Order: 2014-7-10 Served: July 14, 2014



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OF FICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on the 14th day of July, 2014



### ORDER SELECTING CARRIER

Summary By this Order, the Department is re-selecti ng Great Lakes Aviation, Lt d. (Great Lakes), to provide Essential Air Service (EAS) at Hu ron, South Dakota, using Beech 1900D aircraft 1
to Minneapolis/St. Paul, Minnesota (Minneap olis), or Denver, Colorado (Denver), for 12 round trips per week to Minneapolis or De nver for the two-year period from October 1, 2014, through September 30, 2016, for an annual subsidy of $2,552,000. 2 See Appendix A for a map.

Background By Order 2012-8-22 (August 20, 2012), the Depart ment selected Great Lakes, to provide EAS at Huron, for an annual subsidy of $1,929,349, for the period from October 1, 2012 through September 30, 2014.

As the end of the contract was approachi ng, we issued Order 2014-3-16 (March 28, 2014) requesting proposals from air carriers interest ed in providing EAS at the communities for a

1 Many Great Lakes Beech 1900D aircraft have been reconfigured to 9 seats from 19 seats. Great Lakes

states it will return to 19 seats when restricted Air Transport Pilot certificates ha ve been issued to crew.

2 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds. Essential Air Service at

HURON, SOUTH DAKOTA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT-OST-2000-7138- 2 -

new term beginning October 1, 2014. In respons e to that Order, we received proposals

from Great Lakes and Bou tique Air (Boutique).

Proposal of Great Lakes Great Lakes submitted a proposal for Huron for a two-year term with service to Minneapolis or Denver. Their proposal cons ists of using 19-seat, Beech 1900D aircraft reconfigured for 9 seats, for 12 weekly round tr ips to Minneapolis or Denver, at an annual subsidy rate of $2,552,000.

It is expected that the re-installation of the additional 10 seats, allo wing for utilization of all 19 seats, will occur as soon as pilot experien ce allows for the issuance of restricted Air Transport Pilot (ATP) certificates.

Proposal of Boutique Air Boutique submitted a proposal for Huron for a tw o-year term, with service to Minneapolis. Their proposal consists of utilizing 9-seat, single-engine, Pilatus PC-12 aircraft, for 12 weekly round trips, at an annual subsidy rate of $2,339,640.

Community Comments On April 29, 2014, the Department solicited comme nts from the community regarding this

air carrier selection case. We received a letter from Paul Aylward, Mayor of Huron, supporting Great Lakes’ propos al. Among the reasons the community supports Great Lakes, even though Huron experienced high can cellation rates, are th e interline baggage and ticketing agreements they have in place wi th Delta Air Lines, Frontier Airlines, and United Airlines. The community understands th e problems with Great Lakes, as well as

other carriers related to the “1500 Hour Rul e” and the community expects these problems will lessen, thus improving Great Lakes’ reliab ility. The community stated Boutique’s proposal is attractive but its lack of interline or code share agreements, and no gate availability at Minneapolis , were deciding factors.

Decision Regarding Boutique Air’s proposal, the commun ity did not waive its right to twin-engine aircraft, so the Department will not consider Boutique further. 3

Since the community supports Great Lakes to provide air service to Huron, and the Department finds the service and subsidy levels to be reasonable, we will select Great Lakes to provide EAS at Huron for a new, two-year term.

We make this selection of Great Lakes at Huron contingent upon the Department’s receiving properly executed certifications from the air carrier that it is in compliance with

3 Basic Essential Air Service shall include at least the following per 49 U.S.C. § 41731 (b)(5) Service provided in aircraft with at least 2 engines and using 2 pilots, unless scheduled air transportation has not been provided to the place in aircraft with at least 2 engines and using 2 pilots for at least 60 consecutive operating days at any time since October 31, 1978.- 3 -

the Department’s regulations regarding dr ug-free workplaces and nondiscrimination, as well as the regulations c oncerning lobbying activities. 4

Carrier Fitness 49 U.S.C. §§ 41737(b) and 41738 require that we fi nd an air carrier fit, willing, and able to provide reliable service before we may subsidiz e it to provide EAS. Great Lakes is subject to the Department’s continuing fitness require ments, and no information has come to our attention that would cause us to question the ai r carrier’s fitness at this time. We have

contacted the Federal Aviation Administration, and it has rais ed no concerns that would negatively affect our fitness fi ndings. We therefore conclude that Great Lakes is reliable and fit to conduct the oper ations proposed here.

