Order : 201 1

- 1

- 16
Served: January 22 , 20 1 1



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

Issued by the Department of Transportation
on the 18 th day of January , 20 1 1

ORDER GRANTING A PETITION FOR RECONSIDERATION, SELECTING A CARRIER AND SETTING FINAL SUBSIDY RATES

Summary By this order, the Department is : 1) granting the petition of Charter Air Transport, Inc., in cooperation with Public Charters, Inc. (hereinaf ter referred to as Charter J/V), to reconsider
Order 2010

- 9

- 26 and affirming our findings in that order ; and 2) selecting Chautauqua
Airlines

, Inc. d/b/a Frontier Airlines (Frontier), a wholly owned subsidiary of Republic Airways Holdings, Inc.

, to provide subsidized essential air service ( EAS ) at Ironwood, Michigan/Ashland, Wisconsin (Ironwood), and Manistee/Ludington, Michigan (Manistee)

. Service will be provided with 37

- seat Embraer 135 aircraft for a two

- year period beginning when the carrier inaugurates service through the end of the 24 th month thereaf ter , at a combined annual subsidy rate of $ 3,082,383

. 1 (See Appendix A for a map.)

Background

B y Order 2008

- 4

- 10, April 7, 2008, the Department selected Great Lakes Aviation, Ltd. (Great Lakes), to provide subsidized EAS at Ironwood and Manistee utilizin g 19

- seat Beech
1900D aircraft for a new two

- year term beginning when it inaugurated full service. Under that order, Great Lakes provide s Ironwood with two daily one

- stop (at Rhinelander, Wisconsin) round trips to Milwaukee for an annual subsidy rate of $1,492,865. Great Lakes provides Manistee with two daily nonstop round trips to Milwaukee for an ann ual subsidy of $1,799,395, or a combined annual subsidy rate of $3,292,260. Great Lakes commenced

1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds. Essential Air Service at

IRONWOOD, MICHIGAN/ASHLAND, WISCONSIN
MANISTEE/LU DINGTON, MICHIGAN

Under 49 U.S.C. 41731 et seq

. Docket DOT

- OST

- 199 6

- 1266
Docket DOT

- OST

- 1996

- 1711- 2

-

service at the two communities on May 5, 2008, meaning t hat the contract was originally scheduled to expire on May 31, 2010.

In anticipation of the end of the rate term s and in order to attract as many applicants as possible , the Department issued Order 20 10

- 2

- 18 on February 19 , 2010, synchronizing the

contrac t end dates at the two communities with two additional EAS communities in Michigan

– Iron Mountain/Kingsford and Escanaba.

On June 4, b y O rder 2010

- 6

- 4, the Department selected M esaba A irlines to serve Iron Mountain/Kingsford and Escanaba and re quested prop osals from carriers interested in providing EAS at Ironwood and/or Manistee only , for a new two

- year term.

In response to Order 2010

- 6

- 4, Charter J/V and Sovereign Air, Inc.

, submitted proposals to provide EAS at the two communities. In response to the Department’s July 7 solicitation of community pr eferences and comments on the proposals received , both communities, while acknowledging Charter J/V ’s lack of code

- share and marketing agreem ents, unanimously supported selection of the carrier

. However, by Order 2010

- 9

- 26, September 27, 2010, the Department : 1) determined that the two applicants did not have the requisite operating authority necessary to provide EAS ; and 2) requested a third round of proposal s for EAS at Ironwood and/or Manistee only

, due no later than October 18. On October 15, 2010, in
response to the request of Alaska Juneau Aeronautics, Inc. d/b/a/ SeaPort Airlines (SeaPort)

, and with the support from both communities, the Department extended the due date for proposals to October 25.

On October 20, Charter J/V, with support from Ironwood and Manistee, filed a P etition for

R e consideration of Order 2010

- 9

- 26, arguing the Depart ment adopted a restrictive legal interpretation of the p hrase “scheduled air service

. ” We will address their petition below.

Proposals In response to Order 20 10

- 9

- 26

, five carriers submitted proposals: Charter J/V , Gulfstream
International Airlines

, Inc. (Gulfstream), Air Choice One Airlines (Air Choice), SeaPort

, and
Frontier

.

