Revision Effective 1 Jan 09 to Final FY2009 Uniform Rates and Rules.pdf

UNITED STATES TRANSPORTATION COMMAND

508 SCOTT DR

SCOTT AIR FORCE BASE IL 62225-5357

18 Dec 08

MEMORANDUM FOR ALL CARRIERS

FROM: USTRANSCOM/AQ-P

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

SUBJECT: Notice of Revision Effective 1 Jan 09 – 30 Sep 09 Final Fiscal Year 2009 (FY09)

Uniform Rates and Rules for International Service – Solicitation Number

HTC711-08-R-0003

1. The Final FY09 rate package was posted to www.fbo.gov on 31 Jul 08- with fuel pegged at $4.20 per gallon for passenger and $4.15 per gallon for cargo, combi, and L-100. Defense Energy Support Center (DESC) decreased its fuel prices on 20 Nov 08. USTRANSCOM considered this decrease significant enough to adjust the uniform rates. The revised uniform rates are effective 1 Jan 09 with fuel pegged at $2.30 per gallon for passenger and $2.40 per gallon for cargo, combi, and L-100.

2. The attached is the Final FY09 Uniform Rates and Rules for International Service effective 1 Jan 09. It supersedes the Final FY09 Uniform Rates and Rules for International Service dated 31 Jul 08.

3. The final rates for the various classes of service are as follows:

Linehaul Rate Stop Charge Large Class Passenger $.11131 Per Seat Mile $2,000 Medium Class Passenger $.14196 Per Seat Mile $2,000 Small Class Passenger $.16881 Per Seat Mile $2,000 Large Class Cargo $.41048 Per Ton Mile $2,000 Medium Class Cargo $.55722 Per Ton Mile $2,000 Combi Service $22.95696 Per Plane Mile $2,000 L-100 $.99264 Per Ton Mile $2,000 http://www.fbo.gov/

4. If you have any questions please contact me at 618-229-2463 or Susan Meyer Wickell at 618-229-2494.

//SIGNED//

LUCRETIA A. SANCHEZ

Supervisory Price/Cost Analyst

1 Attachment 1 Jan 09 Revised FY09 Final Uniform Rates and Rules for International Service

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

“Revised Page” Effective 1 Oct 08 – 30 Sep 09

FINAL

UNIFORM RATES AND RULES

FOR

INTERNATIONAL SERVICE

FISCAL YEAR 2009

INTRODUCTION

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

“Rates”) have been developed using ratemaking procedures attached to the Memorandum of Understanding (MOU) for FY08 through FY12, and methodologies previously established by the Civil Aeronautics Board. 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).

The proposed rates were issued on 28 Apr 08 with carrier comments due on 30 May 08.

The following carriers provided comments: Evergreen International Airlines, Federal

Express, Omni Air International, and Global Aero Logistics (World Airlines and North

American Airlines). The general comments received relate to the fuel adjustment process, cost escalation factor, minimum return, and scheduled carrier’s proposed utilization. Each of the carrier’s general comments will be addressed in the appropriate subject paragraph which follows.

Participation.

USTRANSCOM Rates are based on carrier’s 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. Federal Express commented on the differences in their revenues for the weightings used in the calculation of the composite Rates. This is often the result of a timing issue in the pulling of revenue data from USTRANSCOM COINS data base for the revenues used in the calculation of the proposed Rates. This difference is rectified in the final Rates. The FY09 Rates were developed on experienced base year cost and statistical data furnished by 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. 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 has 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. Detailed 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.

Aircraft Utilization:

USTRANSCOM applies a carrier’s fleet wide system utilization for the calculation of a system constructed mileage base. USTRANSCOM missions do result in some inefficiency as compared to a CRAF carrier’s commercial scheduled operations.

Therefore, USTRANSCOM recognizes utilization in USTRANSCOM operations along with the continued application of system utilization in accordance with the MOU. The

USTRANSCOM utilization will be used in the calculation of a system mileage base providing a carrier’s data supports a lower utilization. Global Aero Logistics requested utilization for Continental, United Airlines, Delta and Northwest Airlines be adjusted downward to reflect a average utilization in CRAF service. Each of carrier’s utilization reported in the proposed Rates are the carrier’s utilization in USTRANSCOM service and, therefore, cannot be lowered any further on the basis of the current MOU.

