Order : 20 10

- 5

- 4

Served : May 4 , 20 10



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 4 th day of May, 20 10

Ess ential Air Service at

MERCED, CALIFORNIA Docket DOT

- OST

- 1998

- 3521
VISALIA, CALIFORNIA Docket DOT

- OST

- 2004

- 19916
ELY, NEVADA Docket DOT

- OST

- 199 5

- 361

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

ORDER REQUESTING PROPOSALS

Summary By this order, the Department is requesting proposals from carriers interested in providing

essential air service (EAS) at Merced and Visalia , California, and /or Ely , Nevada, for a new

two

- year period, beginning October 1, 2010, with or without subsidy. (See Appendix A for a

service area map )

. Carriers should file their proposals no later than June 1

, 2010.

Background By Order 2008

- 6

- 26

, June 23 , 2008, the Department selected Gr eat Lakes Aviation, Ltd. (Great Lakes) , to provide subsidized EAS at Merced and Visalia, California, and E ly, Nevada,

for the two

- year period beginning October 1, 2008 , at a combined annual subsidy of $4,900,401 with 19

- seat Beech 1900D turboprop aircraft.

Request for Proposals As the end of the current contracts approach , w e are requesting proposals from carriers interested in providing service at Merced, Visalia, and /or Ely

, with or without subsidy, for the

two

- year period beginning October 1, 2010 . Carriers should file their proposals no later than

June 1, 2010 . Staff will then docket the proposals, there by making them public, and direct each carrier to serve a copy of its proposal on the civic parties and other applicants. Shortly- 2

-

afterwards, we will provide a summary of the proposals to the communities and ask them to

submit their final comments

. We wi ll give full consideration to all proposals that are timely

filed. 1

Interested carriers should prepare their proposals with every expectation that their initial proposals will represent their final and only proposals. However, we retain the discretion to negotiate proposals with carriers when we deem it desirable; in such cases, of course, we will give all applicants the same opportunity. We also retain the discretion to reject outright all unreasonable or unrealistic proposals and re

- solicit a new round of proposals. However, negotiation or rejection are only an occasional exception 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 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, they might want to include proposed schedules as well as supporting data for their subsidy requests, such as projected block hours, revenues and expenses. We strongly encourage clear, well

- documented proposals that will facilitate their evaluation by the affe cted communities and the Department. 2

With specific respect to these three comm unities, for Merced and Visalia we expect proposals consisting of service with 15

- seat or larger aircraft offering two or three round trips each

week day and weekend to Las Veg as
, Los Angeles , or any suitable hub with airline connections to the national air transportation system. We would consider subs idizing three or even four round trips a day if the communities are served together on the same flights. At Ely, we expect one daily no nstop or one

- stop round trip to Las Vegas or Denver , or another suitable hub with airline connections to the national air transportation system

. S uch service is generally

consistent with what the communit ies currently receive

. 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 those requirements if they envision other, potentially more attractive service possibilit ies

-- different hubs, for example

-- with subsidy requirements that remain competitive.

Communities and air carriers are encouraged to work together in advance of the due date for proposals to craft a service pattern that is desirable to the community an d meets the operational requirements of the airline interested in submitting a proposal. In addition, carriers should be

1 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 si mply rely on that carrier’s su bsidy

- free service as proposed.

2 In selecting a carrier to provide subsidized essential air service, 49 U.S.C. 41733(c)(1) directs us to consider four factors: (a) scheduled service reliability; (b) contractual and marketing arrangements with a larger carrier to ensure service beyond the hub; (c) interline arrangements that the applicant has made with a larger carrier at the hub; and (d) community views, giving substantial weight to the views of the elected officials represent ing the users. 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 considere d since the inception of the program

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-

very clear as to whether a specific community’s proposal is a stand

- alone option, or whether it is part of a larger, inseparable packa ge connected to other communities.

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 those requirements if they envision other, potentially more attractive service possibilities

-- different hubs, for example

-- with subsidy requirements that remain competitive.

New Filing Procedures 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.

