Source: https://airlineinfo.com/ostdocket2017/ost20170109.html
Timestamp: 2019-09-17 14:53:01
Document Index: 619463358

Matched Legal Cases: ['art 139', 'art 139', 'art 139', 'art 139', 'art 139', 'art 139', 'art 139', 'art 139', 'art 121']

OST-2017-0109 - EAS at St. George, AK
Notice of Termination of Peninsula Airways
PenAir hereby notifies the Department of its intent to discontinue all of its unsubsidized air service at St. Paul, St. George and McGrath, Alaska, effective November 12, 2017. PenAir is willing to continue providing scheduled passenger service at each of these communities if granted an adequate subsidy for such operations under the Department’s Essential Air Service Program.
No other carrier is currently providing scheduled passenger service at St. Paul, St. George or McGrath. Accordingly, with PenAir’s intended discontinuation of service at these airports, there will be no scheduled passenger service to these communities, and thus it will be below the Department’s determined level of essential air service for each community.
Order 2017-8-21
Issued and Served August 22, 2017
By this Order, the Department is (1) prohibiting Peninsula Airways, Inc. from terminating its unsubsidized service at McGrath, St. George, and St. Paul Island, Alaska, and requiring that it continue its current service until conclusion of this Essential Air Service selection case, and; (2) requesting proposals from air carriers interested in providing EAS at McGrath, St. George, and/or St. Paul Island, with or without subsidy. Proposals are due by September 19, 2017.
The Department expects proposals consisting of a minimum of two weekly round trips, with additional or fewer weekly frequencies where seasonality and/or demand warrants. In addition, carriers should be very clear as to whether a specific community’s proposal is on a stand-alone basis, or whether it is part of a larger, inseparable package with other communities.
Request for Amended Request for Proposals
We are writing in response to the US Department of Transportation’s request for proposals for airlines to resume Essential Air Service trips to the communities of McGrath, St. George and St. Paul Island, Alaska. We appreciate that your agency has moved quickly to preserve service, as these communities would be devastated without air transportation. We wanted to ask that you reconsider the scope of your RFP, however, because we think it requests proposals for far less service than our communities should receive under the law.
We request that you amend the RFP to seek service from an airline providing large aircraft(s) exceeding 60 passengers that can accommodate both the number of passengers and accompanying baggage as well as normal cargo and mail requirements of the Community of St. Paul Island. Furthermore, we request that we extend all relevant deadlines by 10 days.
By: Amos Philemonoff
The Department has received a carrier request to extend the due date for proposals. The new due date for proposals will now be September 26, 2017.
Ex-Parte Letter to Mayor of St. Paul Island
The Department has received a request to extend the due date for proposals. Due to the unique circumstances of this EAS case, the Department determined it be in the best interest to grant the request. Proposals are now due Tuesday, October 10, 2017 for the communities of St. Paul, St. George and McGrath, AK.
Comments of Aleut Community of Saint Paul Island
We respectfully request that you amend your RFP to solicit proposals from airlines that can provide service from large aircraft exceeding 60 seats. This is what St. Paul should receive under the law. Moreover, St. Paul has the same need for the jet class carrier service capable of carrying 20,000 pounds that is currently supported by the DOT to similarly isolated communities in the Aleutians (Adak) and the Alaska Panhandle (Gustavus, Petersburg, Yakutat, Wrangell and Cordova). In fact, we believe that St. Paul's situation is very similar to Adak and it is possible that our community could be added to the same route, minimizing further expense to the government.
Additionally, the City of Saint Paul believes that PenAir's termination notice was not only in error, it was also improperly served. Your regulations require that a termination notice be served on "the chief executive of the principal city or other unit of local government at the affected place." We note that PenAir incorrectly claimed service of St. Paul Island through a non-profit association in Anchorage. That group does not represent our community. That role rests with the City of Saint Paul, and the correct point of contact is the Mayor of the City of Saint. Paul, Simeon Swetzoff. As a result of this failure of service, the City only became aware of this issue recently after reading about it in the news. We believe PenAir's "hold-in" period and all relevant deadlines should be extended for 10 days to account for the time when the City of Saint. Paul learned of the improperly-served term in ation notice. Consultation with our comm unity and tribal organizations is important. We know you understand that comm unity consultation and State agreement is required by statute before setting a level of service that differs from historic levels. Additionally, when selecting an BAS carrier in Alaska you are required to consider the views of the "actual and potential users of air transportation at the eligible place, giving substantial weight to the views of the elected officials representing the users." Finally, Pribiloflsland Aleut Comm uni ty of Saint Paul Island is entitled to government-to-government consultation under executive order and US DOT policy. The Dep artm ent has long recognized the special needs of Alaskan communities, and we appreciate that approach very much.
In conclusion, we request that you amend the RFP to seek s ervice from an airline providing large aircraft(s) exceeding 60 passengers th at can acco mm odate both the number of passengers and accompanying baggage as well as norm al cargo and mail requirements of the Community of St. Paul Island . Furth errriore ; we request that we extend all relevant deadlines by 10 days.
Comments of City of Saint Paul
As a practical matter, the community understands getting service by a carrier that would trigger the TSA requirements is not likely given several issues. We the think the TSA piece can be removed from the current discussion.
Part 139 certification is the issue we need to focus on jointly, in a way like how your department is working to re-certificate the Sand Point airport for Part 139 purposes. While the community recognizes a carrier could not begin Part 139 operations soon, we believe working together with a carrier we can achieve this within a 2-year period presented to the US DOT Essential Air Service staff.
PenAir expressed an intent to pursue service to SPI with a Saab 2000 last spring. This action would trigger the need for Part 139 certification as is the case in Sand Point. We understand that PenAir initially suggested it might be able to pursue operations to SPI with the Saab 2000 using a seat configuration of less than 30 seats, which could eliminate the need for Part 139 certification. We have been informed by Danny Seybert, PenAir President and CEO, that idea has been dismissed as uneconomic.
