Adams, Kevin (OST} From: Sent: To:

Cc: Subject: Attachments:

Dear Mr. Hatter, 1 Re: Docket 2000-8556/ Adams, Kevin (OST) Wednesday, July 25, 2012 8:49 AM Alaska DOT, Steven D. Hatter; Adak, City Manager, Layton Lockett, 2012; Alaska DOT, Richard Sewell; Alaska DOT, Linda Bustamante; Alaska DOT, Rebecca Cronkhite; Glenn Muilenburg (Gienn.Muilenburg@dhs.gov); Agafon Krukoff; Adak, City Clerk; Aleut Corp. Exec. Secetary, Angela Bourdukofsky PenAir, Danny Seybert; PenAir, Scott Bloomquist; Alaska Airlines, Sandy Sinick; Tatonduk, Robert Ragar; Northern Air Cargo, David Karp; Frontier/ERA/Hageland, Bob Hajducovich; Devany, Dennis (OST) Request for comments re EAS proposals at Adak, Alaska, Round**2:~** ·Everts Air Cargo Proposal. pdf; Northern Air Cargo Proposal. pdf; Proposal Qf£ra. Alaska. pdf; Alaska Airlines ProposaLpdf ···• J ·**.~**•. • 

### .**~·**

Attached above are copies of the proposals of Alaska Airlines, Era Alaska, Northern Air Cargo, and Everts Air Cargo to provide EAS at Adak, Alaska. The attached proposals are directly from each carrier and will be reflected in the docket. The comments of the community and State are a critically important element in our carrier-selection decision. We ask that you and the community get back to us, preferably by email, no later than August 22, 2012. We will docket this email, as well as any replies. In brief, look at the proposals, and if you have questions, call either the carriers themselves or 

### me, and get back to us by the deadline. Best Regards,
Kevin Adams 202-366-1047

1NORTHERN AIR CARGO

June 26, 2012

Dennis DeVany

.Chief, EAS & Domestic Analysis Division Office of Aviation Analysis U.S. Department of Transportation 1200 New Jersey Avenue, S
.E. Washington, D.C. 20590 RE: "Proposals to Provide Essential Air Service at Adak, Docket 2000-8556"
Dear Mr. DeVany: r\orthern Air Cargo, Inc. hereby submits this proposal to the Department of Transportation (DOT) to provide essential air service to the community of Adak, Alaska
. This proposal contains our subsidy request to provide this service and it includes the following certifications: !. Nondiscrimination Assurance 2. Certification Regarding Influencing Activities

. 3. Certification Regarding Drug-Free Workplace Requirements On behalf of Northern Air Cargo, Inc. we appreciate the opportunity to part1c1pate m the Essential Air Service program and please contact me if you need additional information. Sincerely, 

## ' ""'· ( 

### \ I \ i\ } l \

# ~ r, l
. \ / It I ·I
. I

# ~OJ**\W·~f** David W. Karp President & CEO
Attachments

N ORTH ERN AIR C AR GO, INC , 3900 OLD INTERNATIONAL AIRPORT RD. AN CHORAGE, AK 99502 (907) 243-3331 (800) 727-2141 FAX (907) 249-5190 WWW.NAC.AERO ' :.,**:~ .** 

. . . .**,.~-**

# "Proposals to Provide Essential Air Service at Adak, Docket 2000-8556"

Due Date: July 12, 2012

# "Proposals to Provide Essential Air Service at Adak, Docket 2000-8556 July 

# 12, 2012
Table of Contents

Transmittal Letter Narrative
..............................................................................................Page 1 Subsidy Request
..................................................................................Page 2 Certifications
.......................................................................................Page 7 Nondiscrimination Assurance Certification**Regard~ng lnfluen~ing**  

### Activities Certification Regarding Drug-Free Workplace Requirements

### "Proposals to Provide Essential Air Service at Adak, Docket 2000-8556"
Narrative Northern Air Cargo, Inc. (NAC) is pleased, in response to Order 2012-5-24, to submit its Essential Air Service (EAS) proposal for cargo-only air service, inclusive offreight and mail, to Adak, Alaska with a requested subsidy of $1,017,790 annually, with a proposed subsidy mitigation strategy thatcould result in annuaJ refunds ranging trom $67,000 to $475,000.
Northern Air Cargo, Inc., established in 1956, provides a wide variety of air cargo delivery services, domestic and international mail handling and delivery services, aircraft maintenance services, ground service operations and cargo agent ground handling for a wide variety of governmental and multi-national and regional companies- including the United States Postal Service, the United States Depm1ment of Defense, Shell Oil, BP Global, Continental Airlines, Frontier Airlines and Japan Airlines. Northern Air Cargo, Inc. proposes to provide thirty-four (34) B737-200 cargojet service air t1ights per year to Adak, Alaska trom its Anchorage hub, located at the Ted Stevens Anchorage International Airport (ANC), utilizing the following schedule:
Non-Peak Fishing Season: During the months ofApril, May, September, October, November, December and January , Northern Air Cargo, Inc. proposes to t1y two (2) times per month round-trip service from Anchorage to Adak. One ofthe t1ights is proposed to be an Anchorage

