Order: 2014-9-21 Served: September 26, 2014



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 26 th day of September, 2014

Essential Air Service at

BRADFORD, PENNSYLVANIA EL CENTRO, CALIFORNIA FORT DODGE, IOWA FRANKLIN/OIL CITY, PENNSYLVANIA GREENVILLE, MISSISSIPPI HAGERSTOWN, MARYLAND JACKSON, TENNESSEE KINGMAN, ARIZONA LANCASTER, PENNSYLVANIA MACON, GEORGIA MERCED, CALIFORNIA MUSCLE SHOALS, ALABAMA

Under 49 U.S.C. 41731 et seq

. Docket DOT-OST-2003-14528

Docket DOT-OST-2008-0299

Docket DOT-OST-2001-10682

Docket DOT-OST-1997-2523

Docket DOT-OST-2008-0209

Docket DOT-OST-2006-25228

Docket DOT-OST-2000-7857

Docket DOT-OST-1996-1899

Docket DOT-OST-2002-11450

Docket DOT-OST-2007-28671

Docket DOT-OST-1998-3521

Docket DOT-OST-2000-7856

ORDER GRANTING WAIVERS

Summary By this Order, the U.S. Department of Trans portation (the Department) is granting the waiver petitions of all of the 12 above -captioned communities. These communities’ compliance with 49 U.S.C 41731(a)(1)(B) will be re-assessed ba sed on Fiscal Year 2015 data (October 1, 2014, through September 30, 2015).

Background The FAA Modernization and Reform Act of 2012, Pub. L. 112-95, amended 49 U.S.C. 41731(a)(1)(B) to change the definitio n of “eligible place” fo r Essential Air Service (EAS). The amendment states that to be an “eligible place,” a community must maintain an average of 10 enplanements per service day or more, as determined by the Secretary, during the most recent fiscal year beginning after Septem ber 30, 2012. This requirement does not apply to

locations in Alaska and Hawaii or communities that are more than 175 driving miles from the- 2 -

nearest large or medium hub airport. 1 The Secretary also may waive, on an annual basis, the 10- enplanement requirement for a community if that community demonstrates to the Secretary’s satisfaction that the reason the location averages fewer than 10 enplanements per day is due to a temporary decline in enplanements. 2

The tentative decision in the show-cause Order issued April 24, 2014, gave interested parties until May 14, 2014, to submit objections to the Depa rtment’s findings. The Department received objections to the show-cause Order from 11 of the 13 communities. On June 24, 2014, the Department finalized its tenta tive decision, and set procedures for communities to petition the Department for a waiver. Waiver petitions were due July 24, 2014.

Of the 13 communities found ineligible for EAS ba sed on the requirement that they enplane 10 or more passengers per service day, 12 filed petitions for waivers. Athens, Georgia did not file a waiver petition. 3

Below is a summary of each community’s petition.

BRADFORD, PENNSYLVANIA The Department received several letters either requesting or supporting a waiver petition for Bradford. Tom Frungillo, the Airport Director of the Bradford Regional Airport, submitted a petition on behalf of the community. Mr. Frung illo stated that the community has suffered a temporary and steady decline in passenger enplanem ents since Gulfstream International Airlines (now, Silver Airlines) in augurated service six years ago in 2008. Prior to 2008, he argued that Bradford regularly enplaned more than 10 passengers per day, except for in 2007 when enplanements dropped to 9.9 due to US Airway s’ moving its hub from Pittsburgh International Airport (PIT). He also noted that the Pe nnsylvania Air Service Committee recently conducted a multi-year study of the air service needs of the EAS communities in Pennsylvania. This study

concluded that “reliable service on a 9-seat aircraft to PIT, co mbined with a low-local fare structure can be” successful. The Department also received a waiver petition from the Bradford

Area Alliance. The Alliance’s wa iver petition echoed Mr. Frungillo’ s concerns with Bradford’s current EAS carrier and they believe that a new carrier would result in an increase in enplanements.

EL CENTRO, CALIFORNIA Mr. Ralph Cordova, Jr., Imperial County Executive Officer, submitted a petition on behalf of El Centro. He stated that the decline in enplanemen ts is temporary in nature due to the community adjusting to a change in air carr ier service providers, with servi ce to different hub destinations on a new schedule, on a smaller aircraft type. Mr. Cordova noted that for many years, United Express, operated by SkyWest Airlines, built a loyal following of passengers by providing nonstop service to Los Angeles International Ai rport (LAX), and Yuma, Arizona (YUM), using 30-seat Embraer 120 aircraft. However, in 2013, United Express discontinued its service at the

1 49 U.S.C. § 41731(c) & (d).

