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OST-95-405

Intra Alaska Class Service Mail Rates 

OST-95-429 & OST-95-405 | May 5, 1997

Equalization Notice of Jim Air, Inc. 

JIM AIR INC., a certified air carrier currently authorized to transport mail, hereby gives notice of its intent to equalize its rates between ANCHORAGE and CORDOVA with the lower level(s) paid to another carrier or combination of carriers in the market, effective MAY 28.1997.

By:  Jim Air, James Bern 

Intra-Alaska Class Service Mail Rates (Mainline and Bush Rates)

OST-95-429 | OST-95-405 | May 13, 1997

Rate Equalization Notice of Taquan Air Service

Taquan Air Service, Inc. (H7), a certificated carrier authorized to transport United States mail, hereby gives notice of it election to equalize its mail rate, between and among Ketchikan, Wrangell and Petersburg, Alaska, for all categories of mail, with the lowest levels paid to other carriers or combination of carriers in the markets, regardless of routing, elective immediately.

By: Mark Glaspey, General Manager, 907-225-1010

Intra-Alaska Class Mail Rates (Mainline and Bush Rates)

OST-95-429, 95-405 | July 11, 1997

Rate Equalization Notice of Yute Air

Notice of its intent to equalize its mail rates between Anchorage and Kenai, for all classes of mail with the lower levels paid to other carriers or combinations of carriers in the market effective immediately.

By: Matthew Johnson, Cargo Manager, 907-243-1011

Intra-Alaska Bush Service Mail Rate / Intra-Alaska Class Service Mail Rate (Mainline Rate)

Order 97-9-37 | OST-95-405 | OST-95-429 | Issued October 3, 1997 | Served October 3, 1997

Order to Show Cause

By this order, the Department proposes to: (1) change the methodology it currently uses to update the Alaska Bush and Mainline mail rates; (2) change the frequency of the Alaska Mainline rate updates from twice a year to once a year; and (3) adjust the procedural schedule for responses to Alaska mail rate show-cause orders by eliminating the provision for Notices of Objection and extending the Answer period to 45 days after the service date of the Show Cause Order.

By: Charles Hunnicutt

Intra-Alaska Bush Service Mail Rate / Intra-Alaska Class Service Mail Rate (Mainline Rate)

Order 97-11-20 | OST-95-405 | OST-95-429 | Issued November 12, 1997 | Served November 18, 1997

Order

By this order the Department makes final its tentative findings and conclusions set forth in Order 97-9-37, served October 3, 1997, and (1) changes the methodology the Department currently uses to update the Alaska Bush and Mainline mail rates; (2) changes the frequency of the Alaska Mainline mail rate updates from twice a year to once a year; and (3) adjusts the procedural schedule for responses to Alaska mail rate show-cause orders by eliminating the provision for Notices of Objection and extending the Answer period to 45 days after the service date of the Show Cause Order.

By: Charles Hunnicutt

Intra-Alaska Bush Service Mail Rates

Order 98-1-25 | OST-95-405 (44445) | Issued Janaury 30, 1998 | Served Janaury 30, 1998

Order to Show Cause Establishing Final Bush Service Mail Rates

By this order the Department proposes to establish new intra-Alaska bush service mail rates for the period April 1, 1998, through March 31, 1999. The rates that are currently in effect were established by Order 97-1-12, served January 22, 1997, for the period April 1, 1997, through March 31, 1998. Those rates will remain in effect as final rates through March 31, 1998, or until a final order is issued with respect to the rates proposed here, whichever is later.

• Appendix A: Bush Mail Rates
• Appendix B:  Cost Adjustment Factors
• Appendix C:  Summary of Carriers' Fuel Portion of Linehaul Expenses
• Appendix D:  Total Departure Related Expense
• Appendx E:  General and Administrative Expense

Appendix F:  Regression Results of the Nonfuel Linehaul Unit Costs, YE 9/30/89 through 9/30/97

By:  Charles Hunnicutt

Intra Alaska Bush Service Mail Rates

Order 98-3-28 | OST-95-405 | 44445 | Issued March 27, 1998 | Served April 1, 1998

Order Establishing Final Bush Service Mail Rates

By this order the Department is setting final intra-Alaska bush service mail rates for the period April 1, 1998, through March 31, 1999, or until further order of the Department,whichever occurs later

Appendix A - Rates

By: John Coleman

Intra-Alaska Mainline Service Mail Rates

Order 98-7-3 | OST-95-405 | Issued July 1, 1998 | Served July 8, 1998

Order to Show Cause Establishing Mainline Service Mail Rates

By this order the Department proposes to establish new intra-Alaska mainline service mail rates for the period October 1, 1998, through September 30, 1999. The rates that are currently in effect were established by Order 98-1-9, served January 12, 1998, for the period January 1-September 30, 1998. Those rates will remain in effect as final rates through September 30, 1998, or until a final order is issued with respect to the rates proposed here, whichever is later.

• Appendix A: Intra-Alaska Mainline Class Service Mail Rates
• Appendix B: Intra-Alaska Mainline Class Service Mail Rates Cost Adjustment Factors
• Appendix C: Aircraft Operating Expenses in Scheduled Service (Year Ended March 31, 1998)
• Appendix D: Calculation of the Linehaul Portion of the 10-Year Moving Average

By: Charles Hunnicutt

Intra-Alaska Bush Service Mail Rates

Counsel:  Bagileo Silverberg, Robert Silverberg

Alaska Central Express, Inc.

