### BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.
.. 0 • ') CJ 

### P !-\: 

### 4W

) In the matter of ) Essential Air Service at ) ) HYDABURG,ALASKA ) ) Under49U.S.C.41731 etseq. ) ------------)

SERVICE PROPOSAL OF DOCKET OST-1999-6245

VENTURE TRAVEL, LLC d/b/a TAQUAN AIR SERVICE

Communications with respect to this document should be addressed to: Brien Salazar Venture Travel, LLC d/b/a Taquan Air Service P.O. Box 8495 Ketchikan, AK 99901 (907) 225-8800 brien@taquanair.com June 27,2011 Hank Myers MTC P.O Box 7142 Bellevue, W A 98008 (425) 830-4265 hank@mtcworld.com

### BEFORE THE DEPARTMENT OFTRANSPORTATION**O~~FICE** 

### OFTHE SECRETARY WASHINGTON, D.C. ) 

### In the matter of ) Essential Air Service at ) ) 

### HYDABURG,ALASKA ) ) 

### Under49 U.S.c. 41731 etseq. ) 

### ----------------------) DOCKET OST-1999-6245

SERVICE PROPOSAL OF VENTURE TRAVEL,LLC d/b/a 

### TAQUAN AIRSERVICE

Venture Travel, LLC d/b/a Taquan Air Service (Taquan) herein submits its proposal to provide Essential Air Service at Hydaburg, AK pursuant to Order 2011-5-9 requesting proposals. Taquan is the current providerofEssential Air Service, and the only carrier
ever to be designated the Essential Service carrierbyD.O.T. Order. The current level of subsidized service is three round trips per week year-around between Hydaburg and the designated hub ofKetchikan.

Forpurposes ofthis proposal, Taquan uses the most recent traffic data (YE 3/3112009 - 

### YE 3/3112011) 

### and maintains that traffic level for the entire four year period proposed herein. For consistency, expenses are based on the 12 months ended 3/3112011, and the

1unit revenues are based on those in effect at the midpoint ofthe 12 months, September 30,2010.

Becausethe primary traffic type is mail, revenue yields are beyond the control ofTaquan. Mail rates reflect costs that are 18 months out ofdate, so the subsidyneed reflects the gap between current costs and historically based revenue. Even ifthe mail rates are adjusted to reflect current costs, it would take the full four year term for the mail rates to catch up to current expenses. For this reason, Taquan proposes a level rate for four years. The stabilityofan assured contract offsets the inherent risk offurther cost escalation in excess ofrevenue levels.
Methodology

Due to the spotty weather conditions between Ketchikan and Hydaburg on the west coast ofPrince ofWales Island, flights are frequently cancelled orrerouted to an intermediate stop and then flown to Hydaburg. To compute the traffic in relation to actual flights serving Hydaburg, the total T-IOO KTN (WFB)-HYG traffic was divided by the block time for all scheduled service in or out ofHYG. This establishes the passengers per block hourbased on the incremental service hours operated because ofHydaburg. These rates were applied to a full service schedule to compute the total revenue and expenses associated with a three day a week service pattern year around. (Appendix A)

2

### This assumes that when historic traffic per block hour is applied to a full service schedule, more traffic would be carried than in the past. This is a generous assumption for traffic and revenue as there is no indication that cancelled flights depressed freight or mail traffic in particular because the total weight load factor for all flights into or out of Hydaburg was only 13.3%. As a result, more traffic is projected for a full schedule operation thanhas actuallybeen carried in any year.

It 

### should also be pointed out that the 12 months ended March, 2010 showed higher traffic than any previous year, but included two one time events. First, in the summer of2009, Hydaburg had amassive street paving project which brought additional passenger and freight traffic to town. Second, an experiment on moving food to the Hydaburg food bank resulted in shipping food that was essentially free via air using a combination of Alaska Airlines to Ketchikan and then Taquan to Hydaburg. The shipping cost more than offset the savings in food cost, so that traffic is once again being carriedby surface transportation.
Expense projections are based onthe D.O.T. methodologyfor determining mail rates, which is the vast majority ofcommercial revenue. Direct operating expenses are computed perblockhour, while Traffic and Departurerelated expenses are computed per departure. Capacity Related expenses are taken as a percentage ofall other operating expenses, The additional vehicle related expenses, which are not encountered at other bush villages, are added separately as they were in 2007.

3The yields are based on fares in rates in effect on September, 2010. Both revenue and expenses are escalated by 4% per annum for the four year period sought by Taquan.

