Order: 2014-5-9

Served May 21, 2014

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 21st day of May, 2014

 Essential Air Service at

 MERCED, CALIFORNIA

 VISALIA, CALIFORNIA

Under 49 U.S. C. § 47131 et seq.

 DOCKET DOT-OST-1998-3521

 DOCKET DOT-OST-2004-19916

 

ORDER REQUESTING PROPOSALS

Summary

By this Order, the Department is requesting proposals from air carriers interested in providing 

Essential Air Service (“EAS”) at Merced and/or Visalia, California, for a new two-year period, 

with or without subsidy support. Proposals are due June 27, 2014. (See Appendix A for a map.) 

Background

By Order 2012-9-9, issued on September 10, 2012, the Department re-selected Great Lakes

Aviation, Ltd. (“Great Lakes”) to provide subsidized EAS at Merced and Visalia using 9- and 

19-passenger Beechcraft aircraft, for the two-year period from October 1, 2012, through 

September 30, 2014. Under that contract, Great Lakes has provided Merced with 12 weekly 

nonstop round trips to Los Angeles (LAX), and/or to Las Vegas (LAS), at an annual subsidy rate 

of $1,698,878. At Visalia, Great Lakes has provided 12 weekly nonstop round trips to LAX

and/or LAS, at an annual subsidy or $1,697,929.

That Order, as well as the complete public file for EAS at Merced and Visalia, may be accessed 

online through the Federal Docket Management System at http://www.regulations.gov, by 

entering “DOT-OST-1998-3521” for Merced and “DOT-OST-2004-19916” for Visalia in the 

“SEARCH for: Rules, Comments, Adjudications or Supporting Documents:” field.

Request for Proposals

As the end of the rate term approaches, we are here requesting proposals from air carriers 

interested in providing EAS at Merced and/or Visalia, with or without subsidy support, for the 

two-year period beginning October 1, 2014. Air carriers should file their proposals no later than 

June 27, 2014. After that date, our staff will docket the proposals, thereby making them public. 
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Additionally, we request each air carrier serve a copy of its proposal on the civic parties at 

Merced and Visalia and on the other applicants. Shortly afterwards, we will provide a summary 

of the proposals to the communities and ask them to submit any formal comments on this carrierselection case. We will give full consideration to all proposals that are timely filed.1 

We are here providing interested air 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, we recommend they include information 

concerning proposed schedules and projected block hours. In addition, applicants are 

encouraged to provide financial data supporting their subsidy requests, including information 

on their projected expenses and revenues. We strongly encourage clear, well-documented 

proposals that will facilitate their evaluation by the affected community and the Department.2

The Department expects proposals that are consistent with what the above communities 

currently receive. At Merced and Visalia, Great Lakes currently provides 12 weekly nonstop

round trips to LAX from each community, using 19-seat aircraft, and, as of May 1, some flights 

are operating with 9-seat aircraft. We encourage proposals consisting of 12 weekly nonstop 

round trips with 19-seat or larger aircraft to a large or medium hub. If 9-seat aircraft are 

contemplated, we will consider additional frequencies. Air carriers are also welcome to 

propose more than one service option, if they choose. They also need not limit themselves to 

these requirements if they envision other, potentially more attractive service possibilities --

different hubs or length of contract, for example -- with subsidy requirements that remain 

competitive.

Interested air carriers should prepare their proposal with every expectation that their initial 

proposal will also be their final and only proposal. We retain the discretion to negotiate 

proposals with air carriers when we deem it desirable; in such cases we will give all 

applicants the same opportunity. We also retain the discretion to reject outright all 

unreasonable or unrealistic proposals and solicit a new round of proposals. However, we 

anticipate that negotiation or rejection will remain only occasional exceptions to the rule.

In order to assist air carriers in developing traffic and revenue projections for their proposals, we 

have summarized historical passenger levels at each of the communities in Appendix B. In the 

 1 Air carriers should not expect the Department to accept late filings. In cases where a carrier proposes to provide 

EAS without subsidy and we determine that service can be reliably provided without such compensation, we usually 

do not proceed with the carrier-selection case. Instead, we simply rely on that carrier’s subsidy-free service as 

proposed.