Based on the initial interest expressed by PenAir last spring that would have triggered Part 139, an initial meeting occurred between myself for City of Saint Paul and Harold Kremer who oversees the St. Paul Airport for the department. The purpose of that meeting was to begin discussions about what it takes to achieve Part 139 certification. The department brought up the Sand Point efforts as a "model" to achieve the desired result at SPI.
SPI has an ARFF vehicle on the Island. We are working to ensure it is fully operational. We have an emergency response vessel that could be part of the Airport Water Rescue Plan. Without proposing how quickly we could jointly achieve Part 139 certification for the St. Paul Airport, we wanted you to understand that several pieces are already in place and the community is prepared to participate in providing resources. It is reasonable to suggest that it could be done within a two-year timeframe.
We suggest it would be wise for the community and the department to coordinate prior to any formal response to the proposals that will be sent to US DOT by either party. We understand Mark Hickey discussed this idea with you last week. Proposals are now due on October 10, 2017. We also wish to request a meeting with you in person if possible after the proposals are received, but before either party sends in its formal response about these proposals.
By: City Manager Phillip Zavadil
MTNT in Support of Ryan Air
MTNT, Ltd. is an Alaska Native owned corporation comprised of four Alaska villages (McGrath, Takotna, Nikolai and Telida) headquartered in McGrath, Alaska. We strongly support Ryan Air, lnc.'s proposal to provide air services to McGrath, Alaska under the Essential Air Service Program.
By: Michele Christansen
Proposal of Alaska Central Express
6 weekly McGrath-Anchorage
Subsidy required: $0
6 weekly St. Paul-Anchorage
3 weekly St. George-Anchorage
3 weekly McGrath-Anchorage
Aircraft: Bombardier DHC-8-100
Subsidy required: $1,153,037
By: David Pflieger, 907-266-8310
2 weekly St. Paul-Anchorage
Aircraft: B737-200/300 cargo jet
Subsidy required: $1,470,314
Proposal of Peninsula Airways
5 weekly (high season); 4 weekly (low season) St. Paul/St. George-Anchorage
Subsidy required: $2,321,577 (Year 1); $2,466,284 (Year 2)
5 weekly (high season); 4 weekly (low season) St. Paul-Anchorage
Subsidy required: $2,675,822 (Year 1); $2,817,645 (Year 2)
Subsidy required: $245,320 (Year 1); $276,282 (Year 2)
Proposal of Security Aviation
Three weekly St. George-Anchroage
Aircraft: Cessna Conquest/Lear 45 jet
Subsidy required: $2,540,214
By: Stephen Kapper, 907-248-2677
We issued Order 2017-8-21 requesting proposals from airlines interested in providing EAS, with a due date of September 19, 2017, which was later extended to September 26, 2017, and again to October 10, 2017. In response to our request, we received proposals from the following air carriers at the communities. Note, the proposals for Alaska Central Express are subsidy free at all three communities.
I request that you submit any comments you may have as soon as possible, but no later than Thursday, November 9, 2017.
Corrected Proposal of Corvus Airlines d/b/a Ravn Alaska
It has come to our attention that the passenger calculations included in our financial projections erroneously counted each passenger roundtrip as a single enplanement, which had the effect of understating our projected passenger revenues and overstating our required subsidy calculations. Enclosed herewith are corrected financial projection tables, replacing the tables included in our October 10, 2017 proposals.
We apologize for and regret any inconvenience caused by this oversight. All other aspects of our October 10, 2017 proposals remain unchanged, including but not limited to the proposed patterns of service, schedules and aircraft.
By: David Pflieger
Support Letter for Security Aviation
I am a city council member for the City of StGeorge Island. I have lived here in the middle of the Bering Sea my whole life, and having reliable transportation to and from this island has always been a problem. Regardless of how many complaints we submit, nothing was ever done. As long as St. George and St. Paul will be sharing an airline, there will always be complaints coming from the residents of St. George. St. Paul is a much larger community, and because of that, many residents from St. George are not able to get a seat to and from St. George. Having a dedicated airline for the residents of St. George and only St. George is what our community needs!
So, therefore, I support Security Aviation's proposal for EAS to St. George based on their level of service to our region and our community's need!
By: Victor Malavansky
I am a current City Council member in Saint George and also hold a few positions as Water Operator and acting Public Works Director with the City Of Saint George. I am writing in support of Security Aviation to hopefully become our air carrier at Saint George. I believe that the company has the people of Saint George in mind when they say that service can be far better than what we have now. We all have had to deal with the existing service here and it hasn't been stellar. To have our own carrier would be by far more beneficial to the people and their ability to travel when they need to whether it be for business, personal or medical.
By: Laurence Prokopiof
Extension of Community Comment Date
Via telephone today, the City of McGrath requested an extension for community comments until November 19, 2017. Since November 19 is a Sunday, please provide any comments to us by Monday, November 20, 2017.
Objection and Motion to Strike of Peninsula Airways
After having reviewed other carrier-applicants’ timely filed EAS proposals proposing far lower subsidies than Ravn’s proposal, Ravn had the temerity to ignore the Department’s Order and revise its EAS proposals for each of these communities, claiming a “technical” correction, with the result being significantly reduced subsidy requests. On October 13, the Department’s staff issued a notice informing the other EAS carrier-applicants that it would accept Ravn’s revised EAS proposals, claiming it was “a technical error” regarding passenger calculations. PenAir respectfully disagrees with the staff’s decision and requests that Ravn’s attempt to revise its proposal be rejected.
To be sure, this was no mere “technical error”. Ravn’s so-called “correction” – made several days after the proposals of other carrier-applicants became publicly available – doubled its annual passenger traffic projections in each market (from 2827 to 5654 for SNP/STG, and from 2385 to 4770 for MCG), which resulted in a doubling of revenue and significant reductions of $1.1 million - $1.24 million and $450,000 in the requested subsidies for SNP/STG and MCG, respectively. These are significant, material changes – not “technical” ones – with a net result of making Ravn’s subsidy requests substantially (and belatedly) closer to those of other carrier-applicants.
