Order: 2014

- 4

- 17

Served: April 18, 2014



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 18th day of April , 20 1 4



### ORDER SELECTING AIR CARRIER S

Summary By th is O rder, the Department is selecting Multi

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

Choi ce One )

, to provide Essential Ai r Service (EAS) at Ironwood, Michigan/Ashland

Wisconsin (Ironwood) , using 9

- passenger Cessna Grand Caravan or 8

- passenger Piper

Nava j o aircraft to Chicago O’Hare International Airport (Chicago O’Hare ) f or 3 round trips each weekday and weekend (18 total per week ) , for the two

- year term from Ju ne 1, 2014, through May 31, 2016

, 1 for an annual subsidy of $ 3,563,394

. 2

T he De partment is also re selecting Great Lakes Aviation (Great Lakes) to provide EAS at Thief River Falls, Minnesota , using 19 ( reconfigured to 9) passenger Beech1900D aircraft

with non

- sto p service to Minneapolis /St. Paul International Airport (Minneapolis) for 2 round trip s each weekday and weekend (12 total per week )

, for the two

- year term from June 1, 2014 through May 31, 2016

, for an annual subsidy of $2,428,750

. If Great Lakes

1 The date is an estimate for a budgetary marker. Actual start date will be determined by Air Choice One. End date will be two years from the actual start date.

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

IRONWOOD, MICHIGAN/ASHLAND, WISCONSIN THIEF RIVER FALLS, MINNESOTA WATERTOWN, SOUTH DAKOTA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 1996

- 1266
DOCKET DOT

- OST

- 2001

- 10642
DOCKET DOT

- OST

- 2001

- 1064 4- 2

-

must commence service at Thief River Falls by June 1 or the Department may locate and

select a r eplacement carrier to provide service to Thief River Falls

.

Finally, the Department is re selecting Great Lakes to provide EAS at Watertown, South Dakota using 19 (reconfigured to 9) passenger Beech 1900D aircraft with non

- stop service to Minneapolis for 2 round trips each weekday and weekend and one

- stop service to Denver for one daily round trip, for a total of 19 per week, for the two

- year term from June 1, 2014 through May 31, 2016, for an annual subsidy of $2,847,284. See Appendix A for map.

Background By Order 2 011

- 11

- 30 (November 23, 2011), the Department selected Great Lakes , to provide subsidized EAS at Thief River Falls utilizing 19

- seat Beech 1900D aircraft, with 12 nonstop round trips a week to Minneapolis at an annual subsidy rate of $1,881,815; and

at Wat ertown, utilizing 19

- seat Beech 1900D aircraft, with 18 nonstop round trips a week to Minneapolis, at an annual subsidy rate of $1,710,324, each for a two

- year period.

By Order 2012

- 3

- 5 (March 7, 2012), the Department selected Great Lakes to provide subsidized EAS at Ironwood, utilizing 19

- seat Beech 1900D aircraft, with 12 nonstop round trip s a week to Minneapolis at an annual subsidy rate of $1,747,326, for two years beginning when Great Lakes inaugurated service at Ironwood and Rhinelander,

Wiscons in. 3

Subsequently, by Order 2012

- 6

- 23 (June 26, 2012), the Department stated that it would use May 17, 2012, as the effective start

- date when Great Lakes established EAS at Thief River

Falls and a number of other communities. The contracts will th us exp ire at the end of the

two

- year period through the end of the 24th month thereafter, May 31, 2014.

Finally, by Order 2012

- 9

- 17 (September 14, 2012), the Department established the end date for Great Lakes’ contract to provide service at Ironwood as May 31, 2014, to synchronize it with other EAS contracts with G reat Lakes into its Minneapolis hub (described above for Thief River Falls and Watertown).

As the end of the contract was approaching, we issued Order 2013

- 12

- 14 ( December 23

, 2013) requesting propos als from air carriers interested in providing EAS at the

communities for a new term.

On January 31, 2014, Great Lakes suspended all service at Ironwood, Thief River Falls, and several communities not discussed in this Order, leaving the communities with no scheduled air service. At Watertown, Great Lakes requested approval to operate an alternate service pattern, which added Denver as one of the hubs it could serve, in addition to Minneapolis.

