Proposed FY09 Uniform Rates and Rules.pdf

For Official Use Only

25 Apr 08

MEMORANDUM FOR ALL CARRIERS

FROM: USTRANSCOM/AQ-P

402 Scott Drive Unit 3A1 Scott AFB IL 62225-5302

SUBJECT: Notice of Proposed Fiscal Year 2009 (FY09) Uniform Rates and Rules for

International Service – Solicitation Number HTC711-08-R-0003 (SUSPENSE: 30 May 08)

1. The FY09 rates are based on fuel pegged at $3.10 per gallon for passenger and $3.00 for cargo, combi, and L-100. The proposed rates for the various classes of service are as follows:

Linehaul Rate Stop Charge Large Class Passenger 12.446 cents per seat mile $2,000 Medium Class Passenger 15.672 cents per seat mile $2,000 Small Class Passenger 18.369 cents per seat mile $2,000 Large Class Cargo 45.320 cents per ton mile $2,000 Medium Class Cargo 64.467 cents per ton mile $2,000 Combi Service 25.641 dollars per plan mile $2,000 L-100 Service 1.003 dollars per ton mile $2,000

2. Carriers providing cost data for the rate review should provide comments and supporting documentation to USTRANSCOM/AQ-P, 402 Scott Drive, Unit 3A1, Scott AFB IL 62225-5302 by close of business 30 May 08. No extensions will be granted. If specific information is required on individual cost elements, analyst will provided detailed step-by-step treatment upon carrier request.

3. If you have any questions please feel free to call 618-229-2463 or email me at Bill.Prather@ustranscom.mil.

//SIGNED//

WILLIAM J. PRATHER

Supervisory Price/Cost Analyst

UNITED STATES TRANSPORTATION COMMAND

508 SCOTT DRIVE

SCOTT AIR FORCE BASE, ILLINOIS 62225-5357

Prepared By: United States Transportation Command, Command Acquisition, 508 Scott Drive, Scott AFB IL 62225-5357

UNITED STATES

TRANSPORTATION COMMAND

PROPOSED

UNIFORM RATES AND RULES

FOR

INTERNATIONAL SERVICE

FISCAL YEAR 2009

INTRODUCTION

The proposed FY09 USTRANSCOM Uniform Rates and Rules (hereafter referred to as

“Rates”) have been developed using ratemaking procedures in compliance to the

Memorandum of Understanding (MOU) for FY08 through FY12, and methodologies previously established by the Civil Aeronautics Board (CAB). The objective of the MOU is to establish guidelines to facilitate the ratemaking process for DOD airlift with carriers willing to participate in the Civil Reserve Air Fleet (CRAF).

USTRANSCOM explored changing from Federal Acquisition Regulation (FAR) Part 15, Contracting by Negotiation, to Far Part 12, Acquisition of Commercial Items. The benefit of this change meant Cost Accounting Standards (CAS) and Truth in Negotiation

Act (TINA) would no longer apply, resulting in a decreased workload for both the

Government and carriers. However, to accommodate this change and gain an exemption from CAS, a change was required to the fuel adjustment process, which led to the introduction of an Economic Price Adjustment (EPA).

USTRANSCOM formally presented the CRAF EPA to the carriers on 14 March 2008 at the pre-solicitation conference with comments due by the following Friday. After reviewing the comments and discussing the proposed EPA with Defense Contract Audit

Agency and Office (DCAA) and the Office of the Secretary of Defense (OSD), USTRANSCOM decided to continue contracting under FAR Part 15 and apply for an indefinite wavier to CAS and TINA through DCAA and OSD. As a result, USTRANSCOM is currently pursuing a permanent waiver and will operate under a temporary waiver through FY09. An alternative solution will be sought if

USTRANSCOM is unsuccessful in obtaining a permanent CAS waiver.

Participation.

USTRANSCOM Rates are based on carriers’ cost plus a guaranteed minimum profit.

Carrier’s rates are weight averaged (based on USTRANSCOM revenues for a two-year period) into a single worldwide rate per seat-mile and ton-mile for each of the

USTRANSCOM rate categories. The FY09 Rates were developed on experienced base year cost and statistical data from twenty four carriers who provided thirty cost proposals for the base year ending 30 Jun 07. The MOU requires carriers receiving more than $5M of USTRANSCOM charter business to submit their actual cost data.i However, since we are required to be TINA compliant, carriers with $650K are required to submit cost and pricing data for the annual rate reviews. Once a permanent exemption from CAS and

TINA is approved the threshold to submit cost and pricing data for the annual rate reviews will revert to $5M. USTRANSCOM’s objective is to have a pool of accurate cost data that fairly represents the cost of providing DoD charter service. Carrier’s cost data was audited and USTRANSCOM analyzed carrier’s forecast operating cost projections in the development of the FY09 Rates. Adjustments made to carrier’s forecast costs were based on past ratemaking practices, Federal Acquisition Regulations, and MOU. Explanatory notes are provided in Appendix J to identify individual carrier adjustments. The more significant items of interest for all carriers are explained in the following paragraphs.

Class of Aircraft Service.

In FY04, USTRANSCOM introduced the multi class rate structure for cargo (large and medium) and passenger aircraft (large, medium, and small). The multi class rate structure was introduced to equitably align aircraft operating cost to revenues based on aircraft productivity (ton and seat capacity). The cargo large class consists of aircraft with an ACL ranging from 60 to 90 tons. The cargo medium class includes aircraft with an ACL of 36.5 to 51 tons. The passenger large class includes aircraft with an ACL greater than 260 seats. The medium class is aircraft with an approximate ACL range of

190-260 seats. And finally, the small class includes aircraft with an ACL of 150 seats or less. Aircraft unit operating cost will be used to place aircraft that fall between class categories.

It is accepted airline economics that smaller aircraft typically have higher operating cost per unit (ton/seat mile) and shorter stage lengths. The multi rate structure better aligns the carrier’s aircraft operating cost to USTRANSCOM rate compensation and is based on a performance based strategy.

Capital Compensation.

The MOU establishes methodology used in developing the rate of return on investment

(ROI) for FY09 Rates. ROI encompasses a number of key elements such as the industry capital structure, depreciation policies, industry’s leased equipment (both capital and operating) working capital considerations, and profit risk. USTRANSCOM understands that CRAF participants should receive a fair and reasonable ROI for their capital investment and business risk for their efforts to provide transportation services for DOD customers. The capital compensation component has been studied extensively in the past by industry and government groups.

The Capital Asset Pricing Model (CAPM) was used to calculate the cost of equity in the full ROI calculation. The CAPM methodology is directed by the MOU and uses several elements to develop a percentage indicative of carriers receiving the full ROI.

Continental and Federal Express were the only eligible carriers to receive the full ROI.

As a result, their information produced a 7.83 percent return. This decreased significantly from the Final FY08 rate which was 13.81 percent. The decrease can be attributed to the CAPM factors, especially the Beta, and a reduction of carriers eligible for the maximum return, which is based on weighted revenue ii. As a result of this decrease, Continental and Federal Express were given the 11 percent minimum return.

