Order: 2010-3-26

 Served: March 19, 2010

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 19th day of March, 2010

ORDER SETTING FINAL RATES

On July 14, 2009, Mesaba Airlines, Inc., d/b/a Delta Connection,1 filed 90-day notices of 

intent to suspend its subsidy-free service at the four communities above, effective 

October 12. By Order 2009-7-16, we prohibited Mesaba from terminating service and 

requested proposals while requiring it to continue to maintain service. By

Order 2009-10-8, we selected SkyWest Airlines, Inc., d/b/a United Express, to replace 

Mesaba at these four communities, and SkyWest inaugurated its proposed service at all 

four communities in February, relieving Mesaba of its obligation to continue providing 

essential air service at these four communities.

2 

Nevertheless, Mesaba is entitled to compensation for its forced service. We have 

reviewed Mesaba’s proposals for compensation at these communities, and, after meeting 

with the carrier, have reached agreement as to the reasonable levels of compensation. 

The rates are those reflected in Appendices A and B. 

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

 

1 Mesaba is a wholly-owned subsidiary of Delta Air Lines.

2 Mesaba also filed 90-day notices at Alpena, International Falls, Paducah, and Tupelo at the same time it 

filed notice at these four communities. We will be issuing orders addressing those communities’ essential 

air service in the near future.

Essential Air Service at

EAU CLAIRE, WISCONSIN, 

HANCOCK/HOUGHTON AND 

MUSKEGON, MICHIGAN, AND 

PADUCAH, KENTUCKY

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

 DOCKET OST-2009-0306

 DOCKET OST-2009-0302

 DOCKET OST-2009-0301

 DOCKET OST-2009-0299
ACCORDINGLY,

1. We set the final rates for Mesaba Airlines, Inc., for its provision of essential air service 

at Hancock/Houghton and Muskegon, Michigan, Eau Claire, Wisconsin, and Paducah, 

Kentucky, as described in Appendices A and B;

2. We direct Mesaba Airlines, Inc., to retain all books, records, and other source and 

summary documentation to support claims for payment and to preserve and maintain such 

documentation in a manner that readily permits the 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; 

3. These Dockets will remain open until further Department action; and

4. The Department will serve copies of this order on the Mesaba Airlines, Inc., and on 

Delta Air Lines, Inc.

By:

Susan Kurland

Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available on the World Wide Web at

http://www.regulations.gov
Appendix A

 Annual Subsidy Rate at Four Communities Where SkyWest Replaced Mesaba

Total CMX EAU MKG PAH

Docket Numbers 2009-0302 2009-0306 2009-0301 2009-0299

Hub(s) MSP MSP DTW MEM

R./T.Week 14 14 14 14

Completion Factor 97% 97% 97% 98%

Pax 1/ 117,139 32,573 28,439 28,324 27,803

Block Hours 1/ 6,435 2,148 1,157 1,652 1,478

Flts. to/from Hub 1/ 5,679 1,416 1,416 1,416 1,431

Pax. Revenue $8,101,074 $2,605,808 $1,371,270 $2,011,004 $2,112,992

Other Rev. $1,047,150 $403,158 $189,665 $265,299 $189,028

Total Revenue $9,148,224 $3,008,966 $1,560,935 $2,276,303 $2,302,020

Pilot $1,536,163 $512,770 $276,199 $394,366 $352,828

Fuel $1,549,741 $517,303 $278,640 $397,851 $355,947

Maintenance $2,234,297 $745,807 $401,722 $573,591 $513,177

Aircraft $1,309,780 $437,204 $235,496 $336,248 $300,832

 Total Directs $6,629,981 $2,213,084 $1,192,057 $1,702,056 $1,522,784

Total Indirects $5,024,646 $1,507,345 $1,068,295 $1,243,618 $1,205,388

Total Operating $11,654,627 $3,720,429 $2,260,352 $2,945,674 $2,728,172

Profit @ 5% $582,732 $186,021 $113,018 $147,284 $136,409

Economic Cost $12,237,359 $3,906,450 $2,373,370 $3,092,958 $2,864,581

Annual Subsidy Rate $3,089,135 $897,484 $812,435 $816,655 $562,561

1/

Nonstop Flts./ Days/ Completion Block Block Nonstops Pax. To/

City-Pair Miles Day Year Percent Time Hours to/from Hub From Hub

CMX-MSP 277 4 365 0.97 91 2,148 1,416 32,573

MKG-DTW 161 4 365 0.97 70 1,652 1,416 28,324

PAH-MEM 154 4 365 0.98 62 1,478 1,431 27,803

EAU-MSP 85 4 365 0.97 49 1,157 1,416 28,439

6,435 5,679 117,139
Appendix B

Page 1 of 5

Subsidy Rate Agreement for the Provision of Essential Air Service by Delta/Mesaba at 

Hancock/Houghton, Michigan, Docket 2009-0302

______________________________________________________________________

EFFECTIVE PERIOD: October 12, 2009, thru February 28, 2010. 

________________________________________________________________________

SERVICE: 14 round nonstop round trips per week between Hancock/Houghton and 

Minneapolis. 

