Order 2012-6-25

Served: June 29, 2012

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 29th day of June, 2012

Essential Air Service at 

Altoona, Pennsylvania

Johnstown, Pennsylvania

Victoria, Texas

Staunton, Virginia

Beckley, West Virginia

Clarksburg/Fairmont, West Virginia

Morgantown, West Virginia

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

DOCKET DOT-OST-2002-11446

DOCKET DOT-OST-2002-11451

DOCKET DOT-OST-2005-20454

DOCKET DOT-OST-2002-11378

DOCKET DOT-OST-1997-2761

DOCKET DOT-OST-2005-20736

DOCKET DOT-OST-2005-20735

 

ORDER EXTENDING SERVICE OBLIGATION

Summary

By this Order, the Department extends the Essential Air Service (“EAS”) obligation of Colgan 

Airlines, Inc. d/b/a United Airlines Express (“Colgan”), at Altoona, Johnstown, Staunton, 

Beckley, Clarksburg/Fairmont, and Morgantown, for 30 days, through August 7, 2012. 

Background

By Order 2012-2-9, issued on February 14, 2012, the Department requested proposals from air 

carriers interested in providing EAS at Altoona and Johnstown, PA, for a new term beginning 

July 1, 2012, with or without subsidy. Those proposals were due by March 14, 2012. 

By Order 2012-2-16, issued on February 23, 2012, the Department requested proposals from air 

carriers interested in providing EAS at Beckley, Clarksburg/Fairmont, and/or Morgantown, for a 

new term beginning August 1, 2012, with or without subsidy. Those proposals were due by 

April 3, 2012.
On March 8, 2012, Pinnacle Airlines, Corp., the parent company of Colgan, filed notice of its 

intent to terminate its currently subsidized service at the seven above-captioned communities, 

effective June 8, 2012. 

By Order 2012-3-14, issued on March 23, 2012, in accordance with the mandate in 49 U.S.C. 

Section 41734(b),1 the Department prohibited Colgan from suspending service at all seven 

communities for 30 days beyond the end of the 90-day notice period (i.e. July 8, 2012). That 

Order also requested proposals for replacement service at Victoria and Staunton. We did not 

solicit proposals for the other five communities because we had already solicited proposals due 

to the impending expiration of Colgan’s EAS obligations in those communities at the time 

Colgan filed its 90-day notices. The Staunton and Victoria proposals were due April 25, 2012. 

We have issued Orders selecting replacement carriers at all of the communities except Victoria;

however, the replacement service will not have commenced by July 8, 2012, the end of the 

current hold-in period. 

Additional Developments 

On April 1, 2012, Pinnacle Airlines Corp. filed for protection under Chapter 11 of the 

Bankruptcy Code. Pinnacle has raised questions regarding the Department’s authority to require 

the air carrier to maintain service at the above communities in light of Pinnacle’s Chapter 11 

filing. Pinnacle argues that the automatic stay (11 U.S.C. Section 362) became effective 

immediately upon its Chapter 11 filing on April 1. Pinnacle maintains that, under these 

circumstances, the Department lacks the authority to extend the service obligation at the above 

communities, and any Order requiring Colgan to maintain EAS is null and void under the 

Bankruptcy Code. Moreover, Pinnacle has asserted that its EAS obligations are executory 

contracts that it can seek to reject pursuant to 11 U.S.C. Section 365.

