Order 2013-6-13

Served: June 12, 2013

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 12th day of June, 2013

Docket DOT-OST-1997-2605

FINAL ORDER TERMINATING ELIGIBILITY, ALLOWING SUSPENSION OF 

SERVICE, AND REQUESTING PROPOSALS

Summary

By this Order, the Department is: (1) terminating the eligibility of Lewistown and Miles 

City, Montana, under the Essential Air Service (“EAS”) program; (2) allowing Silver 

Airways, Inc. (“Silver”), to suspend service at Lewistown and Miles City, if it chooses; 

and (3) soliciting proposals from air carriers interested in providing EAS at Glasgow, 

Glendive, Havre, Sidney, and/or Wolf Point, Montana, for a new contract, with or 

without subsidy. Air carriers should file their proposals no later than July 2, 2013. An 

area map is attached as Appendix A. 

Background

By Order 2011-1-27, served on February 3, 2011, the Department selected Silver 

(formally Gulfstream International Airlines) to provide subsidized EAS with 

19-passenger Beechcraft B-1900D aircraft at the above communities, for the two-year 

period ended May 31, 2013. The level of service and subsidy levels for each community 

under that contract is as follows:

Essential Air Service at

LEWISTOWN, MONTANA

MILES CITY, MONTANA

GLASGOW, MONTANA

GLENDIVE, MONTANA

HAVRE, MONTANA

SIDNEY, MONTANA

WOLF POINT, MONTANA

under 49 U.S.C. 41731 et seq.
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Lewistown $1,325,733 12 RTs per week

Miles City $1,621,821 12 RTs per week

Glasgow $1,166,049 12 RTs per week

Glendive $1,193,391 12 RTs per week

Havre $1,162,329 12 RTs per week

Sidney $2,932,152 17 RTs per week

Wolf Point $1,502,378 12 RTs per week

The complete public file for EAS at each of the above Montana communities may be 

accessed online through the Federal Dockets Management System at: 

http://www.regulations.gov by entering “DOT-OST-1997-2605” in the “SEARCH for: 

Rules, Comments, Adjudications or Supporting Documents:” field. Additionally, 

historical traffic and annual subsidy rates are detailed in Appendix B. 

Legislative Changes

The Federal Aviation Administration (“FAA”) Modernization and Reform Act of 2012 

(Public Law 112-95), signed into law on February 14, 2012, amended the definition of 

“eligible place” for the purpose of receiving EAS.1 The amendment, among other things, 

states that to be eligible, a community must have had an average subsidy per passenger of 

less than $1,000 during the most recent fiscal year, as determined by the Secretary of 

Transportation.2

Order to Show Cause

By Order 2013-3-13, issued on March 28, 2013, the Department tentatively determined to 

terminate the eligibility of Lewistown and Miles City under the EAS program. Our 

tentative decision was based on the statutory requirement that the average subsidy per 

passenger must be less than $1,000 during the most recent fiscal year per 

49 U.S.C. § 41731(a)(1)(C).

For the most recent fiscal year (FY 2012), Silver transported 660 total passengers at 

Lewistown and 694 total passengers at Miles City at annual subsidy rates of $1,325,733 

and $1,621,821, respectively. Thus, the corresponding average per passenger subsidy for 

FY 2012 is $2,009 at Lewistown, and $2,337 at Miles City. Order 2013-3-13 directed all 

interested parties to show cause by April 17, 2013, as to why the Department should not 

make final its tentative findings and conclusions. 

Objections to the Department’s Show Cause Order

The Department received a significant number of letters3 from various concerned parties 

objecting to the Department’s tentative decision to terminate EAS at Lewistown and 

Miles City, Montana, including Governor Steve Bullock, elected community officials, 

County Commissioners, multiple civic organizations, travel and tourism groups, small 

 1 See 49 U.S.C. § 41731.

2 Communities in Alaska and Hawaii are exempt. 

3 The Department also received Resolution No. 3811 from the City of Lewistown requesting the Secretary 

of Transportation delay suspension of EAS service at Lewistown.
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business owners, and concerned citizens.4 There were common threads to most of the 

comments and they are summarized below. 

Numerous objecting parties encouraged the Department to take into consideration 

Montana’s unique geographic circumstances when making a final decision. Montana is 

the fourth largest state by area in the nation but has only about one million residents. The 

objectors note that, because of its huge size but sparse population, air transportation is 

vitally important to quality of life of Montana residents. 

Additionally, the objectors point to the fact that enplanements were higher when air 

transportation was provided by Great Lakes Aviation Ltd. (Great Lakes) with a hub 

destination of Denver. When Silver was awarded the EAS contract in 2011, the hub 

destination changed from Denver to Billings, and subsequently, enplanements declined. 

Under these circumstances, the objecting parties request additional time, approximately 

two years, to replace Silver with another suitable air carrier and change the hub 

destination back to Denver.

Additionally, many of the objectors state that these communities have no bus or rail 

service and that EAS is the only form of public transportation available to the citizens of 

Lewistown and Miles City. Therefore, terminating air service would eliminate their only 

access the national air transportation system. 

