Order 2008-5-12

Served: May 13, 2008

**UNITED STATES OF AMERICA**

**DEPARTMENT OF TRANSPORTATION**

**OFFICE OF THE SECRETARY**

**WASHINGTON, D.C.**

![](media/image1.wmf){width="0.9173611111111111in"
height="0.9513888888888888in"}

Issued by the Department of Transportation

on the 13^th^ of May, 2008

+---------------------------------------+------------------------------+
| Essential Air Service at              | **DOCKET OST-2008-0112**     |
|                                       |                              |
| > **MERIDIAN, MISSISSIPPI**           |                              |
|                                       |                              |
| Under 49 U.S.C. 41731 *et seq*.       |                              |
+---------------------------------------+------------------------------+

#  {#section .mainheading}

# ORDER SELECTING CARRIER

**Summary**

By this order, the Department is selecting Atlantic Southeast Airlines,
Inc. d/b/a Delta Connection, (ASA) to provide essential air service at
Meridian, Mississippi, at an annual subsidy rate of \$686,489. The rate
extends through June 30, 2010.

**Background**

On March 17, 2008, ASA filed a 90-day notice of its intention to suspend
its subsidy-free service at Meridian, Mississippi, effective June 16,
2008. By Order 2008-3-24, March 25, 2008, we prohibited ASA from
suspending its service and requested proposals by April 23, 2008. We
received timely-filed proposals by ASA and by Mesaba Aviation, Inc.,
d/b/a Northwest Airlink. By letter dated April 24, 2008, we requested
comments from the community by May 12. We received comments from the
Mayor of Meridian on April 30, 2008, and the issues are ripe for
decision. Both proposals are for the two-year period through June 30,
2010.

### 

### Mesaba Aviation

Mesaba proposes to provide 13 nonstop round trips per week between
Meridian and Memphis. All service would be provided with 34-seat Saab
340 aircraft, and would be operated under a code-share agreement with
Northwest Airlines as Northwest Airlink. Mesaba requests \$960,472
annual subsidy.

### Atlantic Southeast

ASA proposes to continue 13 nonstop round trips per week between
Meridian and Atlanta with 50-seat CRJ-200 aircraft, and would be
operated under a code-share agreement with Delta Air Lines, Inc., as
Delta Connection. ASA requests \$686,489 annual subsidy for this level
of service.

**Community Comments**

On April 24, 2008, we requested community comments regarding the carrier
selection at Meridian. We received comments from the Mayor of Meridian
on April 30, 2008.

The Mayor expressed appreciation for the bid from Mesaba, but indicated
a number of local residents had contacted him, and that all had
expressed a strong desire for ASA. The community preferred ASA as
follows:

> "The ASA proposal includes 13 nonstop, round trips per week to
> Atlanta, where Delta then connects to 129 U.S. destinations and 71
> international destinations. The Mesaba proposal calls for service to
> Memphis, with connections to 88 non-stop destinations. Clearly the ASA
> proposal gives our local and regional travelers more destination
> options.
>
> ASA proposes to utilize the CRJ-200 jet aircraft, while Mesaba would
> use a Saab 340 propeller aircraft. Our community lobbied strongly for
> the preferable jet air service several years ago, and we would not
> want to give up the ease, comfort, and reduced flying times of the jet
> aircraft.
>
> The ASA aircraft seats 50 passengers, while the Mesaba craft seats 34.
> Our travelers will have more booking opportunities under the ASA
> proposal."

In summary, "we have concluded that the ASA submission is unequivocally
the superior proposal."

## Decision

We have reviewed each carrier's proposal and the community's comments,
and have decided to select ASA. This case is very straightforward: ASA's
proposal is \$273,983 less than that proposed by Mesaba, \$686,489 vs.
\$960,472, and the community supports ASA. ASA filed its 90-day notice
to suspend service on March 17. Under 49 U.S.C. 41734 (d), ASA is
eligible to receive compensation after the end of the 90-day notice
period. Therefore, we will make the rate effective from June 16, 2008,
through June 30, 2010.

## 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 compensate it for
providing essential air service. We last found ASA fit by Order
93-2-23**.** Since then, the Department has routinely monitored the
carrier's continuing fitness, and no information has come to our
attention that would lead us to question its ability to operate in a
reliable manner. The Federal Aviation Administration has advised us that
the carrier is conducting its operations in accordance with its
regulations, and knows of no reason why we should not find that ASA
remains fit.

