16_Apr_14_Proposed_FY15_Uniform_Rates_and_Rules_for_International_Service.pdf

16 Apr 14

MEMORANDUM FOR ALL CARRIERS

FROM: USTRANSCOM/TCAQ-P

508 Scott Drive Scott AFB IL 62225-5357

SUBJECT: Notice of Proposed Fiscal Year 2015 (FY15) Uniform Rates and Rules for

International Service – Solicitation Number HTC711-14-R-C002

(SUSPENSE: 16 MAY 14)

1. The proposed FY15 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 $0.12622 Medium Class Passenger $0.14152 Small Class Passenger $0.14628 $2,000 Large Class Cargo $0.45888 Medium Class Cargo $0.56657 Combi Service $22.2118 L100 Service $1.25937

2. Carriers providing cost data for the rate review should provide comments and supporting documentation to USTRANSCOM/TCAQ-P, 508 Scott Drive, Scott AFB IL 62225-5357 by close of business 16 May 14. It is imperative carriers identify all issues of concern prior to this deadline. Under no circumstances will an extension be granted. If specific information is required on individual cost elements, analysts will provide detailed step-by-step treatment upon carrier request.

3. While a narrative is not required, a carrier may submit one by close of business 16 May 14 in accordance with paragraph 2.1.1.4 of the MOU:

"If this table does not adequately predict cost efficiency such as when a carrier's year-over-year increase is a result of operations to high cost locations or a carrier has introduced a fuel efficient aircraft with no prior year's comparisons, carriers are encouraged to provide a narrative explaining justification for a higher cost efficiency rating. Supporting documentation of the

UNITED STATES TRANSPORTATION COMMAND

508 SCOTT DR

SCOTT AIR FORCE BASE, IL 62225-5357

proposed cost efficiency factor must be included. Any narrative provided is limited to 10 pages in length."

4. In accordance with our Memorandum of Understanding, please direct any questions or concerns to me at Susan.M.Wickell.civ@mail.mil or 618-220-7150.

//SIGNED//

SUSAN MEYER WICKELL

Acting Chief, Pricing Branch

Attachment:

16 Apr 14 Proposed FY15 Uniform Rates and Rules for International Service mailto:Susan.M.Wickell.civ@mail.mil

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

UNITED STATES

TRANSPORTATION COMMAND

PROPOSED

UNIFORM RATES AND RULES

FOR

INTERNATIONAL SERVICE

FISCAL YEAR 2015

INTRODUCTION

The proposed FY15 USTRANSCOM Uniform Rates and Rules (hereafter referred to as

“Rates”) were 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).

Late Information.

Information received too late for inclusion in this proposed rate will be evaluated and negotiated with individual carriers for consideration in the final rate.

Bankruptcy.

World Airways (WOA) ceased operation on 27 March 2014 after filing for bankruptcy protection in November 2013. Consequently, USTRANSCOM excluded WOA’s cost input from the FY15 rates since WOA will not be performing USTRANSCOM missions in the

FY15 performance period. Cost input for North American Airlines (NAO), however, was included as a result of the ongoing operation of this airline.

Removal of a Large Cargo Carrier’s Cost Data From Rate.

As of the date of publication of the FY15 proposed rates, USTRANSCOM is unable to complete a conclusive evaluation of one of the large cargo carrier’s cost input submitted for inclusion in the FY15 cargo rate. As a result, USTRANSCOM will exclude this carrier’s

B747 cost input from the FY15 proposed large class cargo rate class. This could change depending on the audit's final conclusions. We will update all carriers in this class once we finalize the audit details.

Transparency.

Carriers are encouraged to discuss issues with their USTRANSCOM cost analyst at any point and will be invited to meet with USTRANSCOM Pricing Branch after comments have been received but before the final rate is issued. This meeting provides an opportunity for face to face discussions on carrier-specific cost/statistical data as well as general items of interest. In addition, individual carrier cut sheets will be provided on 16 April 2014 to facilitate on-going discussions. These cut sheets provide detailed information related to adjustments made by the analyst based on contractor’s costs and/or statistical data.

Comment Period

USTRANSCOM is providing a 30-day suspense for comments. Comments are due by 4 PM

CDT on 16 May 2014.

Participation.

USTRANSCOM rates are based on carriers’ historical costs, projected into the contract year, plus a profit element. Each carrier’s rates are weight averaged (based on USTRANSCOM revenues for a two-year period) into a single worldwide rate per seat-mile or ton-mile for each of the USTRANSCOM rate categories. In accordance with the MOU, carriers receiving 5 percent or greater of USTRANSCOM charter business, as calculated by USTRANSCOM’s internal database,i are required to submit their cost data. USTRANSCOM’s objective is to include a pool of accurate data fairly representing the cost of providing DoD charter service.

The FY15 rates were developed on experienced base year costs and statistical data from 13 carriers providing 20 proposals for the base year ending 30 June 2013. Carrier’s cost data was audited and USTRANSCOM analyzed carrier’s forecast operating cost projections in the development of the FY15 rates. Adjustments made to carriers forecast costs were based on past ratemaking practices, findings reported by the Defense Contract Audit Agency (DCAA), the FAR, and the MOU. For FY15 and henceforth, Appendix J – Explanatory Notes only includes the general methodology used to calculate the Uniform Rate and no carrier specific comments. USTRANSCOM now provides cutsheets for each carrier detailing its exceptions taken to each carrier’s proposal. The more significant items of interest for all carriers are further explored in the following paragraphs.

