-----------------------------------------------------------------------
  Order 2008-7-8

  Served: July 3, 2008
  -----------------------------------------------------------------------

**UNITED STATES OF AMERICA**

**DEPARTMENT OF TRANSPORTATION**

**OFFICE OF THE SECRETARY**

**WASHINGTON, D.C.**

Issued by the Department of Transportation

  -----------------------------------------------------------------------
  on the 3^rd^ day of July, 2008

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

+--------------------------------------+-------------------------------+
| Essential Air Service at             | **DOCKET DOT-OST-2002-13983** |
|                                      |                               |
| > **GRAND ISLAND, NEBRASKA**         | **DOCKET DOT-OST-1997-2935**  |
| >                                    |                               |
| > **EL DORADO/CAMDEN, ARKANSAS**     | **DOCKET DOT-OST-1997-2935**  |
| >                                    |                               |
| > **HARRISON, ARKANSAS**             | **DOCKET DOT-OST-1997-2935**  |
| >                                    |                               |
| > **HOT SPRINGS, ARKANSAS**          | **DOCKET DOT-OST-2006-23932** |
| >                                    |                               |
| > **JOPLIN, MISSOURI**               |                               |
|                                      |                               |
| Under 49 U.S.C. 41731 *et seq*.      |                               |
+--------------------------------------+-------------------------------+

**ORDER SELECTING CARRIER**

## Summary

By this order, the Department is selecting Great Lakes Airlines, Ltd.
(Great Lakes) to provide subsidized essential air service (EAS) at Grand
Island, Nebraska, Joplin, Missouri, El Dorado/Camden, Harrison, and Hot
Springs, Arkansas, at a combined annual subsidy of \$9,159,331
(\$2,271,640 for Grand Island, \$2,311,637 for El Dorado/Camden,
\$1,587,067 for Harrison, \$1,991,307 for Hot Springs, and \$997,680 for
Joplin), for a two-year period beginning when Great Lakes inaugurates
full EAS through the end of the 24^th^ month thereafter. (See Appendix A
for a map).

## Background 

By Order 2008-5-2, May 5, 2008, we selected Hawaii Island Air (Island
Air) to provide EAS at Joplin, Grand Island, Harrison and Hot Springs,
and re-solicited proposals at El Dorado/Camden, due June 13, because no
carrier had submitted a proposal that met the 15-seat standard.
Subsequently, Air Midwest announced on May 14 that it would cease all
operations on June 30, thus leaving these communities with no scheduled
air service.

On June 6, Island Air notified us that it would not be able to
inaugurate service at the four communities where it had been selected:
Grand Island, Harrison Hot Springs and Joplin. Island Air's withdrawal
exacerbates the emergency created by Air Midwest's shutdown on June 30.

In response, we issued Order 2008-6-9, June 9, 2008, requesting
proposals for service at Joplin, Grand Island, Harrison, and Hot
Springs, and extended the deadline for proposals for El Dorado/Camden.
The deadline for all five communities was June 20.

**Proposals**

We received proposals from two carriers, Multi-Aero, Inc. d/b/a Air
Choice One (Multi-Aero) and Great Lakes.

Each carrier's complete proposal may be accessed online at
<http://www.regulations.gov/> by doing a "search" on
"DOT-OST-2003-13983," "DOT-OST-1997-2935," or "DOT-OST-2006-23932."

**Multi-Aero, Inc. d/b/a Air Choice One**

Multi-Aero proposed four options.

Option #1 -- 15 weekly nonstop round trips from Harrison to St. Louis
with Cessna Caravan aircraft for an annual subsidy of \$1,756,866

Option #2 -- 24 weekly nonstop round trips from Harrison to St. Louis
with twin-engine piston aircraft for an annual subsidy of \$1,840,931

Option #3 -- 11 weekly nonstop round trips from El Dorado/Camden to St.
Louis and 15 weekly nonstop round trips from Hot Springs to St. Louis
with Cessna Caravan aircraft for a combined annual subsidy of
\$2,081,450

Option #4 -- 11 weekly nonstop round trips from El Dorado/Camden to
Shreveport with twin-engine piston aircraft for an annual subsidy of
\$653,172

**Great Lakes Aviation, Ltd.**

Great Lakes proposed five options, all with 19-seat Beech 1900 aircraft.