Counsel:  Bagileo Silverberg, Robert Silverberg, 202.944.3300

Intra-Alaska Bush Service Mail Rates

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

Intra-Alaska Bush Service Mail Rates

Order 99-4-11, sets final intra-Alaska bush service mail rates for the period April 12, 1999, through March 31, 2000, or until further order of the Department, whichever occurs later.

By:  John Coleman

Intra-Alaska Bush Service Mail Rates

By:  Office of Aviation Analysis

Intra Alaska Class Service Mail Rates 

Order 2000-1-10 proposes to establish new intra-Alaska bush service mail rates for the period April 1, 2000, through March 31, 20001. The rates that are currently in effect were established by Order 99-4-11, served April 12, 1999, for the period April 12, 1999 through March 31, 2000. Those rates will remain in effect as final rates through March 31, 2000, or until a final order is issued with respect to the rates proposed here, whichever is later. All interested persons are directed to show cause why the Department should not adopt the foregoing tentative findings and conclusions and fix, determine and publish the proposed final rates specified. Objections due March 3, 2000. 

By:  Bradley Mims

Intra-Alaska Class Service Mail Rates 

Counsel: Sanders Dempsey, Marshall Sinick, 202.626.6600

Alaska Central Express, Inc.

By:  Alaska Central, Bob Anderson

Intra-Alaska Class Service Mail Rates 

By:  United States Postal Service, Michael Vandamm

Intra-Alaska Class Service Mail Rates; Alaska Central Express, Inc.

By:  Alaska Central, Bob Anderson, and Silverberg Goldman, Robert Silverberg

Intra Alaska Class Service Mail Rates 

Order 2000-4-1 is vacating the tentative rate proposed in Order 2000-1-10 in view of the omission of Yute Air Alaska's (Yute) data from that order. Objections due to Show Cause Order April 17, 2000. 

By:  Bradley Mims

Intra-Alaska Class Service Mail Rates; Alaska Central Express, Inc./Larry's Flying Service, Inc.

By:  Larry's Flying Service, Jean Chenaille

By:  Arctic Transportation Services, John Eckels

By:  Tanana Air, Fred Ciarlo

Intra-Alaska Class Service Mail Rates; Warbelow's Air Ventures, Inc.

By:  Warbelow's Air Ventures, Arthur Warbelow

Intra-Alaska Class Service Mail Rates 

As discussed above, the Postal Service believes that the Department has acted in an appropriate manner, both in its decision to include Yute, a carrier that operated as a bush service carrier for the entire period used for calculating the rate update, and in the methods used by the Department to estimate Yute's costs for the period. Moreover, the Postal Service believes that the Department has acted appropriately in making its proposed rates final, while allowing the flexibility to make adjustments to-the rate in the upcoming year.

By:  United States Postal Service, Michael Vandamm

The Postal Service has consistently advocated that all carriers who participate in the transportation of mail "make up the competitive marketplace that ultimately determines the cost of operations" and that the exclusion of a carrier be done with great care. The Postal Service believes, however, that the Department should adhere to its past precedent and examine and verify that the new carriers share sufficient operational cost, aircraft type (consistent with the requirements of the rate type), and route characteristics with the mainline carriers currently being used in the update methodology.

By:  United States Postal Service, Michael Vandamm

Intra-Alaska Class Service Mail Rates 

By:  M & C Transportation Management, Hank Myers

Intra-Alaska Class Service Mail Rates

By:  M & C Consultants, Hank Myers

Intra-Alaska Class Service Mail Rates

By:  United States Postal Service, Michael Vandamm

Intra Alaska Class Service Mail Rates 

By:  Bradley Mims

Intra Alaska Class Service Mail Rates 

On March 2, 2000, the Postal Service filed an objection to Order 2000-1 -10 tentatively updating bush mail rates, asserting that the Department's mail update procedure is methodologically flawed. Essentially, the Postal Service argued that the Department should update linehaul rates based on indices that reflect the historical changes in speed and capacity of the aircraft used, and terminal rates on a basis that recognizes, for example, the significant difference in size between a twin-engine Piper Navajo and a single-engine Cessna 207. On April 1, the Department issued Order 2000-4-1 indicating the Postal Service had raised fundamental questions beyond the scope of a simple rate update. We updated the rates in accordance with past update procedures, but directed the parties to meet with Department staff to discuss the issues raised by the Postal Service. On May 9 and 10 a number of carriers met in Anchorage with representatives of the Department of Transportation and the Postal Service. A synopsis of that meeting is included as an attachment.

