convenience and necessity pursuant to 49 U.S.C. § 41102 to engage in interstate scheduled air transportation of persons, property, and mail ) ) ) ) ) ) ) ) ) Docket DOT-OST-2014-0145

October 29, 2014

MOTION OF AIR EXCURSIONS LLC TO RE-OPEN THE RECORD
Air Excursions LLC hereby moves the Department of Transportation to reopen the record in the above-captioned proceeding to take into account new information concerning the service proposal and fitness deficiencies of Harris Aircraft Services, Inc. (“Harris Air”). It has recently become clear that Harris Air has effectively changed its service proposal without accounting for the changes in this docket. Harris Air is telling the Department (“DOT”) one story in this proceeding but another story in a different proceeding – with important implications for the pending certificate application. These inconsistencies confirm that Harris Air has not demonstrated sufficient fitness for certificate authority. The Department should closely examine these issues and issue a request to Harris Air for additional information and documents to address these critical inconsistencies.Motion of Air Excursions Page 2

\\DC - 042333/000001 - 6161975 v3 I. Harris Air’s Recent EAS Submission Is At Odds With Its Representations In Support Of Its Certificate Application. Harris Air has repeatedly and indignantly claimed that it will “continu[e] its existing intra-state services”, that its “existing intra-state operations in this Southeast region of Alaska will continue as currently operated” and that its intra-state Alaska operations will “remain substantially unchanged from 2013, including type of FAA commuter authority held, routes served, service frequency, numbers of employees employed, etc.” 1 Yet, just last week, Harris Air told the Department that if certificated, it will offer substantially more service than it currently operates. In its EAS submission relating to Angoon, Tenakee, and Pelican, Harris Air proposed that it would operate, on a subsidy-free basis, “two scheduled flights daily in the peak season” (14 weekly) and “one flight daily in the off-peak season” (7 weekly) between Sitka and each of Angoon and Tenakee, and one daily roundtrip year-round (7 weekly) between Sitka and Pelican. See Proposal of Harris Air to Provide Essential Air Service, at 4 (October 22, 2014) (Dockets DOT-OST-2002-11586 and 2006- 25542). That proposal is in sharp contrast to the Illustrative Schedule provided with its certificate application in this docket, which shows only a single daily Sitka– Angoon service (7 weekly) and only three times weekly for each of Sitka– Tenakee and Sitka–Pelican. See Exhibit HAS-13.

1 See Application of Harris Air, at 9 (August 25, 2014); Consolidated Reply of Harris Air, at 1, 4 and 5 (September 29, 2014) (underlined emphasis in original).Motion of Air Excursions Page 3

\\DC - 042333/000001 - 6161975 v3 EAS Proposal

dated October 22, 2014 Certificate Application dated August 25, 2014 Angoon Peak: 14 weekly

Off-Peak: 7 weekly 7 weekly

Tenakee Peak: 14 weekly

Off-Peak: 7 weekly 3 weekly

Pelican 7 weekly 3 weekly TOTAL Peak: 35 weekly

Off-Peak: 21 weekly 13 weekly

These new services to Angoon, Tenakee, and Pelican reflect a 169% (peak) and 61% (off-peak) increase from the service levels contained in Harris Air’s certificate application for these three markets alone. Harris Air cannot have it both ways. It cannot legitimately claim that its service will “remain substantially unchanged from 2013” and yet represent to the Department that it will operate substantially more flights. If these increased operations are properly accounted for in connection with this certificate application, as they must be, the fundamental financial fitness underpinnings for Harris Air’s certificate application collapse. The expanded services proposed by Harris Air will necessarily result in substantial higher costs than the costs Harris Air used to compute the financial fitness threshold for its certificate application. By showing far fewer operations on the Angoon, Tenakee, and Pelican routes in the Illustrative Schedule than it has represented in its EAS proposal, Harris Air has substantially under-estimated the costs associated with its planned certificate operations and therebyMotion of Air Excursions Page 4

\\DC - 042333/000001 - 6161975 v3 calculated a much lower financial fitness threshold than if the expanded services were accounted for properly. Operating substantially more flights to Angoon, Tenakee, and Pelican, as Harris Air’s EAS submission proposes, will necessarily incur substantially higher expenses in flight operations, maintenance, ground support, and accounting/administration. For example, increased flight operations will incur higher fuel, maintenance parts and labor, and engine overhaul expenses, which are all a direct function of aircraft hours flown. Further, providing “essential air service” at Angoon, Tenakee, and Pelican will necessarily require increased overhead, especially ground support in those communities that Harris Air does not currently have. With respect to U.S. mail alone, in 2013, the aggregate mail volume to these three communities totaled 72.249 tons. Harris Air will need ground equipment to receive and transport that mail to the U.S. Post Offices; it will need storage for that mail when the Post Offices are closed; and it will need staff to tender the mail to the local Postmasters. As a result of these substantially increased EAS services, outstation offices, staffing, and communications will incur both start-up and ongoing expenses, none of which are included in Harris Air’s certificate application. This significant understatement of the financial fitness threshold is in addition to the understatement of approximately $350,000 arising from Harris Air’s inexplicable reduction of the financial fitness threshold by 44% ($999,000 to $558,000) from what Harris Air itself proposed in its 2013 application and theMotion of Air Excursions Page 5