Option #1 -- 18 weekly nonstop or one-stop round trips from Harrison to
Kansas City and/or Dallas for an annual subsidy of \$1,587,067

Option #2 - 12 weekly nonstop round trips from El Dorado/Camden to
Dallas for an annual subsidy of \$2,311,637

Option #3 -- 12 weekly nonstop round trips from Hot Springs to Dallas
for an annual subsidy of \$1,991,307

Option #4 -- 18 weekly nonstop round trips from Joplin to Kansas City
for an annual subsidy of \$997,680

Option #5 -- 18 weekly nonstop round trips from Grand Island to Kansas
City for an annual subsidy of \$2,271,640

**Community Comments**

By an e-mail dated June 21, 2008, we notified community officials and
airport managers of all of the communities of the proposals and
solicited any comments they wished to submit. We received correspondence
from all five communities indicating Great Lakes as the preferred
option.

The Mayor of El Dorado fully supports the selection of Great Lakes,
especially as it relates to providing the larger, 19-seat aircraft.
Nonetheless, he voices concern about how long it may take Great Lakes to
begin service.

The Boone County Airport Manager, representing Harrison, supports the
selection of Great Lakes because she favors Dallas/Fort Worth as the
connecting hub rather than St Louis as Multi-Aero proposed. She also has
concerns about the size of Multi-Aero's aircraft.

The Mayor of Hot Springs supports Great Lakes, largely because he
opposes the smaller aircraft proposed by Multi-Aero. He also supports
continued service to Dallas-Ft. Worth, and encourages the carrier to
begin service as soon as possible.

We received a letter from the Joplin Airport Manager supporting the
selection of Great Lakes. However, he notes that Great Lakes proposed
three round trips a day rather then the four a day called for in the
Department's RFP. He suggests that we negotiate a four-round-trip-a-day
pattern with Great Lakes or establish a four-round-trip rate by a
proration process.

The Hall County Airport Authority, representing Grand Island, supports
Great Lakes' proposal. They hope Great Lakes will expedite start-up, as
it has no air carrier service as of June 30.

**Decision**

This case is very straightforward. At Joplin and Grand Island, Great
Lakes was the only carrier to submit a proposal and both communities
fully support the selection of the carrier.

At El Dorado, Harrison and Hot Springs, all three communities qualify
for twin-engine aircraft having 15 or more seats. While Multi-Aero has
proposed twin-engine aircraft at El Dorado and Harrison, it has proposed
nine seaters. In the case of Hot Springs, Multi-Aero does not meet
either the twin-engine or the 15-seat requirement. Communities are free
to waive their right to these aircraft minimums, and several have done
so with successful results. However, in this case not only have they not
agreed to the smaller aircraft, they have affirmatively rejected
Multi-Aero because of the size of its aircraft.

Great Lakes is a well-established carrier and provides a significant
amount of subsidized EAS throughout the country. Moreover, we find that
the subsidy levels are reasonable for the service levels to be provided.

We encourage the communities and the carrier to continue to work
together to optimize the service patterns under this carrier selection.
Regarding Joplin's request for four round trips, Great Lakes has
indicated that it will provide a fourth round trip in conjunction with
its daily Harrison -- Kansas City flight.

Thus, we will select the proposal offered by Great Lakes as described
above, to provide subsidized EAS at each of the above communities for
the two-year period beginning when the carrier begins full EAS at each
of the communities.

