Order 2013

- 12

- 1 4

Served: December 23, 2013



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

o n the 23 rd d ay of December

, 2013

ORDER REQUESTING PROPOSALS

Summary By this O rder, the Department is requesting proposals from ca rriers interest ed in providing

E ssential A ir S ervice (EAS) at Ironwood

, Michigan /Ashland, Wisconsin (Ironwood)

, Thief River Falls, Minnesota and /or Watertown, South Dakota , for a new contract period, beginning

June 1, 201 4

, with subsidy support if necessary

. (See Append ix A for a map). Carriers should file their proposals no later than January 22, 2014

.

Background

By Order 2011

- 11

- 30 (November 23, 2011), the Department selected Great Lakes Aviation, Ltd. (Great Lakes), to provide subsidized EAS at Thief River Falls, Mi nnesota, utilizing 19

- seat Beech 1900D aircraft, with 12 nonstop round trips a week to Minneapolis at an annual subsidy

rate of $1,881,815; and at Watertown , utilizing 19

- seat Beech 1900D aircraft, with 18 nonstop round trip s a week to Minneapolis, at an a nnual subsidy rate of $1,710,324 , each for a two

- year period

. Great Lakes inaugurated service to Watertown on April 2, 2012, and at Thief River Falls on May 17, 2012

.

By Order 2012

- 3

- 5 (March 7, 2012), the Department selected Great Lakes to provide su bsi dized

EAS at Ironwood, utilizing 19

- seat Beech 1900D aircraft, with 12 nonstop round trips a week to Minneapolis/St. Paul at an annual subsidy rate of $1,747,326, for two years beginning when Great Lakes inaugurated service at Ironwood and Rhinelander, Wis consin. Great Lakes inaugurat ed service to Ironwood on March 11, 2012, but ultimately did not inaugurate service at

Rhinelander , and another carrier was later selected to serve Rhinelander.

Essential Air Service at

IRONWOOD

, MICHIGAN/ASHLAND,
WISCONSIN THIEF RIVER FALLS, MINNE SOTA WATERTOWN, SOUTH DAKOTA

Under 49 U.S.C. 41731 et seq

. D ocket DOT

- OST

- 1996

- 1266

D ocket DOT

- OST

- 2001

- 10642

D ocket DOT

- OST

- 2001

- 106442

Subsequently, b y Order 2012

- 6

- 23 ( June 26, 2012 ), the Departme nt stated that it would use May 17, 2012, as the effective start

- date when Great Lakes established EAS at Thief River Falls

and a number of other communities. The contracts will thus expire at the end of the two year period th rough the end of the 24 th mont h th e reafter

, May 31, 2014.

Finally , by Order 2012

- 9

- 17 (September 14, 2012), the Department established the end date for Great Lakes’ contract to provide service at Ironwood as May 31, 2014, to synchronize it with

other EAS contracts with Great Lakes int o its Minneapolis

- St. Paul hub (described above for Thief River Falls and Watertown).

The complete public file for EAS at Ironwood, Thief River Falls, and Watertown may be accessed online through the Federal Dockets Management System at: www.regulations.gov by entering “DOT

- OST

- 1996

- 1266”; “ DOT

- OST

- 2001

- 10642 ”; “ DOT

- OST

- 2001

- 10644 ” in the “Search for Rules, Comments, Adjudications, or Supporting Documents” field.

Request for Proposals

As the end of the current c ontract approaches, the Department is requesting proposals from carriers interested in providing EAS at Ironwood, Thief River Falls, and /or Watertown, with subsidy support if necessary , for a new rate term beginning June 1

, 201 4

. Carriers should file

the ir proposals no later than January 22, 2014

. Staff will the n docket the proposals, thereby making them public

. Shortly afterwards, we will provide a summary of the proposals to the

communit y and ask them to submit their final comments. We will give full consideration t o 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 the discretion to negotiate p roposals 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 re

- solicit a new round of proposal s. 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 prescribe 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 present; however, we recommend th ey include information concerning proposed

schedules and projected block hours . In addition, applicants are encouraged to provide financial data supporting their subsidy requests, including information on their projected expenses and