- Bethel

- Adak- Anchorage t1ight·and one of the t1ights is proposedto be an Anchorage

- Adak

- Anchorage t1ight. The Bethel leg is proposed as a strategy to reduce the required EAS subsidy to Northern Air Cargo, Inc.
• Peak Fishing 5 Months: During the months of February, March, June, July and August, Northern Air Cargo, Inc. proposes to t1y four (4) times per month round-trip service from Anchorage to Adak. Two ofthe t1ights are proposed to be Anchorage

- Bethel

- Adak

- Anchorage t1ights and two ofthe t1ights are proposed to be Anchorage

- Adak

- Anchorage flights. Again, the Bethel leg is proposed as a strategy to reduce the required EAS subsidy to Northern Air Cargo, Inc.
Northern Air Cargo, Inc. July 12,2012 EAS Proposal at AdakNorthern Air Cargo, Inc. commits to providing the highest possible degree of service to the Department ofTransportation and the community ofAdak and, to the best ofour ability , to provide the services and capacities as proposed. Although Northern Air Cargo, Inc
. is not required to report on-time perfonnance to the Department ofTransportation (DOT); as a quality control measure Northern Air Cargo, Inc. tracks its on-time perfonnance to DOT and Federal Aviation Administration (FAA) standards. During the past 12 months, Northern Air Cargo, Inc. has had a 92.5% on-time record according to DOT/FAA guidelines. Subsidy Request Northern Air Cargo, Inc. is requesting an EAS subsidy in the amount of $1,017,790 per the following flight schedule:

Months Flights Per Month Flights (ANC-ADK-ANC) Flights {ANC-BET-ADK-ANC)

Revenue Projections Peak Seasons Non Peak Seasons 5 7 4 2 2 1 2 1

Northern Air Cargo, Inc.'s subsidy request assumes that freight volumes remain flat at 2011 levels and that mail volumes continue to decline at an estimated ten percent (10%) annually. Additionally , NAC has assumed that it will achieve an average thirty percent (30%) share of the freight/mail market from Anchorage to Adak and that the remainder will be carried on another carrier selected to provide EAS passenger/cargo air service. Therefore, NAC's revenue projections per flight are:

Northern Air Cargo, Inc. July 12,2012 2 EAS Proposal at AdakRevenue Estimate (per flight) Rate Volume (lbs) Revenue Outbound Freight 

### $ 1.50 2,925 

### $ 4,388 Outbound Mail $ 1.56 1,274 $ 1,987 Inbound Freight $ 0.50 1,849 $ 925 Inbound Mail $ 1.56 106 $ 165 Total 6,154 $ 7,465
Expense Projections Northern Air Cargo, Inc.'s subsidy request is based upon the following expense assumptions; the Anchorage-Bethel-Adak-Anchorage t1ights have an estimated cost of $33,622 per f light and the Anchorage-Adak-Anchorage tlights have an estimated cost of$37,616 per tlight.

Per Flight Estimated Expenses
Variable Costs Cost of Fuel (AN C) Cost of Fuel (ADK) Landing Fees Ground Handling (ADK) (per pound) Ground Handling (AN C) (per flight) MX Flight Hour (per Bhr) Engine Costs (per cycle) Fixed Costs Cap i tal Costs (per Bhr) Mechanic Labor (per Bhr) MX Admin 

### I Overhead (per Bhr) Flight Crew Labor (per Bhr) Flight Ops Admin 

### I Overhead (per Bhr) Insurance (per Bhr) Admin Overhead (per Bhr) Total

Northern Air Cargo, Inc. Jul y 12,201 2 Assumptions Weighting AnchorageBethel -AdakAnchorage (4.5167 Bhr) AnchorageAdakAnchorage (5.1667 Bhr)

·--- -- -· -· · - -----·-· ··-· ·-· ··· · - ··· --- ---· ·· · -- -·· · · $ 3
.00 50.0% L$ 6,342 $ 7,139

--- - ·· - - - - - ---- - - - -· - -·- -

- - ----- · ·· ·

··· . . ······ - $ 6.00 50
.0% ! $ 12,684 $ 14,278**1--'----~"-1-----_::__:~~:::__----= c:c** . , _:_::._:_ ---'------

-- - --

-- --- $ 148 ' $ 148 

### _?

_________**lif~**

- $ 0.05 ! $**~,_?go** 

### _ 

## _s

_______ _

l , ?O<J $

- -- -- __**1,~()** ------ ----- - --- · . $

--- - -- 1,400 $ 1,400**--- 6i**  _ _

_ _ ____ __ _ 

### $

_ _ _______ _ 1,188 $

--**~,359** $ 150 $ 300

_ _ 

### $.

____ ____ --- }()Q
_**$**___**~,_ 02** **4~-- --** **$**__**4, 2_5+** **-~ $**  _ ____**,~~** $ 275 $ 1,?4._?

_ ____ 

### $

_ ___ _ _**4._2~** $ 50 $ 226 $ 258

·----- ·- ·---- ·**--- ---** **--- --·--** **--·-** " '"•

_ _ _ .___ $ 667 $**~- ()** **~~** __$.

