### Order 2012

- 4

- 6

Served: April 4 , 2012



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION



### OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 4 th of April, 2012

Essential Air Service at

GREENVILLE, MISSISSIPPI LAUREL/HATTIESBURG, MISSISSIPPI TUPELO, MISSI SSI PPI, and MUSCLE SHOALS, ALABAM A

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 20 0 8

- 0209

DOCKET DOT

- OST

- 2001

- 10685

DOCKET DOT

- OST

- 2009

- 0305

DOCKET DOT

- OST

- 2000

- 7856

ORDER SETTING FINAL RATES

On July 1 5 , 20 11, Pinnacle Airlines Corporation d/b/a Delta Connection (Delta)

, filed 90

- day notices of intent to suspend their subsid ized service 1 at the four above

- captioned
communities, effective October 1 3, 2011

. 2 By Order 20 11

- 9

- 5

, we requested proposals

and requir ed Delta to continue to maintain service at the communities “consistent with the level we are currently subsidizing. ” See the chart below for that level of service , all

of which was being provided with 34

- seat Saab aircraft, and the attendant subsidy rates.

3

1 The notice was filed by Pinnacle’s two wholly

- owned subsidiaries, Mesaba Aviation, Inc., and Pinnacle Airlines, both doing business as Delta Connection. Delta Air Lines , Inc., proposed to be responsible for the provision of this service itself, rather th an one of its code share partners. Delta indicate d that it would parcel out the EAS responsibilities at separate times to one of its code share partners, including Pinnacle, Atlantic Southeast, SkyWest, Mesaba, or Chautauqua, depending on availability of aircraft and other considerations in order to afford Delta maximum flexibility to meet its obligations.

2 Delta simultaneously filed notice at a number of other communities. This order addresses the past

- period

and prospective rates at only these four com munities.

3 Until Further Notice, i.e., a final rate not subject to retroactive adjustment , but with no firm end date.CarrierSelection End of Annual Intermediate Weekly

Communities Order Contract Subsidy Hub Stops Frequency

Greenville 2010-7-12 9/30/2012 $1,606,662 Memphis 0 14
Laurel/Hattiesburg 2010-5-16 6/30/2012 $1,398,798 Memphis 0 14

Muscle Shoals 2011-1-24 UFN 3 $1,782,928 MEM/ATL 0 14
Tupelo 2010-5-18 5/31/2012 $921,878 Memphis 0 15- 2

-

By Order 2011

- 12

- 25

, we reduced the required level of service to 12 nonstop round trips per week , because Delta had replaced all of its 34

- seat Saab service in favor of larger

, 50

- seat regional jets

. We informally approved Delta’s provision of one

- stop service for

Laurel/ Hattiesburg over Greenville and for Muscle Shoals over Tupelo , which Delta implemented on April 1. We will continue to allow one

- stop service at Muscle Shoal s in view of the significant reduction in subsidy produced by that service

, 4 but will require Delta to revert to nonstop service at Laurel/ Hattiesburg on June 7, 2012

.

We have continued to request proposals for these four communities, most recently by

Order 2012

- 3

- 4, March 6, 2012, with proposals due April 4, 2012. Nevertheless, Delta is entitled to compensation for its forced service until it is replaced . We have reviewed

Delta’s proposals for compensation, and, after meeting with the carrier, have r eached agreement as to the reasonable levels of compensation for each community , both

retroa ctively and going forward

. A ppendix A shows the calculation of all of the rates going forward, as well as the separate subsidy rates for Muscle Sho als and Tupelo w hen

each were served o n a nonstop basis through March 31, 2012.

This order is issued under authority delegated in 49 CFR 1.56a(f).

A CCORDINGLY ,

1. We set the final rates for Delta Air Lines, Inc., for its provision of essential air service

at Greenville, Laurel/Hattiesburg, and Tupelo, Mississippi, and at Muscle Shoals, Alabama, as descri bed in Appendices A and B;

2. These rates are in lieu of, and not in addition to, those set by Order 2010

- 7

- 12,

2010

- 5

- 16, 2011

- 1

- 24, and 2010

- 5

- 18.

