### Order: 2012

- 5

- 17

Served: May 22, 2012



## UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 22 nd 

### day of May , 20 1 2

Essential Air Service at

MUSCLE SHOALS, ALABAMA GREENVILLE, MISSISSIPPI

LAUREL/HATTIESBURG , MISSISSIPPI TUPELO, MISSISSIPPI

GREENBRIER/WHITE SULPHUR SPRINGS, WEST VIRGINIA DOCKET DOT

- OST

- 2000

- 7856

DOCKET DOT

- OST

- 200 8

- 0209

DOCKET DOT

- OST

- 2001

- 10685

DOCKET DOT

- OST

- 2009

- 0305

DOCKET DOT

- OST

- 2003

- 15553



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



## ORDER SELECTING CARRIER

Summary By th is O rder, the Department is selecting Silver Airways

, formerly Gulfstream International Airways (Silver)

, to provide Essential Air Service (EAS) at Muscle Shoals

, Alabama, Greenville, Laurel/Hattiesburg

, and Tupelo, Mississippi , and Greenbrier/White Sulphur Springs, West Virginia (Lewisburg)

, using 34

- passeng er Saab 340 aircraft

, for a

combined annual subsidy of $16,098,538

. 1 

### Muscle Shoals and Laurel/Hattiesburg will each receive 12 weekly nonstop round trips to Atlanta

- Hartsfield International Airport (Atlanta) while Greenville and Tupelo will receive 18 wee kly round trips over a

Greenville

- Tupelo

- Atlanta routing. At Lewisburg, Silver will provide six weekly nonstop

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

funds.

### - 2

-

round trips to Atlanta and six to Washington Dulles International Airport (Washington) during the six

- month off peak season and seven per week during the peak season

.

Background By a series of Orders, the Department selected Mesaba Aviation, Inc. (Mesaba) , operating as Northwest Airlink (now Delta Connection)

, to provide subsidized EAS a t Muscle Shoals, Greenville, Laurel/Hattiesburg and Tupelo. 2



### On July 15, 2011, Mesaba filed notices to terminat e their subsidized service at twenty

- four

EA S communities, including these four

. In response, w e issued Order 2011

- 9

- 5, September 13, 2011, holding the carrier’s service in place and requesting proposals for

these f our communities. W e received proposals from Multi

- Aero Inc. d/b/a Air Choice One (Air Choice One) and SeaPort Airlines, Inc. (SeaPort). Both carriers proposed service with single

- engine aircraft, whereas all of the communities are entitled by statute to service

with twin

- engine aircraft. Since all four communities refused to waive their right to twin

engine aircraft, b y Order 2011

- 11

- 29, November 23, 2011, we requested a second ro und of proposals for the four communities. In response to that Order, we received proposals from Air Choice One, Citizens Capital Corp. d/b/a Blue Sky Airlines (Blue Sky), SeaPort, and Sun Air Express, LLC. (Sun Air). Air Choice One and SeaPort once agai n proposed service with single

- engine aircraft. Blue Sky and Sun Air proposed service with larger

aircraft but did not then (and still do not) have the authority from either the Federal Aviation Administration or the Department to operate such service. T herefore, we issued

Order 2012

- 3

- 4, March 6, 2012, requesting a third round of EAS proposals. In respo nse to that Order, we received proposal s from Air Choi ce One and Silver

.

With regard to Lewisburg, Atlantic Southeast Airlines, Inc. an d Pinnacle Airlines, Inc.,

both operating as Delta Connection, were providing subsidy

- free service from Lewisburg

to Atlanta and New Y ork LaGuardia Airport (New York ). However, o n December 16, 2011, Delta filed a 90

- day notice to terminate all of its servi ce at Lewisburg

effective March 12, 2012. In response to Delta’s filing, we issued Order 2012

- 2

- 7, February 9, 2012, prohibiting Delta from terminating service and requesting proposal s. In response, we received a proposal from Silver that was contingent upon i t also being selected at the four other communities at issue here, i.e., the proposals was a five

- city, inseparable package

.