Stop Charges.

Stop charges were initially introduced as an attempt to better align carrier’s revenues with the cost of operations where certain DOD missions had significantly more revenue stops and the stage length among carriers reflected significantly different averages. At that time, there were fewer rate classes, narrowbody passenger, widebody passenger and cargo. Carriers contended missions such as the Mediterranean channel produced a short stage length, low speed and significantly higher operating costs than the typical long range DoD mission. Carriers operating the inefficient routes with short stage lengths and low utilization experienced higher operating costs per mile, but were receiving the same compensation under the uniform rate.

Stop charges were introduced in an effort to curve the revenues to accommodate for those inefficient routes with short stage lengths.

By FY10, USTRANSCOM had increased the number of rate classes to five (large, medium and small passenger plus large and medium cargo). Increasing the number of rate classes effectively eliminated the need for stop charges in all classes other than small passenger and medium cargo. Unlike the larger rate classes, the small passenger and medium cargo classes still contained a significant amount of inefficient routes with shorter stage lengths and lower utilization than other routes in the class. The linehaul rate is a mathematical equation derived from the effective rate, using weight averaged stage lengths, average tons/seats per mission and the stop charge rateii.Paying the effective rate versus, a linehaul rate plus a stop charge, should be revenue neutral for all carriers provided the following conditions are met: one, the average stage length for all carriers within a rate class remains similar to the weight averaged stage length used in the class and two, no extreme differences exist between the stage lengths of carriers within the same class. Each rate review, USTRANSCOM reviews base year data to determine relevancy of a stop charge in the individual rate classes.

This year’s analysis supports stop charges for the small passenger class only.iii

In order to increase payloads, USTRANSCOM buyers continue to routinely combine missions whenever possible. This practice does decrease the average stage length for some missions in all classes below the weight averaged stage length used in the linehaul calculation; however, the number of these lower stage length missions in the larger rate classes is too small to create a significant variation between the average stage length experienced by each carrier in the class and the weight averaged stage length. Consistent with previous rate reviews, however, requirements in the small passenger class continue to differ significantly in volume and areas of operation causing a significant variation in average stage length between carriers. Although this same variation occurred earlier in the months reviewed for the medium cargo class, the Mediterranean mission causing the most significant variation is no longer required in the FY15 contract year.

Incorporation of Lean Six Sigma (LSS) recommendations.

During both the FY13 and FY14 rate reviews, USTRANSCOM worked with Lean Six Sigma

(LSS) experts from its Army Subordinate Command to determine ways to improve the ratemaking process. As a result, USTRANSCOM proposed the following six changes to the ratemaking process to industry in April 2013. Carriers unanimously agreed to implement changes four through six immediately in FY14 and changes one through three in FY15.

1) Modify the cost package to include mistake proof techniques to assist carriers with data input.

2) Evaluate aircraft and traffic servicing, aircraft insurance, and general ground property in every other rate review, alternating years between passenger and cargo service. For example, these three cost factors will only be evaluated for passenger service in the FY15 rate review and only in cargo in FY16. Values for these three costs factors will remain constant for each rate class until evaluated again.

3) Calculate the proposed rates using the pegged price of fuel, general cost escalation, FICA escalation, and eurocontrol surcharge from the preceding year’s final rates and updating them only in the final rates.

4) Eliminate calculation and application of full return on investment effectively replaced by the application of facilities capital employed in the profit calculation.

5) Eliminate pre-comment meeting held between issuance of the proposed rates and due date for comments. USTRANSCOM will continue to discuss adjustments with carriers disclosed in cutsheets and hold face-to-face discussions after comments are received and before final rates are issued.

6) Eliminate final data call previously required for carrier certification. Formal certification is no longer required as result of legislation giving DOD authority to set rates by law, exempting the contract from this requirement.

In accordance with change two, USTRANSCOM only evaluated aircraft insurance, aircraft and traffic servicing, and general ground property in passenger service in the FY15 rates.

Aircraft insurance, aircraft and traffic servicing, and general ground property in cargo service will remain constant at the FY14 final uniform rate values for each aircraft rate class in both the FY15 proposed and final rates. Please note values for these three cost factors in the proposed rates changed slightly from the values included in the cost package due to rounding.

Additionally in accordance with change three, the FY15 proposed rates applied the same rate factors used in the FY14 final rates for pegged price of fuel, general and FICA cost escalation and Eurocontrol surcharge. These rate factors, however, will be updated in the final rates to reflect the most current data available for the performance period.

Profit

In accordance with the MOU, USTRANSCOM calculated profit using the weighted guidelines model described in detail in the Defense Federal Acquisition Regulation

Supplement (DFARS). The weighted guidelines model compensates CRAF participants for the risk and capital investment associated with providing DOD transportation and effectively replaces the full and minimum ROI models applied in historical rate reviews for the same purpose. It rewards carriers who are focused on reducing costs and investing in modern, more efficient aircraft. In FY15, profit ranged from 7.51 percent for older, aged aircraft to 19.58 percent for the most modern, fuel efficient aircraft.

Cost Efficiency.