Appendix M provides the details for the development of the 7.83 percent full ROI for the

FY09 Rates.

USTRANSCOM applies a minimum return allowance to ensure those carriers who have no flight equipment assets or capital assets that are fully depreciated achieve a measurable return. The minimum return provision is consistent with former ratemaking practices. Therefore, in cases where a carrier’s investment base no longer yields a return on investment equal to or greater than 11 percent of total operating costs, a minimum return of 11 percent has been provided.

Cost Escalation.

Whenever possible, the carriers and USTRANSCOM use factual information such as lease agreements, contract wage agreements, equipment purchase agreements, and insurance premiums to project base period costs into the forecast year. In the event actual data is not available, USTRANSCOM applies a general cost escalation factor as computed on Appendix L. The cost escalation model uses three indices that include the

Air Transport Association Index (ATA), PPI-Nonscheduled Air Transportation Index and

Global Insight Incorporated (GII). The ATA index is weighted at 34 percent. The PPI and GII are both given a weighting of 33 percent. The cost escalation model was developed by USTRANSCOM and coordinated with industry prior to being incorporated into the latest five year MOU (2008-2012). The FY09 proposed annual cost escalation factor is 2.81 percent. The FY09 cost escalation factor is down from 4.70 percent used in

FY08 Rates. USTRANSCOM will review and update these indices as needed for the final rate.

Working Capital.

Working capital represents the timeframe from which services have been provided under

CRAF until the date those services are paid, notwithstanding the carrier’s working capital on hand. Working capital became part of the investment base under the MOU negotiations for FY88-FY93. The number of days used in the calculation was changed to

23 days from 21 days during the MOU (FY03-FY07) negotiation process. Carriers provided no comments in changing the 23 days for the MOU(FY08-FY12).

Fuel.

USTRANSCOM Rates peg the price of fuel for charter services based on data from carrier provided fuel reports and industry data. Fuel reports are reviewed for commercial fuel price trends for DoD missions and ratio of DoD and commercial fuel uplifted in support of DoD missions.

Carriers’ fuel reports for period Nov 07 – Jan 08 conclude cargo carriers receive 67 percent of their fuel at military installations and are charged the rate set annually by

Defense Energy Support Center (DESC). Conversely, passenger carriers receive 74 percent of their fuel commercially, which fluctuates up and down with the fuel market.

Commercial fuel prices for USTRANSCOM service averaged $2.84 and $2.82 for passenger and cargo respectively iii. DESC has projected JP-5 and JP-8 fuel for FY09 at

$2.77 and $2.75 respectively. The monthly Spot Market Energy Information

Administration (EIA) Index average for Mar 08 was $3.14. The weightings between commercial fuel and military fuel along with projected DESC fuel price and current commercial market prices resulted in a USTRANSCOM pegged fuel price of $3.10 and

$3.00 per U.S. gallon, for passenger and cargo (combi and L-100 will use cargo price), respectively. The pegged price includes into-plane fees and taxes. The projected

DESC fuel prices and commercial fuel prices will be reviewed again for the FY09 final rate.

USTRANSCOM will continue to adjust each carrier’s monthly revenues upward or downward if the price of fuel varies by $.01 or more per gallon over the pegged prices in establishing the rate. The solicitation addresses the fuel adjustment procedure.

Stop Charges.

With the introduction of the multi class rate structure in FY04, USTRANSCOM performed another analysis of the stop charge concept. This analysis of USTRANSCOM round-trip and one-way missions disclosed that a $2,000 stop charge for each rate category best met the objective of aligning a carrier’s trip operating cost with trip revenues. Therefore, the stop charge used to develop the line-haul rate for each passenger, cargo, combi and L-100 rate will remain at $2,000 for FY09.

Eurocontrol.

USTRANSCOM provides a Eurocontrol surcharge to compensate carriers for the extra high costs of missions through Eurocontrolled airspace. USTRANSCOM analyzed actual Eurocontrol invoices for specific routes shown in Appendix K. The current

Eurocontrol charges (converted to U.S. dollars) were calculated as a percent of the trip revenues using the FY09 proposed line haul rate (without stop charge). The application of the FY09 Proposed USTRANSCOM rates results in a lowering affect to the

Eurocontrol surcharge for FY09 due to the increased pegged fuel price. Additionally, for the passenger Eurocontrol surcharge, it has decreased further due to carriers’ tendency to skip technical stops. Therefore, USTRANSCOM is proposing the FY09 Eurocontrol surcharge of 2.6 percent for passenger and 3.3 percent for cargo missions, .59 percent for combi, 6.5 percent for L-100 hub and spoke operations and L-100 dollar amount of $530 for KBWI-LPLA-KBWI missions only.

Ferry.

USTRANSCOM changed the ferry rate in FY02 from 75 percent to 90 percent. The ferry rate is a reduced rate based on savings of flying an empty aircraft. An empty aircraft does not incur costs such as food, full cabin crew salary, and passenger liability insurance. The aircraft in empty service is more fuel-efficient and flies a more direct route. An empty aircraft in non-revenue service also incurs lower cost in “aircraft and traffic servicing.” Non-revenue enroute stops do not incur cost related to traffic handling personnel, gate requirements, security, and in some cases lower landing fees.

USTRANSCOM reviewed the current cost levels in all cost categories. The ferry rate for

FY09 will remain at 90 percent of the effective rate.iv See Appendix A for actual ferry rates.

One-Way Rates.

Historically, USTRANSCOM carriers claim that commercial backhaul opportunities for

USTRANSCOM missions are nonexistent. The ability to find a one-way commercial charter to parallel USTRANSCOM’s one-way requirements does not exist since passengers require round-trip service. Unless the USTRANSCOM charter carrier has a significant USTRANSCOM fixed buy that parallels a commercial tour operation, there is limited ability to coordinate aircraft flow and achieve commercial backhaul.

The one-way passenger and cargo rates are based on the round-trip rates, adjusted to reflect certain savings and economies. The adjustments for the one-way rate are: (1) cost savings associated with flying an empty aircraft in backhaul service, (2) a reduction for backhaul miles flown in commercial service, (3) a reduction for fewer miles flown in backhaul service due to aircraft scheduling efficiencies.

USTRANSCOM addressed the savings of flying an empty aircraft in the earlier paragraph concerning the “ferry” rate. The savings for flying an empty aircraft are roughly 10 percent. This savings also holds true for flying an empty aircraft in the reverse segment of a one-way mission.

Although there are limited commercial backhaul opportunities in USTRANSCOM passenger service, historical data does reflect some efficiency in aircraft scheduling resulting in fewer miles flown in empty backhaul service. Appendix N reflects the carrier data associated with empty backhaul service for USTRANSCOM missions. This data reflects the two empty legs before or after an USTRANSCOM one-way mission.