Each carrier’s complete proposal and community comments may be accessed online at http ://www.regulations.gov/ by entering each community’s Docket number in the search

block: M uscle Shoals, DOT

- OST

- 2000

- 7856; Greenville, DOT

- OST

- 2008

- 0209;

Laurel/Hatt iesburg, DOT

- OST

- 20 01

- 10685; Tupelo, DOT

- OST

- 2009

- 0305 ; and Lewisburg, DOT

- OST

- 2003

- 15553

. In addition, the EAS staff negotiated several other service/subsidy options with both appl icants, and they are summarized below as well as their original proposals.

2 See Orders 2010

- 7

- 12, 2010

- 5

- 16, 2011

- 1

- 24 and 2010

- 5

- 18.

### - 3

-

Proposal of Air Choice One

Air Choice One initially submitted a proposal with six opti ons, all proposing to serve Memphis International Airport (Memphis) , with the exception of Opt ion 5, which proposes

to serve Muscle Shoals from Atlanta. After subsequent negotiations with the Department, Air Choice One submitted an additional four options , listed here as Options 7

- 10. The charts below summarize the main components of each option

.

Air Choice One

- Option 1

Community Annual Subsidy (2

- year term Annual Subsidy (4

- year term) Aircraft Seats Engines Stops Weekly Frequency

Muscle Shoals $1,478,752 $1,463,964 Navajo 8 2 0 24

Greenville $1,478,752 $1,463,964 Navajo 8 2 0 24 Laurel/Hattiesburg $1,478,752 $1,463,964 Navajo 8 2 0 24 Tupelo $1,478,752 $1,463,964 Navajo 8 2 0 24



### Air Choice One

– Option 2

Community Annual Subsidy (2

- year term) Annual Subsidy (4

- year term) Aircraft Seats Engines Stops Weekly Frequency

Muscle Shoals $1,641,994 $1,625,574 C aravan 9 1 0 24

Greenville $1,641,994 $1,625,574 C aravan 9 1 0 24 Laurel/Hattiesburg $1,641,994 $1,625,574 C aravan 9 1 0 24 Tupelo $1,641,994 $1,625,574 C aravan 9 1 0 24



### Air Choice One

– Option 3, year one

Community Annual Subsidy Aircraft Engines Seats Stops Weekly Frequency

Greenville $2,457,368 Jetstream 2 8 0 24 Laurel/Hattiesburg $2,457,368 Jetstream 2 8 0 24



### Air Choice One

– Option 3, years 2

- 4

Community Annual Subsidy (year two) Annual Subsidy (years 3

- 4) Aircraft Engines Seats Stops Weekly Frequency

Greenville $2,125,605 $2,104,349 Jetstream 2 18 0 18 Laurel/Hattiesburg $2,125,605 $2,104,349 Jetstream 2 18 0 18

