Order 2011

- 10

- 15

Served: Octo ber 20 , 2011



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 2 0 t h day of October , 20 1 1

ORDER PROHIB ITING SUSPENSION OF SERVICE AND
REQUESTING PROPOSALS

Summary By this order, the Department is : (a) prohibiting Chautauqua Airlines, Inc. , a wholly owned subsidiary of Republic Airways Holdings and doing business as Frontier Airlines (Chautauqua) from suspending service at Rhinelander, Wisconsin; and (b) requesting proposals from carr iers interested in providing essential air service (EAS) at Ironwood, Michigan/Ashland, Wisconsin (Ironwood) ; Manistee/Ludington, Michigan (Manistee) ; and/or Rhinelander for a two

- year period

, with or without subsidy. (See Appendix A for

a service area map )

. Carriers should file their proposals no later than

Novem ber 18

, 20 11

.

Background By Or der 2011

- 1

- 16, January 22, 2011 , the Department selected Chautauqua, utilizing

37

- seat Embraer 135 aircraft, to provide subsidized EAS at Ironwood and Manistee at a combined annual subsidy rate of $3,082,383. With the concurrence of both communities,

u nder the authority in 49 U.S.C. § 40109, Order 2011

- 1

- 16 also allowed the carrier to cease operations at Ironwoo d and Manistee on 180 days’ notice to the Department and

communities

. Chautauqua inaugurated service at both communities on April 18, 2011. On September 12 , 2011, Chautauqua filed a filed a 180

- day notice of its intention to

discontinue operations at Ironwood and Manistee, effecti ve March 10 , 2012.

At Rhinelander, Chautauqua is providing 13 nonstop round trips to Milwaukee using 37

- seat Embra er 135 aircraft. On the same date as the carrier’s 180

- day notice described above, it also filed a 90

- day notice of its intention to s uspend its subsidy

- free service at
Rhinelander , effective December 11 , 2012

. Essential Air Service at

IRONWOOD, MICHIGAN/ASHLAND, WISCONSIN MANISTEE/LUNDINGTON, MICHIGAN RHINELANDER, WISCONSIN

Under 49 U.S.C. 41731 et seq

. Docket DOT

- OST

- 199 6

- 1266
Docket DOT

- OST

- 1996

- 1711
Docket DOT

- OST

- 2011

- 0109- 2

-

Copies of the Chautauqua’s filing s at each community may be accessed online through the Federal Docket Management System (FDMS) at http://www. regulations.gov/ by doing a search on the corresponding docket number for each community noted above

.

Decision Chautauqua ’ s proposed discontinuation of service would leave Ironwood, Manistee and

Rhinelander with no scheduled service. At Rhinelander , the Department must prohibit the carrier from terminating such service at the end of its 90

- day notice period , and require it to maintain 1 2 nonstop round trips per week to Milwaukee . We will also require Chautauqua to continue to maintain that level of servi ce at Rhinelander for

successive 30

- day periods until we have completed processing the carrier

- replacement case and the selected carrier has actually started full EAS. At Ironwood and Manistee

and as noted in Order 2011

- 1

- 16 , the commun ities waived the no rmal hold

- in requirements as described above. Therefore, Chautauqua may discontinue service at

these two communities on March 10, 2012. 1 H owever, as discussed in detail below, we will issue a request for EAS proposals at all three commun ities

.

Request f or Proposals

C arriers interested in providing service at Ironwood, Manistee and/or Rhinelander with or without subsidy, should file their proposals no later than November 18

, 20 1 1

. Staff will then docket proposals, thereby making them public, and shortly afterwards will provide a summary of the proposals to the comm unities and ask them for their comments and preferences . We will give full consideration to all proposals filed in a timely manner. 2

Interested carriers should prepare their proposals with eve ry expectation that their initial proposals will represent their final and only proposals. However, we retain the discretion to negotiate proposals with carr iers when we deem it desirable . We also retain the discretion to reject outright all unreasonable or unrealistic proposals and re

- solicit a new round of proposals. However, negotiation and rejection are only occasional exceptions to

the rule.

We are here providing interested carriers with some basic information to serve as guidance when they prepare their proposals, but we will not prescribe a precise format for their proposals. We expect proposals to adequately describe the service being proposed and the annual amount of subsidy being requested. The applicants can make their own judgments as to th e level of detail they wish to present; however, they might want to include proposed schedules as well as supporting data for their subsidy requests, such as projected block hours, revenues and expenses. We strongly encourage clear, well

-

1 Before suspending service, we expect Chautauqua to contact all passengers holding reservations for travel after the final date of service, to inform them of the change in service, and to assist them in arranging alternate transportation or provide a refund of the ticket price, without penalty.

