Home | Search | Help
OST by Number | OST by Order | OST by Carrier | OST by Subject | OST by Day
OIA by Carrier/Subject | OIA by Day | FAA by Number | FAA by Subject | FAA by Day
Carrier Financials | Charter Office | Answer/Reply Calendar

OST-2000-8556

 http://www.adakisland.com/

EAS Docket

Essential Air Service at Adak, Alaska

By:  Francisco Sanchez

Essential Air Service at Adak, Alaska

By:  Adak Reuse 

Essential Air Service at Adak, Alaska

By:  Norquest - Adak, Richard Pollen

Essential Air Service at Adak, Alaska

By:  Adak Reuse Corporation, Mark and Paula Avery

Essential Air Service at Adak, Alaska

By:  Susan McDermot

Essential Air Service at Adak, Alaska

Counsel:  Shaw Pittman, Robert Cohn, 202.63.8060

Essential Air Service at Adak, Alaska

Evergreen Helicopters of'Alaska, Inc., intends to submit an application to provide essential air service (EAS) at Adak, Alaska. Evergreen inadvertently was unable to submit its application within the 20-day period after the service date of the DOT order requesting proposals. Evergreen hereby requests an extension to March 23, 2001, to submit its EAS proposal.

Counsel:  Evergreen International Aviation, Thomas Lydon

Essential Air Service at Adak, Alaska

PenAir would provide all service with Fairchild SA-227 (Metro III) turboprop aircraft configured with 17 passenger seats, or, depending on market needs, in a combi configuration, seating 10 passengers with additional mail and cargo capacity. While PenAir would ideally like to provide Adak with its firstchose service proposal, the resulting subsidy needs for single-plane Anchorage service via Cold Bay are quite high, and PenAir is continuing to evaluate alternative lower-cost options, including combining service to Adak with PenAir's Atka flights via Dutch Harbor.

As noted by the Department in its Order requesting proposals, the demise of Reeve Aleutian Airways, Inc., which ceased all airline operations on December 5, 2000, has created a short-term service emergency in the Aleutians. PenAir has been working aggressively to fill the service void left by Reeve, and PenAir fully and reasonably expects to be able to provide Adak and other Aleutian communities the type of premier, quality service for which PenAir is known throughout its historic route structure. Following the abrupt service termination by Reeve, PenAir stepped in to provide immediate service to Adak on a temporary emergency basis. PenAir recognizes that small aircraft such as the Cessna Conquest or Piper Navajo do not provide sufficient lift for a permanent solution to Adak's service needs. However, in light of the emergency need for service, PenAir believed it was preferable to provide Adak with some service rather than none.

Coincident with Reeve's demise, in the first two months of 2001, the Instrument Landing System at Adak was out of service due to a dispute between the military and the FAA regarding responsibility for the operation and maintenance of that system. Without a suitable instrument approach and weather reporting capability, neither of which was consistently available, no Part 121 operator would have been capable of providing adequate service to Adak. That situation has now been resolved. Furthermore, in order to satisfy the continuous contact dispatch requirements of Part 121, PenAir has invested approximately $25,000 in ground based repeater stations to enable PenAir pilots to keep in contact with dispatch while flying to Adak and other communities in the Aleutians.

Counsel:  Shaw Pittman, Alexander Van der Bellen, 202.663.8060

Essential Air Service at Adak, Alaska

By:  Evergreen Helicopters, Gerard H. Rock 

Essential Air Service at Adak, Alaska

By:  Evergreen Helicopters, Greg Theis

Essential Air Service at Adak, Alaska

By:  Northern Air Cargo, Robert Hallford

By:  Security Aviation, Michael O' Neill

Essential Air Service at Adak, Alaska

Request of Dennis J. DeVany to Peninsula Airways, Inc. to submit a joint application with either Northern Air Cargo or Evergreen, Peninsula may, of course, submit a stand-alone proposal for service to Adak. The joint application that we are requesting necessarily requires Peninsula Airways to agree upon a proposal with one of the two cargo airlines.

By:  Dennis DeVany

Essential Air Service at Adak, Alaska

By:  Scenic Airlines, Mary Schneider

Essential Air Service at Adak, Alaska

This is a request for consideration by Security Aviation, Inc, Air Carrier Certificate # LATA995, for the referenced solicitation to provide Essential Air Service between Anchorage, AK and Adak, AK. Security Aviation, Inc. is authorized to operate as an Air Carrier under FAR 135, and conduct common carriage operations, including carriage of passengers and cargo, in accordance with the provisions of our FAA Operations Specifications.

Security Aviation, Inc. operates a Cessna, C550, "Citation" aircraft that could be considered to perform the functions of this solicitation.