City of Saint Paul in Support of Ravn Alaska
The purpose of Essential Air Service process is to provide the opportunity for remote or isolated communities to have the best possible air service available – it is not to cater to self-serving agendas of any given airline. Because Ravn’s corrected proposal does not change the level of service and is ONLY a correction to a mathematical calculation, it would be detrimental to the communities to not allow such change based only on the objection of a competing airline. It is because of fairness and the need to obtain proposals that best serve the needs of the communities that DOT provided the opportunity to allow the other carriers to amend proposals that contained a technical error. We support both the DOT’s decision to accept Ravn’s changes and to provide the other airlines the opportunity to make technical changes as well.
The City thanks the DOT for allowing the submission and consideration of the best possible proposals. The DOT should affirm its decision to allow Ravn’s correction and deny Peninsula Airways Motion to Strike.
By: Mayor Simeon Swetzof
Aleut Community of St. Paul Island in Support of Ravn Alaska
The purpose of EAS process is to provide the opportunity for remote or isolated communities to have the best possible air service available – it is not to cater to self-serving agendas of any given airline. Because Ravn’s corrected proposal does not change the level of service proposed and is ONLY a correction to a mathematical calculation, it would be detrimental to the communities to not allow consideration of the corrected proposal. It is because of fairness and the need to obtain proposals that best serve the needs of the communities that DOT provided the opportunity to allow the other carriers to amend proposals that contained a technical error. We support both the DOT’s decision to accept Ravn’s changes and to provide the other airlines the opportunity to make technical changes as well.
Our community thanks the DOT for allowing the submission and consideration of the best possible proposals. The DOT should affirm its decision to allow Ravn’s correction and deny Peninsula Airways Motion to Strike.
Answer of Ravn Alaska to Objection and Motion of Peninsula Airways
PenAir’s arguments are without merit and its Motion should be denied, as two local community leaders and one association have also urged. Additionally, PenAir’s arguments are inconsistent with its own actions in a recent EAS proceeding, in which PenAir itself requested and received from the Department an opportunity to correct its subsidy calculation sheet for a EAS proposal, after the established deadline.
Ravn Alaska’s corrections do not prejudice any proposal submitted to the Department, and do not otherwise confer an undue advantage on Ravn Alaska. PenAir has failed to provide any reason why Ravn Alaska should not be provided an opportunity to correct its errors – an opportunity that PenAir itself recently requested and received. Ravn Alaska respectfully requests that the Department reject PenAir’s Motion and proceed with the comment period and selection process based on the merits of each proposal submitted, including any corrections to technical errors timely received.
Counsel: Zuckert Scoutt, Jonathon Foglia, 202-973-7932
Corrected Proposal of Fly 4 You d/b/a Security Aviation
2 St. Paul-St. George-Anchorage per week (Conquest) / 1 St. George-Anchorage per week (Lear 45 jet)
Visits have been made to the Community by the airlines except ACE, due to weather. After having an opportunity to listen to the officials from the airline companies, to their proposals for passenger service and to their thoughtful responses to community member questions, the leadership have jointly reached the following conclusion. We all support the proposal submitted by Security Air.
By: Mayor Pat Plentikoff
Comments of Alaska Central Express
First and foremost, and perhaps to state the obvious, only Alaska Central offered to provide service to all three points in Alaska on a subsidy-free basis. Even Peninsula Airways, Inc., that subsequently offered to serve St. Paul and McGrath without subsidy (putting aside whether the Department could find PenAir's offer to provide subsidy-free service to be creditable), cannot match the Alaska Central offer. Only Alaska Central offered to the Department to provide its passenger and cargo (freight and mail) service to all three points--St. Paul, St. George and McGrath without the need for US Government funds to do so.
The DOT should name Alaska Central as the carrier to provide essential air service to the three Alaska communities for the 2 year period. However, Alaska Central is not solely relying upon the statutory preference for subsidy-free proposals to claim the right to offer EAS service to St. Paul, St. George and McGrath. By virtually any metric, Alaska Central' s proposal is superior. Alaska Central will operate more annual flights in order to generate more revenue thereby making its proposal more self-staining than any other carrier based on their proposed patterns of service. In other words, based on reasonably estimated operating costs and traffic projections (passengers, freight and mail) the DOT can readily rely on Alaska Central to provide the subsidy-free service it is offering in this Proceeding.
Comments of Ravn Alaska
Fortunately for SNP, MCG and competing carrier applicants, it is the Department – not PenAir – that determines whether a carrier’s subsidy-free service adequately provides basic EAS. In the present case, given PenAir’s current financial condition, it likely is dependent on revenue from uncertain contracts with other airlines and as yet unawarded EAS subsidies in other markets if it is to successfully emerge from bankruptcy. And, due to PenAir’s history of poor service as documented in multiple filings by the St. Paul Community and detailed in Ravn Alaska’s previous letter dated October 31, 2017, there should be considerable doubt that this carrier will be able to maintain the basic levels of EAS to which those communities are entitled. As a result, the Department should require a higher showing of evidence by PenAir that it can do what it has been unable to do for many years before now – when it was not bankrupt.
As with PenAir’s letter of October 27, 2017, the carrier’s November 21st response invokes two prior EAS orders in an unsuccessful attempt to support its remarkable position that the withdrawal of previously-filed service termination notices automatically should end these carrier selection proceedings. However, and as Ravn Alaska detailed in its letter of October 31st, both of those orders are inapplicable to the present case and therefore of no precedential value. In the first such order, involving EAS at El Centro, California, the incumbent carrier’s service termination was withdrawn before any community comments, which are entitled to considerable deference, were provided to the Department. See Order 2005-9-3 at 1 (explaining that SkyWest withdrew its termination notice “before any comments had been received by the community”). And, in the second such order, involving EAS at Athens, Georgia, it does not appear that any community comments were provided before the Department ended the carrier selection proceeding. See Order 2002-5-29 in Docket OST-2002-11348.