_________**~§_**



### _ ?

____ _**~Q _**  

## _?
_ 226

_ _ 

### $

________ --- 258 $

_ __ ____**~~** - -- - - - - - ·--

### $

_ ___ ----- -402 $ 460 $ 50 $ 226 $ 258 $ 33,622 

### $ 37,616

3 EAS Proposal at Adak**Prc~fit** Projections Northern Air Cargo , Inc.'s subsidy request is based upon a tive percent (5% ) profit, based upon the following per flight estimates: Anchorage· Anchorage

### Per Flight Profit Bethel- Adak- AdakAnchorage Anchorage Estimated Expenses ! $ 33,622 $ 37,616 Profit [@5% I f $ 1,681 $ 1,881
Requested Per Flight Subsid y Northern Air Cargo, Inc.'s subsidy request per t1ight is as follows: Anchorage- Anchorage· 

### Per Flight Subsidy Bethel - Adak- AdakAnchorage Anchorage Estimated Revenues ,_____ __**_z~~ 5**  

### I 7,465

- - --- Estimated Expenses 33,622 

### i 37,616 Operating Profit (loss) (26,157)i**(30,15~1** Profit @5% 1,681 

## I 1,881 Requested Subsidy Per Flight 

# I 27,838 1 32,032
Annual Requested Subsidy Based upon the above assumptions , Northern Air Cargo Inc.'s requested annual subsidy to provide the propose? thirty-tour (3 4) 8737-200 cargo jet service t1ights per year to Adak, Alaska from its Anchorage hub, located at the Ted Stevens Anchorage International Airport, is $1,017,790, per t he to !lowing schedule:


### Annual Subsidy Flights Per Year Subsidy Per Flight Annual Subsidy Total Annual Subsidy

Northern Air Cargo, Inc. July 12,2012 4 Anchorage- AnchorageBethel-Adak- AdakAnchorage Anchorage i 17! 17 

## i s 27,838 

### $ 32,032 i 

### $ 473, 246 

### I S 544,544 

### $ 1,017,790

EAS Proposal at AdakProposed Subsidy Mitigation Northern Air Cargo's requested annual subsidy is calculated based upon Northern Air Cargo , Inc. realizing approximately a thirty (30) percent share ofthe 2011 actual ANC-ADK-ANC fre ight and mail volumes. We recognize that the projected market share ofthirty (30) percent is a significant variable: and, therefore, we propose a subsidy mitigation strategy . The proposed subsidy mitigation strategy is based upon an annual reconciliation ofactual total

... 

# .. realized revenues for ANC-ADK-ANC (on both the non-stop and one-stop segments). NAC will remit to the DOT eighty (80) percent ofthe diflerence between the per fli ght subsidy paid to NAC by DOT and the actual realized revenue up to $25 ,000 per flight, which is based upon 100% ofthe 2011 actual mail and freight volumes. NAC will retain twenty (20) percent ofthe

- variance to account for increased variable expenses due to larger cargo load factors.
The following table presents the potential subsidy refund at various mail/freight levels:
Proposed Subsidy Mitigation Estimated Revenue at 30% 

### s 7,464 $ 7,464 

### s 7,464 $ 7,464 $ 7,464 $ 7,464 $ 7,464 $ 7,464 Realized Annual Revenue

- --- --**10"/o :___** **+- --** **t-- --** **-l- --t--** **-- -+-** **-- --** **--- --** **-- --**  ----- --·· 20%

·- ·- I
.. · --

___ __ ___ 3=0'l

= :._:;_ Yo
_**l-$ 7,4_** **.c:: 64** **'-'+- --** **+-- --** **--- -l-** **-- --** **--- --** **-- -----**  ----- - --------- 40% $ 9,953

_ _________ _ _ _ _**5~** -- - >----- 

## - --r2

__ _ g44}
_ - ------ - --- - --1--

- -- - -

- -

- -- 60% $ 14,929

---- -------- ---- 70"/o

- 1----

---· - - --- - - rl--_____12, 417 r--------- --- - 80%
. --- - - -- -- ----- - --- -- --- -- ------- - 1-

- -----
_ $_
_ 19,905

_ ___ _ _ _ 90%

_::_:•:___--t----t--
-- -+--- --t--
- --+----+--- - -l-'$ ,_____**?. 2_2** **~** -- -- --- - --- $ 100"/o Variance $ $ (2,488) $ (4,976) $ (7,464) $ (9,953) $ (12,441) $ (14,929) $ Variable Expenses@ 20% $ 

