## Before the United States Department of Transportation 

# Washington, DC

October 7, 2014

Essential Air Service at: KEARNEY, NEBRASK A Docket OST-1996-1715 NORTH PLATTE, NEBRASK A Docket OST-1999-5173 SCOTTSBLUFF, NEBRASK A Docket OST-2003-14535 under 49 U.S.C. 41731 et.seq.
This document contains Great Lakes Aviation, Ltd.'s response to Order Requesting Proposals 2014-8-20. Great Lakes Aviation, Ltd. is pleased to submit this proposal, as an inseparable package, for all three of these Nebraska communities. Our proposals contemplate conveniently timed c onnecting services to our Denver hub, whereby passengers may utilize our code-share agreements with United Airlines. Local service will be marketed and priced utilizing the Great Lakes (ZK) brand and reservations system. Additionally, Great Lakes maintains interline ticketing and baggage agreements with the majority of the other carriers serving Denver, including interline e-ti cketing agreements with American Airlines, Delta Airlines (with the ability to earn Delta Skymiles) and United Airlines. All of which will offer passengers traveling to and from these communi ties supplemental access to the domestic and international air transportation system. New FAA pilot qualification rules have created an industry-wide pilot shortage which has had an acute impact on Great Lakes. These new rules mandated that first officers obtain an Airline Transport Pilot certification (“ATP”) prior to being qualified to perform crewmember duties in scheduled airline passenger service under FAR Part 121 regulatory requirements. A key factor to enable a pilot to receive an ATP certificate is the accumulation of 1,500 flight hours. On March 18th of this year, Great Lakes received from the FAA new operations specifications allowing us to hire pilots under it's FAR Part 121 Certificate utilizing FAR Part 135 regulatory hiring requirements. This allows our new hire pilots to operate the Beech 1900D aircraft in a nine seat configuration and will enable Great Lakes to restore pilot staffing levels while maintaining FAR Part 121 hiring, training and maintenance standards. Great Lakes is proposing three different service alternatives for all three communities. Service levels vary by equipment type, equipment configuration and frequency of service. In proposal A, Great Lakes is proposing three roundtrips per day operating Beechcraft 1900D aircraft configured for nine seats. Due to pilot supply, this is the current level of service we have been forced to offer Scottsbluff and North Platte.Questions and comments may be referred to:

Michael O. Matthews Chief Financial Officer Great Lakes Aviation, Ltd. 1022 Airport Parkway Cheyenne, WY 82001 (307) 432-7000 It is Great Lakes' belief that regulatory relief for small community air service must be granted in the near future. Excessive subsidy requirements will force communities to loose EAS service eligibility as available seats are being dramatically reduced due to arbitrary limitations on aircraft seating configurations. Great Lakes’ stands ready to participate in creative solutions to assist small communities in their efforts to remain in the National Air Transportation System. Additionally, for the same annualized subsidy requirements as our Beechcraft 1900D configured in nine seats proposal; we are prepared to commit, with the full marketing support of the communities, to upgrading the aircraft to 37 seat or larger regional jets operating two roundtrips per weekday and two roundtrips over the weekend period. In proposal B, for illustrative purposes; we have provided a level of service that will lower subsidy requirements assuming that our Beechcraft 1900D aircraft can be returned to a 19 seat configuration. In proposal C, Great Lakes is proposing two daily roundtrips utilizing Brasilia EMB-120 aircraft configured with 30 seats. By operating the 30 seat Brasilia EMB-120 aircraft, Great Lakes believes that we will be enabled, with the support of the community, to stimulate traffic development by offering additional seats at discounted fares. Great Lakes currently owns six EMB-120 aircraft and has a 20 year history of operating this aircraft type.Table of Contents:Subsidy PassengersAverageSubsidy CostBid Service Point(s) Hub Served Round Trips Equipment Requirement ForecastFare per PassengerA1 Scottsbluff, Nebraska Denver 3 1900D - 9 seat$2,443,52310,000$104.98 $244.35A2 Kearney, Nebraska Denver 3 1900D - 9 seat$2,993,93812,750$119.02 $234.82A3 North Platte, Nebraska Denver 3 1900D - 9 seat$2,818,16310,000$116.55 $281.82Total Cost of 9 Seat Beech 1900-D(1)$8,255,62432,750$252.08(1) As a alternative to the nine seat aircraft EAS bid, Great Lakes would be prepared to commit toupgrading the aircraft to a 37 seat or larger Regional Jet that would provide two round trips perweekday and over the weekend period for the same total annualized subsidy amounts.B1 Scottsbluff, Nebraska Denver 3 1900D - 19 Seat$1,765,84920,000$97.77 $88.29B2 Kearney, Nebraska Denver 3 1900D - 19 Seat$2,034,86627,000$108.21 $75.37B3 North Platte, Nebraska Denver 3 1900D - 19 Seat$2,117,11920,000$107.97 $105.86Total Cost of 19 Seat Beech 1900-D $5,917,83467,000$88.33(2)$2,337,78934,250- $163.75(2) Cost of 1,500 hour ATP to EAS program due to pilot supplyand the loss of 10 available seats in the Beechcraft 1900DC1 Scottsbluff, Nebraska Denver 2 EMB-120$1,764,80622,000$69.38 $80.22C2 Kearney, Nebraska Denver 2 EMB-120$1,998,17824,000$97.99 $83.26C3 North Platte, Nebraska Denver 2 EMB-120$1,995,39622,000$82.98 $90.70Total Cost of 30 seat - EMB-120 $5,758,381 68,000$84.68

# Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at 

## Scottsbluff, Nebraska to Denver (DEN) Three Round Trips - B1900 (9 Seats)- current schedules should be used as sample pattern of service (at 98 percent completion)

Departures: 1,840 Block Hours: 1,656 Revenue Passenger Miles: 1,500,000 Available Seat Miles: 2,484,000
Operating Revenues: Passenger: BFF-DEN 10,000 psgrs at $104.98 $1,049,800

Other: (at 0.62% of passenger revenue) $6,509 Total Operating Revenues: $1,056,309
Operating Expenses: Direct: Aircraft and Hull Insurance $365,710 Fuel and Oil $984,388 Flying Operations $326,629 Maintenance $613,112 Total Direct Expenses: $2,289,839 Total Indirect Expenses: $1,043,334 Total Operating Expenses: $3,333,173 Operating Loss ($2,276,864) Profit Element (5.0% of Total Operating Expenses) $166,659 Annual Compensation Requirement: $2,443,523 All Scottsbluff - Denver - Scottsbluff Service is Non-Stop This Proposal is submitted with no upline scheduling restrctions As a alternative to this nine seat aircraft EAS bid Great Lakes would be prepared to commit to upgrading the aircraft to a 37 seat or larger Regional Jet that would provide two round trips per weekday and over the weekend period for the same total annualized subsidy amount. Regional Jet service option to be offered at Great Lakes discretion and assumes full community marketing support for the companys efforts to offer a minimum of 74 departing seats per day.
RJ Subsidy per departure $2,443,523 Regional Jet Subsidy 1,227 Departures $1,991.46

# Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at 

## Kearney, Nebraska to Denver (DEN) Three Round Trips - B1900 (9 seats) - current schedules should be used as sample pattern of service (at 98 percent completion)

Departures: 1,840 Block Hours: 2,454 Revenue Passenger Miles: 3,660,000 Available Seat Miles: 5,050,800
Operating Revenues: Passenger: EAR-DEN 12,750 psgrs at $119.02 $1,517,505

Other: (at 0.62% of passenger revenue) $9,409 Total Operating Revenues: $1,526,914
Operating Expenses: Direct: Aircraft and Hull Insurance $365,710 Fuel and Oil $1,495,923 Flying Operations $484,027 Maintenance $750,982 Total Direct Expenses: $3,096,642 Total Indirect Expenses: $1,208,931 Total Operating Expenses: $4,305,573 Operating Loss ($2,778,659) Profit Element (5.0% of Total Operating Expenses) $215,279 Annual Compensation Requirement: $2,993,938 All Kearney - Denver - Kearney Service is Non-Sto p This Proposal is submitted with no upline scheduling restrctions As a alternative to this nine seat aircraft EAS bid Great Lakes would be prepared to commit to upgrading the aircraft to a 37 seat or larger Regional Jet that would provide two round trips per weekday and over the weekend period for the same total annualized subsidy amount. Regional Jet service option to be offered at Great Lakes discretion and assumes full community marketing support for the companys efforts to offer a minimum of 74 departing seats per day.
RJ Subsidy per departure $2,993,938 Regional Jet Subsidy 1,227 Departures $2,440.05

# Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at 

## North Platte, Nebraska to Denver (DEN) Three Round Trips - B1900 (9 seats) - current schedules should be used as sample pattern of service (at 98 percent completion)

Departures: 1,840 Block Hours: 2,024 Revenue Passenger Miles: 2,280,000 Available Seat Miles: 3,775,680
Operating Revenues: Passenger: LBF-DEN 10,000 psgrs at $116.55 $1,165,500

Other: (at 0.62% of passenger revenue) $7,226 Total Operating Revenues: $1,172,726
Operating Expenses: Direct: Aircraft and Hull Insurance $365,710 Fuel and Oil $1,257,454 Flying Operations $399,214 Maintenance $676,691 Total Direct Expenses: $2,699,069 Total Indirect Expenses: $1,101,778 Total Operating Expenses: $3,800,847 Operating Loss ($2,628,121) Profit Element (5.0% of Total Operating Expenses) $190,042 Annual Compensation Requirement: $2,818,163 All North Platte - Denver - North Platte Service is Non-Stop This Proposal is submitted with no upline scheduling restrctions As a alternative to this nine seat aircraft EAS bid Great Lakes would be prepared to commit to upgrading the aircraft to a 37 seat or larger Regional Jet that would provide two round trips per weekday and over the weekend period for the same total annualized subsidy amount. Regional Jet service option to be offered at Great Lakes discretion and assumes full community marketing support for the companys efforts to offer a minimum of 74 departing seats per day.
RJ Subsidy per departure $2,818,163 Regional Jet Subsidy 1,227 Departures $2,296.79

# Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at 

## Scottsbluff, Nebraska to Denver (DEN) Three Round Trips - B1900 (19 seats) - current schedules should be used as sample pattern of service (at 98 percent completion)

Departures: 1,840 Block Hours: 1,656 Revenue Passenger Miles: 3,000,000 Available Seat Miles: 5,244,000
Operating Revenues: Passenger: BFF-DEN 20,000 psgrs at $97.77 $1,955,400

Other: (at 0.62% of passenger revenue) $12,123 Total Operating Revenues: $1,967,523
Operating Expenses: Direct: Aircraft and Hull Insurance $365,710 Fuel and Oil $984,388 Flying Operations $326,629 Maintenance $613,112 Total Direct Expenses: $2,289,839 Total Indirect Expenses: $1,265,754 Total Operating Expenses: $3,555,593 Operating Loss ($1,588,070) Profit Element (5.0% of Total Operating Expenses) $177,780 Annual Compensation Requirement: $1,765,849 All Scottsbluff - Denver - Scottsbluff Service is Non-Stop This Proposal is submitted with no upline scheduling restrctions.

# Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at 

## Kearney, Nebraska to Denver (DEN) Three Round Trips - B1900 (19 seats) - current schedules should be used as sample pattern of service (at 98 percent completion)

Departures: 1,840 Block Hours: 2,454 Revenue Passenger Miles: 8,235,000 Available Seat Miles: 10,662,800
Operating Revenues: Passenger: EAR-DEN 27,000 psgrs at $108.21 $2,921,670

Other: (at 0.62% of passenger revenue) $18,114 Total Operating Revenues: $2,939,784
Operating Expenses: Direct: Aircraft and Hull Insurance $365,710 Fuel and Oil $1,495,923 Flying Operations $484,027 Maintenance $750,982 Total Direct Expenses: $3,096,642 Total Indirect Expenses: $1,641,121 Total Operating Expenses: $4,737,763 Operating Loss ($1,797,978) Profit Element (5.0% of Total Operating Expenses) $236,888 Annual Compensation Requirement: $2,034,866 All Kearney - Denver - Kearney Service is Non-Stop This Proposal is subm itted with no upline scheduling restrctions

# Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at 

## North Platte, Nebraska to Denver (DEN) Three Round Trips - B1900 (19 seats) - current schedules should be used as sample pattern of service (at 98 percent completion)

Departures: 1,840 Block Hours: 2,024 Revenue Passenger Miles: 4,560,000 Available Seat Miles: 7,970,880
Operating Revenues: Passenger: LBF-DEN 20,000 psgrs at $107.97 $2,159,400

