FY11 Final Uniform Rates and Rules.pdf

For Official Use Only

16 Nov 10

MEMORANDUM FOR ALL CARRIERS

FROM: USTRANSCOM/TCAQ-P

508 Scott Drive

Scott AFB IL 62225-5357

SUBJECT: Notice of Final Fiscal Year 2011 (FY11) Uniform Rates and Rules for International

Service – Solicitation Number HTC711-10-R-C001

1. The FY11 rates are based on fuel pegged at $2.68 for passenger and $2.95 per gallon for cargo, combi, and L100. The final rates for the various classes of service are as follows. All passenger rates are expressed per seat mile. All cargo rates are per ton mile; while, combi is per plane mile.

Effective Rate Linehaul Rate Stop Charge

Large Class Passenger $0.11555

Medium Class Passenger $0.13282

Small Class Passenger $0.18174 $2,000

Large Class Cargo $0.41976

Medium Class Cargo $0.58785 $2,000

Combi Service $24.18209

L100 $1.05058

2. Please direct any questions or concerns to me at Lucretia.Sanchez@ustranscom.mil or

618-220-7119.

//SIGNED//

LUCRETIA A. SANCHEZ

Supervisory Price/Cost Analyst

UNITED STATES TRANSPORTATION COMMAND

508 SCOTT DRIVE

SCOTT AIR FORCE BASE, ILLINOIS 62225-5357

mailto:Lucretia.Sanchez@ustranscom.mil

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

UNITED STATES

TRANSPORTATION COMMAND

FINAL

UNIFORM RATES AND RULES

FOR

INTERNATIONAL SERVICE

FISCAL YEAR 2011

INTRODUCTION

The Final FY11 USTRANSCOM Uniform Rates and Rules (hereafter referred to as

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

Federal Acquisition Regulation (FAR), 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).

The proposed rates were issued on 07 Jul 10 with carrier comments due no later than 16

Aug 2010. Before final comments were due, USTRANSCOM invited interested carriers to meet with the pricing team. Ten carriers requested meetings. After the meetings were completed, the following carriers provided written comments to the proposed rate: Atlas

Air (Atlas), Delta Airlines (Delta), Evergreen International Airlines (Evergreen), Federal

Express (FedEx), National Air Cargo Group (NAC), North American Airlines (North

American), Northwest Airlines (Northwest), Omni Air International (Omni), United

Parcel Service (UPS) and World Airways, Inc (World). Comments were also received from Aviation Management and Consulting Services (AMCS), team lead for the Alliance

Team. The general comments received relate to:

1) proposed standard allowable cabin loads (ACLs) for the B747-400 and MD11

2) cost escalation

3) maintenance days as they relate to the constructed mileage base

4) stop charges

5) cargo one-way rates

6) proposed live rate for passenger missions

7) proposed ferry rate

8) passenger service expense

9) proposed utilization

10) transparency in establishing the rate and various rate methodologies

Each of the carrier’s general comments will be addressed in the appropriate subject paragraphs which follow.

1) Allowable Cabin Loads

The FY11 Proposed Rates added a new ACL for the passenger A340 and revised the cargo ACL for both the MD11 and B747-400. Establishment of standard ACLs allows for parity among carriers, while still maintaining a competitive environment within the rate. The objective of this review was to determine reasonableness of our current standard pay ACL in relation to aircraft productivity, weight sensitivity, cube sensitivity, range capability and actual payloads achieved by DOD, as well as carrier inputs.

a. Passenger: Industry provided proposed data for the A340-300 and requested a standard ACL be estimated for the A340 in DOD service. The data included aircraft schematics for several different passenger configurations as well as range and payload data for the A340. Based on the performance capability as well as the dimensional differences between the A340 and the MD11, DC10 and B777, USTRANSCOM’s

Pricing Branch (TCAQ) established a standard ACL for the A340-300 aircraft at 345 in the FY11 Proposed Rates. No comments were received regarding the proposed ACL for

A340-300. Therefore, the ACL for the A340-300 will be established at 345.

b. Cargo: The FY10 final rates for the B747-400 were based solely on the industry’s commercial operating statistics and cost data. Since that time, carriers have flown B747-400 aircraft in DOD service and made historical cost and aircraft capability data available for a DOD operation. In the summer of 2009, when the Final FY10 rates were being established, CRAF carriers were beginning to utilize the B747-400 aircraft in

DOD service. During this same time, tests were conducted for the -400 to validate the capability and range in DOD service. The industry was put on notice that operational data and DOD cost data would be used to evaluate a fair and reasonable pay ACL in

DOD service for the FY11 proposed rate.

For the FY11 proposed rate, TCAQ reevaluated both the level of productivity for the aircraft as well as the historical actual payloads achieved in DOD business. HQ AMC

Forms 82 and 83, along with TACC’s “green-book” and historical actual cargo moved were used for this evaluation. TCAQ established the baseline for the analysis with the

B747 classic aircraft, maintaining this ACL at 90 tons. The data resulted in proposed

ACLs for the B747-400 at 95 tons and the MD11 at 80 tons. The proposed lower ACLs resulted in an upward adjustment to the rate, while also creating a more tolerable ACL for the DOD customer that was more closely aligned with the actual payload achieved in

DOD service.