USTRANSCOM allows the carrier to remove days for major modification and scheduled heavy maintenance in the forecast year. This is an area USTRANSCOM will annually request Defense Contract Audit Agency (DCAA) to review.

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

180-260 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 AMC 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 air 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 6.99 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. A review of the CAPM factors for the final rate disclosed no significant changes in these factors.

USTRANSCOM received no carrier’s comments on this subject. As a result of this decrease, the final rate calculation will also provide Continental and Federal Express 11 percent minimum return.

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. Omni Air and Evergreen International requested the 11 percent minimum return be raised to 12 percent. The primary reason provided for the 12 percent minimum return was the commission fee cost to belong to a teaming arrangement. This item was brought up during our recent negotiation for the MOU period FY08-FY12. As stated in the past, commissions paid to teaming arrangements are unallowable in accordance with federal acquisition regulations and therefore cannot be recognized as justification for higher minimum return.

Cost Escalation.

General comments were received on cost escalation. Omni Air recommended the weighting assigned to the ATA index be lowered and weighting for the PPI – Air

Transport Index be increased. The cost escalation model is a ratemaking policy item that is negotiated and coordinated with industry every five years. This is done to provide stability in our annual ratemaking process. The Global Insight Incorporated (GII) index was added to the cost escalation model for the most recent MOU (FY08-FY12) up-date.

The prior escalation model had the ATA index weighted at 75 percent and the PPI-Air

Transportation Index weighted at 25 percent. When the GII Index was added to the escalation model a weighting of 34 percent, 33 percent, and 33 percent was assigned to the ATA, PPI and GII indexes respectively. Omni recommended that the PPI index be given a higher weighting. The PPI index is highest of the three indexes because this index does include some fuel cost. USTRANSCOM can justify the PPI index in the escalation model, even with its fuel inclusion, in order to recognize costs more specific to the nonscheduled air carrier. Omni wanted the adjustment to the escalation model to recognize the weaken USD to the Euro. Global Aero Logistics also commented on the higher operating cost as result of the weaken USD to the Euro. To consider an adjustment factor to offset the weak dollar against the Euro would be difficult to administer. USTRANSCOM would have to find a cohesive index or method that represents all CRAF carriers’ verses basing on individual carrier costs. USTRANSCOM has always considered each carrier’s current operation cost to be recognized in the next rate review. The final FY09 annual cost escalation is 2.96 percent as detailed in

Appendix L.

Fuel.

USTRANSCOM pegs 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.

A review of carriers’ recent monthly fuel reports 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.

The average commercial fuel price is an average of the two commercial fuel index sources which includes the Spot Market Energy Information Administration (EIA) Index and the International Air Transportation Association (IATA) fuel index iii.

Effective 1 Oct 08 – 31 Dec 08: DESC current JP-5 and JP-8 fuel prices, as of 1 Jul 08, is $4.09 and $4.07 respectively. The DESC fuel prices for the FY09 contract period will not be published until late Sep 08. If required, USTRANSCOM will adjust the DESC and commercial fuel prices when DESC publishes their fuel prices in Sep 08.

USTRANSCOM will closely monitor the fuel prices for the FY09 contract performance period and make appropriate adjustments to the pegged fuel prices as we did for the

FY08 contract period. The weightings between commercial fuel and military fuel and the current commercial fuel and military fuel prices results in a pegged fuel price of $4.20 and $4.15 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 on commercial fuel.

Effective 1 Jan 09 – 30 Sep 09: DESC decreased its FY09 fuel prices effective

1 Dec 08. USTRANSCOM considered this decrease significant enough to adjust the pegged prices of fuel to $2.30 and $2.40 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 for commercial fuel.

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. Global Aero Logistics commented on recent stage length decreases and recommended an increase to the stop charge. USTRANSCOM took Global’s comment into consideration; however, when the stop charge is increased the subsequent result is a decrease in the linehaul rate iv. Overall, it does not benefit the carrier to raise the stop charge due to the effect it has on the linehaul rate. 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.

