18_Sep_2015_Revised_Final_FY15_CRAF_Uniform_Rates_and_Rules _International_Service.pdf

18 September 2014

MEMORANDUM FOR ALL CARRIERS

FROM: USTRANSCOM/TCAQ-P

508 Scott Drive Scott AFB IL 62225-5357

SUBJECT: Administrative Update to Notice of Revision Effective 1 Oct 15 to 31 Dec 15 Final Fiscal Year 2015 (FY15) Uniform Rates and Rules for International Service –

Solicitation Number HTC711-14-R-C002

1. The Final FY15 rates were posted to www.fbo.gov on 5 Sep 14. As a result of significant decreases in the DLA fuel prices and commercial fuel prices, USTRANSCOM revised the uniform rates, effective 1 Oct 15, with a fuel pegged at $2.41 per gallon for passenger service and $2.65 per gallon for cargo, combi and L-100 service.

2. The administrative changes are in the introduction, and Appendix A. Further, appendices B- 1, C-1, D-1, E-1, F-1, G-1, H-1, and I-1 were added which reflect costs at the revised pegged fuel prices.

3. The revised rates for the various classes of service, effective 1 Oct 15, remain as follows. All passenger rates are expressed as per seat mile. All cargo rates are per ton mile and the combi rate is per plane mile.

Effective Rate Linehaul Rate Stop Charge Large Class Passenger $0.11695 Medium Class Passenger $0.13471 Small Class Passenger $0.14415 $2,000 Large Class Cargo $0.41428 Medium Class Cargo $0.51418 Combi Service $26.87722 L100 Service $1.24744

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

//SIGNED// 18 September 2015

JASON R. LOGSDON DATE

Branch Chief, TCAQ-P

Attachment:

1. 18 Sep 2015 Revised FY15 Final Uniform Rates and Rules for International Service

UNITED STATES TRANSPORTATION COMMAND

508 SCOTT DR

SCOTT AIR FORCE BASE, IL 62225-5357

http://www.fbo.gov/ mailto:Susan.M.Wickell.civ@mail.mil

“Revised Page” Effective 1 Oct 15 – 31 Dec 15

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 2015

INTRODUCTION

The final FY15 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).

Adjustment for Federal Aviation Regulation Crew Regulation 14 CFR Part 117

USTRANSCOM recognizes the uniform rate process does not capture the increased costs from the flight, duty, and rest regulations codified at 14 CFR part 117 which took effect in

January 2014. USTRANSCOM understands these regulations restrict crew duty days, reduce productivity thereby increasing crew costs while also increasing personnel expenses associated with travel, lodging, and per diem.

In June, USTRANSCOM requested carrier input to quantify cost increases attributable to the regulatory change. USTRANSCOM also conducted an analysis of quarterly data from

Department of Transportation (DOT) Form 41 data with specific focus on crew costs per mile

“pre” and “post” FAR 117 implementation in determining an equitable adjustment. Taking into consideration carrier input and analysis of Form 41 data, USTRANSCOM established a percentage increase in crew costs to each carrier’s cost proposal to adjust for the more costly

FAR 117 regulatory requirements.

The net effect these adjustments have on the FY15 final rates for each category are as follows:

(1) Large Passenger FY15 rate increased 0.84 percent, (2) Medium Passenger FY15 rate increased 1.37 percent; (3) Small Passenger FY15 rate increased 4.37 percent; and (4) Combi

FY15 rate increased 1.00 percent.

Rate Overview

Excluding fuel, the small passenger, large cargo, medium cargo rates and Combi class rates are higher than the FY14 rates; while the large passenger, medium passenger, and L100 class rates are lower. USTRANSCOM has reviewed these costs and the decreases are briefly explained below:

Large Passenger Class

Excluding fuel, the large passenger class rate is down 5.3 percent. This is a direct result of (1) the removal of the highest cost and highest weighted carrier, World, from the rate as result of bankruptcy; (2) the declining costs of the second highest weighted carrier, Omni, and third highest carrier, Atlas. Prior to its removal from the large passenger rate class, World received

32.10 percent of the weighting; while, Omni received 29.34 percent and Atlas 26.87 percent.

As a result, World’s removal along with Omni’s 22 percent and Atlas’ 6 percent decline in

FY15 operating cost over FY14 operating costs, as proposed by the Omni and Atlas, reduced the rate for this aircraft category.

Medium Passenger Class

Excluding fuel, the medium passenger class rate is down less than 1 percent. Similar to the large passenger class, this is a direct result of (1) the reweighting of the class due to the removal of North American; (2) the declining costs of Omni and Atlas. Omni and Atlas now comprise 89% of the rate weightings. Prior to its removal from the medium passenger rate class, North American received 30.74 percent of the weighting; while, Omni received 37.28 percent and Atlas 24.57 percent. These were the two mitigating factors impacting the FY15 medium passenger class.

L100

Excluding fuel, this rate is down 5.63 percent. This decrease is predominantly the result of reduced maintenance costs.