2 In selecting a carrier to provide subsidized EAS for an eligible place not in Alaska, 49 U.S.C. § 41733(c)(1) 

directs us to consider five factors: (a) service reliability; (b) contractual and marketing arrangements with a larger 

carrier at the hub; (c) interline arrangements with a larger carrier at the hub; (d) community views, giving substantial 

weight to the views of the elected officials representing the users; and (e) whether the carrier has included a plan in 

its proposal to market its service to the community. In addition, the Consolidated and Further Continuing 

Appropriations Act, 2012, Public Law No. 112-55, and continued by the Full-Year Continuing Appropriations Act, 

2013, Public Law No. 113-6, and the Continuing Appropriations Act, 2014, Public Law No. 113-46, provides that 

when selecting a carrier to provide EAS, the Department may consider the relative subsidy requirements, thus 

codifying a factor that we have considered since the inception of the program. 
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most recent 12-month period for which data are available (October 1, 2012, through 

September 30, 2013) Merced generated 4,810 total origin and destination passengers, or an 

average of 7.7 enplanements per day.

3 For that same period, Visalia generated 6,762 total origin 

and destination passengers, or an average of 10.8 enplanements per day.

Special discussion regarding Merced

We note that 49 U.S.C. § 41731(a)(B) requires that EAS communities within 175 driving miles 

of a large or medium hub have an average of 10 enplanements per service day or more, as 

determined by the Secretary, during the most recent fiscal year beginning after 

September 30, 2012. Communities that do not enplane an average of 10 or more enplanement 

per service day are not eligible for EAS support, barring a waiver from the Secretary. The 

Secretary has the authority to waive the 10-enplanement standard, on an annual basis, if the 

community can demonstrate that the reason the location averaged fewer than 10 enplanements 

per day is due to a temporary decline in enplanements.4

As noted above, Merced did not meet the 10-enplanement threshold, and the Department issued 

Order 2014-4-26, on April 24, 2014, which directed interested parties to show cause as to why 

the Department should not terminate the eligibility of the those communities that enplaned fewer 

than 10 passengers per day. Those objections were due May 14, 2014, and will be addressed in a 

subsequent Order, which will also include procedures for applying for a waiver. Prospective 

applicants for service at Merced should be aware of this development as Merced would need a 

waiver from the Secretary in order to continue to be eligible for subsidized EAS. Staff will be 

available to answer any questions.

Discussion Regarding Eligibility

The Department of Transportation and Related Agencies Appropriations Act, 2000, prohibits the 

Department from subsidizing EAS to communities located within the 48 contiguous States 

receiving per passenger subsidy amounts exceeding $200, unless the communities are located 

more than 210 miles from the nearest large or medium hub.5 Merced and Visalia are both 

located within 210 miles of a large or medium hub airport, and therefore subject to the $200 cap. 

Merced is approximately 107 miles from Mineta San Jose International Airport (SJC), a medium 

hub, and Visalia is approximately 178 miles from Burbank Bob Hope Airport (BUR), a medium 

hub. The Department fully expects both Merced, if granted a waiver from the 10-enplanement 

requirement, and Visalia to work cooperatively with prospective applicants to ensure subsidy 

rates remain below the $200 per passenger level to remain eligible for the EAS program.6

 3 In calculating enplanements per day, our longstanding practice is to take total annual origin and destination 

passenger numbers for each fiscal year. We then divided by two to get passengers in one direction (enplanements at 

the EAS community), and then by 313 days to get average daily enplanements at the EAS community.

4 See 49 U.S.C. § 41731(e).

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 Appropriations Act of 2000. 

6 On May 1, 2014, a Notice of Proposed Enforcement Policy on the $200 per passenger subsidy cap was published 

in the Federal Register (Volume 79, Issue 84) outlined the Department’s proposed policy on this issue, which would 

use traffic data from October 1, 2014, through September 30, 2015 to measure compliance. The Department has 

solicited public comments on the policy and they are due June 30, 2014. Refer to www.regulations.gov and search 

“DOT-OST-2014-0061” for more information.
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Other Air Carrier Requirements

The Department is responsible for implementing various Federal statutes governing lobbying

activities, drug-free workplaces and nondiscrimination.

7

 Consequently, all air carriers

receiving Federal subsidy to support EAS must certify that they are in compliance with 

Department regulations regarding drug-free workplaces and nondiscrimination, and those air 

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 activities. All air carriers that 

plan to submit proposals involving subsidy should submit the required certifications along 

with their proposals. Interested air carriers requiring more detailed information regarding 

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 

air carriers that do not submit these documents.