Various objecting parties claim that terminating EAS at Lewistown and Miles City would 

have a detrimental effect on the airport, the local travel and tourism industry, and the 

communities’ ability to attract and retain businesses and high-quality educators. 

Moreover, the objectors fear that the remaining five EAS communities in Montana could 

be in jeopardy of losing its service in the coming years if either Lewistown or Miles City 

is eliminated from the EAS program.

Decision

The objecting parties have not disputed our tentative determination that the communities’

average per passenger subsidy for FY 2012 is $2,009 at Lewistown, and $2,337 at Miles 

City - well above the $1,000 limit. As stated above, Public Law 112-95 amended the 

definition of “eligible place” to include the requirement that during the most recent fiscal 

year, a community must have had an average subsidy per passenger of less than $1,000. 

With regard to the low enplanement numbers on air transportation to the hub airport of 

Billings, the Department notes that during the previous air carrier-selection case in 2011, 

the majority of the seven EAS Montana communities, by a 6 to 1 margin, favored Silver 

with the hub destination being Billings.5

While passenger enplanements were higher several years ago when Great Lakes provided 

service to Denver, the statute does not allow the Department to look prospectively when 

 4 The Department also received several letters in support of our tentative decision. 

5 See Order 2011-1-27, issued on February 3, 2011.
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determining whether the communities meet the eligibility requirement; rather, the statute 

requires that the Department look back to the most recent prior fiscal year. 

Given this statutory requirement, the Department hereby finalizes its tentative findings in 

Order 2013-3-13, and allows Silver to terminate service.6 In order to allow for an orderly 

shutdown, we will continue to authorize subsidy through July 15, 2013, and allow Silver

to suspend service at that time. If Silver does decide to suspend service at the 

communities, the Department expects it to contact all passengers who hold reservations 

for flights that will be suspended to inform them of the suspension, and to assist them in 

arranging alternative transportation or to provide them with a refund of their ticket price, 

without penalty, if requested. 

Request for Proposals

As the end of the current contract approaches, we are here requesting proposals from air 

carriers interested in providing EAS at Glasgow, Glendive, Havre, Sidney, and/or Wolf 

Point, Montana, with or without subsidy, for a new two-year period. Air carriers should 

file their proposals no later than July 15, 2013. After that date, our staff will docket 

proposals, thereby making them public, and direct each air carrier to serve a copy of its 

proposal on the civic parties and other applicants. Shortly thereafter, we will provide a 

summary of the proposals to community officials and ask them for their final comments. 

We will give full consideration to all proposals filed in a timely manner.7

Interested air 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 air 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 rejections are only an occasional exception 

to the rule.

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, 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, welldocumented proposals that will facilitate their evaluation by the affected communities 

and the Department.8

 

6 We take this action pursuant to 49 U.S.C. §§ 40101(a)(7), (11), and (16), and 41731-42; see also 14 

CFR Parts 271, 323, 325.

7 Air carriers should not expect the Department to accept late filings. In cases where an air carrier 

proposes to provide EAS without subsidy and we determine that service can be reliably provided without 

such compensation, we typically do not proceed with the carrier-selection case. Instead, we simply rely on 

that carrier’s subsidy-free service as proposed.

8 In selecting a carrier to provide subsidized EAS, 49 U.S.C. § 41733(c)(1) directs us to consider five

factors: (a) scheduled service reliability; (b) contractual and marketing arrangements with a larger carrier to 
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With specific respect to Glasgow, Glendive, Havre, Sidney, and Wolf Point, the 

Department expects proposals consistent with what the communities are currently 

receiving, with continued service to a suitable hub airport that offers numerous 

connecting opportunities to the national air transportation system. Communities and air 

carriers are encouraged to work together in advance of the due date for proposals to 

design a service pattern that is desirable to the community and meets the operational 

needs of the airline interested in submitting a proposal. In addition, air carriers should be 

very clear as to whether a specific community’s proposal is on a stand-alone basis, or 

whether it is part of a larger, inseparable package with other communities. 

We encourage proposals that meet those requirements in an efficient manner. Air 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.

Service and Traffic History

Silver has operated subsidized service at the above communities since 2011. During the 

fiscal year ended 2012, the most recent fiscal year for which data are available, Glasgow 

averaged 6 enplanements a day, Glendive 2, Havre 3, Sidney 34, and Wolf Point 8.9 In 

order to assist air carriers in making their traffic and revenue forecasts, we have included 

historical traffic data in Appendix B.

Filing Requirements

Air carrier proposals should be submitted to the Department with all materials merged 

into a single document. The document will be published on www.regulations.gov and 

each page should be formatted to be viewed online. 

Other Carrier Requirements

The Department is responsible for implementing various Federal statutes governing 

lobbying activities, drug-free workplaces, and nondiscrimination.10 Consequently, all air 

carriers receiving Federal subsidy for EAS must certify that they are in compliance with 

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

 

ensure service beyond the hub airport; (c) interline arrangements that the applicant has made 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 air carrier has included a plan in its proposal to market its 

service to the community. 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 considered since the inception of the program.

