Order: 2014-10-24 Served October 28, 2014



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OF FICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 28 t h day of October, 2014

Essential Air Service at

BECKLEY, WEST VIRGINIA DOT-OST-1997-2761

DOT-OST-2004-18715

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



### ORDER SETTING ANNUAL SERVICE LEVEL AND TOTAL COSTS

UNDER THE ALTERNATE ESSENT IAL AIR SERVICE PROGRAM

Summary By this Order, we approve Raleigh County Me morial Airport’s (Beck ley) application under

the Alternate Essential Air Se rvice (AEAS) program. The De partment will enter into a Grant Agreement with the community to provi de funding for regularly scheduled charter service consisting of a maximum of 1,248 a nnual nonstop flights be tween Raleigh County Memorial Airport (Beckley) and Charlotte D ouglas International Airport (CLT). By the terms of the Grant Agreement, service will be provided utilizing 30-seat Embraer EMB 120 Brasilia twin-engine aircraft operated by Charte r Air Transport (CAT), at an annual rate of not more than $2,696,888.

Background By Order 2012-4-32, issued on April 30, 2012, the Department selected Silver Airways (Silver) to provide EAS at B eckley with 12 weekly round trips to Washington Dulles International Airport (IAD), using 34-seat Saab 340 aircraft, for the period from August 1, 2012, through July 31, 2014, at an annual subsidy rate of $2,512,494. 1

1 Order 2012-4-32 also select ed Silver to provide EAS at Clarksburg and Morgantown.- 2 -

In anticipation of the end of that rate te rm, the Department issued Order 2014-2-13, on February 19, 2014, soliciting proposals from ai r carriers interested in providing EAS at Beckley, with subsidy support if necessary, for a new term beginning August 1, 2014. Proposals were due March 21, 2014.

On March 19, 2014, Silver requested an extension, until April 17, 2014, to submit proposals. Additionally, on March 20, 2014, Bouti que Air, Inc. (Boutique Air) requested an extension, until April 1, 2014, to su bmit EAS proposals to serve Beckley.

The Department granted both extension requests and used Silver Airways’ requested due date to provide the most amount of time for air carriers to de velop proposals. Therefore, proposals were due April 17, 2014.

In response to our request for proposals, Bouti que Air, City Link Air, and Silver submitted proposals to provide subsidized air transpor tation at Beckley. However, on May 14, 2014, the Department received multiple requests from air carriers asking that they be allowed to modify their proposals, which had alread y been submitted for consideration. The Department reviewed the requests and found it to be in the public’s interest to grant the requests. Therefore, the air carriers that s ubmitted proposals in response to the most recent request for proposals had until May 27, 2014 to submit revised proposals, if they chose to

do so.

The complete public file for EAS at Beckley, may be accessed online at http://www.regulations.gov by entering Docket number DOT-OST-1997-2761 in the search

block.

Proposal of Boutique Air Boutique Air proposed two options, each using 9- seat Pilatus PC-12 aircraft: 1) 18 weekly nonstop round trips to Pittsburgh International Airport (PIT) at an annual subsidy rate of $1,780,405; and 2) a dual-hub option of 6 week ly nonstop round trips to PIT and 12 weekly nonstop round trips to IAD, at an annual subsidy of $2,428,138.

Proposal of City Link Air City Link Air, which does not currently have the requisite authority to perform EAS, proposed one inseparable bid to serve Beckle y and Jamestown, New York, with 18 weekly round trips to PIT, using 9-seat Beechcraft 200/300 aircraft, for a co mbined total subsidy of $4,441,314.

Community Comments By letter dated June 18, 2014, Mr. Tom Coch ran, Airport Manager of Raleigh County Memorial Airport, explained that Boutique Ai r would operate its serv ice with single-engine aircraft, and the community is not willing to wa ive its right to twin-engine aircraft service at this time. Additionally, since City Link Air is not in a position to commence service within the near future, the community encourag ed the Department to reject both proposals and issue a new request for proposal s to provide EAS at Beckley.- 3 -

Re-solicitation of Proposals At the request of the community, the Department issued Order 2014-7-11, on July 18, 2014, which rejected Boutique Air an d City Link Air’s pr oposals and re-solicited proposals from air carriers interest ed in providing EAS at Beckle y, with or without subsidy support. Those proposals were due no later than July 31, 2014. In response to the re-solicitation, Charter Air Transport and S un Air International d/ b/a Sun Air Express

submitted bids for consideration.

