6_Aug_13_Final_FY14_Uniform_Rates_and_Rules_for_International_Service.pdf

6 Aug 13

MEMORANDUM FOR ALL CARRIERS

FROM: USTRANSCOM/TCAQ-P

508 Scott Drive Scott AFB IL 62225-5357

SUBJECT: Notice of Final Fiscal Year 2014 (FY14) Uniform Rates and Rules for International

Service – Solicitation Number HTC711-12-R-C004

1. The proposed FY14 rates are based on fuel pegged at $3.44 per gallon for cargo and combi and $3.30 for passenger. The proposed 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 $0.13428 Medium Class Passenger $0.14781 Small Class Passenger $0.14973 $2,000 Large Class Cargo – MFE $0.44955 Large Class Cargo – Classic $0.55257 Medium Class Cargo $0.58230 Combi Service $27.30301 L100 Service $1.34661

2. In accordance with our Memorandum of Understanding, please direct any questions or concerns to Susan.Wickell@ustranscom.mil or 618-220-7150.

//SIGNED//

LUCRETIA A. SANCHEZ

Chief, Pricing Branch

1 Attachment FY14 Final Uniform Rates and Rules for International Service

UNITED STATES TRANSPORTATION COMMAND

508 SCOTT DR

SCOTT AIR FORCE BASE, IL 62225-5357

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 2014

INTRODUCTION

The final FY14 USTRANSCOM Uniform Rates and Rules (hereafter referred to as “Rates”) have been developed using rate-making procedures in compliance with the Federal

Acquisition Regulation (FAR), Memorandum of Understanding (MOU) for FY13 through

FY17, 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).

Excluding fuel, the large passenger, medium passenger, large (classic) cargo and medium cargo rates are higher than the FY13 rates; while the small passenger, large (modern) cargo, Combi and L100 class rates are lower. USTRANSCOM has reviewed these costs extensively and the decreases can be briefly explained as follows:

Small Passenger Class:

Excluding fuel, the small passenger class rate is down 5.37%. This is a direct result of the highest weighted carrier, Miami Air, costs declining and the addition of Sun Country into this class. Miami Air is weighted at 44.00%, so changes in this carrier’s costs will have a dramatic impact to this class. Nevertheless, Miami’s costs are still slightly higher than other

B737-800 operators in this class. Sun Country costs are the lowest in the class and with a weighting of 29.16%, the impact of this new entrant is noteworthy.

Large Cargo (Modern Fuel Efficient (MFE)) Class:

Excluding fuel, the large cargo (MFE) class rate is down 5.93%. In addition to World

Airway’s MD11 costs decreasing this year, the lower rate can be attributed to the addition of three carrier’s B747-400 aircraft into the FY14 rate. Last year’s rate encompassed weightings of 55% B747-400 aircraft and 45% MD11aircraft, while the FY14 rate reflects 81% B747-

400 and 19%MD11. Also of note, the highest cost carrier in this class, FedEx, had a decreased weight, from 23% in FY13 to 10% in FY14.

Combi and L100:

Excluding fuel, these rates are down 3.43% and 5.49% respectively. This decrease is attributed to lower overall costs.

Carrier Comments.

On 11 Apr 13, USTRANSCOM analysts issued individual cut sheets detailing information related to adjustments made to each contractor’s proposed costs and/or statistical data.

Individual profit calculations were also included within the cut sheets. This was followed by publication of the proposed rates on 18 Apr 13. Carrier comments were due no later than 20

May. The FY14 rates consisted of a total of 25 proposals submitted by 15 carriers.

The following carriers provided written comments to the proposed rate: Air Transport

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

(Evergreen), Federal Express (FedEx), National Airlines (National), North American Airlines

(North American), Omni Air International (Omni), Southern Air (Southern) and World

Airways, Inc (World). Carriers were invited to meet with USTRANSCOM in late Jun/early

July to discuss their individual cost elements as well as general rate issues. Eight of these carriers and Miami Air accepted this offer.

Although most carrier comments related to carrier-specific issues, general comments received to the FY14 rate related to:

1. Cargo one way rate

2. Cargo ferry rate

3. Passenger ferry rate

4. Reasonableness of the rate in general

5. Eurocontrol

6. USTRANSCOM decline in business

7. Cost efficiency factor

8. Established Allowable Cabin Loads (ACLs)

1. Cargo one way rate –

Atlas, Evergreen, National Airlines, Patriot Team, Southern Air and World Comment:

The cargo one-way rate of 150% is too low, especially considering the one-way missions for the future will likely be out of Afghanistan.

Recommendation: USTRANSCOM should review the most recent S2 data and also consider allowing a “reverse” one way rate.

USTRANSCOM Response: To calculate the one-way rate, TCAQ reviewed one-way missions reported on carrier S2 reports through Mar 2013. 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. Adjustments for the one-way rates 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.

The live to empty ratio calculated is a direct inverse of the efficiency a carrier achieves. For example, at Appendix N, Atlas’ B747-400 live to empty ratio is 47.38%. Therefore, Atlas achieved 52.62% efficiency in scheduling their B747-400 aircraft in USTRANSCOM service for the period Jul 11 through Mar 13.

