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, 2014

ORDER SELECTING AIR CARRIERS

Summary

By this Order, the Department is selecting Multi-Aero, Inc. d/b/a Air Choice One (Air 

Choice One), to provide Essential Air Service (EAS) at Ironwood, Michigan/Ashland 

Wisconsin (Ironwood), using 9-passenger Cessna Grand Caravan or 8-passenger Piper 

Navajo aircraft to Chicago O’Hare International Airport (Chicago O’Hare) for 3 round trips

each weekday and weekend (18 total per week), for the two-year term from June 1, 2014, 

through May 31, 2016,

1

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

2

 

The Department is also reselecting Great Lakes Aviation (Great Lakes) to provide EAS at 

Thief River Falls, Minnesota, using 19 (reconfigured to 9) passenger Beech1900D aircraft 

with non-stop service to Minneapolis/St. Paul International Airport (Minneapolis) for 2

round trips 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-2001-10644
- 2 -

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

select a replacement carrier to provide service to Thief River Falls.

Finally, the Department is reselecting 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 2011-11-30 (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 Watertown, 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 trips 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, 

Wisconsin.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 thus expire 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 Great 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 proposals 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 later selected to serve Rhinelander. 
- 3 -

In response 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 Caravan or 

Navajo aircraft for an annual subsidy of $2,888,564 for the two-year plan or an annual 

discounted subsidy of $2,859,678 for the four-year plan.

Option 2 is for a two-year or four-year plan for 18 weekly nonstop round trips to Chicago 

using Caravan or Navajo aircraft for an annual subsidy of $3,563,394 for the two-year plan 

or an annual discounted subsidy of $3,527,760 for the 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 configuration. 

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-installation of the additional 

ten seats, allowing 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 for an annual subsidy of $2,152,426.

For Thief River Falls, Great Lakes submitted a proposal for a two-year term for 12 weekly 

round trips to Minneapolis 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 option is for 18 weekly 

nonstop round trips between Watertown and Minneapolis utilizing a Beech 1900D aircraft; 

the second option is for 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 solicited 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. Among the reasons the community supports Air Choice One’s 

proposal are its reliability, the fact that the 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 Lakes’ history of unreliability, 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 Authority 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, supporting Great 

Lakes’ proposal. The reasons the community supports Great Lakes are the options of 

being able to fly to both Minneapolis and Denver, 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 service and subsidy levels to be reasonable, the initial 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 any time since October 31, 1978.” 

Although Thief River Falls and Watertown support Great Lakes to provide air service to 

their respective communities, Thief River Falls has requested that the Department solicit 

new proposals if Great Lakes will not resume 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 contingent upon the Department’s receiving properly executed 

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

regulations regarding drug-free workplaces and nondiscrimination, as well as the 

regulations concerning lobbying activities.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 findings. 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 Service at 

Ironwood, Michigan/Ashland, Wisconsin, and establish the annual subsidy rate as 

described in Appendix C;

2. We select Great Lakes Aviation, Ltd. to provide Essential Air Service at Thief River 

Falls, Minnesota, and Watertown, South Dakota, and establish the annual subsidy rates as 

described in Appendix C.

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

Falls 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 

documentation 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 carriers 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/aviation-policy/small-community-rural-air-service/essential-air-service
- 6 -

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

a commuter air carrier, and capable of providing reliable Essential Air Service 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 Order on the Mayors of Ironwood, Michigan, 

Ashland, Wisconsin, Thief River Falls, Minnesota, and Watertown, South Dakota, the 

managers of Gogebic-Iron County Airport, Thief River Falls Regional Airport, and 

Watertown Regional Airport, Multi-Aero, Inc. d/b/a Air Choice One, and Great Lakes 

Aviation, Ltd.

