[Federal Register Volume 69, Number 37 (Wednesday, February 25, 2004)]
[Notices]
[Pages 8725-8727]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-4169]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

[Docket No. OST-2003-14694]


Agency Information Collection; Activity Under OMB Review

AGENCY: Office of the Secretary, (OST), DOT.

ACTION: 60-day notice.

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SUMMARY: In compliance with the Paperwork Reduction Act of 1995, Public 
Law 104-13, the Office of the Secretary invites the general public, 
industry and other governmental parties to comment on the need for and 
usefulness of the Department's collecting three new quarterly reports 
from intra-Alaska air carriers required by the Rural Service 
Improvement Act of 2002 (RSIA) consisting of: Passenger, freight, and 
charter revenue by market by direction; a more detailed system income 
statement; and system excise taxes paid on passengers and freight. The 
reports would be required of all intra-Alaska carriers intending to 
qualify for the carriage of bush mail from the Postal Service.

DATES: Written comments should be submitted by April 26, 2004.

ADDRESSES: Comments should be directed to: Docket Management Facility; 
U.S. Department of Transportation, 400 Seventh Street, SW., PL-401, 
Washington, DC 20590-0001, fax no. (202) 493-2251 or e-mail: http://dms.dot.gov.
    Comments: Comments should refer to the ``RSIA Quarterly Financial 
Reports.'' Persons wishing the Department to acknowledge receipt of 
their comments must submit with those comments a self-addressed stamped 
postcard on which the following statement is made: RSIA Quarterly 
Financial Reports. The postcard will be date/time stamped and returned.

FOR FURTHER INFORMATION CONTACT: Kevin Adams, Office of Aviation 
Analysis, X-53, Room 6401, Office of the Secretary, 400 Seventh Street, 
SW., Washington, DC 20590-0001, (202) 366-1047.

SUPPLEMENTARY INFORMATION:

RSIA Quarterly Financial Reports

    Title:
    1. Quarterly Revenue Report by Community for Intra-Alaska Bush 
Carriers (net of excise tax);
    2. Quarterly System Income Statement for Intra-Alaska Bush Mail 
Carriers;
    3. Quarterly System Excise Tax.
    This information was discussed in Order 2003-10-10, Issue 3.
    Type of Review: New Reports required by the Rural Service 
Improvement Act of 2002, Section 3002 of Pub. L. 107-206.
    Respondents: Intra-Alaska bush air carriers.
    Number of Respondents: 33.
    Number of Responses per year: 33 carriers x 4 quarters x 3 reports 
= 396.
    Estimated Time per Response: 8 hours total per carrier per quarter.
    Total Annual Burden: 33 carriers x 4 quarters x 8 hours = 1,056 
hrs.
    Needs and Uses: The Department will use this form to fulfill its 
obligation under the Rural Service Improvement Act of 2002 (RSIA). The 
Act states that to prevent carriers from overstating the amount of 
passengers and freight they carry in order to qualify for the carriage 
of Intra-Alaska bush mail, they must submit monthly reports depicting 
the excise taxes they paid for every market they served. We have fully 
discussed this issue in Department of Transportation Order 2003-10-10, 
http://www.dms.dot.gov, Docket 14694, Issue 3 of that Order. We have 
attached that discussion herein as Appendix C. This information 
collection would allow the Department to monitor and disclose the 
amount of revenue each carrier generates in each market where it 
intends to qualify for the tender of mail by the Postal Service. All 
Intra-Alaska certificated carriers interested in being tendered bush 
mail are required to submit this information. The data would be 
submitted beginning with the quarter ended September 30, 2002, the 
first quarter when the Rural Service Improvement Act was implemented.
    In order to encourage carriers to compete with each other as 
intended under the provisions of RSIA to qualify to carry mail at 
individual markets, and so that carriers in the market can review the 
accuracy of their competitors'

[[Page 8726]]

reports, we intend to make the first and second reports public, 180 
days after the end of the reporting period. Because the system excise 
taxes are drawn from and duplicative of IRS Form 720, which is not 
publicly disclosed, we would maintain the confidentiality of that 
individual report, and not disclose it outside the Department. The 
information to be collected and the requirement that it be collected 
were discussed in Department of Transportation Order 2003-10-10, Issue 
3.

    Issued in Washington, DC, on February 18, 2004.
Randall D. Bennett,
Director, Office of Aviation Analysis, X-50.

Appendix A--Carrier Name

         Quarterly Revenue Report at Communties in Which Carriers are Interested in Being Tendered Mail
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                                       Outbound from the hub \1\                  Inbound to the hub \1\
           Examples           ----------------------------------------------------------------------------------
                                Skd. pass.     Skd. frt.      Charter     Skd. pass.    Skd. frt.      Charter
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Bethel-Hooper................          $$$           $$$           $$$           $$$          $$$           $$$
Nome-Ruby, etc...............          $$$           $$$           $$$           $$$          $$$          $$$
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\1\ For example, outbound is Bethel (the hub) to Hooper; Inbound is Hooper to Bethel. Exclude all intervillage
  traffic. We include the inbound above only to prevent possible gamesmanship, consistent with RSIA.
 