Here, the circumstances are very different than those presented in the two EAS orders cited above – as the St. Paul Community has invested considerable time and effort meeting with carrier representatives, soliciting the views of its residents and preparing and submitting its formal comments to the Department, urging that PenAir be replaced with an adequate and more reliable EAS provider. PenAir’s arguments that the Department disregard those views and shut down the carrier selection proceedings for both SNP and MCG are without merit, and such an outcome would be contrary to the public interest given the unique circumstances of this case. PenAir itself instigated these carrier selection proceedings, community comments have been received, and seeing the process through to completion is in the best interest of the impacted communities, which, due to their remote and isolated location, are extraordinarily dependent upon air service and entitled to basic EAS on a consistently reliable basis.
Response of Peninsula Airways
The latest comments from CSP and ACE are factually and legally wrong, and their respective positions that the Department should continue with a carrier-selection process when PenAir has withdrawn its EAS termination notice and intends to continue providing subsidy-free EAS to St. Paul have no legal merit and should be rejected.
CSP’s and ACE’s claims that PenAir is not a reliable EAS carrier are inconsistent with the facts. PenAir had an average completion rate of 92% for 2016 and 2017 (YTD through September), respectively. In fact, during certain months, PenAir’s completion rate exceeded 100% as a result of operating extra sections to handle the increased traffic for the local cannery. This demonstrates a solid and highly reliable track record, particularly given the extreme weather challenges in operating at SNP. Moreover, PenAir’s completion rate over the past two years exceeds Ravn’s projected “controllable completion factor” of 90% at SNP (excluding extreme weather-related cancellations) in its proposals.
CSP also questions whether PenAir will operate an additional weekly flight during the off-peak season. PenAir loaded for sale into Sabre the fourth weekly flight, and the first such flight is scheduled to begin December 2, 2017. It is a reality.
PenAir’s withdrawal of its Notice and decision to continue providing subsidy-free EAS at SNP and MCG eliminates any legal basis for the Department to continue the SNP and MCG carrier-selection proceedings.
The law does not authorize the Department to subsidize another carrier when EAS is being provided without subsidy: “By law we [DOT] are not permitted to pay subsidy to a carrier when reliable subsidy-free EAS is available.” DOT Order 2001-10-14 at 2. Nor does the law authorize the Department “select” another carrier to provide subsidy-free service, when PenAir is already providing such service. If another carrier wants to operate subsidy-free service in addition to the service PenAir is providing, it is free to do so under the free-market policies of the Aviation Code.
PenAir urges the Department to reject the City’s unfounded claims about possible safety issues and lack of DIP funding; issue an Order terminating the carrier-selection proceedings for St. Paul Island and McGrath; and close the corresponding dockets.
OST-2017-0108 - McGrath
OST-2017-0110 - St. Paul Island
Re: Response of Alaska Central Express to Ravn Alaska
Ravn's letter argues that the public interest warrants the continuation of this Proceeding even though Peninsula Airways opportunistically attempted to withdraw its notice of termination of services to St. Paul and McGrath. Alaska Central concurs in this portion of Ravn's communication to you. Alaska Central also concurs with Ravn to the extent it puts forth the argument that PenAir has already proven itself incapable of reliably serving St. Paul. But Alaska Central takes strong exception to the position of Ravn that Alaska Central lacks the necessary DOT and FAA authority to conduct scheduled passenger operations to the three EAS communities. Such is not the case. Ravn obviously wishes to avoid comparison of its heavily subsidized proposal with Alaska Central's subsidy free offer. In fact, Ravn has requested higher subsidy levels to serve St. Paul and St. George than any other carrier in this Proceeding. On the other hand, Alaska Central's proposal to serve all three communities was put forth on a subsidy free basis unlike any of the other applicants.
As a final matter, Alaska Central wishes to comment on the current status of this Proceeding. The initial 90-day hold-in period has now lapsed and it appears PenAir continues to serve St. Paul and McGrath and to do so without subsidy that PenAir states it no longer is requesting as a condition to providing the service. As PenAir wishes to continue to serve St. Paul and McGrath without subsidy, it does not need the EAS determination to do so. For its part Alaska Central maintains its proposal to serve St. Paul and McGrath as the EAS designated carrier even if PenAir continues to operate in one or both of the markets in the future. Alaska Central will also provide subsidy free service to St. George thereby, offering a far superior proposal to that of PenAir that requires annual St. George subsidy payments of $2,675,822 in year 1 and $2,817,645 in year 2. Security Aviation has also proposed to serve St. George on a stand alone basis for a similar amount of annual subsidy. On the other hand, Alaska Central would agree to provide subsidy-free service and to be bound by a commitment to serve all three communities for a two year period at the service levels it has proposed in this Proceeding.
Order 2017-12-5
Issued and Served December 8, 2017
By this Order, the United States Department of Transportation extends the obligation of Peninsula Airways, Inc. to continue to provide essential air service at St. George, Alaska, for an additional 30 days, through January 11, 2018.
On August 14, 2017, PenAir filed 90-day notices to suspend its subsidy-free service at McGrath, St. Paul Island, and St. George, Alaska, effective November 12, 2017. By Order 2017-8-21, the Department prohibited PenAir from suspending its service for an initial 30-day period, through December 12, 2017, and requested proposals for replacement service at the three communities. On October 26, 2017, PenAir withdrew its termination notices at St. Paul and McGrath but not at St. George. Because this case will not be completed by December 12, the end of the current 30-day hold-in period, the Department must extend PenAir’s EAS obligation for an additional 30 days, or until further Department action, whichever comes first.
Withdrawal of Ravn Alaska Objection
On November 22, 2017, Corvus Airlines, Inc. d/b/a Ravn Alaska submitted a letter in the above-captioned dockets, to which Alaska Central Express, Inc., by letter dated December 6, 2017, responded. Based on information set forth in Alaska Central’s December 6th response, Ravn Alaska hereby respectfully withdraws the objections in its November 22nd letter inasmuch as they disputed the scope of DOT certificate authority and FAA authorization held by Alaska Central to conduct the scheduled operations detailed in its essential air service proposal. Alaska Central’s proposal should be evaluated by the Department on its merits, along with the proposals of Ravn Alaska and all other carrier applicants in these proceedings seeking to provide replacement EAS at the affected communities and holding appropriate DOT and FAA authorities.
