### Order 201 5

- 4

- 11

Served: April 17 , 201 5



## UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 17 th 

### day o f April , 20 1 5

Essential Air Service at

PUEBLO, COLORADO DOCKET DOT

- OST

- 1999

- 6589

under 49 U.S.C. 41731 et seq.



## ORDER ESTABLISHING HOLD

- IN SUBSIDY RATE

Summary By this Order, the U.S. Department of Transportation (“the Department”) authorizes a revised annual subsidy rate , as described in Appendix B, to compensate SkyWest Airlines

, Inc. operating as United Express (“ SkyWest ”)

, for providing Essential Air Service (“EAS”)

at Pueblo, Color ado , beyond the air carrier’s 90

- day notice of its intent to terminate service at the community . This rate will remain in effect until a new air carrier is selected and begins full EAS at Pueblo

.

Background By Order 2014

- 2

- 18, issued on February 25, 2014, the Department selected SkyWest to provide subsidized EAS at Pueblo. Under that Order, SkyWest provide d 12 weekly nonstop round trips to Denver International Airport, using 30

- passenger EMB

- 120 Brasilia

aircraft , at an annual subsidy of $1,737,732.

On November 18, 2014, SkyWest filed notice to terminate turboprop air service at Pueblo on February 1, 2015. In th e notices , SkyWest stated that it will transition to an all jet fleet

in 2015 and will eliminate the EMB

- 120 Brasilia from its fleet. SkyWest explained that the fleet change is driven

, “ in part by the additional challenges associated with new FAR117 flight and duty rules, implemented in January 2014

. ” Because SkyWest’s termination

would have mean t that Pueblo would not have scheduled air service, which the community

is entitled to under the EAS program, the Department issued Order 2014

- 11

- 1 8, on

### - 2

-

November 25, 2015, prohibit ing SkyWest from terminating service at Pueblo for 30 days beyond the end of the air carrier’s 90

- day no tice period, i.e. February 16, 2015

. 1 

### Due to the

fact that a replacement air carrier had not been selected by February 16 th 

### , the Department

issued Order 2015

- 3

- 3, o n March 9, 2015, further extending SkyWest’s service obligation

for an additional 30 days, through April 17, 2015.

SkyWest transitioned Pueblo’s service from EMB

- 120 aircraft to CRJ

- 200 on

Febr uary 1, 2015.

Those Orders, as well as t he complete public file for EAS at Pueblo, may be accessed online through the Federal Dockets Management Sys tem at: www.regulations.gov by entering “OST

- 1999

- 6589” in the “ Search for Rules, Comments, Adjudications, or Supporting Documents ” field.

Request for Compensation Adjustment By letter dated March 23, 2015

, SkyWest requested an adjustment to its subsidy rate for providing EAS at Pueblo beginning March 1, 2015.

Decision SkyWest is eligible for a n adjustment to its subsidy on the 91 st 

### day following the air carrier’s letter of intent to cease operations at Pueblo , which in this case is February 17, 2015

. Normally, the Department would set a hold

- in rate for the carrier that provided a termination notice in conjunction with a carrier selection, but the carrier selection case had not been completed, and S kyWest is entitled to an interim rate at the end

of its 90

- day notice. Pursuant to 49 U.S.C. § 41734(d), the Department authorizes a new subsidy rate starting March 1, 2015, in accordance with SkyWest’s request

. The Department find s both the service and subsidy levels of SkyWest to be reasonable.

This Order is issued under the authority assigned in 14 CFR Part 1.56(a).

ACCORDINGLY,

1. The Department authorizes the hold

- in subsidy rate, as described in Appendix B, for SkyWest Airlines, Inc. operating as United Express, to provide Essential Air Service at Pueblo, Colorado , from March 1

, 2015

, through July 3 1 , 2015, or earlier if a new carrier begins service prior to that date ;

2. The Department directs SkyWest Airlines

, Inc. operating as United Express to retain all books, records, and other source and summary documentation to support subsidy claims for payment, and to preserve and maintain such documentation in a manner that readily permits its audit and examination by repres entatives of the Department. Such documentation shall be retained for seven years from the date of service of this Order, or

1 Additionally by Order 2014

- 11

- 15 , the Department requested proposals from air carrier interested in providing EAS at Pueblo for a new term. Those proposals were due December 22, 2014, and the Department is in the process of completing a carrie r selection case for the community

.

### - 3

-

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 air carrier may forfeit its compensation for any claim that is not supported under the terms of this Order;

3 . The Department f i nd s that SkyWest Airlines , Inc. operating as United Express is fit, willing and able to operate as a certificated air carrie r
, and capable of providing reliable

Essential Air S ervice at Pueblo, Colorado ;

4. D ocket DOT

- OST

- 1999

- 6589 will remain open pending further Department action ; and

5 . The Department will serve a copy of this Order on t he City Manager of Pueblo, the City Council of Pueblo, the Director of Aviation at Pueblo Memorial Airport, and SkyWest

Airlines , Inc

. operating as United Express

.

B y:

BRANDON M. BELFORD Deputy Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is ava ilable at http://www.regulations.gov

### Appendix A 

# SkyWest Airlines

Annual Compensation Requirements for

Essential Air Service at Pueblo, Colorado
Twelve Round trips per week
98.0% Completion Factor

Passenger Revenue

Passengers 11400

Average fare $55.00

Revenue $627,000

Block Time

Trip block time
(minutes) 48

Total scheduled

block time 998

Total completed

block time 98% 978

RPMS

Passengers 11,400

Stage length 109

1,242,600

ASMs

Scheduled

departures 1,248

Competed

departures 98% 1,223

Stage length 109

Available Seats 50

6,801,600

Revenue $627,000

Direct operating

expenses $2,641,766

RPM related $4,237

Departure related $868,517

ASM related $63,391

Total expenses $3,577,912

Operating income
(loss) ($2,950,912)

5% profit margin $178,896

Annual subsidy

requirement $3,129,808

### Appendix B

SkyWest Airlines , Inc.

