BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. OFFICE OF THE SECRETARY ______________________________ ) In the Matter of ) ) ESSENTIAL AIR SERVICE ) Docket DOT-OST 2017-0108 AT McGRATH, AK ) ______________________________) ESSENTIAL AIR SERVICE BID OF J&M ALASKA AIR TOURS, INC. d/b/a ALASKA AIR TRANSIT FOR McGRATH, ALASKA Communications with Respect to this Document Should Be Addressed to: Hank Myers Dan Owen/Josie Owen Principal Consultant Owners MTC Alaska Air Transit PO Box 7142 2301 Merrill Field Drive Bellevue, WA 98008-1142 Anchorage, AK 99501-4134 May 18, 2020 BEFORE THE DEPARTMENT OF TRANSPORTATION WASHINGTON, D.C. OFFICE OF THE SECRETARY ______________________________ ) In the Matter of ) ) ESSENTIAL AIR SERVICE ) Docket DOT-OST 2017-0108 AT McGRATH, AK ) ______________________________) ESSENTIAL AIR SERVICE BID OF J&M ALASKA AIR TOURS, INC. d/b/a ALASKA AIR TRANSIT FOR McGRATH, ALASKA INTRODUCTION Alaska Air Transit (AAT) holds a Certificate of Public Convenience and Necessity from the Department of Transportation, as well as an Air Carrier Operating Certificate from the FAA. The operating authority allows for multiple aircraft and pilots, although limited to four flights a week of scheduled service between two non-stop points. AAT will submit a Pre-Application Statement of Intent for the Commuter Operations Specifications required to operate the increased frequency of flights necessary to support the eventual passenger and priority mail needs of the market. Since the enactment of the Rural Service Improvement Act of 2002, air service to McGrath has been bifurcated between large mainline aircraft transporting non-priority and bypass mail and heavy freight, and medium bush aircraft transporting passengers and time sensitive mail and freight. Since the emergence of the COVID-19 pandemic, passenger traffic is almost nil due to the passenger travel restrictions mandated by the State of Alaska and by the City of McGrath. The large bush operators previously providing passenger service used 24-30 seat class aircraft on a frequency of three flights per week, or 72-90 seats per week in each direction IMPACT OF CORONAVIRUS ON SCHEDULED SERVICE TO McGRATH Pursuant to DOT Order 2020-4-2, addressing the drop in demand due to the coronavirus, McGrath’s EAS frequency requirement was temporarily reduced to one flight per week in medium or large aircraft. RAVN, the incumbent EAS carrier subsequently suspended all operations and declared Chapter 7 bankruptcy. There is no scheduled passenger service in the market now. In this proposal, AAT offers four flights a week with nine-passenger Pilatus PC-12 aircraft. The Pilatus PC-12 is a modern design, comfortable pressurized turboprop aircraft with the best safety record of all aircraft, including both single and twin engine, in the 9 passenger and under size class. If there are any primarily cargo trips, AAT may instead use one of its nine-passenger Cessna Grand Caravan EX aircraft to take advantage the high bulk capacity afforded by its cargo pod. While the pressurized PC-12 has a higher operating cost per hour, its faster cruise speed means the cost per roundtrip is about the same as the Cessna Caravan. The PC-12 has a block time equivalent to the SAAB-340 and deHavilland Dash-8 aircraft previously used. As traffic recovers from the impact of the COVID-19 pandemic, AAT proposes to operate as many eight flights per week, or 72 seats, in the market. This is the equivalent of the three SAAB/deHavilland flights per week previously operated by PenAir and RAVN. A significant revenue component of the service is priority mail. The current twice weekly mainline cargo service does not meet the Postal Service’s inhouse standards for priority mail, but it is the only service available. AAT would transport the mail at the Part 135 wheel rate, however the Postal Service has not committed to using these flights at that rate. Initial bids are proposed including and excluding mail revenue. This image cannot currently be displayed. The eventual goal is to provide ten flights per week, which is the seat equivalent of three medium sized aircraft per week. Although the Pilatus is not as large as the previous aircraft in the market, McGrath residents and visitors would enjoy the flexibility of higher frequency pressurized aircraft service. If priority mail is tendered, then flights would be added based on incremental passenger traffic gains. It is unknown whether passenger traffic will return to pre- COVID-19 levels, so operating smaller pressurized aircraft allows incremental capacity adjustments to more accurately match demand. If demand increases sufficiently, it could result in AM and PM departures, which would make day trips possible. Another option would be to offer seasonal service with five flights a week in the off-season, and ten flights a week during the peak season. BACKGROUND OF ALASKA AIR TRANSIT J&M Alaska Air Tours, Inc. d/b/a Alaska Air Transit (AAT) has been owned and managed by Dan and Josie Owen since 