Counsel: Zuckert Scoutt, Jonathon Foglia, 202-298-8660
Aleutian Pribilof Islands Association in Support of Security Aviation
The Aleutian Pribilof Islands Association, Inc. is in full support of Security Aviation's Essential Air Service proposal. Based on considerable history, we firmly believe that Security Aviation has the personnel and equipment to meet the needs and has a far superior record of reliability than other EAS proposals for the same area. We urge you to take into consideration the communities overwhelming support for Security Aviation's proposal as well. Living on a remote island, reliable air service is a fundamental priority to ensure quality of life and economic prosperity.
By: Dimitri Philemonof
City of St. George in Support of Security Aviation
We understand that the government may try to find a carrier willing to perform the EAS without subsidy. HOWEVER, a "zero-subsidy " proposal should not and does not "guarantee" an EAS award to a subsidy-free carrier, especially if that award is to the detriment of the local community based on that carrier 's proven and consistently unreliable service record. Rather , the true meaning of EAS should be considered; air service essential to a rural community's well being. More importantly, the carrier selected should work with the community to give St. George the ability, not only to survive, but to thrive. Security Aviation has sincerely expressed that dedication and commitment through their visit to our community and by their invitations for our people to visit with them at their Anchorage facility. A number of our residents have visited and toured the Security Aviation facility and we continue to be impressed by Security Aviation's dedication to safety and service.
The EAS program at St. George has suffered greatly for many years. Over these many years, Security Aviation has consistently, safely and successfully completed flights to St. George when other carriers would not. We feel Security Aviation's proposal will allow our community to have the confidence to move forward, to develop and increase the population , healthcare and the economic development opportunities St. George has to offer.
By: Mayor Patrick Pietnikoff
Comments of Alaska Department of Transportation and Public Facilities
I request that you give due consideration to the geographic location of and remote access to St. George Island, which includes crossing about 335 miles of the sub-arctic Bering Sea. In this regard, it is a critically important safety issue to have an appropriate airframe for passenger needs, and enough air cargo capacity in providing air service to St. George Island.
The State of Alaska continues to assert that the local residents and organizations are generally best positioned to comment on particular schedules or air carriers, and therefore we think the community should provide comments to you on those specific areas.
I am also writing to express my strong support for continuation of the Essential Air Service program in Alaska and to emphasize the crucial access it provides to our remote communities. I respectfully urge the US DOT to support and continue EAS in Alaska.
Response of Alaska Central Express
On the issue of service reliability , Alaska Central has a strong record of providing service to St. George on a very dependable basis. On the other hand, St. George has stated that "[c]urrent and historical data have clearly and routinely shown a propensity for poor and erratic service by carriers other than Security Aviation." Presently, there are only two scheduled carriers that operate into St. George , PenAir and Alaska Central Express. The claim that Security Aviation had better service than Alaska Central is not supported by the facts.
In terms of mail and freight , ACE has provided highly reliable service in the St. George market. In fact, ACE timely transports 100% of the St. George mail that it is tendered to it by the US Postal Service. In addition to transporting mail originally tendered to Alaska Central, it has also transported approximately 60% of the mail tendered to PenAir on an annual basis due to PenAir's inability to move the mail within the USPS- prescribed transit times. It's the dependability of the mail and freight service provided by Alaska Central that is the basis for the Postal Service decision to routinely order PenAir to transfer backlogged mail to Alaska Central. While the community may perceive Alaska Central has not providing timely service, it must ber recognized that Alaska Central has no control over when the Postal Service orders PenAir to transfer the backlogged mail to Alaska Central given that by Postal Service rule mainline carriers have 24 hours and bush carriers 36 hours to move the mail or be subject to an order to transfer the mail to another carrier. Alaska Central cannot be considered responsible for any spoilage that occurs during the time the original carrier is unable to move the mail per Postal Service regulations. Further and final evidence of Alaska Central's inherent service reliability, the carrier has compiled a 99% dispatch reliability record when operating passenger charter flights when considering carrier-controllable factors (i.e. excluding weather). Alaska Central will match its record of dependability against any other intra-Alaska carrier including Security Aviation.
Finally, to update the Department, recall that the Federal Aviation Administration previously issued to Alaska Central all Operations Specifications amendments necessary to conduct scheduled service but subsequently advised Alaska Central of an administrative issue delaying the matter. Be advised that the FAA has now acted and all needed FAA authority by Alaska Central to conduct scheduled operations has been received and is effective.
Order 2018-1-7
Issued and Served January 11, 2018
By this Order, the United States Department of Transportation extends the obligation of Peninsula Airways, Inc. to continue to provide essential air service at St. George, Alaska, for an additional 30 days, through February 11, 2018.
Petition of Peninsula Airways for Hold-In Subsidy Rate
Peninsula Airways, Inc. hereby petitions the Department of Transportation for a hold-in subsidy rate of $354,310 annually to maintain the current essential air service of three weekly flights at St. George, Alaska.
On August 14, 2017, PenAir filed a 90-day notice of its intent to terminate unsubsidized EAS at St. George, effective November 12, 2017. The Department thereafter prohibited PenAir from terminating its service there and requested proposals for replacement services. See DOT Order 2017-8-21. If a carrier originally had provided unsubsidized essential air service to a community and the Department requires that carrier to continue providing such service until the commencement of replacement service, the Department shall compensate the carrier being held in accordingly.
It is a conservative calculation because it only includes the expenses of the tag SNP-STG-SNP leg with an approximate round trip block time of one hour.
We realize the appeal of a zero-subsidy proposal to the government. Especially in light of the Administrations view of EAS in the Lower-48. Alaska is very different from the rest of the country when in comes to travel and EAS. As you know, St. George is an island approximately 740 miles from Anchorage. Security Aviation's proposal has clearly laid out why the subsidy is needed and where those resources would be best applied to meet St. George's air transportation needs on a regular basis. I have attached the letters of support for Security Aviation so you may have a consolidated overview showing that every organization and elected official affiliated with St. George has voiced their overwhelming support for Security Aviation. We would humbly ask that you review the information below and give thoughtful consideration to Security Aviation's proposal on behalf of the residents of St. George.