Combi

The FY15 combi rate is based on the B757 aircraft cost structure versus the DC8 of prior rate reviews. The B757 allowed USTRANSCOM to increase the number of available seats from

30 to 41 while still maintaining the same lift and range capabilities of the previously used

DC8. The FY15 B757 has a slightly higher capital cost than the DC8; however, this increased cost is nearly off-set by a greater fuel efficiency and increased seating capacity over that of the DC8.

Carrier Comments

On 16 April 2014, USTRANSCOM posted the FY15 proposed rate to Federal Business

Opportunities. On this date, USTRANSCOM also supplied each carrier its individual cut sheet detailing USTRANSCOM’s adjustments to its individual proposed costs and statistical data as well as the carrier’s individual profit calculation. Carriers were advised to provide comments, if it had any, no later than 16 May 2014. The FY15 final rates consisted of a total of 19 proposals submitted by 12 carriers.

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

International (ATI), Atlas Air (Atlas), Delta Airlines (Delta), Federal Express (FedEx), Omni

Air International (Omni), and Sun Country Airlines (Sun Country). Carriers were invited to meet with USTRANSCOM in late Jun/early July to discuss their individual cost elements as well as general rate issues. Five carriers accepted this offer.

General comments received during the FY15 rate discussions related to the following topics:

1. Cargo one way rate

2. Reasonableness of rates

3. Decline in DOD business

4. Reduced profit without adequate explanation

5. Established Allowable Cabin Loads (ACLs)

1. Cargo one way rate

Atlas Comment: The cargo one-way rate of 130 percent may not provide sufficient incentive for carriers to offer services for these requirements, especially considering the continual one-way missions from Afghanistan to the Continental United States (CONUS).

Recommendation: USTRANSCOM should maintain the FY15 cargo one-way rate at the

FY14 value of 155 percent.

USTRANSCOM Response: To calculate the one-way rate, TCAQ reviewed one-way missions reported on carrier S2 reports through March 2014. 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 aircraft’s movement 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 L, Atlas’ B747-400 live to empty ratio is 40.37 percent. Therefore, Atlas achieved

59.63 percent efficiency in scheduling their B747-400 aircraft in USTRANSCOM service for the period July 2012 through March 2014.

USTRANSCOM considers a 13 percent savings for flying an empty aircraft. This savings also holds true for flying an empty aircraft in the reverse segment of a one-way mission. Data considered for the FY15 rate indicated the total live to empty ratios were 36 percent.

Therefore, the statistical ratio of the most recently available paid empty flown miles to paid one-way miles reflects, on average, 64 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 77 percent savings for one-way cargo missions.

Realizing not all carriers achieve a 77 percent savings in empty backhaul, USTRANSCOM establishes the FY15 one-way rate at 130 percent, allowing for the 13% savings associated with flying empty in conjunction with a 57% savings due to efficiencies in scheduling aircraft in empty reverse segments. Based on carrier provided data for the period July 2012 through

March 2014, USTRANSCOM believes this is fair and reasonable compensation for missions performed in one-way service.i USTRANSCOM acknowledges Atlas’ comment regarding insufficient incentive for one-way missions; if, during the FY15 performance period, cargo carrier offerings on one-way missions are inadequate, USTRANSCOM will consider revisiting the one-way rate. Data supporting this rate is provided at Appendix L.

The FY15 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

130%

187%

187%

Contingency Rate (per Appendix A, Para G)

195%

2. Reasonableness of rates

Omni Comment: The FY15 passenger rates include unrealistic fuel burns and variable cost for Delta’s B747-400 and B767-300.

Recommendation: USTRANSCOM review fuel burn rates and cost categories across carriers to ensure no anomalies exist and work with carriers to correct in the even they do.

USTRANSCOM Response: USTRANSCOM reviewed the specific areas of Delta’s proposal cited by Omni. Adjustments were made where appropriate; variable costs were increased based on Delta’s additional information while Delta’s fuel-burn rate was not adjusted as this rate is determined by the aggregate fuel reports submitted by Delta.

USTRANSCOM worked with Delta between the proposed and final rate publications to address the cited anomalies.

3. Decline in DOD business

Omni Comment: The proposed rates do not take into consideration the drawdown in DOD business for future periods. The decreased revenue will have a major impact on all fixed costs, which are recovered based on producing comparable revenues in the forecast year.

Recommendation: USTRANSCOM develop the constructed mileage base (CMB) calculation and daily utilization rates on forecasted data instead of historical and reduce all daily utilization rates in DOD rate calculations to a number that correlates to the decrease in

DOD business.

USTRANSCOM Response: USTRANSCOM reduced the utilization included in the CMB for all charter carriers flying in passenger USTRANSCON service in the FY14 rates in response to this same comment proposed by Omni in the FY14 rate review. Omni’s daily utilization rates for both its B777 and B767 aircraft, however, have not decreased significantly in the July 2012 through June 2013 base year upon which the FY15 rates are built versus the daily utilization rates in the July 2011 through June 2012 base year for the FY14 rates.