2 Carriers should not expect the Department to accept late fillings. In cases where a carrier proposes to provide essential air service without subsidy and we determine that service can be reliably provided without such compensation, we typically do not pro ceed with the carrier

- selection case. Instead, we simply rely on

that carrier’s su bsidy

- free service as proposed.- 3

-

documented propos als that will facilitate their evaluation by the affected communit y and the Department. 3

With specific respect to Ironwood and Rhinelander , the communities are guaranteed

service with 15

- seat or larger aircraft by virtue of their having averag ed 11 or more enplanement per day in any year from 1976

- 1986 ( 49 U.S.C. § 41732 (b)(3) )

. Rhinelander has historically been a strong traffic

- generating community, and, as such

, is entitled to the maximum seat capacity under the EAS program of 67 seats per da y inbound and 67 outbound. Therefore, we request proposals for four round trips a day (24 a week) with 19

- seat aircraft, three round trips a day (18 a week) with 30

- seat aircraft , or two round trips a day (12 a week) with larger aircraft.

Ironwood averag ed 2

- 5 enplanements per day from 2008

- 2010. Traffic increased dramatically after Chautauqua inaugurated service in April 2011. During the first four months after the carrier transition, May

- June 2011, Ironwood generated a total of 2,979

passengers, an average of 14 enplanements per day. Even with this dramatic increase, two round trips a day (12 a week) with 15

- seat or larger aircraft are sufficient to easily accommodate these passenger levels. We would also entertain proposals with 8

- or 9

- seat aircr aft and three round trips a day (18 a week). If the Department receives proposals for 8

- or 9

- seat, and either communit y ultimately support s the service, in effect waiving its rights to 15

- seat or larger aircraft, we would consider the waiver to apply onl y to the carrier

- selection at hand, i.e. we would not assume that the communities would waive their rights in perpetuity . Further, if service with 8

- or 9

- seat aircraft is proposed, service from each community to the hub should be nonstop.

Manistee never averaged 11 enplanements per day in any year from 1976

- 1986; thus, it is

not entitled to service with 15

- seat or larger aircraft. More recently, from 2003

- 2010, the community averaged 5

- 11 enplanements per day. However, in the four months after Chautauq ua began serv ice, Manistee generated 12,090 totaled scheduled passengers, an average of 58 enplanements pe r day. For the past 30 years or so, Manistee has generally averaged fewer than 10 enplanements per day, but

, in the last several months with the advent of Chautauqua’s two round trips a day with regional jets, it has averaged 58 passengers per day, in each direction. These circumstances make it difficult to quantify the actual demand and, thus, the service leve ls that we should be willing to subsidize. Given that the EAS program ensures only a safety

- net level of service, and not necessarily all the service that a community wants or thinks it deserves, we will request proposals for three o r four round trips a d ay (18 or 24 a week) with 8

- or 9

- seat aircraft or two round trips a day (12 a week) with 15

- seat or larger aircraft.

3 In selecting a carrier to provide subsidized essential air service, 49 U.S.C. 41733(c) (1) directs us to to consider four factors: (a) sche duled service reliability; (b) contractual and marketing arrangements with a larger carrier to ensure service beyond the hub; (c) interline arrangements that the applicant has made with a larger carrier at the hub; and (d) community views, giving substanti al weight to the views of the elected officials representing the users. In addition, the Consolidated Appropriations Act, 2008, Public Law 110

- 161, provides that when selecting a carrier to provide EAS, the Department may consider the relative subsidy req uirements, thus codifying a factor that we have considered since the inception of the program.- 4

-

The communities and air carriers are encouraged to work together in advance of the due date for proposals to craft a service pattern that is desirable to the communit ies

, meets the operational needs of the airline , to Milwaukee, Detroit or Minneapolis or any other hub that provides access to the national air transportation system

. In addition, carriers should be very clear as to whether a specific community’s proposal is on a stand

- alone basis, or whether it is part of a large r, inseparable package with any other community

. We encourage proposals that meet these requirements in an efficient manner. Carriers are also welcome to propose more than one service option, if they choose; they need not limit themselves to those requirements if they envision other, potentially more attractive service possibilities

-- different hubs or len gth of service terms, for example

-- with subsidy requirements that remain competitive.