 Notes: 1. All figures are in dollars, and net of excise tax. 2. Consistent with BTS definitions, revenue
  reflects funds going to the carrier for service on its system. 3. These revenue figures should correspond to
  traffic figures for Tables 3 and 4 on the BTS Web site. 4. Outbound refers to traffic originating at the hub/
  acceptance point, i.e., outbound to the bush community.

Appendix B--Name of Carrier

                 Quarterly System Income Statement Submitted by Carrier, Replacing Schedule F-1
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                                                          Revised schedule F-1          Current schedule F-1
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1. Scheduled Passenger..............................  $$$                           $$$
2. Scheduled Freight................................  New
3. Charter..........................................  New \1\
4. Mail.............................................  New
5. Other............................................  New
6. Total Operating Revenue..........................  $$$ \2\                       $$$
7. Non-Operating....................................  New
8. Total Revenue....................................  New
9. Expense per Schedule F-2.........................  $$$
10. Other Operating Expense.........................  New
11. Total Operating Expense.........................  $$$                           $$$
12. Non-Operating...................................  New
13. Total Expense...................................  New
14. Net Income......................................  $$$                           $$$
Per IRS Form 720, Quarterly System Excise Tax \3\
    Passenger Excise Tax............................  $$$
    Freight Excise Tax..............................  $$$
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\1\ Charter revenue is the revenue generated when a single entity purchases the entire use of the plane.
\2\ Passenger, Freight, Mail, and Charter Revenue is for Air Transportation only. The related revenue from
  activities such as hotels, guides, camping, etc., are excluded.
\3\ Carriers should separately report the first page of IRS Form 720 to BTS, which will keep the information
  confidential.

Appendix C--Discussion of the New Reporting Requirements, per Order 
2003-10-10, Docket 14694, October 8, 2003, Issue 3 \4\
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    \4\ The other issues discussed in that Order may be viewed on 
the Department's Docket Management System, http://www.dms.dot.gov.
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    Issue 3: section (k)(5) of the law provides that: ``(5) Not 
later than 30 days after the last day of each calendar month, 
carriers qualified or attempting to be qualified to be tendered 
nonpriority bypass mail shall report to the Secretary the excise 
taxes paid by city pair to the Department of the Treasury and the 
weight of and revenue earned by the carriage of nonmail freight. 
Final compiled data shall be made available to carriers providing 
service in the hub.''
    We have discussed this issue with BTS and the Postal Service. 
Some carriers have informally stated that quantifying excise taxes 
by market would prove difficult, if not impossible. It is not clear 
from the legislative history what the purpose is of carriers 
reporting excise taxes by route. We thus request comments on the 
best method to meet the requirements of the law.\5\
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    \5\ The italicized elements were first listed in the 
Department's notice posted on April 16, 2003, in the docket to this 
proceeding (14694) in the Department's docket management system, and 
are referred to as the RFC, or Request for Comments.
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    Issue 3 Responses: In response to the RFC, many carriers said 
they were fearful the law would be thwarted by carriers' 
misreporting data. The law provides that only carriers transporting 
significant shares of passengers or non-mail freight will be 
tendered mail. For a few carriers, the bulk of their revenue and 
traffic is mail. In other words, those most dependent on mail 
revenue are those most at risk to have it taken away.
    The law recognizes this concern by penalizing carriers that 
significantly overstate their passenger or cargo carriage by taking 
them out of tender, for increasingly extended periods of time with 
each violation.\6\ To attempt to ensure that carriers' passenger and 
cargo reports are accurate, the RSIA requires carriers to submit 
excise taxes by city-pair each month, with the expectation that, 
given such information, the Department and Postal Service could more 
readily detect misreporting of traffic. Many carriers state that 
excise taxes by city pair will be burdensome to report, because 
excise taxes are paid by the carrier selling the ticket or waybill, 
not necessarily by the carrier

[[Page 8727]]