Effective 1 Oct 08 – 31 Dec 08: 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 final line haul rate (without stop charge). The application of the FY09 Final USTRANSCOM Rates results in a lowering affect to the Eurocontrol surcharge for FY09 due to the increased pegged fuel price. The FY09 final Eurocontrol surcharge is 2.4 percent for passenger, 2.7 percent for cargo missions, .51 percent for combi, 5.6 percent for L-100 hub and spoke and L-100 dollar amount of $553 for KWRI-LPLA-KWRI missions only.

Effective 1 Jan 09 – 30 Sep 09: Eurocontrol changed due to the linehaul rate decrease.

The revised FY09 eurocontrol surcharge is 2.6 percent for passenger, 3.2 percent for cargo missions, .59 percent for combi, 5.8 percent for L-100 hub and spoke and L-100 dollar amount of $469 for KWRI-LPLA-KWRI missions only.

Ferry.

No comments were received on the ferry rate as proposed at 90 percent.

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. v 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 AMC’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 reflect some efficiencies 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.

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 FY10 rate review cycle.

Since no comments were received from industry on the proposed one-way rates, and the data used to establish the one-way rates are still current, USTRANSCOM is setting the following one-way rates for final 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. Omni Air has requested a higher pay

ACL for recently acquired DC10-30ER from Northwest. USTRANSCOM will review the performance capability data provided by Omni. Appendix A provides the maximum

ACL’s by rate aircraft category.

Cancellation Fees.

The language that addresses trip cancellation in the solicitation has been moved to the

Uniform Rates and Rules for International Service, Appendix A. The current cancellation percentages were also updated based on the final FY09 Rates.

USTRANSCOM will review and update (if required) these cancellation percentages annually based on the final Rates each year and during any subsequent rate revision.

Standard Pay ACL Review.

USTRANSCOM will perform 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.

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.

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 and the large and medium class of cargo aircraft rates, 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 4.57% 2.82% 7.39% .44 4.79% 6.67% 6.99% iii The average commercial fuel prices used in the calculation of the pegged fuel prices for the final Rates are below:

EIA Index: (as of 8 Jul 08) IATA Index: (as of 4 Jul 08)

New York 403.40 Asia & Oceania 431.4 U.S. Gulf 392.15 Europe & CIS 434.6 Los Angeles 387.40 Middle East & Africa 425.3 Rotterdam 407.21 North America 420.6 Singapore 410.05 iv To demonstrate the impact an increased stop charge would have on the linehaul rate, the following example is provided:

Mission: KATL*EINN-OKBK*EINN-KATL Miles: 14,240 miles Stops: 4

ACL: 330

FY08 Large Pax Linehaul Rate: 0.11832

Revised Linehaul Rate Formula:

((.12063 Effective Rate * 2575 Avg Stage Length * 336 ACL) – $4,000 Stop Charge)/336 ACL 2575 Avg Stage Length = 0.11601

Live Cost w/ stop charge set at $2,000:

14,240 Miles x 0.11832 Linehaul Rate x 330 ACL = $556,009 Stop Charge: 4 stops x $2,000 = $8,000 Total (Live Cost + Stop Charges) = $564,009

Live Cost w/ stop charge set at $4,000:

14,240 Miles x 0.11601 Revised Linehaul Rate x 330 ACL = $545,154 Stop Charge: 4 stops x $4,000 = $16,000 Total (Live Cost + Stop Charges) = $561,154 vThe 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 Preop 0.0000 100% 0.0000 Grd 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 7

B Computation of Uniform Rates (Effective 1 Oct 08 – 31 Dec 08): 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

B-1 Computation of Uniform Rates (Effective 1 Jan 09 – 30 Sep 09): 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 (Effective 1 Oct 08 – 31 Dec 08) 7

C-1 Costs Per Seat Mile by Carrier and Aircraft Type In Large Class Charter Passenger Service (Effective 1 Jan 09 – 30 Sep 09) 7

D Costs Per Seat Mile by Carrier and Aircraft Type in Medium Class Charter Passenger Service (Effective 1 Oct 08 – 31 Dec 08) 7

D-1 Costs Per Seat Mile by Carrier and Aircraft Type in Medium Class Charter Passenger Service (Effective 1 Jan 09 – 30 Sep 09) 7