By: Mayor Pat Pletnikoff
Order 2018-1-16
Issued and Served January 29, 2018
By this Order, the US Department of Transportation authorizes a subsidy rate to compensate Peninsula Airways, Inc. for providing Essential Air Service at St. George, Alaska, beyond the air carrier’s 90-day notice of its intent to terminate service at the community. This rate will remain in effect until the case has been determined or March 31, 2018.
Annual Subsidy: $354,910
Effective Period: November 13, 2017, through March 31, 2018, or earlier if the case is concluded
Scheduled Service: Three weekly flights to/from Ted Stevens Anchorage International Airport (some flights via St. Paul Island)
Aircraft: 30-passenger Saab 340
Rate per Eligible Flight: $2346
Weekly Ceiling for each community: $7038
Revised Petition of Peninsula Airways for Hold-In Subsidy Rate
At the request of the Department, PenAir is submitting this Revised Petition to reflect the number of roundtrips and segments encompassed by the Hold-In Rate request. The annual Hold-In subsidy amount did not change. It remains the same as that approved in DOT Order 2018-1-16.
Counsel: Hogan Lovells, Robert Cohn, 202-637-4999/5659
Order 2018-2-4
Issued and Served February 6, 2018
By Order 2018-1-16 (January 29, 2018), the Department established a hold in subsidy rate to compensate Peninsula Airways, Inc., for providing Essential Air Service at St. George, Alaska, beyond the air carrier’s 90-day notice of its intent to terminate service at the community. The rate will remain in effect until the case has been determined or March 31, 2018. That Order, including Appendix B, characterized the number of trips as three weekly [one-way] flights, rather than the carrier’s intended number of trips as three weekly round trip flights (six weekly flights). PenAir’s subsidy rate remains unchanged and for the purposes of accounting, the scheduled service and rate per eligible flight are corrected.
Order 2018-2-5
Issued and Served Febraury 8, 2018
By this Order, the United States Department of Transportation extends the obligation of Peninsula Airways to continue to provide Essential Air Service at St. George, Alaska, for an additional 30 days, through March 13, 2018.
Order 2018-3-11
Issued and Served March 9, 2018
By this Order, the United States Department of Transportation extends the obligation of Peninsula Airways, Inc. to continue to provide Essential Air Service at St. George, Alaska, for an additional 30 days, through April 12, 2018.
Order 2018-4-5
Issued and Served April 10, 2018
Order Prohibitng Termination of Service, Re-Requesting Proposals, Terminating Carrier Selection Case, and Dismissing Objections
Due to the amount of time that has passed since the Department initially requested proposals and recognizing that all or some of the proposals may be stale, along with the various contested motions during the selection proceeding, the Department is re-requesting proposals from air carriers interested in providing service at McGrath and St. George, with a due date of May 7, 2018 for such proposals.
In response to our original Request for Proposals, the Department formally solicited comments on October 11, 2017, from the communities and the State of Alaska regarding this carrier-selection case, with an initial due date of November 9, 2017, and later extended to November 20, 2017.
In response, the Department received substantial comments. In general, those we received expressed concern with the service that had been provided by PenAir. Commenters indicated that PenAir had many canceled flights and been largely unresponsive to their concerns about completed/canceled flights and delays, resulting in long periods of time where passengers and goods and services are unable to be delivered to/from mainland Alaska in a timely manner. Commenters from St. George and St. Paul Island state their support for passenger service proposed by Security Aviation (St. George) and Ravn (St. Paul Island) and NAC’s proposal for cargo only service for St. Paul Island. Commenters from McGrath generally express support for a Part 121 air carrier.
Order 2018-4-16
Issued and Served April 19, 2018
Order Extending Hold-In Subsidy Rate
By this Order, the US Department of Transportation authorizes a subsidy rate to compensate Peninsula Airways, Inc., for providing Essential Air Service at St. George, Alaska, beyond the air carrier’s 90-day notice of its intent to terminate service at the community. This rate will remain in effect until the case has been determined or September 30, 2018.
Order 2018-6-4
Issued and Served June 7, 2018
By this Order, the United States Department of Transportation extends the obligation of Peninsula Airways, Inc. to continue to provide Essential Air Service at St. George, Alaska, for an additional 30 days, through July 11, 2018.
Please note the due date for proposals for Essential Air Service at McGrath and St. George, Alaska, has been extended until July 2, 2018. The Department received a request for an extension to coincide with Akutan, Atka, and Nikolski, and we find the request to be reasonable.
Order 2018-6-13
By this Order, the United States Department of Transportation extends the obligation of Peninsula Airways, Inc. to continue to provide Essential Air Service at St. George, Alaska, for an additional 30 days, through August 10, 2018.
Order 2018-6-15
Issued and Served June 14, 2018
By this Order, the US Department of Transportation authorizes a subsidy rate to compensate Peninsula Airways, Inc. for providing Essential Air Service at McGrath, Alaska, beyond the air carrier’s 90-day notice of its intent to terminate service at the community. This rate will remain in effect until the case has been determined or September 30, 2018, whichever is earlier.
Annual subsidy: $699,103
OST-1995-363 - Atka/Nikolski
OST-2000-7068 - Akutan
Propsals of Grant Aviation
Atka/Nikolski:
3 weekly Atka-Dutch Harbor / 2 weekly Nikolski-Dutch Harbor
Subsidy required: $2,758,701 (2 year); $7,249,572 (5 year)
12 weekly Akutan-Dutch Harbor
Subsidy required: $4,997,231 (2 year); $13,012,951 (5 year)
3 weekly St. George-Dutch Harbor/St. Paul
Subsidy required: $3,428,005 (2 year); $8,8989,480 (5 year)
By: Bruce McGlasson, 907-529-6699
Combined Proposal of Grant Aviation and Maritime Helicopters
24 weekly Akutan-Akun
Aircraft: Bell 206 Long Ranger 4
Subsidy required: $1,532,804 (Year 1); $1,522,323 (Year 2); $1,574,132 (Year 3); $1,627,952 (Year 4); $1,683,889 (Year 5)
By: Robert Fell, 907-235-7771 for Maritime Helicopters / Robert Kelley, 907-302-3675 for Grant
The Department issued a request for proposals on February 2, 2018 (Order 2018-2-2) from airlines interested in providing EAS at Atka and/or Nikolski and also issued a request for proposals on June 11, 2018 (Order 2018-6-8), from airlines interested in providing EAS at Akutan. Proposals for Atka and Nikolski were originally due March 12, 2018, but the due date was extended several times, to July 2, 2018.