The cost efficiency factor in the weighted guidelines models is a bonus earned by CRAF participants for year-over-year cost savings. The FY15 proposed rate rewarded a cost efficiency factor on 13 of 20 proposals submitted.

Ferry.

USTRANSCOM changed the ferry rate in FY02 from 75 percent to 90 percent. The ferry rate is a reduced rate based on savings of flying an empty aircraft. An empty aircraft does not incur costs such as food, full cabin crew salary, and passenger liability insurance. The aircraft in empty service is more fuel-efficient and flies a more direct route. An empty aircraft in non-revenue service also incurs lower cost in “aircraft and traffic servicing.” Non-revenue enroute stops do not incur cost related to traffic handling personnel, gate requirements, security, and in some cases lower landing fees. USTRANSCOM reviewed the current cost levels in all cost categories. On the basis of this review, the ferry rate for FY15 will remain at 90 percent of the effective rate for passenger and 87 percent of the effective rate for cargo.iv Also see

Appendix A for ferry rates.

One-Way Rates.

Historically, USTRANSCOM carriers claim commercial backhaul opportunities for

USTRANSCOM missions are nonexistent. Passenger and cargo missions are obviously different. Cargo generally moves in one direction and is consumed; while passengers generally require round trip service. Therefore, the ability to find a one-way commercial passenger charter to parallel USTRANSCOM’s one-way requirements generally does not exist. On the other hand, USTRANSCOM cargo charter carriers are better able to coordinate aircraft flow and achieve commercial backhaul on expansion missions continue into

Southwest Asia. These missions appear to parallel their commercial operations.

The FY15 Proposed 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

One-Way Missions

130%

187%

N/A

187%

Contingency Rate (per Appendix A, Para G)

195%

N/A

The above one-way rates are based on the round-trip rate adjusted to reflect (1) cost savings associated with flying an empty aircraft in backhaul service and (2) reduction for carrier efficiencies in scheduling aircraft in empty backhaul service. USTRANSCOM addressed a 13 percent savings of flying an empty aircraft in the earlier paragraph concerning the “ferry” rate.

This savings holds true for flying an empty aircraft in the reverse segment of a one-way mission.

USTRANSCOM reviews one-way missions reported on carrier S2 mileage reports to determine carrier efficiencies in scheduling aircraft in empty backhaul service. Carriers report empty miles associated with the two legs before USTRANSCOM one-way missions originating outside CONUS or, conversely two legs after one-way missions originating inside the CONUS. The empty legs represent the movement of the aircraft prior to re-entering commercial service, positioning to maintenance, or positioning to a carrier’s home base of operation. Appendix M reflects the cargo carrier data associated with empty backhaul service for USTRANSCOM missions for the period Jul 12 through Nov 13.

Large Class Cargo: The overall ratio of empty miles to one-way live revenue miles for the large cargo class was 35 percent for the period Jul 12 through Nov 13 as detailed on Appendix

O. This 35 percent statistical ratio of paid empty flown miles to paid one-way miles reflects, on average, 65 percent efficiency in the scheduling of aircraft in empty reverse segments.

This 65 percent savings in conjunction with the 13 percent savings for flying an empty aircraft reflects an average of 78 percent savings for one-way cargo missions. Considering this average of 78 percent savings coupled with recent USTRANSCOM practice to pay ferry more often on cargo missions than has been done in the past, USTRANSCOM is proposing a one-way rate of 130 percent for FY15. This rate allows a 13 percent savings associated with flying empty in conjunction with a 57 percent savings due to efficiencies in scheduling aircraft in empty reverse segments. In the case of a contingency, this 130 percent one-way rate will be increased to 195 percent to compensate for virtually nonexistent backhaul opportunities during such an event. The one-way contingency rate is used at USTRANSCOM commander’s discretion during conditions such as outbreak of war, armed conflict, insurrection, civil or military strife, or similar conditions (overseas)v.

Medium Class Cargo: This year’s medium cargo class ratio of empty miles to one-way live revenue miles was 100 percent. The statistical ratio of base year paid empty flown miles to paid one-way miles for the medium class reflects no efficiency in the scheduling of aircraft in empty reverse segments. Considering the 13 percent savings associated with flying empty along with the negligible amount of one-way missions in this rate class, USTRANSCOM is proposing a one-way cargo rate for the medium class of 187 percent for FY15. In the case of a contingency, this 187 percent medium cargo one-way rate will be increased to 195 percent to compensate for virtually nonexistent backhaul opportunities during such an event.

Passenger: The one-way passenger rate has historically been based on the round-trip rate, adjusted to reflect savings and economies, as discussed above. Over the past few years, passenger carriers in USTRANSCOM service were receiving ferry based upon a formula derived by the Contracting Officer. This ferry formula made it complex for carriers attempting to report live miles, ferry miles and empty backhaul miles on passenger one-way missions. This became increasingly complicated for the Contracting Officer and administrators.

In FY12 USTRANSCOM introduced a live mile rate for all passenger missions.

USTRANSCOM proposes no change to this methodology. This proposal incorporates the effective or line-haul rate for all live miles, regardless if the miles are one-way or round trip.

For one-way missions, carriers will also receive a “paid ferry return”, based on the ferry rate, for positioning or depositioning miles.

Incremental Passenger Movement.

