Order 2010-5-18

Served: May 13, 2010

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 13th of May, 2010

ORDER SETTING PAST-PERIOD RATES, SELECTING CARRIER AT 

ALPENA, INTERNATIONAL FALLS, AND SAULT STE. MARIE, AND 

TENTATIVELY SELECTING CARRIER AT TUPELO

Summary

By this order, we are setting final past-period subsidy rates for Mesaba Airlines, Inc., 

d/b/a Delta Connection (Mesaba),1 for its forced service at Alpena and Sault Ste. Marie, 

Michigan, International Falls, Minnesota, and Tupelo, Mississippi. We are also selecting 

Mesaba to provide essential air service (EAS) at three of these four communities on a 

prospective basis. At the fourth community, Tupelo, we are tentatively selecting Mesaba 

to provide service based on a pro-rata application of the rate Mesaba agreed to which the 

staff applied to a reduced service level. The table below summarizes the annual rates 

described above. 2

Time Period International Falls Alpena Sault Ste. Marie Tupelo Total

10/12/09 -- 6/9/10 $1,284,788 $738,686 $738,686 $974,131 $3,736,291

6/10/10 -- 5/31/12 $1,309,886 $1,532,660 $237,825 $921,878 $4,002,249

 1 Mesaba is a wholly-owned subsidiary of Delta Air Lines.

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

funds.

Essential Air Service at

ALPENA, MICHIGAN

INTERNATIONAL FALLS, MINNESOTA 

SAULT STE. MARIE, MICHIGAN, and

TUPELO, MISSISSIPPI, 

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

 DOCKET OST-2009-0300

 DOCKET OST-2009-0304

 DOCKET OST-2009-0303

 DOCKET OST-2009-0305
- 2 -

Background

On July 14, 2009, Mesaba Airlines filed 90-day notices of intent to suspend its 

subsidy-free service at these four communities effective October 12.3 By Order 

2009-7-16, we prohibited Mesaba from terminating service and requested 

proposals for replacement service. We received proposals from Mesaba at all of the 

communities, and from Pacific Wings at Tupelo. 

Order 2009-10-8 rejected Mesaba’s proposals as not being consistent with its Form 41 

financial and T-100 traffic data reported to the Department’s Bureau of Transportation 

Statistics, in its Form 41 and T-100 filings.4 The order deferred selecting Mesaba at any 

community until after we discussed the costing of its proposals with the carrier. 

Carrier Proposals and Community Comments

Order 2009-10-8 also re-requested proposals at all four communities. In response to that 

request, we received proposals from Mesaba, Intrepid International Airlines, and Alaska 

Juneau Aeronautics, Inc., d/b/a SeaPort Airlines. Before addressing proposals for specific 

communities, there are several preliminary issues regarding each carrier’s proposals. 

Regarding Mesaba, the carrier noted on November 18, 2009, that it would retire its fleet 

of Saab 340 aircraft, the only aircraft contemplated in its proposals, within two to three 

years. For Intrepid, the carrier’s proposal of one round trip a day falls short of the 

statutory guarantee of two round trips a day, six days a week. Regarding SeaPort, the 

carrier’s proposal does not meet the statutory guarantee of service with 15-seat or larger 

twin-engine aircraft. In late November 2009, the staff sent letters to each community 

requesting comments regarding the proposals submitted in this second round, and we 

have summarized them below. 

Alpena and Sault Ste. Marie Mesaba resubmitted its prior proposal5 requesting 

$1,976,958 annual subsidy for Alpena and Sault Ste. Marie, combined. Under that 

proposal, Alpena would receive 14 nonstops, and Sault Ste. Marie 7 nonstops and 7 onestops over Alpena to Detroit with Saab 340 aircraft. Intrepid International Airlines 

submitted a proposal requesting $1,241,000 annual subsidy. All of Intrepid’s service was 

to be with 50-seat CRJ-200 aircraft with service routed Sault Ste. Marie to Alpena to 

Lansing to Chicago (Midway), and would be for a total of 7 nonstops per week. 