9 See Appendix B for historical traffic data.

10 The regulations applicable to these areas are: (1) 49 CFR Part 20 -- 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 (non-procurement) and governmentwide requirements for drug-free workplace (grants).
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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. 

Because the Department is prohibited from paying subsidy to air carriers that do not 

submit these documents, all air carriers that plan to submit proposals involving subsidy 

should be aware that the selected air carrier will be required to complete the required 

certifications. Interested air carriers requiring more detailed information regarding these 

requirements should contact the Office of Aviation Analysis at (202) 366-5903.11

Community and State Comments

The communities and State 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 date. As noted earlier, we will provide a summary of the proposals to 

the civic parties shortly after July 2, the due date for proposals, and ask them to submit 

their final comments.

This Order is issued under authority delegated in 49 CFR Part 1.25a(b).

ACCORDINGLY,

1. We terminate the eligibility of Lewistown and Miles City, Montana, under the 

Essential Air Service program, effective July 16, 2013;

2. We will continue to authorize subsidy for Silver Airways, Inc. for the provision of 

EAS at Lewistown and Miles City, Montana, as described in Appendix A of Order 2011-

1-27, through July 15, 2013;

3. We allow Silver Airways, Inc., to suspend service at Lewistown and Miles City, 

Montana, after July 15, 2013, if it chooses; and

4. We request that air carriers interested in providing Essential Air Service at Glasgow, 

Glendive, Havre, Sidney, and/or Wolf Point, Montana, submit their proposals, with or 

without subsidy requests, no later than July 15, 2013. The proposals should be e-mailed 

to: EAS@dot.gov with the title “Proposal to Provide Essential Air Service at Glasgow, 

Glendive, Havre, Sidney, and/or Wolf Point, Montana, Docket DOT-OST-1997-2605;”12

5. This docket will remain open until further order of the Department; and

 

11 The certifications are available online under “Reports and Publications” at 

http://www.dot.gov/policy/aviation-policy/small-community-rural-air-service/essential-air-service

12 Questions regarding filings in response to this Order may be directed to Scott Faulk at (202) 366-9721 

or scott.faulk@dot.gov.
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6. We will serve copies of this Order on the mayors of Lewistown, Miles City, Glasgow, 

Glendive, Havre, Sidney, and Wolf Point, Montana, and the airport managers of 

Lewistown Municipal Airport, Miles City Airport/Frank Wiley Field, Wokal 

Field/Glasgow International Airport, Dawson Community Airport, Havre City-County 

Airport, Sidney-Richland Municipal Airport, Wolf Point International Airport, and the 

service list for this docket.

By:

SUSAN L. KURLAND

 Assistant Secretary for Aviation

 and International Affairs

(SEAL)

An electronic version of this document is available on the World Wide Web at:

http://www.regulations.gov/
Appendix A

AREA MAP
Appendix B

Page 1 of 2

Passenger Traffic and Annual Essential Air Service Subsidy at Montana1

Lewistown

12 Months Ended

Total 

Enplanements

Total 

Deplanements

Total 

Traffic

Annual 

Subsidy at 

April 1 Subsidy per Pax

Sep. 30, 2012 337 323 660 $1,325,733 $2,009

Miles City

12 Months Ended

Total 

Enplanements

Total 

Deplanements

Total 

Traffic

Annual 

Subsidy at 

April 1 Subsidy per Pax

Sep. 30 2012 350 344 694 $1,621,821 $2,337

Glendive

12 Months Ended

Total 

Enplanements

Total 

Deplanements

Total 

Traffic

Annual 

Subsidy at 

April 1 Subsidy Per Pax

Sep. 30, 2012 693 632 1,325 1,193,391 $901

Havre

12 Months Ended

Total 

Enplanements

Total 

Deplanements

Total 

Traffic

Annual 

Subsidy at 

April 1 Subsidy per Pax

Sep. 30 2012 1,091 1,056 2,147 $1,162,329 $541

Glasgow

12 Months Ended

Total 

Enplanements

Total 

Deplanements

Total 

Traffic

Annual 

Subsidy at 

April 1 Subsidy per Pax

Sep. 30 2012 693 1,876 2,569 $1,166,049 $453

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

Page 2 of 2

Wolf Point

12 Months Ended

Total 

Enplanements

Total 

Deplanements

Total 

Traffic

Annual Subsidy 

at April 1 Subsidy per Pax

Sep. 30 2012 2,612 2,494 5,106 $1,502,378 $294

Sidney

12 Months Ended

Total 

Enplanements

Total 

Deplanements

Total 

Traffic

Annual Subsidy 

at April 1 Subsidy per Pax

Sep. 30 2012 11,582 10,653 22,235 $2,932,152 $131
Appendix C

Example of General Terms and Conditions for Essential 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 Solicitation beyond September 30, 2013. 

The Government's obligation for performance under this Solicitation beyond 

September 30, 2013, 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 solicitation beyond September 30, 2013, until funds are made available

to the Department for performance. If funds are not made available for performance beyond 

September 30, 2013, the Department will provide notice in writing to the air carrier.

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

under this Order.