In FY02, USTRANSCOM developed an incremental passenger service rate for periodical requirements requiring 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. USTRANSCOM proposes $212 for the FY15 Incremental

Passenger Rate, a decrease from $230 in FY14. It is based on the weighted passenger service cost applied to the average miles per tripvi. See Appendix A for details.

Defense Base Act (DBA) Insurance.

The inclusion of DBA insurance cost in the cost package came up this year with the following conclusion; carriers should not include DBA insurance premiums in their cost packages.

Instead, carriers need to submit a request for reimbursement to their individual Administrative

Contracting Officer (ACO) in accordance with Paragraph H-25 Reimbursable Submission in the CRAF contract. The ACO, in turn, determines if the amount of the request is allocable, allowable, and reasonable in accordance with FAR Part 31. In addition, flying in a war area is not required for reimbursement since carriers are required to obtain DBA insurance to cover workers on all military bases outside the United States.

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 L-100 aircraft rates, respectively. Appendices C through I illustrate individual treatment of each carrier’s cost by aircraft type, with explanatory notes provided in Appendix

J. Appendices K and L provide the Eurocontrol Surcharge and Cost Escalation Factor, respectively. Appendix M provides Backhaul Operational Data for USTRANSCOM Services for the large class cargo category. Finally, Appendix N demonstrates the FICA calculation.

i The Commercial Operation Integrated System (COINS) database supports contracting of commercial airlift.

The database for contract dollars is maintained by USTRANSCOM/TCAQ-C.

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

The following example is for informational purposes only.

$0.14973 = $0.15911 ($2,000 / 1,421 * 150)) iii

Average Stage Length

Large Class Pax Weighted Avg 2482

GTI B747-400 2448

DAL B747-400 2117

OAE B777 2613

UAL B747-400 2318

Medium Class Pax Weighted Avg 2512

GTI B767 2773

DAL B767 2424

NAO B767 2249

OAE B767 2555

Small Class Pax Weighted Avg 1403

DAL B737 847

BSK B737 1379

SCX B737 1809

UAL B737 971

Large Class Cargo Weighted Avg 2812

GTI B747-400 2972

FDX MD11 2265

CKS B747-400 3019

SOO B747-400 2816

UPS MD11 2123

Medium Class Cargo Weighted Avg 1342

ABX B767-200 1515

ATI B767-200 1167

Combi ATI B757 2190 iv The analysis of the Passenger ferry rate was performed using the Proposed FY15 Large Class passenger rate of $0.12622 (effective rate) per seat mile. The proposed passenger ferry rate and paid ferry return rate will be 90% of the effective rate. The analysis of the Cargo ferry rate was performed using the Proposed FY15 Large Class cargo rate of $0.44070

SUBJECT: FY15 Proposed Ferry Rate Passenger

Wgt'd Percentage Cost Ferry

Cost Category Cost Allowed Allowed Rate % Crew 0.9401 100% 0.9401

Fuel 4.6369 88% 4.0573 Maintenance 1.1754 100% 1.1754 Insurance 0.1489 100% 0.1489 Rent 0.0616 100% 0.0616 Depreciation 0.7125 100% 0.7125 Preop 0.0000 100% 0.0000 Capital Gains/Losses 0.0000 0% 0.0000 Grd Property 0.0230 100% 0.0230 Aircraft & Traffic Service 1.0475 85% 0.8904 Passenger Service 1.7331 65% 1.1265 G&A 0.4036 100% 0.4036 Profit 1.7395 100% 1.7395 Total 12.622

11.279 0.8936

SUBJECT: FY15 Proposed Cargo Ferry Rate

Wgt'd Percentage Cost Ferry Cost Category Cost Allowed Allowed Rate % Crew 4.2810 100% 4.2810

Fuel 21.2511 75% 15.9383 Maintenance 4.8548 100% 4.8548 Insurance 0.2293 100% 0.2293 Rent 3.0211 100% 3.0211 Depreciation 1.7308 100% 1.7308 Preop 0.0000 100% 0.0000 Cap Gains/Losses 0.0019 0% 0.0000 Grd Property 0.2599 100% 0.2599 Aircraft & Traffic Service 2.2213 85% 1.8881 G&A 1.1326 100% 1.1326 Profit 5.0862 100% 5.0862 Total 44.0700

38.4221 0.8718 v Definition from Appendix A, Paragraph G vi

One-Way Round-Trip Total

Avg Live Pay Miles

592,990 4,295,093 4,888,083 FY15 Proposed Passenger Seat Mile Rate 0.18933 0.12622

45,504,219 219,728,104

Total Dollars

265,232,324 Total Trips

Total Passengers

161,715 Avg Passenger per Trip

Avg Price Per Trip

664,742.67 Avg Seat Miles Per Trip 4,965,263.26 Avg Miles Per Trip

12,251

Additional passenger service cost per trip 212

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 4

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 4

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

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 3

K Eurocontrol Surcharge 6

L Cost Escalation Factor 2

M Backhaul Operational Data for USTRANSCOM Service 1

N FICA Escalation 1

APPENDIX A

SCHEDULE OF UNIFORM NEGOTIATED RATES AND RULES

FISCAL YEAR 2015

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 $0.12622 Ferry Rate (Base - Effective Rate) 90% $0.11360 Incremental Passenger $212 Fuel Pegged Rate $3.30