The letters to Alpena and Sault Ste. Marie noted that Intrepid’s proposed service fell short 

of the communities’ statutory guarantee of two round trips a day, and, at Sault Ste. Marie, 

 3 Mesaba also filed notices at Eau Claire, Wisconsin, Muskegon and Houghton, Michigan, and Paducah, 

Kentucky. By Order 2009-10-8 we selected SkyWest Airlines to replace Mesaba and by Order 2010-3-26 

we set final rates for Mesaba’s forced service at those four communities from October 12, 2009, thru 

February 2010, when SkyWest replaced Mesaba.

4 Pacific Wings also submitted a proposal at Tupelo with 9-seat Cessna 208 aircraft. Order 2009-8-10 did 

not select them because the community was not willing to waive its right to service with 15-seat aircraft as 

guaranteed under the EAS program’s governing statutes. See 49 U.S.C §41732(b). 

5 Issued in response to Order 2009-7-16.
- 3 -

was short of the statutory requirement of no more than one intermediate stop to a hub. 

Finally, the letter noted that Intrepid did not have authority to operate interstate air 

service, and that, while it had stated it would provide the service by wet-leasing aircraft, 

crew, maintenance, and insurance from Atlantic Southeast Airlines, officials of Atlantic 

Southeast were not aware of any such discussion or agreement. 

In response to our request for comments, both communities gave strong support to 

Mesaba. Alpena noted that Mesaba provided dedicated and reliable air service. Sault 

Ste. Marie noted that it had provided eleven years of reliable service, and looked forward 

to the benefits of the merger of Mesaba’s parent, Northwest Airlines, with Delta. 

International Falls Only Mesaba submitted proposals at this community. Mesaba 

resubmitted its prior proposal, requesting $1,998,849 annual subsidy for 14 nonstop round 

trips per week to Minneapolis, with the aircraft based in Minneapolis. It also submitted a 

new proposal requesting $2,312,114 in annual subsidy. The only difference between this 

option and the first one is that the aircraft would overnight at International Falls. 

The letter to the community recognized the community’s stated desire6 for three nonstop 

round trips a day to Minneapolis, but noted that such service with 34-seat aircraft exceeded 

program guidelines. It reiterated the position of Order 2009-10-8 that three daily nonstops 

would only be possible if that service were linked with another community, such that seats 

were shared and the maximum level of service under program guidelines – two round trips a 

day, fourteen days per week, with 67-seats – would not be exceeded.7 The community 

supported the selection of the high cost option with the aircraft based in International Falls, 

for $2,312,114 annually. 

Tupelo Mesaba affirmed its prior proposal in response to Order 2009-7-16 requesting 

$1,061,068 annual subsidy for a total of 14 nonstop round trips per week to Tupelo – 7 to 

Atlanta and 7 to Memphis. The carrier submitted additional proposals based on a total of 

three round trips per day to Atlanta and Memphis.8

community’s stated desire for three nonstop round trips a day, but noted that such service 

with 34-seat aircraft exceeds program guidelines.

 The letter to Tupelo recognized the 

9

 6 Mesaba did not propose three round trips a day at International Falls. However, carriers are permitted to 

provide service above the EAS level, but we are not allowed to pay for it. 

 

7 International Falls is guaranteed the maximum level of service allowed by program guidelines– two round 

trips and 67 seats per day , but only during the peak summer season. International Falls has historically 

received three round trips per day in the peak season and Mesaba has stated that it intends to continue that 

level of service in the peak, but we have excised the cost of that service from the subsidy support 

calculations. 

8 Mesaba presented three variants on this theme: 21 nonstops total to Atlanta and Memphis for $1,987,253; 20 

nonstops for $1,828,423; and 19 nonstops for $1,660,068 annual subsidy. These proposals had between 12 and 

14 round trips to Memphis, with Atlanta service a constant one round trip per day, reflecting the community's 

preference for the Memphis hub.

9 EAS definitions require capacity sufficient to accommodate historical passengers, with the maximum 

number of passengers set at 40 enplaned and 40 deplaned per day. The Department used a 65 percent load 

factor standard to arrive at a maximum capacity guarantee of 62 seats. The Airport and Airway Safety and 
- 4 -

We also received a proposal from SeaPort Airlines. SeaPort proposed to provide Tupelo 

with a total of 49 nonstops a week, 28 to Memphis and 21 to Atlanta, for $1,058,088 

annually. All of the service would be with 9-seat Pilatus PC-12 aircraft, for a total of 63 

seats per day. The letter noted that SeaPort’s proposal could only be selected if Tupelo 

waived its statutory guarantee of 15-seat or larger twin-engine aircraft, which the 

community chose not to do. 

