-----------------------------------------------------------------------
  Order 2007-10-7

  Served: October 10, 2007
  -----------------------------------------------------------------------

**UNITED STATES OF AMERICA**

**DEPARTMENT OF TRANSPORTATION**

**OFFICE OF THE SECRETARY**

**WASHINGTON, D.C.**

Issued by the Department of Transportation

  -----------------------------------------------------------------------
  on the 4^th^ day of October, 2007

  -----------------------------------------------------------------------

+-------------------------------------+--------------------------------+
| Essential Air Service at            |                                |
+-------------------------------------+--------------------------------+
|                                     |                                |
+-------------------------------------+--------------------------------+
| > **MERCED, CALIFORNIA**            | > **Docket:                    |
|                                     | > DOT-OST-1998-3521**          |
+-------------------------------------+--------------------------------+
| > **VISALIA, CALIFORNIA**           | > **Docket:                    |
|                                     | > DOT-OST-2004-19916**         |
+-------------------------------------+--------------------------------+
| > **ELY, NEVADA**                   | > **Docket: DOT-OST-1995-361** |
+-------------------------------------+--------------------------------+
| > **CEDAR CITY, UTAH**              | > **Docket:                    |
|                                     | > DOT-OST-2003-16395**         |
+-------------------------------------+--------------------------------+
| > **MOAB, UTAH**                    | > **Docket:                    |
|                                     | > DOT-OST-1997-2827**          |
+-------------------------------------+--------------------------------+
| > **VERNAL, UTAH**                  | > **Docket:                    |
|                                     | > DOT-OST-1997-2706**          |
+-------------------------------------+--------------------------------+
|                                     |                                |
+-------------------------------------+--------------------------------+
| under 49 U.S.C. 41731 *et seq.*     |                                |
+-------------------------------------+--------------------------------+

**ORDER SELECTING CARRIERS**

**AND ESTABLISHING SUBSIDY RATES**

## 

**Summary**

By this order, the Department is selecting SkyWest Airlines (SkyWest),
and Great Lakes Aviation, Ltd. (Great Lakes) to provide subsidized
essential air service (EAS) at the above communities for the two-year
period beginning when the carriers inaugurate full EAS. Specifically, we
select SkyWest at Cedar City for the annual subsidy of \$1,242,256 and
Great Lakes at Merced, Visalia, Ely, Moab and Vernal for a combined
annual subsidy of \$5,670,244. Area maps are attached as Appendix A.

**Background**

By a series of Department orders, Air Midwest, Inc., a wholly owned
subsidiary of Mesa Air Group, Inc. (Air Midwest) was selected to provide
subsidized EAS at each of the above communities for a total annual
subsidy of \$5,005,955.[^1] On May 22, 2007, Air Midwest filed 90-day
notices to suspend service at all six communities. In response, the
Department issued Order 2007-6-13 on June 18 soliciting proposals from
air carriers interested in providing EAS, with or without subsidy, at
any or all of the six communities.[^2] In response to that request, we
received proposals from Air Midwest, SkyWest, Great Lakes, Vision
Airlines (Vision Air), and Mountain Bird, Inc., d/b/a Salmon Air (Salmon
Air).

**Proposals**

Each proposal is summarized below by carrier and community. The
proposals are also summarized in Appendix B.

**Air Midwest**

Air Midwest submitted a six-city, indivisible package. Subsidy for the
six communities combined would be \$8,499,870 annually, and all service
would be provided with 19-seat Beech 1900 D turboprop aircraft as US
Airways Express.

  ----------------------- ----------------------- -----------------------
  **Community**           **Service**             **Annual Subsidy Cost**

  **Cedar City**          13 nonstop round trips  **\$8,499,870**
                          each week to Las Vegas; 
                          plus 6 nonstop round    
                          trips each week to      
                          Phoenix                 

  **Ely**                 7 one-stop round trips  
                          each week, via Cedar    
                          City, to Las Vegas      

  **Moab**                12 nonstop round trips  
                          each week to Phoenix    

  **Vernal**              12 one-stop round trips 
                          each week, via Moab, to 
                          Phoenix                 

  **Merced**              24 nonstop and one-stop 
                          round trips to Las      
                          Vegas each week         

  **Visalia**             24 nonstop and one-stop 
                          round trips to Las      
                          Vegas each week         
  ----------------------- ----------------------- -----------------------

**SkyWest**

SkyWest offered two options to serve Cedar City to Salt Lake City, both
using 30-seat Embraer Brasilia turboprop aircraft and operating as Delta
Connection. It did not submit a proposal to serve any of the other
communities.

+-----------------------+-----------------------+-----------------------+
| **Community**         | **Service**           | **Annual Subsidy      |
|                       |                       | Cost**                |
+-----------------------+-----------------------+-----------------------+
| **Cedar City**        | 12 nonstop round      | **\$1,242,256**       |
|                       | trips each week to    |                       |
| **(Option #1)**       | Salt Lake City        |                       |
+-----------------------+-----------------------+-----------------------+
| **Cedar City**        | 18 nonstop round      | **\$1,974,753**       |
|                       | trips each week to    |                       |
| **(Option #2)**       | Salt Lake City        |                       |
+-----------------------+-----------------------+-----------------------+

**Great Lakes**

Great Lakes offered a total of four proposals \-- three individual
proposals, one each for Moab, Vernal and Ely, and a combined proposal
for Merced and Visalia.

The carrier's four individual proposals for the five cities would
require a total annual subsidy of \$5,670,244. All of Great Lakes'
service would be operated with 19-seat Beech 1900D aircraft and
code-share agreements with United Air Lines and Frontier Airlines.

Great Lakes' subsidy proposals assume the *status quo* regarding
federally imposed taxes and fees. If the congress increases the user
fees as is now being proposed in the current Federal Aviation
Administration Reauthorization bill, Great Lakes reserves the right to a
concomitant increase in its subsidy rates.

  ----------------------- ----------------------- -----------------------
  **Community**           **Service**             **Annual Subsidy Cost**

  **Moab**                12 nonstop or one-stop  **\$1,607,903**
                          round trips each week   
                          to Denver               

  **Vernal**              12 nonstop or one-stop  **\$1,147,786**
                          round trips each week   
                          to Denver               

  **Ely**                 6 nonstop or one-stop   **\$1,079,102**
                          round trips each week   
                          to Denver               

  **Merced**              14 nonstop round trips  **\$1,835,453**
                          each week to Las Vegas  

  **Visalia**             14 nonstop round trips  
                          each week to Las Vegas  
  ----------------------- ----------------------- -----------------------

**Vision Air**

Vision Air offered a single proposal to serve Merced and Visalia. The
carrier proposes to use 30-passenger Dornier 328 turboprop aircraft to
serve both communities, and would provide Las Vegas passengers
complimentary airport shuttle (bus) service between the North Las Vegas
Airport and the hub airport at Las Vegas, McCarran International
Airport. Vision Air does not have a code-share agreement with a major
air carrier. While Vision Air holds authority to provide on-demand
passenger service using large aircraft, it has not been granted
operating authority by the Federal Aviation Administration to provide
scheduled passenger service.

  ----------------------- ----------------------- -----------------------
  **Community**           **Service**             **Annual Subsidy Cost**

  **Merced**              7 one-stop round trips  **\$1,304,144**
                          each week to Long       
                          Beach, (Daugherty Field 
                          Airport), via Visalia;  
                          plus 7 one-stop round   
                          trips each week to the  
                          North Las Vegas         
                          Airport, via Visalia    

  **Visalia**             7 nonstop round trips   
                          each week to Long Beach 
                          (Daugherty Field        
                          Airport); plus 7        
                          nonstop round trips     
                          each week to the North  
                          Las Vegas Airport.      
  ----------------------- ----------------------- -----------------------

**Salmon Air**

Salmon Air submitted two options as shown below, one to serve Moab and a
second option to serve both Moab and Vernal. The carrier would use
7-seat, Piper Chieftain, PA31-350 twin-engine, piston aircraft to serve
both communities. The carrier does not have a code-share agreement with
a major carrier.