### s 498 $ 995 $ 1,493 $ 1,991 $ 2,488 

### s 2,986 $ Per flight refund to DOT $ $ (1,991) $ (3,981) $ (5,972) $ (7,962) $ (9,953) $ (11,943) $ Assumed flights 34 Annual subsidy refund L $ l67.6nl $ 1135.354) $ 1203,031) $ 1270.708) $ (33§,385) $ 14()6.()621 $ Conversely, should the annual revenue reconciliation reveal that Northern Air Cargo , Inc. realized less than the estimated revenue of$7,464 per flight; then, the DOT would remit to Northern Air Cargo, Inc. the difference between the $7,464 per flight and the actual realized revenue. 24,881 (17,417)

3,483 (13,934) 1473,7391

Northern Air Cargo , Inc
. July 12,2012 5 EAS Proposal at AdakThe following chart details the revenue assumptions included in the above chart:

Revenue/1 flight

Pound Segment 30% 40"..4 SO% Pounds I Revenue I Pounds I Revenue I Pounds i Revenue Total Per Flight l Total Per Flight I Total Per Flight I Total Per Flight I Total Per Flight\ Total Per Flight 60% Pounds Total Per Fli ht

86,615 2,547**_?_~!~** ANC-ADK 43,307**l,~J.-** . 67,560 $ 1,982_
_ _2?,743- 1,698 $ 90,080
___ $
__ 2,649 72,179 2,123 I $112,599 $ 3,312**-~~ ~NC-ADK**  _ 99,452 2,925 $_ 149,1!7
__**_?~3~**__ 132,6_()_3___ 3,900 $ 198,903
. $ 5,850 165,753**4,874$243,62L~-** 7,313 I ---,--- -·--I



### ..L
...!:§.**~K-ANC** ___**,.1,_~_106** _1
___**5,626~?__**__**16~-** ___ _:!,8()_9
_______ 13_1,_ _$_2,_501 }___ 221 6,0!1 177 I$ 9,377 $ 276 1Ql< Q()'!**~ R~n**  $ 0.50 ADK-ANC 62,852 1,849 $ 31,426 $ 924 83,803 2,465 $ 41,901 $ 1,232 104,754 3,081 I $ 52,377 $ 1,540 7,213 125,704 Total 209,217 6,153 S 253,789 $ 7,464 278,957 8,205 $ 338,385 $ 9,953 343,696 10,256 i $422,982 $12,441 418,435 70% I · 80% I 90% Pounds Revenue I Pounds I Revenue I Pounds ! Revenue Pounds Total Per Flight Total Per Flight I Total Per Flight I Total Per Flight I Total Per Flightj Total Per Flight Total 11111**~C:.Q** 331,505 ':1,750

12,021 354 209,507 6,162**.L.l?I.§.~~-~••••-** 4,636 _115,487
____**.2~. _j_1i!P2-.~.L_S** __**5L~g** 129,922 3,82l.j_$202,679 S 5,961 I**~n,~~v ,,-~v**  1 $ 343,080 $ _10,23_!!.**_265,!'.._~** ____ 7,800**r-L--~0.806** .? 11,700 298,355 8,775 i $447,532 $13,163 $ 13,127 $ 386 9,617 283 $ 15,003 $ 441 10,819 3181 $ 16,878 $ 496 

### s 73,327 $ 2,157 167,606 4,930 $ 83,803 $ 2,465 188,556 5,546. $ 94,278 $ 2,773 

### r-i
__**!.,_5§.1:~-II!S-.~P.!<.** 

### -.. 101,051 2, 972 i.
__ ! 0 _50**AN~:ADK** 232,054 6,825 _?
___ ._!:56**ADK-~NC** ·- 8,415
__ ..112 $ 0.50 ADK-ANC 146,655 4,313 Total 488,174 14,358 

### s 592,174 $ 17,417 557,913 16,409 $ 676,770 $ 19,905 627,652 18,460 i $761,367 $ 22,393 697,392 20,512 l"'JLJt- 1 rt-tf-J';J ,._-.,,**r_,~,.',~-l(,.tJ**

Revenue Total Per Fli ht 

### s135,119 $ 3,974 $298,355 $ 8,775 $ 331 

### s 1,849 $14,929 Revenue Total Per Fli ht $225,199 $ 6,623 $497,258 

### s14,625. $ 18,753 

### s 552 $104,754 $ 3,081 $845,963 $24,881



### ,,

Nonhern Air Cargo, Inc. July 12,2012 '6 EAS Proposal at Adak--··· 

## BEFORE THE U.S. DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.
July 11, 2012 Essential Air Service at: 

### Adak, Alaska DOCKET DOT-OST- 2000-8556 Under 49 U.S.C. 

### § 41731 et. seq.



### Proposals to Provide Essential Air Service at Adak, Alaska

Tatonduk Outfitters Limited (TOL), dba Everts Air Cargo (Everts Air) hereby responds to the Department ofTransportation's re-soliciting for proposals for subsidized Essential Air Service (EAS) at Adak, Alaska with the following proposals for freight and mail only.