In response to our request for comment, the community stated “It is our decision to 

inform you that we prefer Delta Airlines’ proposal scheduling three round trip daily 

flights in and out of Tupelo.” Based on the community’s response, SeaPort’s proposal is 

un-selectable.

Decision

The proposals in response to Order 2009-10-8 essentially left the Department with the 

same set of options as from the first round of proposals that we had earlier rejected. 

Essentially Mesaba proposed a few new options that would require even higher subsidy 

levels, and two new applicants each filed a single proposal, each of which is statutorily 

deficient.10 Rather than request proposals for a third time, we directed the EAS staff to 

negotiate subsidy rates with Mesaba. Because their proposals were fundamentally 

unacceptable, we did not offer to negotiate revised proposals with Intrepid or with 

SeaPort, leaving only Mesaba’s proposals on the table.

We have reached agreement with Mesaba as to reasonable levels of subsidy for specified 

levels of service and subsidy at all four of the communities for the past period, October 12, 

2009, through June 9, 2010.11

2009-10-8, it was our concern about these proposals’ costs that led us to re-request 

proposals, and all of the agreed levels of subsidy are lower than those originally proposed.

For the prospective period, we have reached agreement with 

the carrier for service at all of the communities except Tupelo. As stated in Order 

12

 

Capacity Expansion Act of 1987, P.L. 100-223, changed the load factor standard from 65- to 60-percent, 

thereby increasing the maximum number of seats required, i.e., 40 passengers/60% = 67 seats. As we have 

noted, we could authorize subsidy for additional frequency and capacity for carriers choosing to link 

communities together in a linear service pattern to recognize that the seats are shared by two communities.

 

The reduction in projected subsidy reflects lower estimates of indirect unit costs, reduced 

estimates of block times required to provide the service, thereby affecting direct costs, and a 

prorate of station expenses at International Falls to factor out Mesaba’s historical peakseason service levels that were above the EAS levels. We find that after these adjustments, 

the agreement is consistent with the carrier’s historical costs.

10 Intrepid proposed only one round trip a day with two-stop service to Sault Ste. Marie, and SeaPort 

proposed service with nine-seat aircraft. No community was willing to waive their rights. 

11 Because of the time it takes to revise schedules, the period from now through June 9, when Mesaba will 

revise its schedules, may be considered part of the past period.

12 Technically that is not the case at Alpena, where the rate has increased from $988,479 to $1,532,660. 

However, that is merely an artifact of separating Alpena from Sault Ste. Marie in the prospective period. 

The two-community package has decreased from $1,976,958 as originally proposed by Mesaba to 

$1,770,485 ($1,532,660 plus $237,825)
- 5 -

Sault Ste. Marie The carrier has agreed to an annual subsidy of $738,68613 for the past 

period decreasing to $237,825 prospectively. For the past period Mesaba provided a total 

of 14 round trips per week to Detroit – 7 nonstops and 7 one-stops over Alpena. 

Prospectively, Sault Ste. Marie would receive only nonstop service. The decrease in 

subsidy between the two periods is the result of a revenue increase of almost a quarter at 

Sault Ste. Marie as a result of the superior schedule in the latter period along with some 

additional expenses associated with nonstop service. We find these proposals reasonable.

Alpena The carrier has agreed to annual subsidy of $738,68614 for the past period 

increasing to $1,532,660 prospectively. The increase in subsidy between the two periods 

is the direct result of Sault Ste. Marie, the bigger traffic-generating community, no longer 

sharing its revenue and service with Alpena. Because Alpena had nonstop service to 

Detroit in both periods, there is a minimal effect on its projected revenue. We find these 

proposals reasonable.

International Falls Mesaba has agreed, prospectively, to base an aircraft in the 

community year round with annual subsidy rates of $1,284,788 in the past period, and 

$1,309,886 prospectively. The carrier’s compensation in both periods is based on 14 

nonstops per week year round. The primary difference between the two periods is that 

the past period has an estimate of 0.75 percent inflation applied to it.15 We find these 

proposals reasonable.

