Order 2014

- 1

- 20 Served: January 31, 2014



### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on the 31 st of January, 2014

Essential Air Service at
FORT DODGE, IOWA MASON CITY, IOWA
Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 20 0 1

- 10682 DOCKET DOT

- OST

- 20 0 1

- 10684

ORDER REQUESTING PROPOSALS ON AN EXPEDITED BASIS
Summary By this Order , the Department is requesting proposals no later than February 21 , 201 4 , from carriers interested in providing Essential Air Service (EAS) at Fort Dodge and /or Mason City , Iowa . The communities will be without air service effective February 1, 2014, so c arriers’ proposals should specify when they will be able to inaugurate service. W e anticipate that the selection period w ill be a typical two year period from the start of service

. Background By Order 201 1

- 1 1

- 30 , November 23 , 201 1 , the Department selected Great Lakes A viation, Ltd. ( Great Lakes ) to provide 1 8 and 24 nonstop round trips per week with 19

- seat Beech 1900 aircraft between Fort Dodge and Mason City, r espectively, and Minneapolis

- St. Paul International Airport (MSP) . The selection was to extend for a two

year period beginning when Great Lakes inaugurated EAS at each of the six communities 1 through the end of the 24 th month thereafter

. 2 The Order also set the annual subsidy rates at Fort Dodge and Mason City to be $1,798,6 93 and $1,174,468
, respectively. Because Great Lakes had difficulty starting service, Order 2012

- 6

- 23, June 26, 2012, established May 31, 2014, to be the termination date for Great Lakes’ service at Fort Dodge and Mason City, as well as the four other com munities.
On January 27, 2014, Great Lakes announced that , effective February 1 , 2014, it will be terminating all service at Fort Dodge and Mason City, Iowa, Devils Lake and Jamestown, North Dakota, Thief River Falls, Minnesota, and Ironwood, Michigan, due to a severe

1 The six communities were Fort Dodge and Mason City, Iowa; Brainerd and Thief River Falls, Minnesota; Iron Mountain, Michigan; and Watertown, South Dakota. 2 Because the carrier did not at the time operate to Minneapolis, its proposals were predicated on having a six

- community system of operations at that hub.- 2

-
pilot shortage. Each of t hese six communities is served to Minneapolis

. Great Lakes stated it is suspending its service because it would be:

“

.... in the best interest of our customers, communities, and employees to suspend service from thes e communities until we are able to rebuild our staff of pilots in order to provide reliable service. We deeply regret and apologize for this inconvenience .”

Great Lakes did not indicate if or when it would resume service.
As the two communities are guaranteed EAS, and Great Lakes will soon terminate that service, we are requesting proposals from carriers int erested in providing service at Fort Dodge and/or Mason City, with or without subsidy . The EAS subsidy w ill begin when, pursuant to Department Order, the selected carrier inaugurate s service. Carriers should state in their proposals when they anticipate being able to inaugurate service, because that may be a carrier

- selection criteri on

.
We note that 49 U.S.C . § 41731(a) (1) (B) provides that communities enplaning fewer than ten passengers per day based on traffic for the year ended September 30, 2013, are not eligible for EAS support , barring a waiver from the Secretary . The Department is working towards imple mentation of that provision, and we anticipate addressing that matter in the near future . In the meantime, these two communities will soon be without their required EAS. As developments on the ten enplanement provision proceed, we will keep potential app licants and the communities fully informed and will take appropriate action.
Request for Proposals 3 As the end of the current rate term s approach and in light of termination of the required service by Great Lakes , we are requesting proposals from carrie rs int erested in providing EAS at Fort Dodge and Mason City, Iowa, with or without subsidy, for the period beginning when the carrier can inaugurate service pursuant to Department Order

. Carriers should file their proposals by February 21 , 2014

. S taff will then docket the proposals, thereby making them public. Shortly afterwards, we will provide copies of all timely filed proposals to the communities and request community comments by a specified date

. 4 We will give full consideration to all propo sals filed in a timely manner. 5 Interested carriers should prepare their proposals with every expectation that their initial proposals will also be their final and only proposals. We retain the discretion to negotiate proposals with carriers when we deem it desirable. We also retain the discretion to reject outright all unreasonable or unrealistic proposals and , if necessary, solicit a new round of proposals. However, we anticipate that negotiation or rejection will remain only occasional exceptions to the rule.