By:  Security Aviation, Michael O' Neill

Essential Air Service at Adak, Alaska

By:  Evergreen Helicopters, Greg Theis

Essential Air Service at Adak, Alaska

By:  Dennis  DeVany

Essential Air Service at Adak, Alaska

By:  Northern Air Cargo, Robert Hallford

Essential Air Service at Adak, Alaska

By:  City of Adak, Agafon Krukoff,

Essential Air Service at Adak, Alaska

PenAir's proposal and, in particular, its preferred "Option I" would best meet the essential air service needs of Adak passengers. PenAir would provide Adak with five weekly flights during the 26 week peak season, and three weekly flights during the remaining 26 week off-peak season. This ranks PenAir as one of the highest-frequency service proposals. By contrast, operators proposing costly jet service would provide Adak with only two weekly flights, leaving the community with no service a full five days a week, even during the peak summer period.

By:  Shaw Pittman, Alexander Van der Bellen, 202.663.8060

Essential Air Service at Adak, Alaska

Counsel:  Steptoe Johnson, David Coburn, 202.429.8063

Essential Air Service at Adak, Alaska

By: City of Adak, Agafon Krukoff

Essential Air Service at Adak, Alaska

By:  State of Alaska, Paul Bowers

By:  Susan McDermott

Essential Air Service at Adak, Alaska

By:  Pen Air 

Essential Air Service at Adak, Alaska

By: City of Adak, Agafon Krukoff

By:  Evergreen International, John Irwin

Essential Air Service at Adak, Alaska

Counsel:  Northern Air Cagro, R. J. Hallford, 907.243.3545

Essential Air Service at Adak, Alaska

By:  Eagle Canyon Airlines, Sidney Hurst 

By:  Steptoe Johnson, David Coburn, 202.429.3000, dcoburn@steptoe.com   

Essential Air Service at Adak, Alaska

By this order we are selecting Evergreen International Airlines, Inc., to provide essential air service (EAS) at Adak, Alaska, for $1,502,542 the first year, with the second year to be negotiated. In view of the four months that Evergreen estimates it will need to inaugurate passenger and cargo combination (combi) service, we will make an interim selection of Evergreen's proposed all-cargo service at $748,392 annually, the rate the carrier agreed to in the carrier selection proceeding until it can begin its Boeing 727-100 combination service. That service would be in addition to Peninsula's interim passenger service, selected by Order 2001-6-15.

By:  Susan McDermott

Essential Air Service at Adak, Alaska

By:  State of Alaska Department of Transportation, Paul Bowers

Essential Air Service at Adak, Alaska

Adding a direct mail service contract through the kind of service that Evergreen currently provides, it seems to me, will not only more than satisfy the Sand Point-King Cove, False Pass, Nelson Lagoon, Adak sector of villages who are alt suffering the consequences of the limited service that is currently in place, but it will also save in costs for one-time, once-a-week service for the USPS.

We have been told that the government agencies back East believe we are happy with the current service in place. That is absolutely not true. Adak Fisheries Development Corporation and Icicle Seafoods, together with Aleut Enterprise Corporation, have developed a partnership to process Pacific cod and other fish at Adak. However, if Adak is to meet the demands of a developing fishery, it can only do so with reasonably adequate transportation services in place.

By:  City of Adak, Agaton Krukoff

Essential Air Service at Adak, Alaska

By:  City of Adak, Agafon Krukoff

Essential Air Service at Adak, Alaska

By:  The Aleut Corporation, David Jensen

Essential Air Service at Adak, Alaska

As you recall, Order 2001-7-3 selected Evergreen to provide subsidized EAS with combi-jet aircraft between Adak and Anchorage over Cold Bay, and gave the carrier 120 days to secure the aircraft and inaugurate service. Since that time, because the Postal Service had not tendered the mail to Evergreen, we have held the 120-day startup in abeyance. Mr. James Nawrot of the Postal Service informed us that Evergreen was tendered its first non-priority mail shipment in February, and its first significant shipment on March 6. We understand that the Postal Service has continued tendering Evergreen the non-priority mail for Adak, and not to Peninsula.

In addition, the community has requested that we formally reopen the case if Evergreen does not show due diligence in making progress toward fulfilling its proposed combi service. Thus, we expect Evergreen to have begun in earnest to secure the necessary aircraft to inaugurate the full EAS it proposed and was selected to operate. We request that Evergreen demonstrate to us within 20 days that it is taking timely action to initiate full combi service and a projected date when that service will begin, or why it should not be held to the terms of Order 2001-7-3.

By:  Dennis DeVany

Essential Air Service at Adak, Alaska

As you know EIA has been operating a DC9F aircraft over the route ANC-ADK-CDB-ANC since the inception of this service. The economic conditions, up until the Postal Service tendered mail on March 06, 2002, have not been favorable to EIA, though this company has continued to provide service to the city of Adak. We have, I think, shown loyalty to the provision of service.

Since being selected to provide service EIA has diligently pursued the acquisition of a combi-jet aircraft. These aircraft proved to be difficult to locate in the market and those which were available were not in a particularly good maintenance status. EIA sent inspection teams to view various aircraft and their records including B737-100 and B727-200 aircraft, however we were unsuccessful in locating a suitable aircraft. To date we have continued to search for passenger aircraft to fulfill the desired role, again however this has taken time and, unfortunately we do not see us being successful in such an acquisition by the deadline of service introduction.