By:  Chief EAS and Domestic Analysis, Dennis Devany

Intra-Alaska Class Service Mail Rates

By:  Bradley Mims

Intra-Alaska Class Service Mail Rates

Order 2000-8-14 proposes to establish new Intra- Alaska mainline mail rates for the terminal element for the year ending September 30, 2001, and non-fuel linehaul costs for the same period, which when combined with fuel costs for the quarter ending June 30, 2000, will allow us to set linehaul rates as well. The rates that are currently in effect were established by Order 99-7-16, finalized by Order 99-9-13, for the year ending September 30, 2000, and updated for quarterly fuel adjustments by Order 2000-6-5, or until a final order is issued with respect to the rates proposed here, whichever is later

By:  Francisco Sanchez

Intra-Alaska Class Service Mail Rates

By:  Alaska Air Carriers Association, John Eckels

Intra-Alaska Class Service Mail Rates

By this order the Department is decreasing the linchaul portion of the Intra-Alaska bush mail rates by 1.60% from the current rate, effective October 1, 2000, to reflect recent changes in fuel expenses, consistent with the methodology established in Order 2000-5-30.

Order 2000-5-30 stated that we would continue this quarterly update of fuel until further Department action. Since the carriers' traffic and financial data are to be reported 45 days after the end of the accounting period, we will continue to make quarterly adjustments with a one-quarter lag between the availability of the data and the effective date of the rate, but will not make any changes to non-fuel costs. Order 2000-6-15 updated the rate for quarterly fuel expenses for the preceding quarter, effective July I through September 30, 2000. The data in Appendix C show that fuel costs have decreased to $76.69 per block hour from the $83.56 rate Order 2000-6-15. This produces a 1.60% decrease in the overall linehaul mail rate as shown in Appendix A. The terminal portion of the mail rate is, of course, unaffected by our update of the linehaut for fuel costs. The next adjustment for fuel costs would be based on data for the quarter ended September 30, 2000, and would be effective for the period January 1, 2001, through March 31, 2001.

By:  Francisco  Sanchez

Intra-Alaska Class Service Mail Rates

By:  U.S.P.S., James Nawrot

Intra-Alaska Class Service Mail Rates

By:  Francisco  Sanchez

Intra-Alaska Class Service Mail Rates

By:  Francisco  Sanchez

Intra-Alaska Class Service Mail Rates

By:  Francisco Sanchez

Intra-Alaska Class Service Mail Rates

By:  John Coleman

Intra-Alaska Class Service Mail Rates; Alaska Central Express, Inc.

By:  Tanana Air, Fred Ciarlo

Intra-Alaska Class Service Mail Rates

By:  Village Aviation, Don King

Intra-Alaska Class Service Mail Rates

Although each topic is considered independently below, the Postal Service recognizes a few prevailing ideas that recur throughout this response. First, a full conversion to the new reporting system is essential to improving data quality and, therefore, the accuracy of updates. The Postal Service urges the Department to expedite the adoption of a new update system. Likewise, a resolution to the RTM vs. ATM debate should be a priority as a preliminary step in the progression necessary to address many of the issues discussed below. Reluctance to resolve these issues expeditiously has continued to harm the Postal Service, as can be seen with the latest bush Show Cause Order in which rates increased significantly as a result of this delay. In order to remedy this situation, the Postal Service strongly encourages the Department to organize a series of meetings that would allow all parties the opportunity to discuss these topics and seek consensus on potential solutions to the issues. The Postal Service believes that meetings will enable all parties to more readily seek and arrive at solutions to many of the issues discussed in the document as well as additional issues which each party considers to be of importance. Although the Postal Service hopes these meetings lead to resolution of these issues and obviate the need for a full-blown bush rate case investigation, the Postal Service reserves the right to initiate such an investigation at any time.

By:  United States Postal Service, Michael Mumbach

For several years now ATS has been fretting over how a changing industry was relating to the industry that was in place in 1986 when the current base rate and update methodology were established. Our concerns have not been that the base rates or the methodologies were necessarily incorrect or flawed but rather that some of the data that was going into the calculations were data that were flawed or foreign to bush mail hauling. This has been evidenced by ATS' comments to many of the past rate show cause orders. We would continue to assert that a prime example of this is an increase in the number of 19 seat type aircraft flying in mainline type service being included in the bush rate calculations. This type of flying is totally foreign to bush mail hauling, with its increase in dominance in the pool, it artificially reduces the terminal rate paid for bush mail because of the high departure rates in this type of service. We understand that these are bush aircraft, but the service is unarguably foreign to bush mail hauling. We believe that bush mail rates should be set based on bush mail hauling and thus not strictly on the size of aircraft. This argument may support the question of weighting the pool based on the amount of bush mail carried by each carrier.

There has been much discussion and argument on 'how do we fix the system'. Obviously this discussion assumes that something is broken. The Post Office has suggested that the rates are 'deleterious'. Carriers claim that there are too many carriers allowed to compete thus diluting shares and efficiencies causing financial hardship. Some say that because of all the competition the system encourages a fleet of 'little mosquitos' flying the skies. The passenger carriers say that they are the 'darlings' of the industry and that they should be given preference to the mail. The cargo carriers claim that their service is of equal importance to the system and that actually there is much more logic to the cargo carriers getting preference to the mail because that is their specialty. There is probably a degree of truth in all these statements, but none of them jump out as an overriding argument. We are not convinced that the answer lies in a discussion of rates, efficiencies, finances and who gets a bigger piece of the pie.

If our industry weren't such a safety sensitive industry, it would be logical to sit back and let the parties slug it out and assume that the system will some day find its equilibrium. It is our opinion that the issues involved are too critical to the issue of safety that there lies a better discussion and answers to the questions. Further, that the overriding cause to each and every issue, including the Post Office's claim that rates are too high, is the increasing number of carriers participating in the system.