1 Carriers should not expect the Department to accept late fillings. In cases where a carrier proposes to provide EAS without subsidy and we determine that basic EAS, as required by 49 U.S.C. § 41732, can be reliably provided

without suc h compensation, we typically will not proceed with the carrier

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

- free service as proposed.3

revenues. We strongl y encourage clear, well

- documented proposals that will facilitate their evaluation by the affected communit ies and the Department. 2

The Department expects proposals that are co ns istent with what the community currently

receive s
, with service to a suitable hub airport that provides numerous connecting opportunities to the national air transportation system. If aircraft seating 30 passengers or larger are contemplated, we request proposals for 12 nonstop or one

- stop round trips at each of the three

communit ies. If smaller aircraft (9 seats) are contemplated, we may consider additional frequencies. We encourage proposals that meet these guidelines in an effi cient manner. Carriers are also welcome to propose more than one service option, if they choose. T h ey also need not

limit themselves to the se requirements if they envision other, potentially more attractive service possibilities

-- different hubs or length of contract, for example

-- with subsidy requirements that remain competitive.

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 Histo ry
For the most recent 12

- month period where data is available, Ironwood average 8.1 enplanements per day, Thief River Falls 6.9 , and Watertown 15.1

. We have provided some histori c traffic data

for the communities in Appendix B. Traffic has deceased year over year. At Ironwood, passengers decreased by 659 (

- 11.51%), at Thief River Falls by 1,472 (

- 25%) and at Watertown by 5,046 (

- 35%), respectively.

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

- free workplaces, and nondiscrimination. 3 Consequently, all carriers receiving

2 In selecting a carrier to provide subsidized EAS for an eligible place not in Alaska , 49 U.S.C. § 41733(c) (1) directs us to consider five factors: (a) service reliability; (b) contractual and marketing arrangements with a larger carrier at the hub; (c) interline arrangements with a larger carrier at the hub; (d) community views, giving substantial wei ght to the views of the elected officials representing the users; and (e) whether the carrier has included a plan in its proposal to market its service to the community. In addition, the Consolidated and Further Continuing Appropriations Act, 2012, Public Law No. 112

- 55, and continued by the Full

- Year Continuing Appropriations Act, 2013, Public Law

No. 113

- 6

, and the Continuing Appropriations A ct, 2014, Public Law No. 113

- 46, provides that wh en selecting a carrier to provide EAS, the Department may conside r 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 Essential Air Service will be included in the selectio n Order as part of our authorization of subsidy for the selected service. Appendix C of this Order contains those general provisions.

3 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 Act of 1964; (3) 49 CFR Part 27

-- Nondiscrimination on the Basis of Disability in Programs and Activities Receiving or Benefiting from Federal Financial Assistance; (4)

14 CFR Part 382

-- Nondiscrimination on the Basis of Disability in Air Travel; and (5) 49 CFR Part 29

-- Government

- Wide Debarment and Suspension (Non

- Procurement) and Government

- Wide Requirements for Drug

Free Workplace (Grants).4

Federal subsidy for EAS 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 contract 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 d o not submit these documents, all carriers that plan to submit proposals involving subsidy should be aware that the selected carrier will be required to complete the required certifications. Interested carriers requiring more detailed information regardin g these requirements should contact the Offic e of Aviation Analysis at (202) 366

- 5903. 4

Community Comments

The communit y is welcome to submit comments at any time. We encourage prospective appl icants to contact the community before they submit their prop osals so that they can tailor

them to the communit y ’ s needs, as they will not be able to amend them after the due date. As noted earlier, we will provide a summary of the proposals to the civic parties shortly after the deadline for carrier proposals, and ask them to submit their final comments.

This Order is issued under authority delegated in 49 CFR Part 1.25a(b) and re

- delegated to the Director, Office of Aviation Analysis.