Atlas, FedEx, NAC, World and UPS all commented on the reduction to the B747-400 and MD11 ACLs. Several carriers provided cost data and documentation showing the aircraft’s commercial capability is accurate. The problem is in the makeup of DOD cargo. The limitations in the -400 appear to be that the aircraft has the same number of pallet positions as the classic B747 and DOD cargo is cube sensitive, resulting in lighter pallets. The extra margin of value added to a DOD mission for the increased cost is minimal.

1) MD11: FedEx and World commented that it is USTRANSCOM’s responsibility to ensure full use of the aircraft, but should compensate aircraft based on their capability. Both carriers also commented they have been involved in

USTRANSCOM initiatives to improve load density for the MD11s, including the use of the belly compartment. Both carriers also accurately pointed out that, although the proposed rate indicated the ACL reductions to the MD11 resulted in an upward adjustment to the rate, the per mile net rate for the MD11s is lower than it otherwise would have been for this aircraft types. These carriers also pointed out that the classic

B747 aircraft are the unintended beneficiaries of this upward adjustment because they kept their existing paid ACL, and the result was just a revenue shift to the classic B747.

Response: FedEx and World provided a compelling case. TCAQ’s use of the classic aircraft as the base-line, while resulting in lower ACLs for the MD11 and B747-400, did unintentionally incentivize the classic B747 aircraft in the precise manner identified by

FedEx and World. However, since the proposed rates did not consider lowering the ACL of the classic B747, this cannot be accomplished at this point. Therefore, as a result of the analysis performed, and considering that TCAQ did not intend to incentivize the older less fuel efficient aircraft, TCAQ determined it appropriate to maintain the MD11 at 86 tons.

2) B747-400 vs. Classic B747. UPS and Atlas stated they did not agree that a comparison of only actual payloads achieved by AMC is the fairest measure for carriers, or in the best interest of the Government. However, they both agreed that it should be one component to be considered. UPS and Atlas provided proposals, with supporting data for TCAQ consideration as an alternative position. The UPS proposal, while normalizing the classic at 90 tons, resulted in an increase to the -400 ACLs, but a much lower ACL for the B767 and DC8. The Atlas proposal included an analysis of

Atlas flights only and further addressed missions only with KDOV and KWRI departures.

Response: As there is little difference in actual payloads achieved in DOD service between the classic B747 and the B747-400, TCAQ reevaluated the cargo ACLs to consider both historical payloads achieved in DOD service, as well as aircraft capability as reported on AMC Forms 82 and 83. TCAQ established the base-line for the classic

B747 at 90 tons. The resulting analysis considers the average actual payload achieved in

DOD service of 67 tons for the classic B747 and 74 tons for the B747-400s. The average commercial capability of the B747 population in DOD service (a combination of all classic B747s) equates to an average of 113 tons; while the -400 (combining pure and converted freighters) is approximately 125 tons. Although the data supports the true capability of the -400 in commercial services is significantly more due to dense cargo, the added benefit for the DOD is minimized as the lift capability is limited due to the 42 pallet positions, i.e. DOD payloads usually “bulk out” before they “weigh out”. This data was used, in conjunction with the operating costs of carriers performing in DOD service, to develop the -400 ACL of 100 tons i

It is important to establish that, with the exception of World’s B747-400 aircraft, which is a new entrant, modern -400 aircraft operating costs are declining while the older classic

B747 aircraft operating costs have been increasing. TCAQ is forecasting the classic operating costs to increase even further in future years as a result of increased maintenance, engine overhauls, etc. With removal of outliers, the average per mile cost of the newer fuel efficient B747-400 aircraft is $37 while the older classic aircraft is $39.

This is more easily recognized with the two carriers (Kalitta and Atlas), who maintain both aircraft within their fleet. Comparing airlines that have both aircraft is important because it is with these airlines where all other factors such as operating policies, indirect rates etc. remain the same that the differences can be more accurately evaluated. The total operating costs for the B747-400 aircraft for these airlines is between 5 and 10% less than their classic B747. This implies if USTRANSCOM could utilize the B747-400 more than they are currently being used, even with the same payloads as achieved on the classics, the uniform rate would trend down. This results in a cost savings to the government, regardless of where the ACL is established. This is simply because the weighting for the B747-400 would increase. The increased weighting coupled with the

B747-400’s lower operating cost would result in a lower uniform rate for the

Government.

ii

2) Cost Escalation

The cost escalation model incorporated in the 2008-2012 MOU uses three indices that include the Air Transport Association Index (ATA), Producer Price Index (PPI)-

Nonscheduled Air Transportation Index and Global Insight Incorporated (GII) Index.

The ATA index is weighted at 34 percent. The PPI and GII are both given a weighting of

33 percent. PPI contains a fuel element, which produced a false positive during FY10.

Although the index change between 2007 and 2008 increased 11.71%, the change between 2008 and 2009 produced a negative result of -3.26% even in the final rate calculation.

iii

In an attempt to accommodate for the negative trend which TCAQ predicted would impact the FY11 rate and attempted to resolve the concern by eliminating PPI for the FY10 rate and thus smoothing the negative impact for FY11.

Carriers rejected this position for FY10. TCAQ conceded, cautioning the potential impact for FY11, and calculated escalation in accordance with the FY08-FY12 MOU.

Escalation was also calculated in accordance with the MOU for FY11. The FY11 proposed factor did in fact include negative changes for both the ATA and PPI indices.

Evergreen, North American and World expressed concern over the ATA index subcomponent titled “Transport Related” expenses, which carried 18.66% of the weighting in the proposed rate. They claimed virtually all of the transport related costs incurred by Department of Transportation reporting carriers were not attributable to most carriers flying DOD missions.