By:

SUSAN L. KURLAND

Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available at

http://www.regulations.gov
Appendix 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 Ironwood

 

Representative Schedule

Departure Arrival

IWD 6:00 AM ORD 7:50 AM

ORD 8:15 AM

IWD 11:30 AM

IWD 10:05 AM

ORD 1:20 PM

ORD 12:10 PM

IWD 3:25 PM

IWD 2:00 PM

ORD 5:15 PM

ORD 7:15 PM IWD 9:05 PM

# Passengers: 8,100

Average Fare: $69.00

Departures: 1,822

Block Hours: 2,811

Revenue Passenger Miles: 2,689,200

Available Seat Miles: 4,822,871

Ironwood, Michigan – Cessna Grand Caravan or Piper Navajo

Option 2:

2 Year Service or 4 Year Discounted Service (Discounted in Years 3-4)

18 Total Round Trips Per Week – Based on 97% Completion Rate

Ironwood, Michigan – Chicago O’Hare International Airport – Caravan or Navajo

Operation Revenues

IWD-ORD Revenues $ 558,900

Other Revenues 0

Total Operating Revenues $ 558,900

Direct Operating Expenses

Flying Operations $ 617,872

Fuel and Oil 941,941

Maintenance 809,020

Aircraft Leases 479,750

Total Direct $2,848,583

Marketing 50,000

Indirect 1,027,411

Total Operating Expenses $3,925,994

Operating Loss $3,367,094

Profit Element (5% total Oper. Exp.) 196,300

Compensation Required $3,563,394

Compensation per PAX $440

Compensation per Departure $1,956

02/05/2014

DISCOUNTED FOR YEARS 3-4

DISCOUNTED SUBSIDY

$3,527,760/Year

$1,936/Departure
Appendix B

Page 2 of 3

Great Lakes Proposal for EAS at Thief River Falls
Appendix B

Page 3 of 3

Great Lakes Proposal for EAS at Watertown
Appendix 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, 20161

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

Aircraft: 9-passenger Cessna Grand Caravan (single-engine) or 8-passenger Piper Navajo (twinengine)

Rate per Eligible Flight: $1,962

2

Weekly Ceiling: $70,632

3

Note: The carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance 

with the terms and stipulations of the rate Order, including the service plans outlined in the Order and any other significant 

elements of the required service, without prior approval. The carrier understands that an aircraft take-off and landing at its 

scheduled destination constitutes a completed flight; absent an explanation supporting subsidy eligibility for a flight that 

has not been completed, such as certain weather cancellations, only completed flights are considered eligible for subsidy. 

In addition, if the carrier does not schedule or operate its flights in full conformance with the Order for a significant period, 

it may jeopardize its entire subsidy claim for the period in question. If the carrier contemplates any such changes beyond 

the scope of the Order during the applicable period of 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. 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 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 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 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.

 

1

The date is an estimate for a budgetary marker. Actual start date will be determined by Air Choice One.

2 Annual compensation of $3,563,394 divided by the 1,816 annual departures (36 weekly departures x 52 weeks x 

97 percent completion).

3

36 arrivals and departures per week multiplied by $1,962 per flight.
Appendix C

Page 2 of 3

Great Lakes Aviation

Essential Air 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: $1,9864

Weekly Ceiling: $47,6645

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 must first notify the Office of Aviation Analysis in 

writing and receive written approval from the Department to be ensured of full compensation. Should circumstances 

warrant, the Department may locate and select a replacement carrier to provide service on these routes. The carrier must 

complete all flights that can be safely operated; flights that overfly points for lack of traffic will not be compensated. In 

determining whether subsidy payment for a deviating flight should be adjusted or disallowed, the Department will consider 

the extent to which the goals of the program are met and the extent of access to the national air transportation system 

provided to the community.

If the Department unilaterally, either partially or 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 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 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 Annual compensation of $2,428,750 divided by the 1,223 annual departures (24 weekly departures x 52 weeks x 

98 percent completion).

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 Watertown, 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: $1,471

6

Weekly Ceiling: $55,8987

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 must first notify the Office of Aviation Analysis in 

writing and receive written approval from the Department to be ensured of full compensation. Should circumstances 

warrant, the Department may locate and select a replacement carrier to provide service on these routes. The carrier must 

complete all flights that can be safely operated; flights that overfly points for lack of traffic will not be compensated. In 

determining whether subsidy payment for a deviating flight should be adjusted or disallowed, the Department will consider 

the extent to which the goals of the program are met and the extent of access to the national air transportation system 

provided to the community.

If the Department unilaterally, either partially or 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 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 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.

 

6 Annual compensation of $2,847,284 divided by the 1,936 annual departures (38 weekly departures x 52 weeks x 

98 percent completion).

7

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