Copies of the proposals and community comments may be accessed online through the Federal Docket Management System at: http://www.regulations.gov, by doing a search on
the d oc ket number s listed on the first page

. E ach carrier’s proposal is briefly summarized
below.

Charter J/V

Similar to its previous proposal

, Charter J/V’s bid is a cooperative effort between Public Charters, Inc. and Charter Air Trans port, Inc . Ticketing, reservations, and other customer services would be provided by Public Charters, Inc., while Charter Air Transport, Inc. would operate the flights. EAS at the two communities would be provided by Charter J/V as public
charters under 14 CFR Part 380 of the Department’s aviation regulations.

Charter J/V submitted a n inseparable two

- city package (due to aircraft routing) bid for
service to Milwaukee with 30

- passenger Embraer 120 aircraft. Specifically, Charter J/V- 3

-

would provide each community 12 one

- stop or nonstop round trips a week for an annual subsidy of $3, 584,329

. Charter J/V states that it is currently pursuing an interline agreement
with Frontier Airlines at Milwaukee.

Gulfstream

Gulfstream submitted a package (“all or nothing”) bid for service between each community
and Milwaukee utilizing 19

- passenger Beech 1900D aircraft. Gulfstream would provide each community 12 nonstop round trips a week for a combined annual subsidy of $4,732,526 ($3,035,408 at Ironwood and $1,988,710 at Manistee)

. Gulfstream has maintained ticketing and baggage interline agreements with l egacy carriers in several other large airports and states that it has begun code

- share discussions with potential partners at Milwaukee

.

Air Choice Air Choice, utilizing 9

- seat Cessna Caravans, submitted a proposal with six service options (summarized below), all with nonstop service to Chicago O’Hare International Airport

.

Service Option # Weekly
Round

trips Annual Subsidy Required Ironwood Options

1 18 $2, 793

, 074

2 21 $3,071,607

Manistee Options

1 18 $ 2,360

, 686

2 24 $ 2

, 607

, 032

3 28 $ 2,967

, 621 Combined Manistee and Ironwood Option

1 21 $ 5,215

, 760

The carrier has recently signed an interline ticketing and baggage agreement with United
Airlines

.

SeaP ort
SeaP ort would utilize 9

- seat Pilatus PC

- 12 aircraft and would operate from the business
aircraft centers at Milwaukee, Minneapolis and Detroit with complimentary shuttle service to and from the main terminal for connecting passengers

. For Ironwood , SeaP ort proposed 12 nonstop round trips per week to Minne apolis and 6 one

- stop round trips a week to
Milwaukee or Detroit for a first

- year rate of $2,7 66,041 and a second

- year rate of $2,788,390 . At Manistee, the carrier proposed to provide 12 nonstop round trips per week to
Milwaukee and Detroit for a first

- year subsidy of $ 2,975,723 and a second

- year rate of $ 2,984,437

. Thus, the combined annual subsidy rates for both communities is $5,741,764 for

the first

- year and $5,772,827 the second. SeaP o rt’s proposal includes mention of an inte rline agreement with US Airways; however, the details and applicab ilit y of the agreement at the hubs proposed are not discussed.- 4

-

Frontier

Frontier submitted a two

- city package bid to provide service between each community and Milwaukee utilizing 37

- passenger Embraer 1 35 aircraft (with the flexibility to substitute 50

- seat Embraer 145 aircraft for the same annual subsidy) . Specifically, Manistee would receive

1 2 nonstop round trips a week for an annual subsid y of $1,694,794. The carrier would provide Ironwood 1 2 one

- stop (at Rhinelander or Wausau/Stevens Point, Wisconsin) round trips a week for an annual subsidy of $ 1,387,589

. The combined annual subsidy for both communities would be $ 3,082,383

. Frontier al so requested that the Department and two
communities waive the right to hold

- in Frontier upon a 180

- day notice to terminate service.

Community Comments

On October 26 , the Department solicited the views of both communities

.

O n November 9

, we received letters from the airport managers of both communities stating that their respective A irport Board s , in unanimous vote s , endorsed Frontier and agreed to
waive any hold

- in requirements upon 180

- day notice

.

The Manistee County Blacker Airport Authority made a back

- up recommendation of Charter

J/V

. Ironwood ’s letter also made mention of a community membe r’s suggestion to consider Charter J/V as a viable option for air service.