### . . The Order Re-soliciting Proposals for the next period ofthe EAS subsidy at Adak is attempting to receive alternative bids to what is currently proposed by the previous single respondent i.e. more lift and less requested subsidy. This is a tall order with the current known aircraft types currently being operated in the state. Utilization ofAlaska Airlines' cornbi jet truly provides a beneficial service to the community ofAdak. Everts Air encourages the Department to negotiate with Alaska Airlines' to determine ifthere is a possibility for them to continue theirjet service to Adak for an additional period oftime.

TOLAdakEAS 2012 1 of5 pages

### The following proposal is based on service to and from Adak (from Anchorage), using Everts Air's DC-9-33 cargojet. Operating Costs ofthe DC-9-33

Pilots & 

### Copilots Aircraft Fuel & 

### Oil Extended Aircraft Fuel* Other Maintenance Depreciation Total Direct Indirect expenses
Total Expenses: Per Hour $302 $3476 $ 1124

$221 

### $ 1638

$249 $7010 $ 

### 1496 $8506 Per Trip Extended Costs 5.9 hours 52 flights 

### I year 307 hours $1782 $92,664 $20,508 $ 1,066,416

$6632 $ 344,864 $1304 $67,808 $9664 $ 502,528 $1469 $76,388 $41,359 $ 2,150,668

$8826 $458,952 $50,185 $2,609,620 *The extended aircraft fuel is the additional cost offuel above the average for fuel purchases expected in Cold Bay and Adak based on the singular flight plan ofANC-CDB-ADK-ANC (does not include any other stops for subsidy calculations).


### Several proposals are listed below for the Community and the Department to consider. Everts Air is also available for further discussions or negotiation as needed, which may consjder alternate frequencies offlights. Everts Air's proposed operations provides a weekly scheduled flight from Anchorage to Adak, and requests that the subsidy amount be payable (for each flight) beyond a one week billing period should a flight be delayed and not flown until the subsequent week. Everts Air is currently operating three DC-9-33s, and plans for adding more, so expects ample back up such that mechanical delays will be minimal and rarely felt by the customer. Enroute to Adak, a stop is planned in Cold Bay for fuel (ANC-CDB-ADK-). Depending on the need, a fuel stop may or may not be made in Cold Bay on the return trip from Adak. Commerce in the form ofa regular and published service schedule to Cold Bay has not been included in the revenues in this proposal, but may develop into revenue that can be relied upon for inclusion and calculations offuture requested subsidy amounts in this EAS to Adak. Everts Air is agreeable to recalculate the billable amount ofthe subsidy against increased regular revenues sooner than biennial if

### the department finds this beneficial. 

### In such a Scenario, Everts Air in coordination with the Department, will recalculate reliable expected ongoing revenues into the projected revenue, and where appropriate, reduce the billable amount to the department for the EAS subsidy. On subsequent recalculations, ifa previously reduced billed subsidy amount does not hold, due to reduced revenues, than the billed subsidy amount may revert back up to or below
TOL Adak EAS 2012 2 of5 pages

### the ceiling amount ofthe original proposal amount( stated in option #I or #2, which ever is chosen by the department) for EAS to Adak. In each proposal, Everts Air requests that an additional stop be allowed to any unknown location en-rout to or from Adak for purposes ofadditional air service & 

### commerce. Any additional stop will be planned such that time sensitive scheduled service is not delayed to or from Adak and will apply only to space that Adak commerce does not use. Adak's commerce will take priority over other business. This flexibility is intended to allow potential increased financial return on this route with out detrimental impact to the Adak Community (As an example: ANC-DLG-CDBADK-AKN-ANC). Ifthe Community and Department believe a second additional stop to and from Adak is detrimental to the Adak service, Everts Air will heed the concern, and negotiate on that specific allowance. Everts Air believes that utilizing the un-used space on the aircraft will have a potential benefit in reducing requested subsidy amounts in future EAS solicitations and response proposals. Everts Air is also receptive to developing a sharing provision with the Department for revenues received from transporting commerce on the additional stop, such that substantial profitable operations may be captured, and the subsidy billable amount reduced. The mechanics and formulas for this will have to be discussed and agreed to. Please note that exclusive use ofthe aircraft for Adak commerce only, may diminish the likelihood offuture potential decreases in requested subsidy amounts. It 

### is generally believed that there will be 

### an up-swing in the coming years' traffic with an increase in government work and potential private industry business development in Adak. However, it is uncertain exactly how much traffic may be transported as air freight at tllis time. These unknown revenues are not included in the below revenue projections. Projected revenues have been calculated using historical data averages from the past three years (as provided in there-solicitation), and from speaking with members ofthe community and other interested parties. Average past three year Freight In to Adak, 315,000 Out from Adak 160,000 Average past three year Mail In to Adak Pri Non-Pri Out from Adak Non-Pri Total Projected Revenue

