Order: 2011-5-7

Served: May 5, 2011

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 5

th day of May, 2011

Essential Air Service at

VICTORIA, TEXAS DOCKET DOT-OST-2005-20454

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

ORDER RE-SELECTING CARRIER

Summary

By this order, the Department is re-selecting Colgan Air, Inc., operating as Continental 

Connection (Colgan) to provide essential air service (EAS) at Victoria, Texas, using 34-

seat Saab 340 aircraft for a two-year period beginning July 1, 2011, through June 30, 2013 

for an annual subsidy of $1,856,692.

1

Background

By Order 2009-6-10, June 11, 2009, the Department selected Colgan to provide EAS at 

Victoria for the period from July 1, 2009, through June 30, 2011, for an annual subsidy of 

$1,593,922 for 13 nonstop round trips per week to George Bush Intercontinental Airport 

(Houston).

As the end of the contract was approaching, we issued Order 2011-1-11, January 14, 2011,

requesting proposals from carriers interested in providing EAS at the community, for a 

new, two-year period beginning July 1, 2011. In response to that order, we received 

proposals from the incumbent, Colgan, as well as SeaPort Airlines, Inc. (SeaPort).

 

1

Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated 

funds.
- 2 -

Each carrier’s complete proposal and community comments may be accessed online at 

http://www.regulations.gov/ by entering Docket number DOT-OST-2005-20454 in the 

search block. 

Proposal of Colgan

Colgan proposed two weekday and three weekend nonstop round trips (13 a week) to 

Houston using 34-seat Saab 340 aircraft for an annual subsidy of $1,856,692. 

Proposal of SeaPort

SeaPort proposed three daily nonstop round trips (21 a week) to Dallas Love Field (Dallas) 

using 9-seat Pilatus PC-12 aircraft for an annual subsidy of $2,013,352 for the first year 

and $2,087,314 for the second year.

Community Comments

On February 25, 2011, we requested community comments regarding this carrier-selection 

case. In response, we received letters from Jason Milewski, Managing Director at Victoria 

Regional Airport, and Zuckert, Scoutt & Rasenberger, L.L.P., Counsel for the City of 

Houston and the Greater Houston Partnership. Both letters strongly supported Colgan’s 

EAS proposal at Victoria. Mr. Milewski indicated that between Colgan and SeaPort, 

Colgan’s proposal “better meets our community’s needs.” Mr. Milewski did add, 

however, that if Colgan is re-selected, the community would like the airline to improve

their completion ratio for all flights.

Decision

The decision is straightforward and clearly points to the re-selection of Colgan for a new,

two-year term. The community fully supports Colgan’s proposal and the airline has 

provided reliable EAS at Victoria for several years. In addition, Colgan’s subsidy request 

is slightly less than SeaPort’s. Furthermore, the community was unwilling to waive its 

right to 15-seat or larger aircraft, thus eliminating SeaPort’s proposal altogether. We do 

expect, however, Colgan to work to address the community’s concerns regarding its service 

reliability.

We shall make this selection of Colgan at Victoria contingent upon the Department’s 

receiving properly executed certifications from the carrier that it is in compliance with the 

Department’s regulations regarding drug-free workplaces and nondiscrimination, as well as 

the regulations concerning lobbying activities.

Carrier Fitness

49 U.S.C. 41737(b) and 41738 require 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 subject 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 Federal Aviation Administration, and it has raised no concerns that 

would negatively affect our fitness findings. We therefore conclude that the carrier is 

reliable and remains fit to conduct the operations proposed here.
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This order is issued under authority delegated in 49 CFR 1.56a(f).

ACCORDINGLY,

1. We select Colgan Air, Inc. to provide essential air service at Victoria, Texas, and 

establish an annual subsidy rate of $1,856,692, as described in Appendix C; 

2. We direct Colgan Air, Inc. to retain all books, records, and other source and summary

documentation to support claims for payment, and to preserve and maintain such 

documentation in a manner that readily permits its audit and examination by

representatives of the Department. Such documentation shall be retained for seven years 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;

3. We find that Colgan Air, Inc. continues to be fit, willing and able to operate as a 

commuter carrier, and capable of providing reliable essential air service at Victoria;

4. This docket will remain open pending further Department action; and

5. We will serve copies of this order on the Mayor of Victoria, the Managing Director of 

Victoria Regional Airport, Zuckert, Scoutt & Rasenberger, L.L.P., Colgan Air, Inc., and 

SeaPort Airlines, Inc.

By:

SUSAN L. KURLAND

Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available at

http://www.regulations.gov
Appendix A

AREA MAP

 
Appendix B
 Appendix C

Colgan Air, Inc.

Essential Air Service to be Provided at Victoria, Texas

Effective Period: July 1, 2011, through June 30, 2013

Scheduled Service: Two weekday and three weekend nonstop round trips (13 a week) to Houston

Aircraft: 34-seat Saab 340

Rate per Eligible Flight: $1,416;

1

Weekly Ceiling: 36,8162

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 eligible 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 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 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 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 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 the 

carrier do not constitute a total or partial reduction or cessation of payment.

Funds are not currently available for performance under this order beyond April 8, 2011. The Department’s 

obligation for performance under this order beyond April 8, 2011, 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 for any payment 

may arise for performance under this order beyond April 8, 2011, until funds are made available to the Department 

for performance. If funds are not made available for performance beyond April 8, 2011, the Department will 

provide notice in writing to the carrier.

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.

All claims for payment must be submitted within 60 days of the last day of service provided under this order.

 

1 Annual compensation of $1,856,692 divided by 1,311 annual departures (26 weekly departures x 52 weeks x 97 

percent completion).

2

26 arrivals and departures per week multiplied by $1,416 per flight.