Medium Live Effective Rate $0.14152 Ferry Rate (Base - Effective Rate) 90% $0.12736 Incremental Passenger $212 Fuel Pegged Rate $3.30

Small Live Line Haul Rate $0.14628 Ferry Rate (Base - Effective Rate) 90% $0.14021 Stop Charge (Per Directed Landing) $2,000 Incremental Passenger $212 Fuel Pegged Rate $3.30

(2) CHARTER CARGO SERVICE PER TON MILE

Large Round Trip Effective Rate $0.45888 One-Way 130% $0.59654 Contingency Rate (Per Para G) 195% $0.89481 Ferry Rate (Base - Effective Rate) 87% $0.39922 Fuel Pegged Rate $3.44

Medium Round Trip Effective Rate: $0.56657 One-Way 187% $1.05949 Contingency Rate (Per Para G) 195% $1.10482 Ferry Rate (Base - Effective Rate) 87% $0.49292 Fuel Pegged Rate $3.44

(3) CHARTER COMBI SERVICE PER PLANE MILE

Round Trip Effective Rate $22.21179 One-Way 187% $41.53607 Contingency Rate (Per Para G) 195% $43.31301 Ferry Rate (Base - Effective Rate) 87% $19.99062

(4) CHARTER L-100 SERVICE PER TON MILE

Round Trip Effective Rate $1.25937 Ferry Rate (Base - Effective Rate) 87% $1.09566

(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) Positioning and depositioning ferry: Positioning and depositioning ferry shall be included with the offer and negotiated at time of award. Paid depositioning mileage will not exceed the mileage required to return the aircraft to its originating station.

(b) “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 (a) 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 $212 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:

28.00% 26.94%

8 to 14 days

Passenger and Combi:

Cargo:

18.46% 22.73%

15 to 30 days

Passenger and Combi:

Cargo:

15.65% 19.50%

31 to 45 days Passenger and Combi 6.77% 31 to 75 days Cargo 7.26% 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:

18.46% 22.73%

(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 $1973

B747-400/400ER 100 $2192

MD11F 86 $1885

MD11C 86 $1885

B777F 88 $1929

DC10-30/40 75 $1644

A300-600ER 51 $1713

A300-400F 50 $1679 B767-200F 48 $1612

DC8 45 $1511

L100 23 $1853 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:

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 DC10-30/40 75

B777 Charter Config. 380 B747-100/200/300 90 B747 400 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. 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.

4/ / This symbol used to indicate Backhaul Mileage.

F. 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 E (2) 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 FY13 FY14 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 0.12084$ 110,339$ 88,175$ $198,514 39.57% $0.04782

DELTA AIR LINES INC B747-400 0.12000$ 30,044$ 2,600$ $32,644 6.51% $0.00781

OMNI AIR INTERNATIONAL INC B777 0.13130$ 131,256$ 82,062$ $213,319 42.52% $0.05583

UNITED AIRLINES INC B747-400 0.12951$ 37,303$ 19,897$ $57,200 11.40% $0.01477

$501,676 1.0000

RATE -- WEIGHTED BY REVENUES $0.12622

Exclusive of Fuel $0.07991

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP PASSENGER SERVICE

MEDIUM CLASS AIRCRAFT

USTRANSCOM FY13 FY14 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 0.15171$ 101,604$ 59,408$ $161,012 25.23% $0.03827

DELTA AIR LINES INC B767-300 0.12865$ 30,744$ 19,589$ $50,333 7.89% $0.01015

NORTH AMERICAN AIRLINES B767-300 0.14297$ 121,170$ 62,413$ $183,583 28.76% $0.04112 OMNI AIR INTERNATIONAL INC B767-300 0.13634$ 145,638$ 97,730$ $243,368 38.13% $0.05198

$638,296 1.0000

RATE -- WEIGHTED BY REVENUES $0.14152

Exclusive of Fuel $0.09406

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP PASSENGER SERVICE

SMALL CLASS AIRCRAFT

USTRANSCOM FY13 FY14 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 0.14812$ 3,284$ 386$ $3,670 6.74% $0.00998

MIAMI AIR INTERNATIONAL INC B737-800 0.16449$ 16,686$ 3,436$ $20,123 36.95% $0.06078

MN AIRLINES, LLC DBA SUN COUNTRY AIRLINES B737-800 0.14899$ 15,655$ 3,164$ $18,819 34.55% $0.05148

UNITED AIRLINES INC B737-800 0.15416$ 7,736$ 4,116$ $11,852 21.76% $0.03355

$54,463 1.0000

RATE -- WEIGHTED BY REVENUES $0.15578

Exclusive of Fuel $0.11222

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

$0.15578 1,403 150 $2,000 $0.14628

Note: The weighted average stage length and weighted average seats per mission are based on USTRANSCOM data from Jul 12 to Nov 13.