Proposal of Charter Air Transport (CAT) 2

CAT submitted a proposal consisting of three options, each using 30-seat EMB-120 aircraft for a two-year peri od: 1) 12 nonstop round trips to IAD at a requested annual subsidy rate of $2,798,746; 2) 12 nonstop round trips to PIT at a requested annual subsidy rate of $2,482,601; and 3) 12 nonstop round trips to CLT, at a requested annual subsidy rate of $2,696,888.

Proposal of Sun Air Express, LLC d/ b/a Sun Air International (Sun Air) Sun Air submitted a proposal consisting of two op tions, each using 8-seat Piper Chieftains “Panther” aircraft, for a four-year period: 1) 24 round trips per week to PIT at an annual subsidy request of $3,458,787; and 2) 18 round trip s per week to CLT plus 6 round trips to PIT, at an annual subsidy request of $3,663,905.

Community Comments By letter dated August 1, 2014, the Departme nt requested community comments regarding

this EAS selection case. In response, we received a letter cosigned by the Airport Manager of Raleigh County Airport, Mr. Tom Coch ran, the Mayor of the City of Beckley, Honorable Bill O’Brien, and the Chairman of the Raleigh County Memorial Airport Authority, Mr. Brad Wartella. That letter explained that by unanimous consent, the Airport Authority has endorsed CAT’s opti on C proposal for 12 nonstop round trips per week to CLT. However, that letter expresse d some concern with CAT’s “lack of interline ticket and bag agreements, the higher forecast se gment fares and the bid notation that up to 5 of the 12 flights per week can be one-stop.”

Application for Alternat e Essential Air Service On September 16, 2014, the Raleigh County Ai rport submitted a proposal for Alternate Essential Air Service. That proposal explai ned that the community’s existing EAS carrier, Silver Airways, was directed by its code shar e partner, United Airlines, to remove Beckley

from its route network. Therefor e a replacement carrier was needed to fill the void left by Silver. After carefully evaluating the proposal s submitted in response to the Department’s request for proposals to serve Beckley, the community supported the proposal submitted by CAT with air transportation to CLT. However, because CAT does not have the

2 By application dated August 8, 2009, in Docket DOT-OST-2009-0187, CAT requested commuter authority from the Department. In that application, CAT propose d to operate scheduled flights under 14 CFR Part 380, and therefore the Department limited CAT’s operations to 9-seat aircraft in scheduled operations or up to 30- seats in on-demand operations. CAT cannot operate 30-seat aircraft in scheduled operations under its current FAA authority, and therefore the Department is prohibited from selecting CAT to operate scheduled operations at Beckley using 30-seat aircraft under traditional EAS.- 4 -

requisite authority to operate scheduled serv ice using 30-seat or larger aircraft under traditional EAS, the civic officials conclude d that AEAS was the best strategy for Beckley’s air service needs.

Alternate Essential Air Service Background On December 12, 2003, the Vision 100—Century of Aviation Reauthorization Act, P.L. 108-176 (Vision 100) was signed into law, wh ich, among other things, directed the Department to establish certain Community and Regional Choice Programs. 3

One of those is AEAS. Congress established this Pilot program to provide communities

with an alternative to the tr aditional EAS-type service. Typically, the EAS program pays subsidy to regional air carrier s to provide two or three ro und trips a day to a major hub airport with twin-engine aircraft. The AEAS program is designed to allow communities to forego their EAS for a prescribed amount of ti me in exchange for receiving a grant to spend in a variety of ways that might better suit their individual needs. 4 These options are defined in statute and include more frequent service with smaller aircraft, on-demand air taxi service, scheduled or on-demand surf ace transportation, regionalized air service, purchasing an aircraft, or other transportatio n services permitted by the Secretary. Each community awarded a grant must execute a Grant Agreement with the Department before it begins spending funds under a grant award. By notice dated July 27, 2004, the Department established AEAS and invited communities to submit proposals under the

program.

Decision After careful consideration of this matter, in cluding the comments of local officials, the Department has decided to approve Raleigh County Memorial Airpor t’s application for AEAS, pending execution of a Grant Agreement.

This decision is based on the community’s clear support of CAT’s proposal to provide service to Charlotte. In its application for AE AS, the community lists three critical factors to ensure successful air transportation at Beckle y: 1) reliable air serv ice, 2) reasonable air fares, and 3) quality customer service. Th e community’s position is that CAT offers the most potential to address these factors. Additionally, access to Charlotte will provide travelers to and from Beckley with access to a large hub airport that includes a large number of connecting destinations on a variety of airlines. The Department is also satisfied that the service levels and grant re quest by CAT are reasonable.

