Order 2010

- 2

- 18 Served: February 19 , 2010



### UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation
on the 19 th day of February , 20 10

ORDER REQUESTING PROPOSALS AND SYNCHRONIZING CONTRACT EXPIRATION DATES

Summary By this order, the Department is requesting proposals , by March 25, from air carriers interested in providing essential air service (EAS) at : Iron Mountain/Kingsford, Michigan ; Ironwood, Michigan/Ashland, Wisconsin; Manistee/Ludington, Michigan ; and /or Escanaba

, Michigan , for

a new two

- year period, beginning September 1, 2010

, with or without subsidy. (See Appendix A for a service area map.)

To synchronize the current contract expiration dates at all the above captioned communities, w e are also extending the rate s at Ironwood/Ashland and Manistee/Ludin gton thro ugh August 31, 2010.

Background By Order 200 8

- 4

- 1 0

, April 7 , 200 8 , the Department selected Great Lakes Aviation, Ltd. (Great Lakes) , to provide subsidized EAS at Ironwood /Ashland and Manistee/Ludington utilizing 19

- seat Beech 1900D aircraft for a new two

- year term beginning when it inaugurate d full service

. Under that order, Great Lakes provides Ironwood/Ashland with two daily one

- stop (at Rhinelander, Wisconsin) round trips for an annual subsidy rate of $1,492,865. Great Lakes also provide s Manistee/Ludington with two daily nonstop round trips, for an annual subsidy of $1,799,395. The combined annual subsidy rate of $3,292,26 0

. Great Lakes commenced service at the two communities on May 5

, 2008 , meaning that the contract expires on May 31, 2010

.

Similarly, on August 14, 2008 , the Department issued Order 200 8

- 8

- 14, re selecting Mesaba Aviation, Inc., d/b/a Mesaba Airlines (Mesaba), operating as Northwest Airlink , utilizing 34

- seat Saab 340 aircraft to provide subsidized EAS at Iron Mounta in/Kingsford and Escanaba for a new

Essential Air Service at

IRON MOUNTAIN/KINGSFORD, MICHIGAN IRONWOOD, MICHIGAN/ASHLAND, WISCONSIN MANISTEE/LU DINGTON, MICHIGAN ESCANABA, MICHIGAN

Under 49 U.S.C. 41731 et seq

. D ocket DOT

- OST

- 199 9

- 5175
Docket DOT

- OST

- 199 6

- 1266
Docket DOT

- OST

- 199 6

- 1711
Docket DOT

- OST

- 2003

- 15128- 2

-

two

- year period, beginning August 15, 2008 , through August 31, 2010

. Under the order, Mesaba provides seven one

- stop or nonstop round trips each week between each community and both Detroit and Minneapolis (28 weekly flights per community) for a combined annual subsidy rate of $ 2,870,236.

Request for Proposals In order to attract as many potential applic ants as possible , we find that good cause exists to put all four communities on the same time cycle.

As the end of the current rate term s approach , we are here requesting proposals from carriers interested in providing service at : Iron Mountain/Kingsford ; Ironwood/Ashland; Manistee/Ludington ; and /or Escanaba

, with or without subsidy, for the two

- year period beginning September 1 , 2010 . Carriers should file their proposals no later than March 25 , 2010

. At the end of that period, 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 communities and ask them to
submit their final comments. We will give full consideration to all proposals that are timely
filed. 1

Interested carriers should prepare their proposals with every expectation that their initial proposals will represent their final and only proposals. However, we retain t he 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 all unreasonable or unrealistic proposals and resoli cit 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 pre scribe 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 the level of detail they wish to presen t; 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

- documented proposals that will facilitate their evalua tion by the affected communities and the Department. 2

With specific respect to these four communities

, the Department expect s proposals consisting of
service with 19

- passenger aircraft and offering a mix of two or three round trips a day between

1 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 do not proceed with the carrier

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

free service as proposed.

2 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 reliabil ity; (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 th at when selecting a carrier to provide EAS, the Department may consider the relative subsidy requirements, thus codifying a factor that we have considered sinc e the inception of the program. Interested carriers should also be aware that our general provisions governing EAS will be included in the selection order as part of our authorization of subsidy for the selected service. Appendix C of this order contains those general provisions.- 3

-

each comm unity and Milwaukee , Detroit or Minneapolis , or any hub that provides good access to the national air transportation system

. Larger aircraft, offering fewer daily trips may be
substituted in lieu of the 19

- passenger aircraft, higher frequency service so long as the number of available seats between the EAS community and the hub are approximately equivalent. Such service is generally consistent with what the communities currently receive, and fully satisfies their essential air service requir ements.

