# AKUTAN

UNALASKAISLAND

7 August 2012
Mr. Dennis J. DeVany Chief, EAS and DomesticAnalysis U.S. Department ofTransportation 1200 NewJersey Avenue, SE Washington DC 20590 AKUTAN

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Re: Notice of Peninsula Airways, Inc. Termination of Service of Essential Air Service at Akutan, Alaska, Docket DOT-OST-2000-70068 Dear Mr. DeVany; We are in receipt of an electronic notification from Mr. Kevin Adams of your office regarding a request by PenAir to terminate its obligations under the above-referenced docket number, and discontinue essential air service to Akutan effective 1 September 2012. We have been further advised to provide you with comments on the proposed termination, in order to expedite the selection of a replacement carrier, or carriers. This letter will serve as the City of Akutan's response to your requestfor comment. As you are well aware, the newAkutan Airport is scheduled to begin operations on 1 September 2012. This $71 million project is the result of significant Federal, State, local and private investment, and in no small measure PenAir's consistent commitment to provide air service, including continuation of its existing EAS contract with the U.S. Department of Transportation. Therefore, PenAir's request for termination of service to Akutan is disturbing, and in view ofthe scheduled opening ofAkutan Airport in just three weeks time, presents the community with an unwarranted set ofcircumstances. We submitthe following facts for consideration: 1. Throughout the planning and development phases of the Akutan Airport project, PenAir has provided assurances to local, State and Federal agencies that it would continue service to Akutan after commissioning ofthe new airport. PenAir concurred throughout this period that basic scheduled service would be based on three Saab 340 flights between Anchorage and Akutan perweek.Mr. Dennis J. DeVany 

### 7 August 2012 Page 2

2. Lacking any communication from PenAir on the subject of EAS service to the new airport, the City ofAkutan initiated discussions with principals of PenAir on 6 December 2011. At that time, the City was informed that PenAir intended to provide EAS service to Akutan Airport from Dutch Harbor utilizing a nine passenger twin-engine Navajo aircraft, consistent with its existing EAS contract, i.e., two flights per day, seven days perweek. 3. Over a period of months, the City tried to confirm PenAir's intentions with little success. Among other loosely structured options, PenAir indicated it might simply continue use of the Grumman Goose, either as currently operated by water landing, or by landing on the new 4,500 runway ofAkutan Airport. 4. Beginning in May 2012, the City, Aleutians East Borough and the State ofAlaska formed an Akutan Airport Working Group, for purposes of ensuring timely, safe and effective commissioning ofthe new airport, and to develop the framework for long-term operations. Obviously, a critical item of concern forthe Working Group is the establishment of scheduled air service for the new airport. Consequently, PenAirwas asked to, and has, participated in each Working Group meeting. 5. Within the past month, PenAir has proffered several alternatives for EAS service to Akutan, including continued use of the Grumman Goose, use of a twin-engine Navajo, use of a twin-engine King Air, and use of the Saab 340. Throughout this period, I have repeatedly tried to get Mr. Dan Seybert, President of PenAir, to make a commitment to the community, especially in light of the impending opening of the new airport. These efforts have been repeatedly rebuffed, including in a meeting with Mr. Seybert on 11 July 2012. It is clear to me now, that PenAir's strategy was one of delay and disingenuous dialogue, while preparing to file the Notice ofTermination of Service received by your office and the City on 2August 2012. 6. PenAir repeatedly suggested that the community provide a statement of its proposed service plan in support of continuing its current EAS contract. As a result ofthe efforts ofthe Working Group, the State of Alaska and City ofAkutan were able to agree on an approach, which was defined in a draft letter to you (copy attached), and provided to PenAir for consideration. PenAir's response to the community's specific request for continued service was to file the Notice of Termination of Service now before you, without any further consultation or warning to the City 7. All ofthe above facts and the City's overall response to the Notice ofTermination of Service must be viewed in the context of PenAir's historic and long-term failure to provide adequate service to Akutan. PenAir's performance under the existing EAS contract, and those in the past, has focused almost entirely on mail delivery and freight service. The residents of Akutan, including Trident Seafoods, have suffered the consequences, while PenAir has collected its EAS payments year-in and year-out, regardless of haphazard and irregular passenger service.Mr. Dennis J. DeVany 7 August 2012 Page 3 Unfortunately, they have remained the only game in town for our citizens and taxpayers. It is our understanding that you believe the City of Akutan should support PenAir's Notice of Termination of Service to allow the Department of Transportation to begin the regulatory process of instituting replacement service through a request for proposals process. We further understand:
• The City ofAkutan is guaranteed the continuation of EAS, whether by PenAir or other carrier(s).
• PenAir must continue service until replacement service is initiated.
• If the initiation of replacement service takes longer than 180 days, PenAir may receive additional compensation for "forced service."
• We assume the City can provide further direct comment on the Notice of Termination as part ofthe public notice process required by EAS regulations. The City can support the requested termination; however, there are a number of critical questions yet to be answered: 1. What is the likelihood that replacement service will be initiated in time for the 1 September opening ofAkutan Airport? 2. If PenAir is required to continue EAS service beyond 1 September, how will the level of service be determined? As indicated above, PenAir has been unresponsive to requests by the City and State DOT&PF for a written notice of commitment to the aircraft to be used and the proposed schedule. In the City's view, continuation ofservice by the Grumman Goose beyond 1 September is not a reasonable option, otherthan as a backup to a new service plan. 3. How will the City/State DOT&PF proposed level of service (attached) be addressed as part of the RFP process for selecting a new carrier? During any period ofcontinued service by PenAir? I hope you appreciate the City's dilemma. After years of frustration in dealing with PenAir, the City is looking forward to a fresh approach. However, opening ofthe airport isjust weeks away, and it is unclear how to require PenAir to step up and do the right thing until such time as they are released from their current contract.Mr. Dennis J. DeVany 7 August 2012 