However, what EIA has decided to do is to wet lease in DC9 Passenger capacity, on a temporary basis. This aircraft will have belly holds for freight, plus passenger seats on the main deck. EIA expects to introduce this service within the next month, and expects to continue it for a period of at least three months, until EIA itself is able to acquire an aircraft of its own and add it to its certificate.

By:  Evergreen, Anthony Bauckham, 503.472.0011, tony.bauckham@evergreenaviation.com

Essential Air Service at Adak, Alaska

Although the community of Adak expressed a clear preference for Evergreen's proposal, the service contained in that proposal has not materialized. The citizens of Adak and the entire region have therefore requested that a new solicitation be issued for EAS service to Adak as soon as possible. We concur and wish to express our interest in submitting a new proposal for subsidized service to Adak. It is our understanding that there are other carriers also willing to submit proposal for EAS service to Adak, at least some of which are willing and able to provide the services described in Evergreen's unfruitful proposal of last year.

By:  Northern Air Cargo, Robert Hallford, 907.243.3646

Essential Air Service at Adak, Alaska

Evergreen has defaulted on the combi jet service proposal which formed the basis of its selection in Order 2001-7-3. Evergreen's new proposal to utilize a wetleased DC-9 aircraft instead of the B 727 aircraft originally proposed is unacceptable and should be firmly rejected by the Department. So too should the Department reject Evergreen's request for yet more time to institute service. Penair has been operating essential air service at ADAK since December 2000, when Reeve suddenly and precipitously terminated service to that community. Penair stands ready, willing and able to continue to meet the essential air service needs of ADAK. It is time for the Department to end the cloud of uncertainty over the service requirements of this community. The Department should immediately reopen its carrier selection determination and invite Penair and other interested carriers to file proposals.

Counsel:  Shaw Pittman, Robert Cohn, 202.663.8060, robert.cohn@shawpittman.com 

By Order 2001-7-3 the Department selected Evergreen International Airlines, Inc., to provide two round trips a week with jet equipment between Anchorage and Adak (about 1,200 miles) with an intermediate stop at Cold Bay. Annual subsidy was set at $1,502,542 the first year, with the second year of service and subsidy to be negotiated. Because Evergreen estimated it would need four months to acquire the equipment and operating authority to inaugurate passenger and cargo combination "combi" service, we made an interim selection of Evergreen's proposed one-roundtrip-a-week all-cargo service at $748,392 annually, the rate the carrier agreed to in the carrier selection proceeding, until it could begin its Boeing 727-100 combination service. That interim all-cargo service was in addition to Peninsula Airways, Inc.'s (Peninsula) interim passenger service selected by Order 2001-6-15, consisting of four round trips per week in the peak period and 3 in the off-peak period to Anchorage with 19-seat aircraft for $564,043 annually.

For a variety of reasons beyond its control, Evergreen did not inaugurate passenger service as contemplated, and we have relied on Peninsula's interim passenger service and Evergreen's interim all-cargo service up until now. However, because of the long distances involved and the notoriously difficult weather in the Aleutians, and because Adak's EAS definition requires service with 60-seat or larger aircraft, the interim service level, 19-seat turboprop service offered for passengers and all-cargo jet service by Evergreen, may not be appropriate on a long-term basis. The community of Adak passed a resolution on May 20, 2002, asking Evergreen to abide by the intent of Order 2001-7-3 and inaugurate the passenger combination service it agreed to provide. On May 31, 2002, the Department requested that Evergreen commit within 20 days to a date certain when it would inaugurate the contemplated service, and Evergreen did not respond.

Accordingly, we are requesting proposals for replacement service at Adak. Both Evergreen and Peninsula are required to continue the interim service they are currently providing until we conclude the carrier selection proceeding. As always, we will consider community support and subsidy need as two important criteria in making our carrier-selection decision.

By:  Read Van de Water

Essential Air Service at Adak, Alaska

We have been following the letter traffic regarding the provision of Essential Air Service to Adak, Alaska, and in particular the concerns of the City of Adak as outlined in their Resolution 02-050902. As a carrier very interested in the stable and complete services necessary for a meaningful service to the Aleutian chain, we are in support of the above resolutions, and encourage the EAS division of the USDOT to reopen Docket OST-8556.

High quality service at the Adak airport is necessary because of the distance and unpredictable weather conditions on the Aleutian chain. This will be achieved with freight and passenger service from a large aircraft operator. We support reopening this docket so other carriers interested in operating large combi aircraft into Adak will have an opportunity to look at this again.

By:  Lynden Air Cargo, Michael Hart, 907.243.6150

Several months ago, the Aleutians East Borough wrote supporting Evergreen International Airlines' application to provide Essential Air Service to Adak even though Adak is outside of the Borough's boundaries. From the Borough's prospective, Evergreen's proposal to provide large aircraft service to Adak through Cold Bay twice a week would begin to restore a level of service lost to our region with the demise of Reeve Aleutian Airways.

