Order 2013-6-6

Served: June 7, 2012

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 7th of June, 2012

Essential Air Service at

TATITLEK, ALASKA

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

DOCKET DOT-OST-2013-0030

ORDER RE-SOLICITING PROPOSALS

Summary

By this Order, the Department is re-soliciting proposals by June 20, 2013, from carriers 

interested in providing Essential Air Service (EAS) at Tatitlek, Alaska, for a two-year 

period, with or without subsidy. 

Background

Order 2013-2-22, February 22, 2013, requested proposals for EAS at Tatitlek. That RFP 

noted that Tatitlek’s EAS determination had been established by Order 1980-1-167, 

January 25, 1980, which set Tatitlek’s level of air service to be one scheduled round trip 

per week during the peak season and one flag-stop round trip per week during the offpeak to Cordova with small aircraft having ten or fewer seats and up to two intermediate 

stops. In addition, the RFP encouraged:

“proposals that meet the community’s requirements in an efficient manner. 

Consistent with the EAS determination, proposals should propose to provide one 

scheduled passenger round trip per week [emphasis added]. Carriers are also 

welcome to propose more than one service option, if they choose; they need not 

limit themselves to a single specific 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.” 

That RFP set March 21, 2013, as the deadline for proposals. On March 11, 2013, J&M 

Alaska Air Tours, Inc., d/b/a Alaska Air Transit (AAT), requested an extension of the 

deadline, and by notice dated March 12, 2013, we extended the deadline to April 4, 2013. 

We received timely-filed proposals from AAT, Reeve Air Alaska, LLC (Reeve), and 

from Security Aviation. Below is a summary of each carrier’s proposal, and Appendix C 

provides a detailed outline of the subsidy calculations.
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Proposal of AAT

AAT submitted three options, all of which propose three round trips a week to 

Anchorage. The carrier notes that it currently provides flag-stop service to Tatitlek in 

conjunction with its three scheduled round trips per week to nearby Chenega Bay, and 

has been providing some level of service to Tatitlek for the last nine years. 

Option 1: $170,373 annual subsidy for three nonstop round trips per week to ANC with 

IFR-equipped Piper Navajos configured to 7 seats.1 

Option 2: $137,301 annual subsidy for three round trips per week to ANC with IFRequipped Piper Navajos configured to 7 seats. Two of the round trips would be operated 

on a nonstop basis, and one would be operated as a triangle flight: Anchorage to Chenega 

Bay to Tatitlek to Anchorage. 

Option 3: $140,606 annual subsidy for three nonstop round trips per week to ANC with 

Piper Navajos configured to 7 seats. The only difference from Option 1 is that Option 3 

is contingent upon AAT’s being awarded the Postal Service contract to transport mail 

directly between Anchorage and Tatitlek, without requiring routing through any other 

terminal.2

Proposal of Security Aviation 3

The carrier indicated that the “Tatitlek stop may be incorporated in [an]other routing,” 

and thus does not specify whether or not the service would be operated on a nonstop 

basis.

Option 1: $111,488 annual subsidy for one round trip per week to ANC with IFRequipped Piper Navajo4 aircraft.

Option 2: $222,976 annual subsidy for two round trips per week to ANC with IFRequipped Piper Navajo aircraft.

Proposal of Reeve

The carrier indicated that “due to the strong ties and family connections between 

neighboring communities, Tatitlek passengers will have the option to include Chenega, 

Alaska, in this routing on a flag-stop basis at no additional fare or subsidy cost.” Thus, 

we cannot specify whether or not Reeve’s service would be operated on a nonstop basis. 

 1 Piper Navajos can be configured for up to 9 seats. The carrier indicated that it might upgrade its service 

to Cessna Caravan or Pilatus PC-12 aircraft. However, parties should be aware that because such service 

upgrades could not be required, we would not assign them any decisional weight: carriers are always 

allowed to provide superior service to what they are contracted to provide.

2 We have informally discussed this matter with the Postal Service. The Postal Service is concerned that 

because Tatitlek has the same zip code as Cordova it would incur additional costs to separate Tatitlek’s 

mail in Anchorage from Cordova’s, rather than sending all of that mail to Cordova where the Tatitlek 

bound mail would be forwarded to Tatitlek.

3 The carrier did not specify an annual level of subsidy, but rather indicated it would require “$2,144.00 per 

trip [with] additional charters available as needed at the same cost.” We arrived at the annual subsidy 

figures by multiplying $2,144 per round trip by one round trip per week in Option 1 and two round trips per 

week in Option 2 by 52 weeks. 