Decision On Carrier Selection

After careful consideration of all the facts of this case , including the comments of local officials, the Department has decided to select Frontier to provide EAS at both communities, in accordance with its proposal.

At both communities Frontier ’s proposal meets all o f the statuto ry carrier

- selection criteria

. Its operation provides the communit ies same

- carrier connections to more than 30 domestic nonstop destinations at Milwaukee

. The carrier also has full interline agreements with most major airlines, which will pr ovide additional “seamless” options to Milwaukee travelers

. Both communities support Frontier ’ s proposal, and it requires the least subsidy of all the options. Further, we find that both the service and subsidy levels are reasonable.

Frontier will provi de 12 nonstop round trips a week between Manistee and Milwaukee for an annual subsidy of $1,694,794. Between Ironwood and Milwaukee the carrier will provide 12

one

- stop (at Rhinelander or Wausau/Stevens Point) round trips a week for an annual subsidy of $1,387,589. Service at the two communities will be provided utilizing 37

- seat, Embraer 135 aircraft (or 50

- seat, Embraer 145 aircraft) . The combined annual s ubsidy rate is $3,082,383

.

T he Department fully expects passenger traffic to grow at both communities, and that the
communities and Frontier will work together to ensure the sustainability of the continuation
of the proposed service levels.

The Departmen t shall make this selection at both communities contingent upon the Department’s receiving properly executed certifications from Frontier that it is in compliance- 5

-

with the Department’s regulations regarding drug

- free workplaces and nondiscrimination, as

we ll as the regulations governing lobbying activities.

Compensation for Interim

- Period Service During this long carrier

- replacement case, we will require the incumbent carrier, Great Lakes, to continue providing service until replacement service begins. Great Lakes is eligible to be compensated for the provision of EAS at the two communities until a replacement carrier inaugurates full EAS operations at the communities . Thus, pursuant to
49 U.S.C. § 41734 (d), the Department will continue to compensate G reat Lakes at the subsidy amounts set in Order 2008

- 4

- 10

.

We expect Great Lakes and Frontier to work together to make a smooth transition at the two communities. In that regard, before Gre at Lakes suspends its service , we expect it to contact all passeng ers holding reservations for travel after its final date of service, to inform them of the change in service, and to assist them in arranging alternate transportation or to provide a refund of the ticket price, without penalty, if requested.

Carrier Fitness

49 U.S.C. § 41737(b) requires that we find an air carrier fi t, willing, and able to provide reliable service before we may subsidize it to provide essential air service. Frontier is subject to the Department’s continuing fitness requirements, and no information ha s come to our attention that would cause us to question the car rier's fitness at this time. We have contacted
the Federal Aviation Administration (FAA) , and it has raised no concerns that would negatively affect our fitness finding. We t herefore conclude that th e carrier remains fit to conduct the operations proposed here.

Charter J/V’s Petition for Reconsideration As mentioned above, Charter J/V, with support from Ironwood and Manistee, filed a P etition
to reconsider Order 2010

- 9

- 26 with the Department on October 20. Charter J/V states that the proposal it submitted in response to Order 2010

- 6

- 4 met or exceeded the service criteria that Congress established for basic essential air service

.

In its petition, Charter J/V requested tha t the Department: (1) rec onsider its decision in
Order 2 01 0

- 9

- 26; (2) reverse Order 2010

- 9

- 26 and find Charter Air Transport, Inc. eligible to provide EAS service as regularly scheduled public charter operations; or, alternatively , (3)
declare that an EAS community may waive or request an exemption from the “scheduled
service” requirement and allow subsidy payments to be made to public charter flights that would otherwise meet the requirements of basic essential air service ; and (4) proceed without delay to
select Charter J/V ’s new EAS proposal in response to the latest request for proposals.

