Swanson, Brian (OST)
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All: Swanson, Brian (OST) Tuesday, July 31, 2012 10:03 AM "Joe Brauer' Ubrauer@newnorth.net)'; 'Rhinelander Oneida County Airport (rhiarpt@newnorth.net)'; 'thowen58@hotmail.com'; 'brosenl307@gmail.com'; 'Matthew Brincker (BrinkerM@michigan.gov)'; 'mayor@ci.brainerd.mn.us'; 'rick@brainerdairport.com'; 'Susan Baratono (sabaratono@midco.net)'; 'shawnm@ci.international-falls.mn.us'; 'Bob Anderson' Devany, Dennis <OST> (Dennis.DeVany@dot.gov); Chuck Howell (chowell@flygreatlakes.com); Mike Thompson; 'bob@sovereignairinc.com' Soliciting Comments on EAS Proposals at Iron Mountain/Kingsford, Michigan, Brainerd and International Falls, Minnesota, and/or Rhinelander, Wisconsin -DUE August 17, 2012

Iwould like to update you on the Essential Air Service (EAS) situation at Iron Mountain/Kingsford, Michigan (Iron Mountain), Brainerd and International Falls, Minnesota, and Rhinelander, Wisconsin, and give you an opportunity to submit comments ifyou wish. In response to Great Lakes' June 11, 2012 e-mail explainingthat ithas recently experienced an aggressive expansion, is in the process ofre-engineering its business model (including its approachto code-sharing and the associated reservation system infrastructure), has concerns regarding availabilityofgates and facilities to expand further at Minneapolis/St. Paul, and does not want to hinder communities from considering other alternatives, the Department issued Order2012-6-9 on 1 une 15, 2012, to solicit a new round ofproposals from all interested air carriers to provide EAS at any or all ofthe four communities, for a new contract period. In response to that Order, we receivedproposals from GreatLakes, SkyWestAirlines (SkyWest) and SovereignAir Inc.. ' Copies ofthe proposals may be accessed online through the Federal DocketManagement System at: http://www.regulations.gov, bytyping "DOT-OST-1999-5175" (Iron Mountain), "DOT-OST-2011-0135" (Brainerd), "DOT-OST-2009-0304" (International Falls), or "DOT-OST-2011-0lOY" (Rhinelander) in the "SEARCHfor: Rules. Comments, Adjudications or Supporting Documents:" field. Each carrier's proposal is briefly summarizedbelow. Great Lakes submitted "stand alone" service options for nonstop service between each ofthe four communities and Minneapolis/St. Paul, utilizing 19-passengerBeech 1900D aircraft and its code-share agreements where applicable, as summarized in the table below. Community Daily Annual Subsidy Round Trips Requirement Iron Mountain 3 $1,857,610 (18 weekly) Brainerd 4 $1,785,221 (24 weekly) International 3 $1,797,644 Falls (18 weekly) Rhinelander 3 $1,857,610 (18 weekly)

1SkyWest,.operating w.ith a Delta Air Lines code-share and utilizing Canadair Regional Jet 200 (CRJ200) aircraft, submittedtwo package bids for service to Minneapolis/St. Paul, one to serve Iron Mot:mtain and Rhinelander, and the other for service at Brainerd and International Falls. Iron Mountain would receive a minimum of 13 (7 nonstop) round trips a week and Rhinelander would receive a minimum of 14 nonstop round trips a week, for a combined annual subsidyrate of$4,032,589 ($2,512,971 at Iron Mountain and $1,519, 619 at Rhinelander). Brainerd would receive a minimum of 12 nonstop round trips a week, and International Falls would receive a minimumof 13 (7 nonstop) round trips a week, for a combined annual subsidyrate of$2,464,663 ($1,356,764 at Brainerd and $1,107,900 at International Falls). SovereignAir Inc. submitted various serviceoptions proposal for service at all ofthe communities as summarized in the table below. Hub(s) Served/ Aircraft Daily Annual Option Community (ies) Type Round Subsidy Service Pattern (Seats) Trips Requirement 1 International Falls one-stop (at Brainerd) to Jetstream 41 4 $1,472.093 and Brainerd Minneapolis/St. Paul (MSP) (29) (24 weekly) 2 Brainerd one-stop (at St. Cloud) to Chicago Domier 328 3 $1,302,781 O'Hare International Airport (ORD) (30) (18 weekly) 3 Iron Mountain and one-stop (atRhinelander) to Chicago Dornier 328 5 $1,960,453 Rhinelander O'Hare International Airport (ORO) (30) (30 weekly) We also note that Sovereign Air Inc. lias not obtained the required operating authority from eitherthe Federal Aviation Administration orthe Department. Please note that the average passengerfares.shown in each proposal do not necessarily ret1ect the average local fare· passengers would actually pay, but, rather, ret1ect aprorated portionofthe total ticket price (e.g., the BrainerdMinneapoli·sJSt. Paul portion ofa Brainerd- Minneapolis/St. Paul- Las Vegas ticket) that the subsidized carrier would realize. Also, the fare shownis net ofcertaincharges such as Federal transportation securityfees, excise or ticket taxes, and PassengerFacility'Charges. Ofcourse, carriers have the discretion to charge fares they deem appropriate, and the passengerfares presented in their**propo~als** have beendeveloped for subsidyrate computationpurposes only. Based on the cost elements incorporated in the carriers' computation summaries, the carriers would have to realize passengerfares comparable to the averages shown in their proposals in orderto achieve break-even orprofitable operations without subsidy. You should also note that the carriers' schedules maychange to ret1ect changing conditions (e.g., to better meet shifting connectingbank times at the hub). The Departmentdoes expect subsidized air carriers to maintain well-timed and well-spaced t1ights in orderto ensure full compensation. We request that you submit any comments you mayhave as soon as possible, but in any case no later than August 17, 2012. Please send your comments by fax to 202-366-7638 orby email to both dennis.devany@1dot.gov and hrian.swanson@clot.gov. Ourrules require that you send your comments to both applicants as well. Ifyou have any questions, orneedmore time to reply, please feel free to contact Brian Swanson ofmy staffat 202-366-5392. Sincerely,

Dennis J. DeVany Chief, Essential Air Service Division, X-53 Office ofAviationAnalysis

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