Order 2013

- 1

- 2 Served: January 2, 2013



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION



### OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 2 nd of January, 2013

Essential Air Service at

EL CENTRO

, CALIFORNIA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 2008

- 0299

ORDER SELECTING CARRIER Summary By this Order

, the Department is selecting SeaPort Airlines, Inc. ( SeaPort ), to provide Essential

Air Service (EAS) at El Centro

, California

, for $ 1,943,751 1 annually for 29 nonstop round tr i ps per week to San Diego (SAN)

.

Background
By Order 2010

- 12

- 6, December 3, 2010

, the Department selected SkyWest Airlines, Inc., d/b/a United Express (SkyWest), to provide EAS at El Centro through December 31 , 2012. The carrier was to provide 13 nonstop round trips per week to Los Angeles (LAX) with 30

- seat Embraer Brasilia turboprops for $1,852,091 annual subsidy.

As the end of the current rate term on December 31 , 2012, was approaching, Order 2012

- 8

- 18

, August 17 , 2012, requested proposals by September 18, 2012

. By notice dated September 17, 2012, we granted the request of SeaPort and extended the deadline for proposals to October 2,

2012

.

On October 2 , 2012, we received proposals from SkyWest, SeaP ort , and Sovereign Air, Inc., and

we requested the community to submit its comments by November 6, 2012. On October 24,

1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds.- 2

-

2012, the El Centro chamber of commerce requested an extension to November 14, 2012, to

submit comments an d by notice dated October 24, 2012, we granted that request.

Proposal, S kyWest SkyWest proposes to continue to provide 13 nonstop round trips per week to Los Angeles with 30

- seat Embraer Brasilia aircraft, and requests $2,349,288 annual subsidy for this service.

Proposal, Sovereign Air , Inc. (Sovereign) Option 1 : Sovereign proposes to provide 24 nonstop round trips per week to Los Angeles (LAX)

with 19

- seat Jetstream 31 or 32 aircraft and requests $1,851,761 annual subsidy.

Option 2 : Sovereign proposes to provide 19 nonstop round trips per week to Los Angeles (LAX)

with 30

- seat Jetstream 41 aircraft and requests $1,885,862 annual subsidy.

Proposal, SeaPort

SeaPort also proposes

, as a permutation of the above options to extend its proposal for an

additional two years , but requests more subsidy in those later years, which is a reason for not selecting the carrier for that extended period of time.

Community Response On October 22, 2012, the City of El Centro indicated the importance to it of an early morning depar ture from Imperial and late evening return to Imperial, which would afford passengers the ability to complete business trips without making an overnight stay. The city was also concerned that there be through ticketing and interline baggage agreement s with major airlines, and that the destination be to a major airport, such as Los Angeles (LAX), San Diego, (SAN), or Phoenix (PHX). The city did not recommend a specific carrier or service option. No comments mentioned the two

year versus the four year issue.

On October 22, 2012, the San Diego Regional Airport Authority indicated its support for SeaPort, the only carrier to propose service to San Diego. The airport noted that it had an incentive policy to attract or support new service to the airport.

On October 25, 2012, the C ity of Imperial supported the selection of SeaPort’s Option 3 with

Cessna 208 Caravan service. 2 “This proposal offers a broad level of flight service that connects to

national and international destinations with a high level of flexibility and frequency.”

On November 9, 2012, the Government Affairs Committee of the El Centro and Brawley Chamber s of Commerce “[a]fter careful consideration and examination of the proposals as written, and

2 The City indicates that the airport is located entirely within the boundaries of the City of Imper ial. Option 1 Option 2 Option 3

Hubs SAN SAN PHX Total SAN BUR Total
Weekly Nonstop Round Trips 29 17 12 29 17 12 29

C-208 Caravan $1,943,751 $2,455,474 $2,210,182
Piper Chieftain $2,038,917 $2,750,236 $2,423,280- 3

-

consultation with proponents, the Committee recommends adoption of the proposal by Seaport Airlines, specifically, Option 3 of SeaPort Airlines.”