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 community and meets the operational requirements of the airline inte rested in submitting a proposal. In addition, carriers should be very clear as to whether a specific community’s proposal is a stand

- alone option, or whether it is part of a larger, inseparable package and connected to other communitie s.

We encourage proposals that meet those 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 mor e attractive service possibilities

-- different hubs, for example

-- with subsidy requirements that remain competitive.

New Filing Procedures Carrier proposals should be submitted to the Department with all materials merged into a single
document. In addition, because the document will be published on Regulations.gov, each page
should be formatted to be viewed online.

Service and Traffic History
Historical traffic for Iron Mountain/Kingsford, Ironwood/Ashland, Manistee/Ludington and
Escanaba is detail ed in Appendix B. During the year ended December 31, 200 9

, Escanaba averaged 2 2 .0 e nplanements a day, Ironwood/Ashland 3.7

, and Manistee/Ludington 8 .7. For period January 1, 2009 through Octo ber 31, 200 9

, Iron Mountain/Kingsford generated an average of 1 8.3 enplan e ments per day.

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

- free workplaces, and nondiscrimination. 3 Consequently, all carriers receiving
Federal subsid y 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 awar e 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. 4

3 Th e 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 Part 29

-- Government

- wide debarment and suspension (non

- procurement) and government

- wide requirements for drug

- free workplace (grants).

4 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.- 4

-

Community and St ate Comments The communities and State are welcome to submit comments at any time. We encourage prospective applicants to contact the communities before they submit their proposals so that they can tailor them to the communities’ needs, as they will not b e 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, March 25 , the end of the 30

- day period for carrier proposals.

ACCORDINGL Y, 1. We request that carriers interested in providing essential air service at : Iron Mountain/Kingsford, Michigan; Ironwood, Michigan/Ashland, Wisconsin; Manistee/Ludington, Michigan; and/or Escanaba, Michigan

, submit their proposals, with or without subsidy requests,
no later than March 25

, 2010 . The proposals should be e

- mailed to: EAS@dot.gov with the title with the title “Proposal to Provide Essential Air Service at Iron Mou ntain/Kingsford, Michigan; Ironwood, Michigan/Ashland, Wisconsin; Manistee/Ludington, Michigan; and Escanaba, Michigan

, ” with the docket number s corresponding to the communit ies as shown on the first page of this order; 5

2. We extend the rates set by Ord er 2008

- 4

- 10 for Iron Mountain/Kingsford, Michigan; Ironwood, Michigan/Ashland, Wisconsin, that were due to expire on May 31, 2010, through August 31, 2010;

3. Th ese dockets will remain open until further order of the Department; and

4 . We will serve c opies of this order on the partie s listed in Appendix D

.

By:

SUSAN L. 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

5 Questions regardin g filings in response to this order may be directed to Brian Swanson at (202) 366

- 5392 or brian.swanson@dot.gov

.Appendix A



# AREA MAPAppendix B Page 1 of 2

Historical Enplanements
Ironwood /Ashland

Year
Ended Total
Scheduled Passengers Annual
Enplanements 2 Average Enplanements

Per Service
Day 3

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 5,826 2,913 9.3
31-Dec-08 2,905 1,453 4.6
31-Dec-09 2,290 1,145 3.7

Historical Enplanements 1
I ron Mountain/Kingsford

Year Ended Total
Scheduled Passengers Annual
Enplanements 2 Average Enplanements

Per Service
Day 3

31-Dec-03 10,383 5,192 16.6
31-Dec-04 14,567 7,284 23.2
31-Dec-05 16,860 8,430 26.9
31-Dec-06 15,485 7,743 24.7
31-Dec-07 12,927 6,464 20.7
31-Dec-08 8,042 4,021 12.8
1/1/2009 - 10/31/2009 9,522 4,761 18.3

Notes: 1. Source: http://mdotwas1.mdot.state.mi.us/public/airportstats/ 2. Total scheduled passengers divided by two. 3. Average annual enplanements divided by 313 effective annual service days, except for annual periods ended 12/31/2004 and 12/31/2008 (314 effective annual service days).Appendix B Page 2 of 2