2 49 U.S.C. § 41731(e).
3 See www.regulations.gov and access each community’s waiver petitions by entering “DOT-OST-[each respective community’s docket number as described on page 1].- 3 -

community, and SeaPort Airlines began providing service to San Diego International Airport (SAN) and Burbank Bob Hope Airport (BUR), using 9-seat Cessna Ca ravan aircraft. Mr. Cordova stated that, as a result , the number of daily seats offe red at the community was about half that offered by United Express, and connec ting opportunities at the h ub destinations was far more limited. Further, SeaPort initially lacked in terline agreements with other major air carriers when it entered the market, however, it now has in terline agreements with Alaska Airlines at SAN and BUR, and intends to enter into similar agreements with two other major air carriers and plans to join a major air carrier’s frequent fl yer program in December 2014. Finally, he stated that the community’s “traffic levels had remain ed above the mandatory 10 enplanements per day by at least six passengers ever y year except for 2013.”

FORT DODGE, IOWA The Department received waiver petitions fr om Mayor Matt Bemrich, Mr. Richard Jacobson, Chairman of the Fort Dodge Regional Airpor t Commission, Mr. Dennis A. Plautz, CEO of the Greater Fort Dodge Growth Alliance, James B. Ke rsten, Vice President of External Affairs and Government Relations at Iowa Central Community College, and Paul Trombino, III, Director of the IOWA Department of Transportation. Ma yor Bemrich and Mr. Jacobson’s petitions both noted that Fort Dodge missed the 10-enplanem ent threshold by only 16 passengers per month, which they attributed 54 flight cancellations by their EAS carrier.

FRANKLIN/OIL CITY, PENNSYLVANIA Mr. Otho C. Bell, the Airport Director of the Venango Regional Airport, submitted a petition on behalf of the community. He stated that the co mmunities’ enplanements have suffered due to its EAS carrier’s (Gulfstream International Airlines (now, Silver Airways)) poor management and

service. Mr. Bell also noted that the carrier’s fr equent cancellations due to its inexperience with northern climates and inadequate equipment were further contributing factors. Finally, Mr. Bell referred to a Pennsylvania Air Service Committee study that reco mmends that more frequent service to Pittsburgh International Airport (PIT) with 9-seat airc raft would lift the community’s enplanements over the 10-enplanement bar.

GREENVILLE, MISSISSIPPI The Honorable John H. Cox III, Mayor of Gree nville, submitted a petition on behalf of the community. Mayor Cox noted that passenger enpl anements only recently fell below 10 per day, and that, historically, the community has had mo re than 10 enplanements per day. Mayor Cox attributed the decline in enplanements to poor se rvice by its current EAS carrier, Silver Airways,

which started service at Greenville in October 2012. In addition, the co mmunity stated that Silver’s ticket pricing was not designed to generate traffic, and marketing efforts were

nonexistent.

HAGERSTOWN, MARYLAND Mr. Phillip Ridenour, Airport Dire ctor of the Hagerstown Regional Airport, submitted a waiver petition on behalf of the community. In the pe tition, Mr. Ridenour allege d that the community’s EAS carrier, Sun Air, and its former Chief Ex ecutive Officer Tom Cooper, were averse to adequately marketing Sun Air se rvice, resulting in low passe nger numbers. Additionally, Mr. Ridenour pointed out that Sun Air began service at Hagers town with aircraft that were not fully equipped to operate in winter weather conditions , resulting in poor service reliability, further- 4 -

reducing passenger use. The petition also attri buted its low average enplanements in 2013 to the 2013 government shutdown and its effects on Fede ral Aviation Administration operations. Mr. Ridenour indicated that the government shutdown le d to a shortage of ro ute-qualified pilots for Sun Air and delays in approvals for additional ai rcraft on its operating certificate and Sun Air’s revisions to its operations manual for cold weather operations.

The community stated that since that time, Sun Air has hired a new CEO and other senior management, including a marketing director, and has established a maintenance base at Lancaster, PA, thereby improvi ng reliability a nd ridership.

JACKSON, TENNESSEE The Department received two petitions requesting a wavier on behalf of Jackson: one from the City of Jackson and Madison County, Tennesse e, and the other from the McKellar Sipes Regional Airport. Both pe titions indicated that the co mmunity suffered a decline in enplanements due to poor performance and extremely high air fares offered by the community’s EAS service provider, Pacific Wings d/b/a Te nnessee Skies. In 2011, however, SeaPort replaced Pacific Wings as Jackson’s EAS carrier and the petition’s noted that Jackson’ experienced an increase in enplanements of “240% over the previous carrier.”

