### 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 15 th 

### of December, 2011

Essential Air Service at

KARLUK, ALASKA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 200 4

- 19342

ORDER REQUESTING PROPOSALS Summary By this order, the Department is requesting proposals by January 24

, 201 2

, 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 20 1 0

- 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 , 201 2

. 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 approach es , we will request proposals from carriers interested in providing servi ce at Karluk

, with or without subsidy, for the two

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

. S taff will then docket the proposals, thereby making them public. Shortly afterwards, we will provide a summary of the proposals to the community and S tate and as k 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 expecta tion 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 E ssential A ir S ervice without subsidy and we determine that service can be reliably provided without such compensation, we typically do not pro ceed with the carrier

- selection case. Instead, we simply rely on that carrier’s subsidy

- free service as proposed.

### - 2

-
We are here providing interested carriers with some basic information to serve as guid ance 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 pro posals 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 resp ect 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 we lcome 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

serv ice

– with subsidy requir e ments 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 h ave included historical traffic for the community in Appendix B

. For the year ended October 31 , 201 1 , the most recent annual period for which we have data

, Karluk generated an average of 13 d eplaned passenger equivalents per week

. 3

2 In selecting a carrier to provide subsidized E ssential A ir S ervice in Alaska , 49 U.S.C. 41733(c) (1) directs us to consider f ive 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 requirement s, 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 authorizatio n 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.

### - 3

-

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 ce rtify 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 reg ulations 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 requiri ng 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 doc uments.

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 fo r carrier proposals.

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

- delegated to the Directo r, Office of Aviation Analysis.

ACCORDINGLY,

1. The Department requests proposals from carriers interested in providing E ssential A ir S ervice at Karluk

, Alaska

. Carriers should submit their proposals, with subsidy if necessary, by January 24

, 201 2

. Proposals should be emailed to EAS@dot.gov, with the title “Proposal to Provide Essential Air Service at Karluk

, Alaska , DOT

- OST

- 200 4

- 19342

. ” Questions regarding filings may be directed to Kevin Adams at 202

- 366

- 1047 or Kevin.Adams@dot.gov ;

2

. Th is D ocket 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

.

### - 4

-

3 . We will serve this order on the s ervice l ist for th is 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 (O RI ) 1 6 Akkhiok ( AKK ) 85 Karluk ( KYK ) 74Appendix 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 co mpleted, 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 writt en 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 oper ated; 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 me t 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 locati on 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
pa ragraph.

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 paym ent 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