Order: 20 10

- 3

- 31

Served: March 25 , 20 1 0



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 25 th day of March , 20 10

Docket DOT

- OST

- 1997

- 2515

ORDER REQUESTING PROPOSALS

Summary By this order

, the Department is requesting proposals from carriers interested in providing

essential air service (EAS) at Kirksville

, Missouri , for the next two year period from August 1

, 2010, through July 31 , 2012 , with or without subsidy . Proposals are due April 23 , 20 1 0. ( See Appendix A for an area map.)

Background By Order 200 8

- 5

- 2 , May 5, 2008

, the Department select ed Multi

- Aero, Inc.

, doing business as Air Choice One (“Air Choice One ” ) to provide 1 1 weekly nonstop round trips using twin

- engine aircraft, to Lambert

- St. Louis International Airport (“St. Louis”) , for a two

- year period beginning

when the carrier inaugurated service through the end of the 24 th month thereafter, at an annual subsidy of $806,169. On July 28 , 2008, Air Choice One inaugurated service at Kirksville using a four

- passenger Beechcraft Baron 58 aircraft. On January 7 , 2009, Air Choice One upgraded

Kirksville’s service using a 9

- passenger Piper Navajo Chieftain aircraft

.

Subsidy per P assenger Based on 12

- month traffic levels ending December 31, 2009, the most recent period available

, 1,877 passengers (enplaned and deplaned) used Air Choice One’s service at Kirksville Regional Airport. Air Choice One’s annual subsidy amount to serve Kirksville is $806,169, resulting in a

per

- passenger subsidy of $429. The Department is prohibited from subsidizing service at

commun ities whose subsidy

- per

- passenger exceeds $200 u nless the community is more than 210 Essential Air Service at

KIRKSVILLE

, MISSOURI

under 49 U.S.C. 41731 et seq.- 2

-

miles from the nearest medium or large hub airport, which is not the case here. Kirksville is 16 3 highway miles from Kansas City International Airport, the closest medium hub airport.

We noted in the carrier

- selection Order (2008

- 5

- 2) that subsidy for Kirksville was high when viewed in the context of passenger usage. We then encouraged the community and Multi

- Aero to work together to maximize use of the service awarded u nder th at Order to avoid exceeding the $200 per passenger cap, which could result in the t ermination of eligibility for subsidy under the EAS program. We do see some progress in increasing passenger levels in the fourth quarter of
2009; however, the per

- p assenger subsidy remains above $200

.

Contributing to the high subsidy per passenger at Kirksville is a unique set of circumstance s

. Kirksville has s uffered three different service hiatuses, a fatal crash, sub

- EAS service, and marginal service. In December 1989, Midcontinent Airlines ceased all operations, leaving

Kirksville with no air service. It was n o t until a year later, in December 1990, that the Department selected Redwing to serve Kirksville with 8/9

- seat aircraft , smaller than the 15

- seat aircraft to which Kirksville is entitled under the program’s governing s tatutes. Redwing suddenly ceased all service in 2000, again leaving Kirksville with no air service, and the

D epartment quickly selected Corporate Airlines (“Corporate”) to backfill. In October 2004, Corporate suffered a fatal crash while attempting to land at the Kirksville airport. In August 2006, the Department selected Air Midwest to replace Corporate (which had changed its name to RegionsAir by that time). In June 2008, Air Mid west shut down, once again leaving

Kirksville with no air service. We then selected Air C hoice One to serve Kirksville, which it has done since July 2008.

While the community is very pleased with the carrier’s completion and on

- time performances,

there are other very basic factors that have contributed to a low load factor . From July 2008 through the end of 2009, the carrier operated a schedule that was not conducive for Kirksville travelers. Specifically, the morning flight originated at St. Louis ra ther than at Kirksville as the community requested on numerous occasions since shortly after service was inaugurated , giving Kirksville originating travelers their first departing flight after 9:30 a.m . This was not conducive

for same

- day travel to destin ations beyond St. Louis

, or for any meaningful inbound connections at St. Louis because the flight departed so early in the morning . Finally, in January 2010 , the carrier began originating the aircraft at Kirksville with a departure between 6:00 a.m. and 7:00

a.m. , and p assenger levels have increased slightly. We also note that the passenger levels nearly

doubled from the fourth quarter of 2008 to the fourth quarter of 2009 , and traffic in the first two

months of 2010 show s improvement over the first two months of 2009 1

Internet . However, and most importantly, while Air Choice One is in the Sabre system, thus enabling travel agents to sell

tickets for the Kirksville

- St. Louis segment then combining it with another flight if the pass enger is traveling beyond St. Louis , the carrier does not have interline agreement s and is not in any of

the

- based travel reservation websites (e.g. Expedia, Travelocity, Orbitz )