KINGMAN, ARIZONA Mr. David French, the Executive Director of th e Kingman Airport, submitted a waiver petition on behalf of the community. Mr. French stated that Las Vegas is the community’s logical hub but “it has always been a destination airport a nd in recent years connections into the national system have been reduced during daytime hours ma king convenient connections into the national system difficult.” He also stated that “the act ual driving mile distance to Phoenix is debatable based on any given starting point in Kingman as the 175 mile define d distance is close. However, airline connections in PHX are also difficult, but more as a result of the physical design of multiple terminal structures and ground distance s to cross with limited transfer times. This affects older passengers and families with small children which is a larger part of Kingman’s traveling public.” Finally, Mr. French noted th at Great Lakes recently inaugurated service at Kingman and that “it is the best [service] Kingman has experien ced since the early 1980s and it

should be allowed to be cultivated.”

LANCASTER, PENNSYLVANIA Ms. Christina Hausner, counsel for the Lancaste r Airport Authority, submitted a waiver petition on behalf of the community. In support of the petition, Ms. Hausner stated that passenger

numbers at Lancaster were well above the 10 enplanement per day threshold when Cape Air provided service to Baltimore in 2011 and 2012; however, passenger numbers declined with the

introduction of Sun Air. Ms. Hausner noted th at Sun Air’s reliability was hampered by its inexperience with operating in cold weather envi ronments, lack of proper equipment (e.g., heated planes, deicing), and an inability to certify p ilots due to the 2013 government shutdown and its

effects on Federal Aviation Admi nistration staff and operations. Ms. Hausner observed that “[t]he first six months of 2014 ha s seen an 11% increase in enplan ements over the same period in 2013, demonstrating that the fiscal year ended September 13, 2013 is an anomaly and represents only a temporary decline in passengers.” She al so stated that any issues with Sun Air that contributed to the temporary decline in enplanements have been corrected.- 5 -

MACON, GEORGIA Macon-Bibb County and the Middle Georgia Regi onal Airport submitted a petition for a waiver on behalf of Macon. In the petition, they stat ed that Macon suffered a temporary decline in enplanements due to its previous EAS carrier, Pacific Wings. Pacific Wings, d/b/a Georgia Skies, began EAS at Macon in 2008. While Pacific Wings served Macon, enplanements declined significantly, which the petitioners attr ibute to the carrier’s poo r service and frequent cancellations. They further noted that prior to Pacific Wings entering the market, Macon had no issues with enplaning more than 10 passengers per day, and Fiscal Year 2013 was the most dismal era for passenger service at Macon. Silver Airways has now assumed Macon’s EAS

route with service to Hartsfield-Jackson A tlanta International Ai rport (ATL) and Orlando International Airport (MCO), which they indicated was a positive development for the community’s air service. However, the petition stated that Silver Airways has been negatively affected by the “pilot shortage,” which has caused th e air carrier to delay or cancel some flights, but that enplanements are trending higher.

MERCED, CALIFORNIA The Department received a petition from Mr. John M. Bramble, the Merced City Manager. Mr. Bramble stated that from 2002 through 2008, Merced averaged 24 enplanements per day, and

that Great Lakes started EAS at Merced in 2008. He noted that Great Lakes had serious operational issues at Los Ange les International Airport (LAX) which negatively affected customer confidence, loyalty, and satisfaction, and, he believ es, resulted in a decrease in enplanements. Mr. Bramble also noted that Merced’s enplanements exceeded 10 per day in

Fiscal Year 2012.

MUSCLE SHOALS, ALABAMA Barry Griffith, Airport Director of Northwes t Alabama Regional Airport, submitted a waiver petition on behalf of Muscle Shoals. Mr. Gri ffith claimed that passenger enplanements only recently fell below 10 per day, and that histor ically the community has had more than 10 enplanements per day. He attributed the declin e in enplanement to poor service by the current EAS carrier, Silver Airways, which started servic e at Muscle Shoals in October 2012, and not to “any decline or weakness over historic traffic or revenue levels by the market.” Muscle Shoals’ petition included several customer complaints and newspaper articles in s upport of their position.

Waiver Authority The waiver provision at 49 U.S.C. 41731(e) vests the Secretary w ith broad discretion to grant waivers of the 10-enplanement requirement.