### - 4

-

Air Choic e One

– Option 4, year one

Community Annual Subsidy Aircraft Engines Seats Stops Weekly Frequency

Muscle

Shoals $2,447,733 Jetstream 2 8 0 2 4

Tupelo $2,447,733 Jetstream 2 8 0 2 4



### Air Choice One

– Option 4, years 2

- 4

Community Annual Subsidy (year 2) Annual Subsidy (years 3

- 4) Aircraft Engines Seats Stops Weekly Frequency

Muscle

Shoals $2,102,143 $2,081,121 Jetstream 2 18 0 18

Tupelo $2,102,143 $2,081,121 Jetstream 2 18 0 18



### Air Choice One

– Option 5, year one

Community Annual Subsidy Aircraft Engines Seats Stops Weekly Frequency

Muscle

Shoals $2,510,377 Jetstream 2 8 0 2 4

Tupelo $2,510,377 Jetstream 2 8 0 2 4



### Air Choice One

– Option 5, years 2

- 4

Community Annual Subsidy (year 2) Annual Subsidy (years 3

- 4) Aircraft Engines Seats Stops Weekly Frequency

Muscle

Shoals $2,113,865 $2,092,725 Jetstream 2 18 0 18

Tupelo $2,113,865 $2,092,725 Jetstream 2 18 0 18



### Air Choice One

– Option 6, year one

Community Annual Subsidy Aircraft Engines Seats Stops Weekly Frequency

Muscle

Shoals $1,740,184 Navajo 2 9 0 2 4

Tupelo $1,740,184 Navajo 2 9 0 2 4



### Air Choice One

– Option 6, years 2

- 4

C ommunity Annual Subsidy (year 2) Annual Subsidy (years 3

- 4) Aircraft Engines Seats Stops Weekly Frequency

Muscle

Shoals $2,051,058 $2,030,547 Jetstream 2 18 0 18

Tupelo $2,051,058 $2,030,547 Jetstream 2 18 0 18

### - 5

-

Air Choice One

– Option 7, 2

- year term

Community Annual Subsidy Aircraft Engines Seats Stops Weekly Frequency

Greenville $1,789,740 Navajo or Caravan 2/Navajo

1/Caravan 8/ Navajo

9 / Caravan 0 24

Tupelo $1,789,740 Navajo or Caravan 1 for

Caravan 2 for Navajo 8 for Navajo

9 /Caravan 0 24



### Air Choice One

– Option 8, 2

- year term

Community Annual Subsidy Aircraft Engines Seats Stops Weekly Frequency

Muscle

Shoals $2,090,878 Navajo or

C aravan 2/ Navajo

1/ C aravan 8/Navajo

9/Caravan 0 24

Greenville $2,090,878 Navajo or

Caravan 2/ Navajo

1/ C aravan 8/Navajo

9/Caravan 0 24



### Air Choice One

– Option 9, 2

- year term

Community Annual Subsidy Aircraft Engines Seats Stops Weekly Frequency

Muscle

Shoals $1,881,505 Navajo or

Caravan 2/Navajo

1/Caravan 8/Navajo

9/Caravan 0 24

Tupelo $1,881,505 Navajo or Caravan 2 /Navajo

1/Caravan 8/Navajo

9/Caravan 0 24



### Air Choice One

– Option 10, 2

- year term

Community Annual Subsidy Aircraft Engines Seats Stops Weekly Frequency

Muscle

Shoals $1,920,707 Navajo or

C aravan 2/ Navajo

1/ C aravan 8/Navajo

9 /Caravan 0 24

Greenville $1,920,707 Navajo or

C aravan 2/ Navajo

1/ C aravan 8/Navajo

9 /Caravan 0 24

Tupelo $1,920,707 Navajo or

C aravan 2/ Navajo

1 /Caravan 8/Navajo

9 /Caravan 0 24

### - 6

-

Proposal of Silver

Silver submitted a five

- city, inseparable, all

- or nothing package proposal with two service/subsidy options. After subsequent negotiations with the Department, Silver submitted an additional two options, listed here as Options 3 & 4. The charts below summarize the main components of each option.

Silver

- Option 1

Community Annual Subsidy Hub Aircraft Stops Weekly Frequency

Muscle Shoals $2,603,365 Atlanta Saab 340 0 12

Greenville $2,544,637 Atlanta Saab 340 1 18 Laurel/Hattiesburg $2,965,667 Atlanta Saab 340 0 12 Tupelo $4,500,159 Atlanta Saab 340 0 18 Lewisburg (peak and

off

- peak) $ 4,144,149 Atlanta Saab 340 0 14 (peak) 12 (off

- peak)



### Silver

- Option 2

Community Annual Subsidy Hub Aircraft Stops Weekly Frequency

Muscle Shoals $2,652,313 Atlanta Saab 340 0 12

Greenville $1,765,087 Atlanta Saab 340 1 12 Laurel/Hattiesburg $3,041,015 Atlanta Saab 340 0 12 Tupelo $3,073,535 Atlanta Saab 340 0 12 Lewisburg (peak

and off

- peak $4,241,523 Atlanta Saab 340 0 14 (peak) 12 (off

- peak)