3 Great Lakes inaugurated service to Ironwood on March 11, 2012, but ultimately did not inaugurate service at Rhinelander, and another carrier was late r selected to serve Rhinelander.- 3

-

In respo nse to that Order, Air Choice One submitted its proposal for Ironwood only. Great Lakes, the airline currently providing the service

, submitted its proposal for Ironwood, Thief River Falls, and Watertown.

Proposal of Air Choice One Air Choice One submitted a proposal for Ironwood with two options. Option 1 is for a

two

- year or four

- year plan for 12 weekly nonstop round trips to Chicago using Ca ravan or Nava j o aircraft for an annual subsidy of $2,888,564 for the two

- year plan or an annual

discounted subsidy of $2,859,678 f or the four

- year plan.

Option 2 is for a t wo

- year or four

- year plan for 18 weekly nonstop round trips to Chicago using Caravan or Nava

j o aircraft for an annual subsidy of $3,563,394 for the two

- year plan

or an a nnual discounted subsidy of $3,527,760 for t he four

- year plan.

Air Choice One’s complete proposal and the community’s comments may be accessed

online at www.regulations.gov by entering DOT

- OST

- 1996

- 1266 in the search block.

Proposal of Great Lakes

Great Lakes suspended service at Ironwood and Thief River Falls on February 1, 2014, due to a pilot shortage. They anticipate that they will be able to rebuild their pilot staff whereby pilots will be able operate Beech 1900D aircraft in a nine

- seat confi guration.

Their proposed service to these communities assumes that they will have the necessary FAA approval and will have rebuilt their availability of qualified pilots to crew the Beech

1900D aircraft in a 9 seat configuration. They expect the re

- i nst allation of the additional

ten seats, al lowing for utilization of all nineteen seats, would occur as soon as pilot experience complies with the FAA regulations.

For Ironwood, Great Lakes submitted a proposal for a two

- year term for 12 weekly round trips to Minneapolis using Beech 1900D aircraft f or an annual subsidy of $2,152,4 26.

For Thief River Falls, Great Lakes submitted a proposal for a two

- year term for 12 weekly round trips to Minneap olis using Beech 1900D aircraft, or, one

- stop service to Denver using a 30 passenger Embraer Brasilia EMB

- 120 aircraft for an annual subsidy of $2,428,750.

For Watertown, Great Lakes submitted a proposal with three options, each for a two

- year term, and all for an annual subsidy of $2,847,284. The first opt ion is for 18 weekly nonstop round trips between Watertown and Minneapolis utilizing a Beech 1900D aircraft ; the second option is f

or 12 weekly nonstop round trips between Watertown and Minneapolis

, plus 7 weekly one

- stop round

- trips to Denver utilizing a Beech 1900D

aircraft ; the third option is for 12 weekly one

- stop round trips to Denver utilizing a 30

- seat

EMB

- 120 Brasilia aircraft

.- 4

-

Great Lakes’ complete proposal and the community’s comments may be accessed online at www.regulations.gov by entering DOT

- OST

- 1996

- 1266

, DOT

- OST

- 2001

- 10642 , and

DOT

- OST

- 2001

- 10644 in the search block

.

Community Comments On February 6

, 2014 , the Department solic ited comments from the communities regarding

this air carrier selection case.

We received a letter from Michael Harma, Ironwood Airport Manager

, supporting Air Choice One’s proposal. A mong the reasons the community support s Air Choice One’s proposal are its reliability, the fact that t he community is currently without air service, its schedule offering of early morning flights

, and the community’s concerns about Great

Lakes ’ unreliability. Ironwood is waiving the twin

- engine, dual pilot requirement but

would like to be able to receive twin

- engine, dual pilot air service in the future.

We received a letter from Joe Hedrick, Thief River Falls Airport Manager, recommending Great Lakes’ proposal. Mr. Hedrick states the support does not come without concern.

