# SILVERBERG GOLDMAN

# & 

# BIKOFF, L.L.P. GEORGETOWN PLACE • SUITE 120 • HOI 30TH STREET, NW • WASHINGTON, D.C. 20007
VOICE (202) 944-3300 • FACSIMILE (202) 944-3306 ATTORNEYSAT LAW

Via HandDelivery

Ms. CatherineJ. O'Toole Analyst, Air CarrierFitness Division Office ofAviation Analysis Department ofTransportation 1200NewJerseyAvenue Washington, D.C. 20590

DearMs. O'Toole: December 22, 2010

o cr

Re: Application ofAlaska Central Express, Inc. Docket DOT-OST-1996-1657

I am pleased to respond to your December 17, 2010 letter request for certain additional information from Alaska Central Express, Inc. in connection with its application for reissuance of its certificate of public convenience and necessity to authorize it to engage in scheduled passenger air transportation. Currently, Alaska Central is authorized to engage in the transportation of freight and mail and charter passenger air transportation. Alaska Central has indicated its intention to commence providing scheduled air transportation within the State ofAlaska following on from its successful efforts to offer charter passenger service throughout the State. Alaska Central understands the Department needs certain additional information in order to process Alaska Central's application, which, as you know, is unopposed. Alaska Central hereby responds to your request and states its intention to commence scheduled passenger service as soon as all necessary authority to do so has been gained. Accordingly, Alaska Central requests that the DOT move promptly to consider the additional information and thereafterrule on Alaska Central's application.

The numbered responses below correspond to the numbered questions in your letterdated December 17,2010.

1. Alaska Central has not yet negotiated definitive financing terms for an additional Beech-1900 aircraft as it does not intend to commence operations with a second passenger aircraft until July, 2011. The aircraft will be acquired in June, 2011 and Alaska Central will begin incurring interest expense for the aircraft in that month.Ms. Catherine J. O'Toole December22, 2010 Page 2

However, Alaska Central already owns such aircraft and based on its knowledge ofthe market and its existing aircraft financing arrangement, Alaska Central has projected monthly interest expense ofapproximately $6,730 (and depreciation of $9,615) for the last seven months in 2011. Recall that Alaska Central already conducts charterpassenger air transportation and the passenger configured Beech-1900 aircraft used to conduct charterflights will also be used to conduct scheduledpassenger operations inthe first half of2011 when demand for passenger service is seasonally low.

Alaska Central has already identified potential sources for the additional aircraft although a definitive letter ofintent has not yet been entered into. The forecast monthly expense were Alaska Central to lease the aircraft rather than to purchase the aircraft will approximate the forecast interest expense plus depreciation as shown in the attached profit and loss statement.

2. Enclosed is a detailed forecast profit and loss statement for the proposed scheduled passenger operations ofAlaska Central using the same format and assumptions used to produce the company's 2011 profit and loss statement, as previously submittedto the Department with Alaska Central's application, except that, for further clarity, scheduled passenger revenues and related cargo revenues have been broken out separately as has the fixed and variable costs associated with the scheduled passenger operation. 1 Alaska Central is projecting a first yearnet profit.

Total operating cost related to scheduledpassenger service for the first 12 months ofoperations are forecast to be $2,518,217 which translates into a normalized quarterly operating expense of $629,554. Alaska Central has more than adequate resources to

cover this sum plus expected pre-operating expenses. Per Attachment 2 ofthe Alaska Central aPFlication, as ofSeptember 30, 2010 Alaska Central had cash on hand ofalmost $404,000. In addition, as of September 30, 2010 Alaska Central had assets of $10,038,616 and only $4,712,088 in liabilities and because the carrier has been consistently profitable, positive retained earnings ofover $3.8 million and total equity of $5.3 million.3 In other words, Alaska Central is more than able to commence scheduled passenger operations without imposing any risk on the traveling public. The risk of failure, ifany, will be entirely borne by Alaska Central and its stockholder and not the traveling or shippingpublic.

1 Alaska Central is submitting the requested "stand alone" scheduled passenger forecast profit and loss statement under cover ofa Rule 12 motion. A redacted version ofthe forecast statement is also being submittedwiththis letter.

2 As ofDecember 17, 2010 Alaska Central'scashposition stands at $706,000.

3 See Order 2010-11-05 at page 9 in which the DOT noted affirmatively an applicant carrier's favorable current ratio and positive stockholder's equity as evidence of the ability ofthe applicant to engage in new operations without imposing undue risk to the public.Ms. Catherine J. O'Toole December 22,2010 Page 3

3. As previously noted, because Alaska Central already provides charter passenger service there is no need to initially hire any additional staff to commence scheduled passenger operations. Additional staff will be hired as the second aircraft

comes online and those costs are forecast in the attachedprofit and loss statement. Inthis regard, Alaska Central has assumed the need to hire six additional pilots and three additional staff to conduct scheduled passenger operations during the second half of 2011. However, these incremental costs will not be incurred inthe first halfoftheyear.

As requested, also enclosed with this letter is the certification of Michael A. Bergt, the President of Alaska Central Express, stating that the information being provided undercoverofthis letterand inAlaskaCentral's applicationis accurate.

Finally, please note that Alaska Central has notundergone any substantial change in ownership or operations since it filed its application on November 12, 2010. Accordingly, and withthe requested additional informationhavingbeenprovided, Alaska Central hereby respectfully requests that the Department proceed to promptly reissue to Alaska Central its certificate ofpublic convenience and necessity authorizing it to engage in scheduled passenger air transportation. And as the application ofAlaska Central is unopposed, the DOT shoulddo by moving directlyto the issuance ofaFinal Order.

