Order 2012-1-17

Served: January 23, 2012

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 23rd of January, 2012

Essential Air Service at

JAMESTOWN, NORTH DAKOTA

Under 49 U.S.C. 41731 et seq. 

DOCKET OST-1997-2785

ORDER SELECTING CARRIER 

Summary

By this Order, the Department is selecting Great Lakes Aviation, Ltd. (Great Lakes) to provide 

Essential Air Service (EAS) at Jamestown, North Dakota, for an annual subsidy of $1,987,655,

1

effective with the start of service by Great Lakes. We anticipate that Great Lakes will start 

service on or about March 12, 2012.

Background

By Order 2009-8-6, we selected Mesaba Aviation, Inc., and Pinnacle Airlines, d/b/a Delta 

Connection (Delta), to provide EAS at Jamestown through September 30, 2011, with 34-seat 

Saab 340 aircraft. The annual subsidy level was $1,963,220 for two round trips per day, seven 

days per week to Minneapolis, operated with a mixture of one-stop and nonstop service. 

On July 15, 2011, Delta filed 90-day notices of intent to suspend service at Jamestown, as well as 

at 23 other EAS communities, effective October 13, 2011.

2 By Order 2011-9-5, we prohibited 

Delta from terminating service at Jamestown and requested proposals for replacement service by 

October 21, 2011. 

 

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

2 This order addresses only Jamestown.
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Carrier Proposals

In response to our request for proposals, we received proposals from Great Lakes and Sovereign 

Air.3 

Great Lakes proposes to operate eighteen nonstop round trips per week to Minneapolis with 19-

seat Beech 1900 aircraft, with upline service to Devils Lake, and requested $1,987,655 annual 

subsidy for this service.4

Sovereign Air submitted four options. 

Option 1A proposed fourteen nonstop round trips per week to Minneapolis with 30-seat 

Dornier 328 jet aircraft, with upline service to Devils Lake, and requested $2,312,388 

annual subsidy for this service.

Option 1B proposed the same level of service as Option 1A above. However, this 

option requests only $1,728,375 annual subsidy. Sovereign requests reduced subsidy 

from Option 1A because it assumes we would select them at International Falls and 

Hibbing. 

Option 2A proposed fourteen nonstop round trips per week to Minneapolis with 30-seat 

Jetstream 41 turboprop aircraft, with upline service to Devils Lake, and requested 

$1,822,848 annual subsidy for this service. The only difference from Option 1A is the 

aircraft type proposed.

Option 2B proposed the same level of service as Option 2A above. However, this 

option requests only $1,628,375 annual subsidy. Sovereign requests reduced subsidy 

from Option 2A because it assumes we would select them at International Falls and 

Hibbing. 

Community Comments

On October 21, the staff sent letters to Jamestown requesting comments regarding the proposals and 

on November 17, 2011, we received a single letter jointly signed by Jamestown’s Mayor, airport 

manager, and airport authority

“As you know, our sole air carrier service is currently provided by Mesaba Airlines, d/b/a 

Delta Connection with a 34-seat Saab 340, operating twice daily to Minneapolis/St. Paul 

(MSP). For the past eight years we have been very pleased with this level of service and 

our passenger usage levels have increased exponentially. We feel that a continued 

relationship with Delta Airlines in the form of a seamless and integrated marketing 

agreement which allows us to remain in their network is imperative to our future success. 

The proposal as submitted by Great Lakes Aviation including three nonstop flights to 

Minneapolis/St. Paul, a partial Code Share marketing agreement with Delta that enables 

 

3 Sovereign Air submitted a number of options. We summarize above the option that requires the least subsidy. All 

of Sovereign Air’s proposals, our letters to the community requesting comment, and the community’s comments 

can be seen on www.regulations.gov in the Docket as listed on the front page of this order..

4 By Order 2011-12-6, December 14, 2011, we selected Great Lakes at Devils Lake on an expedited basis.
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customers to purchase tickets on Delta.com, and participation in Delta’s frequent flyer 

program is vastly preferable to the proposals proffered by Sovereign Air. 

On November 21, 2011, we received comment from the North Dakota Aeronautics Commission, 

recommending that we select Great Lakes.

“According to the local FAA Flight Standards District Office, Sovereign Air does not 

currently hold an air carrier certificate. In contrast, Great Lakes Aviation has a history of 

providing air service to both of the Devils Lake and Jamestown communities, and we are 

confident that they can accomplish the air service needs of these communities.”