Decision

T he carrier

- selection decision is straightforward

. Sovereign Air has no Federal Aviation

Administration (FAA) or D epartment of Transportation (DOT) operating authority

. As between SkyWest, the incumbent, and SeaPort , the community supports Seaport’s Option 3

, and that option requires less subsidy than SkyWest

. However, Seaport’s Option 1 will provide El Centro

with 29 nonstop round trips a week to San Diego , also with nine

- seat C

- 208 Caravan aircraft , at considerable subsidy savings of over half a million dollars over two years , and it will provide

excellent access to th e national air transportation system

. Given the program’s current budget

constra ints, we will select the less expensive Option 1, but we encourage the community and carrier to work together so that Seaport may be able to provide the community’s more prefe rred option, Option 3, at the same subsidy rate.

SkyWest ’s historical schedule met the community’s goal of having an early morning departure to the hub and late evening arrival from the hub to El Centro. When SkyWest based an aircraft in

El Centro

, it wa s able to achieve that result, and the growing traffic figures reflected that

schedule. However, s ince SkyWest reverted to basing the aircraft in Los Angeles o n August 28, 2012, traffic has decreased significantly, which has also driven up the level of subsidy the carrier

requests. 3

Seaport p roposed the option of providing two additional years of service, making the carrier

selection effective for a four

- year period. We will rely on the carrier’s two

- year option only. The service we are selecting is v ery different from the community ’s historical service

. In addition, no party addressed the two

- year vs. four

- year issue. While we believe the carrier’s projection of 12,800 passengers is reasonable, the carrier could actually achieve either far more

or f ar fewer passengers. Under those circumstances, extending the term of the carrier selection would expose both the carrier and the Department to unnecessary risk.

Carrier Transition We expect SkyWest and SeaPort to work together to make a smooth transit ion at El Centro . In that regard, before SkyWest suspends its service

, it must notify any passengers holding reservations for travel after the suspension date, to assist those passengers in making alternate air transportation arrangements, or to provide a refund of the ticket price, without pena lty, if requested. We will set a bridge rate for any service provided by SkyWest after December 31, 2012, at the rate it requested in its proposal.

Carrier Fitness

49 U.S.C. §§ 41737(b) and 41738 require that the Department find an air carrier fit, willing, and able to provide reliable service before Department may subsidize it to provide Essential Air

Service

. SeaPort is subject to the Department’s continuing fitness requirements

. The Department has contacted the FAA , and it has raised no concerns that would negatively affect

3 SkyWest projects it will transport 7,500 passengers at El Centro. For the year ended August 31, 2012, during

which SkyWest based its aircraft in El Centro, SkyWest generated 13,351 passengers. Seaport projects that it will transport 12,800 passe ngers with its schedule.- 4

-

our fitness finding s

. The Department therefore concludes that the carrier remain s fit to conduct the operations proposed here.

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

ACCORDINGLY,

1. We select SeaPort Airlines , Inc., to provide Essential Air Service at El Centro

, California ;

2 . We set the final rate of compensation for SeaPort Airlines , Inc., for the provision of Essential

Air Service at El Centro

, California

, as described in Appendix B

- 1;

3 . We set the final rate of compensation for SkyWest Airlines, Inc., for the provision of

Essential Air Service at El Centro, California, as described in Appendix B

- 2;

4 . We direct SeaPort 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.

Suc h documentation shall be retained for seven years from the service data of this Order, 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. Th e carrier may forfeit its compensation for any claim that is not supported under the terms of this Order ;

5 . We find that SeaPort Airlines, Inc., continue s to be fit, willing and able to operate as a certificated carrier and capable of providing reliable Essential Air Service at the these

communities ;

6 . We will continue to require SkyWest Airlines, Inc., to provide EAS at El Centro, California

until it is replaced by SeaPort ;

7

. Th is docket will remain open until furt her Order of the Department; and- 5

-

8 . We will serve copies of this Order on the civic officials of El Centro, California, Imperial California, the California Department of Transportation and Public Facilities, on SkyWest Airlines, Inc., and on SeaPort Airlines, Inc.