New Filing Procedures Carrier proposals should be submitted to the Department with all materials compiled into a single document. In addition, because the document will be published on http://www.regulations.gov/ , each page should be formatted to be viewed online and for easy printing

.

Service and Traffic History

In order to assist carriers in making their passenger and revenue forecasts, we have provide d historical pa ssenger traffic in Appendix B. During the year ended

December 31, 20 10

, Ironwood averaged 2. 3 enplanements per service day

, Manistee

10.8 , and Rhinelander 79.8

. We note that passenger levels at Ironwood and Manistee increased dramatically when Chautauqua inaugurated service on April 18, 2011

, averaging 14 and 58 enplanements per day, respectively

.

Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug

- free workplaces, and nondiscrimination. 4 Consequently, all carriers receiving Federal subsidy for essential air service must certify that they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimination, and those carriers whose subsidies exceed $100,000 over the life of

the rate

- term must also certify that they are in compliance with the regulations governing lobbying activi ties. Because the Department is prohibited from paying subsidy to carriers that do not submit these documents, all carriers that plan to submit proposals involving subsidy should be aware that the selected carrier will be required to complete the required certifications. Interested carriers requiring more detailed information regarding these requirements should contact the Office of Aviation Analysis at (202) 366

- 5903. 5

4 The regulations applicable to these areas are: (1) 49 CFR Part 20

-- New restrictions on lobbying; (2) 49 CFR Part 21

-- Nondiscrimination in federally

- assist ed programs of the Department of Transportation

-- Effectuation of title VI of the Civil Rights Act of 1964; 49 CFR Part 27

-- Nondiscrimination on the basis of disability in programs and activities receiving or benefiting from Federal

financial assistance ; and 14 CFR Part 382

-- Nondiscrimination on the basis of disability in air travel; and (3) 49 CFR Part 29

-- Government

- wide debarment and suspension (non

- procurement) and government

wide requirements for drug

- free workplace (grants).

5 The certification s are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.- 5

-

Community and State Comments

The communit ies and State s are welcome to submit comment s at any time. We encourage prospective applicants to contact the communit ies before they submit their proposals so that they can tailor them to the communit ies ’ needs, as they will not be able to amend them after the due date. As noted earlier, we will provide a summary of the proposals to the civic parties and ask them to submit their final comments shortly after

Novemb er 18

, the deadline for carrier proposals.

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

ACCORDINGLY,

1

. The Department prohibits Chautauqua Airlines, Inc. , a wholly owned subsidiary of Republic Airways Holdings and doing business as Frontier Airlines from suspending

service at Rhinelander

, Wisconsin , at the end of its 90

- day notice period and requires it to maintain at least 12 nonstop round trips per week between the community and

Milwaukee

, Wisconsin

, through December 11 , 2012 , or until a carrier capable of providing reliable air service begins full service, whichever comes first; 6

2. We will allow Chautauqua Airlines, Inc. , a wholly owned subsidiary of Republic Airways Holdings and doing business as Frontier Airlines to discontinue its scheduled air

service at Ironwood, Michigan/As hland, Wisconsin, and Manistee/Ludington, Michigan

, as of March 10, 2 012 ;

3 . We request that carriers interested in providing essential air service at Ironwood, Michigan/Ashland, Wisconsin; Manistee/Ludington, Michigan ; and/or Rhinelander

, Wisconsin, submit their proposals, with or without subsidy requests, no later than

Novem ber 18

, 2011. The proposals should be e

- mailed to: EAS@dot.gov with the title “Proposal to Provide Essential Air Service at Ironwood, Michigan/Ashland, Wisconsin; Manistee/Ludington, Michigan ; and/or Rhinelander, Wis consin” with the docket number corresponding to the communit ies as shown on the first page of this order ; 7

4 . The Department directs Chautauqua Airlines, Inc. , a wholly owned subsidiary of Republic Airways Holdings and doing business as Frontier Airlines 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 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;

6 In accordance with 49 U.S.C. 41734(c), we will extend Chautauqua’s service obligation for successive

30

- day periods as necessary until full replacement service is provided.

7 Questions regarding filings in response to this order may be directed to Brian Swanson at (202) 366

- 5392

or brian.swanson@dot.gov

.- 6

-

5

. The s e docket s will remain open until further order of the Department; and

6 . We will serve copies of this order on the communities and the parties listed in Appendix D.