USTRANSCOM, therefore, does not see adequate justification to reduce utilization rates again in the FY15 rates on the basis of this historical outcome. USTRANSCOM remains open to determining each carriers CMB based on DoD-specific utilization supported by reasonable and rationale data.

4. Reduced profit without adequate explanation

Omni Comment: Profits have decreased for a large majority of the carriers with little to no explanation.

Recommendation: USTRANSCOM provide each carrier with the rationale used in the determination of its individual profit calculation developed on the basis of the weighted guidelines methodology detailed in the Defense Regulation Acquisition Regulation

Supplement (DFARS). USTRANSCOM currently provides a carrier its individual weighted guideline's profit calculation without any explicit explanation of USTRANSCOM's chosen risk values used in the calculation. Additionally, Omni recommends USTRANSCOM disclose each carrier's individual weighted guidelines profit calculation in an appendix in both the proposed and final uniform rates and rules.

USTRANSCOM reevaluate the value assigned to performance risk factor (composed of both technical and management/cost control) in the weighted guidelines calculation for each carrier on the basis of the current industry economic environment making the charter airline industry one of the most difficult industries to earn a profit as evidenced by the bankruptcies of the following airlines over the past two years: World Airways, North American Airlines, Ryan

International Airlines, Southern Air, and Evergreen.

USTRANSCOM determine a carrier's cost efficiency factor included in the weighted guidelines calculation on the basis of carrier controllable costs such as crew, maintenance, and passenger service expense. Currently the efficiency factor is calculated on the basis of year over year cost savings on all operating costs, other than fuel. These non-fuel operating costs include aircraft insurance, lease, and depreciation expense which Omni believes are out of the carriers' control. Omni believes it is not feasible for carriers to immediately right size their fleets in accordance with the changing industry economic environment.

USTRANSCOM Response: USTRANSCOM will increase transparency of chosen values assigned to the various risk factors on each carrier's individual weighted guidelines calculation to that individual carrier only. USTRANSCOM, however, will not release individual carriers' proprietary information in the uniform rates and rules document made public in its posting to Federal Business Opportunities.

USTRANSCOM reevaluated the value assigned to the management/cost control portion of the performance risk factor; while, leaving the value assigned to the technical portion at the reduced amount included in the proposed rates.

USTRANSCOM, however, denies Omni's recommendation to exclude fixed costs (aircraft insurance, lease, and depreciation expense) on the basis that a carrier should be able to control all its costs. Further, USTRANSCOM recognizes the uniform rate format itself provides a similar profit incentive for cost-efficiency which is allowed for by the cost-efficiency factor within the weighted guidelines. The uniform rate determined based on weighted average of competitors costs allows more cost efficient carriers to earn increased profit margins. For these reasons, USTRANSCOM does not agree with disregarding fixed costs in determining the cost-efficiency factor within the weighted guidelines.

5. Established Allowable Cabin Loads (ACLs)

Omni Comment: The uniform passenger rate per seat mile is calculated based on total cost per mile divided by a standard number of seats (ACL). USTRANSCOM’s practice of adjusting paid ACLs below the standard ACL used in the rate calculation, under compensates carriers for its operating costs.

Recommendation: If USTRANSCOM desires to continue to adjust paid ACLs below the standard, then it needs to use a weighted historical paid ACL in the rate calculation in order to eliminate under compensation of carrier operating costs.

USTRANSCOM Response: USTRANSCOM will continue to develop rate on basis of standard ACLs. However, for instances where a carrier performed missions below its standard ACL, USTRANSCOM agrees to increase certain cost elements that are likely understated and incommensurate with the standard ACL. This adjustment is not considered for instances where ACLs have been decremented due to performance deficiencies. The adjustment amount is based on the ratio of the standard ACL to the weighted average ACL during the cost base year, weighted by revenues. An adjustment was made to Atlas’ operating costs for its large passenger aircraft since 35.7% of Atlas’ total revenues were attributable to performance at the standard ACL of 435 while the remaining revenues were attributable to performance at an ACL of 400. Based on these weightings, Atlas weighted ACL was 413.

See Appendix C, page 1 for specific adjustments. (NOTE: A previous iteration of the Rates and Rules suggested an incorrect procedure for awarding expansion business. To clarify, allocation and ordering of expansion airlift is executed in accordance with section H-17 of the contract).

Fuel

The original pegged price of fuel of $3.25 per gallon for passenger service and $3.43 per gallon for cargo service was established based on data from carrier provided fuel reports, industry fuel price data1 from June of 2014 and the published DLA fuel price as of 1 October

1 IATA and OPIS

2014 for JP-8 and JP-5 fuel of $3.70 per gallon and $3.73 per gallon. Based on new information from DLA, the FY16 DLA fuel price effective 1 October 2015 will be $2.95 per gallon. Further, when the pegged price of fuel was established for the FY15 performance period, the average commercial cost of fuel was forecasted to be approximately $2.86 per gallon. However, the actual commercial average has significantly declined during the performance period where the average commercial fuel price for passenger service from

January to May has been $2.00 per gallon.2

Due to the decreasing DLA price of fuel effective 1 October 2015 as well as the lower than expected commercial price of fuel, the uniform rates for the FY15 contract are revised, effective 1 Oct 2015, with fuel pegged at $2.41 per gallon for passenger and $2.65 per gallon for cargo service. The pegged price includes into-plane fees and taxes.

