Order: 20 1 5

- 5

- 15

Served: May 19 , 20 1 5



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 19 th of May , 2015

Essential Air S ervice at

GRAND ISLAND

, NEBRASKA

under 49 U.S.C. § 41731 et seq. Docket DOT

- OST

- 200 2

- 13983

ORDER R E

- SELECTING CARRIER

Summary By this O rder

, the Department is re

- s electing American Airlines (American) to provide E ssential

Air S ervice (EAS) at Grand Island

, Nebraska

, at a n annual subsidy rate of $ 1,270,707 , for the

two

- year period from July 1, 201 5 , through June 30 , 201 7

. 1

Background By Order 201 3

- 5

- 10 , issued May 10 , 2013 , the Department s elected American to provide 1 3 nonstop round trips per week from Grand Island to the Dallas/Ft. Worth International Airport (DFW) using 44 or 50

- seat regional jet aircraft, from July 1, 2013 , through June 30 , 201 5 , for a annual subsidy rate of $ 1,837,021

.

I n anticipation of the end of the current rate term, the Department issued Order 20 1 5

- 1

- 22 on January 27, 2015 , solicit ing proposals to provide EAS , with or without subsidy, at Grand Island

for a new contract peri od. In response to our request we received one proposal from American,

the incumbent . The proposal is summarized below. The full proposal may be accessed at www.regulations.gov by searching for docket DOT

- OST

- 200 2

- 13983

.

Proposal of American

American , the incumbent, proposes to continue its existing pattern of service at Grand Island. Specifically, American would continue providing 13 weekly nonstop round trips to DFW. American proposes to operate regional jet aircraft seating 44 or 50 passengers, conducted by

1 Such subsidy i s calculated and distributed on a fiscal year basis, subject to the availability of funds.- 2

-

American’s regional brand, American Eagle. American requests th e a bility to use these aircraft interchangeably for operational flexibility , allowing it to improve service reliability

. As a

condition of its proposal, American requests that the D epartment and Grand Island waive the right to hold

- in American upon its filin g of a 120

- day notice to terminate service. American requests an annual subsidy of $1,270,707.

Community Comments

On February 26 , 20 1 5

, the Department requested community comment s regarding the carrier

selection at Grand Island

. On March 26 , 201 5

, the Department received resolutions from the City of Grand Island, the Hall County Airport Authority Board , and the Grand Island Chamber

of Commerce. All three entities fully support the reselection of American as Grand Island’s EAS provider , with Grand Islan d Mayor Jeremy Jensen stating that, “We pledge our full support, endorsement, and cooperation to improve the service options available to central Nebraska through the Essential Air Serivce

. ” Additionally, the Hall County Airport Authority Board

acknowled ges and accepts the condition that American be allowed to cease service upon 120

- days notice.

Decision The decision in this case is straightforward. American was the only carrier to submit a proposal,

it meets all of the relevant selection criteria 2 , it received the full support of the community, and the Department finds the service level and subsidy request to be reasonable. American has been providing reliable EAS at Grand Island since June 2011, and has been able to significantly

increase traffic and reduce its annual subsidy by over $944,000 since its initial selection.

The Department therefore selects American to provide EAS at Grand Island , for the two

- year period from July 1, 2015, through June 30 , 2017, at a n annual subsidy rate of $ 1,270,707

. T he Department shall make this selection at Grand Island contingent upon the Department’s receiving properly executed certifications from American that it is in compliance with the Department’s regulations regarding drug

- free workplaces and nondiscriminatio n, as well as the regulations concerning lobbying activities.

Carrier Fitness

49 U.S.C. §§ 41737(b) and 41738 require that the Department find an air carrier fit, willing, and able to provide reliable service before we may subsidize it to provide EAS

. American is sub j ect to the Department’s continuing fitness requirements, and no information has come to our attention that would cause us to question the carriers ’ fitness at this time. We have contacted the Federal Aviation Administration, and it has rai sed no concerns that would negatively affect our fitness finding. We therefore conclude that the carrier remain s fit to conduct the operations proposed here.

2 When selecting a carrier, 49 U.S.C. § 41733(c)(1) directs us to consider five 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; (4) community views, giving substantial weight to the views of the elected officials representing the users; and (5) whether the carrier has included a plan to market i ts services to the community. In addition, The Consolidated and Further Continuing Appropriations Act, 2015 (Public Law No. 113

- 235), provides that when selecting a carrier to provide EAS, the Department may consider the relative subsidy requirements, thu s codifying a factor that we have considered since the inception of the program.- 3

-

This O rder is issued under the authority delegated in 49 CFR Part 1. 25 a( b ).

ACCORDINGLY,

1. Th e Department re select s American Airlines to provide E ssential Air S ervice at Grand Island

, Nebraska ;

2

. The Department set s the final rate of compensation for American Airlines

, for the provision

of E ssential A ir S ervice at Grand Island

, Nebraska , as described in Appendix C ;

3

. The Department direct s American 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 examination by representatives of the Department. Such documentation shall be retained for seven years from the service date of this Order, or until the Department indicates that the records may be destroyed, whichever comes first. Copies o f 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 O rder;

4

. The Department find s that American Airlines continue s to be fit, willing and able to operate

as a certificated air carrier an d capable of providing reliable Es sential A ir S ervice at Grand

Island

, Nebraska ;

5 . Th is docket will remain open until further O rder of the Department; and

6

. The Deaprtment will serve copies of this O rder on the Mayor of Grand Island , Nebraska, the Director of the Hall County Airport Authority, and American Airlines

.

By:

BRANDON M. BELFORD Deputy Assistant Secretary

for Aviation and International Affairs

(SEAL)

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



## AREA MAP

Maps generated by the Great Circle Mapper

- copyright © Karl L. Swartz.Appendix BAppendix C

American Airlines

Essential Air Service to be Provided at Grand Island, Nebraska

Effective Period : July 1, 201 5 , through June 30 , 201 7

Scheduled Service : 1 3 weekly nonstop r ound trips to Dallas/Ft. Worth International Airport

Aircraft : Embraer 140 (44 seats); Embraer 145 (50 seats); CRJ

- 200 (50 seats) Annual Subsidy: $ 1,270,707 1
Rate per Eligible Flight: $ 9 59 2
Weekly Ceiling : $ 24,934 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 eligibi lity 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. If the carrier contemplates any such changes beyond the scope of the Order during the applicable period of this rate, it must first notify the Office of Aviation A nalysis 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; 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

w hich 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

servi ce 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 service levels, the carrier may cease to provide service to that specific location without re gards 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 payment.

Subsidy contract 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 foreg oing paragraph.

Funds may not be available for performance under this Order beyond September 30, 2015

. The Government’s obligation for performance under this Order beyond September 30, 2015 , is subject to the availability of 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 September 30, 2015 , until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond September 30, 2015 , the Department will provide notice in writing to the carrier.

All claims for payment, including any amended claims, must be submitted w ithin 90 days of the last day of the month for which compensation is being claimed. For example, claims for service provided in July must be filed by

October 31; August claims must be submitted by November 30, and so on.

1 See Appendix B.

2 Annual compensation of $1,270,707 divided by 1,325 annual operations ( 26 weekly operations x 52 weeks x 98 percent completion)

. 3 26 operations per week mu ltiplied by $ 959 per flight

.