Tupelo

As stated earlier, SeaPort’s proposal is unselectable, and so we have not negotiated a 

revised proposal with that carrier, making Mesaba the only carrier. Mesaba agreed to a 

rate of $1,419,593 for a total of 19 nonstop round trips per week to Atlanta and Memphis 

with the staff.

 

16 As we have stated in our requests for proposals for both round one and 

round two, the maximum seat guarantee consistent with program guidelines is 67 seats 

per day, or two daily nonstop round trips with Saab 340 aircraft. Mesaba’s proposed 

service level of 19 round trips a week clearly exceeds this level, so we will not select it. 

However, there is an extenuating circumstance in this case. The statutory minimum for air 

service to any community is two round trips per day to a single hub. For almost a year, 

Tupelo has not received that level of service. Before it filed notice, Mesaba changed its 

level of service at Tupelo below the statutory minimum of two round trips per day to a 

single hub by providing one round trip a day to two different hubs. As we discussed in 

Order 2009-10-8, this type of service limits connecting opportunities for passengers. 

Furthermore, the community has a strong preference for service to the Memphis hub, with 

 13 $1,477,371 combined subsidy for Alpena and Sault Ste. Marie, divided by two communities.

14 IBID.

15 That same inflation estimate is applied to the prospective rates at all four communities.

16 Seven round trips to Atlanta for $682,091 and twelve round trips to Memphis for $737,502.
- 6 -

an evening flight from Memphis into Tupelo.17 We find that good cause exists to provide 

the community with some additional service above the program guidelines. For a 

temporary period 18 we are willing to authorize subsidy for an additional weekly round trip 

for a total of fifteen round trips a week. In addition, Mesaba has agreed to base the aircraft 

in Tupelo which, when coupled with 15 round trips a week, could provide the community 

with three round trips on all or most weekdays to Memphis as it has requested, along with 

an early morning flight out of the community and a late evening arrival from the hub. We 

will not prescribe the number of flights that must be provided to each hub, nor the mix of 

flights on weekdays or weekends. Given the community’s stated preference for the 

Memphis hub, for subsidy purposes we have taken the rate agreed to by Mesaba and the 

EAS staff of $737,502 for twelve19 nonstop round trips a week to Memphis and prorated it 

up to fifteen. We believe that this is a very fair offer to Mesaba, as the twelve round trip 

forecast was premised on it also providing competing daily service to Atlanta. We 

encourage the community to work closely with Mesaba to craft a schedule that is in their 

mutual best interests.

We give Mesaba ten days from the service date of this order to show cause why this level 

of service and subsidy is not appropriate.

Carrier Fitness

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

reliable service before DOT may subsidize it to provide essential air service. Mesaba 

Airlines, Inc., 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. DOT has contacted the Federal Aviation Administration, and it has raised no 

concerns that would negatively affect our fitness finding. DOT therefore concludes that 

the carrier remains fit to conduct the operations proposed here.

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

ACCORDINGLY,

1. We set the final rates for Mesaba Airlines, Inc., for its provision of essential air service 

at Alpena and Sault Ste. Marie, Michigan, International Falls, Minnesota, and Tupelo, 

Mississippi, as described in Appendix B;

2. We select Mesaba Airlines, Inc., to provide essential air service at Alpena and Sault 

Ste. Marie, Michigan, and International Falls, Minnesota, as described in Appendix C;

 17 Because of the need for good connections at Memphis, in both directions, we will tentatively require 

Mesaba to continue to base an aircraft in Tupelo.

18 The term of this order.

19 Mesaba submitted three options at Tupelo, each with 7 round trips per week to Atlanta, and either 12, 13, 

or 14 round trips to Memphis. However, its agreement with the staff was for a single option consisting of

19 nonstop round trips per week -- 7 to Atlanta and 12 to Memphis -- and we have based the proposed level

of subsidy on that agreement.
- 7 -

3. We direct Mesaba Airlines, Inc., to show cause within ten (10) calendar days of the 

date of service of this order why we should not select it to provide essential air service at 

Tupelo, Mississippi, as described in Appendix C;

4. If no objections are filed within ten days, we delegate to the Director of the Office of 

Aviation Analysis the authority to make final the tentative rate at Tupelo;