As we noted in our letter to the communities, the aircraft type proposed
by Salmon Air does not meet the 15-or-more-passenger-seat standard
required by our governing statutes (49 U.S.C. 41732(b)(3) and (b)(6)).
The Department would not select Salmon Air's proposal unless we received
written support for such a selection from Moab and/or Vernal.

+-----------------------+-----------------------+-----------------------+
| **Community**         | **Service**           | **Annual Subsidy      |
|                       |                       | Cost**                |
+-----------------------+-----------------------+-----------------------+
| **Option 1 - Moab**   | 12 nonstop round      | **\$1,831,999**       |
|                       | trips each week to    |                       |
|                       | Salt Lake City        |                       |
+-----------------------+-----------------------+-----------------------+
| **Option 2 - Moab &   | [Moab]{.underline} -  | **\$2,472,952**       |
| Vernal**              | 6 nonstop and 6       |                       |
|                       | one-stop round trips  |                       |
|                       | each week via Vernal, |                       |
|                       | to Salt Lake City.    |                       |
|                       |                       |                       |
|                       | [Vernal]{.underline}  |                       |
|                       | -- 6 nonstop round    |                       |
|                       | trips each week to    |                       |
|                       | Salt Lake City.       |                       |
+-----------------------+-----------------------+-----------------------+

**Community and State Comments**

By letter dated July 30, 2007, the Department solicited comments from
all six communities. In response to our request for comments, we
received the following specific recommendations from each of the
communities. In addition, we received a number of comments from citizens
and individual businesses in several of the communities. These comments
are filed in the respective dockets for each community.

**Cedar City**

An August 9 letter from the Mayor of Cedar City indicates the
community's strong opposition to the service currently provided by Air
Midwest. He notes that the passenger levels have fallen in half due to
Air Midwest's extraordinarily poor performance and slipshod operation.
On the other hand, the Mayor notes the community's long history (over 30
years) with SkyWest's service, which had "earned a sterling reputation
for reliable, quality performance." The Mayor states that the only way
to reverse the 48% drop in enplanements that Cedar City had experienced
since May of 2006 when Air Midwest began serving the community, is to
adopt SkyWest's three round-trip-a-day proposal.

**Ely**

We received comments from both the White Pine County Board of
Commissioners and the White Pine County Airport Advisory Board. The
White Pine County Board of Commissioners supports Great Lakes as their
preferred carrier to serve the citizens of the county, stating that
Great Lakes' proposal best meets the needs of the community. The Airport
Advisory Board also supports the selection of Great Lakes, and stated
that Air Midwest's service has been far below any standard of business
and ridership decreased steadily as a result. In addition, we received a
number of letters from individuals, local businesses, and the White Pine
Chamber of Commerce, all supporting Great Lakes.

**Moab**

In a September 4 letter from the chair of the Grand County Council
(Moab), states that the County Council recommends the selection of
Salmon Air to serve the community, as that carrier has provided the
community with the best service in years past. According to the Chair,
the letter "serves as formal notice" that the county waives its
statutory right to EAS with 15 seat or larger aircraft. The letter from
the Chair also states that Salmon Air does not require that the
community's airport comply with the FAA's Part 139 certification
requirements; that it is the County's desire to have its air service
self-sustaining; and that the county believes that Salmon Air is more
closely committed to that objective.

**Vernal**

We received comments from Uintah County Commission stating that the
Airport Board recommended Great Lakes to be the community's EAS carrier.
In addition, in a joint Vernal City/Uintah County meeting, the Uintah
County Commissioners and the Vernal City Council members unanimously
chose Great Lakes as the carrier of choice.

**Merced**

On September 4, the Merced City Council adopted a motion recommending
that Vision Air be selected to provide the community's EAS. In a
follow-up September 5, letter, the Mayor of Merced stated that the
carrier "is ready to enter the passenger market, and has earned the
City's recommendation with its motivated approach." The Mayor indicated
that Great Lakes was "also acceptable to the community" if we did not
select Vision Air.

**Visalia**

On September 5, we received a letter from the Mayor of Visalia stating
that City Council had adopted a motion "unanimously supporting the
proposal of Great Lakes Aviation for Essential Air Service to Visalia."
According to the Mayor's letter, the City Council believes that Great
Lakes' code-share agreements with Frontier and United "will provide . .
. the opportunity to continue to grow air service in the community" thus
making Great Lakes' proposal superior to Vision Air's. The Mayor's
letter further states that the fact that Vision's proposal does not
propose service to a large or medium hub airport makes it "statutorily
deficient," and, thus, unsupportable by the City. The Mayor's letter was
also supported by an email from the airport manager that states, "Vision
Air's proposal to serve Long Beach and North Las Vegas does not provide
nearly the connecting opportunities as Las Vegas McCarran. He correctly
points out that the purpose of the EAS program is to provide access to
the national air transportation system and, in that regard, the EAS
statutes require service to a large- or medium-hub airport, which
neither Long Beach nor North Las Vegas qualifies. Thus, the airport
argues, the Department cannot select Vision Air's proposal unless both
Merced and Visalia waive their rights to service to a large- or
medium-hub airport.

**California Department of Transportation, Division of Aeronautics**

The Director of the California Division of Aeronautics submitted a
letter dated August 27, indicating its support for the use of non-hub
airports (Visalia and Merced paired with Long Beach/Daugherty and North
Las Vegas Airport), stating that such service patterns may be a
realistic alternative and a way to reduce delays and relieve congestion
at primary hub airports (Los Angeles World and Las Vegas International),
where feasible. She also suggested that the carriers were in a better
position to "access and plan for market demand, airport pairing, and
delineating end and through passenger loads, and providing a reliable
means for connecting to other flights if that is determined to be a
market demand condition."

**Decision**

After carefully reviewing all of the facts in this case, including the
comments submitted by the communities, as well as by a number of
individuals and businesses, we have decided to select two carriers to
replace the service currently being provided by Air Midwest.
Specifically, we have decided to select SkyWest to serve Cedar City (two
round trips a day) and Great Lakes to serve the other five. The total
subsidy for SkyWest's service is \$1,242,256 and the five-city total for
Great Lakes is \$5,670,244. Both carriers' proposed service and subsidy
levels are reasonable, and both have a long history of providing
reliable subsidized service under the EAS program.

Despite the number of applicants and proposals, it is rather easy to
significantly narrow the field of options.

We first examined Air Midwest's proposal because it is an inseparable,
six-city package that could theoretically decide the whole case if it
met the selection criteria. However, it does not. Air Midwest's proposed
total subsidy cost of \$8,499,870 is higher than all the other
combinations of options and it did not receive any community support,
even though it is the incumbent carrier at all six. Thus, Air Midwest is
eliminated from further consideration.

That leaves four options on the table: Salmon Air for Moab and Vernal,
Vision Air for Merced and Visalia, SkyWest for Cedar City, and Great
Lakes for all of the communities except Cedar City.

Vision Air proposed to serve Merced and Visalia with one round trip a
day each to Long Beach and North Las Vegas. Great Lakes would provide
two nonstop round trips a day to Las Vegas McCarran airport. Vision
air's annual subsidy of \$1,304,144, is well below Great Lakes' proposal
of \$1,834,453. While Merced supports the selection of Vision Air,
Visalia supports Great Lakes. As Visalia pointed out in its comments,
EAS communities are guaranteed service to a large- or medium-hub airport
in order to provide them access to the national air transportation
system. Vision Air's proposal does not meet that statutorily mandated
criterion as neither the North Las Vegas Airport nor the Long Beach
Airport qualifies as a medium- or large-hub airport.[^3] As a result, we
could select Vision Air only if both communities supported it, but they
do not.

Salmon Air offered two options: Option #1 to serve just Moab, and Option
#2 to serve both Moab and Vernal. Under Option #2, the carrier proposes
to provide Vernal with a single daily Salt Lake City round trip, a level
of service equal to just half of the community's EAS requirement of two
round trips a day to a medium or large hub. Thus, Option 2 is eliminated
from further consideration.

