Order : 2012

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- 10 Served: August 3, 2012



### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION 

### OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on the 3 rd day of August, 2012

Essential Air Service at

MANLEY , ALASKA MINTO , ALASKA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 2004

- 17563

ORDER RE

- SELECTING CARRIER Summary By this Order

, the Department is re

- selecting Warbelows Air Ventures, Inc. ( Warbelows ), to provide Essential Air Service (EAS) at Manley and Minto

, Alaska , for $ 91,068 annually for three round trips per week to Fairbanks

. 1

Background By Order 2010

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- 16, July 13, 2010, the Department selected Warbelows to provide EAS at Manley and Minto through August 31 , 2012 , consisting of three round trips per week to Fairbanks routed Fairbanks

- Minto

- Manley

- Fairbanks with 3

- seat Cessna 206/207 aircraft for an annual subsidy rate of $95,481.

As the end of the current rate term on August 31 , 2012, was approaching, Order 2012

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- 18

, May 21 , 2012, requested proposals at both communities by July 24 , 2012. We received proposals from two carriers, the incumbent and Tatonduk Outfitters, Ltd., d/b/a Everts Air Alaska (Tatonduk). On June 22, 2012, we requested comment s on the pr oposals of the two carriers by July 24, 2012.

1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds.- 2

-

Proposal of Warbelows Under Option 1 , Warbelows proposes to provide three round trips per week with twin

- engine Piper Navajo aircraft on a Fairbanks

- Manley

- Minto

- Fairbanks routing. Warbelows requests $91,068 annual subsidy for this service.

Under Option 2 , Warbelows proposes to provide three round trips per week with single

- engine Cessna 206 aircraft on a Fairbanks

- Manley

- Minto

- Fairbanks routing. Warbelows requests $87,277 annual subsidy for this service.

Proposal of Tatonduk Tatonduk proposes to provide three round trips per week with single

- engine Piper PA

- 32 aircraft on a Fairbanks

- Manley

- Minto

- Fairbanks routing. Tatonduk requests $68,000 annual subsidy for
this service.

Community Response We received comments on June 20, 2012, from the Minto Development Corporation ; on July 11 from Lawrence Brederman of Manley ; on July 24, 2012, from the State of Alaska ; and on July 31, 2012, from the Manley Village C o unc i l

. The Minto Development Corporation supported service by Warbelow s with twin

- engine aircraft.

“Continuation of the regular scheduled service provided the last two years to the community of Minto is imperative to our operations. Warbelows provides reliable, safe and efficient service to our commun ity. We support the planned continuance of the scheduled
service with twin

- engine aircraft instead of single engine. 2 We feel that a twin

- engine plane will provide safer aircraft and greater load capacity, both of which are important considerations for the MDC shop. Current plane size is limited and we would be interested in shipping products f ro m our wood shop located at 309 School Street in Minto. ”

On July 11 Mr. Brederman gave “full sup port for Warbelows Air Ventures to continue to provide Essential Air Service to the village of Manley, Alaska. They have been providing this important mode of transportation to our community for many years and I believe they should continue.” On July 31t he Manley Village Council gave its “support to Warbelows Air Ventures Inc., to provide postal and freight service to our village.” Th e The State of Alaska indicated its strong support of the EAS program, but deferred to the local residents as “ generally b est positioned to comment on particular schedules or air carrier s .” The State also indicated that work on the new airport at Manley would be operational beginning in the fall of 2013.

Decision
T he carrier

- selection issue is straightforward

. When selecting a carrier to provide EAS in Alaska

, 49 U.S.C. §41733(c)(1) directs us to consider five factors : (1) service reliability; (2) contractual and marketing arrangements with a larger carrier at the hub; (3) interline arrangements with a larger carrie r at the hub; (4) community views; and (5) t he experience of the applicant in providing scheduled air service or significant patterns of non

- scheduled air service. In addition, t he Consolidated Appropriations Act, 2008, Public Law 110

- 161, provides that w hen selecting a carrier to provide EAS, the Department may consider the relative subsidy

2 While we selected service with single

- engine aircraft, Warbelows provided service with twin

- engine aircraft.- 3

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requirements, thus codifying a factor that we have considered since the inception of the program. Tatonduk has a clear advantage in terms of required subsidy, request ing $68,000 annual subsidy, or $23,068 less subsidy per year than Warbelows. However, in this instance the community’s
desire for twin

- engine aircraft (Option 1) by Warbelows is decisional. The community values twin

- engine aircraft as being both safer an d provide the additional capacity needed to help a local business , as indicated by the Minto Development Corporation. . The development of that local business holds promise of enhancing revenue and therefore in the long term reducing the required level of subsidy. We also note that Warbelows requests less subsidy than the current rate, notwithstanding that two years have passed since the earlier rate was set. We will therefore select Warbelows.

Carrier Fitness 49 U.S.C. 41737(b) requires that the Department find an air carrier fit, willing, and able to provide reliable service before Department may subsidize it to provide Essential Air Service

. Warbelows Air Ventures, Inc., is subject to the Department’s continuing fitness requirements

. The Depar tment has contacted the Federal Aviation Administration, and it has raised no concerns that would negatively affect our fitness finding s

. The Department therefore concludes that the carrier remain s fit to conduct the operations proposed here.

