BEFORE THE 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. .. 0 • ') CJ P !-\: 4 W 

) 

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 OF TRANSPORTATION 

O~~FICE OF THE SECRETARY 

WASHINGTON, D.C. 

) 

In the matter of ) 

Essential Air Service at ) 

) 

HYDABURG,ALASKA ) 

) 

Under 49 U.S.c. 41731 et seq. ) 

----------------------) 

DOCKET OST -1999-6245 

SERVICE PROPOSAL OF 

VENTURE TRAVEL, LLC d/b/a 

TAQUAN AIR SERVICE 

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 provider of Essential Air Service, and the only carrier 

ever to be designated the Essential Service carrier by D.O.T. Order. The current level of 

subsidized service is three round trips per week year-around between Hydaburg and the 

designated hub of Ketchikan. 

For purposes of this 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 

1 
unit revenues are based on those in effect at the midpoint of the 12 months, September 

30,2010. 

Because the primary traffic type is mail, revenue yields are beyond the control of Taquan. 

Mail rates reflect costs that are 18 months out of date, so the subsidy need reflects the gap 

between current costs and historically based revenue. Even if the 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 

stability of an assured contract offsets the inherent risk of further cost escalation in excess 

of revenue levels. 

Methodology 

Due to the spotty weather conditions between Ketchikan and Hydaburg on the west coast 

of Prince of Wales Island, flights are frequently cancelled or rerouted 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 of HYG. This establishes the passengers per 

block hour based on the incremental service hours operated because of Hydaburg. 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 than has actually been 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 of 2009, 

Hydaburg had a massive 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 carried by surface 

transportation. 

Expense projections are based on the D.O.T. methodology for determining mail rates, 

which is the vast majority of commercial revenue. Direct operating expenses are 

computed per block hour, while Traffic and Departure related expenses are computed per 

departure. Capacity Related expenses are taken as a percentage of all other operating 

expenses, The additional vehicle related expenses, which are not encountered at other 

bush villages, are added separately as they were in 2007. 

3 
The 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 Taquan by 

residents of Hydaburg. Appendix B is a formal resolution from the City Of Hydaburg 

specifically supporting Taquan's reappointment as the EAS carrier. Appendix C is a 

letter from the Hydaburg Postmaster attesting to the reliable service provided by Taquan. 

Other Carrier Requirements 

Taquan Air Service is fit, willing and able to provide the service proposed. Taquan 

remains fit within the meaning of Section 204, and is current with all of its required 

reports. There has been no change in key personnel since the last fitness review, and 

there have been no other changes which qualify as substantial changes within the 

meaning of the regulations. Taquan maintains passenger facilities in downtown 

Ketchikan and at the Ketchikan International Airport on Gravina Island. Taquan has 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 of being the 

current E.A.S. provider. 

4 
WHEREFORE: 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 subsidy rates of $145,809 per annum (two year term) or $151,773 

per annum (four year term).Taquan specifically requested a term of four year to provide 

the stability the community requests that the term of the contract is four years with level 

ceiling payments. A four year term also has the advantage of reducing staff time 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 

5 
ESSENTIAL 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 

6 
ESSENTIAL 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 

7 
City of Hydaburg 

Resolution No. 11-12 

= ' 

A Rxsot.UT10N BY TBB em' OF IlYDABURO 1'0 SUPPOaT THE EsSEJiM'tAL 

Am SERVICE APnlCATlON OF TAQl1Alf AiR 

WH~8, tile City 0: Hydabu~ [the Ci~~ sUPP(lrtlS the 199u9m:l: of n new 

E'Jsem.iiil Air Service (EI\SI t;ClTItract .at Hydaburg to T.:;tquan Air Service 

[Ta..ql:lan], efiectil.'e for four yea.rs I"rorn Novemher t, 2011 (refcr<.:nce Docket 

DOT ·081'-1 Y99- 5245), ar.d 

Wlmx!:As~ Taquan provide:;;. 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 Hydaburg has 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. 

mri Taquan is Ule ohly MenalliDn Shi~'d recipit:nl in $:r:outhem Southeast. 

~k~, The safet}r measures pr'()l,I\dcd b!.' th~!!'I1!! program!;l arc- parti.c1!larly 

important in this; iso'(ated rrl()untalnnus reg,ion nr A.l.a.sku, and 

WHltR.EM, The three wc~ldy BAS !lights to/fr{}m fiydnburr; are 1ife[jlll:o for the 

community. Ta.q\Jan hli,!:l done an exceUt;nl job of maintaining 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 in this regiun, a;nd 

WHMtBA8. Taquan hae the eqwpment ;;and expcrLt:nce- to provide the EAS 

S(!rv10e rcqu il"t'ld; 

l'fO'W THlmEFOU BB I'J ~iO.L1IED BY l'Wi COUNCn. OF THlt CIty' OF' H!'U4/JURG, 

ALA9K.A, that the City of Hydaburg !)uPPQrts the iSSU3"t.c Df tht': RO\S ar 

Hydab~ rg to T~quan. 

PASSED AND APPROV&D Oy a duly constituted q~on.un of l: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--

8 
t./ ay 16, 2011 

fL.;;, Dp.partrnent of Trans-ponation 

Otnce of Aviation Analys,~ 

Esser-mal Air Service (EAS) 

'Nash!ngtQf1{ OC 

Attention: Mic::na-el Martin 

Of:velopment Progr~m 

Re: DOCI«(T OOT-05T-1999-6245 

Dear Sir, 

T~quan Air has provldEtd excellent mail ser .... ice to Hydaburg during the past (ow' 'Iears, 

Vile would like this to conti!llJ€', The r.rtrrl~I' is. reliable and ilt ttf'l€S has to operate I.mder 

difficult weather conditi()n~, 

It is auI' 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 

Hyuabuf g. AK 99922 

9