FY09CRAFProposedFuelEPA.pdf

For Official Use Only

8 Feb 08

MEMORANDUM FOR ALL CARRIERS

FROM: United States Transportation Command Directorate of Acquisition 402 Scott Drive Unit 3A1 Scott AFB IL 62225-5302

SUBJECT: Notice of Proposed Economic Price Adjustment (EPA) for FY09 Uniform Rates and Rules for International Service – Solicitation Number HTC711-08-R-0004

1. The proposed EPA for the FY09 rates and rules is posted for your review and comment. The EPA fuel concept was initially briefed at the Sep 07 MOBREP Conference and is proposed to replace the current fuel adjustment process beginning in the FY09 contract. The posted EPA will be discussed in a group setting at the FY09 Pre-Solicitation Conference on 22 Feb 08. The pre-solicitation conference is the carriers’ opportunity to ask questions and voice any concerns regarding the proposed change to the current fuel adjustment process.

2. Please review the proposed EPA carefully and be prepared to discuss at the FY09 Pre-Solicitation Conference on 22 Feb 08. We are allotting a two hour period for this discussion, but will stay as long as it takes to ensure carriers fully understand the new fuel process. We anticipate a detailed, interactive discussion and, therefore, encourage carriers to bring all appropriate personnel.

3. Please feel free to forward any preliminary questions or concerns to Bill Prather at 618-256-4208 or bill.prather@ustranscom.mil. Carriers interested in visiting USTRANSCOM to discuss the proposed EPA fuel concept individually may contact Bill directly for an appointment.

//SIGNED//

OLIVIA L. HITSMAN

Contracting Officer

Attachment:

Civil Reserve Air Fleet (CRAF) Fuel Adjustment Process w/Attachments cc:

OUSD (AT&L) DPAP (Mr. Dick Ginman) DCAA, Policy and Plans (PAC) (Ms. Fran Cornett)

UNITED STATES TRANSPORTATION COMMAND

508 SCOTT DRIVE

SCOTT AIR FORCE BASE, ILLINOIS 62225-5357

CIVIL RESERVE AIR FLEET (CRAF) FUEL ADJUSTMENT PROCESS

SUBJECT: Proposed Economic Price Adjustment (EPA) Procedures Under FAR Part 12

1. Background: As a result of the recent Office of Secretarial Defense oversight of the USTRANSCOM CRAF contract, we were tasked to develop a fuel index versus utilizing the practice of reimbursing fuel based on actual costs. This change, in conjunction with acquiring the CRAF contract under FAR Part 12, will result in a CAS exemption.

USTRANSCOM's new CRAF Fuel Index is a composite index based on two fuel market price sources.

a. Defense Energy Supply Center (DESC): The first source is the standard published fuel price for JP8 fuel managed by DESC. DESC sets fuel prices sold at military installations. Since JP8 fuel is the primary source used at military installations by CRAF carriers it will be the single DESC military source used in the CRAF Fuel Index.

b. Energy Information Administration (EIA): EIA was created by Congress in 1977, and is a statistical agency of the U.S. Department of Energy. The second source is published by EIA and is the Spot Price Index for Kerosene-Type Jet Fuel. The EIA Index represents the commercial portion of the CRAF Fuel Index, because it tracks fuel prices at five major commercial markets (New York Harbor, U.S. Gulf Coast, Los Angeles, Rotterdam, and Singapore). The EIA monthly fuel price used in the calculation of the CRAF Fuel Index is an average of the Spot Prices.

2. Index Development: Various fuel indexes, in addition to EIA, were considered in the development of the CRAF Fuel Index. Other indexes considered were the Producer Price Index for jet fuel, Air Transport Association Fuel Index, and Oil Price Information Service. The EIA Index was selected because it is widely used by both the airline industry, in the development of fuel surcharges in their commercial business, and other Government agencies for use on contracts where a fuel surcharge or EPA is required.

Additionally, this index is updated daily and includes fuel prices from two international fuel market locations and it is a free service.

Fuel data sources used in the development of the annual CRAF Fuel Index includes USTRANSCOM historical fuel database, EIA Index, and DESC standard fuel prices. A brief summary of the development of the pegged fuel price (baseline) and CRAF Fuel Index is discussed in the following paragraphs:

a. Fuel Database: The fuel database maintains fuel information (military and commercial gallons uplifted and fuel prices) provided by CRAF carriers in the monthly fuel adjustment process. The USTRANSCOM monthly fuel database is reviewed for commercial price trends for DOD missions and to determine the ratio of DOD to along with current DESC and published commercial fuel market prices are reviewed to project the pegged fuel prices used in the Uniform Rates and Rules. This process is done for the proposed and final CRAF Rates.