________________________________________________________________________

AIRCRAFT TYPE: Saab 340

________________________________________________________________________

TIMING OF FLIGHTS: Flights must be well-timed and well-spaced to ensure full 

compensation. 

_______________________________________________________________________

ANNUAL SUBSIDY RATE: $897,484 

RATE PER FLIGHT: $634 1

WEEKLY CEILING: $17,752 2

This rate assumes an annual completion factor of 97 percent. A compensation ceiling is 

to be applied each week, such that service above that ceiling in one week cannot make up 

for service shortfalls in another week. 

 

1 Annual compensation of $897,484 divided by 1,416 annual flights, calculated as follows: 

4 flights per day x 365 days x .97 completion = 1,416

2 $634 times 28 flights per week.
Appendix B

Page 2 of 5

Subsidy Rate Agreement for the Provision of Essential Air Service by Delta/Mesaba at 

Eau Claire, Wisconsin, Docket 2009-0306

______________________________________________________________________

EFFECTIVE PERIOD: October 12, 2009, thru February 28, 2010. 

________________________________________________________________________

SERVICE: 14 round nonstop round trips per week between Eau Claire and Minneapolis. 

________________________________________________________________________

AIRCRAFT TYPE: Saab 340

________________________________________________________________________

TIMING OF FLIGHTS: Flights must be well-timed and well-spaced to ensure full 

compensation. 

_______________________________________________________________________

ANNUAL SUBSIDY RATE: $812,435 

RATE PER FLIGHT: $574 1

WEEKLY CEILING: $16,072 2

This rate assumes an annual completion factor of 97 percent. A compensation ceiling is 

to be applied each week, such that service above that ceiling in one week cannot make up 

for service shortfalls in another week. 

 

1 Annual compensation of $812,435 divided by 1,416 annual flights, calculated as follows: 

4 flights per day x 365 days x .97 completion = 1,416

2 $574 times 28 flights per week.
Appendix B

Page 3 of 5

Subsidy Rate Agreement for the Provision of Essential Air Service by Delta/Mesaba at 

Muskegon, Michigan, Docket 2009-0301

_____________________________________________________________________

EFFECTIVE PERIOD: October 12, 2009, thru February 11, 2010. 

________________________________________________________________________

SERVICE: 14 round nonstop round trips per week between Muskegon and Detroit. 

________________________________________________________________________

AIRCRAFT TYPE: Saab 340

________________________________________________________________________

TIMING OF FLIGHTS: Flights must be well-timed and well-spaced to ensure full 

compensation. 

_______________________________________________________________________

ANNUAL SUBSIDY RATE: $816,655 

RATE PER FLIGHT: $577 1

WEEKLY CEILING: $16,156 2

This rate assumes an annual completion factor of 97 percent. A compensation ceiling is 

to be applied each week, such that service above that ceiling in one week cannot make up 

for service shortfalls in another week. 

 

1 Annual compensation of $816,655 divided by 1,416 annual flights, calculated as follows: 

4 flights per day x 365 days x .97 completion = 1,416

2 $577 times 28 flights per week.
Appendix B

Page 4 of 5

Subsidy Rate Agreement for the Provision of Essential Air Service by Delta/Mesaba at 

Paducah, Kentucky, Docket 2009-0299

______________________________________________________________________

EFFECTIVE PERIOD: October 12, 2009, thru February 11, 2010

________________________________________________________________________

SERVICE: 14 round nonstop round trips per week between Paducah and Memphis. 

________________________________________________________________________

AIRCRAFT TYPE: Saab 340

________________________________________________________________________

TIMING OF FLIGHTS: Flights must be well-timed and well-spaced to ensure full 

compensation. 

_______________________________________________________________________

ANNUAL SUBSIDY RATE: $562,561 

RATE PER FLIGHT: $393 1

WEEKLY CEILING: $11,004 2

This rate assumes an annual completion factor of 98 percent. A compensation ceiling is 

to be applied each week, such that service above that ceiling in one week cannot make up 

for service shortfalls in another week. 

 

1 Annual compensation of $562,561 divided by 1,431 annual flights, calculated as follows: 

4 flights per day x 365 days x .98 completion = 1,431

2 $393 times 28 flights per week.
Appendix B

Page 5 of 5

General Terms and Conditions for Essential Air Service 

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

conformance with the terms and stipulations of this order, including the service plans outlined in the order and 

any other significant elements of the required service, without prior approval. The carrier understands that an 

aircraft take-off and landing at its scheduled destination constitutes a completed flight; absent an explanation 

supporting subsidy eligibility for a flight that has not been completed, such as certain weather cancellations, only 

completed flights are considered eligible for subsidy. In addition, if the carrier did 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 contemplated any such changes beyond the scope of the order during the 

applicable period of this rate, it should have first notified the Office of Aviation Analysis in writing and received

written approval from the Department to be ensured of full compensation. 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. 

Subsidy contracts are subject to, and incorporate by reference, relevant statutes and Department regulations, 

as they may be awarded from time to time. However, any such statutes, regulations, or amendments thereto 

shall not operate to controvert the foregoing paragraph.

All claims for payment must be submitted within 60 days of the issuance of this order.