5. The Department finds that Mesaba Airlines, Inc., continues to be fit, willing and able to 

operate as a certificated carrier and capable of providing reliable essential air service at 

Alpena and Sault Ste. Marie, Michigan, International Falls, Minnesota, and Tupelo, 

Mississippi; 

6. We direct Mesaba Airlines, Inc., 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 the audit and examination by 

representatives of the Department. Such documentation shall be retained for seven years 

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; 

7. These Dockets will remain open until further Department action; and

8. The Department will serve copies of this order on the Mayor and airport manager of 

each community, on Intrepid International Airlines, Inc., SeaPort Airlines, Delta Air 

Lines, Inc., and on Mesaba Airlines, Inc.,

By:

Susan L. 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

Page 1 of 2

Nonstop Great Circle Mileages

INL-MSP 254

APN-CIU 91

APN-DTW 198

CIU-DTW 283

This map is provided by Sabre® AirVisionTM Profit Essentials and is being used with express permission of the 

copyright holder, Sabre Airline Solutions®.
Appendix A-2

Nonstop Great Circle Miles

TUP-MEM 88

TUP-ATL 253

ATL-MEM 332

This map is provided by Sabre® AirVisionTM Profit Essentials and is being used with express permission of the 

copyright holder, Sabre Airline Solutions®.
Appendix B

Page 1 of 6

 Annual Subsidy Rate at Four Communities, October 12, 2009, thru June 9, 2010

Total INL APN/CIU TUP

Docket Numbers 2009-0304 2009-0300/303 2009-0305

Hub(s) MSP DTW ATL/MEM

R./T.Week 14 14 14

Completion Factor 97% 97% 98%

Pax 1/ 89,485 21,243 42,486 25,756

Block Hours 1/ 7,133 1,935 3,493 1,705

Flts. to/from Hub(s) 4,970 1,416 2,124 1,430

Seat Deps.at Hub(s) 79,520 22,656 33,984 22,880

Enpl. Pax. At Hub(s) 44,743 10,622 21,243 12,878

Pax. Revenue $8,270,195 $1,805,655 $4,562,291 $1,902,249

Other Rev. $879,016 $222,351 $443,528 $213,137

Total Revenue $9,149,211 $2,028,006 $5,005,819 $2,115,386

Pilot per Block Hour $1,702,790 $461,923 $833,849 $407,018

Fuel per Block Hour (104 gph) $1,717,840 $466,006 $841,219 $410,615

Mtc. per Block Hour $2,476,649 $671,851 $1,212,805 $591,993

Aircraft $1,451,851 $393,850 $710,965 $347,036

 Total Directs $7,349,130 $1,993,630 $3,598,838 $1,756,662

Total Indirects $4,922,776 $1,161,412 $2,575,629 $1,185,735

Total Operating $12,271,906 $3,155,042 $6,174,467 $2,942,397

Profit @ 5% $613,595 $157,752 $308,723 $147,120

Economic Cost $12,885,501 $3,312,794 $6,483,190 $3,089,517

Annual Subsidy Rate $3,736,290 $1,284,788 $1,477,371 $974,131

1/ Nonstop Flts./ Days/ Completion Block Block Nonstop

City-Pair Miles Day Year Percent Time Hours Flights

INL-MSP 254 4 365 0.97 82 1,935 1,416

TUP-ATL 253 2 365 0.98 92 1,097 715

TUP-MEM 88 2 365 0.98 51 608 715

APN-DTW 198 4 365 0.97 78 1,841 1,416

CIU-DTW 283 2 365 0.97 97 1,145 708

CIU-APN 91 2 365 0.97 43 507 708
Appendix B

Page 2 of 6

Subsidy Rate Agreement for the Provision of Essential Air Service by Delta/Mesaba at 

International Falls, Minnesota, Docket 2009-0304

______________________________________________________________________

EFFECTIVE PERIOD: October 12, 2009, thru June 9, 2010. 

_____________________________________________________________________

SERVICE: 14 round nonstop round trips per week between International Falls and 

Minneapolis. 

________________________________________________________________________

AIRCRAFT TYPE: Saab 340

______________________________________________________________________

TIMING OF FLIGHTS: Flights must be well-timed and well-spaced to ensure full 

compensation. 