For example, monthly fuel reports (1 Oct 05 – 30 April 06) were used to develop the pegged fuel prices (cargo and passenger) for the FY07 Final Rates. The data for this period revealed that cargo carriers uplifted 69 percent of their fuel for CRAF missions at military installations while passenger carriers uplifted 82 percent of their fuel at commercial locations. Military fuel prices averaged $2.37 per gallon while commercial fuel prices averaged $2.09 for this period. Military fuel prices from DESC and commercial fuel prices from the fuel database were the primary sources used to forecast the FY07 pegged fuel prices at $2.25 and $2.15 for cargo and passenger, respectively.

The $2.25 and $2.15 pegged prices multiplied by the aircraft’s Fuel Burn Rate (FBR) composed the per mile fuel rate for the FY07 rate. The pegged fuel prices become the baseline for measuring price changes against the CRAF Fuel Index.

USTRANSCOM fuel database is also used to calculate an adjustment factor that is applied to the weighted CRAF Fuel Index for the commercial portion, which is the EIA allocation. Historically, the average commercial fuel price CRAF carriers pay is not accurately represented in the EIA or any other index considered and listed in Paragraph 2 above. There are two contributing factors for this inequity. First, the CRAF requirements fly primarily into foreign locations which are not depicted in a published index. Secondly, a published index does not include the into-plane fees and taxes incurred by CRAF carriers. To rectify this disparity, average commercial fuel prices (cargo and passenger) reflected in USTRANSCOM’s fuel database is compared to the EIA Index for the same period. The adjustment factor is the average difference between EIA Index and actual fuel prices CRAF carriers incurred. An annual adjustment factor for cargo and passenger was calculated for a four year period (FY04-FY07). The four years were averaged to determine the adjustment factor that is applied to the monthly EIA Index. The reason the adjustment factor was based on four years is to help smooth out the increases and decreases that occur in the fuel market. The factor will be reviewed annually to determine if an adjustment is required. Attachment 1 is an example of how the adjustment factor is calculated.

b. DESC Standard Prices: The DESC fuel price used in the development of the CRAF Fuel Index is the standard fuel price for JP8 fuel in effect at the beginning of the contract performance period. Changes to the DESC standard fuel prices that occur during the month will not be reflected in the CRAF Fuel Index until the following month.

Attachment 2 is an example of the DESC Standard Price.

c. EIA Index: The EIA Index is an average of the five spot prices for the month.

USTRANSCOM converts the index to a price per gallon by dividing the index number by

100. The EIA Index is updated monthly based on the latest fuel prices from the previous month. Attachment 3 is an example of the EIA monthly commercial fuel averages.

d. CRAF Index: The weighted CRAF Fuel Index is a composite index comprised of the DESC fuel price and EIA fuel price weighted by their historical percentage ratios of military and commercial fuel purchases. An adjustment factor is also applied to capture the higher commercial cost CRAF carriers incur for fuel uplifted at obscure international locations. The line charts on Attachments 4 and 5 demonstrate the price differences between CRAF carriers’ actual commercial prices compared to the EIA Index.

The historical percentage fuel ratios (military verses commercial) and adjustment factors applied to the index will vary from year-to-year based on information from the fuel database. The pegged fuel price (cargo and passenger) is the baseline fuel price for measuring the monthly relative price changes. The price variance is used to calculate the monthly fuel adjustment. Once the variance is determined, it is applied to a simple mathematical calculation (pay miles x FBR x price variance) to derive the monthly fuel adjustment. Attachments 6 and 7 are examples of an EPA under the new CRAF Fuel Index for cargo and passenger operations, respectively. A passenger carrier’s and a cargo carrier’s actual fuel cost compared to DESC, EIA, and CRAF Fuel Index prices are provided on Attachments 8 and 9.

3. Index Application: USTRANSCOM will continue to adjust each carrier’s monthly revenues upward or downward if the price of fuel within the CRAF Fuel Index varies by $.01 or more per gallon over the pegged prices in the Uniform Rates and Rules. Below are two examples which demonstrate the application of the CRAF Fuel Index.