TOL Adak EAS 2012 

### 55,000# 110,000 # 16,000# X X

X X

X 

### $1.50 I# 

### $0.70 I#


### $2.46 I# 

### $1.57 I# 

### $1.57 I# =

= 

### $472,500 $112,000
$135,300 $172,700 $25,120 $ 917,620

3 of5 pages

### The following proposal options use revenue projections from the above estimates. Option #1. (With the USPS Mail) 52 round trip flights per year (scheduled day ofweek to be determined) with service between Anchorage to Adak back to Anchorage. Flights will be scheduled regularly and any delays will be re-scheduled to operate as quickly and timely as can be.
Total projected Expenses Profit element at 5% Total projected RevenueProjected necessary subsidy for option #1 at a 100% completion $ 2,609,620 $ 130,481 - $ 917,620

$ 1,822,481 Annual amount of$1,822,481 divided by 52 weeks= $35,047.71 per flight. The amount ofrequested EAS subsidy in option # 1: Per flight $ 35,048.00 Annual amount $1,822,496.00 Biennial amount $3,644,992.00 Option #2 ( with out the USPS Mail ) Same as option #1 except with no mail revenues included. 52 round trip flights per year (scheduled day ofweek to be determined) with service between Anchorage to Adakback to Anchorage. Flights will be 

### scheduled regularly and any delays will be re-scheduled to operate as quickly and timely as can be. Total projected Expenses Profit element at 5% Projected Freight Revenue Projected necessary subsidy for option #2 at 100% completion $2,609,620 $ 130,481 $ 

### 584,500 $ 2,155,601. Annual amount of$2,155,601 divided by 52 weeks= $41,453.87 per flight The amount ofrequested EAS subsidy in option #2: Per flight $ 41,454.00 Annual amount $2,155,608.00 Biennial amount $4,311 ,216.00

TOL Adak EAS 2012 4 of5 pagesThe requested subsidy amount will differ depending on the dispatch ofthe USPS Mail. Option # 1 includes transportation ofthe USPS mail, and option #2 does not include transportation ofthe USPS mail. The USPS normally requires a 28 day notice ofscheduling prior to mail dispatch, but has also elected to dispatch mail with less notice when they deem fit to do so. Note that the USPS has also on occasion neglected to dispatch mail in a timely manner following the 28 day advance notification. For this reason, Everts Air offers two options that may be used in combination, or separately. Everts Air will begin service to Adak depending on which Option is chosen and agreed to. Ifthe Department requests that Everts Air begin scheduled air service to Adak prior to the USPS dispatching mail to the flight, then the subsidy amount would be that indicated in Option #2 (without the USPS Mail). Ifthe Department chooses option #1, than the scheduled service will start in coordination with the USPS dispatching the mail to the Everts Air flight, taking into consideration the Post Office's 28 day filed schedule notice requirement. Public notice and advertising will advise the public ofthe new service so that freight may find its way onto the scheduled flights to and from Adak.
Tatonduk Outfitters Limited certifies that operations are conducted in compliance with Department regulations regarding drug-free workplaces, nondiscrimination and all regulations governing lobbying activities. Sincerely, Tatonduk Outfitters Limited dba Everts Air Cargo 5525 Airport Industrial Rd. 

# Fairbanks;fU;:IJ**~** Robert Ragar ·

# ~ Manager Contracts nagar(CV,evertsair.com 907-450-2300, ext 349

TOL Adak EAS 2012 5 of5 pagesMr. Dennis DeVany Chief, Essential Air Service Division Office of Aviation Analysis Department ofTransportation 1200 New Jersey Avenue, SE Washington, DC 20590 July 24, 2012

Re: Essential Air Service at Adak, Alaska, DOT-OST-2000-8556

- Proposal of Alaska Airlines, Inc-_ Dear Mr. DeVany: Alaska Airlines, Inc. ("Alaska") respectfully submits its proposal to continue, for a one year period, providing twice weekly B-737 nonstop combi service between the community of Adak and Anchorage. The days and nature of the proposed operation would be the same as Alaska now operates_ The compensation level Alaska requests is $1,675,703 the same amount Alaska has been receiving since August 2012 based on Alaska's 2009-10 costs_ 1 Alaska proposes that this rate become effective as of the date of the Department's final carrier selection for Adak essential air service. Alaska's proposal would offer the residents of Adak the best combination of passenger, freight and mail service. Alaska's B-737 combi aircraft have the capacity to easily accommodate all three types of traHic including palletized cargo shipments. The arrival and departure of all traHic on the same aircrail would avoid the operational uncertainties inevitably associated with the operation of separate smaller combination and all-cargo aircrail on different days. The selection of Alaska would also offer the residents of Adak single carrier access to virtually the .:ntire U.S. as well as mileage benefits on the extensive route systems of both Alaska and its many global marketing partners. Alaska's operational performance at Adak has also been exemplary in spite of the challenges posed by the Aleutian weather conditions. And, perhaps most importantly, Alaska has maintained strong community relations with the Adak community which in the past has supported Alaska in each successive Adak essential air service proceeding. Alaska is hopeful that the Adak community will again do so.