By:  Arctic Transportation Services, John Eckels

Intra-Alaska Class Service Mail Rates

By:  Tanana Air, Fred Ciarlo

By:  Hageland Aviation Services, Michael Hageland

Intra-Alaska Class Service Mail Rates

By:  Paul Bowers

Intra-Alaska Class Service Mail Rates

By:  Susan McDermott

Intra-Alaska Class Service Mail Rates

By:  Arctic Transportation Services, John Eckels

By:  Village Aviation, Don King

Intra-Alaska Class Service Mail Rates

Overall, the Postal Service comments are very thoughtful and express many of the concerns of the Carriers. The proposals made by the Department are simply too complex to be adopted in an abbreviated procedure, and require extensive additional study. What is troubling is that attitude of the Postal Service toward its air carrier partners. It has no problem imposing burdensome new reporting requirements on the air carriers, or questioning every aspect of their operations, but is unwilling to even address its own impact on the cost of mail carriage. The Carriers appreciate the continuing dialogue with Postal officials, and believe a truly cooperative approach will be the best solution within the current ratemaking procedure.

What is puzzling is why such an extensive and detailed set of proposals has been raised, now for the second time, when there is little if any stated interest by the parties directly involved. Many superfluous and irrelevant topics have been raised as part of this process. For example, the Department used a letter from a single carrier complaining that the current mail rate and equitable tender procedures made it uneconomic for it to operate the type of aircraft the company desired as justification for making revisions in the rate adjustment method. It is the duty of the Department to recognize and measure the existing mail delivery costs, not to alter them to achieve some separate goal or regulatory philosophy. Both the Postal Service and Paul Bowers have supported this extra-legal activity through their Comments.

By:  Hank Myers

Intra-Alaska Class Service Mail Rates

By:  Susan McDermott

Intra-Alaska Bush Service Mail Rates

By:  Susan McDermott

Intra-Alaska Class Service Mail Rates

At the Alaska Air Carriers Association Annual Meeting on February 27, mainline carriers that currently carry non-priority bypass mail within the State of Alaska raised concerns about the Postal Service's interpretation of subsection (D)(ii). In addition, DOT has verbally informed the Postal Service that it no longer supports the position that a bush carrier should be allowed to equalize when it has not satisfied that subsection. After further review of this question, the Postal Service solicited comments from interested parties on March 12, 2001. The Postal Service considered those comments in making this decision.

After a lengthy and thorough review, and for the reasons stated below, the Postal Service finds no apparent legal basis upon which to continue the current implementation of United States Code § 5402(g)(1)(D)(ii). The Department of Transportation has concurred with this conclusion.

By:  United States Postal Service, J. Michael Krop

Intra-Alaska Mainline Class Service Mail Rates

By this order the Department proposes to establish new intra-Alaska mainline mail rates for the year ending September 30, 2002. The rates that are currently in effect were established by Orders 2000-11-9, which finalized the weighting of costs by amount of mail carried on each aircraft type, and Order 2001-4-12, Petition for Reconsideration, which corrected Order 2000-11-9 for revisions in Lynden Air Cargo's data, and Order 2001-6-10, the most recent quarterly fuel update. Those rates, except for the quarterly fuel update, will remain in effect as final .sates through September 30, 2001, or until a final order is issued with respect to the rates proposed here, whichever is later.

As shown in Appendix A, the projected linehaul rate is .32% higher and the terminal is 1.80% lower than the current rates. The small increase in the linehaul element is a result of NAC's and LAC's unit cost increases being offset by the addition for the first time of ACE's relatively low unit costs. The small decrease in the terminal charge is the combined result of a significant decrease in unit cost for NAC and ACE being offset by a significant increase for Alaska Airlines' unit costs. It is not clear what has caused the divergent changes in Alaska Airlines costs and that of the other two carriers, but it is worth noting that the carriers with decreased unit costs are both predominantly all-cargo operators while Alaska Airlines is a combi carrier.

By:  Susan McDermott

By:  John Coleman

Intra-Alaska Bush Service Mail Rates

By:  United States Postal Service, Samuel J. Schmidt 

Intra-Alaska Class Service Mail Rates 

Notice of Bidzy Ta Hot Aana Corp. d/b/a Tanana Air Service, of its intent to equalize between Fairbanks and Ruby, Alaska, with lower levels paid to another carrier or combination of carriers in the maket, effective August 13, 2001.

By:  Bidzy Ta Hot Aana Corp, Fred Ciarlo 

Notice of Arctic Circle Air Service, Inc. of its intent to equalize between Fairbanks and Galena, Fairbanks and Hughes, Fairbanks and Huslia, Fairbanks and Kaltag and Fairbanks and Nulato, with lower levels paid to another carrier or combination of carriers in the market effective immediately.

By:  Arctic Circle Air Service, Don Singsaas

Intra-Alaska Class Service Mail Rates

Order 2001-9-9 is making its reregular quarterly adjustments to the Intra-Alaska mainline and bush mail rates reflect the most recent quarterly changes in fuel costs, effective October 1, 2001, and reflecting fuel expenses for the QE June 30, 2001, consistent with the methodologies established in Orders 99-12-15 and 2000-5-30. Also, because the 45-day period for objecfions to the mainline rate tentatively proposed in Order 2001-7-1 has expired without objections, the order finalizes the rate along with the updated quarterly fuel cost.