The Aleutians East Borough and its residents have waited patiently for Evergreen to commence the 727-200 combi service. There was a flurry of activity on Evergreen's part at the beginning of 2002 that we interpreted to mean that the proposed combi service was about to begin. However, nothing has happened in the intervening six months that leads us to believe that Evergreen will begin the proposed passenger and freight service.

The Aleutians East Borough is joining the City of Adak and the Aleut Corporation in calling upon the Essential Air Service Division to hold Evergreen International Airlines to their Essential Air Service proposal or rescind the order dividing the Essential Air Service between Evergreen and Pen Air and to call for new proposals.

By:  Aleutians East Borough, Robert Juettner

Essential Air Service at Adak, Alaska

By:  Aleutians East Borough, Robert Juettner

Essential Air Service at Adak, Alaska

EIA is currently the cargo service provider and is willing and able to continue to operate cargo service with jet transport aircraft to the high level previously provided. EIA has now gained experience in this market and has provided essential cargo services for the level and size of freight moving in this market. Historically over the period June 2001 through to June 2002 EIA has carried 525,621 Lbs. of freight over 46 flights equating to an average per flight load of 11426 Lbs. Per flight. These historic loads demonstrate the very real need for this type of transportation to continue in order that the needs of Adak are served.

The operation carried out by EIA has been less than economic for the company. EIA suffered from the lack of provision of mail by the LISPS at the outset of this program, historic levels of freight did not materialize, and the fact that the aircraft provided has been under utilized whilst in Alaska has lead to greater costs to EIA and therefore greater requirement for the DOT subsidy. Further, EIA has recently been denied the ability to carry by-pass mail within Alaska and therefore has been forced into basing this proposal on low utilization of the aircraft once more hence forcing up overall costs and the requirement for a higher subsidy. EIA is however, and has demonstrated in the past a commitment to continue service notwithstanding these difficulties.

By:  Evergreen, Anthony Bauckham, 503.472.0011, tony.bauckham@evergreenaviation.com

PenAir is Adak's current EAS service provider, and should be strongly favored in this selection proceeding to provide Adak with continuity of high-quality air service. PenAir is completing its first full year of Metro 23 service on the Adak-Cold BayAnchorage route and has demonstrated a 99 percent schedule completion rate, notwithstanding the harsh operating conditions of the Aleutian Island chain. PenAir is Alaska's premier bush operator and is extremely well qualified to continue to serve Adak -- either with larger Saab 340 cabin class aircraft, or the existing and highly reliable Metro 23's.

PenAir takes strong exception to the instituting Order's misplaced and unfounded bias against aircraft proposals with fewer than 60 seats. The Order states that "proposals should contemplate service to Anchorage with large aircraft having a minimum of 60 available passenger seats." This requirement is based on an outdated CAB determination that is more than two decades old (CAB Order 801-167), and the flawed and incorrect assumptions that "bad weather and limited daylight hours in the winter create very narrow operating windows [and that] small aircraft cannot consistently be relied on . . . "

By:  Shaw Pittman, Alexander Van der Bellen, 202.663.8060

Essential Air Service at Adak, Alaska

By:  Alaska Airlines, John MacLeod

By:  Scenic Airlines, Mary Schneider, 702.638.3200

Peninsula Airways, Inc. d/b/a Penair and Essential Air Service at Adak, Alaska

By this order, we are setting short-term final subsidy rates, retroactive to October 1, 2001, for Peninsula Airways (Peninsula) for its essential air service (EAS) at Adak and Akutan, Alaska: The rate for Akutan will be effective through August 31, 2002, and for Adak until further Department action.

By:  Read Van de Water

Essential Air Service at Adak, Alaska

The commitment of Evergreen International Airlines to establish passenger jet service to the community was not fulfilled, as committed.. Commercial and community interests have missed opportunities from the failure of Evergreen International to meet the EAS commitment set forth in the order of naming Evergreen International the designated carrier.  We note that there are four respondent carriers to the Order Requesting Proposals issued the 2nd of July 2002. Both Peninsula Airways and Scenic Airlines are not responsive. The aircraft types proposed for use with Peninsula Airways and Scenic Airlines fail to meet EAS defined service levels. Evergreen International is not responsive due to inability to carry passengers and, of course, a previous failure to perform as committed, as the designated EAS carrier.

The proposal from Alaska Airlines to implement service to Anchorage - Adak - Anchorage with an intermediate stop, using a B737-200 combination passenger and freight aircraft, is responsive to the Order Requesting Proposals. We believe the ability to move seafood and large parcels of freight and mail is essential.