Response: TCAQ agrees with this comment. The major components of “Transport

Related” expenses include the cost of outsourcing to regional carriers flying scheduled service code-share routes for major carriers, the cost of aircraft maintenance performed for other carriers and the cost of liquor and food sold in-flight. It is recognized that none of these activities are associated with the support of DOD missions. As such, TCAQ has excluded this component from the ATA escalation index, consistent with the treatment of

Sales and Promotion, Fuel, Commission, etc in the MOU. The ATA and GII indices are both adjusted to remove such elements that are not recognized in the USTRANSCOM ratemaking process iv

. In the final rate, the ATA and GII indices both included positive changes, while only the PPI contained a negative change. This resulted in an annual escalation of -0.22% in the final rate. Appendix L provides the details for the development of this -0.22% annual average cost escalation for the FY11 Rates.

During further negotiations, Atlas, Evergreen, World and Omni commented their crew escalation costs had never been negative. They further provided data and documentation proving a higher escalation for crew.

Response: TCAQ accepted this position for escalation of crew costs. For those carriers who did not provide further supporting documentation, TCAQ also changed crew cost escalation to 0% vs. the annual -.22% in the final rate. However, for FY12 and beyond, carriers will no longer receive general escalation on labor costs. Carriers will be required to provide supporting documentation for any escalation requested; otherwise they will receive 0%.

3) Constructed Mileage Base

For the proposed rate, TCAQ developed the constructed mileage base on 365 days per aircraft listed on Schedule H, unless otherwise supported by the carrier with details of the adjustments. Atlas, Delta, Evergreen, North American, Northwest, Omni, UPS, World and the team lead for the Alliance Team, AMCS, all commented that no aircraft is available for 365 days per year if it is operated under an FAA approved maintenance program.

Response: Although the Department of Transportation (DOT) defines “available” days to include maintenance days, TCAQ agrees that maintenance days are a part of the airline industry and also agrees the cost instructions indicate a reduction for maintenance days greater than 24 hours should be considered. However, the instructions to the cost package also indicate that a carrier who proposes less than 365 days must explain the reduction with supplemental data. Since no carrier offered this documentation, TCAQ took the most conservative position in the proposed rate. For the final rate, however, TCAQ ensured all carriers provided supporting documentation. In most cases, the supporting documentation indicated less maintenance days than that originally proposed.

4) Stop Charges

North American and World commented that the removal of stop charges appears to have created a disincentive for carriers to bid on missions with shorter stage lengths. They recognize this element is not beneficial to either the carriers or the Government.

Response: Stop charges were initially introduced as an attempt to better align carrier’s revenues with the cost of operations. Carriers operating inefficient routes with short stage lengths and low utilization experience higher operating costs per mile, but were receiving the same compensation under the uniform rate. Stop charges were introduced in an effort to curve revenues to accommodate for those inefficient routes with short stage lengths. An analysis of current data, however, still indicates, with the exception of the small class passenger and medium class cargo categories, DOD mission requirements have changed and the average stage lengths for most classes are greater than 2,000 miles.

The linehaul rate is a mathematical equation derived from the effective rate, using average stage length, average tons/seats per mission and the stop charge rate. Providing the average stage length for all carriers within a rate category remains approximately

2,000 miles, paying the effective rate versus linehaul/stop charge should be revenue neutral. This calculation was further explained during October discussions with the carriers. TCAQ did acknowledge that an annual evaluation of the stage lengths for each aircraft category is required. Based on TCAQ’s analysis, the final rate incorporates the stop charge methodology for the medium class cargo and small class passenger categories.

5) Cargo One-Way Rates

Evergreen was the only carrier who commented about the one-way rates. Evergreen stated the one way rate of 165% is not providing incentive for the long-term. That the rates are neglecting a historical reflection of economic conditions, historical cargo capacity available, and competition with foreign government subsidized carriers.

Response: To calculate the one-way rate, TCAQ reviews one-way missions reported on carrier S2 reports. These missions are separated into two distinct categories. Those missions awarded as part of the quarterly award and all others. Carriers report empty miles associated with the 2 legs before USTRANSCOM one-way missions originating outside CONUS or, conversely 2 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.

a. Fixed/Quarterly/Semi-Annual: Appendix O reflects a sample of the calculation, which resulted in a ratio of 59% of empty miles to one-way revenue miles.

The rate, however, considers an average of all carriers within this category. In order to create a fair rate which takes into account most carriers within the class, a one-way rate of 165% of the round trip rate is established for any fixed, semi-annual or quarterly buy.

EIA’s individual percentage was 58.5%, indicating a one-way rate of 165% should be compensatory to EIA. Appendix O provides the details for the development of the 165% fixed/quarterly/semi-annual one-way rate.

b. Ad-Hoc Expansion: Appendix N reflects a sample of the calculation, which resulted in a ratio of 61% of empty miles to one-way revenue miles associated with all missions except the quarterly awards. The rate, however, must consider all carriers within this category and is therefore established at 175% for all missions except those identified in the paragraph above. Appendix N, in conjunction with efficiencies of flying empty, reflects that this rate will accommodate nearly all carriers in this category.

6) Passenger Live Rate

For FY11, TCAQ introduced a live mile rate for all passenger missions. TCAQ proposed use of this single rate for all live miles, regardless if the miles were one-way or round trip.

