### Order 2011

- 8

- 10 Served: August 8, 2011



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

Issued by the Department of Transportation on the 8 th 

### of August, 2011
Essential Air Service at HANCOCK/HOUGHTON, MI CHIGAN EAU CLAIRE, WISCONSIN MUSKEGON, MICHIGAN PADUCAH, KENTUCKY
Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 2009

- 0302 DOCKET DOT

- OST

- 200 9

- 0306 DOCKET DOT

- OST

- 2009

- 0301 DOCKET DOT

- OST

- 2009

- 0299

ORDER REQUESTING PROPOSALS Summary By this order, th e Department is requesting proposals by August 31 , 201 1 , from carriers interested in providing essential air service (EAS) at Eau Claire, Wisconsin, Hancock/ Houghton (Houghton) , and Muskegon, Michigan, and Paducah , Kentucky, for the two

- year period beginni ng January 1 , 201 2 , with or without subsidy. Background By Order 20 09

- 10

- 8 , the Department selected SkyWest Airlines, Inc., d/b/a United Express ( SkyWest ) , to rep lace Mesaba Aviation, Inc. , and provide subsidized EAS to Eau Clair e, Houghton, Muskegon, a nd Paducah , through December 31 , 2011

. SkyWest began service at Muskegon and Paducah o n February 11, 2010, and at Eau Claire and Houghton on March 1 , 2010

. Under that order, each community receive s 14 nonstop round trips per week to Chicago O’Hare with 5 0

- seat regional jets. Annual subsidy for each community was as follows: Eau Claire, $1,732,372; Houghton, $1,404,714; Muskegon, $660,720; Paducah, $569,923

. Request for Proposals As the end of the current rate term approach es , we are here by requesting proposals from carriers int erested in providing service at Eau Claire, Houghton, Muskegon, and Paducah , with or without subsidy, for the two

- year period beginning January 1, 201 2 . Carriers should file their proposals by August 31

. S taff will then docket the proposals, thereby making them public. Shortly afterwards, we will provide a summary of the proposals to

### - 2

-

the communit ies and S tate and as k them to submit their final comments. We will give full consideration to all proposals filed 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 desirable. We also reta in 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 provi ding 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 annu al 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 requests, such as project ed 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 do not anticipate any change in our selection criteria, or in the gene ral provisions governing subsidy payments for essential air service. 2


### With specific respect to Eau Claire, Houghton, Muskegon, and Paducah , we expect proposals consisting of two nonstop round trips per day (14 a week) at each community if 34

- seat or lar ger equipment is pro posed ; two or three (18 a week) nonstop round trips a day with 30

- seat aircraft; three (18 a week) or four (24 a week) round trips per day with 19

- seat aircraft ; and more frequencies with smaller aircraft . We may subsidize additional f requencies if the affected community is served in conjunction with another community. As always, staff will work with the carrier s to ensure service and subsidy are reasonable.
We encourage proposals that meet the communit ies ’ requirements in an efficien t manner. Carriers are also welcome to propose more than one service option, if they choose; they need not limit themselves to the current service pattern if they envision other, potentially more attractive service possibilities

– different hubs, or longe r terms for the contracted service

– with subsidy requir e ments that remain competitive.

1 Carriers should not expect the Department to accept l ate 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 do not proceed with the carrier

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

- free service as proposed. 2 In selecting a carrier to provide subsidized essential air service outside of Alaska , 49 U.S.C. 41733(c) (1) directs us to consider f ive factors : (1) service reliability; (2) contractual and marketing ar rangements with a larger carrier at the hub; (3) interline arrangements with a larger carrier at the hub; and (4) community views

. In addition , The Consolidated Appropriations Act, 2008, Public Law 110

- 161 , provides that when selecting a carrier to provid e 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 governing essential air service 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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We encourage carriers to work with the communities in advance of the due date for proposals when proposals can still be adjusted so that they can craft them to best me et the communit ies ’ needs. In addition, carriers should be very clear as to whether a specific community’s proposal may be considered on a stand

- alone basis, or whether it should be considered as part of a larger, inseparable package with another communit y. As always, we will fully consider the communit ies ’ views before making a long

- term carrier

selection decision.
Filing Format Carrier proposals should be submitted to the Department with all materials merged into a single document. In addition, beca use the document will be published on Regulations.gov, each page should be formatted to be viewed online.