\\DC - 042333/000001 - 6161975 v3 Department accepted in the Show Cause Order associated with its earlier, withdrawn application, DOT Order 2014-3-2, at 6 (“2014 Show Cause Order”). In addition, Air Excursions has already demonstrated that it would be impossible for Harris Air to operate its Illustrative Schedule with its fleet of aircraft. 2 The additional services Harris Air is proposing for Angoon, Tenakee, and Pelican only compound the problem, making its service proposal and financial fitness analysis even more unrealistic. Either Harris Air will continue to engage in unrealistic (and deceptive) scheduling, or it will need to acquire more aircraft, thereby incurring additional costs and rendering its financial forecasts and financial fitness threshold invalid. Either way, it is problematic for Harris Air’s certificate application. Given the increase in service levels and the significant implications for this certificate application, the Department should re-open the record to examine these critical issues and immediately issue a request to Harris Air for more information and documents, including the following:

 Explain in detail on an aircraft-by-aircraft routing basis, how Harris Air can operate its Illustrative Schedule, plus the expanded operations it proposes for Angoon, Tenakee, and Pelican, with its current fleet of aircraft

.

 Explain how it can handle U.S. mail service with its current facilities and ground equipment at Angoon, Tenakee, and Pelican.

 Are there other plans for service increases by Harris Air not reflected in its certificate application?

 Does it plan to add aircraft to its fleet (if so, by ownership or lease)?

2 See Answer of Air Excursions, at 8-9 (September 15, 2014); Motion and Response of Air Excursions, at 5-6 (October 6, 2014) (explaining, for example, that there was no showing how Harris Air could operate several near-simultaneous wheel-plane flights with only two wheel-aircraft).Motion of Air Excursions Page 6

\\DC - 042333/000001 - 6161975 v3  Does it plan to add flight crews?

 Recalculate Harris Air’s financial forecasts and financial fitness threshold accounting for the expanded services proposed for Angoon, Tenakee, and Pelican.

 Recalculate Harris Air’s financial forecasts and financial fitness threshold accounting for the start-up costs set forth in the 2013 application and the 2014 Show Cause Order.
The Department needs this additional information to have an adequate record to reach a decision on the certificate application.

II. These Inconsistencies Are Significant, And Harris Air’s Complaints About Delay Are Without Merit. Harris Air’s complaints about Air Excursions’ submissions being used merely to delay the Department’s consideration of its certificate application are red herrings. Air Excursions’ submissions have all been well-supported and detailed, pointing out flaws with the certificate application. Indeed, Harris Air only has itself to blame for any delays. It is Harris Air that has submitted a certificate application with glaring discrepancies such as (i) a financial fitness threshold that is inexplicably $350,000 lower than the one it submitted a year ago for the same services and the Department accepted earlier this year, and (ii) an Illustrative Schedule that, on its face, cannot be operated. It has steadfastly refused to address the substantive issues raised by Air Excursions, choosing instead to complain about motives, delays, and abuse of process. Curiously, it took Harris Air almost 21⁄2 weeks to file a non-substantive response to Air Excursions’ last submission.Motion of Air Excursions Page 7

\\DC - 042333/000001 - 6161975 v3 III. Conclusion.The Department should grant this Motion, re-open the record, and followup on the issues raised by this new information with new information/clarification requests to Harris Air. The new information presented in this Motion (which only came to light last week) further confirms the dispositive deficiencies of Harris Air’s certificate application.

Respectfully submitted,

______________________________________ Robert E. Cohn Patrick R. Rizzi HOGAN LOVELLS US LLP 555 Thirteenth Street, NW Washington, DC 20004 +1 202 637 4999/5659 Counsel for Air Excursions LLC\\DC - 042333/000001 - 6161975 v3 CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing Motion to Re-Open the Record has been served this 29th day of October 2014, upon each of the following:
pmurphy@lopmurphy.com scott@harrisair.com hank@MTCWorld.com info@flypacificairways.com

Patrick R. Rizzi