By:  Susan McDermott

Intra-Alaska Class Service Mail Rates

By:  Susan McDermott

Intra-Alaska Class Service Mail Rates

We understand that there may well be a need for standardization of the reporting due to the fact that all of us over the years have been forced to develop our own ways of reporting the data. We do not believe that it is the right time to do this with all the turmoil going on in this country at the moment. Any of our employees who have been away during the last two weeks have not even managed to get home much less back to work! We also do not believe for one moment that a 30 day lead time for implementation is sufficient to effect anything other than total reporting chaos. It is true that we have had these databases in our hands for the better part of a year and it is also true that we have heard nothing other than an invitation to comment. The word "training" has never been mentioned. It will be argued that since the "old" reporting would remain ongoing there is nothing to be lost. On the contrary it would appear that without the proper training and lead time this "rush" of the T-100 will be chaotic and self-defeating.

If required to do so we will hire somebody else and comply. We always have. We do feel, however, that we would have to maintain two databases in order that the new system be tested for accuracy and such an activity will lead to more errors and doubled work.

This carrier is in total agreement with "maintaining the current bush mail rate until the review is complete, except for quarterly changes in the fuel element" and we would add and "until proven that the T- 100 system is better ( for the smaller carrier) than what we currently have".

By:  Larry's Flying Service, Jean Chenaille

Intra-Alaska Class Service Mail Rates

By this order the Department is making its regular quarterly adjustments to the IntraAlaska mainline and bush mail rates to reflect the most recent quarterly changes in fuel costs, effective January 1, 2002, and reflecting fuel expenses for the QE September 30, 2001, consistent with the methodologies established in Orders 99-12-15 and 2000-5-30.

By Order 2001-3-11 the Department established final mail rates for carriage of bush mail for the period April 1, 2001, through March 31, 2002, but provided for the regular quarterly update of the rate for changes in fuel costs. Order 2001-9-9 updated that annual rate to reflect QE June 30, 2001, fuel costs, and this order is again updating the annual rate to reflect QE September 30, 2001, fuel costs.

By Order 2001-9-9 the Department established final mail rates for carriage of mainline mail for the period October 1, 2001, through September 30, 2002, but provided for the regular quarterly update of the rate for changes in fuel costs. As provided in

Order 2001-9-9, we will now update the mainline rate to reflect QE September 30, 2001, fuel costs to reflect the most recent data available.  For the bush carriers, the data in Appendix C-Bush show that fuel costs for the bush have decreased to $90.35 per block hour from the $97.04 level in Order 2001-9-9. This produces a 1.39% decrease in the overall bush linehaul rate as shown in Appendix A-Bush. For the mainline carriers, the data in Appendix C-Main show that fuel costs for the mainline have increased to $.263993 per ATM from the $.250883 level in Order 2001-9-9. For the priority rate, this produces a 1. 96 % increase in the overall mainline linehaul mail rate as shown in Appendix A Main, and 1.95 % in the non-priority. The terminal portion of the mail rate is unaffected by our update of the linehaul for quarterly fuel costs for the bush and the mainline, but for easy reference we have included them in Appendices A-Bush and A-Main. The next quarterly adjustment for fuel costs for mainline and bush carriers would be based on QE December 31, 2001, data and would be effective for the period April 1, 2002, through June 30, 2002.

By:  Read Van de Water

Intra-Alaska Bush and Mainline Service Mail Rates

The Postal Service generally agrees with the findings in Order 2001-9-10, has reviewed the filings submitted by other interested parties, and hereby answers in support of the reporting changes proposed in the Order. Given the late acceptance of other parties, the Postal Service asks that this filing be accepted after the filing deadline.

The Postal Service wants to reiterate its support for the data reporting requirements set forth by the Department in Order 2001-9-10. The traffic and expense data being requested by the Department will help all parties, the carriers, the Postal Service, and the Department understand any need for improving the current rate update methodology. As the Postal Service has argued, and the Department has generally agreed, the current rate update methodology may not address changes in operations and costs in Alaska. Having this relevant data on an on-going basis will give all parties transparency into these changes.

The Postal Service agrees that the Department does not wish to unduly burden the carriers with these new reporting requirements. In fact, we fully support the Department's efforts to make these new reporting requirements, while doing away with redundancies, as simple and straightforward as possible. As this improved data becomes available over time, the Postal Service is interested in discussing rate update improvements with both the carriers and the Department in order to develop the most accurate rate possible.

Counsel:  USPS, William Jones

Counsel:  USPS, William Jones, 202.268.3002, wjones8@email.usps.com 

Intra-Alaska Bush and Mainline Service Mail Rates

By this order the Department makes final the revised reporting requirements on an experimental basis as discussed in order to Show Cause 2001-9-10. Also, the order freezes the bush rate, except for quarterly adjustments in fuel, subject to monitoring by the Department, until the review of the newly reported data can be concluded.