. As a result, reservations and ticket sales may be made only through a t ravel agent, via telephone through the

carrier’s toll

- free reservations number

, or through its website. Air Choice One continues to work towards expanding its availability in Internet

- based booking engines.

Given all these circumstances, we are willing to give the community one last chance to remain in the program.

1 January and February 2009

– 199 passengers; January and February 2010

– 308 passengers- 3

-

Request for Proposals

As the end of the current rate te rms approach es , we are here request ing proposals from carriers

inte rested in providing essential air service at Kirksville , with or without subsidy , for the two

- year period beginning August 1 , 2010. Carriers should file their proposals no later than April 23 , 2010.

A fter that date, our staff will docket proposals, thereby making them public, and direct each carrier to serve a copy of its proposal on the civic parties and other applicants. Shortly afterwards, we will provide a summary of the proposals to the communit y and ask them to submit their final comments. We will give full consideration to all proposals that are timely filed. 2

Interested carriers should prepare their proposals with every expectation that their initial proposals will represent th eir final and only proposals. However, we retain the discretion to negotiate proposals with carriers when we deem it desirable; in such cases, of course, we will give all applicants the same opportunity. We also retain the discretion to reject outright a ll unreasonable or unrealistic proposals and solicit a new round of proposals. However, negotiation or rejections 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 judgment s as to the 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

- document ed proposals that will facilitate their evaluation by the affected communities and the Department. 3

Because Kirksville is already over the $200 cap, we will only consider credible proposals from operating carriers that can reasonably demonstrate that they can operate at Kirksville under the $200 per passenger cap after a 12

- month period after inauguration of service or can demonstrate that it would carry enough passengers to not exceed that cap. In that regard, if we do receive and select such a proposal, we intend to monitor passenger levels closely. Specifically, we plan to afford the community a new carrier a three

- month ramp up period, and then examine the next year’s data, i.e., months 4 through 15 after start up. If passenger levels are not high en ough to bring the subsidy

- per

- passenger under the $200 statutory cap, we would take steps to terminate Kirksville’s eligibility under the EAS program. If we receive no such proposals , we would similarly then take action to terminate Kirksville’s eligibili ty.

2 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to provide

essential air service witho ut subsidy and we determine that service can be reliably provided without such compensation, we do not proceed with the carrier

- selection case. Instead, we simply rely on that carrier’s subsidy

free service as proposed.

3 In selecting a carrier to provide subsidized essential air service, 49 U.S.C. 41733(c) (1) directs us to consider four

factors : (1) service reliability; (2) contractual and marketing arrangements with a larger carrier at the hub; (3) interline arrangements with a larger carrier at the hub ; and (4) community views

. 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 requirements, thus codifying a factor that we h ave considered since the inception of the program. Interested carriers should also be aware that our general provisions governing essential air service will be included in the selection order as part of our authorization of subsidy for the selected

servic e. Appendix C of this order contains those general provisions.- 4

-

W e expect proposals consisting of service with two

- pilot, twin

- engine aircraft with at least 15 passenger seats, and offering two round trips each weekday and weekend (12 total round trips per week) to St. Louis or a suitable hub airport, with numerous connecting opportunities to the national air transportation system. While Kirksville is entitled to 15

- seat aircraft, traffic levels

are very low. If less than 15

- seat aircraft are proposed, we request proposals for three round trips each weekday and weekend (a total of 18 to 21 per week). If a proposal offering aircraft fewer than 15 seats is submitted and the community /communities ultimately support the service, in effect waiving their right to 15

- seat or large r aircraft, we would consider the waiver to apply only

to the two

- year carrier

- selection at hand, i.e. we would not assume that the community waives their rights for all time. Of course, as always, we will formally solicit the community’s views on

any ser vice options we receive before making a long

- term carrier selection decision. The community 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 community and meets t he operational needs of the airline interested in submitting a proposal.