Delta, North American, Northwest, World and Omni commented on various aspects of this proposal, such as the use of the ferry rate and use of a 5% minimum vs. the historical

250 miles, application of eurocontrol, etc. Although they stated their appreciation for

TCAQ’s attempt at correcting an apparent issue and support of the initiative, they were concerned they did not have adequate time to review the proposed change.

Response: TCAQ has suspended this proposal until after further discussions with industry can be accomplished. We anticipate holding an integrated process team (IPT) meeting sometime during early 2011 to discuss this change and fully examine any implications. Because of the proposal to utilize a “live rate”, TCAQ did not propose a one-way rate for passenger service. We recognize, however, it would not be equitable to now propose a one-way rate without allowing carriers time to provide comments.

Therefore, for the passenger and combi missions, USTRANSCOM will utilize the FY10 one-way rate percentages.

The FY11 one-way rates are as follows:

One Way Rates (Percent of round-trip seat/ton mile rate)

Cargo

Large Class

Cargo

Medium Class

Passenger/

Combi

Fixed/Semi-

Annual/

Qtrly Expansion

165%

185%

Ad-Hoc

Expansion

175% 185% 185%

Contingency Rate

(per Appendix A, Para G)

195% 195% 193%

7) Ferry Rate

TCAQ proposed to reduce the ferry rate to 80% for passenger mission for FY11. This was, in part, as a result of the above discussion on use of a live rate, where all other miles would have been paid at the ferry rate.

Delta, North American, Northwest, Omni and World commented on the ferry rate.

Although the calculation for the ferry rate was included in the proposed rate, Delta/Northwest requested information on how the ferry rate was calculated. Without providing any other data, they suggested it was too low.

Omni provided arguments on why the lower 80% rate was not compensatory; while

North American and World questioned why TCAQ had dropped the G&A and Profit weightings from 100% to 50%.

Response: Although TCAQ does not necessarily agree that G&A and Profit elements in the ferry calculation should be set at 100%, without further analysis of a lower weighting, they were reestablished at 100%. This resulted in an increase in the passenger ferry rate to 90%.

8) Passenger Service Expense

Omni, North American, World and AMCS commented on passenger service expense.

These carriers recommended all passenger service expense be distributed over

USTRANSCOM pay miles excluding ferry and empty return miles. They all stated inclusion of ferry and empty return miles dilutes the passenger service expenses on a per mile basis since the operation of these miles does not generate any passenger service costs.

Response: For DOT reporting purposes, the average number of revenue passengers is determined by dividing revenue passenger miles by aircraft miles flown in revenue service. Also according to DOT, ferry and empty return miles are included in aircraft miles flown in revenue service. TCAQ showed the carriers that, with the calculations currently contained in the ratemaking process, carriers are receiving full reimbursement of their passenger service expense. If TCAQ calculates the cost per seat mile only on live miles, without empty backhaul, then uses this rate to establish a percentage to pay for the one-way (which includes empty backhaul), the carrier is over compensated. When

USTRANSCOM pays for a mission, we treat empty backhaul as a live mile and provide full passenger service cost per seat mile even though the aircraft is empty. Therefore when developing the rate, we must use the empty backhaul seat miles for distribution of the cost v . This may become an issue when we move forward with the passenger “live rate”. However, these issues will be fully discussed with industry prior to implementation.

9) Aircraft Utilization

TCAQ applies a carrier’s system utilization for the calculation of a system constructed mileage base. In the past, CRAF commercial schedule service carriers experienced inefficiencies on DOD missions as compared to their commercial scheduled operations.

Therefore, TCAQ recognizes utilization in DOD operations, if supported, along with the continued application of system utilization in accordance with the MOU.

World commented that TCAQ did not use the base period for calculating utilization for their B747-400. Atlas commented that the use of system utilization is not reasonable for

DOD missions.

Response: During the proposed rate TCAQ did utilize a more realistic utilization for

World’s B747-400 based on the most current Form 41 data. This was accomplished because the base period data reflected very low utilization as a result of the aircraft’s initial introduction into WOA’s fleet. WOA’s position was that TCAQ should remain consistent in our methodologies. Even though this results in a seemingly high cost for

World’s B747-400 aircraft, TCAQ does recognize that if USTRANSCOM desires carriers to invest in newer, more modern, fuel-efficient aircraft, startup costs for induction of these new aircraft should be realized within the rate. It is, however, important to note that World’s B747-400 operating costs contained in Schedule F of this rate include such start-up costs.

TCAQ agrees with Atlas’ position, however also points out the MOU states that TCAQ will use system utilization unless the carrier supports something other than system. Atlas did not propose an alternative utilization for TCAQ to consider. However, with submission of their comments, Atlas provided data supporting utilization based on operations in DOD service. This data was accepted and adjustments made in the final rate.

10) Transparency

With the efforts of the USTRANSCOM CRAF Executive Working Group, North

American, Omni, World and AMCS commented that the ratemaking process needs to be more open and transparent to the carriers.

Response: TCAQ has taken steps to attempt to gain this transparency to our ratemaking process. For the first time last year we invited carriers to hold face-to-face discussions before the final rate was published. This year, TCAQ offered to hold face-to-face discussions with carriers after the proposed rate was issued, but prior to comments being due. TCAQ also held training on the rate package to all carriers. We then also invited any interested carriers to visit again in October for face-to-face discussions before this final rate was published. For FY12 ratemaking, TCAQ has committed to holding face-to-face discussions prior to issuance of the proposed rate, prior to comments being due, and again before the final rate is published. TCAQ also offered passenger carriers involvement in the “live rate” IPT in early 2011. We trust these actions provide evidence that USTRANSCOM and TCAQ, in particular, are sincere about ensuring transparency in the ratemaking process.