By:  Read Van de Water

Intra-Alaska Class Service Mail Rates

By:  Read Van de Water

Intra-Alaska Class Service Mail Rates

The lead paragraph of the Department Order 2002-1-4 states that the Department makes final the revised reporting requirements on an experimental basis as discussed in order to Show Cause 2001-9-10. Also, the order freezes the bush mail rate, except for quarterly adjustments in fuel, subject to monitoring by the Department, until the review of the newly reported data can be concluded. That Order was published on January 16, 2002. Now, three months later, the Department is Ordering a Show Cause Order as to why the Department should not discontinue quarterly adjustments in fuel.

By:  Fred Ciarlo 

Intra-Alaska Class Service Mail Rates

The Show Cause Order that proposed freezing the Alaska bush mail rates was issued on September 17, 2001. Although we have no facts to support the statement, we feel it is highly likely that the Order was drafted prior to September 11, 2001. Consequently there would have been no way for the drafters of the Order to have known what was in store for the country or the airline industry in particular.

In that same Show Cause Order the Department stated they were afraid that if the current methodology were to be continued that the resultant rates may be above cost. Not at the time, nor now, did this carrier have the information or analytical background to argue the point, so it is difficult for us, and we assume most carriers, to either refute or support those arguments. We can however tell you without a doubt that profits are far from exorbitant and many or most carriers may tell you that even slim profits are only a dream (we do understand that profits can be affected by factors other than rates).

By:  Arctic Transportation Services, John Eckles

Intra-Alaska Class Service Mail Rates

The lead paragraph of the Department Order 2002-1-4 states that the Department makes final the revised reporting requirements on an experimental basis as discussed in order to Show Cause 2001-9-10. Also, the order freezes the bush mail rate, except for quarterly adjustments in fuel, subject to monitoring by the Department, until the review of the newly reported data can be concluded. That Order was published on January 16, 2002. Now, three months later, the Department is Ordering a Show Cause Order as to why the Department should not discontinue quarterly adjustments in fuel.

By:  Fred Ciarlo

Intra-Alaska Bush and Mainline Mail Rates

Alaska Central questions to fundamental rational for the change in Department procedure and that is that fuel prices are no longer as volatile as they were in the recent past. The DOT has not presented any fuel cost data to demonstrate or otherwise validate its conclusion. Further, the increase in U.S. crude oil prices since the beginning of 2002 strongly suggests that pricing variations will continue to be observed in the market. Based on Department of Energy data, the price of a barrel of crude oil jumped from $17.06 in January 2002 to $25.39 in May.  The price of jet fuel is obviously related to the cost of crude oil and Alaska Central assumes that the financial data to be submitted by those carriers in each class on which the Department relies to calculate intra-Alaska mail rates will be reflective of this observed increase in the price of crude oil.

Perhaps, the Department’s observation regarding fuel prices was made based on the decline in the cost of crude oil experienced in the year 2001. While such a decline was experienced in the U.S. market, the fuel rate adjustment procedure was always intended by the DOT to be forward looking and was implemented to avoid the need for potentially large retroactive rate adjustments. Therefore, it is not relevant that calendar year 2001 experienced declines in crude oil prices since the theory supporting fuel price adjustments was to reflect changes in the price of fuel on a more real-time basis.

Counsel:  Silverberg Goldman, Robert Silverberg, 202.944.3300, rsilverberg@sgbdc.com

Larry's Flying Service, Inc. hereby files an objection to the proposal to freeze the fuel rate for the transportation of Intra-Alaska bush mail. In addition Larry's also files an objection to the continuance of the existence of the freeze of bush mail rates implemented at the introduction of the T-100 reporting introduced January 2002.  In our response to the show-cause regarding the implementation of the T-100 reporting system we objected to the new reporting requirements and projected the costs for implementation of this directive. We erred in our projection of these costs .... they turned out to be far higher and more time-consuming than we had originally anticipated. We did not know when we filed this objection that costs would be as high as they were. Many of the carriers have had to purchase new reporting programs at great cost and the training costs for using these programs has been high. We also pointed out that if bush mail rates were frozen at all ( during a short evaluation period) that the quarterly fuel adjustment be exempt. This order serves to rescind that agreement as well.

By:  Larry's Flying Service, Jean Chenaille

The Department's proposal, coming at a time of significant uncertainty over the future cost of fuel, should be rejected. The Department's proposal is troublesome; it adds another element of uncertainty to an already complex environment, even putting aside other well documented dislocating events of the past year. Indeed, the Department's order is not supported by any evidence and is contrary to the best interests of the Postal Service and the Alaska mainline and bush carriers. For these and other reasons, Northern Air Cargo, Inc. opposes the Department's proposal and urges the Department to continue its policy of making quarterly fuel cost adjustments to intra-Alaska mail rates.

We do not agree that prices have stabilized sufficiently to warrant an end to the ongoing quarterly fuel cost adjustments. NAC's Jet A fuel prices hit a peak of approximately 91 cents a gallon in May 2001 and bottomed out at 65 cents a gallon in late 2001. The current price level is at 85 cents. Thus, the amount of increase over the relatively short period from January 2002 to May 2002 is over 30 percent. The comparative averages for the fourth quarter 2001 (the period on which the most recent fuel cost adjustments were based) and April 2002 are approximately 69 cents and 85 cents, a differential of some 23 percent. If fuel prices remain at or above the current level for an extended period, the mainline carriers will again be faced with absorbing substantially higher costs with potentially severe shortfalls in mail rate compensation. That is precisely the situation that the quarterly fuel-cost adjustment schedule was intended to correct.