E Costs Per Seat Mile by Carrier and Aircraft Type in Small Class Charter Passenger Service (Effective 1 Oct 08 – 31 Dec 08) 2

E-1 Costs Per Seat Mile by Carrier and Aircraft Type in Small Class Charter Passenger Service (Effective 1 Jan 09 – 30 Sep 09) 2

F Costs Per Ton Mile by Carrier and Aircraft Type in Large Class Cargo Service (Effective 1 Oct 08 – 31 Dec 08) 9

F-1 Costs Per Ton Mile by Carrier and Aircraft Type in Large Class Cargo Service (Effective 1 Jan 09 – 30 Sep 09) 9

G Costs Per Ton Mile by Carrier and Aircraft Type in Medium Class Cargo Service (Effective 1 Oct 08 – 31 Dec 08) 3

G-1 Costs Per Ton Mile by Carrier and Aircraft Type in Medium Class Cargo Service (Effective 1 Jan 09 – 30 Sep 09) 3

H Cost Per Plane Mile by Carrier Charter Combi Service (Effective 1 Oct 08 – 31 Dec 08) 1

H-1 Cost Per Plane Mile by Carrier Charter Combi Service (Effective 1 Jan 09 – 30 Sep 09) 1

I Cost Per Ton Mile by Carrier Charter L-100 Service (Effective 1 Oct 08 – 31 Dec 08) 1

I-1 Cost Per Ton Mile by Carrier Charter L-100 Service (Effective 1 Jan 09 – 30 Sep 09) 1

J Explanatory Notes 3

K Eurocontrol Surcharge (Effective 1 Oct 08 – 31 Dec 08) 4

K-1 Eurocontrol Surcharge (Effective 1 Jan 09 – 30 Sep 09) 4

L Cost Escalation Factor 2

M Rate of Return on Investment 3

N Operational Data for United States Transportation Command Service 1

“Revised Page” Effective 1 Oct 08 – 30 Sep 09 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

RATE EFFECTIVE DATES

Passenger Linehaul Rate 1 Oct 08 –

31 Dec 08 1 Jan 09 – 30 Sep 09

Round-trip $0.14627 $0.11131 One-way (185% of linehaul rate) $0.27060 $0.20592 Contingency Rate (193% of linehaul rate) $0.28230 $0.21483 Ferry Rate(90% of effective rate) $0.13343 $0.10197 Stop Charge (per directed landing) $2,000 $2,000 Incremental Passenger Rate (per passenger) $202 $202

b. Medium Class Aircraft

RATE EFFECTIVE DATES

Passenger Linehaul Rate 1 Oct 08 –

31 Dec 08

Round-trip $0.17632 $0.14196 One-way (185% of linehaul rate) $0.32619 $0.26263 Contingency Rate (193% of linehaul rate) $0.34030 $0.27398 Ferry Rate(90% of effective rate) $0.16250 $0.13157 Stop Charge (per directed landing) $2,000 $2,000 Incremental Passenger Rate (per passenger) $202 $202

c. Small Class Aircraft

RATE EFFECTIVE DATES

Passenger Linehaul Rate 1 Oct 08 –

31 Dec 08

Round-trip $0.20292 $0.16881 One-way (185% of linehaul rate) $0.37540 $0.31230 Contingency Rate (193% of linehaul rate) $0.39164 $0.32580 Ferry Rate(90% of effective rate) $0.18871 $0.15801 Stop Charge (per directed landing) $2,000 $2,000 Incremental Passenger Rate (per passenger) $202 $202

(2) CATEGORY B (CHARTER) CARGO SERVICE

a. Large Class Aircraft

RATE EFFECTIVE DATES

Cargo Linehaul Rate 1 Oct 08 –

31 Dec 08

Round-trip $0.58000 $0.41048 One-way (180% of linehaul rate) $1.04400 $0.73886 Contingency Rate (195% of linehaul rate) $1.13100 $0.80044 Ferry Rate(90% of effective rate) $0.52989 $0.37733 Stop Charge (per directed landing) $2,000 $2,000

b. Medium Class Aircraft

RATE EFFECTIVE DATES

Cargo Linehaul Rate 1 Oct 08 –

31 Dec 08

Round-trip $0.75535 $0.55722 One-way (180% of linehaul rate) $1.35963 $1.00300 Contingency Rate (195% of linehaul rate) $1.47293 $1.08658 Ferry Rate(90% of effective rate) $0.70124 $0.52293 Stop Charge (per directed landing) $2,000 $2,000