Service and Traffic History In order to assist carriers in making their passenger and revenue forecasts, w e have included historical passenger data in Appendix B. From January 1 through October 31, 200 9 , Merced generated an average of 2.6 enplanements a day; Visalia, 6.6 ; and Ely less than one

. Both Merced and Visalia suffered a service hiatus two years ago when Air Midwest suddenly ceased all operations. In an effort to minimize the hiatus, Great Lakes started service to LA/ Ontario rather than the preferred hub of Las Vegas due to operation al reasons. However, on April 7,

Great Lakes started Merced

- Las V egas service , replacing service to LA/Ontario, and plans to begin Visalia

– Las Vegas on July 1. Based on the adva n ce d bookings, we understand that passenger levels are significantly increasing since the change in hub from Ontario to Las Vegas.

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

- free workplaces, and nondiscrimination. 3

3 The regulations applicable to these areas are: (1) 49 CFR Part 20

-- New restrictions on lobbying; Consequently, all carriers receiving Federal subsidy for essential air service must cert ify 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 regul ations governing lobbying activities. Because the Department is prohibited from paying subsidy to carriers that do not submit these documents, all carriers that plan to submit proposals involving subsidy should be aware that the selected

carrier will be r equired to complete the required certifications. Interested carriers requiring

(2) 49 CFR Part 21

-- Nondiscrimination in federally

- assisted programs of the Department of Transportation

-- Effe ctuation of title VI of the Civil Rights Act of 1964; 49 CFR Part 27

-- Nondiscrimination on the basis of disability in programs and activities receiving or benefiting from Federal financial assistance; and

14 CFR Part 382

-- Nondiscrimination on the basis of disability in air travel; and (3) 49 CFR Part 29

-- Government

- wide debarment and suspension (non

- procurement) and government

- wide requirements for drug

- free workplace (grants).- 4

-

more detailed information regarding these requirements should contact the Office of Aviation Analysis at (202) 366

- 5903. 4

Community and State Comments

The communities and Stat e s are welcome to submit comments at any time. We encourage prospective applicants to contact the communities before they submit their proposals so that they can tailor them to the communities’ needs, as they will not be able to amend them after the

due d ate. 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, June 1 , the end of the 30

- day period for carrier proposals.

This order is issued under authority delegated i n 49 CFR 1.56a(f).

ACCORDINGLY,

1. We request that carriers interested in providing e ssential air service at Merced and Visalia

, California, and /or Ely, Nevada, submit their proposals, with or without subsidy requests, no

later than June 1

, 20 10

. The pr oposals should be e

- mailed to: EAS@dot.gov with the title “Proposal to Provide Essential Air Service at Merced and Visalia , California and/or Ely

, Nevada

, ” with the docket number s corresponding to the com munit ies as shown on the first page of this order; 5

2. These dockets will remain open until further order of the Department; and

3. We will serve copies of this order on the communities of Merced a nd Visalia, California; Ely, Nevada; and the parties li sted in Appendix D.

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.

4 The certifications are also available on the web at http://ostpxweb.dot.g ov/aviation/index.html.

5 Questions regarding filings in response to this order may be directed to Brian Swanson at (202) 366

- 5392 or brian.swanson@dot.gov

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-

This order will be effectiv e 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



# • Ely



# • Merced



# • VisaliaAppendix B



### Historical Passenger Traffic 1

Community Year Enplanements Deplanements Total Average Annual Enplanements per Service Day 2

Ely 2003 899 797 1,666 2.9

2004 1,253 1,127 2,380 4.0

200 5 3,591 3,448 7,039 11.5

2006 4,565 4,516 9,081 14.6

2007 644 485 1,129 2.1

2008 3 204 210 414 < 1

2009 (Jan.

– Oct.) 151 145 296 < 1

Community Year Enplanements Deplanements Total Average Annual Enplanements per Day

Merced 2003 7,510 7,509 15,0 19 20.6

2004 8,004 7,936 15,940 21.9

2005 8,596 8,447 17,043 23.6

2006 7,864 7,770 15,634 21.5

2007 9,033 9,400 18,433 24.7

2008 3 1,332 1,429 2,761 4.9

2009 (Jan.

– Oct.) 789 834 1,623 2.6

Community Year Enplanements Deplanements Total Avera ge Annual Enplanements per Day

Visalia 2003 1,355 1,329 2,684 3.7

2004 1,085 1,046 2,131 3.0

2005 2,377 2,234 4,611 6.5

2006 4,289 4,383 8,672 11.8

2007 6,617 6,398 13,015 18.1

2008 1,674 1,789 3,463 4.6

2009 (Jan.