To develop the proposed pegged price of fuel for each service (passenger and cargo), TCAQ used a projection of commercial fuel cost and the DLA fuel costs for the performance period and weighted them based on the historical proportions used for each aircraft category. The pegged price of fuel for each category is calculated based on the following equation:

Pegged Price = (Wtg of Commercial Fuel) * (Forecasted Avg Cost of Commercial Fuel) +

(Wtg of DLA Fuel) * (Known/Projected Cost of DLA Fuel)

To estimate the average price of commercial fuel during the remaining three month contract performance period (Oct – Dec 2015), USTRANSCOM relied on the relationship between the

IHS Global Insight Index (GII) for Jet Fuels (PPI3241104Y) and the historical average quarterly cost of commercial fuel3. The average commercial cost of fuel and the Jet Fuels PPI data was plotted graphically to examine the relationship between the PPI and the quarterly average cost of commercial fuel. Both categories, passenger and cargo, demonstrated a strong correlation between the PPI and the historical average cost of commercial fuel. The graphical charts for each category are shown below.

2 Based on aggregate monthly fuel report data.

3 Based on aggregate monthly fuel report data.

MS Excel was used to estimate a linear function describing the relationship between the Jet

Fuels PPI and the average commercial cost of fuel which yielded two equations for forecasting the commercial price of fuel based on the Jet Fuels PPI projections, one for each category:

EQ (1): Average Quarterly Commercial Price (Pax)t = 1.8752 * (PPIt) + 0.0961

EQ (2): Average Quarterly Commercial Price (Cargo)t = 1.9264 * (PPIt) + 0.0301

Using these equations, the quarterly commercial fuel prices for the fourth quarter of CY 2015 for both categories were forecasted and are reported in table 2.

Only the last quarter of CY 2015 was used to estimate fuel costs since this is the only quarterly period corresponding to the remaining FY15 performance period. The most current forecasted Jet Fuels PPI value (1.07) was obtained from IHS on 16 September 2015.

A review of carriers’ recent monthly fuel reports shows cargo carriers receive 65.4 percent of their fuel at military installations and are charged the rate set by Defense Logistics Agency -

Energy (DLA-E). Conversely, passenger carriers receive only 38.0 percent of their fuel from

DLA.

The pegged price of fuel was then calculated for each category based on the input values and the Pegged Price of Fuel equation stated above.

Pegged Price (Pax) = (62.0%) * ($2.09) + (38.0%) * ($2.95) = $2.41 / gallon

Pegged Price (Cargo) = (34.6%) * ($2.09) + (65.4%) * ($2.95) = $2.65 / gallon

Forecasted

Avg Qtrly Commercial Fuel Price

Period PPI Passenger Cargo Oct-Dec 2015 1.07 $2.09 $2.09

Table 1: Forecasted Commercial Fuel Costs for Oct-Dec 2015

Cost Escalation

The 27-month cost escalation factor is 5.30 percent for FY15. This is based on the calculations agreed upon in the FY13-17 MOU. This is an increase from the 27 month factor of 4.26 percent for FY14. Appendix K provides detailed information on this calculation.

Eurocontrol

The FY15 Euro control surcharges have been calculated as follows: 2.1 percent for passenger, 2.7 percent for cargo missions, .31 percent for combi. L-100 euro control will be on a cost reimbursable basis. This is a slight change from the FY14 Euro control of 2.1 percent, 2.7 percent and .33 percent for passenger, cargo and combi, respectively. The mission samples and analysis for euro control is provided at Appendix J.

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 FY15

Incremental Passenger Rate is $216ii. 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 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. Appendices J and K provide the Eurocontrol

Surcharge and Cost Escalation Factor, respectively. Appendix L provides Backhaul

Operational Data for USTRANSCOM Cargo Services. Finally, Appendix M demonstrates the FICA calculation.

i

LARGE CARGO PAID ONE-W AY SERVICE W EIGHTED BY ACL

FLOW N

FLOWN ONE-WAY EMPTY INDIVIDUAL

AIRCRAFT ONE-WAY EMPTY ASM'S BACKHAUL CARRIER

CARRIER TYPE ACL PAID MILES BACKHAUL [000] [000] RATIO

DTL B747-400 100 1,133,721 457,644 113,372 45,764 40.37%

CYS B747-400 100 692,143 176,443 69,214 17,644 25.49%

CDX MD11 86 597,061 199,844 51,347 17,187 33.47%

UPS MD11 86 86,026 65,293 7,398 5,615 75.90%

RATIO OF EMPTY QuMrPerlyC Semi AnnuMl ExpMnsion ATM'S TO ONE-W AY ATM'S 3DB72% ii Incremental Passenger Rate calculation

INDEX OF APPENDICES

No.