(3) CATEGORY B (CHARTER) COMBI SERVICE

RATE EFFECTIVE DATES

Combi Linehaul Rate 1 Oct 08 –

31 Dec 08

Dollars per plane mile $30.89237 $22.95696 One-way (185% of linehaul rate) $57.15088 $42.47038 Ferry Rate(90% of effective rate) $28.64860 $21.50673 Stop Charge (per directed landing) $2,000 $2,000

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

RATE EFFECTIVE DATES

L-100 Linehaul Rate 1 Oct 08 –

31 Dec 08

Round-trip $1.20668 $0.99264 One-way Expansion (185% of linehaul rate) $2.23236 $1.83638 Ferry Rate(90% of effective rate) $1.16222 $0.96958 Stop Charge (per directed landing) $2,000 $2,000

(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. The Eurocontrol surcharge calculation does not include stop charges. The Eurocontrol charge will not be calculated on ferry miles.

Effective 1 Oct 08 – 31 Dec 08: Carriers will be paid the applicable rate plus a surcharge of 2.4 percent of trip price for passenger missions, 2.7 percent for cargo missions, .51 percent for combi, 5.6 percent for L-100 hub and spoke operations, and the L-100 requirement for KWRI-LPLA-KWRI will receive $553.

Effective 1 Jan 09 – 30 Sep 09: Carriers will be paid the applicable rate plus a surcharge of 2.6 percent of trip price for passenger missions, 3.2 percent for cargo missions, .59 percent for combi, 5.8 percent for L-100 hub and spoke operations, and the L-100 requirement for KWRI-LPLA-KWRI will receive $469.

(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.

(8) TRIP CANCELLATION

a. General. The Contracting Officer may unilaterally cancel an occasional mission, provided notification is given the Contractor. Any verbal notification will be confirmed in writing. Large-scale cancellations or long term reduction of requirements will not normally be covered by this paragraph. Any reference to days in this clause means a continuous 24-hour period. All "days" in this clause refer to "calendar days."

(1) A cancellation charge will be paid on missions canceled with notification given within the time frames noted below. Times are all prior to scheduled departure. The cancellation charge will be applied to the trip price for the route segment only (ferry, stop charges, Eurocontrol surcharge or any other additional charges will not be included). Cancellation charges will not apply to missions terminated or canceled due to weather situations beyond the control of the Contractor or the Government. The charges are as follows:

(a) Seven days or less: Passenger and Combi – 29.17% Cargo and L-100 – 22.33%

(b) 8 to 14 days: Passenger and Combi – 16.26%

Cargo and L-100 – 14.12%

(c) 15 to 30 days: Passenger and Combi – 15.06% Cargo – 12.71%

(d) 31 to 45 days: Passenger and Combi – 5.68% 31 to 75 days: Cargo – 5.51%

(e) Beyond 45 days: Passenger and Combi – 0.0% Beyond 75 days: Cargo -- 0.0%

(2) Missions awarded less than 14 days prior to the operating date and subsequently canceled will be paid a cancellation charge of 16.26% for passenger and combi and 14.12% for cargo.

(3) Missions awarded less than 5 days prior to the operating date and subsequently canceled will not be paid a percentage cancellation charge. The Contractor shall submit actual incurred mission costs for reimbursement consideration.

(4) Contractor may elect to accept replacement missions in lieu of a cancellation charge.

b. No Cost Cancellations

(1) The Government will accrue one no-cost cancellation per quarter (beginning Oct, Jan, Apr, and Jul) from all Contractors (in the event of a teaming arrangement, each individual member of the team) who have operated 30 or more missions during the previous quarter (Oct will be based on missions from the previous contract). These no-cost cancellations may be applied to either fixed or expansion buys.