Public Support
Taquan, and its predecessor Ketchikan Air Service, have provided scheduled service to Hydaburg for 35 years. Its reliable service is reflected in two letters sent to Taquanby residents ofHydaburg. Appendix B is a formal resolution from the City OfHydaburg specifically supportingTaquan's reappointment as the EAS carrier. Appendix C is a letter from the Hydaburg Postmaster attestingto the reliable service providedbyTaquan.

Other Carrier Requirements
TaquanAir Service is fit, willing and able to provide the service proposed. Taquan remains fit within the meaning ofSection 204, and is current with all ofits required reports. Therehas been no change inkeypersonnel since the last fitness review, and there have been no other changes which qualify as substantial changes within the meaning ofthe regulations. Taquan maintains passengerfacilities in downtown Ketchikan and at the Ketchikan International Airport on Gravina Island. Taquanhas a ticketing and baggage agreement with Alaska Airlines which allows through ticketing of passengers. Taquan is in full compliance with the various Federal statutes governing lobbying activities, drug-free workplaces and non-discrimination by virtue ofbeing the current E.A.S. provider.

4WHEREFORE: Venture Travel, LLC d/b/a Taquan Air Service proposes to provide Essential Air Service to Hydaburg at weekly frequencies between three and five roundtrips at annual subsidyrates of$145,809 per annum (two year term) or $151,773 per annum (four year term).Taquan specificallyrequested a term offour year to provide the stabilitythe communityrequests that the term ofthe contract is four years with level ceiling payments. A four year term also has the advantage ofreducing stafftime and expense for both the Department and Taquan in setting rates. Respectfully submitted, Venture Travel, LLC d/b/a Taquan Air Service

By Brien Salazar Its owner
June 27, 2011

5ESSENTIAL AIR SERVICE AT HYDABURG, AK Appendix A OPERATIONS Page 1 of 2 MARKET DEPSNEAR AVG BLOCK TOTAL BLOCK WFB-HYG 156 32 4992 HYG-WFB 156 32 4992 TOTAL 312 9984 Block Hours 166.4 EXPENSES Item Units YE 12109 - 3111 2012 Unit Costs 2012 Costs 2013 Costs 2014 Costs 2015 Costs Pilot & CoPilot 166.4 $194.51 $206.18 $34,308.45 $35,680.79 $37,108.02 $38,592.34 Fuel & Oil 166.4 $187.29 $198.53 $33,034.96 $34,356.36 $35,730.61 $37,159.84 All Insurance 166.4 $41.60 $44.10 $7,337.57 $7,631.08 $7,936.32 $8,253.77 Maintenance 166.4 $216.16 $229.13 $38,127.17 $39,652.25 $41,238.34 $42,887.88 Depreciation 166.4 $84.71 $89.79 $14,941.49 $15,539.15 $16,160.71 $16,807.14 TOTAL DIRECTS $724.27 $767.73 $127,749.64 $132,859.63 $138,174.01 $143,700.97 Traffic Related 312 $66.74 $70.74 $22,072.25 $22,955.14 $23,873.35 $24,828.28 Departure Related 312 $94.23 $99.88 $31,163.75 $32,410.30 $33,706.71 $35,054.98 TOTAL INDIRECTS $160.97 $170.63 $53,236.00 $55,365.44 $57,580.06 $59,883.26 SUBTOTAL $180,985.64 $188,225.06 $195,754.07 $203,584.23 CAPACITY RELATED 15.00% $27,147.85 $28,233.76 $29,363.11 $30,537.63 TOTAL SYSTEM $208,133.48 $216,458.82 $225,117.18 $234,121.86 Specific Ground Support Vehicle Insurance $1,400.00 $1,456.00 $1,514.24 $1,574.81 $1,637.80 Vehicle Maintenance $2,700.00 $2,808.00 $2,920.32 $3,037.13 $3,158.62 Vehicle Fuel $3,300.00 $3,432.00 $3,569.28 $3,712.05 $3,860.53 TOTAL HYG VEHICLE $7,400.00 $7,696.00 $8,003.84 $8,323.99 $8,656.95 TOTAL OP. EXPENSES $215,829.48 $224,462.66 $233,441.17 $242,778.82 PROFIT @ 5% MARKUP $10,791.47 $11,223.13 $11,672.06 $12,138.94 TOTAL ALL EXPENSES $226,620.96 $235,685.80 $245,113.23 $254,917.76