2004. AAT provides statewide service using its fleet of two Pilatus PC-12 and two new generation Cessna Grand Caravan EX aircraft. AAT has been a Medicaid approved carrier since its inception, and it is approved by and has contracts with both the State of Alaska and the Federal government to carry their employees. AAT has provided twice weekly Essential Air Service to the village of Tatitlek in the Prince William Sound since October, 2015. HISTORY OF SERVICE TO McGRATH and NEIGHBORING COMMUNITIES In August, 2018, Alaska Air Transit received a Certificate of Public Convenience and Necessity from the DOT. AAT carries USPS mail and provides unsubsidized Essential Air Service between the McGrath hub and neighboring Takotna and Tatalina, and it provides mail service between McGrath and Nikolai. In McGrath AAT uses the terminal facility at the Hotel McGrath, directly across the street from the aircraft parking area at the McGrath Airport. The Hotel McGrath facility previously ground handled Peninsula Airways and its 30-passenger SAAB aircraft. Hotel McGrath staff provide transportation of mail between the McGrath Post Office and its terminal, where there is an approved mail holding facility. AAT maintains continual contact with Hotel McGrath via telephone and internet. AAT is well established at McGrath. It has served McGrath as part of its interior service for 8 years. AAT is a major sponsor of the Iditarod Dogsled Race that passes through McGrath each spring, and it sponsors local nonprofits in McGrath such as the Back to Bluegrass Festival, KSKO local public radio, and the Iditarod Area School District students’ annual 4th grade trip. AAT also supports McGrath artists by purchasing their works, to be presented as the “Spirit of the Iditarod” award to the first Iditarod musher to reach McGrath. DOWNTOWN LOCATION AND SHUTTLE SERVICE TO ANCHORAGE INTERNATIONAL AIRPORT For over 5 years, AAT has provided airport shuttle service in its large capacity 12-person Sprinter van, connecting Ted Stevens International Airport with AAT’s Merrill Field terminal via a 15-18-minute shuttle ride. This has provided convenience for oil and commercial fishing industry employees who fly into Ted Stevens International Airport from outside the State of Alaska. AAT’s Sprinter van is the long 170-inch wheelbase version, with more than adequate capacity to carry 9 commercial fishermen and their bulky gear. The Sprinter’s 200 cubic feet of cargo volume with all passenger seats installed would allow it to easily handle the expected amount of USPS mail destined for McGrath. AAT’s Merrill Field location is significantly closer and more convenient to downtown Anchorage hotels, hospitals, and businesses than Ted Stevens airport, and it has plenty of convenient parking. OPERATOR FINANCIAL AND SAFETY FITNESS AAT has a solid financial foundation and operates profitably without subsidy. It maintains an excellent safety record. The two aircraft types in their fleet are well known for their reliability in Alaska, and having multiple aircraft provides redundancy so that service may be continued while aircraft are under maintenance. AAT’s modern all-turboprop fleet averages 9 years since new. AAT embraces a continuous improvement safety culture. Its proactive safety programs exceed regulatory standards, and include in-aircraft CFIT prevention training and the use of trained Flight Coordinators who provide functions similar to major airline dispatchers. AAT’s Flight Coordinators participate with Pilots in pre-departure risk assessment and shared decision making. They use satellite tracking to monitor flights and satellite messaging to provide enroute flight support. AAT’s safety programs are audited annually by a global corporate client. Of recent note, Alaska Air Transit is deemed by the State of Alaska to be “essential infrastructure” and was encouraged to continue operations during a statewide ban on non- essential travel. AAT was required by state mandate to provide the state with a plan detailing how it will work to protect its employees and customers, and how it will mitigate the risk of spreading coronavirus to the remote communities that it serves. The company has implemented its state approved plan, which includes daily screening of employees, screening passengers prior to boarding, requiring employees to wear face masks during customer contact, requiring pilots and passengers to wear face masks during flights, sanitizing aircraft between flights, and reconfiguring its employee and customer waiting areas to facilitate social distancing. MARKETING Alaska Air Transit has maintained a lean marketing budget, with minimal use of paid advertising. AAT primarily markets through its web site, social media, its affiliate connections with the Hotel McGrath, and it receives public recognition of its sponsorship of McGrath’s KSKO public radio station and its “Lead Dog” sponsorship of the Iditarod sled dog race. SERVICE PROPOSAL AAT proposes an initial service level of four flights per weeks.