Historical Traffic In order to assist carriers in making their traffic and revenue projections, we have included historical traffic for the communiti es in Appendix B

. For the year ended April 30 , 201 1 , the most recent annual period, Eau Claire generated an average of 57.5 enplaned passenger s per day ; Houghton, 69.8; Muskegon, 38.2; and Paducah, 59.7

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

- free workplaces , and nondiscrimination. 3 

### Consequently, all carriers receiving Federal subsidy to support essential air service must certify that they are in compliance wi th 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 activiti es. 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 order to receive subsidy. Interested carriers requiring more detailed information regardi ng 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 of ficials 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 ask them to submit their final comments shortly after August 31 , the due date for car rier proposals.
This order is issued under authority delegated in 49 CFR 1.56a(f) and re

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

3 The certifications are available on the web at http://ostpxweb.dot.gov/aviation/index.html.

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ACCORDINGLY,

1

. The Department requests proposals from carriers interested in providing essential air servi ce at Eau Claire, Wisconsin, Hancock/ Houghton, Michigan, Muskegon, Michigan, and Paducah , Kentucky . Carriers should submit their proposals, with subsidy if necessary, by August 31 , 201 1 . Proposals should be emailed to EAS@dot.gov, with the title “Proposa l to Provide Essential Air Service at Eau Claire, Houghton, Muskegon, and /or Paducah , Kentucky, Docket s DOT

- OST

- 200 9

- 0306, 0302, 0301, and /or 0299, respectively

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

- 366

- 1047 or Kevin.Adams@do t.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 385.50, must file such petitions within ten (10) 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 Direct or Office of Aviation Analysis (SEAL)

An electronic version of this document is available on the World Wide Web at http://www.regulations.gov

### Appendix A

Nonstop Great Circle Miles from Hancock/Houghto n , MI ( CMX ) Minneapolis ( MSP ) 277 Chicago ( ORD ) 359 Milwaukee ( MKE ) 293 Detroit ( DTW ) 425 Green Bay (GRB) 186 Nonstop Great Circle Miles from Eau Claire, WI ( EAU ) Minneapolis (MSP) 85 Chicago (ORD) 269 Milwaukee (MKE) 223 Green Bay ( GRB ) 167

Nonsto p Great Circle Miles from Muskegon, MI (MKG) Chicago (ORD) 118 Milwaukee (MKE) 85 Detroit (DTW) 161 Grand Rapids (GRR) 41 Nonstop Great Circle Miles from Paducah, KY (PAH) Chicago (ORD) 342 St. Louis (STL) 145 Nashville (BNA) 133 Memphis (MEM) 154

This map is provided by Sabre ® AirVision TM Profit Essentials and is being used with express permission of the copyright holder, Sabre Airline Solutions®.Appendix B Page 1 of 2 T-100 Market Report, Historical Traffic
Eau Claire, Wisconsin (EAU) Hancock/Houghton, Michigan, CMX Year Month Origin Dest O&D Origin Dest O&D 2008 5 1,322 1,283 2,605 2,376 2,393 4,769 2008 6 1,570 1,524 3,094 2,104 2,294 4,398 2008 7 1,502 1,462 2,964 2,440 2,573 5,013 2008 8 1,406 1,390 2,796 2,545 2,649 5,194 2008 9 1,273 1,188 2,461 1,733 1,633 3,366 2008 10 1,337 1,308 2,645 2,178 2,061 4,239 2008 11 1,195 1,180 2,375 1,973 1,966 3,939 2008 12 1,221 1,287 2,508 1,855 1,812 3,667 2009 1 1,170 1,007 2,177 1,696 1,746 3,442 2009 2 1,101 901 2,002 1,811 1,787 3,598 2009 3 1,147 1,097 2,244 2,260 2,173 4,433 2009 4 1,030 1,061 2,091 2,107 2,290 4,397 YE April 30, 2009 15,274 14,688 29,962 25,078 25,377 50,455