Decision

After careful consideration of a ll 12 petitions, the U.S. Department of Transportation has decided to grant the waiver petitions of all 12 communities.

For many of these communities, a simple comparis on of their enplanement data in recent years

demonstrates that the Fiscal Year 2013 d ecline in enplanements experienced by these communities was temporary. El Centro, Fort Dodge, Greenville, Lancaster, and Muscle Shoals all enplaned far more than 10 passengers per da y in Fiscal Year 2012, an d their Fiscal Year 2013- 6 -

enplanements were a sharp decrease from previous years. Similarly, Hagerstown and Merced exceeded 10 enplanements per day every year in the past decade, except one. 4 Additionally, both communities averaged more than 10 enplanem ents per day in Fiscal Year 2012. Thus, these communities have demonstrated to the Departme nt’s satisfaction that their Fiscal Year 2013 decline in enplanements is temporary.

At the remaining communities, Bradford, Fra nklin/Oil City, Jackson, Kingman, and Macon, a comparison of recent enplanement numbers, alon e, does not directly show that the decline experienced in these communities is tempor ary. Nonetheless, upon review of these communities’ enplanement data over the past seve ral years, in combination with the arguments these communities presented in supp ort of their waiver petitions, th e Department is satisfied that the decline in enplanements at these communities also is temporary. For instance, despite being below an average of 10 enplanements per day, seve ral of these communities showed an increase in enplanements from Fiscal Year 2012 to Fi scal Year 2013. Some co mmunities experienced a service hiatus that resulted in decreased enplan ements once service restarted; enplanements at some of these communities, though, have slowly begun to rebound. Additionally, for some of these communities, the decrease in enplanements occurred in conjunction with service issues

related to their EAS carrier or othe r external factors that could be resolved with the selection of a new EAS provider. In light of these circumstances, these communities have demonstrated to the Department’s satisfaction that the dec line in enplanements is temporary.

We wish to make clear that the statute require s that communities exceed 10 enplanements per day during each fiscal year. Although these comm unities received a temporary waiver from this requirement, their traffic will be reassessed based upon Fiscal Year 2015 data (October 1, 2014, through September 30, 2015). We expect that th ese communities will work with their EAS carriers to address any issues th at contributed to their Fiscal Year 2013 decline in enplanements.

Next Steps

The 12 communities discussed in this order are in various stages of their EAS contracts. For those in mid-contract, the incumbent carrier must continue to provi de EAS. For those communities with contracts expiring soon, we will issue an RFP (Request for Proposals) soon.

For those communities in the midst of a carri er-selection decision, we will announce that decision as soon as possible. We reiterate that we expect the communities and their respective EAS carriers to work together to ensure comp liance with the 10-enplanement statute and all other eligibility criteria.

This Order is issued under authorit y delegated in 49 CFR Part 1.25a(b).

4 Hagerstown was not eligible for EAS during a period of time in FY2008 and FY2009.- 7 -

ACCORDINGLY,

1. The Department grants the petitions for a wa iver for Bradford, Pennsylvania; El Centro, California; Fort Dodge, Iowa; Franklin/Oil City, Pennsylvania; Gr eenville, Mississippi; Hagerstown, Maryland; Jackson, Tennessee; Kingman, Arizona; 5 Lancaster, Pennsylvania; Macon, Georgia; Merced, Califor nia; and Muscle Shoals, Alabama. These

communities will next be reassessed based on Fiscal Year 2015 data (October 1, 2014, through September 30, 2015).

2. These dockets will remain open until further order of the Department; and

3. The Department will serve copies of this Orde r on the mayors, civic, airport officials at

the communities identified in this Order and the carriers that are serving these

communities and have been select ed to serve these communities.

By:

BRANDON M. BELFORD Deputy Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available

at http://www.regulations.gov

5 49 U.S.C. 41731(a)(1)(C) requires that all EAS commun ities, except those in Alaska or Hawaii, have a subsidy per passenger under $1,000 based on end of fiscal year da ta. Mid-FY14 data (for the period ending March 31, 2014) shows Kingman’s subsidy pe r passenger is $1,062. If, based on end of FY14 data, Kingman’s per passenger subsid y remains above $1000, we will address that issue in a subsequent
Order. See Orders 2012-2-14, 2013-2-11, and 2013- 6-13 for how the Department has dealt with the $1,000 requirement for four other communities that did not meet that requirement. The waiver granted by this Order does not insulate Kingman (or any othe r community addressed in this Order) from the $1,000 requirement, or any other requirement for EAS eligibility.