Appendix Title Pages

A USTRANSCOM Uniform Negotiated Rates and Rules 5

B Computation of Uniform Rates: (Effective 1 Oct 14 – 30 Sep 14) 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

B-1 Computation of Uniform Rates: (Effective 1 Oct 15 – 31 Dec 15) 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 (Effective 1 Oct 14 – 30 Sep 14)

C-1 Costs Per Seat Mile by Carrier and Aircraft Type In Large Class Charter Passenger Service 4 (Effective 1 Oct 15 – 31 Dec 15)

D Costs Per Seat Mile by Carrier and Aircraft Type in Medium Class Charter Passenger Service 3 (Effective 1 Oct 14 – 30 Sep 14)

D-1 Costs Per Seat Mile by Carrier and Aircraft Type in Medium Class Charter Passenger Service 3 (Effective 1 Oct 15 – 31 Dec 15)

E Costs Per Seat Mile by Carrier and Aircraft Type in Small Class Charter Passenger Service 4 (Effective 1 Oct 14 – 30 Sep 14)

E-1 Costs Per Seat Mile by Carrier and Aircraft Type in Small Class Charter Passenger Service 4 (Effective 1 Oct 15 – 31 Dec 15)

F Costs Per Ton Mile by Carrier and Aircraft Type in Large Class Cargo Service 4 (Effective 1 Oct 14 – 30 Sep 14)

F-1 Costs Per Ton Mile by Carrier and Aircraft Type in Large Class Cargo Service 4 (Effective 1 Oct 15 – 31 Dec 15)

G Costs Per Ton Mile by Carrier and Aircraft Type in Medium Class Cargo Service 2 (Effective 1 Oct 14 – 30 Sep 14)

G-1 Costs Per Ton Mile by Carrier and Aircraft Type in Medium Class Cargo Service 2 (Effective 1 Oct 15 – 31 Dec 15)

H Cost Per Plane Mile by Carrier Charter Combi Service 1 (Effective 1 Oct 14 – 30 Sep 14)

H-1 Cost Per Plane Mile by Carrier Charter Combi Service 1 (Effective 1 Oct 15 – 31 Dec 15)

I Cost Per Ton Mile by Carrier Charter L100 Service 1 (Effective 1 Oct 14 – 30 Sep 14)

I-1 Cost Per Ton Mile by Carrier Charter L100 Service 1 (Effective 1 Oct 15 – 31 Dec 15)

J Eurocontrol Surcharge 6

K Cost Escalation Factor 2

L Backhaul Operational Data for USTRANSCOM Service 1

M FICA Escalation 1

“Revised Page” Effective 1 Oct 15 – 31 Dec 15 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.

(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

(1) 1 OCT 14 - 30 SEP 15 CHARTER PASSENGER PER SEAT MILE

Large Live Effective Rate $0.12929 Ferry Rate (Base - Effective Rate) 90% $0.11636 Incremental Passenger $216 Fuel Pegged Rate $3.25

Medium Live Effective Rate $0.14703 Ferry Rate (Base - Effective Rate) 90% $0.13233 Incremental Passenger $216 Fuel Pegged Rate $3.25

Small Live Line Haul Rate $0.15548 Ferry Rate (Base - Effective Rate) 90% $0.14915 Stop Charge (Per Directed Landing) $2,000 Incremental Passenger $216 Fuel Pegged Rate $3.25

(1) 1 OCT 15 - 31 DEC 15 CHARTER PASSENGER PER SEAT MIL

Large Live Effective Rate $0.11695 Ferry Rate (Base - Effective Rate) 90% $0.10526 Incremental Passenger $216 Fuel Pegged Rate $2.41

Medium Live Effective Rate $0.13471 Ferry Rate (Base - Effective Rate) 90% $0.12124 Incremental Passenger $216 Fuel Pegged Rate $2.41

Small Live Line Haul Rate $0.14415 Ferry Rate (Base - Effective Rate) 90% $0.12974 Stop Charge (Per Directed Landing) $2,000 Incremental Passenger $216 Fuel Pegged Rate $2.41

(2) 1 OCT 14 - 30 SEP 15 CHARTER CARGO PER TON MILE

Large - Modern Fuel Efficient (MFE) Round Trip Effective Rate $0.46284 One-Way 130% $0.60169 Contingency Rate (Per Para G) 195% $0.90253 Ferry Rate (Base - Effective Rate) 87% $0.40267 Fuel Pegged Rate $3.43

Medium Round Trip Effective Rate: $0.56590 One-Way 187% $1.05824 Contingency Rate (Per Para G) 195% $1.10351 Ferry Rate (Base - Effective Rate) 87% $0.49234 Fuel Pegged Rate $3.43