Carriers report the two legs before USTRANSCOM one-way missions originating outside Continental U.S. (CONUS) or, conversely, the two legs after one-way missions originating inside the CONUS. The empty legs represent the movement of the aircraft prior to re-entering commercial service, positioning to maintenance, or positioning to a carrier’s home base of operation.

The statistical ratio (Appendix N) of base year paid empty flown miles to paid one-way miles reflects some efficiency in the scheduling of aircraft in empty reverse segments.

This savings in conjunction with the 10 percent savings for flying an empty aircraft reflects a minimum of 15 - 20 percent savings for one-way missions. Therefore, USTRANSCOM is proposing a one-way passenger rate of 185 percent for FY09. This is the first year the L-100 requirement is priced under ratemaking methodology. With no backhaul data available for determination of commercial availability for their one-way missions, USTRANSCOM has grouped the L-100 in with the combi. The L-100 one-way rate will be reviewed when base year statistical data becomes available for the FY10 rate review cycle.

Taking these variables into account for all requirements, USTRANSCOM proposed the following one-way rates for FY09:

• The one-way passenger rate is set at 185 percent of the round-trip seat mile rate.

• The one-way expansion cargo rate is set at 180 percent of the round-trip ton-mile rate.

• The one-way combi and L-100 rate is set at 185 percent of the round-trip per plane mile rate.

• The one-way contingency passenger rate is set at 193 percent of the round-trip passenger rate.

• The one-way contingency cargo rate is set at 195 percent of the round-trip cargo rate.

Two Tiered Cargo One-Way Rate.

The two-tiered one-way cargo rate was established in the FY99 Rate. It set a reduced rate of 150 percent for fixed buy one-way channel missions presented to the industry a year in advance. In theory, this concept allowed the carriers the opportunity to work the flow of the DoD one-way missions with their commercial one-way business to make an efficient operation. The cargo requirements for CRAF participants are declining as a result of an increased amount of airlift available from the organic fleet. USTRANSCOM does not have any fixed buy one-way channel missions to offer in FY09. Therefore, the two-tiered cargo one-way rate is not applicable for FY09 fixed buy requirements.

Standard Allowable Cabin Loads (ACL).

In FY92, USTRANSCOM implemented the concept of maximum standard ACL’s for aircraft performing USTRANSCOM business. USTRANSCOM was concerned about parity among carriers and maintaining a competitive environment within the

USTRANSCOM Rates. The maximum standard ACL’s are based on range capability, aircraft usable floor space, gross takeoff weight capacity, lavatories, aircraft operating expense, and passenger comfort and convenience. Appendix A provides the maximum

ACL’s by rate aircraft category.

Incremental Passenger Movement.

In FY02, USTRANSCOM developed an incremental passenger service rate for periodical requirements that require the use of extra seats above the standard ACL. The rate applies when the number of additional passengers above the standard ACL is identified for an exercise, SAAM, or contingency. See Appendix A.

Standard Pay ACL Review.

After the FY09 final Rates are published USTRANSCOM will begin a review of our current standard pay ACL as identified in Appendix A, paragraph B. The objective of the review is to determine reasonableness of our current standard pay ACL in relation to aircraft productivity, weight sensitivity, cube sensitivity, and range capability. Aircraft pay ACL that specifically need to be reviewed are the B-747-400 and MD-11 cargo aircraft. Carriers will be given an opportunity to provide comments to any adjustments that may occur to the current established standard pay ACL.

Appendices.

Appendix A provides procedures and rules for the application of USTRANSCOM Rates.

Appendix B provides the weighting and participation of carriers comprising the large, medium, and small class of passenger aircraft, the large and medium class of cargo aircraft, combi aircraft and L-100 aircraft rates, respectively. Appendices C through I illustrate individual treatment of each carrier’s cost by aircraft type, with explanatory notes provided in Appendix J. Appendices K, L, M and N provide the Eurocontrol

Surcharge, Cost Escalation Factor, Rate of Return on Investment Computations, and

Backhaul Operational Data for USTRANSCOM Services, respectively.

i The Commercial Operation Integrated System (COINS) database supports contracting of commercial airlift. The database for contract dollars is maintained by USTRANSCOM/A34Y.

ii The table below depicts the decrease in the full ROI from the FY08 rate.

Fiscal

Year

RFRI

(a)

Weighted

Debt Spread

(b)

Cost of Debt

(a) + (b)

(c)

Beta

(d)

MRP

(e)

Cost of Equity

(a) +((d) x (e))

(f)

CAPM Calculation

(45% x (c)) + (55% x (f))

(g)

2008 4.94% 3.07% 8.01% 2.77 4.91% 18.55% 13.81%

2009 4.87% 3.01% 7.88% .61 4.79% 7.79% 7.83% iii The average commercial prices in fuel in USTRANSCOM service include into-plane fees and taxes. The below average commercial fuel prices are for the period Nov 07 – Jan 08.

Month Passenger Cargo

Nov 07 $2.71 $2.72 Dec 07 $2.96 $2.88 Jan 08 $2.84 $2.86 ivThe analysis of the ferry rate was performed using the final FY08 Large Class passenger Rate of 11.126 (effective rate) cents per seat mile. The ferry rate will remain at 90 percent.

Wgt'd Percentage Cost Ferry Cost Category Cost Allowed Allowed Rate %

Crew 1.2672 100% 1.2672 Fuel 3.3627 90% 3.0264 Maintenance 1.2881 100% 1.2881 Insurance 0.0823 100% 0.0823 Rent 0.6783 100% 0.6783 Depreciation 0.3324 100% 0.3324 Pre-Operating 0.0000 100% 0.0000 Ground Property 0.0360 100% 0.0360 Aircraft & Traffic Service 0.7029 85% 0.5975 Passenger Service 1.7440 65% 1.1336 G&A 0.5225 100% 0.5225 Profit 1.1094 100% 1.1094 Total 11.126 10.074 0.9054

INDEX OF APPENDICES

No.

Appendix Title Pages

A United States Transportation Command Uniform Negotiated Rates and Rules 6

B Computation of Uniform Rates: 7 Large Class Passenger Service Medium Class Passenger Service Small Class Passenger Service Large Class Cargo Service Medium Class Cargo Service Combi Class Service L-100 Class Service

C Costs Per Seat Mile by Carrier and Aircraft Type In Large Class Charter Passenger Service 7

D Costs Per Seat Mile by Carrier and Aircraft Type in Medium Class Charter Passenger Service 7

E Costs Per Seat Mile by Carrier and Aircraft Type in Small Class Charter Passenger Service 2

F Costs Per Ton Mile by Carrier and Aircraft Type in Large Class Cargo Service 9

G Costs Per Ton Mile by Carrier and Aircraft Type in Medium Class Cargo Service 3

H Cost Per Plane Mile by Carrier Charter Combi Service 1

I Cost Per Ton Mile by Carrier Charter L-100 Service 1

J Explanatory Notes 7

K Eurocontrol Surcharge 4

L Cost Escalation Factor 2

M Rate of Return on Investment 3

N Operational Data for United States Transportation Command 1 Service

APPENDIX A

SCHEDULE OF UNIFORM NEGOTIATED RATES AND RULES

FISCAL YEAR 2009

A. RATES. Air transportation services shall be paid for at the following rates. In addition, carriers' monthly USTRANSCOM revenues based on the uniform rate will be adjusted for the variance in fuel price as provided in paragraph C of this Appendix A.