3 . We d irect Delta Airlines, 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 the audit and examination by representatives of the Department. Such documentation 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 carrier may forfeit its compensation for any claim that is not supported under the terms of this order;

4 . These Dockets will remain open until further Department action; and

4 Ap p endix A shows that the combined subsidy for Muscle Shoals and Tupelo when each community

receives one

- stops service is $4,517,073 ($1,579, 115 + $2,937,9 5 8), while that amount is $3,217,776 when

Muscle Shoals receives one

- stop service over Tupelo, an annual savings of $1.3 million . There were minimal subsidy savings for one

- stop Laurel/ Hattiesburg

- Greenville

- Memphis service.- 3

-

5 . The Department will serve copies of this O rder on Mesaba Aviation, Inc., Pinnacle Airlines Corporation, and Delta Air Lines, Inc.

By:

Susan 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.govAppendix A

Provision of Essential Air Service at Greenville, Laurel/Hattiesburg, and Tupelo, Mississippi,

and Muscle Shoals, Alabama

Muscle

Muscle Muscle Shoals &

Greenville Hattiesburg Tupelo Shoals 1/ Shoals 2/ Tupelo

Dockets 2008-0209 2001-10685 2009-0305 2000-7856 2000-7856 0305 & 7856

Effective Time 1/1/2012 1/11/2012 1/11/2012 1/1/2012 9/1/2011 4/1/2012

Periods: 3/ UFN UFN 3/31/2012 3/31/2012 10/31/2011 UFN
O&D Passengers 12,871 25,499 21,227 15,512 12,022 29,409

Distance 122 250 88 198 136

Hub MEM MEM MEM ATL MEM MEM
Total Flights 4/ 1,227 1,227 1,227 1,227 1,431 1,227

Seats/AC 50 50 50 50 50 50

Total Seats 61,350 61,350 61,350 61,350 71,550 61,350

Block Time 52 69 45 62 53

BH 1,063 1,411 920 1,268 1,264 1,595 5/

Fare $74 $114 $82 $79 $73

Pax. Revenue $952,454 $2,906,886 $1,740,614 $1,225,448 $877,606 $2,347,896

Other @ 12% $114,294 $348,826 $208,874 $147,054 $105,313 $282,903

Total Revenue $1,066,748 $3,255,712 $1,949,488 $1,372,502 $982,919 $2,630,799

Total Directs @ $2,337.59/bh $2,484,858 $3,298,340 $2,150,583 $2,964,065 $2,954,714 $3,728,457

Total Indirects $1,082,505 $1,442,418 $1,209,991 $1,141,135 $1,201,242 $1,841,614

Total Operating $3,567,363 $4,740,758 $3,360,574 $4,105,200 $4,155,956 $5,570,071

Profit @ 5% $178,368 $237,038 $168,029 $205,260 $207,798 $278,504

Economic Costs $3,745,731 $4,977,796 $3,528,603 $4,310,460 $4,363,754 $5,848,575

Annual Subsidy $2,678,983 $1,722,084 $1,579,115 $2,937,958 $3,380,835 $3,217,776

1/ This proposal reflects service to Atlanta. The rest of the proposals on this Appendix reflect service to Memphis.
2/ This proposal reflects 14 round trips per week. The rest of the proposals on this Appendix reflect 12 round trips per week.
2/ The focus of this appendix is to calculate required subsidy for the various 12 round trip options,
the basis for determining the other options. For detail on the various time periods, refer to Appendix B

3/ UFN indicates until further notice.
3/ 12 round trips x 2 directions x 52 weeks x .98 x 313/312 = 1,227
14 round trips x 2 directions x 52 weeks x .98 x 313/312 = 1,431 4/ Hub station cost for Atlanta at $3.38 per passenger, and $5.56 per seat.
5/ MSL-TUP, 12 round trips per week x 2 directions x 52 weeks x .98 x 313/312 = 1,227 flts.x 33/60 = 675 blk. hrs.
TUP-MEM, 12 round trips per week x 2 directions x 52 weeks x .98 x 313/312 = 1,227 flts. x 45/60 = 920 blk. hrs.Appendix B

- 1

Subsidy Rate Agreement for the Provision of Essential Air Service by

Delta Air Lines, Inc., at Greenville, Mississippi, Docket 2008

- 0209

SERVICE: 14 nonstop round trips to Memphis (MEM) thru December 31, reduced to 12 nonstop round trips on January 1.

