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OST-2019-0038 - EAS at St. Paul Island, AK

https://en.wikipedia.org/wiki/St._Paul_Island_Airport - St. Paul Island Airport

 


Essential Air Service at St. Paul Island, Alaska

OST-2019-0038
OST-2017-0108

OST-2017-0110

March 5, 2019

Notice of Ravn Alaska of Intent to Terminate Scheduled Air Service

Corvus Airlines, Inc. d/b/a Ravn Alaska, pursuant to Part 323 of the Department’s regulations, hereby provides notice of its intention to discontinue unsubsidized scheduled air service between Anchorage, Alaska and St. Paul Island, Alaska, effective June 3, 2019.

Ravn Alaska intends to continue operating, without subsidy, the flights which are the subject of this Notice for a minimum of 90 days from the date of this Notice. However, based on the historic financial performance of PenAir-operated flights at SNP, increased pilot, mechanic and other costs as well as Ravn Alaska’s projected operational costs associated with its new, extended overwater operations, Ravn Alaska will not be able to serve SNP on an indefinite basis (i.e., beyond such initial 90-day period) and in an economically viable manner, unless it is granted adequate subsidy under the EAS program. The cost prohibitive nature of providing longer term service on a subsidy-free basis also is driven by significantly higher local airport terminal operating expenses at SNP. Thus, the public interest warrants the prompt establishment of a carrier selection proceeding, so that Ravn Alaska and any other interested carrier(s) may submit their service proposals for consideration by the Department and the St. Paul Island community.

At present, SNP does not receive scheduled air service from any other certificated air carrier. Thus, upon the discontinuation of the Ravn Alaska-operated flights which are the subject of this Notice, air service at SNP will fall below the minimum determined EAS level set by Order 1980-1-167.

Counsel: KMA Zuckert, Jonathon Foglia, 202-298-8660




Order 2019-4-6
OST-2019-0038

Issued and Served April 5, 2019

Order Prohibiting Termination of Service and Requesting Proposals

By this Order, the US Department of Transportation is (1) prohibiting Corvus Airlines d/b/a Ravn Alaska from terminating service at St. Paul Island, Alaska; and (2) requesting proposals, with or without subsidy, from carriers interested in providing replacement service. Proposals are due by May 6, 2019.

In its notice, Ravn states that, “based on the historic [sic] financial performance of PenAir-operated flights at [St. Paul Island], increased pilot, mechanic and other costs as well as [Ravn’s] projected operational costs with its new extended overwater operations, [Ravn] will not be able to serve [St. Paul Island] on an indefinite basis…unless it is granted adequate subsidy.” Further, Ravn states that its inability to provide subsidy-free service is “driven by significantly higher local airport terminal operating expenses” at St. Paul Island Airport.

Ravn’s termination of service could potentially leave St. Paul Island without its historical or near-historical levels of service, including passenger seats and aircraft size. Therefore, the Department is prohibiting Ravn from terminating such service at the end of its proposed 90-day notice period (June 3, 2019) and requires it to maintain service at the community for an initial 30-day period through July 4, 2019. Additionally, the Department is requesting proposals for service after July 4, 2019, with or without subsidy.

Regarding specific levels at St. Paul Island, the Department expects proposals for up to three weekly round trips on intermediate-sized aircraft, providing sufficient capacity to accommodate traffic and mail/cargo to a suitable hub airport. Typically, in Alaska, mail and freight flows are asymmetrical, with up to 90 percent of total mail and freight flowing outbound from the hub to the EAS communities. The Department will evaluate all proposals, either with or without subsidy, in the context of the unsubsidized service St. Paul Island currently receives, when deciding on a carrier selection, including the number of weekly frequencies and aircraft size.

By: Joel Szabat


 


May 6, 2019

Proposal of Corvus Airlines d/b/a Ravn Alaska

3 weekly St. Paul Island-Anchorage
Aircraft: Bombardier Dash 8 100
Subsidy requirement: $2,110,170 (Year 1); $2,224,491 (Year 2)

Counsel: KMA Zuckert, Jonathon Foglia, 202-298-8660




May 6, 2019

Proposal of Northern Air Cargo

1 weekly St. Paul Island-Anchorage (Cargo-only)
Aircraft: B737-300/400
Subsidy required: $610,168

By: Betsy Seaton, 907-249-5163




May 7, 2019

DOT Request for Community Comments

We issued Order 2019-4-6, requesting proposals from airlines interested in providing EAS, with a due date of May 6, 2019. In response to our request, we received proposals from Ravn Alaska and Northern Air Cargo (Cargo only). I request that you review it and submit any comments you may have as soon as possible, but no later than Thursday, June 6, 2019.

By: Michael Gormas, 202-366-1853


 

May 17, 2019

Opposition of Alaska Central Express to Proposal of Northern Air Cargo

Alaska Central Express, Inc. hereby opposes the submission of Northern Air Cargo, Inc. seeking subsidy to provide all-cargo service to St. Paul, Alaska. By Order 2019-4-6, dated April 5, 2019, the Department called for the submission of essential air service proposals to serve St. Paul. On May 6th NAC filed a request for subsidy in order to provide all-cargo service only between Anchorage and St. Paul with an intermediate stop in Dillingham. NAC is neither proposing to provide passenger service to St. Paul and nor is it even authorized by the DOT or FAA to provide scheduled passenger service.