**Additional information concerning Hot Springs**

We are concerned that the subsidy level for Hot Springs is high,
especially when viewed in the context of current passenger usage. For
the most recent 12-month period that traffic was available, April 1,
2007 through March 31, 2008, Hot Springs' total traffic was 6,679
passengers. At Great Lakes' proposed subsidy rate, the subsidy per
passenger would be \$298, well over the \$200 per passenger cap. The
Department is prohibited from subsidizing service at communities where
the subsidy amounts to more than \$200 per passenger, unless they are
more than 210 highway miles from the nearest large or medium hub. Hot
Springs is 197 miles from Memphis International Airport, a medium hub,
and thus, is subject to the cap. We are aware that the community is
experiencing a hiatus in service, as Air Midwest discontinued all
service to Hot Springs on June 30. Although we are selecting Great Lakes
for a two-year period, we will monitor traffic after 12 months of full
service by Great Lakes, and, if the subsidy level exceeds the statutory
\$200 per passenger cap, we will take appropriate action. We encourage
the community and Great Lakes to work together to maximize use of the
service awarded under this Order to avoid exceeding the \$200 per
passenger cap, which could result in the termination of eligibility for
subsidy under the EAS program.

**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 subsidize it
to provide essential air service. We last found Great Lakes fit by
Order 2008-6-11, June 10, 2008, in connection with its essential air
service award at Kingman and Prescott, Arizona. Since then, the
Department has monitored the carrier's continuing fitness, and no
information has come to our attention that would lead us to question the
carrier's ability to operate in a reliable manner. We therefore conclude
that the carrier remains fit to conduct the operations proposed here.

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

## ACCORDINGLY,

1\. The Department selects Great Lakes Airlines, Ltd. to provide
essential air service at Grand Island, Nebraska, Joplin, Missouri, El
Dorado/Camden, Harrison, and Hot Springs, Arkansas, and establishes the
subsidy rates, as detailed in Appendix B, from the date Great Lakes
inaugurates service through the end of the 24^th^ month thereafter;

2\. The Department directs Great Lakes Airlines, Ltd. 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 the 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 is 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;

3\. We find that Great Lakes Airlines, Ltd. continues to be fit, willing
and able to operate as a certificated air carrier and capable of
providing reliable essential air service at Grand Island, Nebraska,
Joplin, Missouri, El Dorado/Camden, Harrison, and Hot Springs, Arkansas;

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

5\. We will serve copies of this order on community officials and the
airport managers of Grand Island, Nebraska, Joplin, Missouri, El
Dorado/Camden, Harrison, and Hot Springs, Arkansas, Great Lakes
Airlines, Ltd., and Multi-Aero, Inc. d/b/a Air Choice One.

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*

**AREA MAP**

![](media/image3.png){width="5.833333333333333in" height="6.78125in"}

Great Lakes Airlines, Ltd.

Essential Air Service To Be Provided at Grand Island, Nebraska

+----------------------+-----------------------------------------------+
| [Effective           | From the date of inauguration through the end |
| Period]{.underline}: | of the 24^th^ month thereafter.               |
+----------------------+-----------------------------------------------+
| [Scheduled           | 18 weekly nonstop round trips to Kansas City. |
| S                    |                                               |
| ervice]{.underline}: |                                               |
+----------------------+-----------------------------------------------+
| [Intermediate stops  | No intermediate stops or upline points are    |
| and upline           | permitted.                                    |
| s                    |                                               |
| ervice]{.underline}: |                                               |
+----------------------+-----------------------------------------------+
| [Aircraft            | Beech 1900 (19 passenger seats).              |
| type:]{.underline}   |                                               |
+----------------------+-----------------------------------------------+
| [Timing of           | Flights must be well-timed and well-spaced in |
| f                    | order to ensure full compensation.            |
| lights:]{.underline} |                                               |
+----------------------+-----------------------------------------------+
| [Annual              | \$2,271,640.                                  |
| compen               |                                               |
| sation:]{.underline} | This rate assumes an annual completion factor |
|                      | of 98 percent. A compensation ceiling is to   |
|                      | be applied per calendar week such that        |
|                      | service above that ceiling in one week cannot |
|                      | make up for service shortfalls in another     |
|                      | week.                                         |
+----------------------+-----------------------------------------------+
| [Subsidy Rate per    | \$1,234.59[^1]                                |
| Flight]{.underline}: |                                               |
+----------------------+-----------------------------------------------+
| [Weekly Compensation | \$44,445.24[^2]                               |
| C                    |                                               |
| eiling:]{.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 parities 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, 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.