Under Option #1, Salmon Air proposes to provide Moab with 12 weekly
nonstop round trips to Salt Lake City for an annual subsidy of
\$1,831,990 using seven-seat Piper Chieftain piston-engine aircraft. In
comparison, Great Lakes would provide Moab with 12 weekly nonstop round
trips to Denver, providing code-share connections to beyond‑the‑hub
destinations on both United Air Lines and Frontier Airlines, with
19-seat Beech 1900 turboprop aircraft for an annual subsidy of
\$1,607,903. While the Moab community clearly supports Salmon Air, the
annual cost of the carrier's proposal exceeds the cost of Great Lakes'
proposal by almost \$225,000. We do not find a compelling reason to
authorize the additional funds in this case. We note that the community
expressed the belief that of its three previous service providers,
including Great Lakes, Salmon Air "provided the best service." However,
as the following table illustrates, we cannot conclude that in fact that
"Salmon Air has provided the best service in year pasts," as stated by
the community.

  ----------------------- ----------------------- -----------------------
  Carrier                 Annual Period           Total Passengers[^4]

  Great Lakes             2003                    3,568

  Salmon Air              2005                    2,606

  Air Midwest             7/1/06-6/30/07          5,253
  ----------------------- ----------------------- -----------------------

Passenger traffic dropped 27.0 percent from 2003 to 2005, the one full
calendar year that Salmon Air served Moab, only to more than double from
2005 to 2006-2007. While we acknowledge the community's support for
Salmon Air, based on Great Lakes' code-share arrangements with both
United Air Lines and Frontier Airlines, its lower subsidy requirement,
and the fact that traffic reached its lowest level in years with Salmon
Air's service, we will select Great Lakes to provide Moab's EAS.

The only remaining proposals are SkyWest to serve Cedar City and Great
Lakes to serve the other five. SkyWest proposed two options \-- one for
two round trips a day and one for three round trips a day. SkyWest would
provide both with 30-seat Brasilia aircraft operated as Delta
Connection. We have reviewed recent traffic history and find that the
two-round-trip-a-day option provides more than enough capacity to
accommodate the historical passengers. Over the last four years, the
highest traffic levels were attained in 2005 when Cedar City generated
19,266 total passengers, or an average of 31 enplanements per day. That
passenger level can easily be accommodated with SkyWest's two round
trips a day with 30-seaters.

At the remaining five communities, Great Lakes would serve Ely, Moab and
Vernal to Denver where it has code-share arrangements with United
Airlines and Frontier Airlines. At Merced and Visalia, it would provide
nonstop service to Las Vegas. All service would be operated with 19-seat
aircraft. Great Lakes has the support of three of the five communities,
and we find the service and subsidy levels reasonable.

Based on all of the above, we will select the proposals offered by Great
Lakes and SkyWest as described above, to provide subsidized EAS through
the end of the 24-month period beginning when each carrier inaugurates
full EAS at each of the six communities.

In order to receive compensation under this order, SkyWest and Great
Lakes must provide to the Department properly executed certifications
that each carrier is in compliance with the Department's regulations
regarding drug-free workplaces, nondiscrimination and lobbying
activities.[^5] The carriers may secure copies of the certifications by
contacting the Office of Aviation Analysis at (202) 366-5903.[^6]

**Subsequent Developments: Vernal and the \$200 subsidy-per-passenger
cap.**

As now codified at 49 United States Code, section 41733 (Note), Congress
prohibits the Department from providing essential air service subsidy to
any community in the 48 contiguous States that "require a rate of
subsidy per passenger in excess of \$200 unless such point is greater
than 210 miles from the nearest large or medium hub airport."[^7] Vernal
is well within 210 miles of Salt Lake City, a large hub, and is thus
subject to this cap.[^8]

On August 1, 2007, Mesa Air Group, on behalf of Air Midwest, submitted a
letter stating that Great Lakes' proposal for Vernal would exceed the
\$200 cap, based on actual passenger results for the year ended June 30,
2007. According to traffic figures Mesa supplied, Vernal generated 4,720
passengers during the 12 months from July 1, 2006 through June 30, 2007.
At Air Midwest's annual subsidy rate of \$562,720, its per passenger
rate was well under the cap, at \$119.20. However, under Great Lakes'
proposal for an annual subsidy rate of \$1,147,786 at Vernal, if based
on the same 4,720 passengers carried by Air Midwest, the per-passenger
rate would rise to \$243.18.[^9] Mesa argues that Great Lakes' proposal
would take it over the cap and therefore cannot be selected.

Mesa's interpretation of the statute, which could deny eligibility to a
community based on a single snapshot in time,[^10] is as impractical as
it is procrustean. Over the period of subsidy, per passenger rates tend
to rise and fall, and are subject to seasonal fluctuations, growth
trends, competitive impacts, variations in local and national business
activity, and various other factors both within and beyond the control
of the community and the airport. We believe that Congress did not
intend for the Department to adopt an interpretation of the \$200 cap
that could require a community to lose its eligibility based upon a
single month of bad weather, a strike, a serious security event, or the
like. Rather, we believe the section requires us to apply the cap in a
more evenhanded fashion, and it has indeed been our consistent policy to
closely examine a community's traffic history and future prospects
before making an adverse determination of eligibility.

Mesa argues that in a previous situation, the Department advised Vernal
that a Great Lakes' proposal that exceeded the \$200 cap was
unselectable,[^11] and that that precedent should be followed here.
However, that situation was different from this, as Vernal's
subsidy-per-passenger was already over the cap, and accepting the Great
Lakes' proposal would perpetuate that situation. In our request for
proposals in that case, we had explicitly noted that Vernal's subsidy
was over the cap, and that we were prepared to consider any proposals
that were under the cap and would allow Vernal to maintain its program
status.[^12]

In the present case, as noted above, Vernal is currently well under the
cap, and a fundamentally different set of equities applies. The
community has received no notice that it is on the brink of losing
eligibility, and thus has seen no immediate need to proactively promote
ridership. More importantly, a primary cause for Vernal's low passenger
bookings may be substandard service from Air Midwest. During the first
quarter of 2007, the carrier completed just 88 percent of its flights
\-- a poor completion rate by any measure. Where a community is
currently eligible, we do not deny it or ourselves a look at the overall
situation to determine the prospects for retaining eligibility,
particularly where it faces termination of subsidy due to poor
performance by the incumbent carrier.

There are also a number of factors here that give us confidence that
Vernal can succeed in keeping the subsidy-per-passenger rate under the
cap over a longer term. Vernal had of course an unfortunate experience
with Air Midwest's poor completion record, but before Air Midwest took
over the route last June, Vernal was served for two years by Salmon Air.
While Salmon Air appeared to perform reasonably well as a carrier, its
service was sub-EAS in that it operated eight-seat aircraft rather than
the 15-seaters as required by statute. (The community had waived its
right to 15-seat aircraft during that carrier-selection case.) In
addition, Salmon Air had no code-share relationships to allow for
seamless, on-line connections beyond the hub. In the present context,
Great Lakes' proposal offers code-share arrangements with both United
Air Lines and Frontier Airlines, the two largest carriers serving
Denver. Those agreements, coupled with Great Lakes' 19-seat service to
Denver, would provide seamless access to the national air transportation
system, and should result in a significant increase in passenger levels.
[^13]

We can also point to a recent experience in which Great Lakes was able
to successfully "turn around" passenger bookings. At Pueblo, Colorado,
it succeeded Air Midwest as the EAS carrier after Air Midwest filed a
notice of intent to suspend service one year into a two-year commitment.
During the year ended August 31, 2005, Air Midwest generated 3,219
passengers. During the nine months from August 1, 2006-April 30, 2007,
Great Lakes generated 5,485 passengers \-- or 7,313 when annualized,
well more than double what Air Midwest generated.[^14]

As we did at Pueblo, we will continue to closely monitor the passenger
traffic situation at Vernal. We will examine traffic data periodically
and, if the passenger levels do not increase to the extent that the
subsidy per passenger falls below \$200, we will initiate the necessary
steps to terminate Vernal's eligibility for continued air service under
the Essential Air Service Program. We do take very seriously Congress'
direction in this regard, and neither the carrier nor the community
should interpret our action here as an indication that continued subsidy
can be taken for granted.

