u.s. Department of 

Transportation 

Office of the Secretary 

of Transportation 

The Honorable Matt Waligora 

Mayor, City of Alpena 

208 North First Ave. 

Alpena, MI 49707 

Dear Mayor Waligora: 

, ..... ? '---' ~ 

1200 New Jersey Avenue, SE 

Washington, DC 20590 

Febmary 17, 2012 

This letter is regarding essential air service (EAS) at Alpena. My purpose in writing is to inform 

you of the results of the service and subsidy proposal we received in response to our third request 

for proposal (RFP) before we submit a recommendation on the carrier-selection issue to the 

Assistant Secretary for Aviation and Intemational Affairs for decision. 

As you know, Mesaba/Pinnacle, cllb/a Delta Connection, filed notice to leave Alpena on July 15. 

Order 2011-9-5, September 13, 2011, prohibited that suspension and requested proposals by 

October 12, 2011. By notice dated October 12 we extended the deadline for proposals to 

October 14, 2011. 

As background, in response to that first RFP, we received proposals from Gulfstream 

Intemational Airlines, Inc. The carrier has since changed its name to Silver Airways, Corp, and 

from Intrepid. Silver Airways proposed 18 nonstop round trips per week to Cleveland with 19-

seat Beech 1900 aircraft for $3,243,009 annual subsidy; Intrepid proposed 4 nonstop round trips 

per week to Lansing with 19-seat Jetstream 31 aircraft for $911,800. As discussed in 

Order 2011-11-20, November 17,2011, (the second RFP) we rejected both proposals. We 

rejected Intrepid's proposal because it did not meet basic EAS levels requiring a minimum of 

twelve round trips per week to a medium or large hub. We rejected Silver Airways' proposal 

because we were concemed that "the level of subsidy Gulfstream requests is very high -- more 

than twice the program average." In response to the second RFP, Silver Airways chose not to 

submit a proposal, and we received a proposal from only one carrier, Intrepid. Intrepid's second 

proposal requested $3,024,000 annual subsidy, but its proposed service of ten round trips per 

week to Lansing and Grand Rapids still did not meet basic EAS standards; it still did not have 

any authority to provide the service it proposed; and it was thus not selectable. 

Most recently, by Order 20012-1-6, January 10, 2012, we requested proposals a third time, with 

proposals due January 31, 2012. At the request of the City of Alpena, by Notice issued 

January 30, we extended the deadline for proposals to February 14, 2012. In response, we 

received a proposal from only one carrier, Multi-Aero, Inc., cllb/a Air Choice One. We emailed 

that proposal to the community, and it can be viewed at the Federal Docket Management System, 

http://www.rcgulations.gov under DOT-OST-2009-0300, so I will only summarize that proposal. 

Air Choice One is currently providing subsidized service to Burlington, Iowa, and Decatur, 

Illinois, and clearly has the required operating authority to provide the proposed service. Of the 

five options submitted by the carrier, the first three proposed service with single-engine 

Cessna 208 Caravan aircraft. Basic EAS requires service with twin-engine aircraft, and those 
three options thus are not selectable without community support. However, Options 4 and 5 

assume service with twin-engine Piper Navajo aircraft. Their proposed service would go to a 

large hub, Chicago O'Hare, and that airport fully meets the basic EAS requirement that service 

be to a medium or large hub airport. Option 4 proposed 18 nonstop round trips per week to 

O'Hare with 9-seat Piper Navajo aircraft for $2,107,332 annual subsidy; Option 5 was the same 

except for increased service/subsidy of 24 nonstop round trips per week for $2,708,478 annual 

subsidy. See Appendix A for the summary of all of the options proposed by Air Choice One. In 

brief, those two options of Air Choice One meet basic EAS requirements, and the subsidy levels 

they requested for Options 4 and 5 are significantly less than that earlier requested by Silver 

Airways. All of Air Choice One's options are stand alone, i.e., the carrier does not need to be 

selected at any other community for the Department or the community to consider its proposal. 

We reiterate that the Department has an obligation to relieve Delta of its obligation to provide 

EAS at Alpena. 

Please note that the average passenger fares in the carrier's proposal shown in the docket and 

Appendix A do not necessarily reflect the average local fares passengers would pay, but, rather, 

reflect the prorated portion of the total ticket price, e.g., the Alpena- Chicago portion of an 

Alpena to New York ticket. Also, the fare shown is net of certain charges such as federal 

transportation security fees, excise or ticket taxes, and passenger facility charges. Of course, 

carriers have the discretion to charge fares they deem appropriate, and the passenger fares 

presented in their proposals have been developed for subsidy rate computation purposes only. 

Based on the cost elements incorporated in the carrier's computation summaries, the carrier 

would have to realize passenger fares comparable to the averages shown in their proposals in 

order to achieve break-even or profitable operations even with subsidy. 

You should also note that the schedules that the carrier has submitted and that are shown in the 

docket are illustrative only, and that the carrier may make schedule changes to reflect changing 

conditions, e.g., to better meet shifting connecting bank times at the hub(s). The Department 

expects subsidized air carriers to maintain well-timed and well-spaced flights in order to ensure 

full compensation. 

We know this matter is important to you and we will act as quickly as possible upon receipt of 

your letter. You can expedite matters by responding as soon as possible and by email to 

EAS@dot.gov, but not later than March 15. If you have any questions or do not wish to submit 

formal comments, please contact Kevin Adams at (202) 366-1047. 

• 

Sincerely, 

)JJ~t1 IJ~ y: / 

Dennis J. De \frr;y 7 

Chief, Essential Air Service Division 

Office of Aviation Analysis 

cc: Air Choice One, Delta, Silver Airways, Intrepid 
Ogtion 1 Ogtion 2 

Aircraft Caravan Caravan 

Hub ORD ORD 

Weekly Nonstop Round Trips 18 21 

O&D Passengers 7,800 9,500 

Projected Passenger Fares $99 $99 

Projected Revenue $779,922 $949,905 

Projected Economic Cost $3,068,014 $3,550,187 

Annual Subsidy, Two-Year Term $2,288,092 $2,600,282 

Discounted Four-Year Term Subsidy $2,265,211 $2,574,279 

All options project approximately 103 minutes per one-way flight. 

All options would base the aircraft in Alpena. 

Appendix A 

Ogtion 3 Ogtion 4 Ogtion 5 

Caravan Navajo Navajo 

ORD ORD ORD 

24 18 24 

10,500 7,800 8,500 

$99 $99 $99 

$1,049,895 $779,922 $849,915 

$3,841,873 $2,887,254 $3,558,393 

$2,791,978 $2,107,332 $2,708,478 

$2,764,058 $2,086,259 $2,681,393