Apart from its legal deficiency, public policy calls for the rejection of the submission. The DOT recognized in Order 2019-4-6 that Ravn's prior statement to DOT that St. Paul lacks any scheduled service was in error. The Department correctly noted that Alaska Central provided at the time and continues to provide three times weekly cargo and mail service to St. Paul and has been doing so since 2002. There is no basis to award EAS subsidy or an EAS determination to a carrier to serve a community that is already served by a carrier without relying on the EAS program to do so. It would be an affront to the policies and principles of airline deregulation to pay subsidy to a carrier to compete with an established incumbent carrier in the market and thereby deprive the incumbent carrier the benefit of its many years of market develop efforts undertaken without dependency on the EAS program.

If however, for whatever, reason the Department were to give consideration to the subsidization of all-cargo service to St. Paul, then it most give contemporaneous consideration to the award to Alaska Central to provide EAS to St. Paul. Specifically, Alaska Central will continue to provide its minimum three times weekly service and to do so without subsidy of any kind. Apart from the savings to the US Treasury, Alaska Central service is superior to the once weekly service being proposed by NAC. As NAC should know, frequency of service is an important decisional criteria when making EAS selections. If St. Paul were only to receive weekly all-cargo service, those in the community would have to wait a full seven days before critical cargo and mail would again be received by the residents of St. Paul. Alaska Central's cargo and mail service to St. Paul Island has been well received by the community for the 17 years it has been provided and is confident that the community will express its strong preference for more frequent and timely service than once weekly service proposed by NAC that will necessarily delay the receipt of critical cargo and mail. And because there is no need for the Department to subsidize the services of Alaska Central, there can be no set of circumstances that would justify the subsidization of NAC's once-weekly service to the detriment of the incumbent all-cargo carrier serving the market multiple times a week.

Counsel: Silverberg Goldman, Robert Silverberg


 

June 6, 2019

City of St. Paul in Support of Ravn Air

The following provides a summary of the recommendations by the community of SPI:

  • Select the proposal by Ravn to provide Essential Air Service passenger and mail/cargo services for Saint Paul Island.
  • Negotiate an increase in the EAS subsidy or make other arrangements to require four round-trips per week between Anchorage and SPI. A plain reading of the applicable federal statutory requirements supports this request.

By: Mayor Jacob Merculief


 

June 6, 2019

Tanadgusix Corporation in Support of Northern Air Cargo

My Name is Ron Philemonoff, the CEO of Tanadgusix Corporation, The Alaska Native Village Corporation, established pursuant to the Alaska Native Claims Settlement Act, for St. Paul Island, Alaska. TDX, as provided for by ANCSA, is a major economic driver for St. Paul and its residents. I am in support of and a signatory to the Community Leadership letter, by these comments we are reaffirming our support of the points in the Community letter. However, we are providing these additional comments out of great concern for the issues of Air Service to and from St. Paul Island. These written comments are in support of the Request for Proposals to provide St. Paul Island with EAS. While we highly support DOT providing EAS subsidy for St. Paul Island; the parameters of US DOT’s request for proposals, and the application by Ravn Alaska as the passenger carrier, fail to meet the basic passenger air service needs of St. Paul Island and the suggested basic outline of service stated in the DOT RFP for passenger service to St. Paul Island is itself inadequate. Therefore, we recommend that US DOT either uses whatever flexibility it has to provide for adequate service under the current, pending RFP, or that it rejects the current RFP and Ravn proposal, and goes out to rebid the EAS, telling bidders to sharpen their pencils to recalculate their costs of their roundtrip tickets, and to address the capacity need for increased frequency of flights to 4 times a week during peak summer season and during the peak Crab fishing season. Also, we support and recommend the approval of the Northern Air Cargo, “NAC,” EAS air cargo proposal.

By: Ron Philemonoff


 

Order 2019-7-3
OST-2019-0038

Issued and Served July 8, 2019

Order Establishing Hold-In Subsidy Rate and Extending Service Obligation

By this Order, the US Department of Transportation authorizes a subsidy rate of $2,110,170, to compensate Corvus Airlines d/b/a Ravn Alaska for providing Essential Air Service at St. Paul Island, Alaska, beyond the air carrier’s 90-day notice of its intent to terminate service at the community. This rate is effective retroactively from June 4, 2019, and will remain in effect until the case has been determined or September 30, 2019, whichever is earlier.

Also, the Department is extending the obligation of Ravn to continue to provide EAS at St. Paul Island for an additional 30 days beyond the current hold-in period, through August 3, 2019.

By: Joel Szabat


 

July 26, 2019

Re: Tanadgusix Corporation in Support of Ravn Alaska

We continue to express our concerns that x3/week service during the year is not adequate to service St Paul. Specifically, during mid-winter, spring and summer periods we have extraordinary pressure to move workers for seafood harvests, and tourists to move for the summer season. We have since expressed our concerns to Ravn Alaska, and along with the community leadership ask that Ravn amend their proposal to DOT to allow for increased flights (x4 flights/week) to meet these critical periods during the year. We understand that Ravn has recently responded, that they have discussed this with DOT and submitted an amended EAS proposal. Ravn has amended its EAS proposal to add a 4th flight each week, an additional Saturday flight schedule to cover peak seasons. Ravn understands DOT staff are out of the office and we are awaiting your feedback, hopefully your approval.

Please consider this our ‘official’ comment. We support Ravn Alaska and their amended EAS proposal, we just hope that all parties will take the extra effort to support x4/week EAS service as may be necessary throughout the year.

By: Ron Philemonoff


 

Order 2019-7-10
OST-2019-0038

Issued and Served July 30, 2019

Order Extending Service Obligation

By this Order, the US Department of Transportation extends the obligation of Corvus Airlines d/b/a Ravn Alaska to continue to provide Essential Air Service at St. Paul Island, Alaska, for an additional 30 days, through September 3, 2019.

By: Todd Homan


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