Fuel

TCAQ 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 68 percent of their fuel at military installations and are charged the rate set by Defense

Energy Support Center (DESC). Conversely, passenger carriers receive 80 percent of their fuel commercially, which fluctuates up and down with the commercial fuel market.

The average commercial fuel price is derived from the International Air Transportation

Association (IATA) fuel index vi

DESC current JP-5 and JP-8 fuel prices, as of 01 Oct 10, are $3.05 and $3.03 respectively. USTRANSCOM will closely monitor fuel prices for the FY11 contract performance period and make appropriate adjustments to the pegged fuel prices as we did for the FY08 and FY09 contract periods.

The weightings between commercial fuel and military fuel and the current commercial fuel and military fuel prices results in a pegged fuel price of $2.68 for passenger and

$2.95 per U.S. gallon for cargo , combi, and L100. The pegged price includes into-plane fees and taxes.

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. TCAQ updated all factors incorporated into this rate;

and the FY11 Incremental Passenger Rate is $151 vii

. See Appendix A for details.

Future Issues for FY12

Passenger “live rate” – As previously discussed, TCAQ would like to address this issue with industry.

Cost Accounting Standards (CAS) – DCAA has realized the major inconsistencies between CAS, Uniform System of Account Reports (USAR) and the ratemaking process and are now supportive of assisting USTRANSCOM in obtaining an exemption to CAS.

USTRANSCOM has proposed legislation which establishes the DOD as the rate setter for the CRAF contract. This would provide for an unequivocal exemption to CAS.

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, and L100 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 and M provide the Eurocontrol Surcharge, Cost Escalation Factor, Rate of Return on Investment Computations, respectively. While

Appendices N and O provide Backhaul Operational Data for USTRANSCOM Services excluding one-way cargo large class long-term expansion, and Backhaul Operational

Data for USTRANSCOM One-Way Cargo Large Class Long-Term Expansion, respectively.

i Tons per mission per TACC Green Book. Commercial Tons per AMC Forms 82 and 83

Commercial % of Capable

Plt Wgt Pallet tons Pay ACL Tons Productivity lbs/pallet Positions per msn Tons/mi at 3500 nm

1/ in DOD service

B-747

3,190 42 67.0 90 113 79.65%

B-747-400

3,524 42 74.0 100 125 80.00%

1/ Average commercial tons based on population of B747s in DOD service...combination of all classic B747s and pure freighter B747-400s along with convertible 400s. This data was used in conjunction with operating cost of carriers performing DOD service.

ii Example of the result of a shift in the weighting between the classic B747 and the lower cost B747-400

Approximate Current Distribution Weighted

Cost Per

FY11 Rate FY11 Rate

AIRCRAFT Plane

Per Ton Per Ton

CARRIER TYPE Mile Wghtg ACL Mile Mile

Carrier X MD11 35.00 15.00% 86 $0.40698 $0.061047

Carrier Y B747-200/300 39.00 60.00% 90 $0.43333 $0.260000

Carrier Z B747-400 37.00 25.00% 100 $0.37000 $0.092500

100.0% $0.41355

Weighting Shift to -400

Weighted

Cost Per

FY11 Rate FY11 Rate

AIRCRAFT Plane

Per Ton Per Ton

CARRIER TYPE Mile Wghtg ACL Mile Mile

Carrier X MD11 35.00 15.00% 86 $0.40698 $0.061047

Carrier Y B747-200/300 39.00 25.00% 90 $0.43333 $0.108333

Carrier Z B747-400 37.00 60.00% 100 $0.37000 $0.222000

100.0% $0.39138

Miles

10,000,000

MD11 -200 -400

Costs @ $0.41355 Rate $53,347,500 $223,315,116 $103,386,627 $380,049,244

Costs w/ Shift @ $0.39138 $50,488,000 $88,060,465 $234,827,906 $373,376,372

Potential Savings at 10M miles $6,672,872 1.76% iii

PPI Air Transportation Index for the Final FY11 Rate

PPI AIR

TRANSPORTATION,

UNSCHEDULED INDEX

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual

Change

2006 132.4 132.8 133.3 134.7 135.9 136.1 136.3 137.5 137.4 139.2 140.5 145.1 136.8 2007 143.3 144.2 145.2 145.4 147.0 146.7 148.2 148.7 148.5 151.5 155.9 156.9 148.5 8.55%

2008 157.7 160.6 159.9 159.7 163.5 166.6 171.7 171.4 171.2 170.8 169.0 167.5 165.8 11.65%

2009 161.2 160.9 160.9 157.5 157.2 158.9 158.8 157.5 157.9 163.2 164.7 165.6 160.4 -3.26% iv USTRANSCOM adjusted weightings for the GII and ATA and the resulting change in the indices

