Order 2011-12-7

Served: December 15, 2011

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 15th of December, 2011

Essential Air Service at

KARLUK, ALASKA

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

DOCKET DOT-OST-2004-19342

ORDER REQUESTING PROPOSALS

Summary

By this order, the Department is requesting proposals by January 24, 2012, from carriers 

interested in providing essential air service (EAS) at Karluk, Alaska, for a new two-year 

period, beginning April 1, 2012, with or without subsidy. 

Background

By Order 2010-6-13, the Department selected Redemption, Inc., d/b/a Island Air Service, to 

provide subsidized EAS to Karluk, Alaska, for the two-year period ending March 31, 2012. 

Under that order, the Department authorized subsidy for Island Air consisting of three 

nonstop round trips per week to Kodiak (ADQ). All of the service was to be provided with 

five-seat Piper PA-32 aircraft, for an annual subsidy rate of $44,349. 

Request for Proposals

As the end of the current rate term approaches, we will request proposals from carriers 

interested in providing service at Karluk, with or without subsidy, for the two-year period 

beginning April 1, 2012. Carriers should file their proposals by January 24, 2012. 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.1 

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.

 1 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to 

provide Essential Air Service without subsidy and we determine that service can be reliably provided 

without such compensation, we typically do not proceed with the carrier-selection case. Instead, we simply 

rely on that carrier’s subsidy-free service as proposed.
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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. 

We expect proposals to adequately describe the service being proposed and the annual 

amount of subsidy being requested. 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, well-documented proposals 

that will facilitate their evaluation by the affected community and the Department. We 

do not anticipate any change in our selection criteria, or in the general provisions 

governing subsidy payments for essential air service.2 

With specific respect to Karluk, we expect proposals consisting of three nonstop round 

trips per day at each community if five-seat or seven-seat equipment is provided, and 

more frequencies with smaller aircraft. We may subsidize additional frequencies if the 

affected community is served in conjunction with another community. As always, staff 

will work with the carrier to ensure service and subsidy is reasonable.

We encourage proposals that meet the community’ 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.

We encourage carriers to work with the community in advance of the due date for 

proposals when proposals can still be adjusted so that they can craft them to best meet the 

community’s needs. As always, we will fully consider the community’s views before 

making a long-term carrier-selection decision. 

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

www.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 Appendix B. For the year ended 

October 31, 2011, the most recent annual period for which we have data, Karluk

generated an average of 13 deplaned passenger equivalents per week.3

 2 In selecting a carrier to provide subsidized Essential Air Service in Alaska, 49 U.S.C. 41733(c) (1) directs 

us to consider five factors. (1) service reliability; (2) contractual and marketing arrangements with a larger 

carrier at the hub; (3) interline arrangements with a larger carrier at the hub; (4) community views; and 

(5) experience of the applicant in providing, in Alaska, scheduled air service or significant non-scheduled 

air service. In addition, The Consolidated Appropriations Act, 2008, Public Law 110-161, provides that 

when selecting a carrier to provide EAS, the Department may consider the relative subsidy requirements, 

thus codifying a factor that we have considered since the inception of the program. Interested carriers 

should also be aware that our general provisions governing essential air service will be included in the 

selection order as part of our authorization of subsidy for the selected service. Appendix C of this order 

contains those general provisions.

3 200 pounds of mail/freight is “equivalent” to one passenger.
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Other Carrier Requirements

The Department is responsible for implementing various Federal statutes governing lobbying 

activities, drug-free workplaces, and nondiscrimination.4 Consequently, all carriers receiving 

Federal subsidy to support essential air service 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 1, the due date for carrier proposals.

This order is issued under authority delegated in 49 CFR 1.56a(f) and re-delegated to the 

Director, Office of Aviation Analysis.

ACCORDINGLY,

1. The Department requests proposals from carriers interested in providing Essential Air 

Service at Karluk, Alaska. Carriers should submit their proposals, with subsidy if 

necessary, by January 24, 2012. Proposals should be emailed to EAS@dot.gov, with the 

title “Proposal to Provide Essential Air Service at Karluk, Alaska, DOT-OST-2004-19342.” 

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

 4 The certifications are available on the web at http://ostpxweb.dot.gov/aviation/index.html.
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3. We will serve this order on the service list for this Docket.

Persons entitled to petition the Department for review of this order under the 

Department’s Regulations, 14 CFR 385.50, must file such petitions within ten (10) days 

after the date of service of this order. 