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, for example

-- with subsidy requirements that remain competitive.

New Filing Procedures Carrier proposals s hould be s ubmitted to the Department with all materials merged into a single

document. The document will be published on Regulations.gov and each page should be

formatted to be viewed online.

Service and Traffic History During the 12

- month period ending December 3 1

, 2009 , th e most recent period for which traffic data are available, Kirksville averaged 3 enplanements a day. 4 In order to assist carriers in making their traffic and revenue forecasts, we have included historical traffic data in Appendix B.

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

- free workplaces, and nondiscrimination. 5

4 See Appendix B for historical traffic data. Enplanements represent one

- half of total origin

- and

- destination traffic, and average enplanements per day are based on 77 weekdays and weekend s each quarter , except as noted. 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 activities. 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

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

– New restrictions on lobbying; (2) 49 CFR Part

21

– Nondiscrimination in federally

- assisted 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 P art 29

– Government

- wide debarment and suspension (non

procurement) and government

- wide requirements for drug

- free workplace (grants).- 5

-

information regarding these requirements should contact the Office of Aviation Analysis at (202) 366

- 5903. 6

Community and State Comments

The communit y and state are welcome to submit comments on the proposals at any time. As noted earlier, however, we will provide a summary of the proposals to the civic parties and ask them to submit their final comments shortly after April 23

, the due date for proposa ls.

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

- delegated to the Director, Office of Aviation Analysis.

ACCORDINGLY,

1. We request that carriers interested in providing essential air service at Kirksville

, Missouri

, from Au gust 1 , 2010, through July 31 , 2012

, submit their proposals, with or without requests for subsidy, no later than April 23 , 20 1 0

. The proposals should be e

- mailed to EAS@dot.gov

, with the title: “Proposal to Provide Essential Air Service at Kirksville

, Missouri , Docket DOT

- OST

1997

- 2515 ; ” 7

2. Th is docket will remain open until further order of the Department;

6 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.

7 Questions regarding filings in response to this order may be directed via e

- mail to Kevin Schlemmer at kevin.schlemmer@dot.gov or via phone at (202) 366

- 3176.- 6

-

3 . We will serve cop ies of this order on the Mayor of the City of Kirksville

, the Executive

Director of Kirksville Regional Airport, and the parties listed in Appendix D

.

Persons entitled to petition the Department for review of this order under the Department’s Regulations, 14 CFR 385.50, must file such petitions within ten (10) days after the date of

service of this order.

This order will be effective immediately, and the filing of a petition for review shall not preclude

its effectiveness.

By:

TODD M. HOMAN

Director Office of Aviation Analysis

(SEAL)

An electronic version of this document is available on the Internet at http://www.regulations.govAppendix A



## AREA MAP

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

Traffic History * Kirksville, Missouri (IRK)

Year Quarter Enplanements Deplanements Totals

2005 1 278 271 549

2005 2 301 275 576

2005 3 385 335 720

2005 4 499 449 948 2,793 CY2005

2006 1 380 392 772

2006 2 436 389 825

2006 3 384 342 726

2006 4 264 194 458

2006 4 371 276 647 3,428 CY2006

2007 1 485 349 834

2007 2 482 510 992

2007 3 351 378 729

2007 4 492 465 957
3,512 CY2007

2008 1 189 232 421

2008 2 197 197 394

2008 3 103 103 206

2008 4 178 182 360 1,381 CY2008

2009 1 162 179 341

2009 2 202 217 419

2009 3 233 231 464

2009 4 329 324 653
1,877 CY2009

A verage daily enplanements at Kirksville for calendar year 2009

– 3.0 **

* Source

– T

- 100 Market Report, Passengers in Scheduled Passenger Service, includes traffic for Regions Air, Inc. (CY2006) Air Midwest, Inc. (4Q2006

- 2Q2008)

, and Multi

- Aero, Inc. d/b/a Air Choice One (3Q2008 through CY2009)

.

**Average daily enplanements is total traffic for the most recent 1 2

- month period ending December 3 1

, 2009, divided by 313 service days, divided by 2.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 aircraft take

- off and landing at its scheduled destination constitutes a completed flight; absent an explanation supporting subsidy eligibility for a flight that has not been completed, suc h as certain weather cancellations, only completed flights are considered eligible for subsidy. In addition, if the carrier does not schedule or operate its flights in full conformance with the order for a significant period, it may jeopardize its entire subsidy claim for the period in question. If the carrier contemplates any such changes beyond the scope of the order during the applicable period of 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 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; flight s 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 ex tent 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 amounts or at the stipulated service levels, the carrier may cease to provide service to that specific location without regard to any require ment 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.

