### Order 2013

- 5

- 13 Served: May 21, 2013



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

Issued by the Department of Transportation on the 21 st 

### of May, 2013

Essential Air Service at PADUCAH, KENTUCKY HANCOC K/HOUGHTON, MICHIGAN MUSKEGON, MICHIGAN PELLSTON, MICHIGAN SAULT STE. MARIE, MICHIGAN WATERTOWN, NEW YORK EAU CLARIE, WISCONSIN
Under 49 U.S.C. 41731 et seq

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ORDER REQUESTING PROPOSALS
Summary By this Order , the Department is requesting proposals by June 26, 2013 , from carriers interested in providing Essential Air Service ( EAS) at Paducah, Kentucky; Hancock/Houghton, Muskegon, Pellston, and Sault Ste. Marie, Michigan, Watertown, New York, and /or Eau Claire, Wisconsin, for a period of two or more years , with or without subsidy.
Background By a series of Orders the Departme nt selected carriers to provide EAS at the above communities at various subsidy rate levels. All of the service at these communities is currently provided with regional jets on a nonstop basis

.

Selection Weekly Community Carrier Hub Order Round Trips Rate Expires Paducah, KY SkyWest ORD 2012-2-2 14 $1,710,775 12/31/2013 Hancock/Houghton, MI SkyWest ORD 2012-2-2 14 $934,156 12/31/2013 Eau Claire, WI SkyWest ORD 2012-2-2 14 $1,733,576 12/31/2013 Muskegon, MI SkyWest ORD 2012-2-11 14 $1,576,067 12/31/2013 Sault Ste.Marie, MI Delta DTW 2012-4-10 13 $1,676,136 1/31/2014 Watertown, NY Am. Eagle ORD 2011-3-34 12 $3,047,972 11/30/2013 Pellston, MI Delta DTW 2012-4-10 14 peak/ $1,055,322 10/31/2013 12 off-peak

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Request for Proposals As the end of the current rate term s approach, we are requesting proposals from carriers int erested in providing service at any or all of these communities , with or without subsidy, for the period beginning when the various subsidy rates expire . Carriers should file their proposals by June 2 6, 2013

. S taff will then docket the proposals, thereby making them public. Shortly afterwards, we will provide a summary of the proposals to each community and ask them to submit their final comments. We will give full consideration to all proposals fil ed in a timely manner. 1 

### 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 desi rable. 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

. 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 p roposed 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, they might want to include proposed schedules as well as supporting data for their subsidy reque sts, such as projected block hours, revenues , and expenses. We strongly encourage clear, well

documented proposals that will facilitate their evaluation by the affected communities and the Department. We anticipate applying our usual carrier

- selection cr iteria and the general provisions governing subsidy payments for EAS

. 2


### As always, we will formally solicit the communit ies’ 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 work together in advance of the due date for proposals to craft a service pattern that is both desirable to the community and meets the operational needs of the airlines, as carriers cannot amend their proposal after the due date.

We en courage proposals that meet the communit ies’ requirements in an efficient manner. All of these communities are strong traffic generators and so we will request the maximum service level at each community

– 67 seats per day in each direction and a

1 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to provide Essential Air Service without subsidy and we determine that service 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 su bsidy

- free service as proposed. 2 In selecting a carrier to provide subsidized EAS, 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) inte rline arrangements with a larger carrier at the hub; (4) community views; and (5) whether the carrier has included a plan in its proposal to market the service. In addition , The Consolidated Appropriations Act, 2008, Public Law 110

- 161, 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 inception of the program. Interested carriers should also be aware that our general provisions gov erning 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 general provisions.

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minimum of two round trips per day. 3 

### Carriers are also welcome to propose more than one service option, if they choose; they need not limit themselves to a single specific service pattern if they envision other, potentially more attractive service possibilities

– different hubs, or longer terms for the contracted service

– with subsidy requirements that remain competitive.
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 Regulations.gov, each page should be formatted to be viewed online.

Historical Traffic In o rder to assist carriers in making their traffic and revenue projections, we have included historical traffic for the communit ies i n 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. 4 

### Consequently, all carriers receiving Federal subsidy to support EAS must certify that 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 s 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 a sk them to submit their final comments shortly after Ju ne 26 , the due date for carrier proposals.