**Carrier Fitness**

49 U.S.C. 41737(b) and 41738 require that we find an air carrier fit,
willing and able to provide reliable service before we may compensate it
for essential air service. We last found SkyWest fit to provide
scheduled passenger service as a certificated air carrier by
Order 2006-6-15 when we selected it to provide essential air service at
Crescent City, California. We last found Great Lakes fit to provide
scheduled passenger service as a commuter air carrier by Order 2007-8-5
when we selected it to provide essential air service at Dodge City,
Garden City, Great Bend, Hays and Liberal, Kansas. The Department has
routinely monitored the carriers' continuing fitness. No information has
come to our attention that would lead us to conclude that either SkyWest
or Great Lakes do not continue to be fit. The Federal Aviation
Administration has advised us that they both are in compliance with all
FAA regulations and that there is no reason why they cannot be selected
for the EAS service at Merced, Visalia, Ely, Cedar City, Moab, and
Vernal. We therefore conclude that SkyWest and Great Lakes are fit to
conduct the operations proposed here.

**Carrier Transition and Compensation for Interim-Period Service**

Air Midwest is eligible to be compensated for its service until Great
Lakes and SkyWest take over the routes. Pursuant to 49 U.S.C 41734(d),
we will continue to compensate Air Midwest at its current rates for 180
days after it filed its notices to suspend service \-- November 18 in
this case. If the carrier transitions occur after November 18, we will
issue another order addressing the Air Midwest's hold-in rate after that
date.

This is a particularly complicated transition period, as Air Midwest is
being replaced not by one carrier, as is the typical case, but by two.
Before suspending service at these six communities, we expect Air
Midwest to work with both SkyWest and Great Lakes to ensure a smooth
transition in service. We expect all three carriers to work together on
an orderly transition. Among other things, they will have to decide
whether both SkyWest and Great Lakes will inaugurate service on the same
day, or whether there will be a staggered transition. We expect Air
Midwest to contact all passengers holding reservations for flights after
the suspension date, to inform them of the change in service, and to
assist them in arranging alternate transportation or to provide a refund
of the ticket price, without penalty, if requested.

This order is issued under authority delegated in 49 CFR 1.56a(f).

**ACCORDINGLY,**

1\. The Department selects Great Lakes Aviation, Ltd., to provide
essential air service at Moab, and Vernal, Utah; Ely, Nevada; and Merced
and Visalia, California, as described in Appendix C, for the period
beginning when the carrier inaugurates full service through the end of
the 24^th^ month thereafter;

2\. The Department selects SkyWest Airlines, to provide essential air
service at Cedar City, Utah, as described in Appendix C, for the period
beginning when the carrier inaugurates full service through the end of
the 24^th^ month thereafter;

3\. We set the final rates of compensation for SkyWest Airlines for the
provision of essential air service at Cedar City, Utah, as described in
Appendix C, beginning when the carrier inaugurates full service through
the end of the 24^th^ month thereafter, payable as follows: for each
month during which essential air service is provided, the amount of
compensation shall be subject to the weekly ceilings set forth in
Appendix C and shall be determined by multiplying the subsidy-eligible
arrivals and departures completed during the month by \$1,015.74;

4\. We set the final rates of compensation for Great Lakes Aviation,
Ltd., for the provision of essential air service at Moab, Utah, as
described in Appendix C, beginning when the carrier inaugurates full
service through the end of the 24^th^ month thereafter, payable as
follows: for each month during which essential air service is provided,
the amount of compensation shall be subject to the weekly ceilings set
forth in Appendix C and shall be determined by multiplying the
subsidy-eligible arrivals and departures completed during the month by
\$1,316.87;

5\. We set the final rates of compensation for Great Lakes Aviation,
Ltd., for the provision of essential air service at Vernal, Utah, as
described in Appendix C, beginning when the carrier inaugurates full
service through the end of the 24^th^ month thereafter, payable as
follows: for each month during which essential air service is provided,
the amount of compensation shall be subject to the weekly ceilings set
forth in Appendix C and shall be determined by multiplying the
subsidy-eligible arrivals and departures completed during the month by
\$940.04;

6\. We set the final rates of compensation for Great Lakes Aviation,
Ltd., for the provision of essential air service at Ely, Utah, as
described in Appendix C, when the carrier inaugurates service through
the end of the 24^th^ month thereafter, payable as follows: for each
month during which essential air service is provided, the amount of
compensation shall be subject to the weekly ceilings set forth in
Appendix C and shall be determined by multiplying the subsidy-eligible
arrivals and departures completed during the month by \$1,760.36;

7\. We set the final rates of compensation for Great Lakes Aviation,
Ltd., for the provision of essential air service at Merced, California,
as described in Appendix C, beginning when the carrier inaugurates full
service through the end of the 24^th^ month thereafter, payable as
follows: for each month during which essential air service is provided,
the amount of compensation shall be subject to the weekly ceilings set
forth in Appendix C and shall be determined by multiplying the
subsidy-eligible arrivals and departures completed during the month by
\$641.32;

8\. We set the final rates of compensation for Great Lakes Aviation,
Ltd., for the provision of essential air service at Visalia, California,
as described in Appendix C, beginning when the carrier inaugurates full
service through the end of the 24^th^ month thereafter, payable as
follows: for each month during which essential air service is provided,
the amount of compensation shall be subject to the weekly ceilings set
forth in Appendix C and shall be determined by multiplying the
subsidy-eligible arrivals and departures completed during the month by
\$641.32

9\. We direct Great Lakes Aviation, Ltd., SkyWest Airlines, Inc., d/b/a
Delta Connection, and Air Midwest, Inc., to retain all books, records,
and other source and summary documentation to support claims for
payment, and to preserve and maintain such documentation in a manner
that readily permits its audit and examination by representatives of the
Department. Such documentation shall be retained for seven years or
until the Department indicates that the records may be destroyed,
whichever comes earlier. Copies of flight logs for aircraft sold or
disposed of must be retained. The carrier may forfeit its compensation
for any claim that is not supported under the terms of this order;

10\. We find that Great Lakes Aviation, Ltd., and SkyWest Airlines,
Inc., are fit, willing and able to operate as scheduled air carriers and
capable of providing reliable essential air service at Cedar City, Moab
and Vernal, Utah; Ely, Nevada; and Merced and Visalia, California;

11\. These dockets will remain open until further order of the
Department; and

12\. We will serve copies of this order on the Mayors and airport
managers of Merced and Visalia, California, Ely, Nevada, and Cedar City,
Moab, and Vernal, Utah. We will also serve copies of this order on the
Governors and state transportation officials of California, Nevada, and
Utah; Great Lakes Aviation, Ltd., Vision Airlines, Mountain Bird, Inc.,
d/b/a Salmon Air, SkyWest Airlines, Inc., and Mesa Air Group, Inc. d/b/a
Air Midwest.

By:

**MICHAEL W. REYNOLDS**

Deputy Assistant Secretary for Aviation

> and International Affairs

(SEAL)

An electronic version of this document is available in the Federal
Docket Management System (FDMS) at

[*http://www.regulations.gov*](http://dms.dot.gov/)

+-----------------------------------------------------------------------+
| To search for a Docket in the **FDMS**, click on the link above. Then |
| from the **Home Page . . .**                                          |
+-----------------------------------------------------------------------+
| 1.  Scroll to **Search Documents**                                    |
+-----------------------------------------------------------------------+
| 2.  Under Optional Step #2, Federal Agency, select "**-ALL-**"        |
+-----------------------------------------------------------------------+
| 3.  Under Optional Step #3, Type of Document, select "**Other**"      |
+-----------------------------------------------------------------------+
| 4.  Under Optional Step #4, Select "**Docket ID**", and               |
+-----------------------------------------------------------------------+
| 5.  Under "Category," enter a Docket Number as **DOT-OST-1998-3521    |
|     (Merced), DOT-OST-2004-19916 (Visalia), DOT-OST-1995-361 (ELY),   |
|     DOT-OST-2003-16395 (Cedar City), DOT-OST-1997-2827 (Moab), or     |
|     DOT-OST-1997-2706 (Vernal)**                                      |
+-----------------------------------------------------------------------+
| 6.  Click: "**Exact Phrase**"                                         |
+-----------------------------------------------------------------------+
| 7.  Then click: **SUBMIT**                                            |
+-----------------------------------------------------------------------+

