Order: 2015-5-15

Served: May 19, 2015

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 19th of May, 2015

Essential Air Service at

GRAND ISLAND, NEBRASKA

under 49 U.S.C. § 41731 et seq.

Docket DOT-OST-2002-13983

ORDER RE-SELECTING CARRIER

Summary

By this Order, the Department is re-selecting American Airlines (American) to provide Essential 

Air Service (EAS) at Grand Island, Nebraska, at an annual subsidy rate of $1,270,707, for the 

two-year period from July 1, 2015, through June 30, 2017.1

Background

By Order 2013-5-10, issued May 10, 2013, the Department selected American to provide 13

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, 2015, for a 

annual subsidy rate of $1,837,021.

In anticipation of the end of the current rate term, the Department issued Order 2015-1-22 on 

January 27, 2015, soliciting proposals to provide EAS, with or without subsidy, at Grand Island

for a new contract period. 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-2002-13983.

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 is calculated and distributed on a fiscal year basis, subject to the availability of funds.
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American’s regional brand, American Eagle. American requests the ability to use these aircraft 

interchangeably for operational flexibility, allowing it to improve service reliability. As a 

condition of its proposal, American requests that the Department and Grand Island waive the 

right to hold-in American upon its filing of a 120-day notice to terminate service. American 

requests an annual subsidy of $1,270,707.

Community Comments

On February 26, 2015, the Department requested community comments regarding the carrier 

selection at Grand Island. On March 26, 2015, 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 Island 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 

acknowledges 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 criteria2, 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 an annual subsidy rate of $1,270,707. The 

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 nondiscrimination, 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 subject 

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 raised no concerns that would negatively affect our 

fitness finding. We therefore conclude that the carrier remains 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 its 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, thus codifying a 

factor that we have considered since the inception of the program.
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This Order is issued under the authority delegated in 49 CFR Part 1.25a(b).

ACCORDINGLY,

1. The Department reselects American Airlines to provide Essential Air Service at Grand Island, 

Nebraska;

2. The Department sets the final rate of compensation for American Airlines, for the provision 

of Essential Air Service at Grand Island, Nebraska, as described in Appendix C;

3. The Department directs 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 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;

4. The Department finds that American Airlines continues to be fit, willing and able to operate 

as a certificated air carrier and capable of providing reliable Essential Air Service at Grand 

Island, Nebraska; 

5. This docket will remain open until further Order of the Department; and

6. The Deaprtment will serve copies of this Order 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.gov
Appendix A

AREA MAP

Maps generated by the Great Circle Mapper - copyright © Karl L. Swartz.
Appendix B
Appendix C

American Airlines

Essential Air Service to be Provided at Grand Island, Nebraska

Effective Period: July 1, 2015, through June 30, 2017

Scheduled Service: 13 weekly nonstop round trips to Dallas/Ft. Worth International Airport

Aircraft: Embraer 140 (44 seats); Embraer 145 (50 seats); CRJ-200 (50 seats)

Annual Subsidy: $1,270,7071

Rate per Eligible Flight: $9592

Weekly Ceiling: $24,9343

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 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 Analysis 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 

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 service levels, the carrier may cease to provide service to that 

specific location without regards 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 foregoing 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 within 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 multiplied by $959 per flight.