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

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

3 This works out to two round trips per day with regional jets, three round tr ips per day (18 a week) with 30

- seat aircraft, and four round trips per day (24 a week) with 19

- seat aircraft. 4 The certifications are available on the web at http://www.dot.gov/policy/aviation

- policy/small

- community

- rural

- air

- service/essential

- air

- service

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ACCORDINGLY,

1

. The Department requests proposals from carriers interested in providing EAS at any or all of these communities . Carriers should submit their proposals, with subsidy if necessary, by June 26, 2013 . Proposals should be emailed to EAS@dot.gov, with the title “ Proposal to Provide EAS at [name of community(s)] , with the appropriate docket ( s )

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

- 366

- 1047 or Kevin.Adams@dot.gov ;

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 is Docket.
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 d ate 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 docum ent is available on the World Wide Web at http://www.regulations.gov

### Appendix A

Nonstop Great Circle Miles to Chicago (ORD) Eau Claire, EAU, 268 Hancock/Houghton, CMX 359 Muskegon, MKG 118 Paducah, PAH 343 Pellston, PLN, 293 Sault Ste. Marie, CIU, 341 Watertown, ART, 618
Nonstop Great Circle Miles to Detroit (D TW) Eau Claire, EAU, 447 Hancock/Houghton, CMX 425 Muskegon, MKG 161 Paducah, PAH 458 Pellston, PLN, 243 Sault Ste. Marie, CIU, 284 Watertown, ART, 391Appendix B-1 Historical Passengers per T-100 Market Report for the Last Three Years Eau Claire, WI (EAU) Hancock/Houghton, MI (CMX)

Year Month Origin Dest O&D Origin Dest O&D 2010 4 1,375 1,404 2,779 1,389 1,588 2,977 2010 5 1,384 1,467 2,851 1,356 1,374 2,730 2010 6 1,367 1,397 2,764 1,388 1,436 2,824 2010 7 1,683 1,778 3,461 1,980 2,224 4,204 2010 8 1,759 1,853 3,612 2,481 2,525 5,006 2010 9 1,688 1,656 3,344 1,759 1,684 3,443 2010 10 1,639 1,644 3,283 2,173 1,983 4,156 2010 11 1,566 1,513 3,079 1,882 1,777 3,659 2010 12 1,427 1,536 2,963 2,048 1,805 3,853 2011 1 1,466 1,323 2,789 1,603 1,702 3,305 2011 2 1,039 1,052 2,091 1,577 1,476 3,053 2011 3 1,540 1,546 3,086 2,046 1,875 3,921 YE 3-31-11 17,933 18,169 36,102 21,682 21,449 43,131

2011 4 1,323 1,352 2,675 1,697 1,859 3,556 2011 5 1,457 1,480 2,937 1,799 1,792 3,591 2011 6 1,546 1,430 2,976 1,628 1,742 3,370 2011 7 1,542 1,596 3,138 2,221 2,348 4,569 2011 8 1,468 1,439 2,907 2,357 2,465 4,822 2011 9 1,347 1,336 2,683 1,933 1,879 3,812 2011 10 1,463 1,498 2,961 2,127 1,942 4,069 2011 11 1,478 1,520 2,998 1,894 1,833 3,727 2011 12 1,690 1,724 3,414 2,002 1,835 3,837 2012 1 1,741 1,570 3,311 1,519 1,754 3,273 2012 2 1,795 1,597 3,392 1,816 1,671 3,487 2012 3 1,860 1,942 3,802 2,232 2,029 4,261 YE 3-31-12 18,710 18,484 37,194 23,225 23,149 46,374

2012 4 1,675 1,724 3,399 2,051 2,199 4,250 2012 5 1,766 1,706 3,472 2,079 2,094 4,173 2012 6 1,908 1,839 3,747 2,080 2,246 4,326 2012 7 1,759 1,600 3,359 2,580 2,499 5,079 2012 8 1,652 1,819 3,471 2,717 2,817 5,534 2012 9 1,625 1,536 3,161 2,065 2,029 4,094 2012 10 1,651 1,621 3,272 2,292 2,030 4,322 2012 11 1,534 1,485 3,019 2,003 1,920 3,923 2012 12 1,521 1,498 3,019 2,101 1,927 4,028 2013 1 1,651 1,443 3,094 1,685 1,783 3,468 2013 2 1,518 1,421 2,939 1,703 1,650 3,353 2013 3 1,772 1,884 3,656 2,085 1,704 3,789 YE 3-31-13 20,032 19,576 39,608 25,441 24,898 50,339Appendix B-2 Historical Passengers per T-100 Market Report for the Last Three Years Muskegon, MI (MKG) Paducah, KY (PAH)