USTRANSCOM considers a 13 percent savings for flying an empty aircraft, as indicated in paragraph 2 below concerning “ferry” rate. This savings also holds true for flying an empty aircraft in the reverse segment of a one-way mission. Data considered for the FY14 rate indicated the total live to empty ratios were 47%. Therefore, the statistical ratio of the most recently available paid empty flown miles to paid one-way miles reflects, on average, 53 percent efficiency in the scheduling of aircraft in empty reverse segments. This savings in conjunction with the 13 percent savings for flying an empty aircraft reflects an average of 66 percent savings for one-way cargo missions. Realizing not all carriers achieve a 66% savings in empty backhaul, USTRANSCOM establishes the FY14 one-way rate at 155 percent, allowing for the 13% savings associated with flying empty in conjunction with a 32% savings due to efficiencies in scheduling aircraft in empty reverse segments. The data at Appendix N indicates only one carrier is below a 32% efficiency rating resulting from scheduling. The final 155% rate is an increase from the proposed rate. Based on carrier provided data for the period Jul 11 through Mar 13 USTRANSCOM believes this is fair and reasonable compensation for missions performed in one-way service. Data supporting this rate is provided at Appendix N.

In response to the request to develop a “reverse” one way rate for missions coming out of

Afghanistan, USTRANSCOM determined a reverse one way rate is not required. This was based on a number of factors. First and foremost, an analysis of S2 data associated with

“reverse” one way missions for the period Jan through Apr 13 indicates carriers were just as efficient scheduling these missions as they were with other one way missions. Only two carriers obtained a lower efficiency than the 32% indicated abovei. Additionally, TCJ3 indicated there would be a minimal number of “reverse” one way missions out of Afghanistan because the intent is to award round trip missions to bring back retrograde.

The FY14 one-way rates are as follows:

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

Cargo Large Class

Cargo Medium Class

Combi

One-Way Missions

155%

187%

187%

Contingency Rate (per Appendix A, Para G)

195%

2. Cargo ferry rate –

Patriot Team and Southern Air Comment: The ferry rate of 187% is too low. Although analysis of the data supports this change, anticipated changes in the CRAF program would dictate no change in this area.

Recommendation: USTRANSCOM should retain the historical 190% ferry rate.

USTRANSCOM Response: It is unclear what changes to the CRAF program would affect the ferry rate. Nevertheless, data supports the ferry rate of 187% for cargo carriersii. The ferry rate remains unchanged at 187%

3. Passenger ferry rate –

Omni Comment: The live/ferry rate disincentivizes passenger carriers from obtaining commercial business in the OCONUS because USTRANSCOM will not pay the return ferry if it is flown after the commercial mission.

Recommendation: USTRANSCOM should reconsider reinstating the round trip/one way rates for passenger vice the live/ferry rates.

USTRANSCOM Response: The live/ferry rate was first introduced because carriers claimed, and the Council for Logistics Research confirmed, commercial business for passenger charters was virtually non-existent. The live/ferry rate ensured all miles flown were paid. It is true, however, if a carrier were to accept a commercial mission within Europe following a USTRANSCOM one-way mission to Southwest Asia, for example, USTRANSCOM would only consider/pay backhaul ferry miles from the Aerial Port of

Debarkation of the USTRANSCOM mission to the Aerial Port of Embarkation of the commercial mission. If charter passenger carriers are experiencing an increase in OCONUS commercial business, USTRANSCOM can reconsider reinstating the round trip/one way.

However, ferry would not be paid utilizing the “ferry formula” that had previously been used.

Carriers should provide written comment no later than 4 Oct 13 if there is an interest in re-addressing this issue.

4. Reasonableness of the rate in general –

Omni Comment: The CAB tested the rate to ensure all carriers could perform DOD missions at a profit. Considering a 5% commission, certain carriers in the large class passenger category are not achieving a profit.

Recommendation: USTRANSCOM should ensure all carriers operate at a profit.

USTRANSCOM Response: USTRANSCOM does review all carriers profit rates and when possible, ensures carrier costs are covered with the uniform rate. However, the economic theory behind the uniform rate is that carriers who operate efficiently achieve higher profits, while those who do not achieve lower profits. USTRANSCOM cannot guarantee carriers with high operating costs will attain certain levels of profits within the uniform rate.

Omni Comment: The fuel burn rate for the B747-400 passenger aircraft is too low.

Recommendation: USTRANSCOM should revisit Delta’s B747-400 fuel burn rate.

USTRANSCOM Response: USTRANSCOM and Delta worked together to develop a more appropriate fuel burn rate for their B747-400 aircraft.

Omni Comment: The proposed B767-200 cargo rate is higher than the proposed B767-200 passenger rate. This should not be the case as cargo does not incur passenger service costs and operates out of military bases where aircraft traffic service costs are less.

Recommendation: USTRANSCOM should increase the standard ACL for the passenger

B767-200 aircraft.

USTRANSCOM Response: The B767-200 cargo rate per mile in the Final FY14 rate is actually lower than the per mile rate for a B767-200 passenger aircraft. No adjustment will be made to the ACL for the B767-200 passenger aircraft.

Omni Comment: Atlas’ B747-400 ACL changed at the end of the base period. Costs incurred were based on a 400 ACL

Recommendation: Atlas’ costs should be normalized to reflect the matching of costs to the paid ACL.

USTRANSCOM Response: Costs are based on total operating costs for the aircraft in

USTRANSCOM service. The FY14 rate incorporates a 435 ACL for Atlas’ B747-400 passenger aircraft. Atlas’ costs should be divided by the ACL they will be paid.

5. Eurocontrol –

Evergreen Comment: The B747-400 eurocontrol is 8.22% higher than other large cargo aircraft.