_______________________________________________________________________

ANNUAL SUBSIDY RATE: $1,284,788 

RATE PER FLIGHT: $907 1

WEEKLY CEILING: $25,396 2

This rate assumes an annual completion factor of 97 percent. A compensation ceiling is 

to be applied each week, such that service above that ceiling in one week cannot make up 

for service shortfalls in another week. 

 1 Annual compensation of $1,284,788 divided by 1,416 annual flights, calculated as follows: 

4 flights per day x 365 days x .97 completion = 1,416.

2 $907 times 28 flights per week.
Appendix B

Page 3 of 6

Subsidy Rate Agreement for the Provision of Essential Air Service by Delta/Mesaba at 

Alpena, Michigan, Docket 2009-0300

______________________________________________________________________

EFFECTIVE PERIOD: October 12, 2009, thru June 9, 2010. 

________________________________________________________________________

SERVICE: 14 round nonstop round trips per week between Alpena and Detroit. 

________________________________________________________________________

AIRCRAFT TYPE: Saab 340

________________________________________________________________________

TIMING OF FLIGHTS: Flights must be well-timed and well-spaced to ensure full 

compensation. 

_______________________________________________________________________

ANNUAL SUBSIDY RATE: $738,686 

RATE PER FLIGHT: $522 1

WEEKLY CEILING: $14,616 2

This rate assumes an annual completion factor of 97 percent. A compensation ceiling is 

to be applied each week, such that service above that ceiling in one week cannot make up 

for service shortfalls in another week.

 1 Annual compensation of $738,686 ($1,477,371 ÷ 2 communities) divided by 1,416 annual flights, 

calculated as follows: 

4 flights per day x 365 days x .97 completion = 1,416.

2 $522 times 28 flights per week.
Appendix B

Page 4 of 6

Subsidy Rate Agreement for the Provision of Essential Air Service by Delta/Mesaba at 

Sault Ste. Marie, Michigan, Docket 2009-0303

______________________________________________________________________

EFFECTIVE PERIOD: October 12, 2009, thru June 9, 2010. 

________________________________________________________________________

SERVICE: 7 one-stop and 7 nonstop round trips per week between Sault Ste. Marie and 

Detroit. 

________________________________________________________________________

AIRCRAFT TYPE: Saab 340

________________________________________________________________________

TIMING OF FLIGHTS: Flights must be well-timed and well-spaced to ensure full 

compensation. 

_______________________________________________________________________

ANNUAL SUBSIDY RATE: $738,686 

RATE PER FLIGHT: $522 1

WEEKLY CEILING: $14,616 2

This rate assumes an annual completion factor of 97 percent. A compensation ceiling is 

to be applied each week, such that service above that ceiling in one week cannot make up 

for service shortfalls in another week. 

 1 Annual compensation of $738,686 ($1,477,371 ÷ 2 communities) divided by 1,416 annual flights, 

calculated as follows: 4 flights per day x 365 days x .97 completion = 1,416.

2 $522 times 28 flights per week.
Appendix B

Page 5 of 6

Subsidy Rate Agreement for the Provision of Essential Air Service by Delta/Mesaba at 

Tupelo, Mississippi, Docket 2009-0305

______________________________________________________________________

EFFECTIVE PERIOD: October 12, 2009, thru June 9, 2010. 

________________________________________________________________________

SERVICE: 7 nonstop round trips per week to Atlanta and 7 nonstop round trips per week 

to Memphis. 

________________________________________________________________________

AIRCRAFT TYPE: Saab 340

________________________________________________________________________

TIMING OF FLIGHTS: Flights must be well-timed and well-spaced to ensure full 

compensation. 

_______________________________________________________________________

ANNUAL SUBSIDY RATE: $974,131 

RATE PER FLIGHT: $681 1

WEEKLY CEILING: $19,068 2

This rate assumes an annual completion factor of 98 percent. A compensation ceiling is 

to be applied each week, such that service above that ceiling in one week cannot make up 

for service shortfalls in another week.

 1 Annual compensation of $974,131 divided by 1,431 annual flights, calculated as follows: 

4 flights per day x 365 days x .98 completion = 1,431.

2 $681 times 28 flights per week.
Appendix B

Page 6 of 6

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

conformance with the terms and stipulations of this 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 did 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 contemplated any such changes beyond the scope of the order during the 

applicable period of this rate, it should have first notified the Office of Aviation Analysis in writing and received 

written approval from the Department to be ensured of full compensation. 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. 