First and foremost is Great La kes’ history of un reliability, since the community has been without air service since February 1, 2014

, and they believe it will take months to restore

traveler confidence in the carrier. The Thief River Falls Airport Auth ority wants to reserve the option to rebid its service should it not resume by June 1, 2014. Additionally, the Authority is concerned that removing 10 of the 19 seats on Great Lakes’ Beech 1900D aircraft places a burden on the carrier and may further delay a return of service.

Finally, the Department received a letter from Airport Manager Todd Syhre, Mayor Steve Thorson, and City Engineer, Tom Drake, of the Watertown community

, s upporting Great Lakes’ proposal. The reasons the community supports Great Lakes are the option s of being able to fly to both M inneapolis and D enver , both airline hub cities, and no other

carriers bid on service to Watertown.

Decision

Since the community supports Air Choice One to provide air service to Ironwood and the Department finds the servic e and subsidy levels to be reasonable, the in i tial decision to

select them is clear. However, the community is concerned that by supporting Air Choice One, which could operate the service with single

- engine Cessna Caravan equipment

, that it

is waiving its right to twin

- engine aircraft in the future . 49 U.S.C. §§ 41732(b ) ( 5) states that [Basic essential air service shall include at least ] “ 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 an y time since October 31, 1978 .”

Although Thief River Falls and Watertown support Great Lakes to provide air service t o thei r respective communities, Thief River Falls has requested that the Department solicit new proposals if Great Lakes will not resum e service there by June 1, 2014. The Department will monitor Great Lakes’ start

- up plan for Thief River Falls. If Great Lakes- 5

-

will not resume service on or about June 1, 2014, we will, in consultation with the community, solicit proposals for a replacement service.

We make this selection of Air Choice One at Ironwood and Great Lakes at Thief River

Falls and Watertown contingen t upon the Department’s receiving properly executed

certifications from the air carrier s that they are in compliance with the Department’s

regu lations regarding drug

- free workplaces and nondiscrimination, as well as the regulations concerning lobbying acti vities. 4

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 EAS

. Air Choice One and

Great Lakes are subject to the Department’s continuing fitness requirements, and no

information has come to our attention that would cause us to question the air carrier’s fitness at this time. We have contacted the Federal Aviation Administration, and it has

raised no concerns that would negatively affect our fitness findin gs . We therefore conclude

that Air Choice one and Great Lakes are reliable and fit to conduct the operations proposed

here.

This Order is issued under authority delegated in 49 CFR Part 1

. 25a(b)

.

ACCORDINGLY,

1. We select Multi

- Aero, Inc. d/b/a Air Choice One to provide Essential Air S ervice at Ironwood, Michigan / Ashland, Wisconsin

, and establish the annual subsidy rate as described in Appendix C;

2. W e select Great Lakes Aviation , Ltd. to provide Essential Air Service at Thief River Falls, Minnesota

, and Watertown, South Dakota, and establish the annual subsidy rate s as described in Appendix C.

3. We will , with consultation with the community, again solicit proposals at Thief River

Fa lls if Great Lakes will not resume service on or about June 1, 2014;

4

. We direct Multi

- Aero, Inc. d/b/a Air Choice one and Great Lakes Aviation, 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 its audit and examination by representatives of the Department. Such

d ocumentation shall be retained for seven years from the service date 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. The ca rrier s may forfeit its compensation for any claim that is not supported under the terms of this Order ;

4 The certifications are available online under “Reports and Publications” at http://www.dot.gov/policy/avi ation

- policy/small

- community

- rural

- air

- service/essential

- air

- service- 6

-

5

. We f i nd that Mult i

- Aero, Inc. d/b/a Air Choice One is fit, willing and able to operate as

a commuter air carrie r
, and capable of providing reliable Essential Air S ervice at Ironwood ;

6

. We find that Great Lakes is fit, willing and able to operate as a commuter air carrier, and capable of providing reliable Essential Air Service at Thief River Falls and Watertown ;

7

. This docket will remain open pending further Department action ; and

8

. The Department will serve a copy of this O rder on the Mayor s of Ironwood, Michigan, Ashland, Wisconsin, Thief River Falls, Minnesota, and Watertown, South Dakota , the

manager s of Gogebic

- Iron County Airport, Thie f River Falls Regional Airport, and Watertown Regional Airport, Multi

- Aero, Inc. d/b/a Air Choice One, and Great L akes

Aviation , Ltd

.