### Silver

- Option 3

Community Annual Subsidy Hub Aircraft Stops Weekly Frequency

Muscle Shoals $2,603,365 Atlanta Saab 340 0 12

Greenville $2,544,637 Atlanta Saab 340 1 18 Laurel/Hattiesburg $2,965,667 Atlanta Saab 340 0 12 Tupelo $4,500,159 Atlanta Saab 340 0 18 Lewisburg (peak/off

peak) $3,484,710 A tlanta/ Washington Saab 340 0 7 to each/6 to

each



### Silver

- Option 4

Community Annual Subsidy Hub Aircraft Stops Weekly Frequency

Muscle Shoals $2,652,313 Atlanta Saab 340 0 12

Greenville $1,765,087 Atlanta Saab 340 1 12 Laurel/Hattiesburg $3,041,015 Atlanta Saab 340 0 12 Tupelo $3,073,535 Atlanta Saab 340 0 12 Lewisburg (peak/off

peak) $ 3,581,689 A tlanta/ Washington Saab 340 0 7 to each/6 to

each

### - 7

-

Community Comments

T he communities of Muscle Shoals, Greenville, Laurel/Hattiesburg, and Tupelo worked together to draft a detailed letter unanimou sly supporting Silver’s Option 1 (which we subsequently renegotiated to the rate level listed as Option 3) . Specifically, four primary

factors influenced the communities ’ decision to support Silver’s proposal over Air Choice

One : 1) service to Atlanta vs. service to Mem phis ; 2) use of 34

- passenger Saab 340 aircraft

vs. Air Choice One’s smaller 9

- seat aircraft; 3) Silver’s complete set of interline and baggage agreements with a ll major airlines compared to Air Choice One’s lack of interline agreements with major airlines at Memphis and beyond; and 4) Silver’s enhanced interline agreement with Delta, the largest airline at Atlanta. Atlanta is not only the communities

pr eferred hub airport but also provides more connecting options to the national air transportation system t han Air Choic e One’s service to Memphis. Silver’s interline and baggage agreements with all major airlines, including an enhanced interline agr eement with Delta, will enable the communities to reach their final destination with ease

.

The City of Lewisbur g, which received no competing bids, also fully supported Silver’s proposal. Mr. John Manchester, Mayor of Lewisburg, says that Silver’s proposal “more than adequately addresses our community’s air service needs.” We note that Silver originally proposed service only to Atlanta but as a result of negotiations between the Department and the airline, Silver added two additional options that include service to Washington and Atlanta. The Department received comments from the community supporting service to b oth hubs.

Decision

We have dec ided to select Silver’s Option 3 at all five communities. The communities support Silver’s proposal and Silver is a well

- established airline in the EAS program.
Nonetheless, while we are very concerned about the significant ly higher subsidy required by Silver compared to Air Choice One, we find that the statu tory carrier

- selection crit eria compel us to select Silver. In selecting a carrier to provide EAS, we are required to base

our decision on the four carrier

- selection cr it eria contain ed in 49 U.S.C. §41733(c) , in addition to its proposed subsidy level : 1) the demonstrated reliability in providing scheduled air service; 2) the contractual and marketing arrangements with a larger carrier to ensure service beyond a hub airpo rt; 3) interline agreements with a larger carrier; and 4) support by the community’s elected officials for the applicants pro posal. Silver’s proposal meets, and has a comparative advantage over Air Choice O ne in all four of these statutory
criteria.

First, Silver , under it s previous name Gulfstream International Airways, has been providing sch eduled air service for nearly twenty years. Air Choice One has been in operation for even longer, but has only provided sc heduled air service continuously since

2008

. Silver is purs u ing a code share with United that would provide Lewisburg

passengers with seamless connections beyond the Washington Dulles hub to the national air transp ortation system

. Moreover, Silver has an interline agreement with Delta and in a letter to the Department Delta states , “If Silver is selected, Delta would be willing to work

### - 8

-

with Silver on developing an (enhanced) interline and t i cketin g arrangement, participation in our SkyMiles frequent flyer program, and booking capability on de lta.com.” And finally, Silver has unani mous community support, the fourth carrier

- selection criterion.

In addition, we note that at two communities, Laurel/Hattiesburg and Tupelo, Air Choice One’s proposal does not offer sufficient capacity to accommodate current passen ger levels. For the year ended June 30, 2011, Laurel/Hattiesburg generated an average of 47 enplanements a day while Tupelo generated an average of 42 e npla nements a day. Air

Choice One proposes using 8 or 9

- seat aircraft and offer s essentially four round trips a day

, which would at most provide 36 seats, well below each community’s current passenger

levels.