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

**ACCORDINGLY,**

1\. We select Atlantic Southeast Airlines, Inc., d/b/a Delta Connection,
to provide essential air service at Meridian, Mississippi;

2\. We set the final rate of compensation for Atlantic Southeast
Airlines, Inc., for the provision of essential air service at Meridian,
Mississippi, as described in Appendix C, to be payable as follows: for
each month during which essential air service is provided, the amount of
compensation shall be subject to the weekly ceiling, and shall be
determined by multiplying the subsidy-eligible arrivals and departures
completed during the month by \$507.76;[^1]

3\. We direct Atlantic Southeast Airlines, 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 first. 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;

4\. We find that Atlantic Southeast Airlines, Inc., continues to be fit,
willing and able to operate and capable of providing reliable essential
air service at Meridian, Mississippi;

5\. This docket will remain open until further order of the Department;
and

6\. We will serve copies of this order on the Mayor and Airport Manager
of Meridian, Mississippi, Mesaba Aviation, Inc., and Atlantic Southeast
Airlines, Inc.

By:

> **MICHAEL W. REYNOLDS**
>
> Acting Assistant Secretary for Aviation
>
> and International Affairs

(SEAL)

*An electronic version of this document is available on the World Wide
Web at*

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

Appendix A

![](media/image2.wmf)

[Great Circle Mileages]{.underline}:

Atlanta, 267

Columbus, 77

Jackson, 86

Memphis, 200

New Orleans, 185

Appendix B

Atlantic Southeast Airlines, Inc., d/b/a Delta Connection, Annual
Compensation for Essential

Air Service at Meridian, Mississippi, Docket 2008-0112

  ------------------------------------------------------ -------------------------
  Departures 1/                                          1,352

  Block Hours 2/                                         1,568

  Passengers                                             35,754

                                                         

  Passenger Revenue                                      \$4,612,265

  Cargo Revenue                                          \$294,181

  [Other Revenue]{.underline}                            [\$6,453]{.underline}

  Total Revenue                                          \$4,912,899

                                                         

  Pilots                                                 \$312,289

  Personnel                                              \$95,891

  Direct Maintenance                                     \$534,149

  Fuel                                                   \$1,824,891

  Aircraft                                               \$508,908

  Other Blk. Hr. Related                                 \$52,576

  [Other Dep. Related]{.underline}                       [\$6,302]{.underline}

  Total Direct Expenses                                  \$3,335,006

                                                         

  Passenger Variable Cost                                \$387,888

  Variable Station                                       \$329,362

  Overhead                                               \$891,152

  Facilities                                             \$140,205

  ASA Contractual                                        [\$249,137]{.underline}

  Total Indirect Expenses                                \$1,997,744

                                                         

  Total Operating Expense                                \$5,332,750

  Profit @ 5 Percent                                     [\$266,638]{.underline}

  Total Economic Cost                                    \$5,599,388

                                                         

  Annual Compensation                                    \$686,489
  ------------------------------------------------------ -------------------------

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

1/ 13 round trips per week x 52 weeks x 2 directions = 1,352 departures.

2/ 1,352 departures x 69.6/60 minutes = 1,568 block hours.

Appendix C

# Atlantic Southeast Airlines, Inc., Essential Air Service to be Provided to  {#atlantic-southeast-airlines-inc.-essential-air-service-to-be-provided-to .mainheading}

# Meridian, Mississippi, Docket OST-2008-0112 {#meridian-mississippi-docket-ost-2008-0112 .mainheading}

[Effective Period]{.underline}: June 16, 2008, through June 30, 2010.

[Scheduled Service]{.underline}: 13 nonstop round trips per week to
Atlanta.

[Aircraft]{.underline}: CRJ-200, 50 seats

[Rate per Eligible Flight:]{.underline} \$507.76 [^2]

[Weekly Ceiling]{.underline}: \$13,201.76 [^3]

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 plans 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 the 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 ensured 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 complete, 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 stipulated
amounts or at the stipulated 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 Department and carrier 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, 2008. The Government\'s obligation for performance
under this order beyond September 30, 2008, 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,
2008, until funds are made available to the Department for performance.
If funds are not made available for performance beyond September 30,
2008, 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]: See Appendix C for calculations

[^2]: Annual compensation of \$686,489 divided by 1,352 estimated annual
    completed departures and arrivals:

    26 one-way flights/week x 52 weeks = 1,352 departures per year.

[^3]: 26 flights/week x \$507.76.