(1) CATEGORY B (CHARTER) PASSENGER SERVICE

a. Large Class Aircraft

Passenger Linehaul Rates, cents per seat mile Round-trip: 12.446 One-way: 23.025 (Contingency Rate): 24.021 Ferry rate: 11.381 (90% of effective rate) Stop Charge: $2,000 per directed landing Incremental Passenger Rate: $202 (per passenger)

b. Medium Class Aircraft

Passenger Linehaul Rates, cents per seat mile Round-trip: 15.672 One-way: 28.993 (Contingency Rate): 30.247 Ferry rate: 14.486 (90% of effective rate) Stop Charge: $2,000 per directed landing Incremental Passenger Rate: $202 (per passenger)

c. Small Class Aircraft

Passenger Linehaul Rates, cents per seat mile Round-trip: 18.369 One-way: 33.983 (Contingency Rate): 35.452 Ferry rate: 17.141 (90% of effective rate) Stop Charge: $2,000 per directed landing Incremental Passenger Rate: $202 (per passenger)

(2) CATEGORY B (CHARTER) CARGO SERVICE

a. Large Class Aircraft

Cargo Linehaul Rates, cents per ton mile Round-trip: 45.320 One-way (expansion buy): 81.576 (Contingency Rate): 88.374 Ferry rate: 41.577 (90% of effective rate) Stop Charge: $2,000 per directed landing

b. Medium Class Aircraft

Cargo Linehaul Rates, cents per ton mile Round-trip: 64.467 One-way (expansion buy):116.041 (Contingency Rate): 125.711 Ferry rate: 60.163 (90% of effective rate) Stop Charge: $2.000 per directed landing

(3) CATEGORY B (CHARTER) COMBI SERVICE

Combi Linehaul Rates ,dollars per plane mile Dollars per plane mile: 25.641 One-Way: 47.436 one-way plane mile Ferry Rate: 23.922 (90% of effective rate) Stop Charge: $2.000 per directed landing

(4) CATEGORY B (CHARTER) L-100 SERVICE

L-100 Linehaul Rates, dollars per ton mile Round-trip: 1.003 One-Way (expansion buy): 1.856 Ferry Rate: .979 (90% of effective rate) Stop Charge: $2.000 per directed landing

(5) EUROCONTROL. Eurocontrol applies where a carrier is required to transit countries with an ICAO prefix of "E" or "L" (i.e., EDAF, LIRA), with the exception of EGYP in the Falkland Islands. Carriers will be paid the applicable rate plus a surcharge of 2.6 percent of trip price for passenger missions, 3.3 percent for cargo missions, .59 percent for combi, 6.5 percent for L-100 hub and spoke operations, and the L-100 requirement for KBWI-LPLA-KBWI will receive $530. The Eurocontrol surcharge calculation does not include stop charges. The Eurocontrol charge will not be calculated on ferry miles.

(6) FERRY. In the event the air carrier operates a round-trip flight where the distance between originating and terminating stations exceeds 250 statute miles, the carrier will be paid either ferry rate for the statute miles between the originating station and termination, or ferry rate for the statute miles between the terminating station and, by mutual consent, one of the carrier's principle operating bases. Ferry will be paid based on standard ACL or lesser amount. Positioning and depositioning ferry shall be included with the offer and negotiated at time of award.

The carrier will not be paid ferry compensation to “close the jaw” if USTRANSCOM has that carrier operate a follow-on flight, which originates from the terminating station, within 24 hours.

(7) INCREMENTAL PASSENGER MOVEMENT. The incremental passenger rate applies when the number of additional passengers above the standard ACL is identified for an exercise, SAAM or contingency. The incremental passenger movement rate is $202 for each additional passenger over the standard ACL. In cases when the per seat cost is lower than USTRANSCOM’s incremental passenger rate, USTRANSCOM will pay the lesser amount.

B. AIRCRAFT STANDARDS. The rate set forth in paragraph A shall be applied to the following standard aircraft loads. When an aircraft is offered for channel missions with less seats than the standard ACL, and the aircraft is not 34 inch seat pitch configuration, we will only pay for the actual number of seats.

PASSENGER AIRCRAFT CARGO AIRCRAFT

Maximum Entitlement Maximum Entitlement Standard Category Standard Category Aircraft Type Payload Aircraft Type Payload

Small Aircraft:

Small Aircraft:

B-727-100 120 Short Range B-727-100 18 Short Range B-737-100 120 Short Range B-727-200 22 Short Range B-737-300 130 Short Range A319 135 Short Range MD-80 140 Short Range B-737-400 140 Short Range B-727-200 150 Short Range B-737-800 150 Short Range A320-232 150 Short Range A321-200 170 Short Range

Medium Aircraft:

Medium Aircraft:

B-757-200 190 Narrow Body DC-8-50 36.5 Narrow Body B-757-200ER 190 Narrow Body DC-8-62 39.2 Narrow Body B-757-300 200 Narrow Body DC-8-61 39.2 Narrow Body B-767-200 200 Narrow Body DC-8-63 45 Narrow Body B-767-200ER 200 Narrow Body DC-8-71 45 Narrow Body A-310 200 Narrow Body DC-8-73F 45 Narrow Body A-300-600ER 210 Narrow Body B-767-200F 48 Narrow Body A-300 210 Narrow Body A300-B4(F) 50 Short Range B-767-300 240 Wide Body A300-600ER 51 Short Range B-767-300ER 240 Wide Body B-767-400ER 260 Wide Body

PASSENGER

AIRCRAFT CONT. Maximum Entitlement

CARGO

AIRCRAFT

CONT. Maximum Entitlement

Standard Category Standard Category Aircraft Type Payload Aircraft Type Payload

Large Aircraft: Large Aircraft:

L-1011-50 280 Wide Body L-1011-50/100 60 Wide Body L-1011-100 280 Wide Body DC-10-10* 53 Wide Body DC-10-10 280 Wide Body B-767-300F 61 Wide Body L-1011-500 300 Wide Body DC-10-30/40 75 Wide Body A-330-300 310 Wide Body MD-11C 82 Wide Body A-330-323 310 Wide Body MD-11F 86 Wide Body B-777-200ER 330 Wide Body B-747-100 90 Wide Body DC-10-40 330 Wide Body B-747-200 90 Wide Body DC-10-30 330 Wide Body B-747-400 90 Wide Body MD-11C 360 Wide Body B-747-400ER 90 Wide Body MD-11ER 360 Wide Body B-747-100 400 Wide Body B-747-200 400 Wide Body B-747-400ER 400 Wide Body

C. FUEL ADJUSTMENTS.

(1) General. The carrier shall be compensated for variance in fuel prices incurred on USTRANSCOM contract full planeload missions bought at the USTRANSCOM rate. Compensation will not be made to the prime or subservicing carrier for substitute service or subcontracted miles. Adjustments will be made upward or downward if the price of fuel varies by more than one cent per gallon from the pegged price (as stated in the USTRANSCOM Uniform Negotiated Rates and Rules) used in establishing the USTRANSCOM rates.