By:  Aleut Corporation

Respectfully submitting a proposal to provide cargo, mail and passenger services between Adak, Alaska and Anchorage, Alaska with Essential Air Service financial assistance.  LMM, INC. was founded in Anchorage, Alaska on October 2, 1995. Since that time the company has expanded its operations throughout the world. Under the Jetstream Aviation name we have international aircraft charter operations with additional bases of operations in Seattle, Los Angeles, New York and Moscow. As Northwestern Arctic Air we currently hold the Life Guard air ambulance contract that serves as Providence Hospital's primary connection between the Aleutian Islands and Anchorage as well as to the 48 contiguous states. We routinely conduct air ambulance, passenger and cargo services throughout Western Alaska and Russia. Our fleet of Gulfstream, Hawker, Learjet and King Air aircraft are equipped to operate in almost any weather conditions with avionics upgrades that surpass the majority of the airlines operating in this state. In its seven year history LMM, INC. has never had an accident. Our Flightcrew Members receive annual simulator training and our maintenance staff receives factory-authorized schooling for the aircraft in our fleet. The LMM, INC. flight operations and maintenance departments have been approved by, and are in good standing with the independent auditing organizations of the Wyvern Group and the Argus Corporation.

By:  LMM, William Ryan

Essential Air Service at Adak, Alaska

In reviewing each of the proposals, it is clear that Alaska Airlines is the only responsive airline. Alaska Airlines is willing and able to provide the aircraft in the appropriate configuration to meet the passenger and cargo needs of Adak. Unfortunately, Alaska Airlines is proposing to have an intermediate stop in Dillingham and not Cold Bay for the first year's operation. Alaska Airlines does provide for the possibility of a stop in Cold Bay during the second year of operation along with the possibility of stopping in King Salmon. While this is not the Borough's preferred option, it does allow the Borough to implement its air system analysis project funded by your agency. The Borough anticipates that the air system analysis will be completed by the end of Alaska Airline's first year of EAS to Adak. The Borough should also have a good idea of what components are necessary on the ground to augment the usability of Cold Bay utilizing FAA planning funds.

By:  Aleutians East Borough, Robert Juettner

By:  Icicle, Don Giles

Essential Air Service at Adak, Alaska

At this time, Eagle Canyon Airlines d/b/a Scenic Airlines withdraws its proposal for EAS at Adak, Alaska

By:  Mary Schneider

Based on the current load factor for air traffic between ANC and ADK my company has determined that it is not economically feasible to conduct these operations even with the support of an Essential Air Service contract. I therefore regret to inform you that Jetstrearn Aviation is removing their proposal to supply service to the Adak community. Thank you for all your help and consideration in this matter.

By: William Ryan

The fact of the matter is that no carrier has submitted an EAS proposal that is fully consistent with the CAB determination. I This is because that Order is hopelessly out of date, and has no bearing on the current economic realities and service needs at Adak. At the time of the CAB determination, in the early 1980s, Adak was a thriving military base, with over 5,000 residents. Today, Adak's population has dwindled to only a few hundred. Adak cannot possibly support 5 weekly round-trip Anchorage flights with large aircraft. Recognizing this fact, no carrier has submitted a proposal that is fully compliant with the EAS determination -- and it is now the Department's responsibility to select the best service proposal alternative that meets the actual needs of the community at a reasonable cost to taxpayers.

The Aleut Corporation may prefer a gold-plated large jet proposal to satisfy its corporate desires, e.g. "[Aleut] has a very sizable economic interest in [air transportation at Adak]. " However, there is no public interest rationale for spending extravagant sums of taxpayer money on a proposal to benefit this private enterprise -­when PenAir has offered a perfectly viable alternative to serve Adak's public service needs at a fraction of the cost. Aleut is free to charter its own aircraft if it demands large jet service -- a luxury enjoyed by few Alaskan communities and none as tiny as Adak.

Alaska Airlines' large jet proposal is ill-suited to the current size of the Adak community and would require an incredible $1,651,411 in annual subsidy -- or, stated another way, over $8,200 for every Adak resident. PenAir's lowest cost proposal would provide over twice the frequency of service at less than one fourth the subsidy cost.

Counsel: Alexander Van der Bellen

Essential Air Service at Adak, Alaska

The commitment of Evergreen International Airlines to establish passenger jet service to the community was not fulfilled, as committed. Commercial and community interests^-have missed opportunities from the failure of Evergreen International to meet the EAS commitment 'set forth in the order of naming Evergreen International the designated carrier. The proposal from Alaska Airlines to implement service to Anchorage - Adak - Anchorage with an intermediate stop, using a B737-200 combination passenger and freight aircraft, is responsive to the Order Requesting Proposals. We believe the ability to move seafood and large parcels of freight and mail is essential.

By:  Vince Tutiakoff

Essential Air Service at Adak, Alaska

According to our calculations, based on historical volumes our annual additional costs were Peninsula Air to provide this service would exceed $1 million, more than seven times what we are currently paying for service to Adak. As a result, the Postal Service would clearly be obliged to consider less costly alternatives for nonpriority service under our statutory option. Accordingly, we would suggest that mail revenues not be as­sumed in the calculation of Peninsula Airway's projected revenues pursuant to 14 CFR 271.5(c).