Other: (at 0.62% of passenger revenue) $13,388 Total Operating Revenues: $2,172,788
Operating Expenses: Direct: Aircraft and Hull Insurance $365,710 Fuel and Oil $1,257,454 Flying Operations $399,214 Maintenance $676,691 Total Direct Expenses: $2,699,069 Total Indirect Expenses: $1,386,557 Total Operating Expenses: $4,085,626 Operating Loss ($1,912,838) Profit Element (5.0% of Total Operating Expenses) $204,281 Annual Compensation Requirement: $2,117,119 All North Platte - Denver - North Platte Service is Non-Stop This Proposal is subm itted with no upline scheduling restrctions

# Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at 

## Scottsbluff, Nebraska to Denver (DEN) Two Round Trips - EMB-120 - Overnight Aircraft (at 97.5 percent completion)

Departures: 1,420 Block Hours: 1,278 Revenue Passenger Miles: 3,300,000 Available Seat Miles: 6,390,000 Load Factor 51.64% Operating Revenues: Passenger: BFF-DEN 22,000 psgrs at $69.38 $1,526,360

Other: (at 0.62% of passenger revenue) $9,463 Total Operating Revenues: $1,535,823
Operating Expenses: Direct: Aircraft and Hull Insurance $337,960 Fuel and Oil $866,226 Flying Operations $303,231 Maintenance $572,524 Total Direct Expenses: $2,079,941 Total Indirect Expenses: $1,063,516 Total Operating Expenses: $3,143,457 Operating Loss ($1,607,634) Profit Element (5.0% of Total Operating Expenses) $157,173 Annual Compensation Requirement: $1,764,806 All Scottsbluff - Denver - Scottsbluff Service is Non-Stop This Proposal is submitted with no upline scheduling restrctions. Overnight Aircraft - Midday trip scheduled in coordination with community input

# Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at 

## Kearney, Nebraska to Denver (DEN)

Two Round Trips - EMB-120 - Overnight Aircraft (at 97.5 percent completion)

Departures: 1,420 Block Hours: 1,905 Revenue Passenger Miles: 7,320,000 Available Seat Miles: 12,993,000 Load Factor 56.34% Operating Revenues: Passenger: EAR-DEN 24,000 psgrs at $97.99 $2,351,760

Other: (at 0.62% of passenger revenue) $14,581 Total Operating Revenues: $2,366,341
Operating Expenses: Direct: Aircraft and Hull Insurance $337,960 Fuel and Oil $1,279,067 Flying Operations $451,999 Maintenance $705,912 Total Direct Expenses: $2,774,938 Total Indirect Expenses: $1,381,747 Total Operating Expenses: $4,156,685 Operating Loss ($1,790,344) Profit Element (5.0% of Total Operating Expenses) $207,834 Annual Compensation Requirement: $1,998,178 All Kearney - Denver - Kearney Service is Non-Sto p This Proposal is submitted with no upline scheduling restrctions. Overnight Aircraft - Midday trip scheduled in coordination with community input

# Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at 

## North Platte, Nebraska to Denver (DEN) Two Round Trips - EMB-120 - Overnight Aircraft (at 97.5 percent completion)

Departures: 1,840 Block Hours: 1,562 Revenue Passenger Miles: 5,016,000 Available Seat Miles: 9,712,800 Load Factor 51.64% Operating Revenues: Passenger: LBF-DEN 22,000 psgrs at $82.98 $1,825,560

Other: (at 0.62% of passenger revenue) $11,318 Total Operating Revenues: $1,836,878
Operating Expenses: Direct: Aircraft and Hull Insurance $337,960 Fuel and Oil $1,103,911 Flying Operations $370,616 Maintenance $632,942 Total Direct Expenses: $2,445,429 Total Indirect Expenses: $1,204,356 Total Operating Expenses: $3,649,785 Operating Loss ($1,812,907) Profit Element (5.0% of Total Operating Expenses) $182,489 Annual Compensation Requirement: $1,995,396 All North Platte - Denver - North Platte Service is Non-Stop This Proposal is submitted with no upline scheduling restrctions. Overnight Aircraft - Midday trip scheduled in coordination with community input