B y:

SUSAN L. KURLAND Assistant Secretary for

Aviation and International Affairs

(SEAL)

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



### AREA MAP

Maps generated by the Great Circle Mapper

- copyright © Karl L. Swartz

.Appendix B Page 1 of 3


### Air Choice One Proposal for EAS at IronwoodAppendix B Page 2 of 3


### Great Lakes Proposal for EAS at Thief River FallsAppendix B Page 3 of 3



### Great Lakes Proposal for EAS at WatertownAppendix C Page 1 of 3

Multi

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

Essential Air Service to be provided at Ironwood, Michigan /Ashland, Wisconsin

Docket DOT

- OST

- 1996

- 1266

Effective Period : June 1, 2014

, through May 31

, 2016 1

Scheduled Service : 18 weekly nonst op round trips to Chicago O’Hare (ORD)

Aircraft : 9

- pas senger Cessna Grand Caravan (single

- engine) or 8

- passenger Piper Nava j o (twin

engine) Rate per Eligible Flight: $ 1, 96 2 2
Weekly Ceiling : $ 70,63 2 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 o utlined 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 suppo rting 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 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 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. I n determining whether subsidy payment for a deviating flight should be adjusted or disallowed, the Department will con sider 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 ser vice 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 service levels, the carrier may cease to provide service to that specifi c 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 writing by the Department and carrier do not constitute a total or partial reduction or ce ssation 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 Government for any payment may arise for performance u nder 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 wi thin 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 The date is an estimate for a budgetary marker. Actual start date will be determined by Air Choice One

. 2 A nnual compensation of $3,563,394 divide d by the 1 ,816 annual departures (36 wee kly departures x 52 weeks x

97 percent completion).

3 36 arrivals and depart ures per week multiplied by $ 1,962 per flight.Appendix C Page 2 of 3

Great Lakes Aviation

Essential Ai r Service to be provided at Thief River Falls, Minnesota

Docket DOT

- OST

- 2001

- 10642

Effective Period : June 1, 2014, through May 31, 2016

Scheduled Service : 12 weekly nonstop round trips to Minneapolis /St. Paul (MSP)

Aircraft : 19 (9)

- passenger Beech 1900D Rate per Eligible Flight: $1,9 86 4
Weekly Ceiling : $ 47,664 5

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 explanati on 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 con formance 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 no tify 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 route s. The carrier must complete all flights that can be safely operated; flights that overfly points for lack of traffic will not be compensated. I n 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 stipulated service levels, the carrier may cease to provide 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 writing by the Department and carrier do not constitute a total or partial reducti on 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 op erate 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 Government 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.

4 A nnual compensation of $2,428,750 divided by the 1 ,223 annual departures (24 weekly departures x 52 weeks x

98 percent completi on).

5 24 arrivals and departures per week multiplied by $ 1,986 per flight.Appendix C Page 3 of 3

Great Lakes Aviation Essential Air Service to be provided at Waterto wn, South Dakota

Docket DOT

- OST

- 2001

- 10644

Effective Period : June 1, 2014, through May 31, 2016

Scheduled Service : 12 weekly nonstop round trips to Minneapolis /St. Paul (MSP) and 7 weekly

one

- stop round trips to Denver (DEN)

Aircraft : 19 (9)

- passenger Beech 1900D Rate per Eligible Flight: $1, 47 1 6
Weekly Ceiling : $ 55,8 98 7

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 this rate, it m ust 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. I n 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 redu ces 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 service levels, the carrier may cease to provide ser vice 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 writing by the Department and carrier do not constitute a total

or par tial 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 avai lability of 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, 2014 , until funds are made available to the Department for perf ormance. 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 las t 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.

6 Annual compensation of $2,847,284 divided by the 1 ,936 a nnual departures (38 weekly departures x 52 weeks x 98 percent completion).

7 38 arrivals and departures per week multiplied by $ 1,471 per flight.