Counsel: United States Postal Service, William Jones

Essential Air Service at Adak, Alaska

Alaska Airlines, Inc. is submitting this letter in response to Peninsula Airways' letter of September 16. As a preliminary matter, Alaska wants to make clear that PenAir is a valued marketing partner of Alaska's and that Alaska would normally refrain from commenting about the statements of a marketing partner. However, in this instance in which PenAir's letter contains misstatements as well as material omissions largely directed at Alaska, Alaska is compelled to respond and set the record straight.

Counsel: Squire Sanders, Marshal Sinick,  202 626-6000

The proposal from Alaska Airlines to provide service to Anchorage - Adak - with an intermediate stop in Dillingham, using a B737-200 combination passenger and freight aircraft, we believe is necessary. Thus, we encourage the Department of Transportation to appoint Alaska Airlines as the designated EAS carrier for Adak, Alaska.

By: Keith Martin

Essential Air Service at Adak, Alaska

The Postal Service should not now be heard to complain about the bush mail rates, which are derived in a wholly separate process from EAS carrier selection proceedings. Nor should the Department heed the Postal Service's improper request to discriminate against PenAir in this EAS proceeding because it is a bush carrier. The Postal Service should not be allowed to manipulate the DOT's EAS selection process, ostensibly for the purpose of subsidizing the Postal Service's own Adak mail obligations. Thus, the Postal Service advocates a lavish "mainline" jet proposal with lower postal rates, but which is clearly in excess of Adak's demonstrated EAS needs.

Counsel: Shaw Pittman, Alexander Van der Bellen

Essential Air Service at Adak, Alaska

Let's face it. PenAir is endeavoring to "satisfy its corporate desires" by using the EAS to be selected as the designated carrier and therewith overreach into the pocket of the U.S. mail system. Adak does not want nor need small airplanes dribbling mail into the community at the established Alaska by-pass mail "bush rate" let alone provide less than acceptable passenger service.  The Department should not fall for this maneuver. The Alaska by-pass mail system has a tendency to unduly cause a disparate decline in concomitant air service levels. (i.e.: passenger and freight services) Here again we see the problem of an air carrier (and in my opinion, the original Adak EAS carrier Evergreen International Airlines) boldly maneuvering to manipulate the EAS for reasons other than what EAS stands for.

The Alaska Airlines proposal is clearly the most cost effective. The Alaska Airline's proposal mostly satisfies the EAS level of service, which Adak is entitled to by law and sound reasoning.

By: David Jensen

Essential Air Service at Adak, Alaska

Alaska Airlines is seriously mistaken in criticizing PenAir for "the strong dissatisfaction which the Adak community had expressed with PenAir's Metro 23 service." Those long outdated complaints related not to PenAir's current Metro 23 service at all, but rather to the small piston engine Piper Navajo aircraft that PenAir was initially forced to use at Adak due to FAA restrictions. PenAir's Metro 23's operate under the most stringent Part 121 operating rules. At the time of the Reeve service suspension, the lack of remote communications availability prevented PenAir from operating its Metro's into Adak under Part 121. However, PenAir stepped up to the plate and invested tens of thousands of dollars in remote communications equipment, so that it could bring Part 121 Metro service to the Adak community.   PenAir wishes to put an end, here and now, to Alaska Airlines' erroneous assertion that the Department would need to select an additional, subsidized all-cargo carrier on top of PenAir.

Counsel:  Shaw Pittman, Robert Cohn, 202-663-8060, robert.cohn@shawpittman.com

Essential Air Service at Adak, Alaska

While Peninsula Airways has been attempting to fulfill the air transportation needs of Adak, I see an increase in the need for cargo capacity. AEC's customers, primarily fishing interests, are reliant on efficient and effective transportation. The customers come to Adak for fuel, supplies, services such as crew changes and parts and repair needs. The ability to do these and other operations is directly dependant on reliable air transportation. I believe that Alaska Airlines is the most responsive bidder and best able to meet the needs of the growing community of Adak.

By: Sandra Moller

Essential Air Service at Adak, Alaska

We have negotiated service agreements with four carriers: Alaska Airlines, Evergreen International, Peninsula Airways, and Jetstream Aviation. We have already received a number of community comments, including those of the City of Adak, the Adak Reuse Corporation, Aleut Enterprises, and the Aleut Corporation, all supporting Alaska Airlines. My purpose in writing you now is to advise you of the results of our negotiations, and to afford you the opportunity to submit any final comments before making our recommendation to the Assistant Secretary for a decision.

We request that you review this information and submit any comments you may have on the carrier selection decision as soon as possible, but in any event, by November 31.

