Order: 2014

- 2

- 22 Served: February 27, 2014



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 27 th day of February, 20 1 4

Essential Air Service at

CODY, WYOMING DOCKET DOT

- OST

- 2011

- 0121

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



### ORDER SELECTING AIR CARRIER S

Summary By th is O rder, the Department is selecting SkyWest Airlines (SkyWest or SkyWest/Delta

Connection ) and United Airlines , Inc. (United or SkyWest/United Express) to provide Essential Air Service (EAS) at Cody, Wyoming, using 50

- passenger Canadair Re gional Jet CRJ200 (CRJ200) aircraft f or a two

- year term beginning on the date of this contract’s issuance and ending through the 24 th month thereafte r for a combined annual subsidy of $1,380,779.

SkyWest / Delta Connection will provide part of Cody’s EAS with one daily nonstop round trip (seven a week) to Salt Lake City International Airport (Salt Lake City) for an annual subsidy of $617,462.

SkyWest/United Express will provide the remainder of Cody’s EAS for the same two

- year

term a s SkyWest/Delta Connection. United, which plans to contract the service with SkyWest , will provide one daily nonstop round trip to Denver International Airport (Denver) for an annual subsidy of $763,317 from October 1 through May 31

. 1 From

1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds.- 2

-

June 1 through September 30, the Department is selecting United to operate at least one daily nonstop round trip unsubsidized.

Background

On June 27, 2011, SkyWest/Delta Connection filed a 90

- day notice of its intent to terminate service to Salt Lake City, effective September 25, 2011. At the time of the filing, SkyWest/Delta Connection provided two daily nonstop round trips (14 a week) to Salt Lake City on 30

- passenger EMB

- 120 Bra silia (Brasilia) aircraft. In addition, SkyWest/United Express provided one r ound trip a day to Denver with CRJ200 aircraft

year

- round and one additional round trip a day during the four

- month peak season using a

30

- passenger Brasilia.

In response to SkyWest/Delta Connection’s filing, we issued Order 2011

- 8

- 26 (August 30 2011), prohibiting the suspension and requesting proposals from air carriers interested in providing EAS at Cody. Because SkyWest/United Express operated two daily round trips to Denver four months of the year and one daily round trip to Denver the other eight months, we requested proposals for only one round trip a day for eight months of the year. In response to that Order, we received a proposal from the incumbent, SkyWest/Delta Conne ction.

By Order 2011

- 11

- 24 (November 18, 2011), the Department selected SkyWest/Delta Connection to provide EAS at Cody from October 4, 2011, through May 31, 2012, and

from October 4, 2012, through May 31, 2013, for an annual subsidy of $352,058. Under

t he EAS subsidy contract, SkyWest/Delta Connection provided Cody one daily round trip (seven a week) to Salt Lake City using CRJ200 aircraft; the service to Denver was provided subsidy

- free.

By Order 2013

- 4

- 18, (April 25, 2013), the Department re

- selected SkyWest/Delta Connection to provide EAS at Cody to Salt Lake City using CRJ200 aircraft from

October 1

, 2013, through May 31, 2014, and October 1, 2014, through May 31, 2015, for an annual subsidy of $627,696.

On August 1, 2013, SkyWest/United Express fil ed a 90

- day notice of its intent to terminate its subsidy

- free service to Denver, effective November 1, 2013. This would leave Cody with only one daily round trip (seven a week) to Salt Lake City for eight months of the year. Since Cody is guaranteed a m inimum of 12 round trips a week to a large

- or medium

- hub, the Department decided to solicit a new round of proposals.

Rather than solicit proposals for the difference in service, we felt it was more convenient for the community if we consolidated all o f its EAS into one contract. Therefore, we

issued Order 2013

- 10

- 15 (October 29, 2013) soliciting proposals from air carriers to provide all of Cody’ s subsidized service. In response to that Order, we received proposals from SkyWest and United.

The airli nes’ complete proposals and the community’s comments may be accessed online

at www.regulations.gov by entering DOT

- OST

- 2011

- 0121 in the search block.- 3

-

Proposal of SkyWest Airlines SkyWest submitted a proposal for one daily n onstop round trip (seven a week) to Salt Lake City on a year

- round basis usi ng CRJ200 aircraft for an annual subsidy of $617,462

. It plans to operate the service as Delta Connection.

Proposal of United Airlines

United submitted a proposal for one subsidized daily nonstop round trip (seven a week) to

Denver from October 1 through May 31 for an annual subsidy of $763,317 . From June 1 through September 30, United will operate at least one daily nonstop round trip,

unsubsi dized. It plans to operate the service contracted with SkyWest as United Express, using CRJ200 aircraft.

Community Comments

On November 27

, 2013, the Department solicited comments from the community regarding this air carrier selection case. We receive d letters from several entities in Cody, including the Honorable Tina Brown, Mayor of Cody, as well as Robert W h isonant

, Chairman of the Yellowstone Regional Airport Joint Powers Board

. Both expresse d support for the proposals put forth by SkyWest and United

.