Example 1:

Cargo Carrier:

989,555 Pay Miles x 8.022 Gallons Per Mile (Fuel Burn Rate) 7,938,210 Total Gallons x ($0.0317) Price Variance in Cargo ($251,641.26) May Fuel Adjustment

Example 2:

Passenger Carrier:

424,455 Pay Miles x 5.251 Gallons Per Mile (Fuel Burn Rate) 2,228,813 Total Gallons x $0.1297 Price Variance in Passenger $289,077.07 May Fuel Adjustment

The new monthly fuel adjustment process will continue to require CRAF carriers to submit Monthly Fuel Report Summaries. The Monthly Fuel Report Summary is the formal document for which the monthly fuel adjustment is based and provides necessary information that will be used for the next rate review cycle. During our annual ratemaking process, Defense Contract Audit Agency reviews the accuracy of the fuel information during the annual rate review process. Attachment 10 is an example of the Monthly Fuel Report Summary.

Attachments:

1. Adjustment Factor Calculation for Higher Commercial Fuel Prices Related to CRAF Mission

2. DESC Fuel Prices

3. EIA Monthly Spot Market Prices

4. EIA Standard Fuel Prices Compared to Cargo’s Actual Commercial Fuel Prices

5. EIA Standard Fuel Prices Compared to Passenger’s Actual Commercial Fuel Prices

6. Computation of EPA for Fuel FY07 Cargo

7. Computation of EPA for Fuel FY07 Passenger

8. Passenger Air Carrier Actual Fuel Cost Compared to CRAF Index With An Adjustment Factor

9. Cargo Carrier Actual Fuel Cost Compared to CRAF Index With An Adjustment Factor

10. Monthly Fuel Report Summary for Cargo and Passenger

Adjustment Factor Calculation For Higer Commercial Fuel Prices Related to CRAF Missions.

(From Fuel Reports) Actual EIA

Commercial Index Percent Average Com'l Avg Difference CGO PAX

FY07 (Apr 06 - Oct 05) FY07 13.1 10.9 Cargo 2.1019 1.8586 -13.09% FY06 10.8 10.1 Passenger 2.0435 1.8586 -9.95% FY05 19.0 11.9

FY04 25.9 20.1

FY06 (Apr 05 - Oct 04) Cargo 1.6320 1.4568 -12.03% 4 Yr Avg 17.2 13.3 Passenger 1.5850 1.4568 -8.80%

FY05 (Apr 04 - Oct 03) Cargo 1.1295 0.9493 -18.98% Passenger 1.0624 0.9493 -11.91%

FY04 (Apr 03 - Oct 02) Cargo 1.0732 0.8527 -25.86% Passenger 1.0241 0.8527 -20.10%

Notes: The period Apr- Oct was used for each of the fiscal years. This period was used because we finalize our numbers for the final rate in Jun. The latest fuel data available in our fuel data base is usually through the month of Apr and a 6-7 month period of fuel data is used to project the pegged fuel prices.

Attachment 1

Monthly Date Average

Jan-2005 139.87 133.41 130.83 132.21 120.96 131.46 Feb-2005 137.98 133.42 144.6 137.77 129.9 136.73 Mar-2005 158.99 156.21 171.49 164.9 157.51 161.82 Apr-2005 158.36 157.28 179.8 172.21 169.9 167.51

May-2005 148.43 147.14 158.63 156.83 151.08 152.42 Jun-2005 168.52 165.37 172.18 174.15 164.32 168.91 Jul-2005 168.59 166.47 175.25 176.27 166.94 170.70

Aug-2005 190.24 187.44 202.72 189.83 180.54 190.15 Sep-2005 217.85 223.23 207.94 198.98 188.6 207.32 Oct-2005 214.38 239.81 201.66 194.25 180.61 206.14 Nov-2005 174.10 169.81 173.65 167.52 154.01 167.82 Dec-2005 175.85 172.73 174.82 166.12 166.94 171.29

Jan-2006 184.52 181.58 193.45 182.26 182.54 184.87 Feb-2006 175.38 175.39 183.67 177.48 177.8 177.94 Mar-2006 191.21 187.46 188.21 183.66 179.86 186.08 Apr-2006 210.03 207.42 213.2 202.61 201.11 206.87

May-2006 212.06 206.99 219.58 208.57 203.96 210.23 Jun-2006 207.36 208.07 218.94 209.2 205.31 209.78 Jul-2006 220.56 215.4 219.88 214.58 208.45 215.77

Aug-2006 217.69 213.31 225.4 218.77 212.6 217.55 Sep-2006 185.13 181.05 195.18 191.09 192.02 188.89 Oct-2006 177.48 173.91 185.65 176.4 176.15 177.92 Nov-2006 175.98 173.3 188.39 176.52 175.58 177.95 Dec-2006 183.98 180.99 207.04 187.07 184.23 188.66