Recommendation: USTRANSCOM should increase the eurocontrol rate for the B747-400 cargo aircraft to 2.61%

USTRANSCOM Response: Although USTRANSCOM does not agree there should be a separate eurocontrol rate for a single aircraft type, we do agree the calculation should not include the B747-200 cargo aircraft since these aircraft have been minimally utilized in CRAF service during FY13. Removal of the B747-200 aircraft resulted in a cargo eurocontrol rate of 2.70%

6. Decline in USTRANSCOM business –

Omni Comment: The EWG shows flying will decrease to $750M in FY14. The uniform rate is based on the premise that historical costs/miles will be similar to forecast costs/miles.

With this proposed decrease, this is not the case.

Recommendation: The constructed mileage base calculation should be based on forecasted miles instead of historical miles because with these changes, historical miles no longer predict future miles.

World/North American Comment: Cost efficiency should include consideration where

DOD actions have caused higher costs. In general, lowering of USTRANSCOM business is a reason for higher costs. Additionally, there is a cost of readiness that should be covered in the uniform rate calculation in the form of spare aircraft and the higher cost of low utilization.

Recommendation: In absence of either of these considerations, USTRANSCOM should consider adjusting aircraft utilization downward to help compensate for lower utilization and geographic fragmentation of the current and future operating environment.

USTRANSCOM Response: USTRANSCOM agrees these comments have merit. The uniform rate is based upon the premise the forecast period will be similar to the base year.

While the FY14 base year revenues were approximately $2.8B, the forecast for FY14 is

$1.1B. Distribution of fixed costs (such as insurance, depreciation and lease costs) is impacted by dramatic changes in utilization. As a result, USTRANSCOM determined an adjustment to certain utilization rates might be appropriate in those instances where the industry relies heavily on DOD business. Therefore, this reduction would not apply to scheduled service carriers, since their overall business structure and utilization would not be greatly impacted by a change in DOD business. This also would not impact cargo charters, as cargo charter service exists outside the DOD. However, full plane-load international charter passenger service outside of DOD is practically non-existent. Therefore, an adjustment was made to charter passenger utilization rates to account for this. This adjustment was based on the difference between the minimum utilization of 5 hours, system utilization and the expected decrease in USTRANSCOM revenues for FY14. Adjustments were discussed in detail with the affected carriers.

7. Cost efficiency factor -

Atlas Comment: The cost efficiency factor incorrectly compares a carriers individual costs year over year. The true measure of a carrier’s efficiency is to its performance versus its peers, not versus itself.

Recommendation: Carrier cost efficiency should be measured against the weighted average cost efficiency of each category.

USTRANSCOM Response: USTRANSCOM continues to disagree with this position.

Carriers can only control their own costs. Therefore, the proper measure of cost efficiency can only be against oneself

8. Established Allowable Cabin Loads (ACLs) –

World Comment: The large class passenger rate is distorted by large ACL aircraft such as the B747-400 and B777.

Recommendation: The B747-400 should be split from the rest of the large passenger class category.

USTRANSCOM Response: It would be inappropriate to remove any particular aircraft from this class at this time, as all aircraft are currently considered modern, fuel-efficient and have comparable capability. USTRANSCOM understands carrier concerns related to ACLs and their impact to the rate. Over the past year TCAQ and the ERC requested carrier comments/ideas on ways to correct the perceived problem related to ACLs. A few responses were received, but only one provided a suggestion for a potentially new method for developing the pay ACL. Since carriers were reluctant to provide guidance, TCAQ turned to the Joint Distribution Process Analysis Center (TCAC) for assistance. We intend to resolve this issue during the FY14 performance period.

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 on 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 61 percent of their fuel at military installations and are charged the rate set by Defense Logistics Agency -

Energy (DLA-E). Conversely, passenger carriers receive 70 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 and Oil Price Information Service (OPIS)iii. Adjustments are made to these prices in consideration for prices paid at locations utilized by CRAF carriers that are outside the spot markets.

DLA-E JP-5 and JP-8 fuel prices anticipated to be effective 01 Oct 13 were used in determining the pegged price of fuel in the final rate. USTRANSCOM estimated DESC prices effective 1 Oct at $3.64 and $3.62 for JP5 and JP8, respectively. USTRANSCOM may adjust the rates prior to contract performance should the posted DLA standard prices differ significantly. USTRANSCOM will continue to closely monitor fuel prices for the FY14 contract performance period and make appropriate adjustments to the pegged fuel prices as we have done in prior 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 $3.30 for passenger and $3.44 per

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

Capital Compensation.

In accordance with carrier agreement to eliminate the calculation and application of the full return on investment (ROI) because it has effectively been replaced by the application of facilities capital employed in the weighted guidelines calculation, an analysis for the FY14 final rate full ROI was not accomplished.

Profit.

As anticipated, for those aircraft classes predominantly weighted by modern, fuel-efficient aircraft, the weighted guidelines methodology used in the FY14 rates produced average minimum profit percentages higher than the previous MOU rate of 11%. The weighted profits realized by category are as follows:

Large Class Passenger 13.78%

Medium Class Passenger 11.75%

Small Class Passenger 12.88%

Large Cargo (Modern) 13.45%

Large Cargo (Aged) 8.53%

Medium Cargo 7.56%

Combi 8.30%

As discussed in the introduction of the FY13 Uniform Rates and Rules, USTRANSCOM will continue to monitor the Facilitates Capital Employed calculation within the weighted guidelines. USTRANSCOM's intent is to ensure the calculation appropriately allocates capital expended against the CRAF contract.

Cost Escalation.

