Order: 2010 - 5 - 10 Served: May

10, 2010 

### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Issued b y the Department of Transportation on the 10 th day

of May , 20 10 Essential Air Service at ALTOONA, PENNSYLVANIA JOHNSTOWN, PENNSYLVANIA Docket DOT - OST - 200 2 - 11446 Docket DOT - OST - 2002 - 11451 under 49 U.S.C. 41731 et seq.



### ORDER SELECTING CARRIER Summary By this order, the Department is selecting Colgan Air Inc., operating as United Express (Colgan), to provide essential air service (EAS) at Altoona and Johnstown , Pennsylvania , for a combined annual subsidy

of $3,348,294 , f

or the two - ye ar period from July 1, 2010 to June 30, 201 2 . 1 Background By Order 2008 - 6 - 10 , the Department selected Colgan to provide the communities of Altoona and Johnstown 18 weekl y nonstop or one - stop round trips to Washington Dulles at a combined annual subsidy of $2,788,785 for the two - ye ar period from June 1 5, 2008, through June 30 , 2010. As the end of the contract was approaching, we issued Order 2010 - 2 - 28, February 26, 2010 , requesting proposals to serve both communities for a n ew, two - year term. In response, we received propos a ls from Charter Air Transport (Charter Air) , Colgan, Gulfstream International Airlines (Gulfstream) and Sovereign Air , Inc. (Sovereign) . Each carrier’s complete proposal may

be accessed online at http://www.regulations.gov/ by entering DOT - OST - 2002 - 11446 for Altoona and DOT - OST - 2002 - 11451 for Johnstown in the search block.

1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds.- 2 -

Proposal of Charter Air Charter Air proposed one service option using 30 - seat Embraer EMB - 120 aircraft operating two round trips e ach day

except Saturday

over an Altoona - Johnstown - Washington Dulles routing, and one round trip each day except Saturday

over an Altoona - Johnstown - Pittsburgh routing for a combined annual subsidy of $2,960,205. Proposal of Colgan Colgan proposed one service option to provide both communities with three round trips each weekday and each weekend (18 a week), with a mix of nonstop and one - stop service over an Altoona - Johnstown - Washington Dulles or Johnstown - Altoona - Washington Dulles routing using 34 - seat Saab 340 aircraft for an annual subsidy of $3,348,294. Proposal of Gulfstream Gulfstream proposed four service options, all of which would use 19 - seat Beechcraft 1900 aircraf t. Option 1 would operate to Cleveland as Continental Express; Options 2 - 4 would operat e to Pittsburgh and be without a code share . Option 1 would offer four weekday round trips and a total of four weekend round trips (24 a week), over a Cleveland - Altoon a - Johnstown Cleveland routing or Cleveland - Johnstown - Altoona - Cleveland routing, for an annual subsidy of $3,874,464. Option 2 would offer three nonstop round trips each weekday and weekend (18 a week) over an Altoona - Pittsburgh routing for an annual subsi dy of $1,983,918. Option 3 would offer three nonstop round trips each weekday and weekend (18 a week) over a Johnstown Pittsburgh routing for an annual subsidy of $1,749,981. (Options 2 and 3 total $3,733,899.) Option 4 would offer four weekday round trips and a total of four weekend round trips with a mix of nonstop and one - stop service over a Pittsburgh - Altoona - Johnstown - Pittsburgh routing or Pittsburgh - Johnstown - Altoona - Pittsburgh routing for an annual subsidy of $3,301,212. Proposal of Sovereign Sovereign proposed three service options. While all three options would use King Air 350 aircraft, under Optio n 1, it would be configured with 12 seats, and under Options 2 and 3, 9 seats. Option 1 would offer five daily round trips (35 a week) over a Jo hnstown - Altoona Washington Dulles routing for an annual subsidy of $1,103,603. Option 2 would offer four daily nonstop round trips (28 a week) over a Johnstown - Washington Dulles routing for an annual subsidy

of $1,117,417. Option 3 would offer four daily nonstop round trips (28 a week) over an Altoona - Washington Dulles routing for an annual subsidy of $ 1,231,939. (Options 2 and 3 total $2,349,356.) We must note , however, that none of these options meet the 15 - seat requirement i n the EAS governing statut es (see 49 USC §41732 (b)(3) ) . Community Comments On March 29 , 2010 , we requested comments from members of the Altoona and Johnstown communities regarding the selection of an air carrier. We received se veral letters from business leaders, airport officia ls and elected representatives . The vast majority of feedback favored the re - selection of Colgan. In a letter dated April 20 , 2010, William Schirf , Mayor of Altoona , expressed support for Colgan’s proposal, stating that the “ Dulles service offered b y Colgan Air/United Express is a popular connection for many of our residents and business people. Colgan also offers dependable, safe and affordable air transportation at the Altoona - Blair County Airport facilit y.”- 3 -