(2) No-cost cancellations may be used by the Government in lieu of paying a cancellation charge for missions canceled with at least 7 days notice and can be used at any time during the contract periods. If a mission is canceled with less than 7 days notice, the application of a no-cost cancellation is subject to mutual agreement.

(3) No-cost cancellations will not be carried over from the current contract to the next contract.

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

Maximum Entitlement

CARGO

AIRCRAFT

CONT.

PASSENGER

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 revised amounts for government directed Seattle landings are still under review due to ATA’s withdrawal from the CRAF program. The revised Seattle landing amounts will be published upon completion of the review.

Large Class Aircraft Ferry In/Live Out TBD Live In/Ferry Out TBD

Medium Class Aircraft Ferry In/Live Out TBD Live In/Ferry Out TBD

Small Class Aircraft Ferry In/Live Out TBD Live In/Ferry Out TBD

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.

"Revised Page" Effective 1 Oct 08 - 31 Dec 08 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 [000] [000]

American Trans Air L-1011-500 $0.16643 $149,772 $55,632 Continental Airlines B-777-200 $0.14281 $4,323 $1,663 Northwest Airlines B-747-200 $0.16150 $5,167 $38,688 Omni Air Int'l DC-10-30/40 $0.15216 $284,589 $255,290 United Airlines B-747-400 $0.14680 $10,996 $0 World Airways MD-11 $0.13235 $374,114 $269,041 World Airways DC-10-30/40 $0.18305 $32,867 $78,203

RATE -- WEIGHTED BY REVENUES $0.14826

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

Length Mission Landing $0.14826 2,966 339 $2,000 $0.14627

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 [000] [000]

American Trans Air B-757-200 $0.20237 $14,318 $10,509 American Trans Air B-757-300 $0.19114 $72,225 $34,652 Delta Airlines B-767-300ER $0.14514 $4,961 $8,773 North American Airlines B-767-300 $0.18006 $152,358 $211,926 North American Airlines B-757-200 $0.18614 $83,638 $76,688 Omni Air International B-757-200 $0.15256 $27,798 $20,576 Ryan International Airlines B-757-200 $0.16755 $23,573 $18,840

RATE-WEIGHTED BY REVENUES $0.18055

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

$0.18055 2,286 207 $2,000 $0.17632

USTRANSCOM UNIFORM RATE

ROUND-TRIP PASSENGER SERVICE

SMALL CLASS AIRCRAFT

USTRANSCOM

ADJUSTED FY07 FY08

American Trans Air B-737-800 $0.21349 $4,813 $6,758 Miami Air Int'l B-737-800 $0.20901 $45,149 $21,141

RATE--WEIGHTED BY REVENUES $0.20968

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

Length Mission Landing $0.20968 1,973 150 $2,000 $0.20292

Note: The weighted average stage length and weighted average seats

USTRANSCOM

ADJUSTED FY07 FY08

RATE PER CARGO CARGO WEIGHTED

AIRCRAFT TON MILE REVENUES REVENUES RATE

Arrow Air DC-10-30/40 $0.51706 $2,837 $4,860 Atlas Airlines B-747-200/400 $0.58641 $426,951 $388,693 Evergreen Int'l Airlines B-747-100/200 $0.59167 $392,612 $362,640

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP CARGO SERVICE

LARGE CLASS AIRCRAFT

g , , Fed Express Corp MD-11 $0.61801 $12,473 $73,923 Gemini Air Cargo DC-10-30 $0.48174 $26,526 $15,103 Kalitta Air B-747-100/200 $0.55358 $63,782 $54,423 Southern Air B-747-200 $0.57917 $4,151 $46,351 United Parcel Service B-747-100/200 $0.69277 $7,377 $5,426 World Airways DC-10-30/40 $0.67656 $4,533 $58,421

RATE -- WEIGHTED BY REVENUES $0.58877

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

$0.58877 2,534 90 $2,000 $0.58000

Note: The weighted average stage length and weighted average tons

ADJUSTED FY07 FY08

RATE PER CARGO CARGO WEIGHTED

AIRCRAFT TON MILE REVENUES REVENUES RATE

CARRIER TYPE [000] [000]