The 27-month cost escalation factor is 4.26 percent for FY14. This is based on the calculations agreed upon in the FY13-17 MOU. This is a decrease from the 27 month factor of 5.31 percent for FY13. Appendix M provides detailed information on this calculation.

Eurocontrol.

The FY14 Euro control surcharges have been calculated as follows: 2.1 percent for passenger, 2.7 percent for cargo missions, .33 percent for combi. L-100 euro control will be on a cost reimbursable basis. This is a change from the FY13 Euro control of 2.0 percent, 2.6 percent and .36 percent for passenger, cargo and combi, respectively. The mission samples and analysis for euro control is provided at Appendix L.

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 in advance for an exercise, SAAM, or contingency. This is not authorized for additional passengers on channel missions. TCAQ updated all factors incorporated into this rate; and the FY14

Incremental Passenger Rate is $231iv. See Appendix A for details.

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 (modern), large (classic), and medium class of cargo aircraft, combi and L-100 aircraft rates, respectively. Appendices C through J illustrate individual treatment of each carrier’s cost by aircraft type, with explanatory notes provided in Appendix K. Appendices L and M provide the Eurocontrol Surcharge and Cost

Escalation Factor, respectively. Appendix N provides Backhaul Operational Data for

USTRANSCOM Services for both large and medium class cargo categories. Finally, Appendix O demonstrates the FICA calculation.

i

FLOWN

ONE-WAY EMPTY INDIVIDUAL

AIRCRAFT

ONE-WAY EMPTY

ASM'S BACKHAUL CARRIER

CARRIER TYPE ACL PAID MILES BACKHAUL

[000] [000] RATIO

GTI B747-400 100 13,942 4,683

1394 468 33.59%

CKS B747-400 100 91,998 12,787

9200 1279 13.90%

WOA B747-400 100 6,971 6,931

697 693 99.43%

EIA B747-400 100 14,058 14,078

1406 1408 100.14%

NAC B747-400 100 11,162 6,305

1116 631 56.49%

FDX MD11 86 7,131 2,092

613 180 29.34%

14426 4658 32.29%

RATIO OF EMPTY ATM'S TO ONE-WAY ATM'S 32.29%*

* Note: This 32.29% is purely coincidental and is not related to the 32% “efficiency” indicated in the 155% one way rate. This ratio actually indicates 67.71% efficiency.

ii The analysis of the Cargo ferry rate was performed using the Final FY14 Large Class MFE cargo rate of $0.44955

Large Class

Wgt'd Percentage Cost Ferry

Cost Category Cost Allowed Allowed Rate % Crew 4.3185 100% 4.3185

Fuel 21.0815 75% 15.8111 Maintenance 5.3931 100% 5.3931 Insurance 0.2276 100% 0.2276 Rent 3.3379 100% 3.3379 Depreciation 1.3180 100% 1.3180 Preop 0.0000 100% 0.0000 Cap Gains/Losses 0.0003 0% 0.0000 Grd Property 0.2628 100% 0.2628 Aircraft & Traffic Service 2.2176 85% 1.8850 G&A 1.4894 100% 1.4894 Profit 5.3086 100% 5.3086 Total 44.9553

39.3520 0.8754 iii

IATA Fuel Price Analysis: (as of 05 Jul 13)

Jet Fuel Price 100%

Asia& Oceania 22% 285.2 62.74 Europe & CIS

28% 293.5 82.18

Middle East &

Africa

7% 283.6 19.85

North America

39% 289.2 112.79 Latin America

4% 301.9 12.08

Average 2.90

OPIS Index:

(Avg 01-08 Jul 13)

New York 286.12 U.S. Gulf 283.12 Los Angeles 283.16 Rotterdam 289.33 Singapore 282.39 Arab Gulf 278.29 Average 2.84 iv Incremental Passenger Rate calculation

Carrier Aircraft Type ACL

Passenger Service Cost

Per Mile

Passenger Service Cost

Per Seat

FY12

Passenger Revenues

(000)

FY13

Passenger

Revenue (000)

Total Revenue by Carrier

Weighted Avg for each Carrier

Weighted Avg Pax Svc

Cost ATLAS B747-400 435 10.3504 0.02379402 9,064 86,000 185,064 0.2047 0.00487 0.00487111

DELTA A330 330 4.5519 0.01379364 37,830 18,182 56,012 0.0620 0.00085 0.00085467

DELTA B747-400 400 5.4562 0.01364050 35,899 30,052 65,951 0.0730 0.00100 0.00099515 OMNI B777 380 5.7708 0.01518632 108,237 114,066 222,303 0.2459 0.00373 0.00373453

WORLD AIRWAYS MD11 360 7.5486 0.02096833 247,291 127,365 374,656 0.4144 0.00869 0.00869030

0.01914577

TOTALS 528,321 375,665 903,986 1.000 0.01915

0.0354197

One-Way Round-Trip Total

Live Pay Miles

1,937,048 7,317,660 9,254,708.00

FY14 Final Passenger Seat Mile Rate 0.24841 0.13428

183,492,859 374,696,196

Total Dollars

558,189,056

Total Trips

Total Passengers

292,481

Avg Passenger per Trip

Avg Price Per Trip

727,756.27

Avg Seat Miles Per Trip

4,601,190.31

Avg Miles Per Trip

12,066

Additional passenger service cost per trip $231

INDEX OF APPENDICES

No.