AREA MAP

Nevada, Utah, Arizona, Colorado, and New Mexico

![](media/image3.png){width="6.995138888888889in" height="8.24375in"}

AREA MAP

California

![](media/image4.wmf){width="6.990277777777778in"
height="7.875694444444444in"}

<table>
<colgroup>
<col style="width: 11%" />
<col style="width: 7%" />
<col style="width: 8%" />
<col style="width: 5%" />
<col style="width: 4%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 0%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 14%" />
</colgroup>
<tbody>
<tr class="odd">
<td rowspan="3"><p><strong>Carrier</strong></p>
<p><strong>(service option)</strong></p></td>
<td rowspan="3"><strong>Aircraft</strong></td>
<td rowspan="3"><strong>Code-Share Partner</strong></td>
<td colspan="8"><strong>Community</strong></td>
<td></td>
</tr>
<tr class="even">
<td colspan="2"><strong>Cedar City, UT</strong></td>
<td><strong>Moab, UT</strong></td>
<td><strong>Vernal, UT</strong></td>
<td><strong>Ely, NV</strong></td>
<td colspan="2"><strong>Merced, CA</strong></td>
<td><strong>Visalia, CA</strong></td>
<td><strong>Total Subsidy</strong></td>
</tr>
<tr class="odd">
<td colspan="8"><strong>Service with Subsidy per Community</strong></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Air Midwest, Inc</strong>.</td>
<td>19-seat Beech 1900D</td>
<td><p>US</p>
<p>Airways</p></td>
<td colspan="2"><p>13 weekly NS RTs to LAS +</p>
<p>6 weekly NS RTs to PHX</p></td>
<td>12 weekly NS RTs to PHX</td>
<td>12 weekly OS RTs to PHX</td>
<td>7 weekly OS RTs, via CDC, to LAS</td>
<td colspan="2">11 weekly NS RTs + 13 weekly OS RTs, via VIS, to
LAS</td>
<td>13 weekly NS RTs + 11 weekly OS RTs, via MCE, to LAS</td>
<td><p><strong>$8,499,870</strong></p>
<p>(Total for all six communities)</p></td>
</tr>
<tr class="odd">
<td><strong>Great Lakes Aviation, Ltd.</strong></td>
<td>19-seat Beech 1900D</td>
<td>United Air Lines &amp; Frontier Airlines</td>
<td colspan="2">None</td>
<td><p>12 weekly NS or OS RTs to DEN</p>
<p><strong>$1,607,903</strong></p></td>
<td><p>12 weekly NS or OS RTs to DEN</p>
<p><strong>$1,147,786</strong></p></td>
<td><p>6 weekly NS or OS RTs to DEN or LAS</p>
<p><strong>$1,079,102</strong></p></td>
<td colspan="2"><p>14 weekly NS RTs to LAS</p>
<p><strong>$1,835,453</strong> (Cost includes Visalia)</p></td>
<td><p>14 weekly NS RTs to LAS</p>
<p><strong>$1,835,453</strong></p>
<p>(Cost includes Merced)</p></td>
<td><p><strong>$5,670,244</strong></p>
<p>(Grand total for five communities)</p></td>
</tr>
<tr class="even">
<td><p><strong>Salmon Air</strong></p>
<p>(Option #1)</p></td>
<td><p>7-seat</p>
<p>PA31-350 Chieftain</p></td>
<td>None Identified</td>
<td colspan="2">None</td>
<td>12 weekly NS RTs to SLC</td>
<td>None</td>
<td>None</td>
<td colspan="2">None</td>
<td>None</td>
<td><p><strong>$1,831,990</strong></p>
<p>(Moab only)</p></td>
</tr>
<tr class="odd">
<td><p><strong>Salmon Air</strong></p>
<p>(Option #2)</p></td>
<td><p>7-seat</p>
<p>PA31-350 Chieftain</p></td>
<td>None Identified</td>
<td colspan="2">None</td>
<td><p>6 weekly NS RTs to SLC +</p>
<p>6 weekly OS RTs to SLC</p></td>
<td>6 weekly NS RTs to SLC</td>
<td>None</td>
<td colspan="2">None</td>
<td>None</td>
<td><p><strong>$2,472,952</strong></p>
<p>(Total for Moab &amp; Vernal only)</p></td>
</tr>
<tr class="even">
<td><p><strong>SkyWest Airlines</strong></p>
<p>(Option #1)</p></td>
<td>30-seat Embraer Brasilia</td>
<td>Delta Air Lines</td>
<td colspan="2"><p>12 weekly NS RTs to SLC</p>
<p><strong>$1,242,256</strong></p></td>
<td>None</td>
<td>None</td>
<td>None</td>
<td colspan="2">None</td>
<td>None</td>
<td><p><strong>$1,242,256</strong></p>
<p>(Cedar City only)</p></td>
</tr>
<tr class="odd">
<td><p><strong>SkyWest Airlines</strong></p>
<p>(Option #2)</p></td>
<td>30-seat Embraer Brasilia</td>
<td>Delta Air Lines</td>
<td colspan="2"><p>18 weekly NS RTs to SLC</p>
<p><strong>$1,974,753</strong></p></td>
<td>None</td>
<td>None</td>
<td>None</td>
<td colspan="2">None</td>
<td>None</td>
<td><p><strong>$1,974,753</strong></p>
<p>(Cedar City only)</p></td>
</tr>
<tr class="even">
<td><strong>Vision Airlines</strong></td>
<td>30-seat Dornier 328</td>
<td>None Identified</td>
<td colspan="2">None</td>
<td>None</td>
<td>None</td>
<td>None</td>
<td colspan="2"><p>7 weekly OS RTs to LGB +</p>
<p>7 weekly OS RTs to VGT</p>
<p><strong>$1,304,144</strong></p></td>
<td><p>7 weekly NS RTs to LGB +</p>
<p>7 weekly NS RTs to VGT (Cost included with Merced)</p></td>
<td><p><strong>$1,304,144</strong></p>
<p>(Total for Merced &amp; Visalia)</p></td>
</tr>
<tr class="odd">
<td colspan="12"></td>
</tr>
<tr class="even">
<td colspan="4"><strong>Notes</strong>:</td>
<td colspan="5"><strong>Airport Codes:</strong></td>
<td colspan="3"></td>
</tr>
<tr class="odd">
<td colspan="4">RTs – round trips</td>
<td colspan="5">CDC – Cedar City</td>
<td colspan="3">VIS – Visalia</td>
</tr>
<tr class="even">
<td colspan="4">NS – nonstop</td>
<td colspan="5">DEN – Denver International Airport</td>
<td colspan="3">MCE – Merced</td>
</tr>
<tr class="odd">
<td colspan="4">OS – one-stop</td>
<td colspan="5">LAS – Las Vegas McCarran International Airport</td>
<td colspan="3">SLC – Salt Lake City International Airport</td>
</tr>
<tr class="even">
<td colspan="4"></td>
<td colspan="5">LGB – Long Beach/Daugherty Field Airport</td>
<td colspan="3">VGT – North Las Vegas Airport</td>
</tr>
<tr class="odd">
<td colspan="4"></td>
<td colspan="5">PHX – Phoenix Sky Harbor International Airport</td>
<td colspan="3"></td>
</tr>
</tbody>
</table>

**Great Lakes Aviation, Ltd., Essential Air Service to be Provided at
Moab, Utah, Docket: OST-1997-2827**

  ------------------------ ----------------------------------------------
  [Effective               From the date service is inaugurated through
  Period]{.underline}:     the end of the 24^th^ month thereafter.

  [Service]{.underline}:   12 weekly nonstop or one-stop round trips to
                           Denver.

  [Intermediate stops and  An intermediate stop is permitted at Vernal
  upline                   under this rate. No beyond or upline point is
  service]{.underline}:    contemplated under the terms of this proposal;
                           accordingly, no such service may be provided
                           on subsidized flights without prior Department
                           approval.

  [Aircraft                19-seat, Beech 1900D turboprop aircraft
  Type]{.underline}:       

  [Timing of               Flights must be well-timed and well-spaced to
  Flights:]{.underline}    ensure full compensation.

