Order: 2015

- 3

- 15

Served: March 26, 201 5



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 26 th day of March 20 1 5

Essential Air Service at

MOAB, UTAH VERNAL, UTAH DOT

- OST

- 1997

- 2827

DOT

- OST

- 1997

- 2706

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



### ORDER SELECTING AIR CARRIER

Summary By this Order

, the United States Department of Transportation (the Department ) is selecting Great Lakes Aviation, Ltd. (Great Lakes) to provide E ssential Air Service (E AS )

at Moab and Vernal, Utah

, for the two

- year term from May 1, 2015, through April 30, 2017 . Both communities will receive two nonstop weekday and weekend round trips (12 per week) to Denver International Airport (DEN ) using 30

- passenger Embraer

Brasilia EMB

- 120 (EMB

- 120) turboprop aircraft . Great Lakes will be compensated at annual subsidy ra tes of $2,245,247 for Moab and $ 2,024,577 for Vernal. 1

Background By Order 2014

- 2

- 18 (February 25, 2014 ), the Department selected SkyWest Airlines, operating as Delta Connection (SkyWest ), to provide EAS at Moab and Vernal to Salt Lake City International Airport (SLC) using EMB

- 120 aircraft at annual subsidy rates of $2,303,347 (Moab) and $1,415,696 (Vernal). 2

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

2 By that same Order

, the Department also selected SkyWest, operating as United Express, to provide EAS at Pueblo, Colorado to DEN.- 2

-

On November 18, 2014, SkyWest filed 90

- day notices to terminate its air service (all provided with turboprops) at Moab and Vernal, effective April 30, 2015. In the notices, SkyWest stated that it will transition to an all jet fleet in 2015 and will eliminate the EMB

120 aircraft from its fleet. Because SkyWest’s termination would result in the

communities ’ not havin g EAS , the Department issued Order 2014

- 11

- 18 (November 25, 2014) prohibiting SkyWest from terminating service and requesting proposals from air carriers interested in providing EAS at the communities. 3 In response to that Order, three air carriers submit ted proposals: Boutique Air, Great Lakes

, and Arrow West Aviation, Inc. d/b/a Redtail Aviation (Redtail).

Each air carrier’s complete proposal and community comments may be accessed online at www.regulations.gov by entering the community’s respective docket number in the search

block.

Air Carrier Proposal Summary for Moab

Air

Carrier Annual Subsidy Aircraft Seats Stops Weekly Frequency Hub Boutique

Air $2,523,089 PC

- 12 9 0 21 SLC

Great

Lakes $2, 245,247 EMB

- 120 30 0 14 DEN

Redtail $1,858,685 Kodiak

100 9 0 12/2 SLC/LAS

Air Carrier Proposal Summary for Vernal

Air

Carrier Annual Subsidy Aircraft Seats Stops Weekly Frequency Hub Boutique

Air $2,490,399 PC

- 12 9 0 21 DEN

Great

Lakes $2,024,577 EMB

- 120 30 0 14 DEN

Community Comments On January 16

, 2015

, the Department reque ste d comments from the communities regarding this EAS air carrier

- selection case. In response, we received letters from the Grand County Council, representing the community of Moab, and the Uintah County Commission, representing the community of Vernal.

3 SkyWest als o filed notice s to terminate service at Crescent City, California, and Pueblo, Colorado, and

Order 2014

- 11

- 18 prohibited the airline from terminating service at those communities as well. We will address Crescent City’s and Pueblo’s EAS in a separate Orde r.- 3

-

Moab supports the proposal put forth by Great Lakes because of its service to DEN and its

use of 30

- passenger, pressurized, twin

- engine EMB

- 120 aircraft. The community also cited that Great Lakes has existing interline agreements with several larger airlines that will enable passengers to connect to the national air transportation sys tem with relative

ease.