This Order is issued under authority delegated in 49 CFR 1.56a(f).

ACCORDINGLY,

1. We select Warbelows Air Ventures, Inc., to provide Essential Air Service at Manley and Minto

, Alaska ;

2 . We set the final rate of compensation for Warbelows Air Ventures, Inc.

, f or the provision of Essential Air Service at Manley and Minto

, Alaska

, as described in Appendix C ;

3 . We direct Warbelows Air Ventures, Inc, to retain all books, records, and other source and summary documentation to support claims for payment, and to preserve and maintain such documentation in a manner that readily permits its audit and examination by representatives of the Department. Such d ocumentation shall be retained for seven years from the service dat e of this Order, or until the Department indicates that the records may be destroyed, whichever comes first. Copies of flight logs for aircraft sold or disposed of must be retained. The c arrier may forfeit its compensation for any claim that is not supported under the terms of this Order ;

4 . We find that Warbelows Air Ventures, Inc., continue s to be fit, willing and able to operate as a certificated carrier and capable of providing relia ble Essential Air Service at the community;

5 . Th is docket will remain open until further Order of the Department; and- 4

-

6 . We will serve copies of this Order on the civic officials of Manley and Minto , Alaska, the Alaska Department of Transportation and Public Facilities, and on Warbelows Air Ventures, Inc., and Tatonduk Outfitters, Ltd.

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.govAppendix A

Nonstop Great Circle Miles from Fairbanks (FAI) Manley (MLY) 83 Minto (MNT) 50 Ramparts (RMP) 82 Tanana (TAL) 127 Circle (IRC) 130 Central (CEM) 104 Healy Lake (HKB) 74

Minto to Manley, 39Appendix B

Essential Air Service at Manley and Minto, Alaska, Docket 2004-17563

Option A Option B Aircraft Type Piper Navajo Cessna 206 Departures 468 1/ 468
Block Hours 208 2/ 296 3/

Manley Minto Total Total Passengers 34 186 220 220

Pax. Revenue $2,688 $13,669 $16,357 $16,357

Freight Pounds 2,530 1,810 4,340 4,340 Freight Revenue $1,240 $724 $1,964 $1,964

Mail Pounds 37,450 19,800 57,250 57,250
Mail Revenue $33,705 $15,048 $48,753 $48,753

Total Revenue $67,074 $67,074

Pilots $19,668 $12,473

Fuel $34,530 $19,313

Other $3,380 $4,817

Maintenance $37,779 $40,663 Depreciation/Rental $20,800 $23,712

Total Directs $116,157 $100,978

Indirects $27,608 $39,341

Operating $143,765 $140,319

Profit $14,377 $14,032

Economic Cost $158,142 $154,351

Annual Subsidy $91,068 $87,277

1/ Fairbanks - Manley -Minto - Fairbanks 3 trips per week x 3 departures per trip x 52 weeks = 468 departures. 2/ 3 trips per week x 1.333 hours per trip x 52 weeks = 208 block hours. 3/ 3 trips per week x 1.90 hours per trip x 52 weeks = 296 block hours.Appendix C

Essential Air Service to be Provided to Minto and Manley

, Alaska , Docket 2004

- 17563

Effective Period : September 1, 2012, through August 31, 2014 Scheduled Service : Manley : 3 nonstop or one

- stop round trips per week to Fairbanks. Minto : 3 nonstop or one

- stop round trips per week to Fairbanks. Aircraft Type s : 9

- seat, PA

- 31

- 350 Navajo, Cessna 206, 8

- seats 1 Manley Minto Annual Subsidy 2 $45,534 $45,534 Annual Flights 3 312 312 Rate per Flight 4 $146 $146 Weekly Ceiling 5 $876 $876

Note: The carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance wi th the terms and stipulations of the rate Order , including the service plans outlined in the Order and any other significant elemen ts 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 b een 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 jeop ardize 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 this rate, it must first notify the Office of Aviation Analysis in writing and receive w ritten 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 ar e 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 lo cation 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 spec ific location without regar d 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 pa yment.

Subsidy contract 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 th e foreg oing paragraph.

Funds are not currently available for performance under this Order beyond September 30, 2012 . The Government’s obligation for performance under this Order beyond September 30, 2012 , is subject to the availability of appropriated funds fro m 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 September 30, 2012 , until funds are made available to the Department for performance. If funds ar e not made available for performance beyond September 30, 2012 , the Department will provide notice in writing to the carrier.

All claims for payment must be submitted within 60 days of the last day of service provided under this Order

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1 8 seats assigned to Cessna 206 for payout purposes only.
2 Annual subsidy of $91,068 ÷ 2 communities.
3 Manley : 3 round trips per week x 2 directions x 52 weeks = 312; Minto : 3 round trips per week x 2 directions x 52 weeks = 312;
4 Annual subsidy divided by annual flights. 5 $146 per flight x 6 flights per week at Manley, and also six flights per week at Minto. Flights operated with single

- engine piston aircraft will assigned 8 seats for payout purposes , and the subsidy rate per flight will be $130

per flight: 8/9 seats x $146 per flight with a 9

- seat Navajo = $130

.