This order will be effective immediately, and the filing of a petition for review 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 from Kodiak, (ADQ)

Old Harbor (OLH) 47

Ouzinkie (KOZ) 13

Larsen Bay (KLN) 57

Port Lions (ORI) 16

Akkhiok (AKK) 85

Karluk (KYK) 74
Appendix B

Scheduled Service at Karluk, Island Air Service, T-100 Market Report

Origin of Karluk Dest of Karluk Origin and Dest of Karluk

Pax. Equivalents Pax. Equivalents Pax. Equivalents

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

2008 11 10 0.0 0.7 10.7 11 12.5 4.6 28.1 21 12.5 5.3 38.8

2008 12 13 0.0 0.8 13.8 15 23.4 13.3 51.7 28 23.4 14.1 65.5

2009 1 9 0.0 0.8 9.8 5 20.5 3.8 29.3 14 20.5 4.6 39.1

2009 2 12 0.0 0.5 12.5 15 12.8 6.1 33.8 27 12.8 6.6 46.4

2009 3 6 0.5 0.4 6.9 12 5.2 4.2 21.4 18 5.7 4.6 28.3

2009 4 16 0.2 0.9 17.1 16 14.6 3.9 34.5 32 14.8 4.8 51.6

2009 5 18 0.1 0.6 18.6 12 17.5 4.8 34.3 30 17.6 5.4 53.0

2009 6 53 0.0 0.7 53.8 44 18.6 6.4 69.0 97 18.6 7.1 122.7

2009 7 17 0.3 0.5 17.8 22 12.3 2.8 37.2 39 12.6 3.3 54.9

2009 8 25 0.1 0.3 25.4 48 19.6 19.0 86.5 73 19.7 19.3 112.0

2009 9 108 0.0 0.7 108.7 79 36.6 4.2 119.8 187 36.6 4.9 228.5

2009 10 15 0.1 0.8 15.8 12 7.4 1.1 20.5 27 7.5 1.9 36.4

Total 302 1.3 7.7 310.9 291 201 74.2 566.1 593 202.3 81.9 877.2

2009 11 6 0.0 0.1 6.1 12 13.2 4.6 29.8 18 13.2 4.7 35.9

2009 12 25 0.0 0.4 25.5 8 10.9 10.1 29.0 33 10.9 10.5 54.4

2010 1 7 0.0 0.4 7.4 6 14.5 5.0 25.5 13 14.5 5.4 32.9

2010 2 15 0.0 0.2 15.2 8 9.9 6.6 24.5 23 9.9 6.8 39.7

2010 3 13 0.0 0.2 13.2 15 10.5 7.9 33.4 28 10.5 8.1 46.6

2010 4 3 0.0 0.6 3.6 12 7.4 3.0 22.4 15 7.4 3.6 26.0

2010 5 9 0.1 0.2 9.3 16 7.2 6.9 30.1 25 7.3 7.1 39.4

2010 6 22 0.1 0.8 22.9 29 26.4 5.4 60.8 51 26.5 6.2 83.7

2010 7 20 0.3 0.7 21.0 18 11.7 2.7 32.4 38 12.0 3.4 53.4

2010 8 26 0.7 0.1 26.8 51 27.9 8.8 87.7 77 28.6 8.9 114.5

2010 9 107 5.2 0.3 112.5 60 28.1 13.9 102.1 167 33.3 14.2 214.5

2010 10 26 1.7 0.4 28.1 43 20.0 14.0 77.0 69 21.7 14.4 105.1

Total 279 8.1 4.4 291.6 278 187.7 88.9 554.7 557 195.8 93.3 846.1

2010 11 14 0.0 0.3 14.3 16 8.4 7.8 32.1 30 8.4 8.1 46.5

2010 12 31 0.5 0.2 31.8 17 7.6 4.6 29.2 48 8.1 4.8 60.9

2011 1 19 0.1 0.7 19.8 33 12.3 9.4 54.7 52 12.4 10.1 74.5

2011 2 18 0.0 0.3 18.3 11 14.0 4.3 29.3 29 14.0 4.6 47.6

2011 3 11 0.6 0.4 12.0 19 17.7 9.8 46.4 30 18.3 10.2 58.5

2011 4 13 0.6 0.5 14.1 17 14.4 7.2 38.6 30 15.0 7.7 52.7

2011 5 31 1.5 4.3 36.9 41 17.4 5.3 63.6 72 18.9 9.6 100.5

2011 6 33 0.1 0.4 33.5 19 13.5 3.6 36.1 52 13.6 4.0 69.6

2011 7 29 0.4 0.3 29.7 36 13.3 3.7 52.9 65 13.7 4.0 82.7

2011 8 13 0.0 0.3 13.4 41 35.0 4.4 80.4 54 35.0 4.7 93.7

2011 9 62 9.5 0.4 71.8 89 49.9 13.3 152.1 151 59.4 13.7 224.1

2011 10 25 0.1 0.3 25.3 33 21.8 5.6 60.4 58 21.9 5.9 85.8

Total 299 13.4 8.4 320.9 372 225.3 79 675.8 671 238.7 87.4 997.1

Note: 200 pounds of mail freight is one passenger equivalent.
Appendix C

Example of General Terms and Conditions for Essential 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 are not currently available for performance under this solicitation beyond 

[DATE]. The Department’s obligation for performance under this solicitation beyond 

[DATE], is contingent upon the availability of appropriated 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 carrier will receive notice in writing by the 

Department.

All claims for payment must be submitted within 60 days of the last day of service 

provided under this order