Year Month Origin Dest O&D Origin Dest O&D 2010 4 1,121 1,265 2,386 1,830 1,778 3,608 2010 5 831 959 1,790 1,999 1,932 3,931 2010 6 865 925 1,790 1,770 1,674 3,444 2010 7 1,147 1,301 2,448 1,713 1,736 3,449 2010 8 1,273 1,141 2,414 1,607 1,594 3,201 2010 9 1,181 1,105 2,286 1,877 1,838 3,715 2010 10 1,161 1,117 2,278 1,788 1,814 3,602 2010 11 981 996 1,977 1,667 1,667 3,334 2010 12 1,059 1,203 2,262 1,502 1,516 3,018 2011 1 872 640 1,512 1,309 1,260 2,569 2011 2 734 805 1,539 998 996 1,994 2011 3 991 925 1,916 1,186 1,225 2,411 YE 3-31-11 12,216 12,382 24,598 19,246 19,030 38,276
2011 4 798 922 1,720 1,293 1,386 2,679 2011 5 840 915 1,755 1,732 1,740 3,472 2011 6 959 1,165 2,124 1,812 1,688 3,500 2011 7 1,476 1,508 2,984 1,538 1,642 3,180 2011 8 1,559 1,377 2,936 1,543 1,619 3,162 2011 9 1,143 1,052 2,195 1,630 1,607 3,237 2011 10 1,343 1,289 2,632 1,623 1,759 3,382 2011 11 1,241 1,182 2,423 1,625 1,605 3,230 2011 12 1,504 1,638 3,142 1,496 1,524 3,020 2012 1 1,193 958 2,151 1,172 1,166 2,338 2012 2 1,369 1,267 2,636 1,165 1,185 2,350 2012 3 1,674 1,435 3,109 1,532 1,509 3,041 YE 3-31-12 15,099 14,708 29,807 18,161 18,430 36,591
2012 4 1,302 1,620 2,922 1,706 1,798 3,504 2012 5 1,506 1,536 3,042 1,928 1,834 3,762 2012 6 1,423 1,594 3,017 2,016 1,999 4,015 2012 7 1,673 1,621 3,294 1,878 1,968 3,846 2012 8 1,829 1,680 3,509 1,828 1,865 3,693 2012 9 1,428 1,300 2,728 1,944 1,911 3,855 2012 10 1,259 1,243 2,502 1,869 1,963 3,832 2012 11 1,153 1,133 2,286 1,751 1,729 3,480 2012 12 1,367 1,466 2,833 1,714 1,705 3,419 2013 1 1,220 1,044 2,264 1,433 1,376 2,809 2013 2 1,177 1,142 2,319 1,219 1,230 2,449 2013 3 1,599 1,397 2,996 1,478 1,537 3,015 YE 3-31-13 16,936 16,776 33,712 20,764 20,915 41,679Appendix B-3 Historical Passengers per T-100 Market Report for the Last Three Years Pellston, MI (PLN) Sault Ste. Marie, MI (CIU)