Essential Air Service to be Provided at Pueblo, Colorado

Annual Subsidy: $3,129,808

Effective Period : March 1, 201 5 , through July 31 , 201 5

Scheduled Service : 12 weekly nonstop round trips to Denver International Airport

Aircraft : 50

- passenger CRJ

- 200 Rate per Eligible Flight: $ 2,559 1



### Weekly Ceiling for each community : $ 61,416 2

Note: The air c a rr i e r un d er st a nds t h a t it m a y f o rfe it its c omp e ns a tion f or a n y f li g hts th a t it do e s not op era te in

c o n f o r m a n c e with the t er ms a nd stipul a tions of the ra te Order

, i n c luding the s er vi c e pl a ns outlin e d in the Order a nd

a n y oth e r s i g ni f i c a nt e l e m e nts of the re qui re d s er vi ce , without p r ior a p p r ov a l. The air c arr i e r und e r st a nds th a t a n

a i r cr a f t t a k e

- o f f a nd l a nding a t its s c h e du l e d d e stin a tion c onstitut e s a c ompl e t e d f li g ht; a bs e nt a n e x pl a n a tion

suppo r ting subsi d y e li g i b ili t y f o r a f l i g ht th a t h a s n ot b ee n c ompl e t e d, su c h a s cer t a in w ea th e r ca n ce ll a tions, o n l y

c ompl e t e d f li g hts a r e c onsid ere d e l i g ible f or su b si d y

. I n a ddition, if the air carr i e r d o e s not s c h e dule or o p era t e its

f li g hts in f ull c on f o r m a n c e with the Order f o r a s i g ni f i ca nt p e r iod, it m a y j e op ar di z e its e nti r e subsi d y c l a im f or t he

p er iod in qu e stion. I f the air c a rr i e r c ont e mpl a t e s a n y su c h c h a ng e s b e y ond the s c ope o f the Order du r ing the

a ppli ca ble p e r iod of th e se ra t e s, it must f i r st noti f y the O ff i c e of Avi a tion An a l y sis in w r iti n g a nd r ece ive w r itt e n

a pp r o v a l f r om the D e p a r tm e nt to be e nsu re d o f f ull c omp e ns a tion. S hould c i rc umst a n ce s w ar r a n t , the D e p ar tm e nt

m a y l o c a te a nd s e l e c t a re pl a ce m e nt air c arr i e r to p r ovide s er vi c e on th e se r out e s. The air c a rr i e r must c ompl e te a ll

f li g hts th a t ca n b e s a f e l y op era t e d; f l i g hts th a t ov e rf l y points f o r l ac k of t r a f f ic will not be c omp e ns a t e d. I n d e t er m i ning wh e t h e r subsi d y p a y m e nt f o r a d e v i a ting f l i ght should be a djust e d or dis a llow e d, t he D e p a r tm e nt will

c onsid e r the e x t e nt to whi c h the g o a ls of the p r og ra m a r e m e t a nd the e x t e nt of acce ss to the n a tion a l a ir

t ra nspo r t a tion s y s t e m p r ovid e d to the c ommuni t y

.

I f the D e p ar tm e nt unil a t e ra l l y
, e ith e r p a r ti a l l y or c ompl e t e l y , t er min a t e s or re du ce s p a y m e nts f or s e r vi c e or c h a ng e s

s er vi c e r e qui re m e nts a t a sp ec i f ic lo c a tion p r ovid e d f or und e r this Order, th e n, a t the e nd of the p e r iod f or whi c h the

D e p ar tm e nt d o e s m a ke p a y m e nts in the stipul a t e d a mounts or a t the stipul a t e d s er vi c e l e v e ls, the air c a rr i e r m a y

cea se to p r ovide s er v i c e t o th a t sp ec i f ic lo c a tion without re g a r d to a n y r e qui re m e nt f or noti c e of su c h c e ss a tion.

Those a djustm e nts in the l e v e ls of subsi d y a nd/or s er vi c e th a t ar e mutu a l l y a g r ee d to in w r iting b y the D e p ar tm e nt

a nd air ca r r i e r do not c on s titute a tot a l or p ar ti a l re d u c tion or ce ss a tion of p a y m e nt.

S ubsi d y c ont r a c ts ar e su b j ec t to, a nd in c o r po r a te b y r ef e re n c e
, r e l e v a nt st a t ut e s a nd D e p ar tm e nt r e g ul a tions, a s th e y

m a y be a m e nd e d fr om time to tim e . How e v er
, a n y su c h st a tut e s, r e g ul a tions, or a m e ndm e nts th ere to sh a ll not

op era te to c ont r o v er t the f o r e g oi n g p ar a g r a ph.

Funds may not be available for performance under this Order beyond September 30 , 201 5 . 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 ma de. 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 perf ormance 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 st ; August claims must be submitted by November 30 th , and so on.

1 Ann ual compensation of $ 3,129,808 divided by 1,2 23 annual departures (24 departures per week x 52 weeks x 98 percent completion).

2 24 arrivals and departures per week multiplied by $ 2,559 per flight

.