Eligibility Discussion To maintain eligibility in the AEAS program, communities must comply with all eligibility requirements that apply to tr aditional EAS communities. B eckley is exempt from the $200

3 See Appendix A for a co py of the statute.

4 Under no circumstances could a community participate in both the traditional EAS Program and the AEAS Program at the same time. Communities choosing to withdraw from the AEAS Program may request to be reinstated in the traditional EAS program, but there could be a hiatus in service.- 5 -

per passenger statutory limit 5 because it is more than 210 miles from the nearest large or medium hub airport; however, the Departme nt wishes to remind CAT and Beckley about

the enacted law FAA Modernization and Reform Act of 2012 (P.L. 112-95) that established a subsidy cap at $1,000 per passenger regardless of distance from hub airport. 6

The Department fully expects the community and CAT to work cooperatively to ensure subsidy rates remain below the $1,000 per passenge r level, as well as address the concerns raised above in the Community Comment section.

ACCORDINGLY, 1. The Department selects the application of Beckley, West Virginia, as submitted by the Raleigh County Memorial Airport, for Altern ate Essential Air Service, for two years upon execution of a Grant Agreement with the Department and beginning December 1, 2014, ending November 30, 2016, subject to complia nce with all eligib ility criteria;

2. The Department directs Raleigh County Memorial Airport and any carrier that it contracts with to provide service at Beckley, in cluding Charter Air Transport, Inc., to retain all books, records, and other source and su mmary documentation to support claims for payment, and to preserve and maintain su ch documentation in a manner that readily permits its audit and examination by representatives of the Department. Such documentation shall be retained for seven years fr om the service date of this Order 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 air carrier may forfeit its compensation for any claim that is not supported under the terms of this Order;

3. This docket will remain open pend ing further Departmental action; and

5 Congress first established the $200 ceiling under P.L. 101-164 for fiscal year 1990, and reestablished it in fiscal years 1994-1999. The ceiling was made permanent by P.L. 106-69, the Department of Transportation and Related Agencies Appr opriations Act of 2000.

6 See 49 U.S.C. § 41731(a)(1)(C).- 6 -

4. The Department will serve copies of th is Order on the Mayor of Beckley, the Airport Manager of Raleigh County Memorial Ai rport, Sun Air Express d/b/a Sun Air International, and Charte r Air Transport, Inc.

By:

BRANDON M. BELFORD Deputy Assistant Secretary for

Aviation and International Affairs

(SEAL)

An el ectronic version of this do cument is available at http://www.regulations.gov49 U.S.C. § Sec. 41745. Community and regional choice programs (a) ALTERNATE ESSENTIAL AIR SERVICE PILOT PROGRAM (1) ESTABLISHMENT - The Secretary of Transpor tation shall establish an alternate essential air service pilot program in accordance w ith the requirements of this section. (2) ASSISTANCE TO ELIGIBLE PLAC ES - In carrying out the pr ogram, the Secretary, instead of paying compensation to an air ca rrier to provide essential air se rvice to an eligible place, may provide assistance directly to a unit of local government having jurisdiction ove r the eligible place or a State within the boundaries of which the eligible place is located. (3) USE OF ASSISTANCE - A unit of local government or State receiving assistance for an eligible place under the program may use the assistance for a ny of the following purposes: (A) To provide assistance to air carriers that will use smaller equipment to provide the service and to consider increasing the freque ncy of service using su ch smaller equipment if the Secretary determines that passenger sa fety would not be compromised by the use of such smaller equipment and if the State or unit of local government waives the minimum service requirements under section 41732(b). (B) To provide assistance to an air carrier to provide on-demand air taxi service to and from the eligible place. (C) To provide assistance to a person to provide scheduled or on-demand surface transportation to and from the eligible place and an airport in another place. (D) In combination with othe r units of local government in the same region, to provide transportation services to and from all the elig ible places in that region at an airport or other transportation center th at can serve all the eligib le places in that region. (E) To purchase aircraft to provide transportation to and from the eligible place or to purchase a fractional share in an aircraft to provide such tr ansportation after the effective date of a rule the Secretary issues relating to fractional ownership. (F) To pay for other transpor tation or related services that the Secretary may permit.