2009 5 1,032 992 2,024 2,246 2,154 4,400 2009 6 1,295 1,176 2,471 1,931 2,268 4,199 2009 7 1,196 1,233 2,429 2,583 2,720 5,303 2009 8 1,090 1,066 2,156 2,825 2,811 5,636 2009 9 683 652 1,335 1,897 1,800 3,697 2009 10 683 549 1,232 1,901 1,778 3,679 2009 11 534 542 1,076 1,746 1,730 3,476 2009 12 548 623 1,171 1,733 1,444 3,177 2010 1 841 703 1,544 1,433 1,477 2,910 2010 2 646 617 1,263 1,499 1,495 2,994 2010 3 1,136 1,075 2,211 1,736 1,444 3,180 2010 4 1,375 1,404 2,779 1,389 1,588 2,977 YE April 30, 2010 11,059 10,632 21,691 22,919 22,709 45,628

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 2011 4 1,323 1,352 2,675 1,697 1,859 3,556 YE April 30, 2011 17,881 18,117 35,998 21,990 21,720 43,710Appendix B Page 2 of 2 T-100 Market Report, Historical Traffic
Muskegon, Michigan (MKG) Paducah, Kentucky (PAH) Year Month Origin Dest O&D Origin Dest O&D 2008 5 3,717 3,800 7,517 1,921 1,887 3,808 2008 6 2,629 2,217 4,846 1,918 1,921 3,839 2008 7 2,931 2,804 5,735 1,922 1,896 3,818 2008 8 2,800 2,748 5,548 1,748 1,861 3,609 2008 9 1,530 1,368 2,898 1,812 1,786 3,598 2008 10 1,652 1,514 3,166 1,954 1,960 3,914 2008 11 1,402 1,449 2,851 1,602 1,690 3,292 2008 12 1,490 1,400 2,890 1,594 1,497 3,091 2009 1 1,277 1,132 2,409 1,184 1,132 2,316 2009 2 1,326 1,239 2,565 1,182 1,131 2,313 2009 3 1,277 1,253 2,530 1,422 1,434 2,856 2009 4 1,246 1,300 2,546 1,689 1,736 3,425 YE April 30, 2009 23,277 22,224 45,501 19,948 19,931 39,879

2009 5 1,224 1,266 2,490 1,760 1,728 3,488 2009 6 1,361 1,360 2,721 1,976 1,955 3,931 2009 7 1,735 1,780 3,515 2,007 1,975 3,982 2009 8 1,637 1,498 3,135 1,632 1,653 3,285 2009 9 1,180 1,079 2,259 1,462 1,431 2,893 2009 10 1,205 1,141 2,346 1,494 1,514 3,008 2009 11 1,020 969 1,989 1,341 1,362 2,703 2009 12 997 1,051 2,048 1,368 1,345 2,713 2010 1 1,109 928 2,037 1,095 993 2,088 2010 2 867 806 1,673 1,093 1,073 2,166 2010 3 897 889 1,786 1,536 1,603 3,139 2010 4 1,121 1,265 2,386 1,830 1,778 3,608 YE April 30, 2010 14,353 14,032 28,385 18,594 18,410 37,004

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 2011 4 798 922 1,720 1,293 1,386 2,679 YE April 30, 2011 11,893 12,039 23,932 18,709 18,638 37,347

### Appendix C
Example of General Terms and Conditions for Essential Air Service T he 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 t he 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 com pleted, 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 writte n 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 opera ted; 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 communit ies

. If the Department unilaterally, either partially or completely, terminates or reduces payments for service or changes service requirements at a specific locat ion 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 t o 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 p aragraph.
Funds are not currently 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 appropriated funds from which pay ment 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 fo r performance beyond [DATE], 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