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP CARGO SERVICE

LARGE CLASS AIRCRAFT

USTRANSCOM FY13 FY14 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 0.44857$ 169,203$ 70,899$ $240,102 51.53% $0.23114

FEDERAL EXPRESS CORPORATION MD11 0.52819$ 41,727$ 16,457$ $58,184 12.49% $0.06596

KALITTA AIR, LLC B747-400 0.42238$ 87,261$ 33,854$ $121,114 25.99% $0.10979

UNITED PARCEL SERVICE CO. MD11 0.52032$ 32,714$ 13,846$ $46,560 9.99% $0.05199

$330,905 $135,056

$465,961 1.0000

RATE -- WEIGHTED BY REVENUES $0.45888

Exclusive of Fuel $0.24715

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP CARGO SERVICE

MEDIUM CLASS AIRCRAFT

USTRANSCOM FY13 FY14 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 0.58422$ $4,160 $2,583 $6,743 50.28% $0.29375

AIR TRANSPORT INTERNATIONAL LLC B767-200F 0.54873$ $3,833 $2,835 $6,668 49.72% $0.27282

$7,993 $5,418

$13,411 1.0000

RATE -- WEIGHTED BY REVENUES $0.56657

Exclusive of Fuel $0.34106

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP COMBI SERVICE

COMBI AIRCRAFT

USTRANSCOM FY13 FY14 Total Adjusted Combi Combi Combi

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

AIR TRANSPORT INTERNATIONAL LLC B757 $22.21179 $0 $80,156 $80,156 100.00% $22.21179

$80,156 1.0000

RATE -- WEIGHTED BY REVENUES $22.21179

Exclusive of Fuel $13.09924

COMPUTATION

USTRANSCOM UNIFORM RATE

ROUND-TRIP SERVICE

LYNDEN L100 AIRCRAFT

USTRANSCOM FY13 FY14 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 L100 1.25937$ $14,377 $0 $14,377 100.00% $1.25937

$14,377 1.0000

RATE -- WEIGHTED BY REVENUES $1.25937

Exclusive of Fuel $0.89711

APPENDIX C

ATLAS AIRLINES (GTI) Aircraft Type B747-400

LARGE CLASS AIRCRAFT Passenger Service

FY15 RATE REVIEW

FORECAST YEAR FY15

YE JUN 13

CARRIER BY AS

SYSTEM CARRIER ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 2,511 2,011 1,986

AVERAGE DAILY AIRCRAFT UTILIZATION 6.7 6.5 6.5

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $3.1459 $3.3160 $3.2967 Fuel, Oil, & Aircraft Supplies 16.7367 21.3585 21.3585 Flight Equipment Maintenance 3.3657 3.6367 3.5242

Total Direct Variable 23.2484 28.3112 28.1794

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 1.0416 1.1778 1.1783 Aircraft Rentals & Miscellaneous 0.0000 0.1015 0.1105 Flight Equipment Depreciation & Obsolescence 2.3942 1.3686 1.3108 Amortization of Preoperating Expense 0.0000 0.0000 0.0000 Capital Gains & Losses 0.0000 0.0000 0.0000

Total Direct Fixed 3.4358 2.6479 2.5996

Indirect:

Maintenance & Depreciation-General Ground Property 0.0403 0.0409 Aircraft & Traffic Servicing 3.8250 3.9355 Passenger Service 9.3070 9.2830 General & Administrative 2.0476 1.8756

Total Indirect 15.2199 15.1350

TOTAL OPERATING COST 46.1790 45.9140

Profit 0.0000 6.6525

TOTAL COST $46.1790 $52.5665

Allowable Cabin Load 400 435

RATE PER SEAT MILE $0.11545 $0.12084

DELTA AIRLINES INC (DAL) Aircraft Type B747-400

LARGE CLASS AIRCRAFT Passenger Service

FY15 RATE REVIEW

FORECAST YEAR FY15

YE JUN 13

CARRIER BY AS

SYSTEM CARRIER ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 34,252 568 565

AVERAGE DAILY AIRCRAFT UTILIZATION 11.1 11.5 11.1

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $2.1125 $2.7362 $2.7716 Fuel, Oil, & Aircraft Supplies 21.8787 19.5319 19.5318 Flight Equipment Maintenance 1.9741 2.4387 2.1184

Total Direct Variable 27.9521 24.7068 24.4218

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.0453 12.9553 0.0488 Aircraft Rentals & Miscellaneous 7.0965 0.0036 1.5567 Flight Equipment Depreciation & Obsolescence 1.0221 1.2048 1.0791 Amortization of Preoperating Expense 0.0000 0.0000 0.0000 Capital Gains & Losses 0.0000 0.0000 0.0000

Total Direct Fixed 2.8890 14.1637 2.6846

Indirect:

Maintenance & Depreciation-General Ground Property 12.9601 0.0305 Aircraft & Traffic Servicing 12.9553 9.3007 Passenger Service 4.9443 4.9759 General & Administrative 1.7711 1.0263

Total Indirect 32.6308 15.3335

TOTAL OPERATING COST 71.5013 42.4399

Profit 0.0000 5.5620

TOTAL COST $71.5013 $48.0019

Allowable Cabin Load 400 400

RATE PER SEAT MILE $0.12789 $0.12000

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

LARGE CLASS AIRCRAFT Passenger Service

FY15 RATE REVIEW

FORECAST YEAR FY15

YE JUN 13

CARRIER BY AS

SYSTEM CARRIER ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 2,591 2,428 A 2,379

AVERAGE DAILY AIRCRAFT UTILIZATION 8.1 8.2 B 8.1

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $4.1395 $4.2622 C $4.4059 Fuel, Oil, & Aircraft Supplies 15.7743 15.4179 D 15.4660 Flight Equipment Maintenance 5.8768 6.0486 E 6.1846