In response to the Department’s request, we received two proposals for consideration:
Grant Aviation (for Akutan, Atka, and Nikolski); includes proposals that are part of larger packages with another community
Maritime Helicopters (for Akutan); proposes service in conjunction with Grant.
Please review the proposals and submit any comments by July 23, 2018.
Proposal of Alaska Central Express - 7MB
Subsidy required: $1,797,497
Subsidy required: None
Aircraft: Bombardier Dash-8-100
Subsidy required: $245,124 (Year 1); $275,848 (Year 2)
the Department issued a request for proposals on April 10, 2018 (Order 2018-4-5), from airlines interested in providing EAS at either McGrath, St. George, or both. Proposals were originally due May 7, 2018, but the due date was extended several times, to July 2, 2018.
In response to the Department’s request, we received three proposals for consideration:
Alaska Central Express (for McGrath and St. George)
Grant Aviation (for St. George); includes proposals that are part of larger packages with other communities
Ravn Alaska (for McGrath)
We maintain our support for Security Aviation's proposal and would like to reference our letters of support from October 2017 and April 2018, as well as letters from the Aleutian Pribilof lsland Association and individual community members. As previously stated, we believe that Security Aviation possesses the equipment and personnel to provide the most consistent and dependable service to St. George lsland, and has identified a reasonable rate for passenger and freight service in their proposal. We also strongly believe that a dedicated aircraft and service focused on St. George is
necessary to ensure that our residents are receiving access to critical medical supplies, communications, food provisions and health services available only off-island.
By: Mayor Pat Plenikoff
Comments of Grant Aviation
We have reviewed the letter from Pat Pletnikoff, Mayor of the City of St. George in strong support of the EAS contract being awarded to Security Aviation. Mayor Pletnikoff makes very valid comments on behalf of the St. George community. We applaud the Mayor’s efforts and advocacy for the community.
It has been our observation that the DOT has shown exceptional judgement and due diligence in evaluating the bids and awarding the contracts to the appropriate air carrier consistent with the objectives of the EAS program.
However, we would like to point out that awarding a subsidy to a community to provide service to the largest airport in Alaska approximately 800 miles away when there are numerous hubs closer to the community (St. Paul (50 miles), Dutch Harbor (225 miles), Cold Bay (280 miles), Bethel (420 miles), Dillingham (450 miles), and King Salmon (510 miles)) does not appear consistent with the intention of the EAS program. As is represented in the subsidy requests in each of the bid proposals, the distance between the community and the proposed hub contributes significantly to the amount of the subsidy.
We also believe providing EAS service to Anchorage establishes potentially untenable precedence as we believe all communities in Alaska would in turn seek to have their EAS service also include direct service to Anchorage.
By: Robert Kelley, 907-885-3458
City of McGrath in Support of Ravn Alaska
McGrath has the opportunity for Essential Air Service. To us that means having the safest, most reliable and overall most beneficial company selected to uphold an enforceable contract with the Department of Transportation. This Essential Air Service contract is such an important and critical service to our community. We are of one voice stating that Ravn Alaska has provided the only credible proposal to provide Essential Air Services to McGrath at this time.
By: Mayor Ralph Morgan
Order 2018-8-3
By this Order, the United States Department of Transportation extends the obligation of Peninsula Airways, Inc. to continue to provide Essential Air Service at St. George, Alaska, for an additional 30 days, through September 9, 2018.
Support Letters for Security Aviation
Attached is a letter from the Mayor of St. George to the Office of Aviation Analysis at DOT in support of the proposal by Security Aviation to provide EAS. Additionally, please find attached numerous letters and communications in support of the selection of Security Aviation. On behalf of the Senator, I want to be sure that community comments are being received so that they are given all due consideration. While we are not advocating for one air carrier over another, I want to ensure you are aware that from the community’s perspective the decision to choose Security Aviation for this service.
By: Scott Leathard, 202-224-3004
Order 2018-9-1
Issued and Served September 4, 2018
By this Order, the United States Department of Transportation extends the obligation of Peninsula Airways, Inc. to continue to provide Essential Air Service at St. George, Alaska, for an additional 30 days, through October 10, 2018.
Order 2018-9-19
OST-1995-363 - Atka and Nikolski
Issued and Served September 21, 2018
By this Order, the United States Department of Transportation is re-selecting Grant Aviation, Inc. to provide Essential Air Service at Atka, Nikolski, and, at the same time, selecting Grant to provide EAS at St. George, Alaska, for the period from October 1, 2018, through September 30, 2020, for all three communities. At Atka and Nikolski, Grant will provide three round trips per week from Atka to Dutch Harbor and two round trips per week from Nikolski to Dutch Harbor (Unalaska Airport or DUT), as well. Service will be provided at a combined annual subsidy rate of $1,357,302 ($1,032,163 at Atka and $325,139 at Nikolski) for the period from October 1, 2018, through September 30, 2019, and $1,401,399 ($1,066,556 at Atka and $334,843 at Nikolski) from October 1, 2019, through September 30, 2020, using 9-seat Beechcraft King Air aircraft. At St. George, Grant will provide three weekly round trips to Dutch Harbor for a first-year annual subsidy of $888,787, and a second-year annual subsidy of $910,867, also using 9-seat Beechcraft King Air aircraft.
Appeal of City of St. George
To say we are disappointed with the DOT's selection is an understatement. I firmly believed that our numerous conversations, coupled with the overwhelming letters of support for Security Aviation and an Anchorage based hub would have helped the DOT understand the unique and dire challenges surrounding air transportation at St. George Island and why we choose to endorse Security Aviation.