ACCORDINGLY,

1. We request that carriers interested in providing Essential Ai r Service at Ironwood, Michigan/Ashland, Wisconsin, Thief River Falls, Minnesota

, and Watertown, South Dakota

, submit their proposals, with subsidy support if necessary , no later than January 22, 2014 . The proposals should be e

- mailed to: EAS@dot.gov with the title “Proposal to Provide E AS at Ironwood, MI, Thief River Falls, MN, and /or Watertown, S D ”; 5

2. Th ese docket s will remai n open until further O rder of the Department; and

3 . We will serve copies of this O rder on the mayor s of Ironwood, Michigan, Ashland, Wisconsin, Thief River Falls, Minnesota, and Watertown, South Dakota, the airport manager s of Gogebic

- Iron County Airport (Ironwood/Ashland), Thief River Falls Regional Airport

, Watertown Regional Airport, and the service list for th ese docket s

.

4 The certifications are also available on the web at http://www.dot.gov/policy/aviation

- policy/small

- community

rural

- air

- service/essential

- air

- service

. 5 Questions regarding filings in response to this O rder may be directed to Michael Gormas at (202) 366

- 1853 or mail to:michael.gormas@dot.gov

.5

Persons entitled to petition the Department for review of this Order under the Department’s Regulations, 14 CFR Part 385.31(a), must file such petitions within seven (7) days after the date

of service of this Order.

This Order will be effective immediately, and the filing of a petition for review shall not preclude

its effectiveness.

By:

TODD M. HOMAN

Director Office of Aviation Analysis (SEAL) An electronic version of this document is available

o nline at http://www.regulations.gov

.Appendix A

AREA MAP

Maps generated by the Great Circle Mapper

- copyright © Karl L. Swartz.Appendix B Page 1 of 2

EAS Carrier Traffic at :

I ronwood, MI/Ashland, WI (IWD ) 1
Thief River Falls, MN (TVF) Watertown, SD (AT Y)

Ironwood, Michigan

Quarter Year Deplanements Enplanements Total Traffic Enplanements per Day 2

4 2011 957 982 1,939 12 .3

1 2012 591 674 1,265 8 .2

2 2012 495 444 939 6 .0

3 2012 784 798 1,582 10 .0

Annual

Totals 2,827 2,898 5,725 9 .1

4 2012 604 616 1,220 7.7

1 2013 477 544 1,021 6.6

2 2013 637 531 1,168 7 .5

3 2013 809 848 1,657 10 .5

Annual

Totals 2,527 2,539 5,066 8 .1

Thief River Falls, Minnesota

Quarter Year Deplanements Enplanements Total Traffic Enplanements per Day

4 2011 556 64 8 1,204 7.6

1 2012 740 761 1,501 9.7

2 2012 731 660 1,391 8.9

3 2012 876 823 1,699 10.8

Annual

Totals 2,903 2,892 5,795 9 .3

4 2012 561 575 1,136 7 .2

1 2013 529 531 1,060 6.9

2 2013 497 499 996 6.4

3 2013 584 547 1,131 7 .2

Annual

Totals 2, 171 2,152 4,323 6.9Appendix B Page 2 of 2

Watertown, South Dakota

Quarter Year Deplanements Enplanements Total Traffic Enplanements per Day

4 2011 2,548 2,566 5,114 32 .4

1 2012 2,243 2,306 4,549 29.5

2 2012 1,056 994 2,050 13 .1

3 2012 1,416 1,385 2,801 17.7

Annu al

Totals 7,263 7,251 14,514 23 .2

4 2012 1,289 1,289 2,578 16 .3

1 2013 1,259 1,093 2,352 15 .3

2 2013 1,245 1,166 2,411 15 .5

3 2013 1,088 1,039 2,127 13 .5

Annual

Totals 4,881 4,587 9,468 15 .1

Notes : 1. Source: Bureau of Transportation Statist ics T

- 100 Market

. 2. E nplanements per Day = Total Traffic/2/ 313 annual service days (314 in leap years).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 d oes 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 aircraf t 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 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 ensured of full compensation. Should circumstan ces 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 det ermining 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

c ommunity.

If the Department unilaterally, either partially or complete, 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 Departmen t 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 cessation. Those adjustments in the levels of

subsi dy 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 may not be available for performance under this Order beyond [DATE]. The Government’s

obl igation for performance under this Order beyond [DATE], 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 [DATE], until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond [DATE] , the Department will provide notice in writing to the carrier.

Subsidy contracts are subject to, and incor porate 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, i ncluding any amended claims, must be submitted within 9 0 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 st ; August claims must be submitted by November 30 th , and so on.