Finally, as to which of Silver’s four options to choose, we select Option 3 because it provides sufficient capacity to meet the communities’ passenger levels

. Silver’s Options 3 and 4 are identical to its Options 1 and 2 except that Lewisburg would receive one round trip a day to Atlanta and Washing ton. Operationally, the split hub will allow Silver to flow

aircraft and crew from its Washington operations to its Atla nta system, which is much

closer to it s maintenance base. The split hub options also require significantly less subsidy

than the Atlanta

- only options. As between Silver’s Option 3 and 4, Option 3 is clearly preferable . Its Option 4 would serve Greenville and Tupelo with 12 weekly round trips

over a Greenville

- Tupelo

- Atlanta routing , i.e., 68 seats in each direction in total for both

communities. However , during the year ended June 30, 2011, Tupelo generated 42 enplanements a day and Greenville, 24, a total of 66 enplanements a day. Thus, as a practical matter, that option does not provide sufficient capacity for th ose two communities, whereas Silver’s Option 3 would provide three round trips a day, or 102 seats a day in each direction.

We shall make this selection of Silver contingent upon the Department’s receiving properly executed certifications from the carrier that it is in compliance with the Department’s regulations regarding drug

- free workplaces and nondiscrimination, as well as the regulations concerning lobbying activities. 3



### S er vice Transition We expect Silver , Pinnacle, Mesaba, and Delta to work together to make a smooth transition at these communities. In that regard, before Pinnacle , Mesaba, and Delta suspend their s ervice they must notif y any passengers holding reservations for trav el after the suspension date, assist those passengers in making alternate air transpor t ation

arrangements, or provide a refun d of the ticket price, without penalty, if requested.

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 E AS

. Silver is subject to the Department’s continuing fitness requirements, and no information has come to our

attention tha t would cause us to questio n the carrier ’s fitness at this time. We have

3 The certifications are available on the Web at http://ostpxweb.dot.gov/aviation/index.html

.

### - 9

-

contacted the Federal Aviation Administration, and it has raised no concerns that would negatively affect our fitness finding s . We the refore conclude that Silver is a reliable air

carrier and remain s fit to c onduct the operations proposed here.

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

ACCORDINGLY,

1. We select Silver to provide Essential Air S ervice at Muscle Shoals, Alabama, and Greenville, Laurel/Hattiesburg, and Tupelo, Mississippi , and Lewisburg, West Virginia,

and establish an annual subsidy rate as described in Appendix C;

2

. We direct Silver to retain all books, records, and other source and summary documentation to support claims for payment, and to preserve and ma intain 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 may forfeit its compensation for any claim that is not supported under the terms of this Order ;

3 . We f i nd that Silver continue to be fit, willing and able to operate as a commuter carrie r
, and capable of providing reliable Essential Air S ervice at Muscle Shoals, Alabama, Greenville, Laurel/Hattiesburg, and Tupelo, Mississippi , and Lewisburg, West Virginia ;

### - 10

-

4

. These d ocket s will remain open pending further Department action ; and

5 . We will serve copies of this Order on the Mayor s and Airport Managers of Muscle

Shoals

, Alabama, Greenville, Laurel/Hattiesburg, and Tupelo, Mississippi, Lewisburg, West Virginia, Multi

- Aero Inc. d/b/a Air Choice One, Sil ver Airways, and Delta Air Lines

.

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.gov

### ` Appendix A Page 1 of 2



# AREA MAP

### Appendix A Page 2 of 2



# AREA MAP

### Appendix B

Essential Air Service to be Provided at Greenville, Hattiesburg, Lewisburg, Muscle Shoals and Tupelo

