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### All: Swanson, Brian (OST) Friday, July 06, 2012 11:49 AM ... 

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/\ fl: ::_;,_'Mario Cifuentez'; 'ssalomon@ci.visalia.ca.us'; 'Elliott Ron'; 'bramblej@cityofmerCed.org' Mike Mathews (mmatthews@flygreatlakes.com); Chuck Howell (chowell@flygreatlakes.com); Tim Sieber [tsieber@seaportair.com] (tsieber@seaportair.com) Soliciting Comments on Proposal for EAS at Merced and Visalia, California
- Due August 1, 2012 '



### I would like to update you on the Essential Air Service (EAS) situation at Merced and Visalia, California, and give you an opportunity to submit comments ifyou wish. In anticipation ofthe end ofGreat Lakes'**curren~** 

### contract on September 30;2012, the

### Department issued Order 2012-5-11 on May 10, 2012, to solicitproposals from all interested air carriers to provideEAS at Merced and/or Visalia, for anew contract period. In response to that Order, we received proposals from two carriers. Great Lakes submitted an inseparable package proposal (serving both communities only) with a single service pattern. SeaPort Airlines, Inc. (SeaPort) also submitted an inseparable packagebid with one linear service pattern, but included the use oftwo 9-seat aircraft types (either Cessna Caravan orPiper Chieftains). Copies ofthe proposals may also be accessed online through the Federal Docket Management System at: http://www.regulations.gov, by typing "DOT-OST-1998-3521" (Merced) or "DOT-O§T-2004-19916" (Visalia) in the "SEARCHfor: Rules, Comments, Adjudications or Supporting Documents:" field. Hyperlinks have beenprovided for your convenience; however, each carrier's proposal is briefly summarizedbelow. Before summarizing each carrier's proposal, we would like to note that EAS definitions call for service with two-pilot, twin-engine aircraft. Second, we are proh?bited from paying subsidy for EAS at any community where the per-passengerrate exceeds $200, unless the community is greater than 210 highwaymiles from the nearest large or medium hub. In

### this case, Merced and Visalia are fewer than 210 highway miles from a large ormedium hub and, therefore, are subjectto the $200 subsidy-per-passenger ceiling. We noted in the Request for Proposals that passenger levels at both Merced and Visalia are very low. Bothcommunities are well over the $200perpassenger cap, so the communities should address that issue. Great Lakes would utilize 19-passenger Beech 1900D aircraft and its code-share agreements where applicable, as summarized in the table below. Hub(s) Served/ Daily Annual Community Service Pattern Round Subsidy Trips Requirement one-stop to Los Angeles (LAX), Ontario (ONT), or 2 Merced Orange County (SNA); or (12 weekly) $1,698,878 non-stop to Las Vegas (LAS) Visalia nonstop to Los Angeles (LAX), Ontario (ONT) or 2 $1,697,929 Orange County (SNA) (12 weekly)

1As mentioned above, SeaPort submitted a proposal with two different 9-seat aircraft types. The carrier also states that it would offer thE communities a fo.!;!£year option at noincrease in annu:1l subsidie.s in table below." Thecattierproposed

.. a linegr'service pattern thaLwoulci b'e rollted Oakland 

### (OAk)- Merced- VisaliaBurbank (BUR)- SanDiego (SAN) and consist of 18 arrivals and departures each weekat each community. We note, however, that statutoryEAS provides service from a designated communityto ahub airport, and we cannotrequire the hub to hub service proposed. · 

### Ann1.,1al Community Aircraft Type Subsidy



## . Required Merced Cessna Caravan $1,578,113



### .Piper Chieftain -$1,604,249 Visalia Cessna Caravan $1,857,912 Piper Chieftain $1,890,839

Please note that the average passenger fares shown in each proposal do not necessarily reflect the average local fare passengers would**actua~ly** pay, but,-rather, reflect a prorated portion efthe·total ticket price (e.g., the Visalia- Los Angeles portion ofa Visalia- Los Angeles- Chicago ticket) that the subsidized carrier would realize. Also, the fare shown is net ofcertain charges such as Federal transportation securityfees? excise or ticket**taxe~and** PassengerFacility Charges. Ofcourse, carriers have the discretion to charge fares they deem appropriate, and the passengerfares presented in theirproposals havebeen developed for subsidyrate computationpurposes only. Based on the cost elements incorporated in the carriers' computation summaries, the carriers would have to realize passengerfares comparable to the averages shown in their proposals in order to achieve break-even orprofitable.operations without subsidy. Ymt should also note that the carriers'·schedules may changeto reflect changing conditions (e.g., to better meet shifting connectingbanktimes at the hub). The Department does expect subsidized air carriers to maintain well-timed and well-spaced flights in orderto ensure full compensation. We ret1fuest·that you submit any comments you mayhave·as soon as possible, but in any case no laterthan August 1, 2012. Please send your comments by fax to 202-366-7638 orby email to both dcnnis.dcvany@dot.gov and brian.swanson@dot.gov. Ourrules require that you send your comments to both applicants as well. Ifyou have any questions, orneed more time to reply, please feel free to contact Brian Swanson ofmy staffat 202-366-5392. Sincerely,

Dennis 

### J. DeVany**,,~** Chief, Essential Air Service Division, X-53 -Office ofAviation Analysis

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