Appendix Title Pages

A USTRANSCOM Uniform Negotiated Rates and Rules 6

B Computation of Uniform Rates: 8 Large Class Passenger Service Medium Class Passenger Service Small Class Passenger Service Large Class Cargo (MFE) Service Large Class Cargo (Classic) 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 5

D Costs Per Seat Mile by Carrier and Aircraft Type in Medium Class Charter Passenger Service 4

E Costs Per Seat Mile by Carrier and Aircraft Type in Small Class Charter Passenger Service 4

F Costs Per Ton Mile by Carrier and Aircraft Type in Large Class Cargo Service (MFE) 6

G Costs Per Ton Mile by Carrier and Aircraft Type in Large Class Cargo Service (Classic) 2

H Costs Per Ton Mile by Carrier and Aircraft Type in Medium Class Cargo Service 2

I Cost Per Plane Mile by Carrier Charter Combi Service 1

J Cost Per Ton Mile by Carrier Charter L100 Service 1

K Explanatory Notes 3

L Eurocontrol Surcharge 6

M Cost Escalation Factor 2

N Backhaul Operational Data for USTRANSCOM Service 1

O FICA Escalation 1

APPENDIX A

SCHEDULE OF UNIFORM NEGOTIATED RATES AND RULES

FISCAL YEAR 2014

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

Large

Live Effective Rate

$0.13428 Ferry Rate (Base - Effective Rate) 90% $0.12085 Incremental Passenger

$231

Fuel Pegged Rate

$3.30

Medium

Live Effective Rate

$0.14781

Ferry Rate (Base - Effective Rate) 90% $0.13303

$3.30

Small

Live Line Haul Rate

$0.14973

Ferry Rate (Base - Effective Rate) 90% $0.14320 Stop Charge (Per Directed Landing) $2,000

Fuel Pegged Rate $3.30

(2) CHARTER CARGO SERVICE PER TON MILE

Large - Modern Fuel Efficient (MFE)

Round Trip Effective Rate

$0.44955 One-Way 155% $0.69681 Contingency Rate (Per Para G) 195% $0.87663 Ferry Rate (Base - Effective Rate) 87% $0.39111

$3.44

Large - Classic

$0.55257 One-Way 155% $0.85648 Contingency Rate (Per Para G) 195% $1.07750 Ferry Rate (Base - Effective Rate) 87% $0.48073

$3.44

Medium

Round Trip Effective Rate:

$0.58230 One-Way 187% $1.08890 Contingency Rate (Per Para G) 195% $1.13549 Ferry Rate (Base - Effective Rate) 87% $0.50660 Fuel Pegged Rate $3.44

(3) CHARTER COMBI SERVICE PER PLANE MILE

$27.30301

One-Way 187% $51.05662 Contingency Rate (Per Para G) 195% $53.24087 Ferry Rate (Base - Effective Rate) 90% $24.57271

(4) CHARTER L-100 SERVICE PER TON MILE

$1.34661

Ferry Rate (Base - Effective Rate) 87% $1.17155

(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. On round trip passenger, one-way passenger when either the live or empty segment transits a eurocontrol country, cargo or combi missions, Eurocontrol will be paid on live miles only.

On one way passenger missions when Eurocontrol is applicable to both the live and empty segment, Eurocontrol will be paid on the live miles plus an additional 85 percent of those miles (i.e., 6,000 mile one way passenger mission would be paid 2.1 percent on 6,000 miles + 5,100 miles). Carriers will be paid the applicable rate plus a surcharge of

2.7 percent for cargo missions and 0.33 percent for combi. Eurocontrol fees for the L100 class aircraft 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.

(c) “Front/backhaul ferry” on one-way passenger missions will be applied to empty backhaul miles in addition to, and in the same manner as, positioning/depositioning ferry identified in subparagraph (b) above.

(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 $231 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). Cancellation of one way passenger missions will be calculated on a trip price made up of the live miles plus 85 percent of those miles at the live mile rate (i.e., 6,000 mile one way passenger mission would be paid the applicable cancellation percentage on 6,000 miles + 5,100 miles times the live mile rate). The charges are as follows:

Time Frame Service Type

Seven days or less

Passenger and Combi:

Cargo:

28.49% 26.36%

8 to 14 days

Passenger and Combi:

Cargo:

19.65% 21.59%

15 to 30 days

Passenger and Combi:

Cargo:

16.30% 18.12%

31 to 45 days Passenger and Combi 7.74% 31 to 75 days Cargo 7.02% 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:

19.65% 21.59%

(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 $2132

B747-400/400ER 100 $2206

MD11F 86 $1897

MD11C 86 $1897

B777F 88 $1941

DC10-30/40 75 $1777

A300-600ER 51 $1808

A300-400F 50 $1773 B767-200F 48 $1702

DC8 45 $1596

L100 23 $1912 B727-100 18 $905 B727-200 22 $1106

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 the fixed buy 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 – Modern Fuel Efficient (MFE)

A330-200 310 MD11 86

A330-300 330 B747-400 100

B777-200ER 330 B777F 88

DC10-30 330 B767-300F 61

A340 345 MD11/MD11ER 360 Large Aircraft – Classic B777 Charter Config. 380 DC10-30/40 75 B747 400 B747-100/200/300 90 B747 Charter Config. 435

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 cargo is transported on two or more successive revenue flights in opposite directions.

E. SEATTLE CHANNELS. 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 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.