(2) Category B. The solicitation/contract addresses the current fuel adjustment procedures.

D. ROUND-TRIP SERVICES. The round-trip rate will be applied to trips where passengers and/or cargo are transported on two or more successive revenue flights in opposite directions.

E. CHANNEL EXTENSIONS. Seattle closed as of 1 Oct 05 as a full up commercial gateway and now operates as a channel extension. The following amounts will be paid per stop when the government directs a landing at Seattle.

The channel extension prices will be updated in the final rate.

Large Class Aircraft Ferry In/Live Out $3,594 Live In/Ferry Out $2,224

Medium Class Aircraft Ferry In/Live Out $3,594 Live In/Ferry Out $2,224

Small Class Aircraft Ferry In/Live Out $3,594

Live In/Ferry Out $2,224

F. COMPUTATION OF PASSENGER SEAT-MILES AND CARGO TON-MILES FOR PAY PURPOSES.

Long Range Service: Computation of miles and stop charges shall be computed as follows:

(a) If a live route segment is less than 4,000 miles, mileage shall be computed nonstop from origin to destination of that segment.

(b) When a route segment is 4,000 miles or more the mileage shall be computed via an intermediate point(s) which yields the shortest mileage. The government will pay for a directed operational stop when a route segment exceeds 4,000 miles. Carrier enroute stops related to paid ferry when positioning an aircraft for USTRANSCOM service do not receive a stop charge since paid ferry is paid on the effective rate versus the linehaul rate.

Examples: KBWI*CYQX–EDDF–LTAG–EDDF*CYQX–KBWI-KCHS = 7 Paid Stops1/

KCHS#MMCZ-MPTO=1 Paid Stop2/

KWRI+KCOF-TAPA-FHAW-TAPA-KCOF+KWRI= 4 Paid Stops3/

1/ * This symbol used in the above example indicates operational stops.

2/ # This symbol used in the above example indicates special miles for circumnavigating countries which will not grant over flight clearances—stop charges do not apply.

3/ + This symbol used in the above example indicates ferry leg for which stop charges do not apply.

(c) If a route segment is in the Pacific, the mileage shall be computed as indicated below:

PACIFIC ROUTINGS

PHILIPPINE

BETWEEN THAILAND A/ ISLANDS GUAM KOREA HAWAII TAIWAN OKINAWA JAPAN ALASKA

CONUS 4 or 6 4 or 6 5 4 or 8 B/ 1 4 or 8 B/ 4 or 8 B/ 2 or 5 B/ 1

ALASKA 3 3 - 3 - 3 3 1 or 3

JAPAN 1 1 1 1 1 B/ 1 1

OKINAWA 1 1 1 1 3 B/ 1

TAIWAN 1 1 1 1 3 B/

HAWAII 7 7 1 3 B/

KOREA 9 1 1

GUAM 1 1

PHILIPPINE 1

ISLAND

ROUTINGS

1. Direct 4. Via Anchorage and Yokota AB, Japan 7. Via Guam

2. Via Anchorage 5. Via Honolulu 8. Via Honolulu and Yokota AB, Japan

3. Via Yokota AB, Japan 6. Via Honolulu - Guam 9. Via Taipei A/ Certain trips to Thailand require submission of flight plan for circumnavigation.

B/ Honolulu – Yokota AB, Japan either direct or via Midway or Guam as specified in the USTRANSCOM contract.

G. DEFINITIONS.

“Category B Airlift” USTRANSCOM channel airlift for the transportation of passengers in full planeload lots on aircraft chartered from the commercial air industry. These international charter flights are scheduled by USTRANSCOM on a regular basis to and from designated commercial airports and/or USTRANSCOM gateways and/or military aerial ports.

“Charter rate” means a commercial price that is in fact available to the general public for equivalent services. Missions bought at a commercial charter price are all inclusive of taxes and any other ancillary cost and are not subject to adjustments for fuel prices.

“Consignment” means a number of Category A cargo pallets moving as one shipment, on the same date and assigned a Government/Commercial Bill of Lading (GBL/CBL) Number or listed on a DD Form 250 as one shipment. The minimum charge for any consignment is based on pallet minimum weight guarantees, times the number of pallets in the consignment. If the total weight of cargo on all pallets in the consignment exceeds the average guarantee, make payment for the actual weight.

“Contingency rate” The USTRANSCOM proposed contingency one-way rates are to be used at the USTRANSCOM commander’s discretion during conditions such as outbreak of war, armed conflict, insurrection, civil or military strife, or similar conditions (overseas). The one-way rates are adjusted to reflect limited backhaul capabilities.

“Stop charge” The stop charge is paid by the government in the case of government directed landings (operational and traffic stops) identified by the contract or delivery order to support the USTRANSCOM mission.

Operational stops allowed in accordance with Appendix A, Paragraph F (b) are considered directed stops. Landings made by the contractor of his own discretion for maintenance, aborted flights, fuel stops, crew changes, or emergency landings are not considered "directed landings," and therefore receive no stop charge.

“Pay miles” means the statute miles used to compute the price of the mission in accordance with COINS.

COINS calculates distances based on longitude and latitude for geographical locations listed in the DoD Flight Information Publication (FLIP) and identified by location indicators assigned by the International Civil Aviation Organization (ICAO) and published in the Location Indicator, Doc 7910/67.

APPENDIX B

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP PASSENGER SERVICE

LARGE CLASS AIRCRAFT

USTRANSCOM

ADJUSTED FY07 FY08

RATE PER PASSENGER PASSENGER WEIGHTED

AIRCRAFT PAX MILE REVENUES REVENUES RATE

CARRIER TYPE (CENTS) [000] [000] (CENTS)

American Trans Air L-1011-500 $14.362 $149,772 $46,627 Continental Airlines B-777-200 $12.710 $4,323 $592 Northwest Airlines B-747-200 $13.842 $5,167 $0 Omni Air Int'l DC-10-30/40 $13.046 $284,589 $132,761 United Airlines B-747-400 $12.564 $10,996 $0 World Airways MD-11 $11.575 $374,114 $143,565 World Airways DC-10-30/40 $13.445 $32,867 $21,624

RATE -- WEIGHTED BY REVENUES $12.645

Linehaul Rate Effective Rate Average Average Rate Per Per Paid Per Seat Mile Stage Seats Per Directed Seat Mile

(cents) Length Mission Landing (cents) $12.645 2,966 339 $2,000 $12.446

Note: The weighted average stage length and weighted average seats are based on international base year data.

