Order : 20 11
- 8
- 27 Served: August 31 , 2011


### UNITED STATES OF AMERICA **DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY**  **WASHINGTON, D.C.** Issued b y the Department of Transportation on the 31 st of August, 2011 Essential A ir S ervice at **JACKSON, TENNESSEE** under 49 U.S.C. 41731 et seq. **DOT -**  **OST -**  **2000 -**  **7857**

**ORDER PROHIBITING TERMINATION OF SERVICE AND REQUEST**  **ING PROPOSALS**  **Summary** By this order, the Department is (1) prohibiting Pacific Wings, LLC (Pacific Wings) from terminating its subsidized Essential Air S ervice (EAS) at Jackson, Tennessee, for 30 day s beyond the end of its 90
- day notice period ; and (2) soliciting proposals from carriers interested in providing EAS at Jackson , with or without subsidy . Proposals are due S eptember 30 , 2011
. (See Appendix A for a map.) **Background** By Order 2009
- 6
- 17 ( June 22 , 2009 ) , the Department selected Pacific Wings to provide 18 nonstop round trips per week from Jackson to Nashville using a 9
- passenger Cessna Grand Caravan, for 24 months beginning when the carrier inaugurated service, for an annual subsidy rate of $1, 225,628. Pacific Wings inaugurated service at Jackson on August 31, 2009
. The current contract will exp ire on August 31, 2011 . Pacific Wings operates the service under the brand names K entucky S kies and Tennessee Skies. Before Pacific Wings inaugurat ed service at Jackson, the community experienced an extended service hiatus. The previous carrier, Big Sky Airlines, ceased operations at Jackson on January 6, 2008. Great Lakes Aviation, Ltd. (Great L akes) was selected to serve Jackson by Order 2008
- 2
- 1 ( February 6, 2008 ) , but Great Lakes never began service. Thus, Jackson was without scheduled air service from January 7, 2008 , until August 31, 2009.- 2
-

In anticipation of the expiration of Pacific Wings’ contract on August 31, 2011, the Department issued Order 2011
- 1
- 19 ( January 21, 2011 ) , soliciting proposals on or before March 16, 2011 , from carriers interes ted in providing service at Jackson
. On March 15, 2011, prior to the due date for proposals, Pacific Wings notified the Department of its intention to provide subsidy
- free service at Jackson, effective September 1, 2011, the end of its current contract. As a result, the Department notified the community and ceased the carrier
- selection process. On June 30, 2011, Pacific Wings filed with the Department a 90
- day notice of its intent to terminate service at Jackson, as well as Owensboro, Kentucky , 1 effectiv e September 30, 2011. Pacific Wings stated that despite many attempts, it ha d been “unable to procure counter or gate space at [Nashville International Airport] on reasonable terms.” The carrier state d that these “barriers to access continue to impede an d frustrate our service delivery efforts.” **D iscussion**  Public L aw 112
- 27, signed into law on August 5 , 2011, amended the definition of “eligible place” for the purpose of receiving EAS
. See 49 U.S.C. § 41731 . The amendment states that to be eligible, a community

must be located not less than 90 miles from the nearest medium or large hub airport and must have had an average subsidy per passenger of less than $1,000 during the most recent fiscal year, as determined by the Secretary

o f Transportation. Section 41731, as amended, also grants the Secretary the authority to issue a waiver of the 90
- mile criteri on if the Secretary determines that the “ geographic characteristics of the location result in undue difficulty in accessing the ne arest medium or large hub airport .” 49 U.S.C. § 41731(d). The Department is currentl y working on a Notice of Proposed Rulemaking regarding the new provisions under 49 U.S.C. § 41731, as amended , which it plans to issue in the near future
. Because Pacific Wings’ proposed termination of service would leave Jackson without any scheduled air service, we must prohibit the carrier from terminating such service at the end of its 90
- day notice period and request proposals from carriers interested in providing ser vice to the community . To honor that obligation, and to serve the public interest , we will require Pacific Wings to continue to maintain service at the community for 30 day s, and successive 30 day periods as necessary , at least until a new carrier is sele cted and begins service or the Department completes the forthcoming new regulation implementing Section 41731, as amended , and determines Jackson’s status as an EAS community under the new rule, whichever is earlier
. 2 In addition, the Department is pro hibited from subsidizing air service at a community where the subsidy per passenger exceeds $200, unless the community is more than 210 highway miles from the nearest large or medium hub airport. 3 Based on the most recent fiscal year for which data are available (12 months ending September 30, 2010) , 5,252 passengers were enplaned and deplaned at Jackson. The annual subsidy amount for Jackson is $1,225,628
. Therefore, the subsidy per
1 See Order 2011
- 8
- 6 for information regarding Owensboro. 2 We take this action pursuant to 49 U.S.C. §§ 40101(a) (7), (11), and (16), 40109(c) , and 41731
- 42; see also 14 CFR Parts 271, 323, and 325. 3 Congress first established the $200 ceiling under P.L. 101