4 Security Aviation indicated that on the critical outbound leg, Anchorage to Tatitlek, its Navajo would 

offer a maximum payload of 1,700 pounds. 
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Option 1: $117,250 annual subsidy for one round trip per week to ANC with IFRequipped Piper Navajo aircraft.

Option 2: $187,430 annual subsidy for two round trips per week to ANC with IFRequipped Piper Navajo aircraft.

Comments

The North Pacific Rim Housing Authority (NPRHA) recommends that we select AAT, 

preferring the additional frequency it proposed. 

“NPRHA many times has to send out staff to Tatitlek ...and these trips usually 

are 2-3 days in length. ......... If service is only once per week as the other 

proposers have submitted (Reeve does provide a proposal with 2 flights per 

week but at a significantly higher cost).... it would require a costly charter [by 

NPRHA] for one leg of the trip.”

The Village of Tatitlek indicated it was “excited to have this happen, and we looked at all 

three [carriers’] proposals. We are in favor of Alaska Air Transit.” 

On May 2 the Postal Service indicated the following: 

“The mail for both locations presently originates from Cordova [CDV] and not 

[Anchorage] ANC. Making ANC the head out point has the potential to exclude mail as 

one of the traffic elements to support the service. If CDV was a point on the [subsidized] 

itinerary enroute to both locations it would capture that volume. In addition, it is possible 

that none of the potential carriers interested in the subject service are certificated carriers. 

If so, this would create a potential issue for the Postal Service because the Postal Service 

may only provide payment for domestic air service to certificated carriers. 

Decision

The RFP stated the following:

“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.” 

In this instance we have decided to solicit a new round of proposals. Three carriers 

submitted proposals for Tatitlek, but there are material weaknesses with each. Neither 

Reeve nor Security Aviation clearly specifies whether their service would be operated on 

a nonstop or one-stop basis.5 In addition, Security Aviation’s proposal does not make 

clear whether or not its Option 2 would be for two round trips per week year round or 

something less than that level of service. It also refers to chartering the aircraft.6 AAT 

submitted three options. However, all three options are based on three round trips per 

week – three times the one-round-trip-per-week level specified by the RFP. 

 5 Although the RFP allowed for nonstop, one-stop, or two-stop service, carriers must accurately describe 

exactly what service level they are proposing so that the community and state officials can make an 

informed recommendation and we can make an informed decision. Also, when carriers contract for 

nonstop service, unauthorized intermediate stops are not fully compensated.

6 49 U.S.C. § 41732(a) requires that EAS be provided on a scheduled basis.
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Based on the above, we will re-solicit proposals. However, we will make one adjustment 

to our earlier request for proposals. In its response to the first RFP, the community 

argued that one round trip per week might not be sufficient. We will therefore request 

proposals for one or two round trips per week, year round, at Tatitlek. 

Request for Proposals

We are requesting proposals from carriers interested in providing service at Tatitlek, with 

or without subsidy, from the start of their service pursuant to a carrier-selection Order for 

a two-year period. Carriers should file their proposals by June 20, 2013. Staff will then 

docket the proposals, thereby making them public. 

Typically we provide a 30-day deadline from the issuance of the RFP for proposals to be 

submitted. Because Tatitlek is currently without scheduled air service, and because this 

is a re-solicitation, we will shorten the time for carriers to submit proposals in response to 

this RFP to June 20. Likewise, our staff will contact community officials after we 

receive proposals to establish a shorter-than-usual comment period.

We will give full consideration to all proposals filed in a timely manner.7 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.

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 for 

their proposals. 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, welldocumented proposals that will facilitate their evaluation by the affected community and 

the Department. We anticipate applying our usual carrier-selection criteria and the 

general provisions governing subsidy payments for EAS.8 

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

provide EAS 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.

8 In selecting a carrier to provide subsidized EAS in Alaska, 49 U.S.C. § 41733(c) (1) directs us to consider 

six 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; (5) whether the 

carrier has included a plan in its proposal to market the service; and (6) 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 EAS 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.
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As always, we will formally solicit the community’s views on any service options we 

receive before making a long-term carrier-selection decision. The community and air 

carriers are encouraged to work together in advance of the due date for proposals to craft 

a service pattern that is both desirable to the community and meets the operational needs 

of the airlines, as carriers cannot amend their proposal after the due date. 

We encourage proposals that meet the community’s requirements in an efficient manner. 

Proposals should offer either one or two scheduled passenger round trips per week. 