Great Lakes Aviation, Ltd.

Essential Air Service To Be Provided at Joplin, Missouri

+----------------------+-----------------------------------------------+
| [Effective           | From the date of inauguration through the end |
| Period]{.underline}: | of the 24^th^ month thereafter.               |
+----------------------+-----------------------------------------------+
| [Scheduled           | 18 weekly nonstop round trips to Kansas City. |
| S                    |                                               |
| ervice]{.underline}: |                                               |
+----------------------+-----------------------------------------------+
| [Intermediate stops  | No intermediate or upline points are          |
| and upline           | permitted.                                    |
| s                    |                                               |
| ervice]{.underline}: |                                               |
+----------------------+-----------------------------------------------+
| [Aircraft            | Beech 1900 (19 passenger seats).              |
| type:]{.underline}   |                                               |
+----------------------+-----------------------------------------------+
| [Timing of           | Flights must be well-timed and well-spaced in |
| f                    | order to ensure full compensation.            |
| lights:]{.underline} |                                               |
+----------------------+-----------------------------------------------+
| [Annual              | \$997,680.                                    |
| compen               |                                               |
| sation:]{.underline} | This rate assumes an annual completion factor |
|                      | of 98 percent. A compensation ceiling is to   |
|                      | be applied per calendar week such that        |
|                      | service above that ceiling in one week cannot |
|                      | make up for service shortfalls in another     |
|                      | week.                                         |
+----------------------+-----------------------------------------------+
| [Subsidy Rate per    | \$542.22[^3]                                  |
| Flight]{.underline}: |                                               |
+----------------------+-----------------------------------------------+
| [Weekly Compensation | \$19,519.92[^4]                               |
| C                    |                                               |
| eiling:]{.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 parities 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, 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.

Great Lakes Aviation, Ltd.

Essential Air Service To Be Provided at El Dorado/Camden, Arkansas

+----------------------+-----------------------------------------------+
| [Effective           | From the date of inauguration through the end |
| Period]{.underline}: | of the 24^th^ month thereafter.               |
+----------------------+-----------------------------------------------+
| [Scheduled           | 12 weekly nonstop round trips to Dallas.      |
| S                    |                                               |
| ervice]{.underline}: |                                               |
+----------------------+-----------------------------------------------+
| [Intermediate stops  | Service must be nonstop.                      |
| and upline           |                                               |
| s                    |                                               |
| ervice]{.underline}: |                                               |
+----------------------+-----------------------------------------------+
| [Aircraft            | Beech 1900 (19 passenger seats).              |
| type:]{.underline}   |                                               |
+----------------------+-----------------------------------------------+
| [Timing of           | Flights must be well-timed and well-spaced in |
| f                    | order to ensure full compensation.            |
| lights:]{.underline} |                                               |
+----------------------+-----------------------------------------------+
| [Annual              | \$2,311,637.                                  |
| compen               |                                               |
| sation:]{.underline} | This rate assumes an annual completion factor |
|                      | of 98 percent. A compensation ceiling is to   |
|                      | be applied per calendar week such that        |
|                      | service above that ceiling in one week cannot |
|                      | make up for service shortfalls in another     |
|                      | week.                                         |
+----------------------+-----------------------------------------------+
| [Subsidy Rate per    | \$1,883.97[^5]                                |
| Flight]{.underline}: |                                               |
+----------------------+-----------------------------------------------+
| [Weekly Compensation | \$45,215.28[^6]                               |
| C                    |                                               |
| eiling:]{.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 parities 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, 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.

Great Lakes Airlines, Ltd.