(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 FY12 FY13 Total Adjusted Passenger Passenger Passenger

Aircraft Rate Per Revenues Revenues Revenues Weighted Carrier Type Pax Mile [000] [000] [000] Wgt % Rate

ATLAS AIR, INC. B747-400 0.12336$ 99,064$ 86,000$ $185,064 20.47% $0.02526

DELTA AIR LINES INC A330 0.16846$ 37,830$ 18,182$ $56,013 6.20% $0.01044

DELTA AIR LINES INC B747-400 0.13654$ 35,899$ 30,052$ $65,951 7.30% $0.00996

OMNI AIR INTERNATIONAL INC B777 0.14131$ 108,237$ 114,066$ $222,304 24.59% $0.03475

WORLD AIRWAYS INC MD11 0.12999$ 247,291$ 127,365$ $374,656 41.44% $0.05387

$903,988 1.0000

RATE -- WEIGHTED BY REVENUES $0.13428

Exclusive of Fuel $0.08730

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP PASSENGER SERVICE

MEDIUM CLASS AIRCRAFT

USTRANSCOM FY12 FY13 Total Adjusted Passenger Passenger Passenger

Aircraft Rate Per Revenues Revenues Revenues Weighted Carrier Type Pax Mile [000] [000] [000] Wgt % Rate

ATLAS AIR, INC. B767-300 0.15992$ 74,167$ 84,573$ $158,740 18.31% $0.02928

DELTA AIR LINES INC B767-300 0.16862$ 50,485$ 26,960$ $77,445 8.93% $0.01506

NORTH AMERICAN AIRLINES B767-300 0.14793$ 235,072$ 104,700$ $339,772 39.19% $0.05798 OMNI AIR INTERNATIONAL INC B767-300 0.13553$ 171,388$ 119,535$ $290,923 33.56% $0.04548

$866,880 1.0000

RATE -- WEIGHTED BY REVENUES $0.14781

Exclusive of Fuel $0.10040

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP PASSENGER SERVICE

SMALL CLASS AIRCRAFT

USTRANSCOM FY12 FY13 Total Adjusted Passenger Passenger Passenger

Aircraft Rate Per Revenues Revenues Revenues Weighted Carrier Type Pax Mile [000] [000] [000] Wgt % Rate

DELTA AIR LINES INC B737-800 0.16165$ 4,224$ 3,284$ $7,508 12.13% $0.01961

MIAMI AIR INTERNATIONAL INC B737-800 0.16191$ 11,760$ 15,470$ $27,229 44.00% $0.07125

, LLC DBA SUN COUNTRY AIRLINES B737-800 0.15364$ 3,594$ 14,450$ $18,045 29.16% $0.04480

UNITED AIRLINES INC B737-800 0.15951$ 2,219$ 6,879$ $9,098 14.70% $0.02345

$61,880 1.0000

RATE -- WEIGHTED BY REVENUES $0.15911

Exclusive of Fuel $0.11455

Average Average Rate Per Linehaul Rate Effective Rate Stage Seats Per Directed Per Paid Per Seat Mile Length Mission Landing Seat Mile

$0.15911 1,421 150 $2,000 $0.14973

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

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP CARGO SERVICE

LARGE CLASS AIRCRAFT (MFE)

USTRANSCOM FY12 FY13 Total Adjusted Cargo Cargo Cargo

Aircraft Rate Per Revenues Revenues Revenues Weighted Carrier Type Ton Mile [000] [000] [000] Wgt % Rate

ATLAS AIR, INC. B747-400 0.43919$ 249,673$ 160,033$ $409,706 37.65% $0.16537

FEDERAL EXPRESS CORPORATION MD11 0.57733$ 73,135$ 40,100$ $113,235 10.41% $0.06008

KALITTA AIR, LLC B747-400 0.45672$ 99,708$ 81,201$ $180,908 16.63% $0.07594

SOUTHERN AIR INC. B747-400 0.44013$ 64,663$ 88,608$ $153,271 14.09% $0.06200

WORLD AIRWAYS INC B747-400 0.41230$ 72,903$ 64,927$ $137,830 12.67% $0.05223

WORLD AIRWAYS INC MD11 0.39651$ 60,494$ 32,645$ $93,139 8.56% $0.03394

$620,576 $467,513

$1,088,090 1.0000

RATE -- WEIGHTED BY REVENUES $0.44955

Exclusive of Fuel $0.23874

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP CARGO SERVICE

LARGE CLASS AIRCRAFT (CLASSIC)

USTRANSCOM FY12 FY13 Total Adjusted Cargo Cargo Cargo

Aircraft Rate Per Revenues Revenues Revenues Weighted Carrier Type Ton Mile [000] [000] [000] Wgt % Rate

EVERGREEN INTERNATIONAL AIRLINES, INC. B747 0.55027$ 197,618$ -$ $197,618 90.89% $0.50016

KALITTA AIR, LLC B747 0.57546$ 19,801$ -$ $19,801 9.11% $0.05241

$217,419

$217,419 1.0000

RATE -- WEIGHTED BY REVENUES $0.55257

Exclusive of Fuel $0.25268

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP CARGO SERVICE

MEDIUM CLASS AIRCRAFT

USTRANSCOM FY12 FY13 Total Adjusted Cargo Cargo Cargo

Aircraft Rate Per Revenues Revenues Revenues Weighted Carrier Type Ton Mile [000] [000] [000] Wgt % Rate

ABX AIR INC B767-200F 0.60126$ $3,341 $4,160 $7,501 65.75% $0.39534

AIR TRANSPORT INTERNATIONAL LLC DC8 0.54591$ $3,491 $416 $3,907 34.25% $0.18696

$6,832 $4,576

$11,408 1.0000

RATE -- WEIGHTED BY REVENUES $0.58230

Exclusive of Fuel $0.32283

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP COMBI SERVICE

COMBI AIRCRAFT

USTRANSCOM FY12 FY13 Total Adjusted Combi Combi Combi

Aircraft Rate Revenues Revenues Revenues Weighted Carrier Type Per Mile [000] [000] [000] Wgt % Rate