General Terms and Conditions for Essential Air Service 

Subsidy contracts are subject to, and incorporate by reference, relevant statutes and Department regulations, 

as they may be awarded from time to time. However, any such statutes, regulations, or amendments thereto 

shall not operate to controvert the foregoing paragraph.

All claims for payment must be submitted within 60 days of the issuance of this order.
Appendix C

Page 1 of 6

 Annual Subsidy Rate at Four Communities, June 10, 2010, through May 31, 2012

INL APN CIU Tupelo

Docket Numbers 2009-0304 2009-0300 2009-0303 2009-0305 2009-0305

Hub(s) MSP DTW DTW ATL MEM

R./T.Week 14 13 14 7 12

Completion Factor 97% 97% 97% 98% 98%

Pax 1/ 21,243 16,994 32,573 13,594 18,028

Block Hours 1/ 1,935 1,709 2,289 1,097 1,042

Flts. to/from Hub(s) 1,416 1,315 1,416 715 1,226

Seat Deps.at Hub(s) 22,656 21,040 22,656 11,440 19,616

Enpl. Pax. At Hub(s) 10,622 8,497 16,287 6,797 9,014

Pax. Revenue $1,805,655 $1,384,416 $3,646,908 $1,087,520 $1,207,876

Other Rev. $222,351 $133,168 $323,756 $126,770 $129,509

Total Revenue $2,028,006 $1,517,584 $3,970,664 $1,214,290 $1,337,385

Pilot per Block Hour $465,387 $411,032 $550,527 $263,839 $250,611

Fuel per Block Hour (104 gph) $469,508 $414,672 $555,403 $266,176 $252,831

Mtc. per Block Hour $676,882 $597,825 $800,715 $383,742 $364,502

Aircraft $396,810 $350,465 $469,405 $224,962 $213,683

 Total Directs $2,008,587 $1,773,994 $2,376,050 $1,138,719 $1,081,627

Total Indirects $1,170,358 $1,131,000 $1,632,035 $667,358 $894,456

Total Operating $3,178,945 $2,904,994 $4,008,085 $1,806,077 $1,976,083

Profit @ 5% $158,947 $145,250 $200,404 $90,304 $98,804

Economic Cost $3,337,892 $3,050,244 $4,208,489 $1,896,381 $2,074,887

Annual Subsidy Rate $1,309,886 $1,532,660 $237,825 $682,091 $737,502

1/ Nonstop Flts./ Weeks/ Completion Block Block Nonstop

City-Pair Miles Week Year Percent Time Hours Flights

INL-MSP 254 28 52.14 0.97 82 1,935 1,416

APN-DTW 198 26 52.14 0.97 78 1,709 1,315

CIU-DTW 283 28 52.14 0.97 97 2,289 1,416

TUP-ATL 253 14 52.14 0.98 92 1,097 715

TUP-MEM 88 24 52.14 0.98 51 1,042 1,226

Note: 52*365/364 = 52.14 weeks per year -- to take account of the fact that 52 weeks equals 364 days.
Appendix C

Page 2 of 6

Subsidy Rate Agreement for the Provision of Essential Air Service by Delta/Mesaba at 

International Falls, Minnesota, Docket 2009-0304

_____________________________________________________________________

EFFECTIVE PERIOD: June 10, 2010, through May 31, 2012 

________________________________________________________________________

SERVICE: 14 round nonstop round trips per week between International Falls and 

Minneapolis. The carrier agrees to base its aircraft in International Falls.

________________________________________________________________________

AIRCRAFT TYPE: Saab 340

________________________________________________________________________

TIMING OF FLIGHTS: Flights must be well-timed and well-spaced to ensure full 

compensation. 

_______________________________________________________________________

ANNUAL SUBSIDY RATE: $1,309,886

RATE PER FLIGHT: $9251

WEEKLY CEILING: $25,9002

This rate assumes an annual completion factor of 97 percent. A compensation ceiling is 

to be applied each week, such that service above that ceiling in one week cannot make up 

for service shortfalls in another week. 

 1 Annual compensation of $1,309,886 divided by 1,416 annual flights, calculated as follows: 

4 flights per day x 365 days x .97 completion = 1,416.