USTRANSCOM UNIFORM RATE

ROUND-TRIP PASSENGER SERVICE

MEDIUM CLASS AIRCRAFT

USTRANSCOM

ADJUSTED FY07 FY08

RATE PER PASSENGER PASSENGER WEIGHTED

AIRCRAFT PAX MILE REVENUES REVENUES RATE

CARRIER TYPE (CENTS) [000] [000] (CENTS)

American Trans Air B-757-200 $18.291 $14,318 $7,965 American Trans Air B-757-300 $17.164 $72,225 $25,984 Delta Airlines B-767-300ER $12.598 $4,961 $5,593 North American Airlines B-767-300 $15.979 $152,358 $111,876 North American Airlines B-757-200 $16.510 $83,638 $29,604 Omni Air International B-757-200 $13.412 $27,798 $7,421 Ryan International Airlines B-757-200 $14.713 $23,573 $4,716

RATE-WEIGHTED BY REVENUES $16.095

Per Seat Mile Stage Seats Per Directed Seat Mile

$16.095 2,286 207 $2,000 $15.672

USTRANSCOM UNIFORM RATE

ROUND-TRIP PASSENGER SERVICE

SMALL CLASS AIRCRAFT

USTRANSCOM

ADJUSTED FY07 FY08

RATE PER PASSENGER PASSENGER WEIGHTED

AIRCRAFT PAX MILE REVENUES REVENUES RATE

CARRIER TYPE (CENTS) [000] [000] (CENTS)

American Trans Air B-737-800 $19.436 $4,813 $7,511 Miami Air Int'l B-737-800 $18.964 $45,149 $14,301

RATE--WEIGHTED BY REVENUES $19.045

Per Seat Mile Stage Seats Per Directed Seat Mile

(cents) Length Mission Landing (cents) $19.045 1,973 150 $2,000 $18.369

USTRANSCOM

ADJUSTED FY07 FY08

RATE PER CARGO CARGO WEIGHTED

AIRCRAFT TON MILE REVENUES REVENUES RATE

CARRIER TYPE (CENTS) [000] [000] (CENTS)

Arrow Air DC-10-30/40 $41.579 $2,837 $2,381 Atlas Airlines B-747-200/400 $47.335 $426,951 $185,211 Evergreen Int'l Airlines B-747-100/200 $44.998 $392,612 $170,782 Fed Express Corp MD-11 $53.135 $12,473 $27,628 Gemini Air Cargo DC-10-30 $37.799 $26,526 $12,391 Kalitta Air B-747-100/200 $43.863 $63,782 $26,003 Southern Air B-747-200 $45.303 $4,151 $14,971 United Parcel Service B-747-100/200 $57.574 $7,377 $2,367 World Airways DC-10-30/40 $50.571 $4,533 $33,669

RATE -- WEIGHTED BY REVENUES $46.197

Effective Rate Average Average Rate Per Per Paid Per Ton Mile Stage Tons Per Directed Ton Mile

$46.197 2,534 90 $2,000 $45.320

Note: The weighted average stage length and weighted average tons

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP CARGO SERVICE

LARGE CLASS AIRCRAFT

ADJUSTED FY07 FY08

RATE PER CARGO CARGO WEIGHTED

AIRCRAFT TON MILE REVENUES REVENUES RATE

CARRIER TYPE (CENTS) [000] [000] (CENTS)

Air Transport Int'l DC-8-73 55.937 $6,654 $7,849

ASTAR DC-8-63/71/73F 75.697 $11,439 $4,744

National Air Cargo DC-8-63/71/73 70.656 $1,467 $2,484

RATE -- WEIGHTED BY REVENUES $66.848

Effective Rate Average Average Rate Per Per Paid Per Ton Mile Stage Tons Per Directed Ton Mile

$66.848 1,867 45 $2,000 $64.467

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP CARGO SERVICE

MEDIUM CLASS AIRCRAFT

USTRANSCOM UNIFORM RATE

ROUND-TRIP COMBI SERVICE

COMBI AIRCRAFT

USTRANSCOM

ADJUSTED FY07 FY08

RATE PER COMBI COMBI WEIGHTED

AIRCRAFT PLANE MILE REVENUES REVENUES RATE

CARRIER TYPE (DOLLARS) [000] [000] (DOLLARS)

Air Transport International DC-8-62/72 $26.5799 $74,645 $50,916

RATE--WEIGHTED BY REVENUES $26.580

Effective Rate Average Rate Per Per Paid Per Plane Mile Stage Directed Plane Mile

(dollars) Length Landing (dollars) $26.580 2,129 $2,000 $25.641

Note: The average stage length is the stage length carrier proposed for USTRANSCOM operations.

ADJUSTED FY07 FY08

RATE PER L-100 L-100 WEIGHTED

AIRCRAFT TON MILE REVENUES REVENUES RATE

CARRIER TYPE (DOLLARS) [000] [000] (DOLLARS)

Lynden L-100/382 $1.0879 $45,050 $48,877

RATE -- WEIGHTED BY REVENUES $1.088

Effective Rate Average Average Rate Per Per Paid Per Ton Mile Stage Tons Per Directed Ton Mile

(dollars) Length Mission Landing (dollars) $1.088 1,027 23 $2,000 $1.003

COMPUTATION

USTRANSCOM UNIFORM RATE

L-100 CARGO SERVICE

L-100 AIRCRAFT

APPENDIX C

AMERICAN TRANS AIR Aircraft Type L-1011-500

LARGE CLASS Passenger Service

FY09 RATE REVIEW

FORECAST YEAR FY09

YE JUN 07

CARRIER BY AS

SYSTEM CARRIER ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 5,173 4,587 A 4,576

AVERAGE DAILY AIRCRAFT UTILIZATION 6.6 5.9 B 5.9

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $5.0070 $4.4540 C $4.3847 Fuel, Oil, & Aircraft Supplies 11.3876 10.4918 D 15.6698 Flight Equipment Maintenance 2.1763 2.4794 E 2.4652

Total Direct Variable 18.5709 $17.4252 22.5197

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.1419 0.2546 F 0.2532 Aircraft Rentals & Miscellaneous 0.3067 0.6676 G 0.6672 Flight Equipment Depreciation & Obsolescence 1.9655 3.2951 H 3.2955 Amortization of Preoperating Expense 0.0000 0.0000 0.0000

Total Direct Fixed 2.4141 4.2173 4.2159

Indirect:

Maintenance & Depreciation-General Ground Property 1.0748 J 0.3008 Aircraft & Traffic Servicing 2.4810 K 3.3162 Passenger Service 5.3505 L 5.2862 General & Administrative 3.0243 M 3.1766

Total Indirect 11.9306 12.0798

TOTAL OPERATING COST 33.5731 38.8154

Return on Investment 3.6930 N 4.2697 *

TOTAL COST $37.2661 $43.0851

Average Investment for FY09 Working Capital 1.8823 O 2.3842 Owned Flight Equipment (net) 9.4929 P 7.9458 Long Term/Capital Leased Flight Equipment (net) 0.0000 0.0000 Ground Property & Equipment (net) 3.0822 R 0.1924 Deferred Preoperating Expense/Other 0.0000 0.0000 Annual Operating Lease Expense 0.5141 T 0.5143

Allowable Cabin Load 300 U 300

RATE PER SEAT MILE $0.12422 $0.14362

* Allows minimum return at 11 percent of operating cost.