8

Community Comments

Civic officials and the State are welcome to submit comments at any time. We encourage

prospective applicants to contact the community before they submit their proposals so that 

they can tailor them to the community’s needs, as they will not be able to amend them after 

the due date. As noted earlier, we will provide a copy of the proposals to the civic parties and 

ask them to submit their final comments shortly after June 27, 2014, the due date for air 

carrier proposals.

This Order is issued under authority delegated in 49 CFR Part 1.25a(b) and re-delegated to the

Director, Office of Aviation Analysis.

ACCORDINGLY,

1. We request that air carriers interested in providing Essential Air Service at Merced and/or 

Visalia, California, submit their proposals, with or without subsidy requests, no later than 

June 27, 2014. The proposals should be emailed to: EAS@dot.gov with the title “Proposal to 

Provide Essential Air Service at Merced and/or Visalia, California,” with the docket number 

corresponding to the comminutes as show on the first page of this Order;9

2. Dockets DOT-OST-1998-3521 and DOT-OST-2004-19916 will remain open until further 

Order of the Department; and 

 7 The regulations applicable to these areas are: (1) 49 CFR Part 20 – New restrictions on lobbying; (2) 49 CFR Part 

21 – Nondiscrimination in federally-assisted programs of the Department of Transportation – Effectuation 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 (nonprocurement) and government-wide requirements for drug-free workplace (grants).

8 The certifications are also available on the web at http://www.dot.gov/policy/aviation-policy/small-communityrural-air-service/essential-air-service

9 Questions regarding filings in response to this Order should be directed to Mr. Scott Faulk at scott.faulk@dot.gov 

or (202) 366-9967.
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3. The Department will serve copies of this Order on the civic officials of Merced and Visalia, 

California; the Managers of Merced Regional Airport/Macready Field and Visalia Municipal 

Airport; Great Lakes Aviation, Ltd.; and the service list for this docket.

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

Regulations, 14 CFR Part 385.31(a), must file such petitions within seven (7) 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

Director

Office of Aviation Analysis

An electronic version of this document is available

online at www.regulations.gov.
Appendix A

AREA MAP

Maps generated by the Great Circle Mapper - copyright © Karl L. Swartz.
Appendix B

Page 1 of 2

Historical passenger Traffic at Merced, CA1

Year Quarter Enplanements Deplanements Total

Avg. Daily 

Enplanements

2010 4 640 615 1255

2011 1 487 481 968

2011 2 805 808 1613

2011 3 925 939 1864

2857 2843 5700 9.1

2011 4 947 929 1876

2012 1 795 797 1592

2012 2 924 963 1887

2012 3 921 984 1905

3587 3673 7260 11.6

2012 4 614 604 1218

2013 1 471 469 940

2013 2 632 590 1222

2013 3 730 700 1430

2447 2363 4810 7.7

 1 Source: Bureau of Transportation Statistics; Schedule T-100. 
Appendix B

Page 2 of 2

Historical passenger Traffic at Visalia, CA1

Year Quarter Enplanements Deplanements Total

Avg. Daily 

Enplanements

2010 4 474 503 977

2011 1 425 435 860

2011 2 711 630 1341

2011 3 941 932 1873

2551 2500 5051 8.1

2011 4 903 832 1735

2012 1 768 695 1463

2012 2 905 908 1813

2012 3 985 1,025 2010

3561 3,460 7021 11.2

2012 4 686 728 1414

2013 1 688 640 1328

2013 2 996 1,011 2007

2013 3 975 1,038 2013

3345 3,417 6762 10.8

 1 Source: Bureau of Transportation Statistics; Schedule T-100. 
Appendix C

Example of General Terms and Conditions for Eassential Air Service

The air 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 the required service, without 

prior approval. The air 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 completed, such as certain weather cancellations, only completed flights 

are considered eligible for subsidy. In addition, if the air 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 air 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 written approval from the Department to be ensured of 

full compensation. Should circumstances warrant, the Department may locate and select a

replacement air carrier to provide service on these routes. The air 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 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 community.

If the Department unilaterally, either partially or completely, terminates or reduces payments 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 air 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 air 

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 paragraph.

Funds may not be available for performance under this Order beyond [DATE]. The 

Government’s obligation for performance under this Order beyond [DATE], is subject to the 

availability of funds from which payment 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 sufficient funds 

are not made available for performance beyond [DATE], the Department will provide notice in 

writing to the carrier. 

All claims for payment, including any amended claims, must be submitted within 90 days of the 

last day of the month for which compensation is being claimed. For example, claims for service 

provided in July must be filed by October 31st; August claims must be submitted by November 

30th, and so on.