The Johnstown - Cambria County Airport Authority

and Blair Count y Airport Authority jointly submitted a detailed letter also supporting Colgan’s proposal, citin g continuity of service, the connections offered at Washington Dul les, and the interline ticketing and baggage a greements that Colgan, through its code share with United , has with most major carriers as the principal reasons for their decision . Both the Cleveland and Pittsburgh airports submitted letters supporting Gulfstream’s proposal. Decision After carefully reviewing each carrier’s proposal and taking into account community feedback, we have decided to select Colgan’s proposal of three round trips each weekday and each weekend (18 a week), with a mix of nonstops and one - stop service over an Altoona - Johnstown Washington Dulles or Johnstown - Altoona - Washington Dulles routing using 34 - seat Saab 340 aircraft for an annual subsidy of $3,348,294. We find that the service and subsidy levels are reasonable, and will meet the community ’s EAS needs. W e base our decisi on to choose Colgan on the four carrier - selection criteria contained in 49 U.S.C. § 41733(c): 1) the demonstrated reliability in providing scheduled air service; 2) the contractual and marketing arrangements with a larger carrier to ensure service beyond a hub airport; 3) interline agreements with a larger carrier; and 4) community support. Colgan’s proposal meets all four statutory criteria. Colgan is an established scheduled air carrier serving communities throughout the U.S., and, in the case of Altoona and Johnstown, has provided the two communities reliable air service for several years. Colgan has a code share with United Airlines and , therefore, can provide its passengers connections beyond the Washington Dulles hub to the national air transportatio n network with relative ease. Colgan, through its code share with United Airlines, has interline agreements with most major air carriers, enabling passengers to reach their destination with one reservation, ticket and baggage check - in. L astl y, the commun ities overwhelmingl y support Colgan’s proposal. While Gulfstream has a code sharing agreement with Continental Airlines that would provide seamless service beyond the hub, it would offer no appreciable subsidy savings (its least expensive option is only $48,000 less than Colgan’s for both communities combined and the others are more expensive.) Moreover, it received no local support. Regarding the proposals of Charter Air and Sovereign, there was no community support for either carrier’s proposals, and, in the case of Sovereign , the carrier currently does not have the requisite operating authority from either the Federal Aviation Administration ( FAA ) or the Department of Transportation ’s Economic Fitness Division to operate its proposed service. We shall make this selection of Colgan contingent upon the Department’s receiving properl y executed certifications from the carrier that it is in compliance with the Department’s regulations regarding drug - free workplaces and nondiscrimination, as well as th e regulations concerning lobbying activities. Carrier Fitness 49 U.S.C. 41737(b) requires that we find an air carrier fit, willing, and able to provide reliable service before we may

subsidize it to provide essential air service . Colgan is subj ect to the Department’s continuing fitness requirements, and no information has come to our attention that would cause us to question the carrier's fitness at this time. We have contacted the FAA , and it- 4 -

has raised no concerns that would negativel y affect our fitne ss finding. We therefore conclude that the carrier remains fit to conduct the operations proposed here. This order is issued under authority delegated in 49 CFR 1.56a(f). AC CORDINGLY, 1. We select Colgan Air Inc. , operating as United Express, to provid e essential air service at Altoona and Johnstown, Pennsylvania ; 2. We set the final rate of compensation for $ 3,348,294 for the provision of essential air service at Altoona and Johnstown , as described in Appendix C; 3. We direct Colgan Air Inc. to reta in all books, records, and other source and summary documentation to support claims for pay ment, and to preserve and maintain such documentation in a manner that readil y permits its audit and examination by representatives of the Department. Such document ation shall be retained for seven ye ars or until the Department indicates that the records may

be destroyed, whichever comes first. Copies of flight logs for aircraft sold or disposed of must be retained. The carrier may forfeit its compensation for any claim that is not supported under the terms of this order; 4. We f i nd that Colgan Air Inc. continues to be fit, willing and able to operate as a certificated carrier and capable of providing reliable essential air service at Altoona and Johnstown, Pennsylvania ; 5 . Docket s DOT - OST - 2002 - 11446 and DOT - OST - 2002 - 11451 will remain open pending further Department action ; and 6. We will serve cop ies of this order on the City and Airport Manager s of Altoona and Johnstown , Colgan Air Inc ., Charter Air Transport, Gulfstream International Airlines, and Sovereign Air. By :

SUSAN L. KURLAND Assistant Secretary for Aviation and International Affairs (SEAL) An electronic version of this document is ava ilable on the World W ide Web at http://www.regulations.govAppendix A 

## A REA MAPAppendix BAppendix C Colgan Air Inc. Essential Air Service to be Provided at Altoona and Johnstown, Pennsylvania Effective Period : July

1, 2010 through June 30 , 2012 Scheduled Service : 1 8 weekl y nonstop and one - stop round trips over an Altoona - Johnstown Washington Dulles or Johnstown - Altoona - Washington Dulles routing Aircraft : Saab 340 34 - seat aircraft Rate per Eligible Flight: $ 922 1 Weekly Ceiling for each community : $ 33,192 2 Note: 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 service 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 explanation supporting subsidy eligibility for a flight that has not been completed, such as certain weather cancellations, only completed flights are considered elig ible 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 suc h 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 carrier to provide service on these 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 determi ning 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 complete ly , 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 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 w riting by the Department and the 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 Departme nt 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 order beyond Se ptem ber 30, 2010 . The Department’s obligation for performance under this order beyond September 30, 2010 , is subject to the availability of appropriated funds from which payment for services can be made. No legal liability on the part of the Government f or any payment may arise for performance under this order beyond September 30, 2010 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30, 2010 , the Department will provide n otice in w riting to the carrier. All claims for payment must be submitted within 60 days of the last day of service provided under this order.

1 Annual compensation of $3,348,294 divided by3,632 annual departures (36 weekly departures x 2 communities x 52 weeks x 97 percent co mp letion) . 2 36 arrivals and departures per week multiplied by $922 per flight .