Community Hattiesburg Lewisburg Muscle Shoals Greenville/Tupelo

Docket # 2001

- 10685 2002

- 11378 2000

- 7856 2008

- 0209

(cont.) 2009

- 0305
Completion 98% 98% 98% 98%

3

- Ltr Code PIB LWB MSL GLH/TUP
Aircraft Type Saab 340 Saab 340 Saab 340 Saab 340

Hub ATL ATL/IAD ATL ATL
Weekly Round Trips 1/ 12 13 12 18

Block Hours 2,042 2,159 1,531 4,290

Passengers 20,825 22,591 13,328 35,581

Avg. Fare $91.57 $91.57 $91.57 $91.57

Total Revenue $1,906,945 $2,068,654 $1,220,445 $3,258,128

Crew $720,278 $761,823 $540,208 $1,513,390

Fuel $1,202,008 $1,271,824 $905,970 $2,563,867

Maintenance $1,403,812 $1,484,784 $1,052,859 $2,949,577

Aircraft Ownership $283,680 $366,686 $182,366 $540,478

Total Directs $3,609,778 $3,885,117 $2,681,403 $7,567,312

Distribution $275,478 $298,838 $176,306 $589,133

Promotion $12,000 $12,000 $12,000 $24,000

Station $573,962 $874,041 $663,137 $1,309,183

Overhead $169,365 $218,922 $108,878 $322,681

Total Indirects $1,030,805 $1,403,801 $960,321 $2,244,997

Total Operating $4,640,583 $5,288,918 $3,641,724 $9,812,309

Profit @ 5% $232,029 $264,446 $182,086 $490,615

Economic Cost $4,872,612 $5,553,364 $3,823,810 $10,302,924

Annual Subsidy $2,965,667 $3,484,710 $2,603,365 $7,044,796

1/ Twelve nonstop round trips per week each for Hattiesburg and Muscle Shoals; eighteen one

- stop

round trips

-- GLH

- TUP

- ATL and return

-- for Greenville and Tupelo. At Lewisburg,

Silver proposes a total of twelve nonstop round trips per week in the 26

- week off

- peak and

fourteen nonstop round trips per week in the 26

- week peak period. Half of the ser vice

in each time period would be to Washington (IAD) and half to Atlanta (ATL).

### Appendix C Page 1 of 5

Sil ver Airways

Essential Air Service to be Provided at Muscle Shoals, Alabama

Effective Period : Beginning with full EAS through the end of the 24 th 

### month thereafter

Scheduled Service : 1 2 weekly nonstop round trips to Atlanta

Aircraft : 34

- passenger Saab 340 Rate per Eligible Flight: $ 2,129 1



### Weekly Ceiling for each community : $ 51,096 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 significan t elements of the required service, without pr ior 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 the carrier does not schedule or operate its flights in full conformance with the Order for a significant per iod, it may jeopardize its entire subsidy claim for th e 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. 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 service levels, the carrier may cease to provide service to that specific location without regards 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.

1 Annual compensation of $ 2,603,365 divided by 1,223 annual departures (24 weekly departures x 52 weeks x 98 percent completion)

. 2 24 arrivals and dep artures per week multiplied by $2,129 per flight

.

### Appendix C Page 2 of 5

Silver Airways

Essential Air Service to be Provided at Greenville, Mississippi

Effective Period : Beginning with full EAS through the end of the 24 th 

### month thereafter

Scheduled Service : 1 8 weekly one

- stop round trips to Atlanta

Aircraft : 34

- passenger Saab 340 Rate per Eligible Flight: $ 1,920 1



### Weekly Ceiling for each community : $ 69,120 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 t he 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 the carrier does not schedule or operate its flights i n 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 mus t 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 t hese 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 D epartment 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 reduce s 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 may cease to provide servi ce 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 constitute a total or parti al 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 sh all not operate to controvert the foregoing paragraph.

Funds are not currently available for performance under 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 part of the Government for any payment may arise for performance under this Order beyond September 30, 2012, until funds are made available to the D epartment for performance. If funds are not made available for performance beyond September 30, 2012, the Department will provide notice in writing to the carrier.

All claims for payment must be submitted within 60 days of the last day of service provide d under this Order

.

1 Annual compensation of $7,044,796 divided by two cities = $3,522,398. $3,522,398 divided by 1,835 annual departures (36 weekly departures x 52 weeks x 98 percent completion)

. 2 36 arrivals and departure s per week multiplied by $1,920 per flight

.