Verytrulyyours,

SILVERBERG, GOLDMAN & BIKOFF, LLP

Attorneys for 

### CENT!EXP SS, INC. 

# By'**Rf;~ Sil~erbe~** 

# =S

Enclosures

cc: All Parties onthe attached Service ListSERVICE LIST

HughA. McLaughlin Manager, Flight Standards District Office Federal AviationAdministration 300West 36thAvenue, Suite# 1 01 Anchorage, Alaska99503

Ms. Dee Rice Principal Operations Inspector Federal AviationAdministration 300West 36thAvenue, Suite#101 Anchorage, Alaska99503

Marc Luiken DeputyCommissionerofAviation AlaskaDepartment ofTransportation & Public Facilities P.O. Box 112500 Juneau, AK 99811-2500.....ka Cenlrll**~** Inc.

_pal**'_a~)11**

,**;1i,1il1\t:';2'\~P'"'** 

# e_

Jon

2978<1 6,667

339 6 1030 3,72

112 3M 931 1 11754 2 75 206S

665 2500 8-4._ 

# - Fob

78<1 6 7

339

1030 3723

112 354 931 1200 11754 2275 2068

8B5 500 8-4.456**~t** M

..

35369

154 403 776 1223 4421

133 421 1105 1425 13957 2702 456 1028 2500 78,073 

# - Apr

31646 7296

360 695**1~** 3956

119 377 969 1275 12468 2417 2196

919 2500 66.328 Budge' May 

# - Jun

# - Jul -Revenues-

- Operating Expenses

-

31646 33507 76322 7296 7725 17596

360 381 009 695 735 1675**1~** 1159 2639 3956 4168 9540

119 126 287 377 399 90a 969 1047 2365 1275 1350 3074 12466 13223 30 118 2,417 560 5630 2196 327 5300

919 973 865 2500 2500 2500 66.328 72.200 15Ul0 

# e_

Aug

63768 19313

953 1639 2 7 10471

315 997 2616 3374 33057 6399 5817 973 2500 175,191 

# e_

Sept

81906 1688<

932 1796 2633 10238

308 975 2560 3299 32322 6257 5666

973 2500 171,472

# - Oct

78183 16026

890 1716 2704 9773 294 930 443 3149 30 653 5972 5429

665 2500 163,728

# -Nov

81906 1888<

932 1798 633 10238

308 975 2560 3299 32322 6257 5666 973 2500 171.472**~,** Doc

81906 1888<

932 1796 2633 10238

308 975 2560 3299 32322 6257 5666 973 2500 171.472 Total OFSALES

$075725 $155792**Ot~**

$7 e,g1 0,,",**:~~!+** C1'Y.



# - S2 M2 0.". sa 041**o.~** $2111S 01% 27217 "" $268 656 1$'Y. $51618 "" $46 925 03% $11195 \'11% 13<),000 $1.427.166 8r.-.- Fixed Costs

-

6800 6800 6768 6735 6702 6670 6637 $47111 ,,% SO '0% 9615 9615 9615 9615 9615 9615 $576.2 0.3'\.

436 436 22436 436 22436 22436 $134617 (Lgo", 1000 1 000 500 500 500 500 500 500 500 500 500 7000 0.1l'" 4 3 4643 4 643 4&43 4643 0643 4643 4 &43 4643 4643 5043 sse 118 03'.., 13125 1301. 12006 12966 12966 12913 13113 13166 13166 13325 13325 $157 173 , ..... 1567 1563 1561 1561 1561 1559 1559 1561 1561 1567 1567 $16756 01'", 13 13425 13725 13825 13825 13625 13625 13925 13925 13925 13925 51&< 337 '''' 28687 26687 29 816 26 866 28516 28416 28416 28116 28116 28116 28116 $3<42558 ,,%
7499 7399 774;9 8,,,,9 7949 7116 7 216 7 016 6 916 6616 6616 $67541 0$-'

.. 1511 1511 1511 1511 1511 1511 1511 1511 1511 1511 1511 $16127 Q1'4 I , I**71~27** 71.2.47 72.471 72.021 76.271 100.134 108,.02 100.224 109,092 106.924 100.2!ll $1.001.031 11.1'"

oIaI Opofatlng C

....

IeIlncome .........uv.CertificationofAlaska CentralExpress,Inc.

The contents ofthe Application ofAlaska Central Express, Inc. filed with the Department in Docket DOT-OST-1996-1657 on November 12, 2010 and the attachments thereto and the forecast profit and loss statement enclosed herewith

are true and correct to the best ofmy knowledge and belief. Pursuant to Title 18 United States Code Section 1001, I, Michael A. Bergt, President of Alaska Central Express, Inc., in my individual capacity and as the authorized representative ofthe applicant, have not in any manner knowingly and willfully falsified, concealed or failed to disclose any material fact or made any false, fictitious, or fraudulent statementorknowinglyused any documentswhich contain such statements in connection with the preparation, filing or prosecution ofthe application. I understand that an individual who is found to have violated theprovisions of18 U.S.C section 1001 shall be fmed orimprisonednotmore than five years, orboth.

Dated: December 21, 2010 Michael A. Bergt President AlaskaCentral Express, Inc.