Jan-2007 169.16 165.42 178.25 169.73 165.99 169.71 Feb-2007 177.26 174.03 185.95 177.88 170.85 177.19 Mar-2007 188.39 184.63 191.96 183.85 178.79 185.52 Apr-2007 204.28 203.62 207.81 197.16 192.51 201.08

May-2007 208.43 204.43 211.45 200.13 195.35 203.96 Jun-2007 211.89 209.92 215.35 208.24 199.13 208.91 Jul-2007 217.31 213.69 219.55 215.16 207.9 214.72

Aug-2007 211.77 209.16 214.24 207.96 200.62 208.75 Sep-2007 232.22 226.52 225.93 224.06 216.00 224.95 Oct-2007 239.63 237.24 243.97 239.71 230.25 238.16 Nov-2007 271.17 267.33 276.92 276.67 268.12 272.04 Dec-2007 266.14 260.10 266.15 265.24 258.07 263.14

Notes:

1. Source: http://tonto.eia.doe.gov/dnav/pet/pet_pri_spt_s1_d.htm

2. USTRANSCOM developed this spreadsheet as EIA list spot markets separately and they do not average the markets

Energy Information Administration (EIA) Monthly Spot Market Prices

New York Harbor Kerosene-Type Jet

U.S. Gulf Coast Kerosene-Type

Los Angeles, CA Kerosene-

Rotterdam

(ARA)

Singapore Kerosene-Type Jet

Attachment 3

EIA Standard Fuel Prices Compared to Cargo's Actual Commercial Fuel Prices

EIA Index Com'l Prices Oct 06 1.78 2.10 Nov 06 1.78 2.01 Dec 06 1.89 2.07 Jan 07 1.70 2.08 Feb 07 1.77 1.94 Mar 07 1.86 1.99 Apr 07 2.10 2.12 May 07 2.04 2.22 Jun 07 2.09 2.25 Jul 07 2.15 2.34 Aug 07 2.09 2.36 Sep 07 2.25 2.33

0.5

1.5

2.5

Oct

Nov

Dec

Ja n 0

Feb

Mar

Apr

May

Ju n 0

Ju l 0

Aug

Sep

EIA Index Com'l Prices

Attachment 4

EIA Standard Fuel Prices Compared to Passenger's Actual Commercial Fuel Prices

EIA Index Com'l Prices Oct 06 1.78 2.07 Nov 06 1.78 2.01 Dec 06 1.89 2.04 Jan 07 1.70 2.06 Feb 07 1.77 1.95 Mar 07 1.86 2.02 Apr 07 2.10 2.15 May 07 2.04 2.24 Jun 07 2.09 2.28 Jul 07 2.15 2.34 Aug07 2.09 2.33 Sep07 2.25 2.40

0.5

1.5

2.5

Oct

Nov

Dec

Ja n 0

Feb

Mar

Apr

May

Ju n 0

Ju l 0

EIA Index Com'l Prices

Attachment 5

(a) (b) (c) (d) (e) (f) (g) 68.79% 31.21% CRAF Fuel

DESC Standard EIA Index Index 3 Price EPA EPA Month Fuel Price 1 Monthly Price 2 (b x .6879) + ((c x 117.2%) x .3121) Relative 4 Percent Change Price Variance 5

Pegged Fuel Price: 6 2.37 2.09 2.2500 100

Oct-06 2.30 1.78 2.2333 99.26 (0.0074) ($0.0167) Nov-06 2.30 1.78 2.2333 99.26 (0.0074) ($0.0167) Dec-06 2.30 1.89 2.2735 101.04 0.0104 $0.0235 Jan-07 2.30 1.70 2.2040 97.96 (0.0204) ($0.0460) Feb-07 2.30 1.77 2.2296 99.09 (0.0091) ($0.0204) Mar-07 2.30 1.86 2.2625 100.56 0.0056 $0.0125 Apr-07 2.14 2.10 2.2402 99.57 (0.0043) ($0.0098) May-07 2.14 2.04 2.2183 98.59 (0.0141) ($0.0317) Jun-07 2.14 2.09 2.2366 99.40 (0.0060) ($0.0134) Jul-07 2.14 2.15 2.2585 100.38 0.0038 $0.0085 Aug-07 2.14 2.09 2.2366 99.40 (0.0060) ($0.0134) Sep-07 2.14 2.25 2.2951 102.01 0.0201 $0.0451