AIR TRANSPORT INTERNATIONAL LLC DC8 $27.30301 $90,579 $88,208 $178,786 100.00% $27.30301

$178,786 1.0000

RATE -- WEIGHTED BY REVENUES $27.30301

Exclusive of Fuel $14.15240

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP SERVICE

LYNDEN L100 AIRCRAFT

USTRANSCOM FY12 FY13 Total Adjusted L100 L100 L100

Aircraft Rate Revenues Revenues Revenues Weighted Carrier Type Per Ton Mile [000] [000] [000] Wgt % Rate

LYNDEN AIR CARGO LLC DC8 1.34661$ $17,360 $14,440 $31,801 100.00% $1.34661

$31,801 1.0000

RATE -- WEIGHTED BY REVENUES $1.34661

Exclusive of Fuel $0.99879

APPENDIX C

ATLAS AIRLINES (GTI) Aircraft Type B747-400

LARGE CLASS AIRCRAFT Passenger Service

FY14 RATE REVIEW

FORECAST YEAR FY14

USTRANSCOM FINAL

PROPOSED ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 1,466 1,466

AVERAGE DAILY AIRCRAFT UTILIZATION 7.9 B 6.5

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $3.5039 $3.5093 Fuel, Oil, & Aircraft Supplies 24.4410 D 22.2804 Flight Equipment Maintenance 2.9568 E 2.9769

Total Direct Variable 30.9016 28.7666

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.9213 F 1.1197 Aircraft Rentals & Miscellaneous 0.0714 G 0.0872 Flight Equipment Depreciation & Obsolescence 1.0240 H 1.2446 Amortization of Preoperating Expense 0.0000 0.0000 Capital Gains & Losses 0.0000 0.0000

Total Direct Fixed 2.0167 2.4515

Indirect:

Maintenance & Depreciation-General Ground Property 0.0370 0.0370 Aircraft & Traffic Servicing 4.0448 4.0655 Passenger Service 4.3561 M 10.3504 General & Administrative 1.4581 2.0163

Total Indirect 9.8960 16.4691

TOTAL OPERATING COST 42.8143 47.6873

Profit 5.5441 5.9762

TOTAL COST $48.3584 $53.6635

Allowable Cabin Load 435 435

RATE PER SEAT MILE $0.11117 $0.12336

DELTA AIRLINES (DAL) Aircraft Type A330-200/300

LARGE CLASS AIRCRAFT Passenger Service

FY14 RATE REVIEW

FORECAST YEAR FY14

USTRANSCOM FINAL

PROPOSED ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 837 837

AVERAGE DAILY AIRCRAFT UTILIZATION 12.0 B 6.9

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $5.4761 C $4.9286 Fuel, Oil, & Aircraft Supplies 12.4852 D 13.9457 Flight Equipment Maintenance 5.2701 E 5.4170

Total Direct Variable 23.2314 24.2913

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.0548 0.0994 Aircraft Rentals & Miscellaneous 0.0042 G 0.0007 Flight Equipment Depreciation & Obsolescence 2.6817 4.6638 Amortization of Preoperating Expense 0.0000 0.0000 Capital Gains & Losses 0.0000 0.0000

Total Direct Fixed 2.7406 4.7639

Indirect:

Maintenance & Depreciation-General Ground Property 0.1918 K 0.2467 Aircraft & Traffic Servicing 3.4413 L 10.2729 Passenger Service 3.7203 M 4.5519 General & Administrative 1.1192 1.6208

Total Indirect 8.4726 16.6923

TOTAL OPERATING COST 34.4446 45.7475

Profit 8.7097 9.8434

TOTAL COST $43.1543 $55.5909

Allowable Cabin Load 330 330

RATE PER SEAT MILE $0.13077 $0.16846

DELTA AIRLINES (DAL) Aircraft Type B747-400

LARGE CLASS AIRCRAFT Passenger Service

FY14 RATE REVIEW

FORECAST YEAR FY14

USTRANSCOM FINAL

PROPOSED ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 695 695

AVERAGE DAILY AIRCRAFT UTILIZATION 10.7 B 7.8

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $6.8360 C $6.2534 Fuel, Oil, & Aircraft Supplies 16.0240 D 21.8530 Flight Equipment Maintenance 3.0166 E 3.0836

Total Direct Variable 25.8765 31.1900

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.0573 F 0.0819 Aircraft Rentals & Miscellaneous 1.7432 G 2.3862 Flight Equipment Depreciation & Obsolescence 1.1579 H 1.5884 Amortization of Preoperating Expense 0.0000 0.0000 Capital Gains & Losses 0.0000 0.0000

Total Direct Fixed 2.9583 4.0565

Indirect:

Maintenance & Depreciation-General Ground Property 0.0059 K 0.0395 Aircraft & Traffic Servicing 5.2951 L 6.6443 Passenger Service 4.1684 M 5.4562 General & Administrative 1.1965 1.3712