This Order is issued under authorit y delegated in 49 CFR Part 1.25a(b).

ACCORDINGLY, 1. We select Great Lakes Aviation, Ltd. to pr ovide Essential Air Se rvice at Huron, South Dakota and establish the annual subsidy rate as described in Appendix C;

2. We direct Great Lakes Aviation, Ltd. to re tain all books, records, and other source and summary documentation to support claims for paym ent, and to preserve and maintain such documentation in a manner that readily permits its audit and examination by representatives of the Department. Such doc umentation shall be reta ined for seven years from the service date of this Order or until the Department indicates that the records may be destroyed, whichever comes firs t. 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 Aviation, Ltd. is fit, willing and able to operate as a commuter air carrier, and capable of providing re liable Essential Air Service at Huron;

4. This docket will remain open pend ing further Department action; and

4 The certifications are available online under “Reports and Publications” at http://www.dot.gov/policy/aviation-policy/small-co mmunity-rural-air-service/essential-air-service- 4 -

5. The Department will serve a copy of this Order on the Mayor of Huron, South Dakota, the airport manager of Huron Regional Airpor t, Great Lakes Aviation, Ltd, and Boutique

Air.

By:

SUSAN L. KURLAND Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available at http://www.regulations.govAppendix A



### AREA MAP

Maps generated by the Great Circle Mapper - copyright © Karl L. Swartz

.Appendix B



### Great Lakes Proposal for EAS at HuronAppendix C

Great Lakes Aviation, Ltd. Essential Air Service to be provided at Huron, South Dakota

Docket DOT-OST-2000-7138

Effective Period: October 1, 2014, through September 30, 2016 Scheduled Service: 12 weekly round trips to Minneapolis (MSP) or Denver (DEN); upline service permitted

Aircraft: 19-seat Beech 1900D 1 Rate per Eligible Flight: $2,080 2 Weekly Ceiling: $49,920 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 pr ior 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 f lights in full conformance with the Order for a significant perio d, it may jeopardize its entire subsidy claim for the period in ques tion. If the carrier contempl ates 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 written approval from the Department to be ensured of full compensation. Should circumstances warrant, the Department may locate and se lect a replacement carrier to provide serv ice 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 shoul d be adjusted or disallowed, the Department will consider the extent to which the goals of the program are met and th e extent of access to the natio nal 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 th e stipulated service levels, the carrier may cease to provid e service to that specific location without regards to any requirement for notice of such cessation. Those adjustments in the levels of subsidy and/or service that are mutually agreed to in writin g by the Department and carrier do not constitute a total or partial reduction 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 not operate to controvert the foregoing paragraph.

Funds may not be available for performance under this order beyond September 30, 2014. The Government’s obligation for performance under this order beyond September 30, 2014, is subject to the availability of funds from which payment for services can be made. No legal liability on the part of the Go vernment for any payment may arise for performance under this order beyond September 30, 2014, until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond September 30, 2014, the Department will provide notice in writing to the carrier.

All claims for payment, including any amended claims, must be submitted within 90 days of the last day of the month for which compensation is being claimed. For example, claims for service provided in July must be filed by October 31; August claims must be submitted by November 30, and so on.

1 Many Great Lakes Beech 1900D aircraft have been reconfig ured to 9 seats from 19 seats. Great Lakes states it

will return to 19 seats when restricted ATPs have been issued to crew.

2 Annual compensation of $2,552,000 divided by the 1,227 annual departures (4 flights per day x 313 days x 98 percent completion).

3 24 arrivals and departures per w eek multiplied by $2,080 per flight.