Decision Since SkyWes t and United were the only air carriers to submit proposals for Cody’s EAS

case the decision to re

- select them is c lear and these selections are subject to the provisions

con tained in Appendix C , pages 1 and 2

. The co mmunity fully supports both air carriers’ proposals and w e find the service and subsidy levels to be reasonable.

By selecting United’s proposal, we are relying on the carrier to provide unsubsidized service from Cody to Denver for four months of the year, from June 1 through September 30 to fulfill Cody’s EAS requirement.

We shall make this selection of SkyWest and United at Cody contingent upon the Department’s receiving properly executed certifications from the air carrier s that they are in compliance w ith the Department’s regu lations regarding drug

- free workplaces and nondiscrimination, as well as the regulations concerning lobbying activities. 2

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 EAS

. SkyWest and United

are subject to the Department’s continuing fitness requirements, and no information has

come to our attention tha t would cause us to questions either air 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 both SkyWest a nd U nited are reliable and fit to conduct the operations proposed here.

2 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- 4

-

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

. 25a(b)

.

ACCORDINGLY,

1

. We re

- select SkyWest Airlines to provide Essential Air S ervice from Cody, Wyoming

to Salt Lake City, Utah

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

2

. We select United Airlines , Inc. to provide Essential Air Service from Cody, Wyoming to Denver, Colorado, and establish the annual subsidy rate as described in Appendix C;

3. We rely on United Airlines, Inc. to provide Essential Air Service from Cody, Wyoming to Denver, Colorado on an unsubsidized basis from June 1 through September 30 of each year this Order is in effect;

4

. We direct SkyWest Airlines and United 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 its 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 s may forfeit its compensation for any claim that is not supported under the terms of this Order ;

5 . We f i nd that SkyWest Airlines and United Airlines, Inc. are fit, willing and able to

operate as a c ertificated air carrie r s
, and capable of providing reliable Essential Air S ervice

at Cody ;

5

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

6

. The Department will serve a copy of this O rder on the Mayor of Cody, the airport manager at Yellowstone Regional Airport, SkyWest Airlines, United Airlines, Inc., and the Wyoming Department of Transportation

.

B y:

SUSAN L. KURLAND Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is ava ilable at http://www.regulations.govAppendix A



## AREA MAP

Maps generated by the Great Circle Mapper

- copyright © Karl L. Swartz

.Appendix B Page 1 of 2



### SkyWes t Proposal for EAS at CodyAppendix B Page 2 of 2



### United Airlines Proposal for EAS at CodyAppendix C Page 1 of 2

SkyWest Airlines

Essential Air Service to be Provided at Cody, Wyoming

Effective Period : February 27

, 2014

, through February 29

, 2016

Scheduled Service : Seven (7) weekly nonstop round trips to Salt Lake City

Aircraft : 50

- passenger CRJ200 Rate per Eligible Flight: $ 866 1
Weekly Ceiling : $ 12,124 2

Note: The carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance

with t he 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

schedul ed 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, i f 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 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. I n 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 unilateral ly, 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 stipulate d service levels, the carrier may 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 D epartment and carrier do not constitute 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 March 18, 2014

. The Government’s obligation for performance under this order beyond March 18, 2014

, 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 u nder this order beyond March 18, 2014 , until funds are made available to the Department for performance. If sufficient funds are not made

available for performance beyond March 18, 2014 , the Department will provide notice in writing to the carrier.

All claims for payment, including any amen ded 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 A nnual compensation of $617,462 divide d by t he 713 annual departures (14 weekly departures x 52 weeks x 98 percent completion)

. 2 14 arrivals and depart ures per week multiplied by $ 866 per flight

.Appendix C Page 2 of 2

U nited Airlines, Inc.

Essential Air Service to be Provided at Cody, Wyoming

Effective Period : February 27, 2014, through May 31, 2014; O ctober 1, 2014, through May 31, 2015, and October 1, 2015, through February 29, 2016

Scheduled Service : Seven (7) weekl y nonstop round trips to Denver

Aircraft : 50

- passenger CRJ200 Rate per Eligible Flight: $ 1,57 1 3
Weekly Ceiling : $ 21,994 4

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 t he 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 Or der 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 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. I n determining whether subsidy payment for a dev iating 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 s ervice levels, the carrier may 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 Depa rtment and carrier do not constitute 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 March 18, 2014

. The Government’s obligation for performance under this order be yond March 18, 2014 , 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 March 18, 2014 , until funds are ma de available to the Department for performance. If sufficient funds are not made

available f or performance beyond March 18, 2014 , 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.

3 Annual compensation of $763,317 divided by the 486 annual departures ( 2 flights a day x 243 days x 100 percent completion)

. 4 14 arrivals and depart ures per week multiplied by $1,571 per flight

.