By:

SUSAN L. KURLAND Assistant Secretary for Aviation

and International Affairs

(SEAL)

An electronic version of this document is available

at http://www.regulations.govAppendix A



## AREA MAP

Airport Codes

DTW: Detroit Metropolitan Wayne County Airport

IWD : Gogebic

- Iron County Airport ( Ironwood , Michigan)

MBL : Manistee County Blacker Airport (Manistee, Michigan) MKE: General Mitchell International Airport

MSP : Minneapolis

– St. Paul International Airport

ORD : Chicago O’Hare International Airport

RHI : Rhinelander/Oneida County Airport

This map is provided by Sabre ® AirVision TM Profit Essentials and is being used with express permission of the copyright holder, Sabre Airline Solutions®.Appendix B



### Passenger Traffic

Ironwood/Ashland 1

Year

Ended Total Scheduled
Passengers Annual

Enplanements 3 Average Enplanements
Per Service Day 4

31-Dec-03 4,574 2,287 7.3

31-Dec-04 5,769 2,885 9.2

31-Dec-05 6,405 3,203 10.2

31-Dec-06 6,622 3,311 10.6

31-Dec-07 826 413 1.3

31-Dec-08 2,905 1,453 4.6

31-Dec-09 2,290 1,145 3.7

31-Dec-10 1,445 723 2.3

Jan. - April 2011 1,044

May - Aug. 2011 2,979

Manistee/Ludington 1

Year

Ended Total Scheduled
Passengers Annual

Enplanements 3 Average Enplanements
Per Service Day 4

31-Dec-03 2,917 1,459 4.7

31-Dec-04 3,941 1,971 6.3

31-Dec-05 3,951 1,976 6.3

31-Dec-06 5,551 2,776 8.9

31-Dec-07 6,004 3,002 9.6

31-Dec-08 4,044 2,022 6.4

31-Dec-09 5,472 2,736 8.7

31-Dec-10 6,760 3,380 10.8

Jan. - April 2011 2,399

May - Aug. 2011 12,090

Rhinelander 2

Year

Ended Total Scheduled
Passengers Annual

Enplanements 3 Average Enplanements
Per Service Day 4

31-Dec-03 66,969 33,485 107.0

31-Dec-04 78,559 39,280 125.1

31-Dec-05 86,341 43,171 137.9

31-Dec-06 81,602 40,801 130.4

31-Dec-07 73,889 36,945 118.0

31-Dec-08 52,750 26,375 84.0

31-Dec-09 52,649 26,325 84.1

31-Dec-10 49,938 24,969 79.8

May - Mar. 2011 8,760

Notes:

1. Source: http://mdotwas1.mdot.state.mi.us/public/airportstats/

2. Source: US DOT Bureau of Transportation Statistics, Forms T

- 100 Market Report

3. Total scheduled passengers divided by two.

4. Average annual enplanements divided by 313 effective annual service days, except for annual periods ended 12/31/2004 and 12/31/2008 (3 14 effective annual service days).Appendix C

Example of General Terms and Conditions for Essential Air Service

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 aircra ft 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 period, it may jeopardize its entire subsidy claim for the period in question. If the carrier contemplates an y such changes beyond the scope of the order during the applicable period of these rates, 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 circumsta nces 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

de termining 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 Depart ment 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 adjustments in the levels of su bsidy 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 contracts are subject to, and incorporate by reference, relevant statutes and Departm ent 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 solicitation b eyond [DATE] . The Department’s obligation for perform ance under this solicitation beyond [DATE] is contingent upon the availability of appropriated funds from which payment for services can be made. No legal liability on the part of the Department for an y payment may arise for performance under this order beyond [DATE] , until funds are made available to the Department for performance. If funds are not made available for performance beyond [DATE] , the carrier will receive notice in writing by the Departme nt.