In support of its request

, the carrier makes four major arguments

. First, as background,
Charter J/V restates several key findings documented in a recent Gove rnment Accountability
Office (GAO) r epor t on small community air service , including the lack of carriers currently participating in the EAS program. Consistent with the report, the petitioner restates the
GAO’s recommendation that the Department evaluate other forms of air service that might
better serve communities

. The carrier argues that its Transportation Security Administration Secure Flight compliant service, utilizing 30

- seat

, pressurize d aircraft and marketed through- 6

-

the internet

, would offer more comfort and convenience to passengers when compared to
EAS carriers using 9

- seat aircraft ( which may not operate from an airport’s main commercial
airline terminals )

, and Charter J/V offer s quality access to the nation’s air transportation
network. Second, Charter J/V contends that the Department’s interpretation of basic EAS in
Order 2010

- 9

- 26 is incorrect

. The carrier notes that the Department acknowledge d that Charter J/V could provide service as it proposed in response to Order 2010

- 6

- 4 (i.e., a s public
charters operated pursuant to a published schedule with 30

- seat aircraft), but that the service
cannot be subsidized by the EAS Program

. The petitioner insists that the Department’s interpretation of basic essential air service requirements deprives EAS communities the opportunity to obtain air service that can be provided in non

- subsidized markets. The carrier also explains how its interpretation of several other important aviation and safety regulations
and definitions differ s from the Dep artment’s finding s documented in Order 2010

- 9

- 26.
Charter J/V maintains that public charter air service operated according to a published
schedule should not be precluded as a means of subsidized EAS if that service meet s or exceed s all requ ired EAS servi ce requirements. Third, Charter J/V claims that the Department has the authority to grant a waiver or exemption to allow a community to receive
subsidized EAS via public charter air service , if it is in the public interest (or if the

c ommunity is willing to waive its rights to basic essential air service ) . The carrier
summarizes the precedent s of EAS communities ’ waiving their rights to the minimum EAS service attributes, including aircraft operated by twin

- engine and two

- pilots, 15

- seat aircraft

, and carrier hold

- in requirements , and asserts that if the community is willing to accept public
charter air service and waive its right to basic essential air service requirements, the Department similarly should be willing to accept such service under the EAS program

. Lastly, Charter J/V emphasizes that its proposed service is consiste nt with the public interest
in that both Ironwood and Manistee fully supported Charter J/V’s proposal. The carrier reiterates that its proposed charter service is superior to t hat provided by EAS carriers that operate 15

- seat or less aircraft and could bolster service provided to EAS communities.

Community Comments

B oth Ironwood and Manistee supported Charter J/V ’s Petition for Reconsideration, but expressed no opinions on the Department’s interpretation of basic EAS requirements. However, in a manner similar to that discussed in Charter J/V’s Petition , both communities
noted several examples where, at the specific request of EAS communities, the Department
has waived basic essen tial air service requirements and selected (and pays subsidy) to the carrier recommended by the community. In support of the Petition, b oth communit ies affirmatively waived their rights to “scheduled air service” and specifically asked the Department for clarification on whether subsidized EAS could be provided by public charter air service operated according to a published schedule (by waiver or exemption) if the communities supported the s ervice

.

Decision on Charter J/V’s Petition for Reconsideration

We have decided to grant Charter J/V’s Petition for Reconsideration and, upon reconsideration, we affirm our findings in Order 2010

- 9

- 26.

Charter J/V fails to meet the EAS Program requirement s because it does not hold authority from the Department and the FAA to operate 30

- seat aircraft in scheduled operations. Congress established the framework of the EAS program in 49 U.S.C. §41732(a), which- 7

-

states, “GENERAL.

- Basic Essential Air Service pro vided under section 41733 of this title is
scheduled [emphasis added] air transportation of passengers and cargo...” The company currently holds economic authority from the Department to conduct operations pursuant to

14 CFR Part 135

. 2 That authority allows the company to provide scheduled air service with

9

- seat or smaller, non

- turbo

- jet aircraft, and public charter service with up to 30

- seat aircraft,
under 14 CFR Part 380. Public charter operations are not by definition, scheduled operations. 3 How ever, Charter J/V’s proposal is to operate 30

- seat Embraer Brasilia aircraft, for which it does not possess the requisite DOT or FAA authority to operate in scheduled air transportation. 4

Charter J/V argues that the communities effectively waived their r ights to scheduled air service and would agree to charter service. Charter J/V further argues that other EAS communities have waived other features of the EAS program, e.g., some communities prefer more frequent service with 9

- seat aircraft rather than 15

- seat aircraft as guaranteed to most communities. We disagree. As we mentioned above, the very framework of the program is
established in 49 U.S.C. §41732(a) and requires scheduled air service. The exemptions to
which C h arter J/V refers are contained in 49 U.S.C. §41732(b), and are service minimums designed to protect the community, and communities have from time to time effectively exempted themselves from those minimum service requirements. Congress did not list
scheduled service as one of the minimum service requirements specified in
49 U.S.C. §41732(b) , but instead included it as part of the basic definition of the program. Consequently, we are not able to allow communities to rewrite the framework of the EAS program by exempting them from the basic requirement that all essential air service be provided by scheduled operations.