– Oct.) 2,017 1,873 3,890 6. 6

1 U.S. DOT, Bureau or Transportation Statistics, T

- 10 0 Market data and Order 2008

- 5

- 42

. 2 Annual Enplanements divided by 313 days, 314 days for 2004 and 2008, leap years.

3 Data for June, July and August is not reported.Appendix 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 se rvice 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 expl anation 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 ful l 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 f irst 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 thes e routes. The carrier must complete all flights that can be safely operated; 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 Depa rtment 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 p ayments 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 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 co nstitute 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 are not currently available for performance under this solicitation beyond [DATE] . The Department’s obligation for perform ance under this solicitation beyond [DATE] i s contingent upon the availability of appropriated funds from which payment for services can be made. No legal liability on the part of the Department 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 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

u nder this order.Appendix D

SERVICE LIST

Air Greco, d/b/a Wings Air, Aaron Goerlich Kenmore Air, Tim Brooks Air Greco, d/b/a Wings Air, Charles Mintz Mesa Air Group, Jonathan Ornstein Air Greco, d/b/a Wings Air, Robert Rupard Mesa Air Group, Michael Lotz

Air Suns hine, Mirmohammad Adili Mesa Air Group, Mike Holcomb Air Wisconsin, Barbara Jones Mesaba, Max Shemesh Alaska Airlines, Jeff Cole Mesaba, John Spanjers Alaska Airlines, Sandy Sinick Midwest Airlines, Anthony Intravia Allegiant Air, Robert Ashscroft Midw est Airlines, David Reeve Alliance Air, Paul Berliner Midwest Airlines, Greg Aretakis American Airlines, Carl Nelson MN Aviation, Jose Maldonado American Eagle, Jeff Hartz Multi Aero, Darnea Bemidji Aviation, Arlen Rinkenberger Multi Aero, Shane Storz Bemidji Aviation, Cori Rude NYDC, Henok Araya Cape Air, Andrew Bonney Northwest, Aaron Murray Cape Air, Dan Wolf Northwest, Tim McDonald Cape Air, J. Flaherty OST, Dennis DeVany, Renee Williams, Caribbean Sun Airlines, John Rupert OST, Kevin Adams, Br ian Swanson Colgan Air, Mike Colgan Pacific Wings, Frank Ford Colgan Air, Kevin Scott Pacific Wings, Greg Kahlstorf CommutAir, Andy Price Pinnacle Airlines, Joe Williams CommutAir, Joel Raymond Pinnacle Airlines, Phil Reed Continental, Bruce Keiner Pu blic Charters, Jim Gallagher Continental, Dan Weiss Salmon Air, Dan Schroeder Continental, Lorry Halloway Salmon Air, JoAnn Wolters Delta Air Lines Amy Martin Scenic, Mary Schneider Delta Air Lines, Jeff Morgan Scenic, Mitzi Daines Delta Air Lines, Da n Shuman Seaborne Airlines, Wayne D’Amico Delta Air Lines, Joe Esposito SeaPort Airlines. Rob McKinney Delta Air Lines, Sascha Vanderbellen Shuttle America, Jerry Balsano Delta, Karen Zachary SkyWest, Eric Christensen Executive Airlines, Kate Soled Sky West, Michael Thompson Great Lakes Airlines, Chuck Howell Sovereign Air, Bob Karns Great Lakes Airlines, Doug Voss Sovereign Air, Lois R. Barton Great Lakes Airlines, Greg Stephens Tradewind, Eric Zipkin Gulfstream, Dave Hackett Trans States, Bill Mish k Gulfstream, Mickey Bowman Trans States, Gerry Wigmore Gulfstream, T. Cooper United, Alicia Gabriel Homeland Security, Michael Duffy United, James Starnes Homeland Security, Randy Webb US Airways, Howard Kass Horizon Air, Dan Russo US Airways, Jason Reisinger Horizon Air, Jennifer Thompson US Airways, Benjamin Slocum Horizon Air, Jeff Cole Vintage Props and Jets, Nate Vallier ICEPR, Luis Irizarry Wings of Alaska, Bob Jacobsen Island Air Charters, Linda House Wings of Alaska, Michelle Donohue

Jet Air, Daniel Wolford