CONTINENTAL AIRLINES, INC. Aircraft Type B-777-200

LARGE CLASS AIRCRAFT Passenger Service

FY09 RATE REVIEW

FORECAST YEAR FY09

YE JUN 07

CARRIER BY AS

SYSTEM CARRIER ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 31,140 230 A 229

AVERAGE DAILY AIRCRAFT UTILIZATION 14.3 14.3 B 11.6

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $0.9487 $1.6424 C $2.3728 Fuel, Oil, & Aircraft Supplies 7.4356 8.3438 D 12.0590 Flight Equipment Maintenance 1.8569 6.7740 E 6.9048

Total Direct Variable 10.2413 $16.7602 21.3366

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.1666 0.1470 F 0.1792 Aircraft Rentals & Miscellaneous 1.3496 1.6945 G 2.1383 Flight Equipment Depreciation & Obsolescence 0.4165 1.0309 H 1.4081 Amortization of Preoperating Expense 0.0000 0.0000 0.0000

Total Direct Fixed 1.9327 2.8724 3.7256

Indirect:

Maintenance & Depreciation-General Ground Property 2.2423 J 0.1256 Aircraft & Traffic Servicing 8.3902 K 3.2527 Passenger Service 1.2736 L 6.8710 General & Administrative 2.0906 M 2.4759

Total Indirect 13.9967 12.7252

TOTAL OPERATING COST 33.6293 37.7874

Return on Investment 7.1064 N 4.1566 *

TOTAL COST $40.7357 $41.9440

Average Investment for FY09 Working Capital 1.9128 O 2.2840 Owned Flight Equipment (net) 11.7564 P 13.9913 Long Term/Capital Leased Flight Equipment (net) 13.2929 Q 15.6220 Ground Property & Equipment (net) 27.4993 R 1.5397 Deferred Preoperating Expense/Other 0.0000 0.0000 Annual Operating Lease Expense 1.6945 T 2.1383

Allowable Cabin Load 330 U 330

RATE PER SEAT MILE $0.12344 $0.12710

NORTHWEST AIRLINES Aircraft Type B-747-200

LARGE CLASS AIRCRAFT Passenger Service

FY09 RATE REVIEW

FORECAST YEAR FY09

YE JUN 07

CARRIER BY AS

SYSTEM CARRIER ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 3,383 173 A 165

AVERAGE DAILY AIRCRAFT UTILIZATION 6.4 6.3 B 6.4

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $3.2232 $3.2255 C $3.2481 Fuel, Oil, & Aircraft Supplies 14.4209 14.5397 D 22.3761 Flight Equipment Maintenance 12.3432 12.3519 E 12.4254

Total Direct Variable 29.9873 $30.1171 38.0496

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.0219 0.5784 F 0.2192 Aircraft Rentals & Miscellaneous 1.0641 0.0000 0.0000 Flight Equipment Depreciation & Obsolescence 1.2335 0.1031 H 0.0529 Amortization of Preoperating Expense 0.0000 0.0000 0.0000

Total Direct Fixed 2.3195 0.6815 0.2721

Indirect:

Maintenance & Depreciation-General Ground Property 0.0040 J 0.0042 Aircraft & Traffic Servicing 6.0938 K 6.3691 Passenger Service 1.6805 L 3.3285 General & Administrative 1.4884 M 1.8563

Total Indirect 9.2667 11.5581

TOTAL OPERATING COST 40.0653 49.8798

Return on Investment 4.4072 N 5.4868 *

TOTAL COST $44.4725 $55.3666

Average Investment for FY09 Working Capital 2.5179 O 3.1388 Owned Flight Equipment (net) 3.3827 P 3.7138 Long Term/Capital Leased Flight Equipment (net) 0.0000 0.0000 Ground Property & Equipment (net) 0.0630 R 0.0662 Deferred Preoperating Expense/Other 0.0000 0.0000 Annual Operating Lease Expense 0.0000 0.0000

Allowable Cabin Load 400 U 400

RATE PER SEAT MILE $0.11118 $0.13842

OMNI AIR INTERNATIONAL Aircraft Type DC-10-30/40

LARGE CLASS AIRCRAFT Passenger Service

FY09 RATE REVIEW

FORECAST YEAR FY09

YE JUN 07

CARRIER BY AS

SYSTEM CARRIER ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 9,377 7,512 A 8,290

AVERAGE DAILY AIRCRAFT UTILIZATION 6.7 7.3 B 6.7

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $4.5609 $5.1266 C $4.9636 Fuel, Oil, & Aircraft Supplies 11.4935 11.7274 D 17.4251 Flight Equipment Maintenance 5.6620 6.2050 E 6.1564

Total Direct Variable 21.7165 $23.0590 28.5451

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.4065 0.2489 F 0.2947 Aircraft Rentals & Miscellaneous 1.9816 2.2776 G 2.5144 Flight Equipment Depreciation & Obsolescence 0.0598 0.0536 H 0.0621 Amortization of Preoperating Expense 0.0000 0.0000 0.0000

Total Direct Fixed 2.4479 2.5801 2.8712

Indirect:

Maintenance & Depreciation-General Ground Property 0.0626 J 0.0602 Aircraft & Traffic Servicing 2.5177 K 2.2974 Passenger Service 3.6213 L 3.7322 General & Administrative 1.0859 M 1.2785

Total Indirect 7.2875 7.3683

TOTAL OPERATING COST 32.9266 38.7846

Return on Investment 3.6219 N 4.2663 *

TOTAL COST $36.5485 $43.0509

Average Investment for FY09 Working Capital 2.0675 O 2.4357 Owned Flight Equipment (net) 0.7271 P 0.8263 Long Term/Capital Leased Flight Equipment (net) 0.0346 Q 0.0000 Ground Property & Equipment (net) 0.8046 R 0.7738 Deferred Preoperating Expense/Other 0.0000 0.0000 Annual Operating Lease Expense 2.2686 T 2.5030

Allowable Cabin Load 330 U 330

RATE PER SEAT MILE $0.11075 $0.13046

UNITED AIRLINES Aircraft Type B-747-400

LARGE CLASS AIRCRAFT Passenger Service

FY09 RATE REVIEW

FORECAST YEAR FY09

YE JUN 07

CARRIER BY AS

SYSTEM CARRIER ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 68,027 690 A 690

AVERAGE DAILY AIRCRAFT UTILIZATION 11.6 11.6 B 11.1

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $2.0873 $3.4914 C $3.4592 Fuel, Oil, & Aircraft Supplies 13.1139 13.5830 D 20.2637 Flight Equipment Maintenance 2.8086 3.4840 E 3.5104