  [Subsidy Rate per Denver \$1,316.87[^15]
  Flight]{.underline}:     

  [Weekly Compensation     \$31,604.88
  Ceiling]{.underline}     
  ------------------------ ----------------------------------------------

**Note:**

The carrier understands that it may forfeit its compensation for any
flights that it does not operate in conformance with the terms and
stipulations of the rate order, including the service plan outlined in
the order and any other significant elements of the required service,
without prior approval. The carrier understands that an aircraft
take-off and landing at its scheduled destination constitutes a
completed flight; absent an explanation supporting subsidy eligibility
for a flight that has not been completed, such as certain weather
cancellations, only completed flights are considered eligible for
subsidy. In addition, if the carrier does not schedule or operate its
flights in full conformance with this order for a significant period, it
may jeopardize its entire subsidy claim for the period in question. If
the carrier contemplates any such changes beyond the scope of the order
during the applicable period of these rates, it must first notify the
Office of Aviation Analysis in writing and receive written approval from
the Department to be assured of full compensation. Should circumstances
warrant, the Department may locate and select a replacement carrier to
provide service on these routes. The carrier must complete all flights
that can be safely operated; flights that overfly points for lack of
traffic will not be compensated. In determining whether subsidy payment
for a deviating flight should be adjusted or disallowed, the Department
will consider the extent to which the goals of the program are met and
the extent of access to the national air transportation system provided
to the community.

If the Department unilaterally, either partially or completely,
terminates or reduces payments for service or changes service
requirements at a specific location provided for under this order, then,
at the end of the period for which the Department does make payments in
the agreed amounts or at the agreed service levels, the carrier may
cease to provide service to that specific location without regard to any
requirement for notice of such cessation. Those adjustments in the
levels of subsidy and/or service that are mutually agreed to in writing
by the parties to the agreement do not constitute a total or partial
reduction or cessation of payment.

Funds are not presently available for performance under this Order
beyond September 30, 2007. The Government\'s obligation for performance
under this Order beyond September 30, 2007, is contingent upon the
availability of appropriated funds from which payment for services can
be made. No legal liability on the part of the Government for any
payment may arise for performance under this Order beyond September 30,
2007, until funds are made available to the Department for performance.
If funds are not made available for performance beyond September 30,
2007, the carrier will receive notice in writing by the Department.

Subsidy contracts are subject to, and incorporate by reference, relevant
statutes and Department regulations, as they may be amended from time to
time. However, any such statutes, regulations, or amendments thereto
shall not operate to controvert the foregoing paragraph.

All claims for payment must be submitted within 60 days of the last day
of service provided under this order.

**Great Lakes Aviation, Ltd., Essential Air Service to be Provided at
Vernal, Utah, Docket OST-1997-2706**

  ------------------------ ----------------------------------------------
  [Effective               From the date service is inaugurated through
  Period]{.underline}:     the end of the 24^th^ month thereafter.

  [Service]{.underline}:   12 weekly nonstop or one-stop round trips to
                           Denver.

  [Intermediate stops and  An intermediate stop is permitted at Moab
  upline                   under this rate. No beyond or upline points is
  service]{.underline}:    contemplated under the terms of this proposal;
                           accordingly, no such service may be provided
                           on subsidized flights without prior Department
                           approval.

  [Aircraft                19-seat, Beech 1900D turboprop aircraft
  Type]{.underline}:       

  [Timing of               Flights must be well-timed and well-spaced to
  Flights:]{.underline}    ensure full compensation.

  [Subsidy Rate per Denver \$940.04[^16]
  Flight]{.underline}:     

  [Weekly Compensation     \$22,560.96
  Ceiling]{.underline}     
  ------------------------ ----------------------------------------------

**Note:**

The carrier understands that it may forfeit its compensation for any
flights that it does not operate in conformance with the terms and
stipulations of the rate order, including the service plan outlined in
the order and any other significant elements of the required service,
without prior approval. The carrier understands that an aircraft
take-off and landing at its scheduled destination constitutes a
completed flight; absent an explanation supporting subsidy eligibility
for a flight that has not been completed, such as certain weather
cancellations, only completed flights are considered eligible for
subsidy. In addition, if the carrier does not schedule or operate its
flights in full conformance with this order for a significant period, it
may jeopardize its entire subsidy claim for the period in question. If
the carrier contemplates any such changes beyond the scope of the order
during the applicable period of these rates, it must first notify the
Office of Aviation Analysis in writing and receive written approval from
the Department to be assured of full compensation. Should circumstances
warrant, the Department may locate and select a replacement carrier to
provide service on these routes. The carrier must complete all flights
that can be safely operated; flights that overfly points for lack of
traffic will not be compensated. In determining whether subsidy payment
for a deviating flight should be adjusted or disallowed, the Department
will consider the extent to which the goals of the program are met and
the extent of access to the national air transportation system provided
to the community.

If the Department unilaterally, either partially or completely,
terminates or reduces payments for service or changes service
requirements at a specific location provided for under this order, then,
at the end of the period for which the Department does make payments in
the agreed amounts or at the agreed service levels, the carrier may
cease to provide service to that specific location without regard to any
requirement for notice of such cessation. Those adjustments in the
levels of subsidy and/or service that are mutually agreed to in writing
by the parties to the agreement do not constitute a total or partial
reduction or cessation of payment.

Funds are not presently available for performance under this Order
beyond September 30, 2007. The Government\'s obligation for performance
under this Order beyond September 30, 2007, is contingent upon the
availability of appropriated funds from which payment for services can
be made. No legal liability on the part of the Government for any
payment may arise for performance under this Order beyond September 30,
2007, until funds are made available to the Department for performance.
If funds are not made available for performance beyond
September 30, 2007, the carrier will receive notice in writing by the
Department.

Subsidy contracts are subject to, and incorporate by reference, relevant
statutes and Department regulations, as they may be amended from time to
time. However, any such statutes, regulations, or amendments thereto
shall not operate to controvert the foregoing paragraph.

All claims for payment must be submitted within 60 days of the last day
of service provided under this order.

**Great Lakes Aviation, Ltd., Essential Air Service to be Provided at
Ely, Nevada, Docket OST-1995-361**

  ------------------------ ----------------------------------------------
  [Effective               From the date service is inaugurated through
  Period]{.underline}:     the end of the 24^th^ month thereafter.

  [Service]{.underline}:   6 weekly nonstop or one-stop round trips to
                           Denver or Las Vegas.

  [Intermediate stops and  No other service to any intermediate or upline
  upline                   points is contemplated under the terms of this
  service]{.underline}:    proposal; accordingly, no such service may be
                           provided on subsidized flights without prior
                           Department approval.

  [Aircraft                19-seat, Beech 1900D turboprop aircraft
  Type]{.underline}:       

  [Timing of               Flights must be well-timed and well-spaced to
  Flights:]{.underline}    ensure full compensation.

  [Subsidy Rate per Las    \$1,760.36[^17]
  Vegas or Denver          
  Flight]{.underline}:     

  [Weekly Compensation     \$21,124.32
  Ceiling]{.underline}     
  ------------------------ ----------------------------------------------

**Note:**

The carrier understands that it may forfeit its compensation for any
flights that it does not operate in conformance with the terms and
stipulations of the rate order, including the service plan outlined in
the order and any other significant elements of the required service,
without prior approval. The carrier understands that an aircraft
take-off and landing at its scheduled destination constitutes a
completed flight; absent an explanation supporting subsidy eligibility
for a flight that has not been completed, such as certain weather
cancellations, only completed flights are considered eligible for
subsidy. In addition, if the carrier does not schedule or operate its
flights in full conformance with this order for a significant period, it
may jeopardize its entire subsidy claim for the period in question. If
the carrier contemplates any such changes beyond the scope of the order
during the applicable period of these rates, it must first notify the
Office of Aviation Analysis in writing and receive written approval from
the Department to be assured of full compensation. Should circumstances
warrant, the Department may locate and select a replacement carrier to
provide service on these routes. The carrier must complete all flights
that can be safely operated; flights that overfly points for lack of
traffic will not be compensated. In determining whether subsidy payment
for a deviating flight should be adjusted or disallowed, the Department
will consider the extent to which the goals of the program are met and
the extent of access to the national air transportation system provided
to the community.