- 164 for fiscal year 1990, and reestablished it in fiscal years 1994
- 1999. The ceiling was made permanent by P.L. 106
- 69, the Department of Transportation and Related Agencies Appropriations Act o f 2000.- 3
-

passenger is $2 3 3 at Jackson. Thus, Jackson presently exceeds the $2 00 per passenger cap and is fewer than 210 miles from a large or medium hub airport
. As stated above, before Pacific Wings in augurat ed service at Jackson, the community experienced an extended service hiatus from January 7, 2008 , until August 31, 2009. Rather than terminate service eligibility at the community based onl y on the most recent data following the hiatus, the Department will solicit proposals for EAS and evaluate all proposals submitted before committing to a new contract or making a final determination of Jackson’s continuing eligibility under the $200 per passenger ceiling . Prior to the due date for proposals, we expect the community to work aggressivel y with all potential applicants to mitigate some of the risks that the carriers may

face in an attempt to lower their subsidy levels and/or substantially increase usage of the air service. **Request for Proposals** W e are requesting proposals from carriers interested in providing service at Jackson, with or without subsidy , to be filed no later than S eptember 30 , 2011. A fter that date, our staff will docket the proposals, thereb y making them public. Shortly afterwards, we will provide a summary of the proposals to the community and ask them to submit their final comments. We will give full consideration to all proposals that are timel y filed. 4 Interested carriers should prepare their proposals with every expectation that their initial proposals will represent their final and only proposals. However, we retain the disc retion to negotiate proposals with carriers when we deem it desirable. We also retain the discretion to reject outright all unreasonable or unrealistic proposals and sol icit a new round of proposals. We are 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 adequatel y describe the service being proposed and the amount of subsidy being requested. The applic ants can make their own judgments 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 stron gl y encourage clear, well
- documented proposals that will facilitate their evaluation by the affected communities and the Department. 5

4 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to provide EAS without subsidy and we determine that service can be reliably provided without such compensation, we do not proceed with the carri er - selection case. Instead, we simply rely on that carrier’s subsidy
- free service as proposed. 5 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, PL 110
- 161, provides that when selectin g a carrier to provide EAS, the Department may consider the relative subsidy requirements, thus codifying a factor that we have considered since the inception of the program. Interested carriers should also be aware that our general provisions governing E AS will be included in the selection order as part of our authorization of subsidy for the selected service. Appendix B of this O rder contains those general provisions.- 4
-

Because Jackson is already over the $200 cap, we will only consider credible proposals from operating carriers that can reasonabl y demonstrate that they can operate at Jackson under the $200 per passenger cap on a sustained basis. We ask that carriers submit proposals for two nonstop round trips per day (12 round trips per week) with 15
- seat or larger aircraft to Atlanta, Memphis, St. L ouis, or another suitable hub where numerous connections to the national air transportation sy stem can be made. Although the Department often awards two
- ye ar contracts for subsidized EAS at a community , proposals should reflect an understanding that the community ’s EAS status may be affected by the recent amendment and pending rulemaking, which may impact the terms of any

new contract. While Jackson is entitled to service with 15
- seat or larger aircra ft, we would also entertain proposals for eight
- or nine
- seat aircraft with an additional frequency (18 to 21 round trips per week) for the community . If the Department receives proposals for eight
- or nine
- seat aircraft , and the community

ultimately

supp orts the service, in effect waiving their right to 15
- seat or larger aircraft, we would consider the waiver to apply onl y to the carri er selection at hand, i.e. we would not assume that the community would waive their rights for all time. As alway s, we wi ll formally solicit the community ’s views on an y s ervice options we receive before making a long
term carrier selection decision. I f service with eight
- or nine
- seat aircraft is proposed, service from the community

to the hub should be nonstop. 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 the operational needs of the airline. We encourage proposals that meet these requirem ents in an efficient manner. Carriers are also welcome to propose more than one service option and , if they so choose , they need not limit themselves to the requirements set forth in this request if they envision other, potentially more attractive service possibilities
-- different hubs or length of service terms , 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** For the most recent fiscal year (October 1, 2010 through September 30, 2010), 5,252 passengers were enplaned and deplan ed at Jackson, an average of 8.4 enplanements per day (at Jackson)
. 6