Notes:

1. Source for Defense Energy Supply Center (DESC) fuel prices http://www.desc.dla.mil/default.asp

2. Source for Energy Information Administration's (EIA) five spot markets is http://tonto.eia.doe.gov/dnav/pet/pet_pri_spt_s1_d.htm

3. The DESC & EIA price (column d) is developed monthly based on EIA average monthly fuel price and DESC fuel price weighted by military and commercial fuel weighting. This Index includes an adjustment factor for higher fuel cost CRAF carriers incur in performance of CRAF requirements

4. Price relative is the relationship of the monthly weighted CRAF Index to the pegged (base) fuel price

5. EPA (price change) is difference between base period price and USTRANSCOM's monthly developed price. The price variance is applied to monthly fuel pay miles and fuel burn rate to calculate monthly fuel adjustment

6. The FY07 pegged fuel price was developed from the monthly fuel report data for period 1 Oct 05 - 30 Apr 06 and commercial fuel market prices. This is the fuel price that went into the development of the FY07 Rates and is the baseline for measuring price variance against the CRAF Fuel Index

COMPUTATION OF ECONOMIC PRICE ADJUSTMENT (EPA) FOR FUEL

FY07 CARGO

Attachment 6

(a) (b) (c) (d) (e) (f) (g) 18.46% 81.54% CRAF Fuel

DESC Standard EIA Index Index 3 Price EPA EPA Month Fuel Price 1 Monthly Price 2 (b x .1846) + ((c x 113.3%) *.8154) Relative 4 Percent Change Price Variance 5

Pegged Fuel Price 6 2.37 2.09 2.1500 100

Oct-06 2.30 1.78 2.0690 96.23 (0.0377) ($0.0810) Nov-06 2.30 1.78 2.0690 96.23 (0.0377) ($0.0810) Dec-06 2.30 1.89 2.1707 100.96 0.0096 $0.0207 Jan-07 2.30 1.70 1.9951 92.80 (0.0720) ($0.1549) Feb-07 2.30 1.77 2.0598 95.80 (0.0420) ($0.0902) Mar-07 2.30 1.86 2.1429 99.67 (0.0033) ($0.0071) Apr-07 2.14 2.10 2.3351 108.61 0.0861 $0.1851 May-07 2.14 2.04 2.2797 106.03 0.0603 $0.1297 Jun-07 2.14 2.09 2.3259 108.18 0.0818 $0.1759 Jul-07 2.14 2.15 2.3813 110.76 0.1076 $0.2313 Aug-07 2.14 2.09 2.3259 108.18 0.0818 $0.1759 Sep-07 2.14 2.25 2.4737 115.06 0.1506 $0.3237

Notes:

1. Source for Defense Energy Supply Center (DESC) fuel prices http://www.desc.dla.mil/default.asp

2. Source for Energy Information Administration's (EIA) five spot markets is http://tonto.eia.doe.gov/dnav/pet/pet_pri_spt_s1_d.htm

3. The DESC & EIA price (column d) is developed monthly based on EIA average monthly fuel price and DESC fuel price weighted by military and commercial fuel weighting. This Index includes an adjustment factor for higher fuel cost CRAF carriers incur in performance of CRAF requirements

4. Price relative is the relationship of the monthly weighted CRAF Index to the pegged (base) fuel price

5. EPA (price change) is difference between base period price and USTRANSCOM's monthly developed price. The price variance is applied to monthly fuel pay miles and fuel burn rate to calculate monthly fuel adjustment

6. The FY07 pegged fuel price was developed from the monthly fuel report data for period 1 Oct 05 - 30 Apr 06 and commercial fuel market prices. This is the fuel price that went into the development of the FY07 Rates and is the baseline for measuring price variance against the CRAF Fuel Index

COMPUTATION OF ECONOMIC PRICE ADJUSTMENT (EPA) FOR FUEL

FY07 PASSENGER

Attachment 7

(Fuel Reports) Pax Actual DESC EIA Index CRAF Index

Oct 06 2.16 2.30 1.78 2.07 Nov 06 2.09 2.30 1.78 2.07 Dec 06 2.16 2.30 1.89 2.17 Jan 07 2.21 2.30 1.70 2.00 Feb 07 2.02 2.30 1.77 2.06 Mar 07 2.06 2.30 1.86 2.14 Apr 07 2.13 2.14 2.10 2.34 May 07 2.21 2.14 2.04 2.28 Jun 07 2.24 2.14 2.09 2.33 Jul 07 2.30 2.14 2.15 2.38 Aug 07 2.31 2.14 2.09 2.33 Sep 07 2.32 2.14 2.25 2.47

Missing Jul's fuel report so an estimate was used.