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In that regard, we are asking for your support, and that ofthe Alaska Congressional Delegation, in protecting the interests ofthe Akutan community, and the substantial Federal, State, local and private investment in the Akutan Airport project. Sincerely, 

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Joe Bereskin Mayor Enclosure: cc: Honorable Senator Lisa Murkowski Honorable Senator Mark Begich Honorable Congressman Don Young Honorable Stanley Mack, Mayor, Aleutians East Borough Marc Luiken, Commissioner, State ofAlaska DOT&PF

### July 12, 2012

Mr. DennisJ. DeVany Chief, EAS andDomesticAnalysis U.S. DepartmentofTransportation 1200NewJerseyAvenue, SE Washington, DC 20590 Re: Essential Air Service for AkutanDocket2000-7068 DearMr. DeVany PeninsulaAirways, Inc. (PenAir)provides subsidizedEssential Air Service (EAS)tothe community ofAkutan atanannual rate of$710,157perOrder2011-3-31. The Orderrequired PenAirtoprovide 11 nonstoproundtrips a weekwitha 9-seat Grumman Goose seaplane from Dutch Harbor (DUT) to Akutan Seaplane Base (KQA). The EAS contractwill expire onApril 30,2013. The State ofAlaskabuilt a newairportwitha4,500 foot pavedrunway for the communityof Akutan onnearbyAkunIslandwhichwill open onorabout September 1, 2012. PenAir, the State ofAlaska, andthe communityofAkutanrequest an "alternate servicepattern."Inbrief, the subsidylevel wouldremainfixed, butPenAirwouldprovidethree nonstop Saab 340roundtrips aweekbetweenAkutanAirport (+OlD) andAnchorage (ANC) and six nonstop (Navajo, King Airor Grumman Goose) roundtripsperweekbetweenAkutanAirport (+OlD) andDutchHarbor (DUT). Ifyouhave anyquestions, please contactus at yourearliestconvenience. Sincerely,

Danny Siebert, COO PeninsulaAirways, Inc. 6100 BoeingAvenue AnchorageAlaska99502
Tele: 907-771-2500 Joe Bereskin, Mayor CityofAkutan PO Box 109 Akutan, Alaska 99553
Tele: 907-698-2228 StevenD. Hatter Deputy Commissioner

- Aviation AlaskaDOT&PF P.O.Box 196900 Anchorage, Alaska99519 Tele: 907-269-0730