6 5,252 passengers used the service to and/or from Jackson for the period October 1, 2009 through September 30, 2010. Enplanements represent one - half of t otal origin
- and
- destination traffic, and average enplanements per day are based on 313 days per year
.- 5
-

**Other Carrier Requirements** The Department is responsible for implementing various Federal statutes governing lobb yi ng activities, drug
- free workplaces, and nondiscrimination. 7 Consequ ently , 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 l ife of the rate term must also certify that they are in compliance with the regulations governing lobb yi ng activities. Because the Department is prohibited from paying subsidy to carriers that do not submit these documents, all carriers that plan to submi t 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 An aly sis at (202) 366
- 5903. 8 **Community and State Comments** The community and S tate 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 S eptember 30 , 2011, the due date for pro posals. This order is issued under authority delegated in 49 CFR 1.56a (f). **ACCORDINGLY,** 1. We prohibit Pacific Wings, LLC from suspending service at Jackson, Tennessee at the end of its 90
- day notice period (September 30 , 2011) , and require it to maint ain service as set forth in Appendix A, for an initial 30
- day period through October 30, 2011; 9 2. We request that carriers interested in providing essential air service at Jackson, Tennessee, submit their proposals, with or without requests for subsidy , no later than S eptember 30 , 2011. The proposals should be e
- mailed to EAS@dot.gov, with the title: “Proposal to Provide Essential Air Service at Jackson, Tennessee (Docket DOT
- OST
- 2000
- 7857)”
. 10 3
. We direct Pacific Wings, LLC to retain all books and other source and summary documentation to support claims for pay ment, and to preserve and maintain such documentation
7 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 Ac t 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). 8 The certifications are also available on the web at http://o stpxweb.dot.gov/aviation/index.html
. 9 As stated above, we will extend Pacific Wings’ service obligation for successive 30
- day periods as necessary, at least until replacement service actually begins or the Department completes the forthcoming rulemaking and Jackson’s continuing status as an EAS community is determined under the new rule, whichever is earlier. 10 Questions regarding filings in response to this order may be directed via electronic mail to Kevin Schlemmer at kevin.schlemmer@dot.gov or via phone at (202) 366
- 3176.- 6
-

in a manner that readil y permits its audit and examination by representatives of the Department. Such documentation shall be retained for seven ye ars or until the Department indicates that the records may

be destroyed, whichever is earlier. Copies of logs for aircraft sold or disposed of must be retained. The carrier may forfeit its compensation for an y claim that is not supported under the terms of this order; 4 . This docket will remain open until further order of the Department; and 5
. We will serve copies of this order on the Mayor of Jackson, the manager of McKellar
- Sipes Regional Airport, Pacific Wings, LLC , and the parties listed in Appendix C
. By :

**SUSAN L. KURLAND** Assistant Secretary

for Aviation and International Affairs (SEAL) An electronic version of this document is available a t: http://www.regulations.govAppendix A

PACIFI C WINGS, LLC dba KENTUCKY SKIES dba TENNESSEE SKIES ESSENTIAL AIR SERVICE TO BE MAINTAINED

JACKSON, TENNESSEE
EFFECTIVE PERIOD 30 day s beyond September 30, 2011, until further Department action
SERVICE 18 weekl y nonstop round trips to Nashville International Airport

(3 nonstop round trips each weekday and 3 nonstop round trips each weekend)
AIRCRAFT TYPE Cessna Grand Caravan (9 seat s)
TIMI NG OF FLIGHTS Flights must be well timed and well spaced to ensure full compensation

SUBSIDY RATE As outlined in Order 2009
- 6
- 17, June 22, 2009, effective September 1,

2011, until further Department actionAppendix B 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 o utlined 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 suppo rting 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. I f 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 Analy sis 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. Th e carrier must complete all flights that can be safel y operated; flights that overfl y points for lack of traffic will not be compensated. In determining whether subsidy pay ment for a deviating flight should be adjusted or disallowed, the Department will c onsider the extent to which the goals of the program are met and the extent of access to the national air transportation sy stem provided to the community
. If the Department unilaterally , either partially or completely , terminates or reduces pay ments for s ervice 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 pay ments 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 subsidy and/or service that are mutuall y agreed to in writing by the Department and carrier do not constitute a to tal or partial reduction or cessation of payment. Subsidy c ontracts are subject to, and incorporate by r eference, 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 solicitation beyond [DATE]
. T he Government’s obligation for perform ance under this solicitation beyond [DATE] , is contingent upon the availability of appropriated funds from which pay ment for services can be made. N o legal liability