Passenger Air Carrier Actual Fuel Cost Compared to CRAF Index With An Adjustment Factor

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Pax Actual

DESC

EIA Index CRAF Index

Attachment 8

(Fuel Report) Cgo Actual DESC EIA Index CRAF Index

Oct 06 2.25 2.30 1.78 2.23 Nov 06 2.24 2.30 1.78 2.23 Dec 06 2.27 2.30 1.89 2.27 Jan 07 2.25 2.30 1.70 2.20 Feb 07 2.21 2.30 1.77 2.23 Mar 07 2.22 2.30 1.86 2.26 Apr 07 2.13 2.14 2.10 2.24 May 07 2.16 2.14 2.04 2.22 Jun 07 2.17 2.14 2.09 2.24 Jul 07 2.18 2.14 2.15 2.26 Aug 07 2.18 2.14 2.09 2.24 Sep 07 2.18 2.14 2.25 2.30

Cargo Carrier Actual Fuel Cost Compared to CRAF Index With An Adjustment Factor

0.00

0.50

1.00

1.50

2.00

2.50

Oct

Nov

Dec

Ja n 0

Feb

Mar

Apr

May

Ju n 0

Ju l 0

Cgo Actuals

DESC

EIA Index CRAF Index

Attachment 9

MONTHLY FUEL REPORT SUMMARY

DATE: 2/9/2007 MONTH: May-07

CARRIER: XXXXX ACFT TYPE: B-747

CONTRACT: XXXXX TYPE OPS: CGO

1. The following amounts are certified:

Round Trip Pay Miles: 900,000 One Way Pay Miles: 89,555 Total Live Miles: 989,555 Flown Empty Reverse Segment: 0 Paid/Actual Flown Ferry (Whichever is Less): 0

TOTAL FUEL MILES: 989,555

2. Proposed fuel adjustment:

Total fuel miles: 989,555 Pay Fuel Burn Rate: 8.022 Price Variance: -0.0317

FUEL ADJUSTMENT: -$251,641.26

3. Fuel summary information:

Avg Cost /

Gallons Cost Gallon

Total Commercial fuel: 4,026,063 8,061,247.18 2.0023 Total military fuel: 1,404,181 3,229,616.30 2.3000 Total fuel purchased: 5,430,244 11,290,863.48 2.0793

Carrier Certification

Must be signed by a person authorized to legally bind company Date

BY SIGNING THIS FORM, YOU ARE CERTIFYING AS TO THE ACCURACY OF

ALL INFORMATION AND AGREE TO KEEP BACKUP RECORDS FOR A

PERIOD OF 5 YEARS. THIS INFORMATION IS SUBJECT TO AUDITS.

Contracting Officer Signature Date

Attachment 10

MONTHLY FUEL REPORT SUMMARY

DATE: 2/9/2007 MONTH: May-07

CARRIER: XXXXX ACFT TYPE: L-1011

CONTRACT: XXXXX TYPE OPS: PAX

1. The following amounts are certified:

Round Trip Pay Miles: 400,000 One Way Pay Miles: 24,455 Total Live Miles: 424,455 Flown Empty Reverse Segment: 0 Paid/Actual Flown Ferry (Whichever is Less): 0

TOTAL FUEL MILES: 424,455

2. Proposed fuel adjustment:

Total fuel miles: 424,455 Pay Fuel Burn Rate: 5.251 Price Variance (listed in Uniform Rates and Rules): 0.1297

FUEL ADJUSTMENT: $289,077.07

3. Fuel summary information:

Avg Cost /

Gallons Cost Gallon

Total Commercial fuel: 4,026,063 8,061,247.18 2.0023 Total military fuel: 1,404,181 3,229,616.30 2.3000 Total fuel purchased: 5,430,244 11,290,863.48 2.0793

Carrier Certification

Must be signed by a person authorized to legally bind company Date

BY SIGNING THIS FORM, YOU ARE CERTIFYING AS TO THE ACCURACY OF

ALL INFORMATION AND AGREE TO KEEP BACKUP RECORDS FOR A

PERIOD OF 5 YEARS. THIS INFORMATION IS SUBJECT TO AUDITS.

Contracting Officer Signature Date

Attachment 10