Vernal also supported Great Lakes’ proposal. The community stat es that Boutique Air was not a suitable option and, therefore, Great Lakes was se lected by default. The community does, however, have serious concerns about Great Lak es and its ability to provide reliab le

air service based on its experience with the airline

. The community states, “In the past, Great Lakes provided very poor service to this community...flights were often unexpectedly cancelled or late. It’s very hard to increase enplanements when passengers cannot be assured that their flight will take off or that they will get home on a return flight.” The Unitah County Commission also added, “We are more than willing to welcome Great Lakes back, but only after some serious discussions about our needs, followed by assurances on their part of a willingness to provide better service.”

Dec ision After carefully reviewing each air carrier’s proposal and taking into account community feedback, the Department has decided to select Great Lakes to provide EAS at Moab and

Vernal for a two

- year term. Great Lakes has the suppo rt of Moab and the qualified support

of Vernal

, which is a key selection criterion

. We also find the service and subsidy proposed to be reasonable. As compared to Boutique Air, Great Lakes requires less subsidy at each community

– by $465 ,000 at Vernal and $278 ,000 at Moab. Regarding

Redtail , the air carrier does not currently have the requisite economic authority from the

U.S. Department of Transportation’s Air Carrier Fitness Division to operate its proposed service and does not have any community support.

As noted by Vernal’s comments, the Department acknowledge s that Great Lakes ’ past service has not been satisfactory. The Department is aware that Great Lakes suffered serious operational problems over the past two years. Nonetheless

, one the EAS program’s r esponsibi lit ies is to ensure reliable air service to all EAS communities. In that regard, t he Department is reminding Great Lakes tha t poor service could cause a drop in passenger usage at the airports the carrier serve s , which could potentially jeopardize a

commu nity’s future eligibility in the EAS program. T he Department expects that Great

Lakes will to use this selection as an opportunity to demonstrate , definitively, to the

communities , as well as the Department, that it is committed to providing consistent,

r eliable air service

.

The Department shall make this selection contingent upon its receiving properly executed

certifications from Great Lakes that it is in compliance with the Department’s regulations- 4

-

regarding drug

- free workplaces and nondiscrimination, as well as the regulations concerning lobbying activities. 4

Service Transition We expect SkyWest to maintain its current service levels at the subsidy rates described in

Order 2014

- 2

- 18, until Great Lakes begins full EAS at both communities, which, at thi s time, is expected to begin in May 2015

.

We expect SkyWest and Great Lakes to work together to make a smooth transition at both communities. In that regard, before SkyWest suspends its service, we expect it to notify all passengers holding reservations for travel after the suspension date, to assist those passengers in making alternate air transportation arrangements, or to provide a refund of the ticket price, without penalty, if requested.

Carrier Fitness

49 U.S.C. §§ 41737(b) and 41738 require that the Department find an air carrier fit, willing, and able to provide reliable service before the Department may subsidize it to provide EAS

. Great Lakes is subject to the Department’s continuing fitness requirements,

and no information has come to o ur attention that would cause us to question the air

carrier’s fitness at this time. The Department has contacted the Federal Aviation Administration, and it has raised no concerns that would negatively affect our fitness

findin gs. The Department therefo re conclude s that Great Lakes is reliable and fit to conduct the operations proposed here.

This Order is issued under authority delegated in 49 CFR Part 1

. 25a(b)

.

ACCORDINGLY,

1. The Department select s Great Lakes Aviation, Ltd. to provide Essential Air S ervice at Moab and Vernal, Utah

, and establish es the annual subsidy rate s as described in Appendix C ;

2

. The Department direct s Great Lakes Aviation, Ltd. 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 d ocumentation shall be retained for seven years from the service date of this Order 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 ca rrier s may forfeit their compensation for any claim that is not supported under the terms of this Order ;

3

. The Department f i nd s that Great Lakes Aviation, Ltd. is fit, willing and able to operate

as a commuter air carrie r
, and capable of providing reliable Essential Air S ervice at Moab and Vernal, Utah ;

