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OST-2000-7068

http://www.welcometoalaska.com/Communities/akutan.htm

Peninsula Airways, Inc. d/b/a Penair

PenAir has determined that it cannot continue to operate this service economically without a subsidy, particularly in light of the extremely high costs associated with operating and maintaining the Grumman Goose aircraft. Since Akutan does not have a land runway, it must be served by an aircraft capable of landing on the water. The twin-engine Goose is a "flying boat," which is uniquely able to provide safe operations to connect Akutan to Dutch Harbor and other communities in Alaska. Unfortunately, PenAir cannot continue to sustain the losses associated with operating this service to Akutan absent a subsidy, and therefore, has reached the difficult but necessary decision to terminate service to the Akutan.

Counsel:  Shaw Pittman, Sheryl Israel, 202.663.8060

Peninsula Airways, Inc. d/b/a Penair

By:  Bradley Mims

Peninsula Airways, Inc. d/b/a Penair

By:  Penair, 907.243.2485, www.penair.com  

Peninsula Airways, Inc. d/b/a Penair

Order 2000-7-21 is extending Peninsula Airways' service obligation at Akutan, Alaska, for another 30 days, through August 7, 2000.

By:  Randall Bennett

Peninsula Airways, Inc. d/b/a Penair

Please accept these comments in response to your June 29, 2000 opportunity to comment on Essential Air Service for Akutan, Alaska. As you know, service to Akutan has been problematic for some time, considering there is neither a land-based airport nor breakwater protected harbor and air service is via float capable aircraft into a relatively unprotected open harbor. Nonetheless, continuing to connect Akutan to our national air service network is critical for life safety and enhancement of commerce in that area. In written correspondence, both the City of Akutan and the Aleutians East Borough lamented high airfares in the Akutan market and expressed support for EAS and runway construction. Toward these ends, the State of Alaska would encourage an Essential Air Service provision that best mirrors the historic need for airlift be provided to this community. It appears PenAir proposal Option A-1 best suits that level, however we do not have those records here in this office, as your office should, to determine a specific service level decision.

As part of the specific subsidy level, we think it is also important to recognize the type of aircraft that is best suited to this market. Your office should have data on the types of aircraft that have been used for service to Akutan in the past (we know both the G21 Grumman Goose and the Cessna 208 Caravan have been used). We understand PenAir is proposing to provide this service with a piston engined G21 and, in the unprotected waters of the Akutan Harbor, we suspect this displacement hull aircraft has advantages for service over float-equipped aircraft, such as the C208, where operating efficiency may be higher, but mission completion would suffer. Operating a 50-year-old aircraft in a salt-water environment in commercial revenue service is very likely more expensive than some other aircraft, but considering the unique service requirements for Akutan, consideration of a higher subsidy rate to accommodate the higher operating costs of this aircraft appears warranted.

By:  State of Alaska, Paul Bower

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 Akutan, Alaksa

Appendix C shows traffic levels at Akutan for the past three years. Given the declines in passenger and freight traffic -- mail has remained constant -- Peninsula's 10-round-trip-a­week option will fully accommodate all of the recent traffic levels, even taking into account seasonality and the severe directional imbalance of mail and freight. Peninsula continues to provide Akutan with reliable essential air service and we find that both the service and subsidy levels are reasonable. In view of the above, we will tentatively reselect Peninsula to provide EAS at Akutan with 10 nonstop round trips a week to Dutch Harbor at the agreed-to annual subsidy of $361,200 for an additional two-year period beginning May 1, 2003, and ending April 30, 2005. For the period from when the last contract expired, September 1, 2002, through April 30, 2003, we will compensate Peninsula at the agreed-to rate of $524,765 for 13 round trips a week.

Competing proposals for Akutan should contemplate service to Dutch Harbor, or any other appropriate hub city, at levels commensurate with those tentatively selected here. In order to help carriers in their passenger and revenue forecasts, we have included historical traffic data in Appendix C.

By: Read C. Van de Water

Essential Air Service at Akutan, Alaska

Order 2005-4-4
OST-2000-7068

Issued and Served April 6, 2005

Order Requesting Proposals

PenAir has provided service to Akutan for a number of years. In the last carrier selection order, we decreased the required service level from thirteen round trips per week to ten, because of traffic decreases. Since then, traffic at Akutan has rebounded somewhat, such that an increase in capacity of approximately ten percent, or one flight per week with a 9‑seat aircraft, appears in order. Akutan is unusual in that its level of traffic would normally support subsidy‑free essential air service. However, PenAir's Grumman Goose that serves Akutan, while very reliable, has very high operating expenses because of its advanced age. In addition, Akutan's extreme isolation increases the cost of serving it because it is very distant from any carrier's maintenance and pilot bases and headquarters.