2 $925 times 28 flights per week.
Appendix C

Page 3 of 6

Subsidy Rate Agreement for the Provision of Essential Air Service by Delta/Mesaba at 

Alpena, Michigan, Docket 2009-0300

______________________________________________________________________

EFFECTIVE PERIOD: June 10, 2010, thru May 31, 2012.

________________________________________________________________________

SERVICE: 13 round nonstop round trips per week between Alpena and Detroit. 

________________________________________________________________________

AIRCRAFT TYPE: Saab 340

________________________________________________________________________

TIMING OF FLIGHTS: Flights must be well-timed and well-spaced to ensure full 

compensation. 

_______________________________________________________________________

ANNUAL SUBSIDY RATE: $1,532,660

RATE PER FLIGHT: $1,1661

WEEKLY CEILING: $30,3162

This rate assumes an annual completion factor of 97 percent. A compensation ceiling is 

to be applied each week, such that service above that ceiling in one week cannot make up 

for service shortfalls in another week. 

 1 Annual compensation of $1,532,660 divided by 1,315 annual flights, calculated as follows: 

26 flights per week x 52 weeks x 365/364 days x .97 completion = 1,315.

2 $1,166 times 26 flights per week.
Appendix C

Page 4 of 6

Subsidy Rate Agreement for the Provision of Essential Air Service by Delta/Mesaba at 

Sault Ste. Marie, Michigan, Docket 2009-0303

______________________________________________________________________

EFFECTIVE PERIOD: June 10, 2010, thru May 31, 2012

________________________________________________________________________

SERVICE: 14 nonstop round trips per week between Sault Ste. Marie and Detroit. 

________________________________________________________________________

AIRCRAFT TYPE: Saab 340

________________________________________________________________________

TIMING OF FLIGHTS: Flights must be well-timed and well-spaced to ensure full 

compensation. 

_______________________________________________________________________

ANNUAL SUBSIDY RATE: $237,825 

RATE PER FLIGHT: $168 1

WEEKLY CEILING: $4,704 2

This rate assumes an annual completion factor of 97 percent. A compensation ceiling is 

to be applied each week, such that service above that ceiling in one week cannot make up 

for service shortfalls in another week. 

 1 Annual compensation of $237,825 divided by 1,416 annual flights, calculated as follows: 

4 flights per day x 365 days x .97 completion = 1,416.

2 $168 times 28 flights per week.
Appendix C

Page 5 of 6

Subsidy Rate Agreement for the Provision of Essential Air Service by Delta/Mesaba at 

Tupelo, Mississippi, Docket 2009-0305

______________________________________________________________________

EFFECTIVE PERIOD: June 10, 2010, thru May 31, 2012.

________________________________________________________________________

SERVICE: 15 nonstop round trips per week to Memphis and/or Atlanta. The carrier 

agrees to base its aircraft in Tupelo.

________________________________________________________________________

AIRCRAFT TYPE: Saab 340

________________________________________________________________________

TIMING OF FLIGHTS: Flights must be well-timed and well-spaced to ensure full 

compensation. 

_______________________________________________________________________

ANNUAL SUBSIDY RATE: $921,878 1

RATE PER FLIGHT: $601 2

WEEKLY CEILING: $18,030 3

This rate assumes an annual completion factor of 98 percent. A compensation ceiling is 

to be applied each week, such that service above that ceiling in one week cannot make up 

for service shortfalls in another week. 

 1 $737,502 times 15/12 round trips per week. See Appendix C, Page 1.

2 Annual compensation of $921,878 divided by 1,533 annual flights, calculated as follows: 

30 flights per week x 52 weeks x 365/364 days x .98 completion = 1,533.

3 $601 times 30 flights per week.
Appendix C

Page 6 of 6

General Terms and Conditions for Essential Air Service

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 these rates, 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 contracts 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 solicitation beyond September 30, 

2010. The Government’s obligation for performance under this solicitation beyond 

September 30, 2010, is contingent upon 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, 2010, until funds are 

made available to the Department for performance. If funds are not made available for 

performance beyond September 30, 2010 , the carrier will receive notice in writing by the 

Department.

All claims for payment must be submitted within 60 days of the last day of service provided 

under this order.