Order 99-2-19 - Intra-Alaska Bush Service Mail Rates

Order 99-2-19

Intra-Alaska Bush Service Mail Rates

Order 99-2-19 OST-95-405 44445	Issued February 19, 1999 Served February 24, 1999	Order to Show Cause Establishing Final Bush Service Mail Rates	Intra-Alaska Bush Service Mail Rates
		Appendix A: Intra-Alaska Bush Service Mail Rates
		Appendix B: Cost Adjustment Factors
		Appendix C: Summary of Carriers' Fuel Portion of Linehaul Expenses
		Appendix D: Total Departure Related Expense
		Appendix E: General and Administrative Expense
		Appendix F: Regression Results of Nonfuel Linehaul Unit Costs

The proposed final rates, contained in Appendix A, reflect the application of cost adjustment factors, developed in Appendix B. to the basic mail rate structure established by the Department in Order 90-10-34. We have used the carriers' reported operating expenses for the YE 9/30/98, and have increased their unit costs to the mid-point of the new rate period, based on the long-term (nine-year) average annual changes in unit costs. We have also added Grant and Warbelow's operations to the cost pool. This is appropriate because both are large carriers in terms of overall bush operations and they generated 4.6% and 4. 1% respectively of total bush mail revenue in Alaska. 2 Adding their data to the cost pool makes the update more representative of the system without unnecessarily burdening it with carriers relatively insignificant in terms of the volume of mail they transport or in their overall size. As the Department deems appropriate, additional carriers may be added to or deleted from the pool of update-carriers in the future, so that a representative sample of the bush carriers in Alaska is maintained. At this time, we lack only one period from having sufficient data for a full ten-year moving average. We have not included Alaska Central Express, one of the biggest operators of bush equipment in Alaska, because their costs are atypical, i.e., their terminal costs are very low per ton enplaned because the bulk of their operations consist of operating high frequency service with bush aircraft over mainline routes.

By: Charles Hunnicutt