By:  Dennis DeVany

Essential Air Service at Adak, Alaska

During negotiations on this bill my staff and I repeatedly met with the Postal Service in an attempt to reach a consensus on this important legislation. It was understood by all parties throughout those negotiations that "service", within the context of this section, includes the costs associated with the carriage of that mail. As with any other customer in the United States, cost is always a factor in selecting a particular product or service. Cars, appliances, and airline tickets are examples of this phenomenon, Customers balance the relative quality of a product in relation to its costs and those of its competitors. This should also apply to mail. In fact, the entire Act is replete with direct references and indirect implications that cost and service are often times inseparable from the perspective of the Postal Service. Without this understanding the Postal Service would never have agreed to this section or the passage of the entire Act, The Postal Service was simply not going to allow itself to be forced to tender mail to any particular carrier at the behest of a Department without a chance to review the quality of service being provided by the carriers and the cost associated with that service.

As the lead author of this bill in the Senate, and the creator of the original bypass mail system 32 years ago, I have a unique interest in making sure the provisions of this Act are properly interpreted by all parties. I hope your Department will see fit to properly interpret this provision and that you will work with the Postal Service to improve all services - passenger and mail - to Adak and other BAS communities. I would be happy to discuss this further with you personally if necessary.

By:  Senator Ted Stevens

Essential Air Service at Adak, Alaska

Adak is an anomaly and what happens at Adak will not have any far-reaching consequences for the Postal Service in delivering mail elsewhere in Alaska. This is because no other Alaskan community -- or indeed any community in the United States - - with fewer than 100 residents has large jet service. The fact that Adak happens to have a heavily subsidized mainline carrier is a decades-old relic from when Adak was a thriving military base with over 5,000 residents. PenAir's proposal is right-sized for the current Adak marketplace and is the fiscally responsible choice, regardless of whether EAS subsidy cost alone or mail rates too are included. PenAir is Adak's current EAS carrier and has a proven track record of high quality and consistently reliable service. The cabin class Saab 340 aircraft that PenAir is proposing will provide even greater passenger convenience and comfort at substantially less government cost than any competing proposal.

Counsel: Shaw Pittman, Robert Cohn

Essential Air Service at Adak, Alaska

We thank PennAir and Orin for stepping in December 2000 to cover air service in Adak when no one else offered to after Reeve folded up. But we can't keep thanking him forever! It's time for Adak to grow and become a serious contender in the Alaska fisheries. It cannot do so with the small planes PenAir has.

By: Agafon Krukoff

PenAir has no standing to suggest that the EAS determination for aircraft size should be reduced from large to small. There is no reason to change the size of aircraft level of service determination. PenAir is not an eligible bidder and should not even be considered for EAS. The PenAir proposal to substitute small aircraft for the EAS subsidy at Adak then to supplement the subsidy with the "bush mail" rate would be a major overreach; a major disservice to Adak; and extremely costly in the whole.  The community support for the Alaska Airlines proposal is overwhelming. The remoteness of Adak even by Alaska standards is justification for the higher level of service. The growth potential and continued regional airfield operations require large aircraft. The community cannot gamble on the "what happens if a bush carrier does not receive bush mail revenue."

By:  Aleut, David Jensen

Our City Council would also like to advise that the deadline for the EAS carrier be held firm. We feel strongly that EAS to Adak would be more efficient if the time frames for the carriers are to be met as written in each proposal; we believe this would also benefit our Community. If the awarded airline fails to meet the deadline, the EAS issue will be immediately re-evaluated.

By: Keith Martin

PenAir has generally refrained from answering civic comments, which have been biased in favor of large jet service -- so long as the Department of Transportation is willing to pay the large subsidy cost of such operations. Neither Aleut nor any other commenting party has indicated they would be willing to underwrite the service or pay greatly increased fares to have a large jet.  The fact of the matter is that market size drives aircraft size, and not vice-versa. Unless the Department is willing to commit to an enormous and further escalating subsidy at Adak, it must select a carrier with a proposal that is rationally sized to the marketplace. Whether the number of people living on Adak is 100, or twice that number, at any given time is immaterial. The simple truth is that Adak is now far too small -- by several orders of magnitude -- to support a large jet.

Counsel:  Shaw Pittman, Robert Cohn, 202-663-8000

Essential Air Service at Adak, Alaska

As stated in a previous correspondence, the Aleutians East Borough supports the City of Adak's choice of Alaska Airlines to provide Adak EAS because it was the only responsive proposal to the request for proposals, The Alaska Airlines proposal was the only one to provide an aircraft to carry the passengers, freight and mail as specified in the request for proposals. Furthermore, the Alaska. Airlines proposal is the only reasonable proposal given the distance and weather conditions in the Aleutians. The ;possibility of having Alaska Airlines stop in Cold Bay would be beneficial in that it would begin the process of returning large aircraft, per the Cold Bay EAS, to the Alaska Peninsula as well as providing the possibility of subsidy free service to Adak in the future.