1 This amount is less than the $2_023 million hold-in rate approved by the Department. The reduction results from Alaska's lower than earlier anticipated fuel costs.Mr. Dennis
..**D~Yanx,** July 24, 2012 Page 2 ·. r ' , .:... __
Alaska is submitting its proposal on a one year basis because it continues to believe that over the long term the capacity provided by its existing schedule pattern with B-737 aircraft may not be the best option for Adak, Alaska, however, wants to make quite clear that it remains committed to evaluating various air service solutions that

- again over the long term
- will both favorably address the community's needs while also further lowering the amount of needed essential air service compensation. Alaska also shortly intends to separately submit the nondiscrimination, lobbying compliance and drug-free workplace certifications addressed in the Department's resolicitation. Finally, Alaska would be pleased to answer any questions the Department ma)i have.

-

cc: Mr. Kevin Adams Mar all S. Sinick Alaska Airlines Inc. Washington Counsel marshall.sinick@squiresanders.comBEFORE THE DEPARTMENT OF TRANSPORTATION \VASHINGTON, D.C.

Essential Air Service at ) ) ) ) ) ) ADAK, ALASKA Docket OST-2000-8556 under 49 

# e.s.c. § 41731 et. seq.

PROPOSAL OF ERA AVIATION INC. TO PROVIDE ESSENTIAL AIR SERVICE AT ADAK, ALASKA

Communications with respect to this document should be addressed to: James Hajdukovich Robert Hajdukovich 

### Era Aviation 

### Inc. 4700 Old Internatiomil Airport Road Anchorage, AK 99502
July 24, 2012

## .· BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C.

Essential Air Service at ) ) ) ) ) ) 

### ADAK, ALASKA Docket OST-2000-8556 under 49 O.S.C. § 41731 et. seq. .July 24, 2012

PROPOSAL OF ERA AVIATION INC. 

### TO PROVIDE ESSENTIAL AIR SERVICE AT ADAK, ALASKA Pcrsuant to DOT Order 2012-2-8. Era Aviation. Inc. hereby presents its proposal to provide subsidized essential air service (''EAS") to Adak. Alaska. for a t\vo year period beginning August I, 20 l2. l. Era Aviation Aduk 

### EAS Proposal EraAviation proposes to provide 108 roundtrip t1ights between Adak and Anchorage using 

### Era·s 

### 3 7 -passenger deHavilland Dash 

### 8 that will afford customers a level ofsafe, all weather access to their community. Era's proposal would require an annual subsidy of S 2,208,808.36. See Exhibit and Notes. Era's 37 seat dcHavilland Dash 8 aircraft is appropriately sized for the ;\dak market. The Dash 8 aircraft otTers stand-up cabin, leather seating, full lavatory, tlight attendant service, and substantial baggage capacity. The Dash 8 aircraft could otfer 7696 seats with 2 day a week service for the Adak market. The Adak market is estimated to have 3000 total passengers annually. The reduced frequency (2 tlights weekly) is offered in hopes that a large capacity cargo carrier could provide substantial Cargo and Mail service. Everts Air Cargo has been contacted and the DC-9-33 aircraft with an average payload of30,000 pounds could be operated into the Adak market. Cargo and Mail is estimated at 450,000 pounds annually into Adak and 

### 200.000 pounds out ofAdak. 

### 18 tl ights with a payload 

### nf 

### 25,000 cargo and mail would provide adequate cargo and mail service needed for the Adak market.Era;\viation 's entire scheduled operation is conducted under Federal Aviation Regulation (fi\R) Part 121 -the highest safety and regulatory standard for scheduled' 

# . airlines. Era has an excellent safety record and 

### a strong record ofregulatory 

### compliance 

### with the Federal Aviation Administration (FAA). 

### Era enjoys a positive relationship 

### with the F.I\A at 

### the local, regional, and national levels. 

### Era Aviation has J 

### long-standing marketing relationship with Alaska Airlines and is part 

# or the Era Alaska network of carriers. The Era 

### Alaska 

### family is now proud to offer scheduled service to 

### more than 100 communities statewide. II. Carrier Selection**F1!~!9r1l** 

### • • 

### • • • Largest Payload Passenger Aircraft offered by 

### all current proposals
. 

### Era Aviation can**oper::~te** 

### [9 seat aircmft etlong: 

### vvith 37 seat aircraft capable of providing sen ice into Adak.**Passcng~r Prctl:r~ncc**  

### Operation for rhc community of /\dak Ability to Remain qver-Night (RON) \vilh aircraft in A(bk and Cold Bay
. Providing over 62 years of;\viation Services in the State of.\Iaska
. ln conclusion, Era 