Total Direct Variable 25.7907 25.7287 26.0565

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.3520 0.3442 F 0.3548 Aircraft Rentals & Miscellaneous 5.3588 0.3579 G 0.0460 Flight Equipment Depreciation & Obsolescence 0.7651 5.9746 H 4.6539 Amortization of Preoperating Expense 0.0000 0.0000 I 0.0000 Capital Gains & Losses 0.0000 0.0000 J 0.0000

Total Direct Fixed 6.4759 6.6767 5.0547

Indirect:

Maintenance & Depreciation-General Ground Property 0.0278 K 0.0724 Aircraft & Traffic Servicing 2.9699 L 3.5433 Passenger Service 5.9040 M 6.0716 General & Administrative 1.3419 N 1.2921

Total Indirect 10.2436 10.9794

TOTAL OPERATING COST 42.6490 42.0906

Profit 0.0000 O 7.8034

TOTAL COST $42.6490 $49.8940

Allowable Cabin Load 380 P 380

RATE PER SEAT MILE $0.11223 $0.13130

UNITED AIRLINES INC (UAL) Aircraft Type B747-400

LARGE CLASS AIRCRAFT Passenger Service

FY15 RATE REVIEW

FORECAST YEAR FY15

YE JUN 13

CARRIER BY AS

SYSTEM CARRIER ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 47,461 638 A 728

AVERAGE DAILY AIRCRAFT UTILIZATION 10.6 10.6 B 10.6

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $3.2374 $4.1460 C $3.5837 Fuel, Oil, & Aircraft Supplies 20.7525 23.0376 D 22.6514 Flight Equipment Maintenance 3.9787 5.2101 E 4.5035

Total Direct Variable 27.9686 32.3937 30.7387

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.0099 0.0462 F 0.0445 Aircraft Rentals & Miscellaneous 0.6785 0.0041 G 0.7386 Flight Equipment Depreciation & Obsolescence 2.2535 1.9185 H 1.9260 Amortization of Preoperating Expense 0.0000 0.0000 I 0.0000 Capital Gains & Losses 0.0000 0.0000 J 0.0000

Total Direct Fixed 2.9419 1.9688 2.7091

Indirect:

Maintenance & Depreciation-General Ground Property 1.4138 K 0.3752 Aircraft & Traffic Servicing 2.1587 L 4.9732 Passenger Service 4.9988 M 4.5020 General & Administrative 3.6028 N 2.5150

Total Indirect 12.1741 12.3654

TOTAL OPERATING COST 46.5366 45.8132

Profit 0.0000 O 5.9896

TOTAL COST $51.1672 $51.8027

Allowable Cabin Load 400 P 400

RATE PER SEAT MILE $0.12792 $0.12951

APPENDIX D

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

MEDIUM CLASS AIRCRAFT Passenger Service

FY15 RATE REVIEW

FORECAST YEAR FY15

YE JUN 13

CARRIER BY AS

SYSTEM CARRIER ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 3,605 3,149 3,113

AVERAGE DAILY AIRCRAFT UTILIZATION 6.8 7.1 B 7.1

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $3.7434 $3.8009 $4.0135 Fuel, Oil, & Aircraft Supplies 4.1143 11.3084 11.3084 Flight Equipment Maintenance 3.1896 3.3287 E 3.3525

Total Direct Variable 11.0473 18.4380 18.6744

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.5513 0.5694 F 0.5825 Aircraft Rentals & Miscellaneous 0.0000 0.3487 G 0.3637 Flight Equipment Depreciation & Obsolescence 1.4329 1.4278 H 1.4145 Amortization of Preoperating Expense 0.0000 0.0000 0.0000 Capital Gains & Losses 0.0000 0.0000 0.0000

Total Direct Fixed 1.9842 2.3459 2.3607

Indirect:

Maintenance & Depreciation-General Ground Property 0.0396 0.0171 Aircraft & Traffic Servicing 3.3699 3.2921 Passenger Service 4.4319 M 4.9586 General & Administrative 1.5570 N 1.5691

Total Indirect 9.3984 9.8369

TOTAL OPERATING COST 30.1823 30.8720

Return on Investment 0.0000 O 5.5379

TOTAL COST $30.1823 $36.4100

Allowable Cabin Load 240 P 240

RATE PER SEAT MILE $0.12576 $0.15171

DELTA AIR LINES (DAL) Aircraft Type B767-300/ER

MEDIUM CLASS AIRCRAFT Passenger Service

FY15 RATE REVIEW

FORECAST YEAR FY15

YE JUN 13

CARRIER BY AS

SYSTEM CARRIER ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 98,015 912 A 836

AVERAGE DAILY AIRCRAFT UTILIZATION 10.7 7.3 B 10.7

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $2.2141 $2.5754 C $2.6857 Fuel, Oil, & Aircraft Supplies 16.2107 10.7353 D 10.6081 Flight Equipment Maintenance 2.0723 2.2988 E 2.5103

Total Direct Variable 20.4971 15.6095 15.8040

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.3593 5.6209 F 0.0394 Aircraft Rentals & Miscellaneous 2.4799 0.0000 G 0.0988 Flight Equipment Depreciation & Obsolescence 2.0944 2.1570 H 1.3561 Amortization of Preoperating Expense 0.0000 0.0000 I 0.0000 Capital Gains & Losses 0.0000 0.0000 J 0.0000

