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 

1 
NORTHERN 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\ } 

rl , \ l ~ . \ / It I ·I . I 

David 

~OJ W. \W·~f Karp 

President & CEO 

Attachments 

N ORTHERN AIR C ARGO, INC, 3900 OLD INTERNATIONAL AIRPORT RD. ANCHORAGE, 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 of freight 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 cargo jet 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 of April, 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 of the t1ights is 

proposed to be an Anchorage - Bethel - Adak- Anchorage t1ight·and one of the t1ights is 

proposed to 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 of the t1ights are proposed to be Anchorage - Bethel - Adak -

Anchorage t1ights and two of the 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 Adak 
Northern Air Cargo, Inc. commits to providing the highest possible degree of service to the 

Department of Transportation and the community of Adak and, to the best of our 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 of Transportation (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 Adak 
Revenue 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 flight 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 

Capital 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. 

July 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 _ 

$ ___ ~,_024~-- -- $ __ 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· AnchoragePer Flight Profit Bethel- Adak- AdakAnchorage Anchorage 

Estimated Expenses ! $ 33,622 $ 37,616 

Profit [@5% I 

f $ 1,681 $ 1,881 

Requested Per Flight Subsidy 

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 (34) 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 the 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 Adak 
Proposed Subsidy Mitigation 

Northern Air Cargo's requested annual subsidy is calculated based upon Northern Air Cargo, Inc. 

realizing approximately a thirty (30) percent share of the 2011 actual ANC-ADK-ANC fre ight 

and mail volumes. We recognize that the projected market share of thirty (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 of actual 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 of the 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 Adak 
The 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 

_?_~!~ 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 86,615 2,547 

-~~ ~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 

s 135,119 $ 3,974 

$298,355 $ 8,775 

$ 331 

s 1,849 

$14,929 

Revenue 

Total Per Fli ht 

$225,199 $ 6,623 

$497,258 s 14,625. 

$ 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 of Transportation'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 of the 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 of Alaska Airlines' cornbi jet truly provides a beneficial 

service to the community of Adak. Everts Air encourages the Department to negotiate with Alaska 

Airlines' to determine ifthere is a possibility for them to continue their jet service to Adak for an 

additional period of time. 

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 cargo jet. 

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 of fuel above the average for fuel purchases expected in Cold Bay 

and Adak based on the singular flight plan of ANC-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 of flights. 

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 of a 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 of future requested subsidy amounts in this EAS to Adak. Everts Air is 

agreeable to recalculate the billable amount of the 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, if a 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 of the 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 of additional 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). 

If the 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 of the 

aircraft for Adak commerce only, may diminish the likelihood of future 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 of the 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 of week 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 of requested 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 of week 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 of requested 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 pages 
The requested subsidy amount will differ depending on the dispatch of the USPS Mail. Option # 1 

includes transportation of the USPS mail, and option #2 does not include transportation of the 

USPS mail. 

The USPS normally requires a 28 day notice of scheduling 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. If the 

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). If the 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 of the 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 

Manager 

Ragar 

Contracts 

· ~ nagar(CV,evertsair.com 

907-450-2300, ext 349 

TOL Adak EAS 2012 5 of5 pages 
Mr. Dennis DeVany 

Chief, Essential Air Service Division 

Office of Aviation Analysis 

Department of Transportation 

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.com 
BEFORE 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 l 2. 

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 of safe, 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 of Adak. 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 (f i\R) Part 121 -the highest safety and regulatory standard for scheduled 
' . 

airlines. Era has an excellent safety record and a strong record of regulatory 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 I LlJduko\ ich 

V icc President Finance 

rra ;\ viation Inc. 

-J.700 Old International Airport Road 

Anchorage, AK 90502 

(907) 450-7:247 
Notes to Era Aviation Inc._EAS subsidy Proposal 

Note 1; Mail and Freight revenues were excluded from our revenue estimate~ 

because our proposul relies on a joint 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 or providing 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 Sen ice 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 $ 1:25,000 
Total 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