Year Month Origin Dest O&D Origin Dest O&D 2010 4 1,072 1,365 2,437 1,085 1,227 2,312 2010 5 1,305 1,527 2,832 1,047 1,122 2,169 2010 6 2,073 2,466 4,539 1,031 1,187 2,218 2010 7 4,202 4,430 8,632 1,317 1,434 2,751 2010 8 4,597 4,011 8,608 1,482 1,279 2,761 2010 9 2,526 2,213 4,739 1,281 1,128 2,409 2010 10 2,074 1,889 3,963 1,330 1,290 2,620 2010 11 1,007 999 2,006 1,153 1,093 2,246 2010 12 962 1,148 2,110 1,247 1,238 2,485 2011 1 1,119 926 2,045 1,282 1,061 2,343 2011 2 889 805 1,694 1,094 1,017 2,111 2011 3 1,214 1,140 2,354 1,692 1,617 3,309 YE 3-31-11 23,040 22,919 45,959 15,041 14,693 29,734
2011 4 977 1,203 2,180 1,463 1,598 3,061 2011 5 1,481 1,754 3,235 1,405 1,539 2,944 2011 6 2,271 2,786 5,057 1,269 1,454 2,723 2011 7 4,121 4,177 8,298 1,896 2,032 3,928 2011 8 3,973 3,460 7,433 2,159 1,872 4,031 2011 9 2,343 2,097 4,440 1,553 1,451 3,004 2011 10 1,866 1,587 3,453 1,674 1,568 3,242 2011 11 1,283 1,276 2,559 1,557 1,529 3,086 2011 12 1,063 1,260 2,323 1,628 1,589 3,217 2012 1 1,067 837 1,904 1,365 1,297 2,662 2012 2 1,105 940 2,045 1,661 1,485 3,146 2012 3 1,184 1,193 2,377 1,893 1,866 3,759 YE 3-31-12 22,734 22,570 45,304 19,523 19,280 38,803
2012 4 689 954 1,643 1,516 1,729 3,245 2012 5 1,434 1,628 3,062 1,588 1,736 3,324 2012 6 2,361 3,012 5,373 1,353 1,625 2,978 2012 7 4,687 4,647 9,334 1,738 1,826 3,564 2012 8 4,481 4,173 8,654 2,109 1,978 4,087 2012 9 2,620 2,195 4,815 1,598 1,356 2,954 2012 10 2,227 1,942 4,169 1,618 1,530 3,148 2012 11 1,541 1,477 3,018 1,682 1,584 3,266 2012 12 1,298 1,450 2,748 1,659 1,632 3,291 2013 1 1,247 897 2,144 1,585 1,404 2,989 2013 2 1,241 1,088 2,329 1,850 1,528 3,378 2013 3 1,483 1,452 2,935 1,984 2,061 4,045 YE 3-31-13 25,309 24,915 50,224 20,280 19,989 40,269Appendix B-4 Historical Passengers per T-100 Market Report for the Last Three Years Watertown, New York (ART)

Year Month Origin Dest O&D 2010 4 197 238 435 2010 5 159 244 403 2010 6 184 249 433 2010 7 172 214 386 2010 8 180 250 430 2010 9 175 250 425 2010 10 160 243 403 2010 11 142 231 373 2010 12 249 275 524 2011 1 135 214 349 2011 2 158 228 386 2011 3 250 372 622 YE 3-31-11 2,161 3,008 5,169
2011 4 234 287 521 2011 5 252 347 599 2011 6 263 335 598 2011 7 336 384 720 2011 8 250 350 600 2011 9 228 306 534 2011 10 261 347 608 2011 11 639 697 1,336 2011 12 1,396 1,371 2,767 2012 1 978 1,073 2,051 2012 2 1,266 1,185 2,451 2012 3 1,380 1,481 2,861 YE 3-31-12 7,483 8,163 15,646
2012 4 1,394 1,539 2,933 2012 5 1,379 1,616 2,995 2012 6 1,298 1,485 2,783 2012 7 1,726 1,853 3,579 2012 8 1,833 1,955 3,788 2012 9 1,303 1,367 2,670 2012 10 1,550 1,614 3,164 2012 11 1,389 1,646 3,035 2012 12 1,471 1,546 3,017 2013 1 1,313 1,514 2,827 2013 2 1,192 1,315 2,507 2013 3 1,437 1,554 2,991 YE 3-31-13 17,285 19,004 36,289

### App endix C
Example of General Terms and Conditions for Essential Air Service The carri er 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 requi red 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 enti re 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 approv al 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; fli ghts 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 provid ed 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 requ irement 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 may not be available for performance under this solicitation beyond [DATE]. The Department’s obligation for performance under this solicitation beyond [DATE], is contingent upon the availability of 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 [DATE], until funds are made available to the Department for performance. If funds are not made available for performance beyond [DATE], t he 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