Counsel:  Lachter Clements, Stephen Lachter, 202.862.4321, lachter@starpower.net

Intra-Alaska Bush and Mainline Mail Rates

Objects to the Department's tentative decision set forth in Order 2002-4-14 to eliminate the quarterly adjustment of mainline and bush mail rates for changes in fuel costs. That Order recites that fuel costs appear to have both stabilized and decreased to levels approximating those prior to the 1999 fuel spike. Alaska disagrees with the stated conclusion that jet fuel prices have stabilized and, even more relevantly, with the implicit conclusion that the Alaskan carriers, as a class-wide entity, are in any position to absorb the risks of static mail rates in the face of recent indications that fuel price volatility is re-emerging. The upward swings in Alaska's March and April's fuel prices, 8.78 percent and 12.2 percent, respectively, higher than February's fuel prices suggest that the markedly lower fuel prices of the preceding October-February period may not be a bellwether for the coming months. Alaska suggests that the Department postpone its proposed elimination of the quarterly fuel adjustment until there has been a clearer demonstration of a return to price stability.

With the increasing tensions associated with some of the major exporters of crude oil to the United States, there is no circumstantial geopolitical or, more narrowly, fuel cost evidence to support the conclusion that fuel prices have stabilized. To the contrary, Alaska's experience which shows that April's fuel prices were 12.5 percent higher than February's suggests the opposite.

Counsel:  Squire Sanders, Marshall Snick, 202.626.6651, msinick@ssd.com

Intra-Alaska Bush and Mainline Mail Rates

By this order, the Department makes final our decision to terminate quarterly fuel updates for the mainline carriers as proposed by Order 2002-4-14. For the bush carriers, we defer until further notice the termination of the quarterly update of fuel expense tentatively proposed by Order 2002-4-14, and add insurance costs to fuel as a cost item eligible for quarterly adjustment, as proposed by Arctic Transportation Services and Larry's Flying Service. The Alaska bush and mainline mail quarterly fuel updates were first adopted by Orders 99-12-15 for the mainline and 2000-5-30 for the bush to reflect spikes in fuel prices.

By:  Read Van de Water

Frontier Flying Service, Inc.

Subject to the conditions below, Frontier Flying Service, Inc. gives notice of its election to equalize its otherwise applicable rate for small aircraft in the Anchorage to Aniak market to match, on a total rate per pound basis, the lower rate or combination of rates now in effect or hereafter prescribed and paid to Alaska Airlines, Northern Air Cargo, Lynden Air Transport. Alaska Central Express, Arctic Circle Air Service and Air Cargo Express. and further elects to equalize its otherwise applicable rates in this market to any lower rate or combination of rates prescribed and paid in the future to any other carrier or carriers.

By: Robert Hajdukovich

Intra-Alaska Bush Service Mail Rates

Since the passage of legislative changes to the Alaskan bypass mail system, our office has received several inquiries regarding documentation, statistical data and execution of the new law. It would be beneficial for your office and the U.S. Department of Transportation to hear these questions directly so you can answer them for our members.

By: Karen Casonvas

Frontier Flying Service, Inc.

Equalization Notice of Frontier Flying Service, Inc. with the intent to equalize between Fairbanks and Tanana, Fairbanks and Ruby, Fairbanks and Galena, Fairbanks and Huslia, Fairbanks and Nulato, Fairbanks and Kaltag, Fairbanks and Fort Yukon, Fairbanks and Allakaket, Fairbanks and Anaktuvuk Pass, with lower levels paid to another carrier or combination of carriers in the market, effective immediately.

Subject to the conditions below, Frontier Flying Service, Inc. gives notice of its election to equalize its otherwise applicable rate for small aircraft in the Fairbanks to Tanana, Ruby, Galena, Huslia, Nulato, Kaltag, Fort Yukon, Allakaket, and Anaktuvuk Pass markets to match, on a total rate per pound basis, the lower rate or combination of rates now in effect or hereafter prescribed and paid to Everts Air Cargo or other carriers, and further elects to equalize its otherwise applicable rates in this market to any lower rate or combination of rates (i.e. mainline between Fairbanks and Galena, bush between Galena, Ruby, Huslia, Nulato and Kaltag) prescribed and paid in the future to any other carrier or carriers.

By: Robert Hajdukovich

Intra-Alaska Class Service Mail Rates

Subject to the conditions below, Frontier Flying Service, Inc. gives notice of its election to equalize its otherwise applicable rate for small aircraft in the Anchorage to Holy Cross markets to match, on a total rate per pound basis, the lower rate or combination of rates now in effect or hereafter prescribed and paid to Everts Air Cargo, Northern Air Cargo and Alaska Airlines, and further elects to equalize its otherwise applicable rates in this market to any lower rate or combination of rates (i.e. mainline between Anchorage and Aniak,, bush between Aniak and Holy Cross) prescribed and paid in the future to any other carrier or carriers.