3 Applicants should be aware of the provisions of 49 U.S.C. § 41731(a) (1) (B), the ten enplanement rul e, discussed above, when preparing their proposals. Staff will be available to answer any questions. 4 Normally we provide a 30

- day period to comment. We anticipate shortening that to a t hree

- week period. 5 Carriers should not expect the Department to ac cept late filings. In cases where a carrier proposes to provide EAS without subsidy and we determine that basic EAS, required by 49 U.S.C. § 41732, can be reliably provided without such compensation, we typically do not proceed with the carrier

- selection case. Instead, we simply rely on that carrier’s subsidy

- free service as proposed.- 3

-
We are here providing interested carriers with some basic information to serve as guidance when they prepare their proposals, but we will not prescribe a precise format for their proposals. We expect proposals to adequately describe the service being proposed and the annual amount of subsidy being requested. The applicants can make their own judgments as to the level of detail they wish to present; however, we recommend that they include information concerning proposed schedules and projected b lock hours. In addition, applicants are urged to provide financial data supporting their subsidy requests, including information on their projected expenses and revenues. We strongly encourage clear, well

- documented proposals that will facilitate their evaluation by the communit ies and the Department. 6
As always, we will formally solicit each community ’ s views on any service options we receive before making a long

- term , carrier

- selection decision. The communit ies and air carrier s are encouraged to w ork together , in advance of the due date for proposals , to craft service pattern s that are both desirable to the communit ies and meet the operational needs of the airlines, as carriers cannot amend their proposal s after the due date.
We encourage proposals that meet the communit ies’ requirements in an efficient manner. With specific respect to Fort Dodge, the Department expects proposals consisting of three nonstop round trips each day ( a total of 18 per week) to Minneapolis , Chicago O’Hare, or another large or medium hub airport w ith numerous connections to the national air transportation system using 19

- seat aircraft . At Mason City, we expect four nonstop or

one

- stop round trips each day ( a total of 24 per week) , also to a large or medium

- hub airport u sing 19

- seat aircraft. For service using larger aircraft, two nonstop or one

- stop round trips each weekday and weekend ( a total of 12 per week) would be sufficient to accommodate recent traffic levels at each community. If smaller air craft are contemplated (e.g. 9

- seat aircraft), additional frequencies will be considered , al though we would expect the service to be nonstop from each community to the hub airport

. We encourage proposals that meet those requirements in an efficient manner . Carriers are also welcome to propose more than one service option, if they choose. They need not limit themselves to the requirements specified above if they envision other, potentially more attractive service possibilities

– different hubs, for exampl e

– with subsidy requirements that remain competitive.

6 In selecting a carrier to provide subsidized EAS for an eligible place not in Alaska, 49 U.S.C. § 41733(c) (1) directs us to consider five 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; (4) communit y views; and (5) whether the carrier has included a plan in its proposal to market the service. In addi tion, the Consolidated Appropriations Act, 2014, Public Law No. 113

- 76, 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 inceptio n of the program. . Interested carriers should also be aware that our general provisions governing EAS will be included in the selection Order as part of our authorization of subsidy for the selected service. Appendix C of this Order contains those genera l provisions.- 4

-

Filing Format Carrier proposals should be submitted to the Department with all materials merged into a single document. In addition, because the document will be published on

www.r egulations.gov, each page should be formatted to be viewed online.

Historical Traffic In o rder to assist carriers in making traffic and revenue projections, we have included historical traffic for the communit ies in Appendi x B for the most recent annual periods.

Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug

- free workplaces , and nondiscrimination. 7 Consequently, all carriers receiving Federal subsidy to support EAS must certify tha t they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimination, and those carriers whose subsidies exceed $100,000 over the life of the rate term must also certify that they are in compliance with the regulations governing lobbying activities. Because the Department is prohibited from paying subsidy to carriers that do not submit these documents, the selected carrier will be required to submit them in o rder to receive subsidy. Interested carriers requiring more detailed information regarding these requirements, as well as copies of the certifications, should contact the Office of Aviation Analysis at (202) 366

- 5903 . The Department is prohibited from paying subsidy to carriers that do not submit these documents.
Community Comments Civic officials and the State are welcome to submit comments on the proposals at any time. As noted earlier, we will provide a summary of the proposals to the civic parties and ask them to submit their final comments shortly after Febr uary 21 , 201 4 , the due date for carrier proposals.

This Order is issued under authority delegated in 49 CFR Part 1. 25a(b) and re

- delegated to the Directo r, Office of Aviation Analysis.
ACCORDINGLY,

1

. The Department requests proposals from carriers interested in providing EAS at Fort Dodge , Iowa , and /or Mason City , Iowa . Carriers should submit proposals, with subsidy if necessary, by February 21 , 201 4 . Proposals should be emailed to EAS@dot.gov, with the title “Proposal (s) to Provide EAS at Fort Dodge and/or Mason City ” 8 ;

2

. Th ese D ocket s will remain open until further Order of the Department; and

3 . We will serve this Order on the s ervice l ist for th ese Docket s

.

7 The certifications are available on the web at http://www.dot.gov/policy/aviation

- policy/small

- community

- rural

- air

- service/essential

- air

- service

. 8 Questions regarding filings may be directed to Kevin Adams at 202

- 366

- 1047 or Kevin.Adams@dot.gov

.- 5

-
Persons entitled to petition the Department for review of this Order under the Department’s Regulations, 14 CFR Part 385. 31 , must file such petitions within seven ( 7 ) days after the date of service of this Order

.
This Order will be effective immediately , and the filing of a petition for review shall not preclude its effectiveness.
By:

TODD M. HOMAN Director Office of Aviation Analysis (SEAL)

An electronic version of this document is available at http://www.regulations.govAppendix A

Nonstop Great Circle Miles Fort Dodge (FOD) and Mason City (MCS) 61 Fort Dodge to Des Moines (DSM) 75 Mason City to Minneapolis (MSP) 119 Fort Dodge to Omaha (OMA) 123 Mason City to Chicago (ORD) 288Appendix B-1 Fort Dodge, Iowa (FOD), Scheduled Passenger Service, T-100

Passengers Departures Completion Year Month Origin Dest O&D Performed Scheduled Factor 2010 12 888 812 1,700 114 124 91.94% 2011 1 763 767 1,530 124 124 100.00% 2011 2 717 654 1,371 106 112 94.64% 2011 3 911 987 1,898 123 124 99.19% 2011 4 747 733 1,480 118 120 98.33% 2011 5 951 948 1,899 121 124 97.58% 2011 6 983 984 1,967 120 120 100.00% 2011 7 990 992 1,982 123 124 99.19% 2011 8 853 890 1,743 124 124 100.00% 2011 9 905 922 1,827 120 120 100.00% 2011 10 824 810 1,634 124 124 100.00% 2011 11 897 883 1,780 120 120 100.00% YE 11/30/2011 10,429 10,382 20,811 1,437 1,460 98.42%

2011 12 1,000 963 1,963 119 124 95.97% 2012 1 948 924 1,872 105 108 97.22% 2012 2 847 788 1,635 98 53 184.91% 2012 3 1,031 1,054 2,085 101 106 95.28% 2012 4 549 595 1,144 136 142 95.77% 2012 5 445 440 885 165 170 97.06% 2012 6 357 399 756 154 162 95.06% 2012 7 135 122 257 90 92 97.83% 2012 8 267 331 598 203 231 87.88% 2012 9 246 245 491 210 220 95.45% 2012 10 276 292 568 219 232 94.40% 2012 11 248 253 501 214 224 95.54% YE 11/30/2012 6,349 6,406 12,755 1,814 1,864 97.32%