(2) 1 OCT 15 - 31 DEC 15 CHARTER CARGO PER TON MILE

Large - Modern Fuel Efficient (MFE) Round Trip Effective Rate $0.41428 One-Way 130% $0.53856 Contingency Rate (Per Para G) 195% $0.80785 Ferry Rate (Base - Effective Rate) 87% $0.36042 Fuel Pegged Rate $2.65

Medium Round Trip Effective Rate: $0.51418 One-Way 187% $0.96152 Contingency Rate (Per Para G) 195% $1.00265 Ferry Rate (Base - Effective Rate) 87% $0.44734 Fuel Pegged Rate $2.65

(3) 1 OCT 14 - 30 SEP 15 CHARTER COMBI PER PLANE MILE

Round Trip Effective Rate $28.93952 One-Way 187% $54.11689 Contingency Rate (Per Para G) 195% $56.43206 Ferry Rate (Base - Effective Rate) 87% $25.17738 Fuel Pegged Rate $3.43

(3) 1 OCT 15 - 31 DEC 15 CHARTER COMBI PER PLANE MILE

Round Trip Effective Rate $26.87722 One-Way 187% $50.26040 Contingency Rate (Per Para G) 195% $52.41058 Ferry Rate (Base - Effective Rate) 87% $23.38318 Fuel Pegged Rate $2.65

(4) 1 OCT 14 - 30 SEP 15 CHARTER L-100 PER TON MILE

Round Trip Effective Rate $1.33049 Ferry Rate (Base - Effective Rate) 87% $1.15753 Fuel Pegged Rate $3.43

(4) 1 OCT 15 - 31 DEC 15 CHARTER L-100 PER TON MILE

Round Trip Effective Rate $1.24744 Ferry Rate (Base - Effective Rate) 87% $1.08527 Fuel Pegged Rate $2.65 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 0.31 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 $216 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:

28.84% 27.97%

8 to 14 days

Passenger and Combi:

Cargo:

19.38% 23.18%

15 to 30 days

Passenger and Combi:

Cargo:

16.45% 19.58%

31 to 45 days Passenger and Combi 7.65% 31 to 75 days Cargo 7.19% 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:

19.38% 23.18%

(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 $2030

B747-400/400ER 100 $2255

MD11F 86 $1939

MD11C 86 $1939

B777F 88 $1985

DC10-30/40 75 $1691

A300-600ER 51 $1682

A300-400F 50 $1649 B767-200F 48 $1583

DC8 45 $1484

L100 23 $2091 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 Charter Config 207 A300-B4(F) 50

B767-200/200ER 200 A300-600ER 51

A310 200 A300 210

B767-300/300ER 240

B767-400ER 260

Large Aircraft:

Large Aircraft: MD11 86 A330-200 310 B747-400 100 A330-300 330 B777F 88

B777-200ER 330 B767-300F 61

DC10-30 330

A340 345 DC10-30/40 75

MD11/MD11ER 360 B747-100/200/300 90

B777 Charter Config. 380 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. The 4,000 mile rule is not applicable on non-stop service.

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))

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 0.12511$ 110,339$ 104,183$ $214,523 37.66% $0.04711

DELTA AIR LINES INC B747-400 0.12699$ 30,044$ 4,930$ $34,974 6.14% $0.00780

OMNI AIR INTERNATIONAL INC B777 0.13257$ 129,729$ 119,080$ $248,809 43.68% $0.05790

UNITED AIRLINES INC B747-400 0.13157$ 36,856$ 34,506$ $71,361 12.53% $0.01648

$569,666 1.0000

RATE -- WEIGHTED BY REVENUES $0.12929

Exclusive of Fuel $0.08267

"Revised Pages" Effective 1 Oct 14 - 30 Sep 15 Appendix B

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 0.15495$ 101,604$ 90,896$ $192,500 36.07% $0.05589

DELTA AIR LINES INC B767-300 0.16686$ 30,744$ 25,855$ $56,599 10.61% $0.01770

OMNI AIR INTERNATIONAL INC B767-300 0.13773$ 145,455$ 139,144$ $284,599 53.33% $0.07345

$533,697 1.0000

RATE -- WEIGHTED BY REVENUES $0.14703

Exclusive of Fuel $0.10034

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 0.18366$ 3,284$ 386$ $3,670 6.35% $0.01166

MIAMI AIR INTERNATIONAL INC B737-800 0.17625$ 16,686$ 5,516$ $22,203 38.40% $0.06767

LLC DBA SUN COUNTRY AIRLINES B737-800 0.15539$ 15,655$ 4,381$ $20,036 34.65% $0.05384

UNITED AIRLINES INC B737-800 0.15797$ 7,736$ 4,181$ $11,917 20.61% $0.03255

$57,825 1.0000

RATE -- WEIGHTED BY REVENUES $0.16573

Exclusive of Fuel $0.12290

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

$0.16573 1,301 150 $2,000 $0.15548

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

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 0.44975$ 169,203$ 83,593$ $252,795 51.60% $0.23205