Total Indirect 10.6659 13.5112

TOTAL OPERATING COST 39.5008 48.7576

Profit 4.9025 5.8601

TOTAL COST $44.4033 $54.6177

Allowable Cabin Load 400 400

RATE PER SEAT MILE $0.11101 $0.13654

OMNI AIR INTERNATIONAL (OAE) Aircraft Type B777-200CH

LARGE CLASS AIRCRAFT Passenger Service

FY14 RATE REVIEW

FORECAST YEAR FY14

USTRANSCOM FINAL

PROPOSED ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 1,962 1,962

AVERAGE DAILY AIRCRAFT UTILIZATION 6.0 B 5.8

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $5.0290 C $5.3563 Fuel, Oil, & Aircraft Supplies 16.4061 15.2335 Flight Equipment Maintenance 7.2830 E 7.7869

Total Direct Variable 28.7182 28.3768

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.4478 0.4700 Aircraft Rentals & Miscellaneous 0.0573 0.0576 Flight Equipment Depreciation & Obsolescence 5.1745 H 5.6962 Amortization of Preoperating Expense 0.0000 0.0000 Capital Gains & Losses 0.0000 0.0000

Total Direct Fixed 5.6796 6.2239

Indirect:

Maintenance & Depreciation-General Ground Property 0.5294 K 0.0631 Aircraft & Traffic Servicing 2.6877 2.7015 Passenger Service 5.7460 5.7708 General & Administrative 0.9934 N 1.0471

Total Indirect 9.9566 9.5825

TOTAL OPERATING COST 44.3544 44.1831

Profit 9.3787 9.5139

TOTAL COST $53.7331 $53.6970

Allowable Cabin Load 380 380

RATE PER SEAT MILE $0.14140 $0.14131

WORLD AIRWAYS (WOA) Aircraft Type MD-11

LARGE CLASS AIRCRAFT Passenger Service

FY14 RATE REVIEW

FORECAST YEAR FY14

USTRANSCOM FINAL

PROPOSED ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 6,301 6,301

AVERAGE DAILY AIRCRAFT UTILIZATION 6.8 B 6.4

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $4.2124 C $4.4574 Fuel, Oil, & Aircraft Supplies 19.0826 17.3958 Flight Equipment Maintenance 6.3949 6.4258

Total Direct Variable 29.6899 28.2790

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.2457 F 0.2605 Aircraft Rentals & Miscellaneous 2.1864 G 2.2985 Flight Equipment Depreciation & Obsolescence 0.4118 H 0.4349 Amortization of Preoperating Expense 0.0000 0.0000 Capital Gains & Losses 0.0000 0.0000

Total Direct Fixed 2.8439 2.9939

Indirect:

Maintenance & Depreciation-General Ground Property 0.0177 0.0177 Aircraft & Traffic Servicing 2.4022 2.4145 Passenger Service 7.5191 7.5486 General & Administrative 1.6630 N 1.6963

Total Indirect 11.6021 11.6771

TOTAL OPERATING COST 44.1358 42.9499

Profit 3.7718 3.8458

TOTAL COST $47.9076 $46.7956

Allowable Cabin Load 360 360

RATE PER SEAT MILE $0.13308 $0.12999

APPENDIX D

ATLAS AIR, INC (GTI) Aircraft Type B767-300/ER

MEDIUM CLASS AIRCRAFT Passenger Service

FY14 RATE REVIEW

FORECAST YEAR FY14

USTRANSCOM FINAL

PROPOSED ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 1,018 1,018

AVERAGE DAILY AIRCRAFT UTILIZATION 8.2 B 6.0

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $5.2527 $5.2617 Fuel, Oil, & Aircraft Supplies 12.5478 D 11.4386 Flight Equipment Maintenance 3.8447 E 3.8671

Total Direct Variable 21.6452 20.5674

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.6539 F 0.8937 Aircraft Rentals & Miscellaneous 0.5523 G 0.7587 Flight Equipment Depreciation & Obsolescence 1.0094 H 1.3795 Amortization of Preoperating Expense 0.0000 0.0000 Capital Gains & Losses 0.0000 0.0000

Total Direct Fixed 2.2156 3.0319

Indirect:

Maintenance & Depreciation-General Ground Property 0.0380 0.0380 Aircraft & Traffic Servicing 3.2919 3.3087 Passenger Service 4.3561 M 4.9094 General & Administrative 1.6377 1.7599

Total Indirect 9.3237 10.0161

TOTAL OPERATING COST 33.1846 33.6154

Profit 4.5897 4.7651

TOTAL COST $37.7743 $38.3805

Allowable Cabin Load 240 240

RATE PER SEAT MILE $0.15739 $0.15992

DELTA AIRLINES (DAL) Aircraft Type B767-300/ER

MEDIUM CLASS AIRCRAFT Passenger Service

FY13 RATE REVIEW

FORECAST YEAR FY14

USTRANSCOM FINAL

PROPOSED ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 1,368 1,368

AVERAGE DAILY AIRCRAFT UTILIZATION 11.2 11.2

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $3.8451 C $7.8452 Fuel, Oil, & Aircraft Supplies 10.9189 D 11.9915 Flight Equipment Maintenance 2.7266 E 4.5523

Total Direct Variable 17.4906 24.3890

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.0558 0.0581 Aircraft Rentals & Miscellaneous 0.2165 G 0.1913 Flight Equipment Depreciation & Obsolescence 1.6608 1.6608 Amortization of Preoperating Expense 0.0000 0.0000 Capital Gains & Losses 0.0000 0.0000

Total Direct Fixed 1.9330 1.9102

Indirect:

Maintenance & Depreciation-General Ground Property 0.3065 K 0.0566 Aircraft & Traffic Servicing 2.2985 L 3.5822 Passenger Service 3.9422 4.5578 General & Administrative…