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

under this order.Appendix D

SERVICE LIST

Air Greco/Wings Air Era Aviation, Lori Goodman Pacific Aviation Group, Craig Garrick

Air Sunshine, Inc. Executive Airlines, Kate Soled Pacific Aviation Group, Ron Rye

Air Sunshine, Mirmohammad Adili Frontier Airlines, Daniel Shurz Pacific Wings, Frank Ford

Air West, Inc., John Raatz Frontier Flying, Bob Hajducovich Pacific Wings, Greg Kahlstorf

Air W isconsin, Annette Daly Frontline Aviation Penn Air, Danny Seybert

Air Wisconsin, Jim Rankin Gem Air, Dan Schroeder Penn Air, Scott Bloomquist

Airline Associates, Bill Mishk Gem Air, JoAnn Wolters Pinnacle Airlines, Jennifer Gammill

Alaska Airlines, Jeff Cole Great Lakes Airlines, Chuck Howell Pinnacle Airlines, Megan Rosia

Alaska Airlines, Sandy Sinick Great Lakes Airlines, Doug Voss Pinnacle Airlines, Phil Reed

Allegiant Air, Brian Davis Gulfstream, Dave Hackett Planemasters, Inc., John Kessler

American Airlines, Carl Nelson Gulfstream, Mickey Bowman Planemasters, Inc., Paul Berliner

American Eagle, Gary Foss Gulfstream, T. Cooper Planemasters, Inc., Todd DeSimone

American Eagle, Robert Emrich Homeland Security, Bill Ragan Raytheon, Mike Schied t

Atlantic Southeast, Jon Lindlief Homeland Security, David Bernier Rectrix, Aviation, Scott LaForge

Atlantic Southeast, Roger Weston Horizon Air, Dan Russo Saab Group, Polly Prelinger
Aviation Technologies/Charter Air Transport, Jim Gallagher Horizon Air, Jennifer Thompson Scenic, Mary Schneider

Bemidji Aviation, Arlen Rinkenberger Horizon Air, Mike McQeen Scenic, Mitzi Daines

Bemidji Aviation, Cori Rude Horizon Air, Jeff Cole Seaborne Airlines, Shawn Lewis

Cape Air, Andrew Bonney ICEPR, Luis Irizar ry SeaP ort Airlines , Daniel Helland

Cape Air, Dan Wolf Intrepid Internatl Air, Rick Eyk SeaPort Airlines. Rob McKinney

Cape Air, J. Flaherty Island Air Charters, Linda House Shuttle America, Jerry Balsano

Chautauqua, Josh Pascoe Jet Air, Daniel Wolford SkyWest, Brad Rawson

Classic Aviation, Tony Henderson Kenmore Air, Tim Brooks SkyWest, Eric Christensen

Colgan Air, Kevin Scott McCall Aviation, Dan Scott SkyWest, Michael Thompson

Colgan Air, Mike Colgan McCall Aviation, Michelle Sovereign Air, Bob Karns

CommutAir, Andy Price Mesaba, John Spanjers Sovereign Air, Lois R. Barton

CommutAir, Joel Raymond Mesaba, Max Shemesh Tatonduk, Robert Everts

Consultant, Mike Mooney Michigan DOT, Matt Brinker Tatonduk, Robert Ragar

Consultant, Robert Silverberg Midstar Airlines, Jeffrey Fonner Tradewind, Eric Zipkin

Continental, Bruce Keiner Republic Air Line , Greg Aretakis Transport Azumah, Joel Anabilah

Azumah

Continental, Dan Weiss MN Aviation, Jose Maldonado Trans States, Fred Oxley

Continental, Lorry Hall oway Multi Aero, Darnea Trans States, Gerry Wigmore

Delta Air Lines Anthony Canitano Multi Aero, Shane Storz United, Alicia Gabriel

Delta Air Lines, Dan Shuman Northern Air Cargo, David Karp United, James Starnes

Delta Air Lines, Dana Debel Northern Air Cargo, Eric Van Andel US Airways, Benjamin Slocum

Delta Air Lines, Jeff Davidman NYDC, Henok Araya US Airways, Howard Kass

Delta Air Lines, Jeff Morgan OST, Brian Swanson US Airways, Jason Reisinger

Delta Air Lines, Joe Esposito OST, Dennis DeVany Warbelows Air Ventures, Art

Warbelow

Delta Air Lines, Kristal Murphy OST, Kevin Adams Gogebic

- Iron County Airport, Duane DuRay

Delta Air Lines, Sally Veith OST, Kevin Schlemmer Manistee County Blacker Airport, Barry Lind

Delta Air Lines, Sascha Vanderbellen OST, Michael Martin Rhinela nd er/Oneida County Airport, Joseph Brauer

Delta Air Lines, Stephen A. Hedden Michigan Department of Transportation, Matthew Brincker

Dorado Jets

Dorado Jets, Mark McKenna