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

ACCORDINGLY,

1. We select Chautauqua Airlines

, Inc. d/b/a Frontier Airlines , to provide essential air
service at Ironwoo d, Michigan/Ashland, Wisconsin, and Manistee/Ludington, Michigan , as described in Appendix C

, for a two

- year period beginning when the carrier inaugurates service through the end of the 24 th month thereafter ;

2. The Department directs Chautauqua Airlines, Inc. d/b/a 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 examin ation 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 re tained. The carrier may forfeit its compensation for any claim that is not supported under the terms of this order;

2 See Order 2010

- 3

- 8, issued March 8, 2010, in Docket DOT

- OST

- 2009

- 0187.

3 See 14 CFR §§ 119.3, 380.2.

4 O ur determination in this case does not impact the carrier’s ability t o provide service under Part 380 in a
context other than EAS.- 8

-

3 . We find that Chautauqua Airlines, Inc. d/b/a Frontier Airlines , continues to be fit, willing and able to operate as a certificated air carrier and capable of providing reliable essential air
service at Ironwoo d, Michigan/Ashland, Wisconsin, and Manistee/Ludington, Michigan ;

4. U nder our authority in 49 U.S.C. § 40109, we will allow Chautauqua Airlines, Inc. d/b/a Frontier Airlines to cease operations at Ironwoo d, Michigan/Ashland, Wisconsin, and Manistee/Ludington, Michigan

, on 1 8 0 days ’ notice to the Department and communities;

5

. We will extend the annual subsidy rate s and the rates per flight and weekly compensation ceilings set for Great Lakes Aviation, Ltd. in Order 2008

- 4

- 10

, April 7 , 2008, until Chautauqua Airlines, Inc. d/b/a Frontier Airlines inaugurates full EAS ;

6. We grant Charter Air Transport , Inc. ’s Petitio n for Reconsideration and , on the merits, affirm our findings in Order 2010

- 9

- 26;

7

. These Dockets will remain open until further order of the Department; and

8

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

.

By:

SUSAN L. KURLAND Assistant Secretary for
Avi ation and International Affairs

(SEAL)

An electronic version of this document is available i n the Federal Docket Management System (FDMS) at http://www.regulations.govAppendix A



# AREA MAPAppendix B Page 1 of 2

Chautauqua Airlines, Inc. d/b/a Frontier Airlines
Provision of Essential Air Service at Ironwood

, Michigan/Ashland, Wisconsin Calculation of Compensation Requirement

Aircraft ERJ

- 135 (37

- seats) or ERJ

- 145 (50

- seats) Mileage : 70 ASMs/Flight 2,590 Daily Departures : 4 Annual ASMs 3,442,110 Annual Departures : 1329 Annual RPMs 832,160
Block per Departure : 0.45 hours Load Factor 24.2%
Annual Block Hours : 598 hours Annual Seats 49,173
Annual Onboard Pax : 11,888 Fuel Cost per Gallon $2.50 Completion Percent: 98%

Revenue
Annual Pax 11,888 Average Segment Fare $87.83
Total Revenue $1,044,123

Expenses System/Station Costs $1,792,780
Fuel Costs $523,136 Total Annual Expense $2,315,916

Profit/(Loss) ($1,271,793) Profit Margin @5% $115,796 Subsidy Request $1,397,589 Subsidy/Departure $1,044.08 Subsidy/Pax $116.72Appendix B Page 2 of 2

Chautauqua Airlines, Inc. d/b/a Frontier Airlines
Provision of Essential Air Service at Manistee/Ludington

, Michigan Calculation of Compensation Requirement

Aircraft : ERJ

- 135 (37

- seats) or ERJ

- 145 (50

- seats) Mileage : 123 ASMs/Flight : 4,551 Daily Departures : 4 Annual ASMs : 6,048,279 Annual Departures : 1329 Annual RPMs : 2,655,324 Block per Departure : 0.75 hours Load Factor : 43.9%
Annual Block Hours : 997 hours Annual Seats : 49,173
Annual Onboard Pax : 21,588 Fuel Cost per Gallon : $2.50 Completion Percent: 98%