By: Robert Juettner

Essential Air Service at Adak, Alaska

Putting aside all of the legal arguments about the recent bypass mail statute and even the EAS definition of basic air service, there is one policy and fairness point which appears to have gotten lost in the deluge of filings and counter-filings. It was only fifteen months ago that DOT found that Adak deserved twice weekly combi-jet service at an annual cost of $1.5 million. PenAir along with several other carriers participated in that proceeding. The combi-jet service proposal was the unanimous choice of the Adak community, and despite arguments to the contrary from PenAir and several other carriers who participated in that proceeding, the community's choice was accepted by DOT. For reasons not relevant to the present proceeding, the carrier selected never acquired the combi aircraft that it promised and never inaugurated passenger jet service. In the intervening 15 months nothing has changed which would support depriving Adak of the two-year period of combi-jet service that it was promised in the year 2000. We understand why certain others would prefer that Adak be denied the very service which the DOT has already decided the community deserves and which it has failed to receive through absolutely no fault of its own. That, however, would be fundamentally unfair as well as, on the basis of the statutory provisions quoted above, unlawful.

By: Roger DuBrock

Essential Air Service at Adak, Alaska

In submission number 62 to this Docket, the US Postal Service (USPS) posits an interpretation of 39 USC 5402(g)(6)(A), as recently enacted by the Rural Service Improvement Act of 2002, PL 107-206, that, if applied generally to mail service in Alaska, could lead to increased costs for Essential Air Service in Alaska. In that interpretation, USPS construes the term "service" to include cost of service. Although the USPS interpretation has no effect on this case -­the selection I have made does not pose any conflict based on mail rate differ­entials - I discussed with USPS the potential for conflict between our two pro­grams in Alaska, at a meeting in my office on December 4, 2002 from 2-3 PM ET. USPS also raised some concerns about international mail.

By: Read Van de Water

Essential Air Service at Adak, Alaska

We have decided to select Alaska Airlines. The proposals of Jetstream and Evergreen lack community support and require similar or more subsidy than the other applicants, and so can be readily rejected. However, the decision between Peninsula and Alaska Airlines requires us to consider conflicting carrier-selection criteria: Peninsula requires significantly less subsidy than Alaska Airlines, ranging from $749,095 to $1,247,547 less, depending on which option were selected. On the other hand, Alaska Airlines is strongly favored by the community. In non­Alaska communities, the Department would nearly always select the lower-cost alternative when the subsidy differences are this great. Also, two of Peninsula's options would provide service with cabin-class Saab 340 aircraft, equipment larger than most subsidized communities receive, and all of Peninsula's options would provide more frequent service than Alaska Airlines contemplates.

Given the very substantial level of subsidy required to support this service, if traffic does not respond or the level of subsidy support needed does not decline, we will review the issue towards the end of the one-year contract period.

By: Read Van de Water

Essential Air Service at Adak, Atka, and Nikolski, Alaska

Order 04-3-18
OST-00-8556 - EAS at Adak, AK
OST-95-363 - EAS at Atka Island-Umnak Island

Issued and Served March 17, 2004

Order Requesting Proposals

By this order, the Department is requesting proposals from carriers interested in providing essential air service (EAS) at Adak, Atka, and Nikolski, Alaska, for a new two‑year period, with or without subsidy. The order reflects new, streamlined procedures for processing such proposals.

Under normal procedures when nearing the end of a subsidy rate term, absent any expected interest from carriers other than the incumbent, we have negotiated a new subsidy rate with the incumbent and issued an order tentatively reselecting it for a new rate term at the agreed rate, while directing other parties to show cause why we should not finalize our tentative decision. Other carriers wishing to submit competing proposals are invited to do so in response to the show-cause order. If any such proposals are filed, we process them as a competitive case.

In this instance, however, we expect that other carriers will be interested in providing service at Adak, Atka, and Nikolski. In order to give the communities and ourselves a full array of service/subsidy options for consideration, we have decided to forgo negotiating new rates with Peninsula Airways (for Atka and Nikoiski) and Alaska Airlines (for Adak) at this time and instead proceed directly to a competitive carrier selection case by requesting proposals from all interested carriers, including the incumbents.

By: Karan Bhatia

OST-00-8556 - EAS at Adak, AK
OST-95-363 - EAS at Atka Island-Umnak Island

March 22, 2004

Re: Request for Proposals

On behalf of Alaska Airlines, Inc., we are requesting a 28 day extension of time, ie., from April 16 to May 14, for the submission of EAS proposals for service to Adak, Atka and Nikolski. This request is occasioned by not only the press of business under which Alaska's Planning staff finds itself, but also by the new "best and final" procedure contemplated by the RFP. The new procedure places far greater emphasis on each applicant carrier at the outset formulating the optimal proposal or series of proposals. The elimination of the negotiation phase under which carriers could previously revise their initial proposals requires immediate consideration of multiple options. Among those considerations unique to the State of Alaska are the variable revenue streams which depend on the routing of mail as well as the category of aircraft used for mail carriage.

Above all else, the extraordinary isolation of the three points under consideration make "getting it right" all the more critical, For all of the above reasons, Alaska believes that a 28 day extension until May