GII

USTC

USTC Adjusted

Elements Index

LABOR

Transportation Workers 25.40% 25.40% 32.56%

Benefits 4.20% 4.20% 5.38%

MATERIALS

Aircraft Parts 15.40% 15.40% 19.74%

Aircraft Engines 7.70% 7.70% 9.87%

Labor Cost in Aircraft Parts and Engines 18.10% 18.10% 23.21%

Materials Used in Air Transportation 3.60% 3.60% 4.62%

ENERGY

Jet Fuel* 22.00%

Gasoline 3.60% 3.60% 4.62%

COMPOSITE 100.00% 78.00% 100%

GII WGT 2009 2010 % Change 2010 2011

Change

LABOR

Transportation Workers 32.56% 18.8018 19.21225 2.18% 19.21225 19.4113 1.04%

Benefits 5.38% 108.525 111.1398 2.41% 111.13975 113.757 2.35%

MATERIALS

Aircraft Parts 19.74% 169.625 170.1605 0.32% 170.1605 171.452 0.76%

Aircraft Engines 9.87% 193.817 199.4568 2.91% 199.45675 203.916 2.24%

Labor Costs in Aircraft Parts and

Engines 23.21% 32.269 33.61925 4.18% 33.61925 34.5815 2.86%

Materials Used in Air Transportation 4.62% 172.95 182.7455 5.66% 182.7455 183.75 0.55%

ENERGY

Gasoline 4.62% 202.075 246.9825 22.22% 246.9825 256.705 3.94%

100.00% 89.390 93.167 4.23% 93.167 94.787 1.74%

ATA

USTC

USTC Adjusted

Elements Index

Labor 24.90% 24.90% 41.09%

Fuel* 23.80%

Aircraft Ownership 7.10% 7.10% 11.72%

Non-Aircraft Ownership 4.70% 4.70% 7.76%

Professional Services 8.30% 8.30% 13.70%

Food & Beverage 1.70% 1.70% 2.81%

Landing Fees 2.20% 2.20% 3.63%

Maintenance Material 1.80% 1.80% 2.97%

Aircraft Insurance 0.10% 0.10% 0.17%

Non-Aircraft Insurance 0.40% 0.40% 0.66%

Passenger Commissions* 1.00%

Communication 1.00% 1.00% 1.65%

Advertising & Promotion* 0.60% Utilities & Office Supplies 0.60% 0.60% 0.99%

Transport Related* 13.90%

Other Operating Expenses 7.80% 7.80% 12.87%

Interest* 0.10%

Composite 100.00% 60.60% 100%

USTC ATA COMPOSITE COST INDEX

WGT* Sep-08 Dec-08 Mar-09 Jun-09 Sep-09

INDEX

Labor 41.09% 119.82 123.59 123.52 127.39 129.98

Aircraft Ownership 11.72% 89.61 87.94 93.28 93.08 92.08

Non-Aircraft Ownership 7.76% 115.45 127.18 121.88 110.90 109.91

Professional Services 13.70% 135.93 139.66 121.43 112.04 113.81

Food & Beverage 2.81% 60.95 60.25 58.68 57.37 60.57

Landing Fees 3.63% 152.21 148.92 157.50 159.71 158.52

Maintenance Material 2.97% 71.28 74.12 83.03 77.58 86.76

Aircraft Insurance 0.17% 124.05 120.20 120.75 161.52 171.21

Non-Aircraft Insurance 0.66% 189.58 190.74 198.44 170.98 179.15

Communication 1.65% 81.87 76.43 78.69 76.67 77.31

Utilities & Office Supplies 0.99% 106.79 113.03 80.11 96.06 99.67

Transport Related 0.00% 626.41 590.11 530.01 524.64 521.11

Other Operating Expenses 12.87% 129.40 154.16 129.41 114.78 107.85

1.00 117.20 123.07 117.88 115.31 115.97

FOURTH QUARTER MOVING AVERAGE

117.08 119.71 120.29 118.37 118.06

AVERAGE OVER PREVIOUS AVERAGE

1.0528 1.0718 1.0684 1.0242 1.0084

5.28% 7.18% 6.84% 2.42% 0.84% v Passenger Service Expense Discussion to include Empty Backhaul (MTBH) and Ferry miles as revenue miles

History

The way we pay ref

Pay miles

R/t miles 16,000 a

16000 ow miles 8,000 b

MTBH 6,000 c

6000 assumed 175% oneway rate total mi 30,000

30,000 total pay miles

350 seats ow rate 175 percent

10,500,000 seat miles 10,500,000 seats 350

0.0119

$ 0.0095

$124,950.00

$100,000.00 pax service cost pool $ 100,000.00

Overpaid cost per live mile $ 4.17 a+b cost per live mi w MTBH $ 3.33 a+b+c

Uniform rate options cost per seat mile $ 0.0119 wo MTBH cost per seat mile $ 0.0095 w MTBH vi

IATA Fuel Price Analysis: (as of 24 Sep 10) Jet Fuel Price 100% Asia& Oceania 22% 210.3 46.27