Total Direct Variable 18.0098 $20.5584 27.2333

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.0300 0.2396 F 0.2315 Aircraft Rentals & Miscellaneous 0.6909 0.9616 G 0.9475 Flight Equipment Depreciation & Obsolescence 0.8368 1.4268 H 1.4354 Amortization of Preoperating Expense 0.0000 0.0000 0.0000

Total Direct Fixed 1.5577 2.6280 2.6144

Indirect:

Maintenance & Depreciation-General Ground Property 0.4603 J 0.1648 Aircraft & Traffic Servicing 4.3173 K 5.9722 Passenger Service 5.3631 L 7.1762 General & Administrative 1.5992 M 2.1140

Total Indirect 11.7399 15.4272

TOTAL OPERATING COST 34.9263 45.2749

Return on Investment 4.1217 N 4.9802 *

TOTAL COST $39.0480 $50.2551

Average Investment for FY09 Working Capital 2.0843 O 2.7549 Owned Flight Equipment (net) 22.9411 P 20.4747 Long Term/Capital Leased Flight Equipment (net) 1.4097 Q 1.3693 Ground Property & Equipment (net) 6.6764 R 1.7689 Deferred Preoperating Expense/Other 0.0000 0.0000 Annual Operating Lease Expense 0.9581 T 0.7089

Allowable Cabin Load 400 U 400

RATE PER SEAT MILE $0.09762 $0.12564

WORLD AIRWAYS Aircraft Type MD-11

LARGE CLASS AIRCRAFT Passenger Service

FY09 RATE REVIEW

FORECAST YEAR FY09

YE JUN 07

CARRIER BY AS

SYSTEM CARRIER ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 12,617 10,011 A 10,057

AVERAGE DAILY AIRCRAFT UTILIZATION 8.8 8.8 B 8.8

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $2.5325 $2.6616 C $2.6969 Fuel, Oil, & Aircraft Supplies 5.2394 10.7839 D 15.9049 Flight Equipment Maintenance 4.1373 4.1412 E 4.4002

Total Direct Variable 11.9092 $17.5867 23.0020

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.1573 0.3083 F 0.2977 Aircraft Rentals & Miscellaneous 1.8040 3.9417 G 3.9339 Flight Equipment Depreciation & Obsolescence 0.1049 0.5210 H 0.4752 Amortization of Preoperating Expense 0.0000 0.0000 0.0000

Total Direct Fixed 2.0662 4.7710 4.7068

Indirect:

Maintenance & Depreciation-General Ground Property 0.0660 J 0.0587 Aircraft & Traffic Servicing 2.8569 K 2.5057 Passenger Service 5.6272 L 5.5477 General & Administrative 1.4974 M 1.7194

Total Indirect 10.0475 9.8315

TOTAL OPERATING COST 32.4052 37.5403

Return on Investment 3.5646 N 4.1294 *

TOTAL COST $35.9698 $41.6697

Average Investment for FY09 Working Capital 2.0064 O 2.3326 Owned Flight Equipment (net) 2.1086 P 3.1016 Long Term/Capital Leased Flight Equipment (net) 0.1757 Q 0.2112 Ground Property & Equipment (net) 0.0958 R 0.0854 Deferred Preoperating Expense/Other 0.0000 0.0000 Annual Operating Lease Expense 3.7268 T 3.7191

Allowable Cabin Load 360 U 360

RATE PER SEAT MILE $0.09992 $0.11575

WORLD AIRWAYS Aircraft Type DC-10-30/40

LARGE CLASS AIRCRAFT Passenger Service

FY09 RATE REVIEW

FORECAST YEAR FY09

YE JUN 07

CARRIER BY AS

SYSTEM CARRIER ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 505 493 A 499

AVERAGE DAILY AIRCRAFT UTILIZATION 5.0 5.0 B 5.0

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $2.7564 $5.5222 C $2.6308 Fuel, Oil, & Aircraft Supplies 5.0891 11.3984 D 16.8110 Flight Equipment Maintenance 9.2911 16.4719 E 8.8558

Total Direct Variable 17.1366 $33.3925 28.2976

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.1624 0.2715 F 0.2608 Aircraft Rentals & Miscellaneous 3.2752 1.4954 G 1.4926 Flight Equipment Depreciation & Obsolescence 1.3703 1.1367 H 1.0909 Amortization of Preoperating Expense 0.0000 0.0000 0.0000

Total Direct Fixed 4.8079 2.9036 2.8443

Indirect:

Maintenance & Depreciation-General Ground Property 0.0568 J 0.0503 Aircraft & Traffic Servicing 2.4612 K 2.1448 Passenger Service 4.8045 L 4.8317 General & Administrative 2.0945 M 1.8040

Total Indirect 9.4170 8.8308

TOTAL OPERATING COST 45.7131 39.9727

Return on Investment 5.0284 N 4.3970 *

TOTAL COST $50.7415 $44.3697

Average Investment for FY09 Working Capital 2.8065 O 2.4474 Owned Flight Equipment (net) 3.3744 P 2.2963 Long Term/Capital Leased Flight Equipment (net) 0.0000 0.0000 Ground Property & Equipment (net) 0.0825 R 0.0731 Deferred Preoperating Expense/Other 0.0000 0.0000 Annual Operating Lease Expense 1.4799 T 1.4771

Allowable Cabin Load 330 U 330

RATE PER SEAT MILE $0.15376 $0.13445

APPENDIX D

AMERICAN TRANS AIR Aircraft Type B-757-200

MEDIUM CLASS Passenger Service

FY09 RATE REVIEW

FORECAST YEAR FY09

YE JUN 07

CARRIER BY AS

SYSTEM CARRIER ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 8,842 869 A 869

AVERAGE DAILY AIRCRAFT UTILIZATION 8.6 5.0 B 5.0

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $2.8912 $4.2877 C $4.1128 Fuel, Oil, & Aircraft Supplies 5.3987 5.4809 D 8.4231 Flight Equipment Maintenance 1.0720 1.4114 E 1.4023

Total Direct Variable 9.3619 $11.1800 13.9382

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.2748 0.3787 F 0.3774 Aircraft Rentals & Miscellaneous 2.0133 3.9540 G 3.9611 Flight Equipment Depreciation & Obsolescence 1.8184 3.3885 H 3.3956 Amortization of Preoperating Expense 0.0000 0.0000 0.0000

Total Direct Fixed 4.1065 7.7212 7.7341

Indirect:

Maintenance & Depreciation-General Ground Property 0.6063 J 0.1633 Aircraft & Traffic Servicing 1.8518 K 2.2829 Passenger Service 4.4267 L 4.6920 General & Administrative 2.4972 M 2.4984

Total Indirect 9.3820 9.6366

TOTAL OPERATING COST 28.2832 31.3089

Return on Investment 3.1112 N 3.4440 *

TOTAL COST $31.3944 $34.7529

Average Investment for FY09 Working Capital 1.5543 O 1.7553 Owned Flight Equipment (net) 7.3093 P 13.4190 Long Term/Capital Leased Flight Equipment (net) 0.0000 0.0000 Ground Property &…