AIRCRAFT TYPE: CRJ

- 200, 50 seats

TIMING OF FLIGHTS: Flights must be well

- tim ed and well

- spaced to ensure full compensation.

October 1, 2011 January 1, 2012 December 31, 2011 Until Further Notice

FLIGHTS: 1,431 1 1,227 2

ANNUAL SUBSIDY RATE: $3,125,480 3 $2,678,983

RATE PER FLIGHT: $2,184 4 $2,183 5

WEEKLY CEILING: $61,152 6 $52,392 7

Discussion Delta was selected by Order 2010

- 7

- 12 through September 30, 2011, for 14 nonstop round trips per week to Memphis with Saab 340s for $1,606,662 annual subsidy. The carrier filed notice on July 15, 2011, and was held in by Order 2011

- 9

- 5 to that level of se rvice. Delta thus became eligible for a new rate on October 1, 2011, i.e., at the end of its contract under Order 2010

- 7

- 12.

Order 2011

- 12

- 25 reduced the required level of service to 12 nonstop round trips per week, which Delta began providing on January 1, 2012.

1 14 rou nd trips per week x 2 directions x 52 weeks x 0.98 completion x 313/312 days = 1,431.

2 12 round trips per week x 2 directions x 52 weeks x 0.98 completion x 313/312 days = 1,227.

3 $2,678,983 x 14/12 round trips = $3,125,480.

4 $3,125,480 ÷ 1,431 annual flights.

5 $2,678,983 ÷ 1,227 annual flights.

6 $2,184 x 28 flights per week.

7 $2,183 x 24 flights per week.Appendix B

- 2

Subsidy Rate Agreement for the Provision of Essential Air Service by Delta Air Lines, Inc., at Laurel/Hattiesburg, Mississippi, Docket 2001

- 10685

SERVICE TO: 12 nonstops to Memphis (MEM) 1

AIRCRAFT TYPE: CRJ

- 200, 50 seats

TIMING OF FLIGHTS: Flights must be well

- timed and well

- spaced to ensure full compensation.

January 11, 2012,

Until Further Notice

FLIGHTS: 1,227 2

ANNUAL SUBSIDY RATE: $1,722,084

RATE PER FLIGHT: $1,403 3

WEEKLY CEILING: $33,672 4

Discussion Delta was selected by Order 2010

- 5

- 16 through June 30, 2012, for 14 nonstops to Memphis with Saab 340s for $1,398,798. The carrier filed notice on July 15, 2011, and Order 2011

- 9

- 5 held the

carrier in to that level of serv ice. Delta thus became eligible for a new rate on January 11, 2012, i.e., 180 days after it filed notice. Order 2011

- 12

- 25 reduced the required level of service to 12 nonstop round trips per week, which Delta was providing on January 11, 2012

.

1 One

- stop service over Greenville, Mississippi, allowed, without penalty, from April 1, 2012, to
June 6, 2012.

2 12 round trips per week x 2 directions x 52 weeks x 0.98 completion x 313/312 days = 1,227.

3 $1,722,084 ÷ 1,227 annual flights.

4 $1,403 x 24 flights per week.Appendix B

- 3

Subsidy Rate Agreement for the Provision of Essential Air Service by Delta Air Lines, Inc., at Tupelo, Mississippi, Docket 2009

- 0305

SERVICE: 12 nonstop round trips per week to Memphis (MEM). Upline service to Muscle Shoals begins April 1, 2012.

AIRCRAFT TYPE: CRJ

- 200, 50 seats

TIMING OF FLIGHTS: Flights must be well

- timed and well

- spaced to ensure full compensation.

January 11, 2012, April 1, 2012 March 31, 2012 Until Further Notice

FLIGHTS: 1,227 1 1,227

ANNUAL SUBSIDY RATE: $1,579,115 $1,608,888 2

RATE PER FLIGHT: $1,287 3 $1,311 4

WEEKLY CEILING: $30,888 5 $31,464 6

Discussion Delta was selected by Order 2010

- 5

- 16 through June 30, 2012, for 1 5 nonstops to Memphis with Saab 340s for $1,398,7 98. The carrier filed notice on July 15, 2011, and was held in by

Order 2011

- 9

- 5 to that level of service. Delta is thus eligible for a new rate on January 11, 2012, i.e., 180 days after it filed notice. Order 2011

- 12

- 25 reduced the required level of s ervice to 12 nonstop round trips per week, which Delta was providing on January 11, 2012. Delta began providing upline service to Muscle Shoals on April 1, 2012

1 12 round trips per week x 2 directions x 52 weeks x 0.98 completion x 313/312 days = 1,227.