Funds are not curren tly available for performance under this solicitation beyond [DATE]

. The Government’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 Government for any 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] , th e carrier will receive notice in writing by the Department.

Subsidy contracts 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, o r amendments thereto shall not operate to controvert the foregoing paragraph.

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

.Appendix D

Scheduled Air Carriers, Contiguous US and Puerto Rico
Air Sunshine, Inc. Jet Air, Daniel Wolford
Air Sunshine, Mirmohammad Adili Kenmore Air, Tim Brooks
Air West, Inc., John Raatz McCall Aviation and Salmon Air, Dan Scott Air Wisconsin, Annette Daly McCall Aviation, Michelle
Airline Associates, Bill Mishk Mesa, Jonathan Ornstein
Alaska Airlines, Jeff Cole Mesa, Michael Lotz Alaska Airlines, Sandy Sinick Mesa, Mike Holcomb Allegiant Air, Robert Ashscroft Mesaba, John Spanjers
American Airlines, Carl Nelson Mesaba, Max Shemesh American Eagle, Jeffrey Hartz Midstar Airlines, Jeffrey Fonner
Atlantic Southeast, Jon Lindlief Midwest Airlines, Anthony Intravia Atlantis Southeast, Roger Weston Midwest Airlines, Greg Aretakis Bemidji Aviation, Co ri Rude Midwest Airlines, J.C. Augustson Bemidji Aviation, Arlen Rinkenberger MN Aviation, Jose Maldonado Cape Air, Andrew Bonney Multi Aero, Darnea Cape Air, Dan Wolf Multi Aero, Shane Storz Cape Air, J. Flaherty Northwest, Tim McDonald

Classic Aviation, Tony Henderson NYDC, Henok Araya Colgan Air, Mike Colgan OST, Brian Swanson CommutAir, Andy Price OST, Dennis DeVany CommutAir, Joel Raymond OST, Kevin Adams Consultant, Robert Silverberg OST, Kevin Schlemmer
Continental, Bruce Keiner OST, Michael Martin
Continental, Dan Weiss OST, Renee Williams Continental, Lorry Halloway Pacific Wings, Frank Ford Delta, Amy Martin Pacific Wings, Greg Kahlstorf
Delta, Dan Shuman PenAir, Danny Seybert Delta, Jeff Morgan PenAir, Scott Bloomquist Delta, Joe Esposito Pinnacle Airlines, Joe Williams Delta, Karen Zachary Pinnacle Airlines, Phil Reed
Delta, Sascha Vanderbellen Public Charters, Jim Gallagher

Dorado Jets Scenic, Mary Schneider
Dorado Jets, Mark McKenna Scenic, Mitzi Daines
Era Aviation, Mike Lenorman Seaborne Airlines, Wayne D'Amico
Executive Airlines, Kate Soled SeaPort Airlines, Jim Day Frontier Flying, Bob Hajducovich SeaPort Airlines, Rob McKinney
Gem Air, Dan Schroeder Shuttle America, Jerry Balsano
Gem Air, JoAnn Wolters SkyWest, Eric Christensen
Great Lakes, Chuck Howell SkyWest, Michael Thompson Great Lakes, Doug Voss Sovereign Air, Bob Karns Great Lakes, Greg Stephens Sovereign Air, Lois R. Barton
Gulfstream, Dave Hackett Tradewind, Eric Zipkin Gulfstream, Mickey Bowman TransStates, Fred Oxley Gulfstream, T. Cooper TransStates, Gerry Wigmore Homeland Security, David Bernier United, Alicia Gabriel Homeland Security, Randy Webb United, James Starnes
Horizon Air, Dan Russo US Airways, Benjami n Slocum Horizon Air, Jennifer Thompson US Airways, Howard Kass
Horizon Air, Jeff Cole US Airways, Jason Reisinger ICEPR, Luis Irizarry Warbelows Air Ventures, Art Warbelow
Island Air Charters, Linda House Wings Air (Air Greco), Aaron Goerlich