Historical Enplanements 1 Manistee/ Lu dington

Year
Ended Total
Scheduled Passengers Annual
Enplanements 2 Average Enplanements

Per Service
Day 3

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

Historical Enplanements 1
Escanaba

Year
Ended Total
Scheduled Passengers Annual
Enplanements 2 Average Enplanements

Per Service
Day 3

31-Dec-03 16,223 8,112 25.9
31-Dec-04 17,856 8,928 28.4
31-Dec-05 19,029 9,515 30.4
31-Dec-06 18,485 9,243 29.5
31-Dec-07 17,216 8,608 27.5
31-Dec-08 10,277 5,139 16.4
31-Dec-09 13,779 6,890 22.0

Notes: 1. Source: http://mdotwas1.mdot.state.mi.us/public/airportstats/ 2. Total scheduled passengers divided by two. 3. Average annual enplanements divided by 313 effective annual service days, except for annual periods ended 12/31/2004 and 12/31/2008 (314 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

approva l. 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 cancellati ons, 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 ensur ed 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 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 cessati on. 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 currently available for performance u nder this solicitation beyond [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 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] , the carrier will receive notice i n 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,
or 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

SERVICE LIST

Air Greco, d/b/a Wings Air, Aaron Goerlich Kenmore Air, Tim Brooks Air Greco, d/b/a Wings Air, Charles Mintz Mesa Air Group, Jonathan Ornstein Air Greco, d/b/a Wings Air, Robert Rupard Mesa Air Group, Michael Lotz Air Sunshine, Mirmohammad Adili Mesa Air Group, Mike Holcomb Air Wisconsin, Barbara Jone s Mesaba, Max Shemesh Alaska Airlines, Jeff Cole Mesaba, John Spanjers Alaska Airlines, Sandy Sinick Midwest Airlines, Anthony Intravia Allegiant Air, Robert Ashscroft Midwest Airlines, David Reeve Alliance Air, Paul Berliner Midwest Airlines, Greg Aretakis American Airlines, Carl Nelson MN Aviation, Jose Maldonado American Eagle, Jeff Hartz Multi Aero, Darnea Bemidji Aviation, Arlen Rinkenberger Multi Aero, Shane Storz Bemidji Aviation, Cori Rude NYDC, Henok Araya Cape Air, Andrew Bonney Northwest, Aaron Murray Cape Air, Dan Wolf Northwest, Tim McDonald Cape Air, J. Flaherty OST, Dennis DeVany, Renee Williams, Caribbean Sun Airlines, John Rupert OST, Kevin Adams, Brian Swanson Colgan Air, Mike Colgan Pacific Wings, Frank Ford Colgan Air, Kevin Scott Pacific Wings, Greg Kahlstorf CommutAir, Andy Price Pinnacle Airlines, Joe Williams CommutAir, Joel Raymond Pinnacle Airlines, Phil Reed Continental, Bruce Keiner Public Charters, Jim Gallagher Continental, Dan Weiss Salmon Air, Dan Schroeder Continental, Lorry Halloway Salmon Air, JoAnn Wolters Delta Air Lines Amy Martin Scenic, Mary Schneider Delta Air Lines, Jeff Morgan Scenic, Mitzi Daines Delta Air Lines, Dan Shuman Seaborne Airlines, Wayne D’Amico
Delta Air Lines, Joe Esposito SeaPort Airlines. Rob McKinney Delta Air Lines, Sascha Vanderbellen Shuttle America, Jerry Balsano Delta, Karen Zachary SkyWest, Eric Christensen Executive Airlines, Kate Soled SkyWest, Michael Thompson Great Lakes Airlines, Chuck H owell Sovereign Air, Bob Karns Great Lakes Airlines, Doug Voss Sovereign Air, Lois R. Barton Great Lakes Airlines, Greg Stephens Tradewind, Eric Zipkin Gulfstream, Dave Hackett Trans States, Bill Mishk Gulfstream, Mickey Bowman Trans States, Gerry Wigmore Gulfstream, T. Cooper United, Alicia Gabriel Homeland Security, Michael Duffy United, James Starnes Homeland Security, Randy Webb US Airways, Howard Kass Horizon Air, Dan Russo US Airways, Jason Reisinger Horizon Air, Jennifer Thompson US Airways, Benjamin Slocum Horizon Air, Jeff Cole Vintage Props and Jets, Nate Vallier ICEPR, Luis Irizarry Wings of Alaska, Bob Jacobsen Island Air Charters, Linda House Wings of Alaska, Michelle Donohue Jet Air, Daniel Wolford