Revenue
Annual Pax 21,588 Average Segment Fare $75.02
Total Revenue $1,619,531

Expenses System/Station Costs $2,284,606
Fuel Costs $871,894 Total Annual Expense $3,156,500

Profit/(Loss) ($1,536,969) Profit Margin @5% $1 5 7

, 825 Subsidy Request $1,694,794 Subsidy/Departure $1, 275.24 Subsidy/Pax $78

. 50Appendix C Page 1 of 3

Chautauqua Airlines, Inc. d/b/a Frontier Airlines
Essential Air Service to Be Provided at Ironwood

, Michigan/Ashland, Wisconsin

Effective Period Two years beginning when Frontier inaugurates service through
the end of the 24 th month thereafter. :

Scheduled Service 1 2 one

- stop round trips to Milwaukee a week : Intermediate stops and upline
service : An i nterm ediate stop at Rhinelander or Wausau/Stevens Point,
Wisconsin is permitted

.

No service to any other intermediate point is contemplated under the terms of the carrier’s proposal; accordingly, no such service may be provided on subsidiz ed flights without prior Department approval. Aircraft type: Embraer 135 (3 7

- seats) or 145 (50

- seats)

. Timing of flights: Flights must be well

- timed and well

- spaced in order to ensure full compensation. Annual compensation: $ 1

, 387,589 This rate assumes an annual completion factor of 98 percent. A compensation ceiling is to be applied per calendar week such that service above that ceiling in one week cannot make up for
service shortfalls in another week. Subsidy Rate per Flight : $ 1,130.88 1 Weekly Compensation Ceiling: $ 27,141.12 2

1 $ 1,387,589 divided by 1,227 annual departures: 4 flights/day x 313 days x .98 (completion fact or) =1,227.

2 24 flights per week multiplied by $1,130.88 per flight.Appendix C Page 2 of 3

Chautauqua Airlines, Inc. d/b/a Frontier Airlines
Essential Air Service to Be Provided at Manistee/Ludington

, Michigan

Effective Period Two years beginning when Frontier inaugurates service through
the end of the 24 th month thereafter. :

Scheduled Service 1 2 nonstop round trips to Milwaukee a week : Intermediate stops and upline
service : No service to any intermediate point is contemplated under the
terms of the carrier’s proposal; accordingly, no such service may be provided on subsidized flights without prior Department approval. Aircraft type: Embraer 135 (3 7

- seats) or 145 (50

- seats)

. Timing of flights: Flights must be well

- timed and well

- spaced in order to ensure full compensation. Annual compensation: $1,694,794 This rate assumes an annual completion factor of 98 percent. A compensation ceiling is to be applied per calendar week such that service above that ceiling in one week cannot make up for
service shortfalls in another week. Subsidy Rate per Flight : $ 1,381.25 3 Weekly Compensation Ceiling: $ 33,150 4

3 $ 1,694,794 divided by 1,227 annual departures: 4 flights/day x 313 days x .98 (completion factor) =1,227.

4 24 flights per week multiplied by $1,381.25 per flight.Appendix C Page 3 of 3

Note:

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, 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 ma y 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

r eceive 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; 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 pr ogram are met and the extent of access to the national air transportation system provided to the community.

If the Department unilaterally, either partially or complete ly , 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 wi thout regard to any requirement 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 pay ment.

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 t he foregoing paragraph.

Funds are not currently available for performance under this order beyond March 3 , 201 1 . The Department’s obligation for performance unde r this order beyond March 3 , 2011 , is subject to 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
March 3 , 2011 , until funds are made available to the Department for performance. If funds are not

m ade available for performance beyond March 3 , 2011 , the Department will provide notice in writing to the carrier.

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

SERVICE LIST

Mr. Duane DuRay Manager Gogebic

- Iron County Airport E5560 Airport Road Ironwood, Michigan 49938

Mr. Gerald E. Edwards
Assistant Administrator

, Aviation Services
Division Bureau of Aeronautics & Freight Services Michigan Department of Transportation Aeronautics Building 2700 Port Lansing Road Lansing, Michigan 48906

Mr. Barry Lind Manager Manistee County Blacker Airport 2323 Airport Road
Maniste e, Michigan 49960