Europe & CIS

28% 218.3 61.12

Middle East & Africa

7% 208.9 14.62 North America

39% 212 82.68

Latin America

4% 219.2 8.77

Average 2.13 vii

Incremental Passenger Rate calculation

Carrier Aircraft Type ACL

Passenger Service

Cost Per Mile

Passenger Service Cost Per

Seat

Total Revenue by Carrier

Weighted Avg for each Carrier

Weighted Avg Pax Svc

Cost

NWA A330 310 6.9249 0.02233839 11,789 0.0064 0.00014 0.00014396

NWA B747 400 6.7241 0.01681025 96,828 0.0529 0.00089 0.00088978

OAE DC-10-30 330 2.8951 0.00877303 724,678 0.3961 0.00348 0.00347537

UAL B747 400 5.0152 0.01253800 33,770 0.0185 0.00023 0.00023145

UAL B-777-200-ER 330 5.4865 0.01662576 734 0.0004 0.00001 0.00000667

WOA DC-10-30/40 330 5.1322 0.01555212 339,075 0.1854 0.00288 0.00288265

WOA MD-11 360 7.2314 0.02008722 622,464 0.3403 0.00684 0.00683503

0.01446490

351.43

TOTALS 1,829,338 1.0000 0.0145

0.0267601

One-Way Round-Trip Total

Avg Live Pay Miles

2678461 15,513,684 18,192,145.00

FY11 Final Passenger Seat Mile Rate 0.21377 0.11555

200,971,337 629,204,771

Total Dollars

830,176,108

Total Trips

1,746

Total Passengers

612,846

Avg Passenger per Trip

Avg Price Per Trip

475,473.14

Avg Seat Miles Per Trip

3,657,183.79

Avg Miles Per Trip

10,419

Additional passenger service cost per trip 151

INDEX OF APPENDICES

No.

Appendix Title Pages

A USTRANSCOM Uniform Negotiated Rates and Rules 5

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

L100 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 11

G Costs Per Ton Mile by Carrier and Aircraft Type in Medium Class Cargo Service 4

H Cost Per Plane Mile by Carrier Charter

Combi Service 1

I Cost Per Ton Mile by Carrier Charter

L100 Service 1

J Explanatory Notes 5

K Eurocontrol Surcharge 3

L Cost Escalation Factor 2

M Rate of Return on Investment 3

N Backhaul Operational Data for USTRANSCOM Service

Excluding One-Way Cargo Large Class Quarterly Expansion 1

O Backhaul Operational Data for USTRANSCOM Service

One-Way Cargo Large Class Quarterly Expansion 1

APPENDIX A

SCHEDULE OF UNIFORM NEGOTIATED RATES AND RULES

FISCAL YEAR 2011

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) CHARTER PASSENGER SERVICE PER SEAT MILE

RATE EFFECTIVE DATES 1 Jan 11 – 30 Sep 11

Passenger

Large

(Effective)

Medium

(Effective)

Small

(Linehaul)

Round Trip $0.11555 $0.13282 $0.18174

One-Way 185% $0.21377 $0.24572 $0.33623

Contingency Rate (Per Para G) 193% $0.22301 $0.25634 $0.35077

Ferry Rate (Base – Effective Rate) 90% $0.10399 $0.11954 $0.16987

Stop Charge (per directed landing) $2,000

Incremental Passenger Each $151 $151 $151

Fuel Pegged Rate $2.68 $2.68 $2.68

(2) CHARTER CARGO SERVICE PER TON MILE

Cargo

Large

(Effective)

Medium

(Linehaul)

Round Trip $0.41976 $0.58785

One-Way:

Fixed/Semi Annual/Qtrly Exp (Large) 165% $0.69260

Ad-Hoc Expansion (Large) 175% $0.73458

Fixed/Semi Annual/Qrtrly/Ad-Hoc

Expansion (Medium)

$1.08752

Contingency Rate (Per Para G) 195% $0.81853 $1.14631

Ferry Rate (Base – Effective Rate) 90% $0.37778 $0.55215

Stop Charge (per directed landing) $2,000

Fuel Pegged Rate $2.95 $2.95

(3) CHARTER COMBI SERVICE PER PLANE MILE

Combi Effective Rate

Round Trip $24.18209

One-Way 185% $44.73687

Ferry Rate 90% $21.76388

Fuel Pegged Rate $2.95

(4) CHARTER L-100 SERVICE PER TON MILE

L-100 Live Rate

Round Trip $1.05058

Ferry Rate 90% $0.94552

Fuel Pegged Rate $2.95

(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.

Carriers will be paid the applicable rate plus a surcharge of 2.8 percent of trip price for passenger missions, 3.0 percent for cargo missions and 0.57 percent for combi. The L-100 class has a surcharge of $458 per KWRI-LPLA-KWRI mission, while other eurocontrol fees for any expansion missions will be cost reimbursable.

(6) FERRY. Ferry will be paid based on standard ACL or lesser amount.

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

(b) Positioning and depositioning ferry: Positioning and depositioning ferry shall be included with the offer and negotiated at time of award. In the case of a round-trip flight where the ferry awarded exceeds 250 miles, and the ferry declaration indicates actual ferry flown is less than 250 miles, no ferry will be paid.

(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 $151 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 cancellation charge will be paid on missions canceled with notification given within the time frames noted below (see contract Section H, TRIP CANCELLATION). Times are all prior to scheduled departure. Reference to days means a continuous 24-hour period. All ―days‖ refers to ―calendar days.‖

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). The charges are as follows:

Time Frame Service Type 1 Jan 11 – 30 Sep 11

Seven days or less

Passenger and Combi:

Cargo:

29.91%

23.66%

8 to 14 days

Cargo:

18.62%

17.24%

15 to 30 days

Cargo:

14.89%

13.95%

31 to 45 days Passenger and Combi 6.52%

31 to 75 days Cargo 6.73%

Beyond 45 days Passenger and Combi 0%

Beyond 75 days Cargo 0%

Missions awarded less than 14 days prior to operating date and subsequently cancelled

Passenger and Combi:

Cargo:

18.62%

17.24%

(9) DEMURRAGE. Demurrage will be paid on completed cargo missions when departure is delayed over 3 hours beyond scheduled block time and the delay is Government controlled (see contract Section H, REIMBURSABLE SUBMISSION). Payment of delays of fractions of an hour will be calculated using normal rounding procedures, i.e., 29 minutes or less will be dropped, 30 minutes or more will be rounded to the next whole hour. Demurrage charges are as follows:

Aircraft Type ACL Demurrage

B747-100/200 90 $1,903

B747-400/400ER 100 $2,115

MD11F 86 $1,819

MD11C 86 $1,819

DC10-30/40 75 $1,586

A300-600ER 51 $2,210

A300-400F 50 $2,167

B767-200F 48 $2,080

DC8 45 $1,950

B727-100 18 $ 905

B727-200 22 $1,742

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 fewer 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

Aircraft Type Maximum Standard

Payload Aircraft Type Maximum Standard

Payload

Small Aircraft: Small Aircraft:

A319 135 B737-200 14

MD80 140 B727-200 22

B737-400/700 140 L100 23

B737-800 150

A320 150

A321 170

Medium Aircraft: Medium Aircraft:

B757-200/200ER 190 DC8 45

B757-300 200 B767-200F 48

B767-200/200ER 200 A300-B4(F) 50

A310 200 A300-600ER 51

A300 210

B767-300/300ER 240

B767-400ER 260

Large Aircraft: Large Aircraft

A330 310 B767-300F 61

B777-200ER 330 DC10-30/40 75

DC10-30 330 MD11 86

A340 345 B747-100/200/300 90

MD11/MD11ER 360 B747-400 100

B747 400

C. FUEL ADJUSTMENTS.

(1) The carrier shall be compensated for variance in fuel prices incurred on USTRANSCOM contracted 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) The solicitation/contract addresses the current fuel adjustment procedures (see PWS, Appendix 3, 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. Channel extension services at Seattle, as directed by the performance work statement, are TBD prior to performance.

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:

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

(2) 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 AMC 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 Stops 1/

KCHS#MMCZ-MPTO=1 Paid Stop 2/

KWRI+KCOF-TAPA-FHAW-TAPA-KCOF+KWRI= 4 Paid Stops 3/

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.

(3) 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.

―Charter Service‖ means USTRANSCOM contracted airlift for the transportation of passengers in full planeload lots on aircraft chartered from the commercial air industry and paid at the USTRANSCOM negotiated rate.

These international charter flights are scheduled by AMC to and from designated commercial airports and/or AMC 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.

―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 USTRANSCOM contracted missions. 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.

―Linehaul Rate‖ The Linehaul rate = Effective Rate - (Stop charge/(Average Stage Length * ACL))

APPENDIX B

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP PASSENGER SERVICE

LARGE CLASS AIRCRAFT

USTRANSCOM FY09 FY10 Total

Adjusted Passenger Passenger Passenger

Aircraft Rate Per Revenues Revenues Revenues Weighted

Carrier Type Pax Mile [000] [000] [000] Wgt % Rate

Northwest Airlines A330 $0.11085 $11,789 $0 $11,789 0.64% $0.00071

Northwest Airlines B747-200 $0.11817 $87,886 $8,942 $96,828 5.29% $0.00626

Omni Air Int'l DC10-30/40 $0.10761 $371,542 $353,136 $724,678 39.61% $0.04263

United Airlines B747-400 $0.10836 $26,533 $7,237 $33,770 1.85% $0.00200

United Airlines B777-200 $0.12130 $734 $0 $734 0.04% $0.00005

World Airways DC10-30/40 $0.12921 $190,328 $148,747 $339,075 18.54% $0.02395

World Airways MD11 $0.11742 $250,690 $371,774 $622,464 34.03% $0.03995

$939,503 $889,835

$1,829,338 1.0000

RATE -- WEIGHTED BY REVENUES $0.11555

USTRANSCOM UNIFORM RATE

ROUND-TRIP PASSENGER SERVICE

MEDIUM CLASS AIRCRAFT

USTRANSCOM FY09 FY10 Total

Adjusted Passenger Passenger Passenger

Aircraft Rate Per Revenues Revenues Revenues Weighted

Carrier Type Pax Mile [000] [000] [000] Wgt % Rate

Continental Airlines B767-400 $0.10545 $827 $2,987 $3,814 0.31% $0.00032

Delta Airlines B767-300 $0.10359 $8,014 $7,118 $15,131 1.22% $0.00127

North American B757-200 $0.15127 $75,923 $70,170 $146,094 11.79% $0.01784

North American B767-300 $0.13211 $304,482 $260,824 $565,306 45.63% $0.06028

Omni Air Int'l B757-200 $0.12186 $50,066 $32,690 $82,757 6.68% $0.00814

Ryan Int'l Airlines B757-200 $0.15806 $25,659 $18,523 $44,182 3.57% $0.00564

Ryan Int'l Airlines B767-300 $0.12769 $136,404 $245,323 $381,727 30.81% $0.03934

$1,239,010 1.0000

RATE -- WEIGHTED BY REVENUES $0.13282

USTRANSCOM UNIFORM RATE

ROUND-TRIP PASSENGER SERVICE

SMALL CLASS AIRCRAFT

USTRANSCOM FY09 FY10 Total

Adjusted Passenger Passenger Passenger

Aircraft Rate Per Revenues Revenues Revenues Weighted

Carrier Type Pax Mile [000] [000] [000] Wgt % Rate

Miami Air Int'l B737-800 $0.18741 $42,470 $29,648 $72,118…