FEDERAL EXPRESS CORPORATION MD11 0.55595$ 41,727$ 17,437$ $59,164 12.08% $0.06713

KALITTA AIR, LLC B747-400 0.42449$ 87,261$ 42,858$ $130,118 26.56% $0.11273

UNITED PARCEL SERVICE CO. MD11 0.52109$ 32,714$ 15,165$ $47,879 9.77% $0.05092

$489,956 1.0000

RATE -- WEIGHTED BY REVENUES $0.46284

Exclusive of Fuel $0.25158

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 0.58526$ $4,160 $2,583 $6,743 50.28% $0.29427

AIR TRANSPORT INTERNATIONAL LLC B767-200F 0.54633$ $3,833 $2,835 $6,668 49.72% $0.27163

$13,411 1.0000

RATE -- WEIGHTED BY REVENUES $0.56590

Exclusive of Fuel $0.34095

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 $28.93952 $0 $79,384 $79,384 100.00% $28.93952

$79,384 1.0000

RATE -- WEIGHTED BY REVENUES $28.93952

Exclusive of Fuel $19.98754

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 1.33049$ $14,377 $0 $14,377 100.00% $1.33049

$14,377 1.0000

RATE -- WEIGHTED BY REVENUES $1.33049

Exclusive of Fuel $0.94254

"Revised Page" Effective 1 Oct 15 - 31 Dec 15 APPENDIX B-1

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 0.11161$ 110,339$ 104,183$ $214,523 37.66% $0.04203

DELTA AIR LINES INC B747-400 0.11425$ 30,044$ 4,930$ $34,974 6.14% $0.00701

OMNI AIR INTERNATIONAL INC B777 0.12198$ 129,729$ 119,080$ $248,809 43.68% $0.05328

UNITED AIRLINES INC B747-400 0.11680$ 36,856$ 34,506$ $71,361 12.53% $0.01463

$569,666 1.0000

RATE -- WEIGHTED BY REVENUES $0.11695

Exclusive of Fuel $0.08326

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 0.14266$ 101,604$ 90,896$ $192,500 36.07% $0.05146

DELTA AIR LINES INC B767-300 0.15535$ 30,744$ 25,855$ $56,599 10.61% $0.01648

OMNI AIR INTERNATIONAL INC B767-300 0.12522$ 145,455$ 139,144$ $284,599 53.33% $0.06677

$533,697 1.0000

RATE -- WEIGHTED BY REVENUES $0.13471

Exclusive of Fuel $0.10000

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 0.17309$ 3,284$ 386$ $3,670 6.35% $0.01098

MIAMI AIR INTERNATIONAL INC B737-800 0.16535$ 16,686$ 5,516$ $22,203 38.40% $0.06349

LLC DBA SUN COUNTRY AIRLINES B737-800 0.14477$ 15,655$ 4,381$ $20,036 34.65% $0.05016

UNITED AIRLINES INC B737-800 0.14439$ 7,736$ 4,181$ $11,917 20.61% $0.02976

$57,825 1.0000

RATE -- WEIGHTED BY REVENUES $0.15439

Exclusive of Fuel $0.12263

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

$0.15439 1,301 150 $2,000 $0.14415

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

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 0.40075$ 169,203$ 83,593$ $252,795 51.60% $0.20677

FEDERAL EXPRESS CORPORATION MD11 0.50734$ 41,727$ 17,437$ $59,164 12.08% $0.06126

KALITTA AIR, LLC B747-400 0.37620$ 87,261$ 42,858$ $130,118 26.56% $0.09991

UNITED PARCEL SERVICE CO. MD11 0.47418$ 32,714$ 15,165$ $47,879 9.77% $0.04634

$489,956 1.0000

RATE -- WEIGHTED BY REVENUES $0.41428

Exclusive of Fuel $0.25103

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 0.53213$ $4,160 $2,583 $6,743 50.28% $0.26756

AIR TRANSPORT INTERNATIONAL LLC B767-200F 0.49603$ $3,833 $2,835 $6,668 49.72% $0.24662

$13,411 1.0000

RATE -- WEIGHTED BY REVENUES $0.51418

Exclusive of Fuel $0.34036

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 $26.87722 $0 $79,384 $79,384 100.00% $26.87722

$79,384 1.0000

RATE -- WEIGHTED BY REVENUES $26.87722

Exclusive of Fuel $19.96019

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 1.24744$ $14,377 $0 $14,377 100.00% $1.24744

$14,377 1.0000

RATE -- WEIGHTED BY REVENUES $1.24744

Exclusive of Fuel $0.94163

ATLAS AIRLINES (GTI) Aircraft Type B747-400

LARGE CLASS AIRCRAFT Passenger Service

FY15 RATE REVIEW

FORECAST YEAR FY15

USTRANSCOM FINAL

PROPOSED ADJUSTED

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

AVERAGE DAILY AIRCRAFT UTILIZATION 6.5 6.5

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $3.2967 $3.3074 Fuel, Oil, & Aircraft Supplies 21.3585 22.1553 * Flight Equipment Maintenance 3.5242 3.5697