By:  Robert Hajdukovich

Intra-Alaska Class Service Mail Rates

Subject to the conditions below, Peninsula Airways, Inc. gives notice of its election to equalize its otherwise applicable rate for small aircraft in the Anchorage to King Salmon and Anchorage to Dillingham markets to match, on a total rate per pound basis, the lower rate or combination of rates now in effect or hereafter prescribed and paid to Everts Air Cargo, Alaska Central Express, Northern Air Cargo, Alaska Airlines, Frontier Flying Service and Lynden Air Cargo, for each category of mail they transport in these markets. Peninsula Airways, Inc. further elects to equalize its otherwise applicable rates in these markets to any lower rate or combination of rates prescribed and paid in the future to any other carrier or carriers.

By: Scott Bloomquist

Alaska Class Service Mail Rates

I am in receipt of a request from Penair for authorization to equalize to the mainline rate for mail to King Salmon and Dillingham. They are asking for tender of each category of mail currently flown by the existing mainline carriers. As it pertains to by-pass nail, that clearly would violate the provisions of the new regulations unless they intend to provide at least 75% of the number of passenger seats currently provided by Alaska Airlines, and have done so for the past 6 months. 

As regards the non-priority and priority mail, I believe there are requirements tha# the USPS must agree that there is a need for additional lift, and the current mainline carriers were not meeting the service needs of the USPS to these markets. There are four mainline carriers serving Dillingham, which is probably already too many, but certainly would not appear to have a service problem. As for King Salmon, since we do nct serve that market, I can't speak for it, but I believe there is adequate service there as well. 

By:  Michael Hart

Intra-Alaska Class Service Mail Rates

All responsible carriers welcome and applaud the efforts of the Postal Service to finally implement scheduled flight performance measures for certificated carriers. The fundamental challenge for the Postal Service and carriers is that the protocol or data exchange is reliable and accommodating for all participants. The attached d4icument summarizes several recommendations for the technological concepts of such a system that is widely accepted, supported and proven in business applications. Please review it and let me know if you have any questions or would like more information.

By:  Ken Acton, Aviation Consulting & Training

Intra-Alaska Bush Service Mail Rates

As discussed at the recent meetings in Anchorage and Fairbanks, attached is a survey that we would like for you to complete and return. Our goal is to collect sufficient information to most effectively build a Web interface between your company and the Postal Service. This interface is critical to the successful transition in November 2003 to the requirements of the new statute.

By:  USPS, J. Michael Krop

Intra-Alaska Class Service Mail Rates

With the passage of the "Rural Service Improvement Act of 2002," Tanana Air Service is concerned about the lack of leadership from the Secretary.  Because of this void in leadership, the Postal Service is filling that void with their interpretation of what the Act means.  The Postal Service has indicated that they will require daily/weekly traffic reports from each carrier showing time of scheduled departure, time of actual departure, number of passengers on each leg, pounds of non mail freight, pounds of mail, pounds of mail dispatched, and other data to ensure compliance with carriers operating flights under their proposed schedule. They are not giving any assurance that this information will be confidential for any period of time.

As a carrier, we have not received any indication of what the Secretary is going to do, or what a carrier must provide to establish the three new bush mail rates, other than the normal monthly T-100 reports and quarterly financial data. When I ask my contemporaries if they know what is going on concerning the new Act, I receive opinions about what the Act means, but no definite answers. Only the Secretary can say what needs to be accomplished prior to the effective date of the Act. 

By: Fred Ciarlo, 907-474-0301

Intra-Alaska Class Service Mail Rates

There are many other concerns about the USPO's interpretations of this Act. There seems to be a lot more questions than there are answers. I am concerned about the way it looks like this is to be implemented, and would ask that it be looked into.

By:  Grant Thompson, 907-852-8333

Intra-Alaska Bush Service Mail Rates

The attached represents immediate changes in PO-508, Intra-Alaska Mail Service by Air, Instructions for Certificated Carriers and Bypass Shippers.  Please makes these changes to your copies of the Handbook.  

Any questions regarding the attachments may be directed to Jim Nawrot at (202) 268-4373 or JNawrot@email.usps.gov .

By: John Bonafilia

Intra-Alaska Class Service Mail Rates

The Rural Service Improvement Act (RSIA) provides for the Secretary of Transportation and the Postal Service to take certain actions beginning 6 nonths after its enactment date of August 2, 2002. Hageland Aviation is concerned about the apparent failure of both the Department and the Postal Service to pursue such actions.

By:  James Tweto, 907-245-0119

Intra-Alaska Bush Service Mail Rates

On August 2, 2002, the Rural Service Improvement Act of 2002 became law.  The Act concerns intra-Alaska mail.  Among other things, it requires the Secretary of Transportation to implement certain provisions of the Act.  The law requires that the Secretary use show-cause procedures to conduct a bush mail rate investigation to determine new rates and review the need for such every two years.  The Department has begun that process.  Order 2002-1-4 required the carriers to submit additional data to enable the Department to conduct such an investigation.

The new law also raises several issues that would have important effects on intra-Alaska mail.  As a result, the law requires the Department to act in several new areas, and we are requesting comments before we act. 

By: Read C. Van de Water

OST-95-429 -
OST-95-405

January 30, 2004

Terminate Rate Equalization Notice of Frontier Flying Service

Frontier Flying Service, Inc., an air carrier currently authorized to transport mail, hereby gives notice of its intent to terminate the rate equalization between Fairbanks and Deadhorse effective February 12, 2004.

By: Frontier, Robert Hajdukovich

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