Essential Air Service To Be Provided at Harrison, Arkansas

+----------------------+-----------------------------------------------+
| [Effective           | From the date of inauguration through the end |
| Period]{.underline}: | of the 24^th^ month thereafter.               |
+----------------------+-----------------------------------------------+
| [Scheduled           | 12 weekly one-stop round trips to Dallas and  |
| S                    | 7 weekly nonstop or one-stop round trips to   |
| ervice]{.underline}: | Kansas City.                                  |
+----------------------+-----------------------------------------------+
| [Intermediate stops  | Service may be nonstop or one-stop at Great   |
| and upline           | Lakes' discretion.                            |
| s                    |                                               |
| ervice]{.underline}: |                                               |
+----------------------+-----------------------------------------------+
| [Aircraft            | Beech 1900 (19 passenger seats).              |
| type:]{.underline}   |                                               |
+----------------------+-----------------------------------------------+
| [Timing of           | Flights must be well-timed and well-spaced in |
| f                    | order to ensure full compensation.            |
| lights:]{.underline} |                                               |
+----------------------+-----------------------------------------------+
| [Annual              | \$1,587,067.                                  |
| compen               |                                               |
| sation:]{.underline} | This rate assumes an annual completion factor |
|                      | of 98 percent. A compensation ceiling is to   |
|                      | be applied per calendar week such that        |
|                      | service above that ceiling in one week cannot |
|                      | make up for service shortfalls in another     |
|                      | week.                                         |
+----------------------+-----------------------------------------------+
| [Subsidy Rate per    | \$817.23[^7]                                  |
| Flight]{.underline}: |                                               |
+----------------------+-----------------------------------------------+
| [Weekly Compensation | \$31,054.74[^8]                               |
| C                    |                                               |
| eiling:]{.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 parities 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, 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.

Great Lakes Airlines, Ltd.

Essential Air Service To Be Provided at Hot Springs, Arkansas

+----------------------+-----------------------------------------------+
| [Effective           | From the date of inauguration through the end |
| Period]{.underline}: | of the 24^th^ month thereafter.               |
+----------------------+-----------------------------------------------+
| [Scheduled           | 12 weekly nonstop round trips to Dallas.      |
| S                    |                                               |
| ervice]{.underline}: |                                               |
+----------------------+-----------------------------------------------+
| [Intermediate stops  | Service must be nonstop.                      |
| and upline           |                                               |
| s                    |                                               |
| ervice]{.underline}: |                                               |
+----------------------+-----------------------------------------------+
| [Aircraft            | Beech 1900 (19 passenger seats).              |
| type:]{.underline}   |                                               |
+----------------------+-----------------------------------------------+
| [Timing of           | Flights must be well-timed and well-spaced in |
| f                    | order to ensure full compensation.            |
| lights:]{.underline} |                                               |
+----------------------+-----------------------------------------------+
| [Annual              | \$1,991,307.                                  |
| compen               |                                               |
| sation:]{.underline} | This rate assumes an annual completion factor |
|                      | of 98 percent. A compensation ceiling is to   |
|                      | be applied per calendar week such that        |
|                      | service above that ceiling in one week cannot |
|                      | make up for service shortfalls in another     |
|                      | week.                                         |
+----------------------+-----------------------------------------------+
| [Subsidy Rate per    | \$1,622.91[^9]                                |
| Flight]{.underline}: |                                               |
+----------------------+-----------------------------------------------+
| [Weekly Compensation | \$38,949.84[^10]                              |
| Ceiling Per          |                                               |
| Com                  |                                               |
| munity:]{.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 parities 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, 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]: \$2,271,640 divided by 1,840 annual departures (6 flights x 313
    days x 98%).

[^2]: 36 arrivals and departures per week multiplied by \$1,234.59 per
    flight.

[^3]: \$997,680 divided by 1,840 annual departures (6 flights x 313 days
    x 98%).

[^4]: 36 arrivals and departures per week multiplied by \$542.22 per
    flight.

[^5]: \$2,311,637 divided by 1,227 annual departures (4 flights x 313
    days x 98%).

[^6]: 24 arrivals and departures per week multiplied by \$1,883.97 per
    flight.

[^7]: \$1,587,067 divided by 1,942 annual departures (38 flights/week x
    52 weeks +6 x 98%).

[^8]: 38 arrivals and departures per week multiplied by \$817.23 per
    flight.

[^9]: \$1,991,307 divided by 1,227 annual departures.

[^10]: 24 arrivals and departures per week multiplied by \$1,622.91 per
    flight.