o n the part of the Government for any p ay ment may

arise for performance under this order beyond [DATE] , until funds are made availa ble to the Department for performance. If funds are not made available for performance beyond [DATE] , the carrier will receive notice in writing b y the Department. All claims for pay

ment must be submitted within 60 day s of the last day of service provide d under this order
.Appendix C **Scheduled Air Carriers, Contiguous US and Puerto Rico** Air Greco/Wings Air McCall Aviation, Dan Scott Air Sunshine, I

nc. McCall Aviation, Michelle Air Sunshine, Mirmohammad Adili Mesaba, John Spanjers Air West, I

nc., John Raatz Mesaba, Max Shemesh Air Wisconsin, Annette Daly MidStar Airlines, Jeffrey Fonner Air Wisconsin, Jim Rankin Midwest Airlines, Greg Aretakis Airline Associates, Bill Mishk MN Aviation, Jose Maldonado Alaska Airlines, Jeff Cole Multi Aero, Darnea Alaska Airlines, Sandy Sinick Multi Aero, Shane Storz Allegiant Air, Brian Davis Northern Air Cargo, David Karp Am erican Airlines, Carl Nelson Northern Air Cargo, Eric Van Andel Am erican Eagle, Jeffrey Hartz Northwest, Tim McDonald Atlantic Southeast, Jon Lindlief Northwest, Aaron Murray Atlantis Southeast, Roger Weston NYDC, Henok Araya Aviation Technologies/Charter Air Transport OST, Brian Swanson Bemidji Aviation, Cori Rude OST, Dennis DeVany Bemidj i Aviation, Arlen Rinkenberger OST, Kevin Adams Cape Air, Andrew Bonney OST, Kevin Schlemmer Cape Air, Dan Wolf OST, Michael Martin Cape Air, J. Flaherty Pacific Aviation Group, Craig Garrick Classic Aviation, Tony Henderson Pacific Aviation Group, Ron Pye Colgan Air, Mike Colgan Pacific Wings, Frank Ford Colgan Air, Kevin Scott Pacific Wings, Greg Kahlstorf CommutAir, Andy Price PenAir, Danny Seybert CommutAir, Joel Raymond PenAir, Scott Bloomquist Consultant, Robert Silverberg Pinnacle Airlines, Jennifer Gammill Continental, Bruce Keiner Pinnacle Airlines, Megan Rosia Continental, Dan Weiss Pinnacle Airlines, Phil Reed Continental, Lorry Halloway Planemasters, I nc. John Kessler Delta, Anthony Canitano Planemasters, I nc. Paul Berlin er Delta, Dan Shuman Planemasters, I nc. Todd DeSimone Delta, Jeff Morgan Raytheon, Mike Scheidt Delta, Joe Esposito Saab Group, Polly Prelinger Delta, Karen Zachary Scenic, Mary Schneider Delta, Kristal Murphy Scenic, Mitzi Daines Delta, Sascha Vanderbellen Seaborne Airlines, Shawn Lewis DHS, Bill Ragan SeaPort Airlines, Daniel Helland DHS, David Bernier SeaPort/Wings of Alaska, Jim Day Dorado Jets SeaPort/Wings of Alaska, Nate Vallier Dorado Jets, Mark McKenna SeaPort/Wings of Alaska, Rob McKinney Era Aviation, Lori Goodman Shuttle America, Jerry Balsano Executive Airlines, Kate Soled SkyWest, Brad Rawson Frontier Flying, Bob Hajducovich SkyWest, Eric Christensen Frontier, Daniel Shurz SkyWest, Michael Thompson Frontline Aviation Sove reign Air, Bob Karns Gem Air, Dan Schroeder Sovereign Air, Lois R. Barton Gem Air, JoAnn Wolters Tatonduk, Robert Everts Pacific Wings, Chuck Howell Tatonduk, Robert Ragar Pacific Wings, Doug Voss Tradewind, Eric Zipkin Gulfstream, Dave Hackett TransStates, Fred Oxley Gulfstream, Mickey Bowman TransStates, Gerry Wigmore Gulfstream, T. Cooper Transport Azumah, Joel Anabilah
- Azumah Horizon Air, Dan Russo United, Alicia Gabriel Horizon Air, Jennifer Thompson United, James Starnes Horizon Air, Mike McQueen US Airways, Benjamin Slocum Horizon Air, Jeff Cole US Airways, Howard Kass ICEPR, Luis I

rizarry US Airways, Jason Reisinger Intrepid I nternatl Air, Rick Eyk Warbelows Air Ventures, Art Warbelow Is land Air Charters, Linda House Jet Air, Daniel Wolford Kenmore Air, Tim Brooks