4 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- 5

-

4. We require SkyWest Airlines, operating as Delta Connection, to maintain its current service at Moab and Vernal, Utah

, as described in Order 2015

- 3

- 3, and any subsequent Orders extending its service obligations, until Great Lakes Aviation, Ltd. begins service at each community ;

5

. Th ese docket s will remain open pending further Department action ; and

6

. The Department will serve a copy of this O rder on the mayors of Moab and Vernal, Utah, the Unitah County Commission, the airport managers at Canyonlands Field (Moab), Vernal Regional Airport, Arrow West Aviation, Inc. d/b/a Redtail Aviation, Boutique Air, Great Lakes Aviation, Ltd., and SkyWest Airlines, operating as Delta Connection

.

B y:

BRANDON M. BELFORD Deputy Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available at www.regulations.govAppendix A



## AREA MAP

Maps generated by the Great Circle Mapper

- copyright © Karl L. Swartz

.Appendix B Page 1 of 2Appendix B Page 2 of 2Appendix C Page 1 of 2

Great Lakes Aviation, L td.

Essential Air Service to be provided at Moab, Utah

DOT

- OST

- 1997

- 2827

Annual Subsidy : $2,245,247

Contract Term : May 1, 2015, through April 30, 2017

Hub : Denver International Airport (DEN )

Scheduled Service : 12 non stop round trips per week to DEN

Aircraft : 30

- passenger EMB

- 120 Rate per Eligible Flight : $1,836 1
Weekly Ceiling: $44,064 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, suc h 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 this rate, it must first notify the Office of Aviation Analysis in writing and receive written approval fr om 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 exte nt 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 fo r under this Order, then, at the end of the period for which the Department does make payments in the stipulated service levels, the carrier may cease to provide service to that specific location without regards to any requirement for notice of such cessat ion. Those adjustments in the levels of subsidy and/or service that are mutually agreed to in writing by the Department and carrier do not constitute a total or partial reduction or cessation of payment.

Subsidy contract are subject to, and incorporate b y 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 pe rformance under this Order beyond September 30, 2015

. The Government’s obligation for performance under this Order beyond September 30, 2015 , is subject to the availability of funds from which payment for

services can be made. No legal liability on the p art of the Government for any payment may arise for performance under this order beyond September 30, 2015 , until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond September 30, 2 015 , 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 31; August claims must be submitted by November 30, and so on.

1 Annual compensation of $2,245,247 divided by 1,223 annual departures (24 weekly departures x 52 weeks x 98 percent completion).

2 24 arrivals and depart ures per week multiplied by $1,836 per flight.Appendix C Page 2 of 2

Great Lakes Aviation, L td. Essential Air Service to be provided at Vernal, Utah

DOT

- OST

- 1997

- 2706

Annual Subsidy : $2,024,577

Contract Term : May 1, 2015, through April 30, 2017

Hub : Denver International Airport (DEN)

Scheduled Service : 12 nonstop round trips per week to DEN

Aircraft : 30

- passenger EMB

- 120 Rate per Eligible Flight : $ 1,655 1
Weekly Ceiling: $ 39,720 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 th e 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 co mpleted 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

pe riod of this rate, 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 carrie r 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 adju sted 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 complet ely, 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 service levels, the carrier m ay cease to provide service to that specific location without regards 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 carrier do not co nstitute a total or partial reduction or cessation of payment.

Subsidy contract 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 September 30, 2015

. The Government’s obligation for performance under this Order beyond September 30, 2015 , 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 September 30, 2015 , until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond September 30, 2015 , the Department will provide notice in writing to the carrier.

All claims for payment, including any amended claims, must be submitted w ithin 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 31; August claims must be submitted by November 30, and so on.

1 A nnual compensation of $2,024,577 divided by 1,223 annual departures (24 weekly departures x 52 weeks x 98 percent completion).

2 24 arrivals and departur es per week multiplied by $1,655 per flight.