The Secretary’s obligation to ensure that an EAS carrier continues to provide at least a minimum 

level of EAS applies both to subsidized and unsubsidized EAS carriers. Section 41734(c) 

requires the Secretary to hold-in a carrier for additional 30-day periods until replacement service 

actually begins. 2 Contrary to Pinnacle’s assertion, the automatic stay does not prohibit the 

Department from carrying out its statutory obligation under Section 41734. Rather, any and all 

orders issued by the Department extending Colgan’s service obligations pursuant to Section 

41734 are consistent with the exception to the automatic stay provided for in Section 362(b)(4) 

of the Bankruptcy Code. Thus, the Secretary’s authority -- or, more accurately, the Secretary’s 

legal obligation -- derives not from what Debtors allege is an executory contract, but from the 

 1 49 U.S.C. Section 41734(b) states:

If at the end of the notice period under subsection (a) of this section the Secretary has not found another air 

carrier to provide basic essential service to the eligible place, the Secretary shall require the carrier 

providing notice to continue to provide basic essential air service to the place for an additional 30-day 

period or until another carrier begins to provide basic essential air service to the place, whichever occurs 

first. (Emphasis added).

2 49 U.S.C. Section 41734(c) provides:

If at the end of the 30-day period under subsection (b) of this section the Secretary decides another air 

carrier will not provide basic essential air service to the place on a continuing basis, the Secretary shall

require the carrier providing service to continue to provide service for additional 30-day periods, until 

another carrier begins providing service on a continuing basis.... (Emphasis added).
Secretary’s statutory requirement to issue hold-in orders pursuant to Section 41734, which 

applies equally to carriers operating outside of a bankruptcy as to those operating post-petition as 

a debtor-in-possession. 

Nevertheless, the Department has been working closely with all the stakeholders in this case, 

including Pinnacle, Colgan, United Airlines, the communities, and Silver Airways, the selected 

replacement carrier at all the communities except Victoria. 3 Based on the assurances that we 

have received from Silver Airways (“Silver”) and United Airlines (“United”), we are confident, 

and fully expect, that Silver’s replacement service will be fully operational by August 1. 

Furthermore, for flight reservations beginning on August 1 and thereafter, United has taken steps 

on its website to effectuate the transition to Silver by identifying Silver as the carrier operating 

flights between the communities specified below and Dulles International Airport. In view of all 

of the above, and in accordance with 49 U.S.C. Section 41734(c), we will extend the service 

obligations of Colgan at the communities specified below for an additional 30 days, or until 

replacement service actually begins, whichever occurs first. The Department will continue to 

provide compensation to Colgan pursuant to 49 U.S.C. Section 41734(d). Moreover, because we 

have been assured that Silver and United will be prepared to begin providing EAS at the 

communities specified below by August 1, 2012, we do not anticipate that there will be a need 

for further hold-in orders to be issued to Colgan.

This Order is issued under the authority assigned in 14 CFR 385.12(k)(5). 

ACCORDINGLY,

1. The Department requires Colgan Airlines, Inc. a wholly-owned subsidiary of Pinnacle 

Airlines Corporation, d/b/a United Express, to continue providing EAS at Altoona and 

Johnstown, Pennsylvania; Staunton, Virginia; and Beckley, Clarksburg/Fairmont, and 

Morgantown, West Virginia; for an additional 30 days, through August 7, 2012, or until an air 

carrier capable of providing reliable EAS actually begins service, whichever comes first;

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

3. The Department will serve a copy of this Order on the mayors and airport managers of: 

Altoona and Johnstown, PA; Victoria, TX; Staunton, VA; and Beckley, Clarksburg/Fairmont, 

and Morgantown, WV; Pinnacle Airlines, Corp., Silver Airways, United Airlines and Colgan 

Airlines, Inc.

Persons entitled to petition the Department for review of this order under the Department’s 

regulation at 14 C.F.R. § 385.50 must file such petitions within ten (10) days after the date of 

service of this order.

 

3 Colgan represents that it is not able to continue providing EAS at Victoria, Texas beyond June 30, 2012. The 

carrier has advised us that by that date, it has or will have terminated its entire Houston operation, which supports 

the Victoria service, in order to preserve the company as an ongoing concern. However, we are well on the way to 

securing replacement service at Victoria. We have received carrier proposals, the community has submitted their 

preferences regarding the carrier selection, and we expect to issue a final decision shortly selecting a replacement 

carrier for Victoria.
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 document is available online at

www.regulations.gov