I have no doubt the DOT was well intentioned with this award. However, what looks good on paper has no bearing on real life events. We at St. George have years of experience and knowledge regarding aviation in the Pribilof and the Aleutian Islands. I feel it is glaringly obvious that this proposal is fraught with problems and I am confident that, as currently awarded, this EAS program is doomed to fail before it can even begin.
Selecting Grant Aviation to provide service at St. George is not a viable option.
While I can certainly appreciate the DOT's referenced fiduciary responsibility, I would also put forth that the greater responsibility of the Federal Government and the EAS program is to be a good steward to the people by offering reliable and affordable travel and help promote commerce. We feel that St. George must have a dedicated EAS program with an Anchorage hub to remain a viable community.
By: Mayor Patrick Pletnikoff
Petition for Reconsideration of Security Aviation
The recent purchase of Pen Air by J.F. Lehman - the parent company of Ravn Air Group, Inc. It has been reported that this purchase is scheduled to be announced Friday October 5, 2018, and the sale will need to be approved by Federal Regulators; a process that could take 4-6 weeks. We would ask that the DOT take pause to evaluate how or if any interline, contractual and marketing agreements in Dutch Harbor could be affected.
It has already been established that travel to Anchorage under the current award would increase the cost to the residents of St. George by approximately 30%. It has yet to be determined how the purchase of Pen Air could affect ticket prices out of Dutch Harbor. Security Aviation would encourage the DOT to consider this before allowing service to begin.
Security Aviation would ask the DOT to expedite our request as the sale of Pen Air and the issues above raise serious questions regarding four of the six carrier selection requirements.
Comments of Security Aviation
The concerns I am hearing are that the DOT made the decision to change the hub airport for St. George from Anchorage to Dutch Harbor without fully considering the consequences. Per the letter from the City of Atka, this will increase flights and inevitably increase the delays and cancellations to the Grant hub in Dutch Harbor. This will adversely affect all the communities involved. In the letter from the City of Atka (#4), the City asked for the DOT to include provisions for Grant to supply additional resources consisting of two King Air aircraft and two pilots dedicated to those aircraft . Did the DOT ask for any such provisions prior to the award? If so, what arrangements were agreed to?
In the past, Anchorage was the hub and destination airport for the residents of St. George so there was no need for an interline agreement. However, the current award makes travel to St. George cumbersome and expensive. The residents used to be able to book travel through one reservation, ticket, and baggage check in process. It is my understanding that the "single agent" booking process can be a requirement in the lower-48 for smaller carriers connecting to larger carriers at hub airports. I understand this does not apply to Alaska. However, it was part of the historical or traditional level of service provided to the community of St. George. Under the current program, the level of service has been altered. The change of the hub airport now requires the residents of St. George to book multiple tickets on different carriers with multiple stops, ultimately resulting in a considerable increase in travel time and a significant increase in price.
Is Dutch Harbor now the final destination of the St. George EAS program for the next two years? Did Grant giv e the DOT any indication that interline agreements were forthcoming at Dutch or St. Paul?
Order 2019-1-5
By this Order, the US Department of Transportation accepts the petitions for reconsideration of Order 2018-9-19, dated September 21, 2018, submitted by City of St. George, Alaska, Mayor Patrick Pletnikoff and Fly 4 You, Inc. d/b/a BA Security Aviation and, upon review, denies both petitions for reconsideration.
St. George’s petition argued that the Department’s selection of Grant is not a workable solution, due to Grant’s “poor service reliability,” weather issues that will likely cause passenger travel to be interrupted while connecting to/from Anchorage flights, including limited hotel space in Dutch Harbor, lack of availability on Dutch Harbor-Anchorage flights due to seasonal commercial fishing industry travel, lack of a plan to deliver mail/cargo, and PenAir’s bankruptcy/reduction in service. The Department notes that Grant has not previously provided EAS at St. George. Order 2018-9-19 detailed the Department’s decision for selecting Grant, noting that the carrier is a stable, mature airline with roots in Western Alaska and a proven track record of service in the region. Grant also has a fully developed reservations system, dispatch, and flight operations systems, and Grant’s proposal stated that it is investing in operational infrastructure to further improve the safety, quality, and reliability of its flight operations in the region. Furthermore, Grant intends to coordinate with mainline carriers providing service to Anchorage from St. Paul Island and Dutch Harbor so that it may seasonally adjust its flight schedules to connect with mainline service to Anchorage. In evaluating the proposals submitted to provide EAS at St. George, the Department gave serious consideration to the views of the community, while remaining mindful of its fiduciary responsibilities to the EAS program.
As stated in the Order, and given the concerns raised by the community regarding Grant’s operations in inclement weather, the Department noted that adverse weather conditions in the Pribilof and Aleutian Islands present challenges for any air carrier, and, in several conversations with Grant over the past year, the carrier has consistently expressed to the Department its commitment to safety. Grant states that it does not operate in unsafe conditions, or in conditions that it deems could be unsafe. Safety should remain the focus. In the Order, the Department directed Grant to be as transparent as possible with its customers and the communities when delays and cancellations inevitably happen. The Department’s general experience with many Alaskan communities is that residents and visitors understand the adverse weather conditions, but it is the “unknown” that affects them more, as making plans and dealing with emergency situations become more difficult (e.g. when shipments of food and medicine may be delayed). Therefore, the Department reminded Grant in the Order that it should increase its efforts to be communicative in these difficult situations.
Both petitioners expressed concerns that Grant does not have an interline agreement or a contractual marketing arrangement with a larger carrier at the hub, and that the fiscal uncertainty of PenAir’s bankruptcy make it difficult to foresee future air service to Anchorage. The Department notes that Security Aviation, the carrier that the St. George community supported, also does not have any interline or marketing arrangement with a larger carrier. Ravn Air Group, Inc. recently purchased the assets of PenAir and has stated that it will continue service from Dutch Harbor and St. Paul to Anchorage; however, the Department will monitor any material changes that could affect the community’s ability to access connecting opportunities to/from Anchorage.
Based on all the above, the Department denies the petitions for reconsideration from the City of St. George Mayor Pletnikoff and Security Aviation, and affirms its decision in Order 2018-9-19.