providing the service. They also argue that since excise taxes are 
paid when the sale is made, they may not reflect when passengers or 
freight are actually transported and the revenue earned. Warbelow's 
Air Ventures (Warbelow's) notes that excise taxes are a straight 
percentage of revenue,\7\ so in lieu of directly reporting excise 
taxes by each market, carriers could meet the requirements of the 
law by reporting revenue by market. We note too that for the freight 
pool, unlike the passenger pool, RSIA permits the Postal Service to 
use either the weight of the freight transported in the market, as 
reported on the T-100, or the associated revenue to determine 
qualification for tender, and this further supports our tentative 
decision to require the reporting of revenue.
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    \6\ One month for the first offense, six months for the second, 
one year for the third, and permanently for the fourth.
    \7\ Excise tax is applied at 7.5% of passenger revenue and 6.25% 
of freight revenue. In addition, at a few non-rural airports in 
Alaska, carriers collect an excise tax of $3 per segment. Charter 
revenue is taxed similarly to scheduled revenue, except that 
aircraft with certificated take-off weight of less than 6,000 pounds 
are not taxed unless they operate with some degree of regularity 
between definite points.
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    While we recognize that the statute is designed to ensure 
accurate mail tender by the Postal Service and is not our primary 
responsibility to interpret, we believe the carriers raise serious 
problems with implementation of the excise tax report. We will 
continue to consider those concerns, but tentatively require that 
carriers report the data described in Appendix A on an interim 
basis. Since excise tax is a straight percentage of revenue, rather 
than directly reporting excise taxes by market, the same goal can be 
accomplished by reporting revenue by market. Because the Postal 
Service has said it will tender mail based on annual results, 
perhaps updated every three months, it would serve no purpose to 
collect this information by month, so we will require only quarterly 
submissions of the data in Appendix A. The information (consistent 
with the overall intent of the law) is to be made public and will 
accordingly be placed on the BTS Web site. As with the T-100 On-
Flight O&D reports, which it crosschecks, we will afford carriers a 
15-day grace period after the information is published on the BTS 
Web site to report corrections. We believe this interim reporting, 
along with that in Appendix B, will fully accomplish the intent of 
the legislation and considerably lessen the carriers' reporting 
burden.
    The intent of this part of the legislation is to substantiate 
passenger and freight counts, and to reward carriers that transport 
significant passenger and freight levels with mail tender. Thus, 
carriers that do not expect to qualify for bypass mail do not need 
to submit the data on Appendix A.
    We note that the Postal Service has said that it intends to 
modify its tender of non-priority, non-bypass mail to conform with 
the RSIA requirements for tender of bypass mail, even though the 
RSIA does not so require. The Consolidated Carriers \8\ object, 
stating that any special RSIA reporting cannot be extended beyond 
bypass mail. We agree, but the Postal Service can undertake its own 
data collection as necessary to administer its tender policy for 
non-priority, non-bypass mail. Of course, consistent with our rules, 
all carriers are still required to report the T-100 passenger and 
freight traffic, even those that do not transport any bypass mail.
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    \8\ The Consolidated Carriers consist of: Alaska Seaplane, 
Baker, Bellair, Cape Smythe, Grant, Iliamna, Island Air, Katmai, 
LAB, Larry's Flying Service, Olson, Servant, Skagway, Smokey Bay, 
Tanana, Taquan, Wings, and Wright.
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Additional Reports, Appendix B

    Larry's Flying Service recommends that the Department have 
carriers report a more detailed income statement, in lieu of excise 
taxes, stating: ``Scheduled passenger revenue follows the Net Income 
line on [Schedule F-1 and] should not be flawed by any code-sharing 
or ticket stock issued by other airlines. If reported accurately, 
this should give the same or better information as would a creative 
exercise with excise taxes. We would not be averse to an added line 
for passenger charter revenue or (taxable) freight revenue as 
well.''
    Again, we think RSIA imposes ultimate responsibility for data 
use on the Postal Service. While we consider this additional 
concern, this revised interim Schedule F-1 will serve as a proxy. 
Moreover, it requires minimal additional detail, will tentatively be 
submitted quarterly, not monthly, beginning with the QE 9/30/02, and 
is shown in Appendix B.\9\ Under the RSIA, Freight Revenue is an 
alternate way to rank carriers for inclusion in the freight pool. 
Also, having Charter Revenue will be useful as a check on carrier 
reporting, because many carriers are currently claiming that other 
operators are misclassifying charter passenger and freight 
operations as scheduled service.\10\ We will also tentatively 
require carriers to report, from the first page of IRS Form 720, 
system excise taxes for persons by air and property by air, 
beginning with QE 9/30/02. It is very easily reported, and should 
enable us to conduct reviews of carriers to pinpoint where on-site 
reviews might be required or where the Postal Service should be 
alerted to a potential problem. We will hold confidential the 
information on Form 720.
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    \9\ The only additional data that must be submitted are charter 
revenue, mail revenue, and freight revenue. The other additional 
lines are simply subtotals and totals of those data.
    \10\ We believe Department instructions are clear: charter 
operations, including part charters, are those where customer(s) 
contract for the entire plane, without individual tickets or 
waybills. Comparing flight regularity with scheduled service is 
often not determinative in Alaska.
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Appendix D--Carriers Transporting Intra-Alaska Bush Mail as of February 
1, 2004

1. 40-Mile Air.
2. Alaska Central Express (ACE).
3. Alaska Seaplane.
4. Arctic Circle.
5. Arctic Transportation Services (ATS).
6. Baker.
7. Bellair.
8. Bering.
9. Camai (Village).
10.Cape Smythe.
11. ERA Aviation.
12. Frontier Flying Service.
13. Grant.
14. Hageland.
15. Iliamna.
16. Inland.
17. Island (Redemption).
18. LAB.
19. Larry's Flying Service.
20. Olson.
21. Peninsula.
22. Promech.
23. Servant.
24. Skagway.
25. Smokey Bay.
26. Spernak.
27. Tanana.
28. Taquan.
29. Tatonduk (Everts).
30. Warbelows Air Ventures.
31. Wings of Alaska.
32. Wright Air Service.
33. Yute.

[FR Doc. 04-4169 Filed 2-24-04; 8:45 am]
BILLING CODE 4910-62-P