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP CARGO SERVICE

MEDIUM CLASS AIRCRAFT

Air Transport Int'l DC-8-73 $0.68018 $6,654 $14,607

ASTAR DC-8-63/71/73F $0.88321 $11,439 $4,744

National Air Cargo DC-8-63/71/73 $0.85750 $1,467 $3,904

RATE -- WEIGHTED BY REVENUES $0.77916

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

$0.77916 1,867 45 $2,000 $0.75535

USTRANSCOM UNIFORM RATE

ROUND-TRIP COMBI SERVICE

COMBI AIRCRAFT

USTRANSCOM

ADJUSTED FY07 FY08

RATE PER COMBI COMBI WEIGHTED

AIRCRAFT PLANE MILE REVENUES REVENUES RATE

Air Transport International DC-8-62/72 $31.83178 $74,645 $70,437

RATE--WEIGHTED BY REVENUES $31.83178

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

Length Landing $31.83178 2,129 $2,000 $30.89237

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

COMPUTATION

USTRANSCOM UNIFORM RATE

L-100 CARGO SERVICE

L-100 AIRCRAFT

AIRCRAFT TON MILE REVENUES REVENUES RATE

Lynden L-100/382 $1.29135 $45,050 $51,217

RATE -- WEIGHTED BY REVENUES $1.29135

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

$1.29135 1,027 23 $2,000 $1.20668

"Revised Page" Effective 1 Jan 09 - 30 Sep 09 APPENDIX B-1

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 [000] [000]

American Trans Air L-1011-500 $0.12739 $149,772 $55,632 Continental Airlines B-777-200 $0.11613 $4,323 $1,663 Northwest Airlines B-747-200 $0.12378 $5,167 $38,688 Omni Air Int'l DC-10-30/40 $0.11501 $284,589 $255,290 United Airlines B-747-400 $0.11060 $10,996 $0 World Airways MD-11 $0.10089 $374,114 $269,041 World Airways DC-10-30/40 $0.14676 $32,867 $78,203

RATE -- WEIGHTED BY REVENUES $0.11330

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

$0.11330 2,966 339 $2,000 $0.11131

USTRANSCOM UNIFORM RATE

ROUND-TRIP PASSENGER SERVICE

MEDIUM CLASS AIRCRAFT

USTRANSCOM

ADJUSTED FY07 FY08

American Trans Air B-757-200 $0.16924 $14,318 $10,509 American Trans Air B-757-300 $0.15794 $72,225 $34,652 Delta Airlines B-767-300ER $0.11243 $4,961 $8,773 North American Airlines B-767-300 $0.14552 $152,358 $211,926 North American Airlines B-757-200 $0.15032 $83,638 $76,688 Omni Air International B-757-200 $0.12108 $27,798 $20,576 Ryan International Airlines B-757-200 $0.13277 $23,573 $18,840

RATE-WEIGHTED BY REVENUES $0.14619

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

$0.14619 2,286 207 $2,000 $0.14196

USTRANSCOM UNIFORM RATE

ROUND-TRIP PASSENGER SERVICE

SMALL CLASS AIRCRAFT

USTRANSCOM

ADJUSTED FY07 FY08

American Trans Air B-737-800 $0.18105 $4,813 $6,758 Miami Air Int'l B-737-800 $0.17461 $45,149 $21,141

RATE--WEIGHTED BY REVENUES $0.17557

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

Length Mission Landing $0.17557 1,973 150 $2,000 $0.16881

Note: The weighted average stage length and weighted average seats

ADJUSTED FY07 FY08

RATE PER CARGO CARGO WEIGHTED

AIRCRAFT TON MILE REVENUES REVENUES RATE

Arrow Air DC-10-30/40 $0.36371 $2,837 $4,860 Atlas Airlines B-747-200/400 $0.41720 $426,951 $388,693 Evergreen Int'l Airlines B-747-100/200 $0.41658 $392,612 $362,640

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP CARGO SERVICE

LARGE CLASS AIRCRAFT

g , , Fed Express Corp MD-11 $0.48713 $12,473 $73,923 Gemini Air Cargo DC-10-30 $0.32437 $26,526 $15,103 Kalitta Air B-747-100/200 $0.38065 $63,782…