2 $3,217,776 for MSL and TUP combined, divided by two, equals $1,608,888.

3 $1,579,115 ÷ 1,227 annual flights.

4 $1,608,888 ÷ 1,227 annual flights.

5 $1,287 x 24 flights per week.

6 $1,311 x 24 flights per week.Appendix B

- 4

Subsidy Rate Agreement for the Provision of Essential Air Service by Delta Air Lines, Inc., at Muscle Shoals, Alabama, Docket 2000

- 7856

AIRCRAFT TYPE: CRJ

- 200, 50 seats

INTERMEDIATE STOPS: Non

- stops through March 31, 2012, one

- stop thereafter.

TIMING OF FLIGHTS: Flights must be well

- timed and well

- spaced to ensure full compensation.

9/1/2011 to 1/1/2012 to 4/1/2012

12/31/2011 3/31/2012 UFN

HUBS MEM or ATL Atlanta Memphis

FLIGHTS: 1,431 1 1,227 2 1,227

ANNUAL SUBSIDY RATE: $3,404, 227 3 $2,937,958 $1,608,888 4

RATE PER FLIGHT: 2,379 5 $2,394 6 $1,311 7

WEEKLY CEILING: $66,612 8 $ 57,456 9 $31,464 10

Discussion Delta was selected by Order 2008

- 12

- 17, through January 31, 2011, with Saab 340 aircraft for 14 nonstops and 5 one stops per week to Memphis, for $1,798,928 annual subsidy.

Order 2009

- 4

- 24 approved an alternate service pattern of 14 nonstops per week to Atlanta with Saabs for the same level of subsidy, with the same termination date, i.e., Janua ry 31, 2011.

Order 2011

- 1

- 24 extended the terms of that contract from February 1, 2011, Until Further Notice (UFN), for 14 Nonstops to Atlanta, but provided that Mesaba could revert to the prior service. The carrier filed notice on July 15, 2011, and was held in by Order 2011

- 9

- 5 to that level of service. Delta replaced its Saabs with regional jets on September 1, 2011, thus requiring the setting of a new rate on that date. For the months of November and December Delta switched the hub from Memphis to A tlanta, as Order 2011

- 1

- 24 allowed, but maintained the required 14 nonstops per week. Order 2011

- 12

- 25 reduced the required level of service to 12 nonstop round trips per week, which Delta began providing on January 1, 2012. On April 1, 2012, Delta began providing Muscle Shoals with one

- stop service over Tupelo, which significantly reduced the required subsidy for the two

- city Muscle Shoals

- Tupelo package.

1 14 round trips per week x 2 directions x 52 weeks x 0.98 completion x 313/312 days = 1,431.

2 12 round trips per week x 2 directions x 52 weeks x 0.98 completion x 313/312 days = 1,227.

3 See Appendix A : ($3,380,835 + 14/12 x $2,937,958) ÷ 2 = $3,404,227.

4 $3,217,776 for MSL and TUP combined, d ivided by two.

5 ($3,380,835+$3,427,618)/2÷ 1,431 annual flights.

6 $2,937,958 ÷ 1,227 annual flights.

7 $1,607,957 ÷ 1,227 annual flights.

8 $2,379 x 28 flights per week.

9 $2, 394 x 24 flights per week.

10 $1,310 x 24 flights per week.Appendix B

- 5

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 u nderstands 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 complet ed 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 th e 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 from the Department to be ensured of full compensa tion. 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 peri od 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 adjustme nts 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 by reference, relevan t 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 are not currently available for performance und er this Order beyond September 30, 2012. The Government’s obligation for performance under this Order beyond September 30, 2012, is subject to the availability of appropriated 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, 2012, until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30, 2012,

the De partment will provide notice in writing to the carrier.

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

under this Order.