Total Direct Variable 28.1794 29.0324

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 1.1783 1.1783 Aircraft Rentals & Miscellaneous 0.1105 0.1116 Flight Equipment Depreciation & Obsolescence 1.3108 1.3691 Amortization of Preoperating Expense 0.0000 0.0000 Capital Gains & Losses 0.0000 0.0000

Total Direct Fixed 2.5996 2.6590

Indirect:

Maintenance & Depreciation-General Ground Property 0.0409 0.0409 Aircraft & Traffic Servicing 3.9355 4.1865 * Passenger Service 9.2830 9.9934 * General & Administrative 1.8756 1.9054

Total Indirect 15.1350 16.1262

TOTAL OPERATING COST 45.9140 47.8175

Profit 6.6525 6.6050 **

TOTAL COST $52.5665 $54.4224

Allowable Cabin Load 435 435

RATE PER SEAT MILE $0.12084 $0.12511

* Designates that the cost element was adjusted by a factor of 1.0532688 (435/413) to adjust the operating cost to be more reflective of costs from operating at the standard, 435 ACL.

** Profit was adjusted for consistency with original profit percentage.

"Revised Pages" Effective 1 Oct 14 - 30 Sep 15 Appendix C

DELTA AIRLINES (DAL) Aircraft Type B747-400

FY15 RATE REVIEW

FORECAST YEAR FY15

USTRANSCOM FINAL

PROPOSED ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 565 565

AVERAGE DAILY AIRCRAFT UTILIZATION 11.1 10.3

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $2.7716 $6.7664 Fuel, Oil, & Aircraft Supplies 19.5318 19.2359 Flight Equipment Maintenance 2.1184 2.8583

Total Direct Variable 24.4218 28.8606

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.0488 0.0534 Aircraft Rentals & Miscellaneous 1.5567 0.2543 Flight Equipment Depreciation & Obsolescence 1.0791 1.2046 Amortization of Preoperating Expense 0.0000 0.0000 Capital Gains & Losses 0.0000 0.0000

Total Direct Fixed 2.6846 1.5123

Indirect:

Maintenance & Depreciation-General Ground Property 0.0305 0.3767 Aircraft & Traffic Servicing 9.3007 7.0034 Passenger Service 4.9759 6.1040 General & Administrative 1.0263 1.1938

Total Indirect 15.3335 14.6779

TOTAL OPERATING COST 42.4399 45.0508

Profit 5.5620 5.7444

TOTAL COST $48.0019 $50.7953

Allowable Cabin Load 400 400

RATE PER SEAT MILE $0.12000 $0.12699

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

FY15 RATE REVIEW

FORECAST YEAR FY15

USTRANSCOM FINAL

PROPOSED ADJUSTED

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

AVERAGE DAILY AIRCRAFT UTILIZATION 8.1 8.1

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $4.4059 $4.8371 Fuel, Oil, & Aircraft Supplies 15.4660 15.2330 Flight Equipment Maintenance 6.1846 6.2362

Total Direct Variable 26.0565 26.3063

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.3548 0.3548 Aircraft Rentals & Miscellaneous 0.0460 0.0464 Flight Equipment Depreciation & Obsolescence 4.6539 4.6539 Amortization of Preoperating Expense 0.0000 0.0000 Capital Gains & Losses 0.0000 0.0000

Total Direct Fixed 5.0547 5.0552

Indirect:

Maintenance & Depreciation-General Ground Property 0.0724 0.0724 Aircraft & Traffic Servicing 3.5433 3.5786 Passenger Service 6.0716 6.1226 General & Administrative 1.2921 1.3211

Total Indirect 10.9794 11.0947

TOTAL OPERATING COST 42.0906 42.4562

Profit 7.8034 7.9209

TOTAL COST $49.8940 $50.3770

Allowable Cabin Load 380 380

RATE PER SEAT MILE $0.13130 $0.13257

UNITED AIRLINES INC (UAL) Aircraft Type B747-400

FY15 RATE REVIEW

FORECAST YEAR FY15

USTRANSCOM FINAL

PROPOSED ADJUSTED

TOTAL REVENUE & BACKHAUL/PAID MILES (000) 728 728

AVERAGE DAILY AIRCRAFT UTILIZATION 10.6 10.6

COST PER REVENUE/PAID AIRCRAFT MILE

Direct Variable:

Crew $3.5837 $4.5310 Fuel, Oil, & Aircraft Supplies 22.6514 22.3083 Flight Equipment Maintenance 4.5035 4.5452

Total Direct Variable 30.7387 31.3845

Direct Fixed:

Hull, Public Liability, & Property Damage Insurance 0.0445 0.0445 Aircraft Rentals & Miscellaneous 0.7386 0.7386 Flight Equipment Depreciation & Obsolescence 1.9260 1.9260 Amortization of Preoperating Expense 0.0000 0.0000 Capital Gains…