By: Karan Bhatia

May 5, 2005

Proposal of Peninsula Airways

PenAir is the current provider of essential air service at Akutan. PenAir has provided essential air service to Akutan for over five years and was last selected by the Department to provide subsidized essential air service to Akutan in Order 2003-4-1. PenAir wishes to be reselected to provide essential air service to Akutan for an additional two year period. Given PenAir's knowledge of and long history of serving the community, PenAir should be strongly favored to be reselected in this proceeding to continue to provide Akutan with high-quality essential air service. Pen-Air is Alaska's premier bush operator and is extremely well qualified to continue to serve Akutan.

PenAir's proposal involves the operation of year-round essential air service to Akutan with 11 weekly nonstop roundtrip flights between Akutan and Dutch Harbor, using Grumman G-21 Goose aircraft configured with 9 seats. This represents an increase of one weekly flight over PenAir's existing subsidized pattern of service. PenAir's proposal requires subsidy in the amount of $350,381 per year.

Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999, recohn@hhlaw.com

Order 2005-5-12
OST-2000-7068

Issued May 19, 2005 | Served May 19, 2005

Order Reselecting Carrier

Because only one carrier, PenAir, submitted one proposal ‑‑ and for an increased service level at that ‑‑ we did not formally solicit comments from the community or state, but merely informed them of the proposal. As we have noted before, subsidy is required because of the high cost of operating to Akutan, caused by the community's extreme isolation, 759 miles from Anchorage, and because Akutan requires service with seaplane aircraft. We find the proposed subsidy rate reasonable for the service to be provided.

By: Karan Bhatia

Order 2007-1-13
OST-2000-7068

Issued and Served January 24, 2007

Order Requesting Proposals

Essential air service for Akutan requires a minimum of two round trips per week with small aircraft (10 or fewer seats) to either Dutch Harbor or Cold Bay. Service to Dutch Harbor must be operated on a nonstop basis, while service to Cold Bay may have up to two intermediate stops. Because of the need to accommodate historical traffic and the directional imbalance of freight and mail, for the last several two‑year contracts we have authorized subsidy for significantly more service than required by the EAS determination. Proposals should match capacity with demand in a reasonable manner. We note that the current contract is for eleven nonstop round trips per week to Dutch Harbor with a Grumman Goose. Because Akutan has no landing strip, seaplane service is required.

Akutan is unusual in that its level of traffic would normally support subsidy‑free essential air service. However, PenAir's Grumman Goose that serves Akutan has very high operating expenses because of its advanced age. In addition, Akutan's extreme isolation increases the cost of serving it because it is very distant from any carrier's maintenance and pilot bases and headquarters.

By: Todd Homan

February 21, 2007

EAS Proposal of Peninsula Airways

PenAir's proposal involves the operation of year-round essential air service to Akutan with 11 weekly nonstop roundtrip flights between Akutan and Dutch Harbor, using Grumman G-21 Goose aircraft configured with 9 seats. This represents the same pattern of service PenAir currently provides under the existing EAS designation. PenAir's proposal requires subsidy in the amount of $556,155 per year.

PenAir is the current provider of essential air service at Akutan. PenAir has provided reliable and cost‑efficient essential air service to Akutan for over seven years.

Counsel: Hogan & Hartson, Robert Cohn, 202-637-4999

Order 2007-3-3
OST-2000-7068

Issued and Served March 9, 2007

Order Reselecting Carrier

Because PenAir’s contract is due to expire on April 30, we requested proposals to provide subsidized service at Akutan by Order 2007-1-13, January 24, 2007. Only PenAir submitted a proposal, and it submitted only one option. The carrier proposes to continue to provide the same level of service it currently provides, as described above, and requests $556,155 annual subsidy -- an increase of $205,774.

By this order, we are reselecting Peninsula Airways, Inc. to provide subsidized essential air service at Akutan Alaska, for the period from May 1, 2007, through April 30, 2009, at an annual subsidy rate of $556,155.

By: Andrew Steinberg

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