Carriers are also welcome to propose more than one service option, if they choose; they 

need not limit themselves to a single specific 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.

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 

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 most recent annual 

periods. 

Other Carrier Requirements

The Department is responsible for implementing various Federal statutes governing 

lobbying activities, drug-free workplaces, and nondiscrimination.9 Consequently, all 

carriers receiving Federal subsidy to support EAS 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, after consultation with them, establish a deadline for community comments.

This Order is issued under authority delegated in 49 CFR Part 1.25a(b).

 9 http://www.dot.gov/policy/aviation-policy/small-community-rural-air-service/essential-air-service.
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ACCORDINGLY,

1. The Department requests proposals from carriers interested in providing EAS at 

Tatitlek, Alaska. Carriers should submit their proposals, with subsidy if necessary, by 

June 20, 2013. Proposals should be emailed to EAS@dot.gov, with the title “Proposal to 

Provide EAS at Tatitlek, Docket DOT-OST-2013-0030.” 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

3. We will serve this Order on the service list for this Docket.

By: 

Susan L. Kurland

Assistant Secretary for

Aviation and International Affairs

(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 to Tatitlek (TEK)

Anchorage, ANC 113

Cordova, CDV 49

Chenega, NCN 71

Valdez, VDZ 24
Appendix B

Historical Traffic at Tatitlek (TEK)

Origin, Tatitlek Dest, Tatilek O&D, Tatilek

Year Month Freight Mail Freight Mail Freight Mail

2010 1 0.1 0.8 8.4 11.8 8.5 12.6

2010 2 0.0 0.7 2.1 10.8 2.1 11.5

2010 3 0.0 0.2 1.1 9.1 1.2 9.3

2010 4 0.0 1.1 2.2 11.1 2.2 12.2

2010 5 0.2 0.9 0.8 6.1 1.0 6.9

2010 6 0.2 1.7 1.6 10.1 1.8 11.7

2010 7 0.1 1.0 0.3 7.4 0.4 8.4

2010 8 0.0 0.4 7.1 6.2 7.2 6.6

2010 9 0.0 0.2 6.6 11.8 6.6 12.0

2010 10 0.0 0.2 0.5 12.4 0.5 12.5

2010 11 5.0 0.2 3.3 12.3 8.3 12.6

2010 12 10.1 0.7 1.2 19.1 11.2 19.8

Total 15.8 8.0 35.1 128.2 50.9 136.2

2011 1 0.0 0.6 2.0 6.0 2.0 6.6

2011 2 0.1 0.3 0.1 9.3 0.2 9.6

2011 3 0.0 1.1 0.9 8.0 0.9 9.1

2011 4 0.0 0.3 3.9 8.3 3.9 8.6

2011 5 0.0 0.6 6.8 9.1 6.8 9.7

2011 6 0.0 0.2 4.9 17.7 4.9 17.9

2011 7 0.0 0.4 0.7 11.6 0.7 12.0

2011 8 0.0 1.6 4.0 19.3 4.0 20.9

2011 9 0.2 0.3 3.3 20.7 3.5 21.0

2011 10 0.0 0.6 4.2 13.9 4.2 14.5

2011 11 0.0 0.2 2.0 19.0 2.0 19.2

2011 12 0.0 1.4 8.1 15.9 8.1 17.3

Total 0.3 7.6 40.9 158.9 41.1 166.5

2012 1 0.0 0.5 6.9 16.8 6.9 17.3

2012 2 0.7 0.4 10.7 12.6 11.4 13.0

2012 3 0.0 0.0 4.1 18.8 4.2 18.8

2012 4 0.1 0.1 0.6 10.2 0.8 10.4

2012 5 0.2 1.3 0.6 9.6 0.9 10.9

2012 6 0.0 1.6 0.9 13.6 0.9 15.2

2012 7 0.0 0.9 1.6 9.6 1.6 10.5

2012 8 0.0 4.4 8.0 15.6 8.0 20.0

2012 9 0.0 0.9 1.4 17.1 1.4 18.0

2012 10 0.1 0.9 4.8 16.6 4.8 17.4

2012 11 0.0 1.6 8.4 8.0 8.4 9.6

2012 12 0.0 0.6 1.4 15.2 1.4 15.9

Total 1.2 13.2 49.5 163.7 50.7 176.9

Source: T-100 Market Report

Note: All data in passenger equivalents -- 200 pounds of mail or freight is one passenger equivalent (PEQ).

Note: There was a de minimis level of charter, or of scheduled passenger service reported.
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 may not be 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 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