By:

Susan Kurland 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.govAppendix A

Nonstop Great Circle Miles from El Centro (IPL)
Yuma, YUM 58 Palm Springs PSP 87 San Diego, SAN 94 Los Angeles, LAX 181 Burbank, BUR 186 Phoenix, PHX 211Appendix B

- 1

SeaPort Airlines, Inc., Essential Air Service to be Provided to

El Centro

, California , Docket 2008

- 0299

Effective Period : Start of Service until the end of the 24 th month thereafter.

Scheduled Service : San Diego, 29 nonstop round trips per week

. Type : Cessna 208 Caravan aircraft, 9

- seat , single engine turboprop

.

Annual Subsidy $ 1, 943,751
Annual Flights 1 2,986
Rate per Flight 2 $ 651
Weekly Ceiling 3 $ 37,758

Note: The carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance wi th the terms and stipulations of the rate Order , including the service plans outlined in the Order and any other significant elemen ts 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 b een 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 this rate, it must first notify

the Office of Avia tion 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 co mplete 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 exten t 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 stipulated amounts or at the stipulated service levels, the carrier may cease to provide service t o that specific location without regard to any requirement for notice of such cessation. Those adjustments in the levels of subsidy and/or service th at are mutually agreed to in writing by the Department and carrier do not constitute a total or partial re duction or cessation of payment.

Subsidy contract 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 n ot operate to controvert the foregoing paragraph.

Funds are not currently available for performance under this Order beyond March 31, 2013 . The Government’s obligation for performance under this Order beyond March 31, 2013 , is subject to 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 t his

Order beyond March 31, 2013 , until funds are made available to the Department for per formance. If funds are not made available for performance beyond March 31, 2013 , the Department will provide notice in writing to the carrier.

All claims for payment must be submitted within 60 days of the last day of service provided u nder this Order

.

1 29 round trips per week x 2 directions x 52 weeks x .99 completion = 2,986

. 2 Annual subsidy divided by annual flights.

3 29 round trips per week x 2 directions x $ 651 = $ 37,758.

.Appendix B

- 2

SkyWest Airlines, Inc., Essential Air Service to be Provided to El Centro, California, Docket 2008

- 0299

Effective Period : January 1, 2013, until the SeaPort inaugurates scheduled air service.

Scheduled Service : Los Angeles (LAX), 13 nonstop round trips per week. Type : Embraer Brasilia aircraft, 30

- seat.

Annual Subsidy $ 2,349,288
Annual Flights 1 1, 325
Rate per Flight 2 $ 1,773
Weekly Ceiling 3 $ 46,098

Note: The carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance wi th the terms and stipulations of the rate Order , including the service plans outlined in the Order and any other significant elemen ts 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 b een 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 jeop ardize 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 this rate, it must first notify the Office of Aviation Analysis in writing and receive w ritten 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 ar e 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 lo cation 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 spec ific location without regar d 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 pa yment.

Subs idy contract 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 th e foregoing paragraph.

Funds are not currently available for performance under this Order beyond March 31, 2013 . The Government’s obligation for performance under this Order beyond March 31, 2013 , is subject to 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 t his

Order beyond March 31, 2013 , until funds are made ava ilable to the Department for performance. If funds are not made available for performance beyond March 31, 2013 , the Department will provide notice in writing to the carrier.

All claims for payment must be submitted within 60 days of the last day of serv ice provided under this Order

.

1 LAX: 13 nonstop round trips per week x 2 directions x 52 weeks x .98 completion = 1,325.

2 Annual subsidy divided by annual flights.

3 13 nonstop round trips to LAX x 2 directions x $1,773.