Total Direct Fixed 4.9336 7.7779 1.4944

Indirect:

Maintenance & Depreciation-General Ground Property 5.6586 K 0.0301 Aircraft & Traffic Servicing 5.6209 L 5.4055 Passenger Service 3.0777 M 3.3625 General & Administrative 1.0136 N 0.7265

Total Indirect 15.3708 9.5246

TOTAL OPERATING COST 38.7582 26.8230

Return on Investment 0.0000 O 4.0539

TOTAL COST $38.7582 $30.8769

Allowable Cabin Load 240 P 240

RATE PER SEAT MILE $0.16149 $0.12865

NORTH AMERICAN AIRLINES (NAO) Aircraft Type B767-300/ER

MEDIUM CLASS AIRCRAFT Passenger Service

FY15 RATE REVIEW

FORECAST YEAR FY15

YE JUN 13

CARRIER BY AS

SYSTEM CARRIER ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 3,752 3,570 A 3,528

AVERAGE DAILY AIRCRAFT UTILIZATION 7.1 7.1 B 7.1

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $4.3451 $4.4298 C $3.1674 Fuel, Oil, & Aircraft Supplies 11.7838 11.5737 D 11.5031 Flight Equipment Maintenance 6.0365 6.2867 E 4.1602

Total Direct Variable 22.1655 22.2902 18.8308

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.2092 0.2277 F 0.1999 Aircraft Rentals & Miscellaneous 2.5256 2.6556 G 2.5984 Flight Equipment Depreciation & Obsolescence 0.2854 0.2957 H 0.1474 Amortization of Preoperating Expense 0.0000 0.0000 I 0.0000 Capital Gains & Losses 0.0000 0.0000 J 0.0000

Total Direct Fixed 3.0203 3.1790 2.9457

Indirect:

Maintenance & Depreciation-General Ground Property 0.0650 K 0.0077 Aircraft & Traffic Servicing 2.9541 L 2.5546 Passenger Service 6.0552 M 5.4638 General & Administrative 1.9888 N 1.4457

Total Indirect 11.0631 9.4717

TOTAL OPERATING COST 36.5323 31.2482

Return on Investment 0.0000 O 3.0651

TOTAL COST $36.5323 $34.3132

Allowable Cabin Load 240 P 240

RATE PER SEAT MILE $0.15222 $0.14297

OMNI AIR INTERNATIONAL (OAE) Aircraft Type B767-300/ER

MEDIUM CLASS AIRCRAFT Passenger Service

FY15 RATE REVIEW

FORECAST YEAR FY15

YE JUN 13

CARRIER BY AS

SYSTEM CARRIER ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 5,804 3,826 A 3,768

AVERAGE DAILY AIRCRAFT UTILIZATION 7.2 7.3 B 7.2

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $3.0588 $3.2337 C $3.3117 Fuel, Oil, & Aircraft Supplies 8.5354 11.5680 D 11.5767 Flight Equipment Maintenance 4.3519 4.6213 E 4.6675

Total Direct Variable 15.9461 19.4230 19.5560

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.2561 0.3455 F 0.3530 Aircraft Rentals & Miscellaneous 3.2219 0.5602 G 0.5298 Flight Equipment Depreciation & Obsolescence 0.4719 2.1363 H 1.8660 Amortization of Preoperating Expense 0.0000 0.0000 I 0.0000 Capital Gains & Losses 0.0000 0.0000 J 0.0000

Total Direct Fixed 3.9498 3.0420 2.7488

Indirect:

Maintenance & Depreciation-General Ground Property 0.0337 K 0.0668 Aircraft & Traffic Servicing 2.3334 L 2.7535 Passenger Service 3.6328 M 3.6975 General & Administrative 0.8772 N 0.8808

Total Indirect 6.8771 7.3986

TOTAL OPERATING COST 29.3421 29.7033

Return on Investment 0.0000 O 3.0171

TOTAL COST $29.3421 $32.7204

Allowable Cabin Load 240 P 240

RATE PER SEAT MILE $0.12226 $0.13634

APPENDIX E

DELTA AIRLINES INC (DAL) Aircraft Type B737-800

SMALL CLASS AIRCRAFT Passenger Service

FY15 RATE REVIEW

FORECAST YEAR FY15

YE JUN 13

CARRIER CARRIER AS

SYSTEM PROPOSED ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 16,583 82 A 81

AVERAGE DAILY AIRCRAFT UTILIZATION 9.6 6.2 B 9.6

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $2.5020 $3.3684 C $2.7780 Fuel, Oil, & Aircraft Supplies 6.9024 5.4283 D 6.0801 Flight Equipment Maintenance 2.2691 3.0807 E 2.4019

Total Direct Variable 11.6735 11.8774 11.2601

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.4269 3.7609 F 0.0634 Aircraft Rentals & Miscellaneous 0.0000 0.0002 G 0.0238 Flight Equipment Depreciation & Obsolescence 11.5103 2.8031 H 1.5282 Amortization of Preoperating Expense 0.0000 0.0000 I 0.0000 Capital Gains & Losses 0.0000 0.0000 J 0.0000

Total Direct Fixed 11.9372 6.5642 1.6154

Indire…