### Aviation requests that the Department select it to be the subsidized passenger essential air service carrier at Adak, Alaska. for a two-year period. Era Aviation also requests that the department consider selecting a 

### subsidized cargo only 

### carrier for cargo 

### and maiL which is essential to the community of Adak.


### Sincerely,



### ....., ) /1/

## r~·-:::/t--- "'.unes ILlJduko\ ich Vicc President Finance rra ;\

### viation Inc. -J.700 Old 

### International Airport 

### Road Anchorage, AK 90502 (907) 450-7:247Notes to Era Aviation Inc._EAS subsidy Proposal Note 1; Mail and Freight revenues were excluded from our revenue**estimate~** because our proposul relies on ajoint approach to meeting the community passenger. mail and freight needs. While the Dash 8 can carry a significant amount of mail and freight in the cargo compartment. we anticipate most of the**"p.:~ssenger** plane" cargo to he priority maiL**ex~;ess** bags and priority freight. After 

### l\\-0 years orproviding this 

### service, \-Ve would be better positioned to estimate 

### ho"v much Mail 

### and cJrgo could be expected to be transported on the passenger ship. Mail is also specillcall) excluded because of the lack of mandate to transport the mail on the prevailing EAS provider. Because the Postal Senice has the latitude to transport the mail as they see 

### fk it can't be relied upon as a revenue stream for this particular projection. Note 2: Era i\

### viation wi II require a refuding te<.:h stop at Cold Bay (CDB) on the
· Anchomge to Adak llight. There \viii be no local ANC-CDB 

### traffic on the tlight

servicing Adak. Note 3: Era Aviation estimates average revenue per passenger of$ 393.00 (net oftaxes) for the ANC-ADK market. Note 4: The Price of fuel has increased in the past two years. Era's fuel expense is based on current fuel prices of$3.50 (Anchorage) and $6.69 (Adak and Cold Bay.) /\\erage fuel price of$5.10_ Block fuel burn per hour of 160 gallons and block tlig.ht time of9.S. 816.00 

### per block hour fuel cost. Note 5: The "extra crew member'' includes estimated pay/training for an additional Captain to meet 14 CFR Section 11 7.II
. · ·**~** Note 6: The "extra mx cn:w member'' induJes estimated pay/training 1(n A & P mechanic to travel on board the ;\NC-CDR-i\DK-;\NC tlight.Aircraft dcH;nilland Dash 8-106 Passenger Aircraft 

### Only- 9 Monthly /\NC'/CDR/;\DK//\NC Passenger Distanc<:: Passengers Payload

. Monthly Round Trips

Annual Flights Annual Departures Block Time Block Hours Passenger Anchorage-Adak· Adak-Anchorage Freight Anchorage-Adak Adak-Anchorage 

### Mail Anchoragc-1\dak Adak-Am:horage ANC-ADK-ANC priority 1192 :2983 6000 C) 108 3.24 9.1) l.05i).4

$393.00 $393.00

$1.50/lb $.75/lb

$1.6102 $1.6102 $2.4345 Revenue

----- 1

,49() pax $ 587.9.28.00 1.--1-87 pax $ 584,391.00

.284,520 lb. $ 426.780 174,500 lb. $ 130,875

138,468 lb. $ 2.22.961 17 13.740lh. $ 22.124.15 16,912 lh. $ 41.172.26 (10 percent ofthc total mail estimated to be paid at mainline pri-ratc of$2.4345) Total Revenue 'f) 1,173,319 flying Ops per hr $ 223.24 pcr/blk/hr $ 236.280.26 Fuel & Oil per hr $ 816.00 per/blk/hr $ 863,654.40 Insurance per hr $ 40.24 per/blk/hr $**42.s~n.s3** Maintenance per 

### hr $ 722.49 per/blk/hr 

### $ 764.685.34 Aircraft per hr $ 1 

### CJ3.04 per/blk/hr $ 204.301.;.84 Flight Attendant per hr $ 52.03 pcr/hlk/hr 

### $ 55.069.14 Extra Crew Member $ 174.75 pcr/blk/hr 

### $ 184,955.40 Extra Mx Crew memher $ 39.00 per/blk/hr 

### $ 41.277.60 Stati up expense 1 $ 1:25,000Total Directs 

## s 2,517,818.51 

### Departure Related@; $3g5.4g per Dep. $**124}~94.08** 

### Traffic Related r(l} 233.03 pcr/blkihr $ 246,633.94 

### Capacity Related (a) J 

### 1**3.~2** pcriblk/hr $ 331.717.16 Total I ndirccts 

### '5 711.3,255.17 TOTAL OPERATING EXPENSE $ 3,22] ,073.68 

### Profit**1[~;** 

### 5% $ 16 UJ53.68 Economic Costs $ 3,382,127.36**Annu~ll** Subsidy 

### J$ 2,208,808.361