If the Department unilaterally, either partially or completely,
terminates or reduces payments for service or changes service
requirements at a specific location provided for under this order, then,
at the end of the period for which the Department does make payments in
the agreed amounts or at the agreed service levels, the carrier may
cease to provide service to that specific location without regard to any
requirement for notice of such cessation. Those adjustments in the
levels of subsidy and/or service that are mutually agreed to in writing
by the parties to the agreement do not constitute a total or partial
reduction or cessation of payment.

Funds are not presently available for performance under this Order
beyond September 30, 2007. The Government\'s obligation for performance
under this Order beyond September 30, 2007, is contingent upon the
availability of appropriated funds from which payment for services can
be made. No legal liability on the part of the Government for any
payment may arise for performance under this Order beyond September 30,
2007, until funds are made available to the Department for performance.
If funds are not made available for performance beyond
September 30, 2007, the carrier will receive notice in writing by the
Department.

Subsidy contracts are subject to, and incorporate by reference, relevant
statutes and Department regulations, as they may be amended from time to
time. However, any such statutes, regulations, or amendments thereto
shall not operate to controvert the foregoing paragraph.

All claims for payment must be submitted within 60 days of the last day
of service provided under this order.

**Great Lakes Aviation, Ltd., Essential Air Service to be Provided at
Merced, California, Docket OST-1998-3521**

  ------------------------ ----------------------------------------------
  [Effective               From the date service is inaugurated through
  Period]{.underline}:     the end of the 24^th^ month thereafter.

  [Service]{.underline}:   14 weekly nonstop stop round trips to Las
                           Vegas.

  [Intermediate stops and  No service to any intermediate or upline
  upline                   points is contemplated under the terms of this
  service]{.underline}:    proposal; accordingly, no such service may be
                           provided on subsidized flights without prior
                           Department approval.

  [Aircraft                19-seat, Beech 1900D turboprop aircraft
  Type]{.underline}:       

  [Timing of               Flights must be well-timed and well-spaced to
  Flights:]{.underline}    ensure full compensation.

  [Subsidy Rate per Las    \$641.32[^18]
  Vegas                    
  Flight]{.underline}:     

  [Weekly Compensation     \$17,956.96
  Ceiling]{.underline}     
  ------------------------ ----------------------------------------------

**Note:**

The carrier understands that it may forfeit its compensation for any
flights that it does not operate in conformance with the terms and
stipulations of the rate order, including the service plan outlined in
the order and any other significant elements of the required service,
without prior approval. The carrier understands that an aircraft
take-off and landing at its scheduled destination constitutes a
completed flight; absent an explanation supporting subsidy eligibility
for a flight that has not been completed, such as certain weather
cancellations, only completed flights are considered eligible for
subsidy. In addition, if the carrier does not schedule or operate its
flights in full conformance with this order for a significant period, it
may jeopardize its entire subsidy claim for the period in question. If
the carrier contemplates any such changes beyond the scope of the order
during the applicable period of these rates, it must first notify the
Office of Aviation Analysis in writing and receive written approval from
the Department to be assured of full compensation. Should circumstances
warrant, the Department may locate and select a replacement carrier to
provide service on these routes. The carrier must complete all flights
that can be safely operated; flights that overfly points for lack of
traffic will not be compensated. In determining whether subsidy payment
for a deviating flight should be adjusted or disallowed, the Department
will consider the extent to which the goals of the program are met and
the extent of access to the national air transportation system provided
to the community.

If the Department unilaterally, either partially or completely,
terminates or reduces payments for service or changes service
requirements at a specific location provided for under this order, then,
at the end of the period for which the Department does make payments in
the agreed amounts or at the agreed service levels, the carrier may
cease to provide service to that specific location without regard to any
requirement for notice of such cessation. Those adjustments in the
levels of subsidy and/or service that are mutually agreed to in writing
by the parties to the agreement do not constitute a total or partial
reduction or cessation of payment.

Funds are not presently available for performance under this Order
beyond September 30, 2007. The Government\'s obligation for performance
under this Order beyond September 30, 2007, is contingent upon the
availability of appropriated funds from which payment for services can
be made. No legal liability on the part of the Government for any
payment may arise for performance under this Order beyond September 30,
2007, until funds are made available to the Department for performance.
If funds are not made available for performance beyond
September 30, 2007, the carrier will receive notice in writing by the
Department.

Subsidy contracts are subject to, and incorporate by reference, relevant
statutes and Department regulations, as they may be amended from time to
time. However, any such statutes, regulations, or amendments thereto
shall not operate to controvert the foregoing paragraph.

All claims for payment must be submitted within 60 days of the last day
of service provided under this order.

**Great Lakes Aviation, Ltd.,** **Essential Air Service to be Provided
at Visalia, California, Docket OST-2000-7857**

  ------------------------ ----------------------------------------------
  [Effective               From the date service is inaugurated through
  Period]{.underline}:     the end of the 24^th^ month thereafter.

  [Service]{.underline}:   14 weekly nonstop stop round trips to Las
                           Vegas.

  [Intermediate stops and  No other service to any intermediate or upline
  upline                   points is contemplated under the terms of this
  service]{.underline}:    proposal; accordingly, no such service may be
                           provided on subsidized flights without prior
                           Department approval.

  [Aircraft                19-seat, Beech 1900D turboprop aircraft
  Type]{.underline}:       

  [Timing of               Flights must be well-timed and well-spaced to
  Flights:]{.underline}    ensure full compensation.

  [Subsidy Rate per Las    \$641.32[^19]
  Vegas                    
  Flight]{.underline}:     

  [Weekly Compensation     \$17,956.96
  Ceiling]{.underline}     
  ------------------------ ----------------------------------------------

**Note:**

The carrier understands that it may forfeit its compensation for any
flights that it does not operate in conformance with the terms and
stipulations of the rate order, including the service plan outlined in
the order and any other significant elements of the required service,
without prior approval. The carrier understands that an aircraft
take-off and landing at its scheduled destination constitutes a
completed flight; absent an explanation supporting subsidy eligibility
for a flight that has not been completed, such as certain weather
cancellations, only completed flights are considered eligible for
subsidy. In addition, if the carrier does not schedule or operate its
flights in full conformance with this order for a significant period, it
may jeopardize its entire subsidy claim for the period in question. If
the carrier contemplates any such changes beyond the scope of the order
during the applicable period of these rates, it must first notify the
Office of Aviation Analysis in writing and receive written approval from
the Department to be assured of full compensation. Should circumstances
warrant, the Department may locate and select a replacement carrier to
provide service on these routes. The carrier must complete all flights
that can be safely operated; flights that overfly points for lack of
traffic will not be compensated. In determining whether subsidy payment
for a deviating flight should be adjusted or disallowed, the Department
will consider the extent to which the goals of the program are met and
the extent of access to the national air transportation system provided
to the community.

If the Department unilaterally, either partially or completely,
terminates or reduces payments for service or changes service
requirements at a specific location provided for under this order, then,
at the end of the period for which the Department does make payments in
the agreed amounts or at the agreed service levels, the carrier may
cease to provide service to that specific location without regard to any
requirement for notice of such cessation. Those adjustments in the
levels of subsidy and/or service that are mutually agreed to in writing
by the parties to the agreement do not constitute a total or partial
reduction or cessation of payment.

Funds are not presently available for performance under this Order
beyond September 30, 2007. The Government\'s obligation for performance
under this Order beyond September 30, 2007, is contingent upon the
availability of appropriated funds from which payment for services can
be made. No legal liability on the part of the Government for any
payment may arise for performance under this Order beyond September 30,
2007, until funds are made available to the Department for performance.
If funds are not made available for performance beyond
September 30, 2007, the carrier will receive notice in writing by the
Department.

Subsidy contracts are subject to, and incorporate by reference, relevant
statutes and Department regulations, as they may be amended from time to
time. However, any such statutes, regulations, or amendments thereto
shall not operate to controvert the foregoing paragraph.

All claims for payment must be submitted within 60 days of the last day
of service provided under this order.