### Appendix C Page 3 of 5

Silver Airways

Essential Air Service to be Provided at Laurel/Hattiesburg, Mississippi

Effective Period : Beginning with full EAS through the end of the 24 th 

### month thereafter

Scheduled Service : 1 2 weekly nonstop round trips to Atlanta

Aircraft : 34

- passenger Saab 340 Rate per Eligible Flight: $ 2,42 5 1



### Weekly Ceiling for each community : $ 58,2 00 2

Note: The carrier understands that it may forfeit its compensation for any flights t hat 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 significan t 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 con sidered eligible for subsidy. In addition, if the carrier does not schedule or operate its flights in full conformance with the Order for a significant per iod, it may jeopardize its entire subsidy claim for the period in question. If the carrier contempl ates 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 circ umstances 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 period for which the

d epartment 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 cessation. Those adjustments in the levels of subsidy and/or service th at 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, 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 are not currently available for performance under 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 part of the Government for any payment may aris e 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 Department 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

.

1 Annual compensation of $ 2,965,667 divided by 1,223 annual departures (24 weekly departures x 52 weeks x 98 percent completion)

. 2 24 arrivals and departures per week multiplied by $2,425 per flight

.

### Appendix C Page 4 of 5

Silver Airways

Essential Air Service to be Provided at Tupelo , Mississippi

Effective Period : Beginning with full EAS through the end of the 24 th 

### month thereafter

Scheduled Service : 1 8 weekly nonstop round trips to Atlanta

Aircraft : 34

- passenger Saab 340 Rate per Eligible Flight: $1,920 1



### Weekly Ceiling for each community : $ 69,120 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 significan t
ele ments 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 no t 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 per iod, it may j eopardize 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 receiv e 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 safe ly 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 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 Department 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 are no t currently available for performance under 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 part 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 perf ormance beyond September 30, 2012, the Department 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

.

1 Annual co mpensation of $7,044,796 divided by two cities = $3,522,398.

$3,522,398 divided by 1,835 annual departures (36 weekly departures x 52 weeks x 98 percent completion)

. 2 36 arrivals and departures per week multiplied by $1,920 per flight

.

### Appendix C Page 5 of 5

Silver Airways

Essential Air Service to be Provided at Lewisburg, West Virginia

Effective Period : Beginning with full EAS through the end of the 24 th 

### month thereafter

Scheduled Service : 1 2 weekly nonstop round trips in the 26

- week o ff

- peak season (November 1

- April 30), 14 weekly nonstop round trips in the peak 26

- week season (May 1

- October 31)

Hu b: Atlanta and Washington Dulles

Aircraft : 34

- passenger Saab 340 Rate per Eligible Flight: $ 2,622 1



### Weekly Ceiling : Peak: $73,416 2



### Off

- peak: $62,928 3

Note: The carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance wi th the terms and stipulations of the rate Order, including the service plans outlined in the Order and any o ther 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 the carrier does not schedule or operate its flights in full conformance with the Order for a signific ant 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 i n 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 ca rrier must complete all flig hts 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 w hich 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 requir ements 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 may cease to provide service to that specific location without re gards

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 constitute a total or partial reduction or cessation of payment.

Subsidy c ontract are subject to, and incorporate by reference, relevant statutes and Department regulations, as they may be amended fr om time to time. However, any such statutes, regulations, or amendments thereto shall not operate to controvert the foregoing p ara graph.

Funds are not currently available for performance under this Order beyond September 30, 2012. The Government’s obligation fo r performance under this Order beyond September 30, 2012, is subject to the availability of appropriated funds from which p ayment 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, 2012, until funds are made available to the Department for performance. If funds are not mad e available for performance beyond September 30, 2012, the Department 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.

1 Annual compe nsation of $ 3,484,710 divided by 1,329 estimated annual completed departures and arrivals:

Peak: LWB

- IAD (7 trips per week x 2 directions x 26 weeks x 98 percent completion x 313/312)

LWB

- ATL (7 trips per week x 2 directions x 26 weeks x 98 perc ent completion x 313/312)

Off Peak: LWB

- IAD (6 trips per week x 2 directions x26 weeks x 98 percent completion x 313/312)

LWB

- ATL (6 trips per week x 2 directions x 26 weeks x 98 percent completion x 313/312)

2 Peak: 28 arrivals and departures per week multiplied by $2,622

3 Off

- peak: 24 arrivals and departures per week multiplied by $2,622