6ESSENTIAL AIR SERVICE AT HYDABURG, AK Appendix A TRAFFIC per Blk Hr Sched Traffic 2012 Proj. Yield Page 2 of 2 PASSENGERS 0.191 40 $110.24 $4,379.61 $4,554.80 $4,736.99 $4,926.47 FREIGHT 52.1 10837 $0.84 $9,074.74 $9,437.73 $9,815.23 $10,207.84 MAIL 275 57200 $1.23 $70,202.15 $73,010.24 $75,930.65 $78,967.88 TOTAL $83,656.51 $87,002.77 $90,482.88 $94,102.19 SUBSIDY NEED $142,964 $148,683 $154,630 $160,816 SUBSIDY NEED/DEPARTURE $458.22 $476.55 $495.61 $515.43

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### CityofHydaburg Resolution No. 11-12 = '

A Rxsot.UT10N BYTBB

### em' OF IlYDABURO 1'0 SUPPOaT THE EsSEJiM'tAL Am SERVICE APnlCATlONOF TAQl1AlfAiR**WH~8,** tile City 0:**Hydabu~** [the**Ci~~** sUPP(lrtlS the 199u9m:l: ofn new E'Jsem.iiil Air Service (EI\SI t;ClTItract .at Hydaburg toT.:;tquan Air Service [Ta..ql:lan], efiectil.'e for four yea.rs I"rorn Novemher t, 2011 (refcr<.:nce Docket DOT·081'-1Y99-5245), ar.d**Wlmx!:As~** Taquanprovide:;;. rdlable schedulod EAS to Hydaburg, upon which Lhe community depends fOJ' Ul.<!.il, passenger and f:,eight 9(..'rvlce. This is :he fourth Yf!ar thM Hydaburghas l:x::n.::fittcd fruJI] lhis**3~.r;.rice,** a.nd**WH~Il,** Taquan aircraft are equippoed with C<J.patone r.aviga.tiansl**cquip.m~nt.** mriTaquanis Ule ohly MenalliDn**Shi~'d** recipit:nl in $:r:outhem Southeast.**~k~,** The safet}rmeasures pr'()l,I\dcd b!.'**th~!!'I1!!** program!;l arc- parti.c1!larly importantin this; iso'(ated rrl()untalnnus reg,ion nr A.l.a.sku, and WHltR.EM, The three**wc~ldy** BAS !lightsto/fr{}m fiydnburr; are 1ife[jlll:ofor the community. Ta.q\Jan hli,!:l done an exceUt;nljob ofmaintaining**schcdule~,** lloometc.o:II;:s in chellengjng**~Iil:ather'** Cfmditians, and WlfERE.M, Tuqueh was estSibli&hed in 1977 and**i~** the**lon~st** opt:,lottmg air c.aTrlf!r inthis regiun, a;nd WHMtBA8. Taquan hae the eqwpment ;;and expcrLt:nce- to provide the EAS S(!rv10ercquil"t'ld; l'fO'W THlmEFOU BBI'J**~iO.L1IED** BY l'Wi COUNCn. OF THlt CIty' OF' H!'U4/JURG, ALA9K.A, that the City ofHydaburg !)uPPQrts the iSSU3"t.c Dftht': RO\S ar**Hydab~**rg to**T~quan.** PASSEDAND APPROV&D Oy a duly constituted**q~on.un** ofl:h.t Hyc/;.1.burg City**C()~t1oll** this 71<1 day 0:JUI1C 201 1,

A'ITISl':

## I~ Adr.ian

# L.::~r**J!!nn;f~T Moo~-!:}'-.-.**  C-j-t)'-C-:1-CT-k--

8t./ay 16, 2011
fL.;;, Dp.partrnent ofTrans-ponation Otnce ofAviation**Analys,~** Esser-mal Air Service (EAS) 'Nash!ngtQf1{ OC Attention: 

### Mic::na-el Martin Of:velopment**Progr~m** Re: DOCI«(TOOT-05T-1999-6245 Dear Sir,**T~quan** Air has provldEtd excellent mail ser....iceto Hydaburg during the past (ow' 'Iears, Vile would like thisto conti!llJ€',The**r.rtrrl~I'** is. reliable and ilt ttf'l€Shas tooperate I.mder difficult weather**conditi()n~,** It isauI' r'c>commcnd<)tion that 3 new**EI~S** be**i~sued** to Taquan Mr for**Hydabur~** At:: mai' service. Sincerel\',**D-1E!dn~** GuthrJl:!" 

### Postmaster Hyuabufg. AK 99922

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