**SkyWest Airlines, Essential Air Service to be Provided at Cedar City,
Utah,**

**Docket OST-2003-16395**

  ------------------------ ----------------------------------------------
  [Effective               From the date service is inaugurated through
  Period]{.underline}:     the end of the 24^th^ month thereafter.

  [Service]{.underline}:   12 nonstop stop round trips each week to Salt
                           Lake City.

  [Intermediate stops and  No other service to any intermediate or upline
  upline                   points is contemplated under the terms of this
  service]{.underline}:    proposal; accordingly, no such service may be
                           provided on subsidized flights without prior
                           Department approval.

  [Aircraft                30-seat, Embraer Brasilia turboprop aircraft
  Type]{.underline}:       

  [Timing of               Flights must be well-timed and well-spaced to
  Flights:]{.underline}    ensure full compensation.

  [Subsidy Rate per Salt   \$1,015.74[^20]
  Lake City                
  Flight]{.underline}:     

  [Weekly Compensation     \$24,377.76
  Ceiling]{.underline}     
  ------------------------ ----------------------------------------------

**Note:**

The carrier understands that it may forfeit its compensation for any
flights that it does not operate in conformance with the terms and
stipulations of the rate order, including the service plan outlined in
the order and any other significant elements of the required service,
without prior approval. The carrier understands that an aircraft
take-off and landing at its scheduled destination constitutes a
completed flight; absent an explanation supporting subsidy eligibility
for a flight that has not been completed, such as certain weather
cancellations, only completed flights are considered eligible for
subsidy. In addition, if the carrier does not schedule or operate its
flights in full conformance with this order for a significant period, it
may jeopardize its entire subsidy claim for the period in question. If
the carrier contemplates any such changes beyond the scope of the order
during the applicable period of these rates, it must first notify the
Office of Aviation Analysis in writing and receive written approval from
the Department to be assured of full compensation. Should circumstances
warrant, the Department may locate and select a replacement carrier to
provide service on these routes. The carrier must complete all flights
that can be safely operated; flights that overfly points for lack of
traffic will not be compensated. In determining whether subsidy payment
for a deviating flight should be adjusted or disallowed, the Department
will consider the extent to which the goals of the program are met and
the extent of access to the national air transportation system provided
to the community.

If the Department unilaterally, either partially or completely,
terminates or reduces payments for service or changes service
requirements at a specific location provided for under this order, then,
at the end of the period for which the Department does make payments in
the agreed amounts or at the agreed service levels, the carrier may
cease to provide service to that specific location without regard to any
requirement for notice of such cessation. Those adjustments in the
levels of subsidy and/or service that are mutually agreed to in writing
by the parties to the agreement do not constitute a total or partial
reduction or cessation of payment.

Funds are not presently available for performance under this Order
beyond September 30, 2007. The Government\'s obligation for performance
under this Order beyond September 30, 2007, is contingent upon the
availability of appropriated funds from which payment for services can
be made. No legal liability on the part of the Government for any
payment may arise for performance under this Order beyond September 30,
2007, until funds are made available to the Department for performance.
If funds are not made available for performance beyond
September 30, 2007, the carrier will receive notice in writing by the
Department.

Subsidy contracts are subject to, and incorporate by reference, relevant
statutes and Department regulations, as they may be amended from time to
time. However, any such statutes, regulations, or amendments thereto
shall not operate to controvert the foregoing paragraph.

All claims for payment must be submitted within 60 days of the last day
of service provided under this order.

[^1]: Air Midwest was selected to provide subsidized air service at
    Cedar City by Order 2006-1-19; at Moab and Vernal by Order
    2006-3-21; and at Ely, Merced, and Visalia by Order 2006-8-29.

[^2]: Order 2007-6-13 also requested proposals from carriers interested
    in serving Roswell and Alamogordo/Holloman Air Force Base, New
    Mexico. The carrier-selection proceeding at Roswell was terminated
    after American Eagle indicated that it would serve Dallas-Ft. Worth
    without subsidy. The carrier-selection proceeding at
    Alamogordo/Holloman Air Force Base is being handled separately.

[^3]: Las Vegas -- McCarran International Airport is classified as a
    large-hub airport; Long Beach as a small-hub; and North Las Vegas
    Airport as a non-hub.

[^4]: T-100 market data from the Department's Bureau of Transportation
    Statistics.

[^5]: The regulations applicable to these areas are: (1) 49 CFR Part 20
    \-- New restrictions on lobbying; (2) 49 CFR Part 21 \--
    Nondiscrimination in federally-assisted programs of the Department
    of Transportation \-- Effectuation of title VI of the Civil Rights
    Act of 1964; 49 CFR Part 27 \-- Nondiscrimination on the basis of
    disability in programs and activities receiving or benefiting from
    Federal financial assistance; and 14 CFR Part 382 \--
    Nondiscrimination on the basis of disability in air travel; and (3)
    49 CFR Part 29 \-- Government-wide debarment and suspension
    (non-procurement) and government-wide requirements for drug-free
    workplace (grants).

[^6]: The certifications are also available on the web at
    <http://ostpxweb.dot.gov/aviation/index.html>.

[^7]: Congress first established the \$200 cap in P. L. 101-164 for
    fiscal year 1990, and reestablished it for fiscal years 1994-1999.
    The cap was made permanent in P. L. 106-69, the Department of
    Transportation and Related Agencies Appropriations Act of 2000.

[^8]: Hub classifications are based on each hub's enplanements as a
    percentage of all U.S. enplanements: a large hub accounts for at
    least 1.00 percent, a medium hub for at lease 0.25 but less than
    1.00 percent, and a small hub for at least 0.05 but less than 0.25
    percent.

[^9]: Great Lakes' proposal would be under the cap if the Department
    calculated the subsidy-per-passenger rate based on its *forecast*
    passengers. Mesa argues that the Department calculates based on
    passengers actually carried. While DOT does not accept carrier or
    community forecasts at face value, in appropriate situations we do
    use available data to reach our own conclusions about expected
    future performance.

[^10]: By Air Midwest's logic, its own proposal is well over the \$200
    cap, thus rendering its entire six-city package unselectable. The
    annual subsidy cost of Air Midwest's proposal for all six
    communities is \$8,499,870. When communities are served as a
    package, our longstanding program policy has been to allocate the
    subsidy based on the number of frequencies each community receives.
    In this case, Vernal would receive 12 round trips a week compared to
    a total of 98 round trips a week for all six. Based on that ratio,
    Vernal's allocated subsidy would be \$1,040,800. Based on the 4,720
    passengers that Air Midwest reported for the year ended June 30,
    2007, its subsidy per passenger would be more than \$220 \-- well
    over the cap.

[^11]: Letter of February 2, 2006.

[^12]: See Order 2005-12-11, December 21, 2005.

[^13]: ^9^ Air Midwest also has a code share relationship, with US
    Airways, but at issue here is Mesa's argument that Great Lakes'
    proposal should be summarily rejected because it exceeds the cap.

[^14]: ^10^ See Order 2005-11-16.

[^15]: Total annual subsidy \$1,607,903 divided by 1,221 completed
    one-way flights \[4 x 313 x .975 = 1,221\]. Twenty four flights per
    week \* \$1,316.87 = \$31,604.88.

[^16]: Total annual subsidy \$1,147,786 divided by 1,221 completed
    one-way flights \[4 x 313 x .975 = 1,221\]. Twenty four flights per
    week \* \$940.04 = \$22,560.96.

[^17]: Total annual subsidy \$1,079,102 divided by 613 completed one-way
    flights \[2 x 313 x .98 = 613\]. Twelve flights per week \*
    \$1,760.36 = \$21,124.32.

[^18]: One-half of total annual subsidy of \$1,835,453 divided by 1,431
    completed one-way flights \[24 x 365 x .98 = 1,431\]. Twenty eight
    flights per week \* \$641.32 = \$17,956.96.

[^19]: One-half of total annual subsidy of \$1,835,453 divided by 1,431
    completed one-way flights \[24 x 365 x .98 = 1,431\]. Twenty eight
    flights per week \* \$641.32 = \$17,956.96.

[^20]: Total annual subsidy \$1,242,256 divided by 1,223 completed
    one-way flights. Twenty four flights per week \* \$1,015.74 =
    \$24,377.76.