2012 12 265 272 537 209 228 91.67% 2013 1 235 240 475 207 232 89.22% 2013 2 192 193 385 188 208 90.38% 2013 3 295 337 632 201 228 88.16% 2013 4 205 212 417 149 165 90.30% 2013 5 242 233 475 144 170 84.71% 2013 6 231 230 461 155 160 96.88% 2013 7 266 244 510 161 170 94.71% 2013 8 251 263 514 157 168 93.45% 2013 9 188 205 393 153 162 94.44% 2013 10 208 169 377 149 170 87.65% 2013 11 198 190 388 122 156 78.21% YE 11/30/2013 2,776 2,788 5,564 1,995 2,217 89.99%

Note: Great Lakes replaced Mesaba on the 11th of April, 2012.Appendix B-2

Mason City, Iowa (MCW), Scheduled Passenger Service, T-100

Passengers Departures Completion Year Month Origin Dest O&D Performed Scheduled Factor 2010 12 1,279 1,188 2,467 140 162 86.42% 2011 1 1,176 1,135 2,311 151 156 96.79% 2011 2 1,013 928 1,941 129 144 89.58% 2011 3 1,191 1,274 2,465 158 162 97.53% 2011 4 904 916 1,820 146 152 96.05% 2011 5 991 995 1,986 148 160 92.50% 2011 6 896 869 1,765 114 120 95.00% 2011 7 968 869 1,837 122 124 98.39% 2011 8 938 921 1,859 124 124 100.00% 2011 9 858 804 1,662 120 120 100.00% 2011 10 806 748 1,554 124 124 100.00% 2011 11 809 765 1,574 115 118 97.46% YE 11/30/2011 11,829 11,412 23,241 1,591 1,666 95.50%

2011 12 877 845 1,722 115 124 92.74% 2012 1 637 643 1,280 102 108 94.44% 2012 2 818 735 1,553 96 100 96.00% 2012 3 852 874 1,726 106 106 100.00% 2012 4 469 523 992 168 181 92.82% 2012 5 429 419 848 215 232 92.67% 2012 6 399 463 862 215 222 96.85% 2012 7 451 450 901 226 230 98.26% 2012 8 366 419 785 283 293 96.59% 2012 9 377 360 737 272 280 97.14% 2012 10 359 364 723 277 294 94.22% 2012 11 363 342 705 265 284 93.31% YE 11/30/2012 6,397 6,437 12,834 2,340 2,454 95.35%

2012 12 343 359 702 261 290 90.00% 2013 1 256 246 502 239 296 80.74% 2013 2 223 220 443 225 264 85.23% 2013 3 234 291 525 242 290 83.45% 2013 4 237 276 513 209 225 92.89% 2013 5 253 278 531 207 232 89.22% 2013 6 311 343 654 208 220 94.55% 2013 7 333 356 689 221 232 95.26% 2013 8 292 304 596 213 230 92.61% 2013 9 259 295 554 190 212 89.62% 2013 10 287 290 577 197 224 87.95% 2013 11 205 246 451 147 202 72.77% YE 11/30/2013 3,233 3,504 6,737 2,559 2,917 87.73%

Note: Great Lakes replaced Mesaba on the 11th of April, 2012.App endix C
Example of 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 co mpleted, 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 th is 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 operat ed; 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 a ny 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 co ntracts 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 para graph.
Funds may not be available for performance under this Order beyond [DATE]. The Government’s obligation for performance under this Order beyond [DATE], is subject to the availability of funds from which payment for services can be made. No legal l iability on the part of the Government for any payment may arise for performance under this Order beyond [DATE], until funds are made available to the Department for performance. If funds are not made available for performance beyond [DATE], the Departmen t will provide notice in writing to the carrier.
All claims for payment, including any amended claims, must be submitted within 90 days of the last day of the month for which compensation is being claimed. For example, claims for service provided in Jul y must be filed by October 31; August claims must be submitted by November 30, and so on.