Decision

The carrier-selection decision is straightforward. Great Lakes requests $1,987,655 annual 

subsidy, approximately the same level of subsidy set by Order 2009-8-6 that expired on 

October 31, 2011, and all of this service would operate on a nonstop basis. On the other hand, 

Sovereign Air has no operating authority from either the FAA or the Department and no immediate 

prospect of receiving any.5 When selecting a carrier, 49 U.S.C. §41733(c)(1) directs us to 

consider four factors: (1) service reliability; (2) contractual and marketing arrangements with a 

larger carrier at the hub; (3) interline arrangements with a larger carrier at the hub; and 

(4) community views. In addition, The Consolidated Appropriations Act, 2008, 

Public Law 110-161, provides that when selecting a carrier to provide EAS, the Department may 

consider the relative subsidy requirements, thus codifying a factor that we have considered since 

the inception of the program. Great Lakes has a clear advantage on all four criteria, especially as 

Sovereign is not an operating carrier, and does not have the requisite operating authority from 

either the Federal Aviation Administration or the Department. 

Certifications

We shall make these selections contingent upon the Department’s receipt of properly executed 

certifications from Great Lakes that it is in compliance with the Department’s regulations 

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

lobbying activities.

Carrier Fitness

49 U.S.C. 41737(b) requires that we find an air carrier fit, willing, and able to provide reliable 

service before we may subsidize it to provide Essential Air Service. Great Lakes is subject to the 

Department’s continuing fitness requirements, and no information has come to our attention that 

would cause us to question the 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 

finding. We therefore conclude that the carrier remains fit to conduct the operations proposed 

here.

 

5 Order 2010-10-21, issued on October 27, 2010, dismissed Sovereign’s application for authority to operate 

scheduled passenger service, and Order 2011-2-3, issued on February 3, 2011, affirmed that decision after Sovereign 

petitioned for reconsideration.
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Carrier Transition

We expect Delta and Great Lakes to work together to make a smooth transition at these 

communities. In that regard, before Delta suspends its service we expect it to 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 

penalty, if requested. In this regard, the EAS staff will be working with Delta to establish new 

hold-in subsidy rates as the current contracts become eligible for renegotiation.

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

ACCORDINGLY,

1. We select Great Lakes Aviation, Ltd., to provide EAS at Jamestown, North Dakota;

2. We set the final rate of compensation for Great Lakes Aviation, Ltd., for the provision of 

Essential Air Service at Jamestown, North Dakota, as described in Appendix C;

3. We direct 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 date it begins 

providing EAS 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 carrier 

may forfeit its compensation for any claim that is not supported under the terms of this Order;

4. We find that Great Lakes Aviation, Ltd., continues to be fit, willing and able to operate as a 

commuter carrier and capable of providing reliable EAS at the these communities;

5. This docket will remain open until further order of the Department; and
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6. We will serve copies of this Order on the Mayors and Airport Managers of Jamestown, North 

Dakota.

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.gov
Appendix A

Nonstop Great Circle Miles 

Devils Lake (DVL) to Minneapolis (MSP) 351

Jamestown (JMS) to Minneapolis (MSP) 299

Grand Forks (GFK) to Minneapolis (MSP) 284

Fargo (FAR) to Minneapolis (MSP) 223

Jamestown to Grand Forks (GFK) 100

Jamestown to Fargo (FAR) 88

Jamestown to Devils Lake 83
Appendix B

Great Lakes Aviation, Ltd.

Annual Compensation Requirements for Essential Air Service at

Jamestown, North Dakota to Minneapolis/St. Paul ( MSP )

Three Round Trips - B1900

98.0% completion factor

Departures: 1,840

Block Hours: 2,531

Revenue Passenger Miles: 4,559,750

Available Seat Miles: 10,453,040

Operating Revenues:

Passenger: JMS-MSP 15,250 psgrs at $132.75 $2,024,438

Other: (at 0.62% of passenger revenue) $12,552

Total Operating Revenues: $2,036,990

Operating Expenses:

Direct: Aircraft and Hull Insurance $365,710

Fuel and Oil $1,331,293

Flying Operations $443,279

Maintenance $611,761

Total Direct Expenses: $2,752,043

Total Indirect Expenses: $1,080,951

Total Operating Expenses: $3,832,994

Operating Loss $1,796,005

Profit Element (5.0% of Total Operating Expenses) $191,650

Annual Compensation Requirement: $1,987,655

No Upline Scheduling Restrictions
Appendix C

Great Lakes Aviation, Ltd. Essential Air Service 

to be Provided to Jamestown, North Dakota

Effective Period: Two-year period beginning when Great Lakes begins service through the 24th

month thereafter.

Service: 18 nonstop round trips per week to Minneapolis (MSP).

Aircraft: Beech 1900D, 19 seats.

Rate per Eligible One-Way Flight: $1,080 1

Weekly Ceilings: $38,880 2

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 amounts or at the stipulated 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 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 are not currently available for performance under this order beyond September 30, 2012. The Government’s 

obligation for performance under this order beyond September 30, 2012, 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 this order beyond September 30, 2012, until funds are made available to 

the Department for performance. If funds are not made available for performance beyond September 30, 2012, 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 under this order.

 

1 Annual compensation of $1,987,655 divided by 1,840 estimated annual completed departures and arrivals:

18 flights/week x 2 directions x 52 weeks x 313/312 days x 98 percent completion.

2 $1,080 x 36 flights per week = $38,880.