## Before the United States Department of Transportation 

# Washington, DC January 14, 2015

Essential Air Service at ALLIANCE, NEBRASKA Docket OST-2000-8322 CHADRON, NEBRASKA under 49 U.S.C. 41731 et.seq.

This document contains the response of Great Lakes Aviation, Ltd. to Order Requesting Proposals 2014-11-10 Great Lakes Aviation, Ltd. is pleased to submit these proposals to provide essential air transportation to these Nebraska communities addressed in the Order as an inseparable package.

Great Lakes is proposing two different service alternatives for both communities. The proposals consist of Beech 1900D service configured with nine seats and Beech 1900D service configured with 19 seats. Great Lakes is proposing two roundtrips per day operating Beech 1900D aircraft configured for nine seats. Due to pilot supply, this is the current level of service we have been forced to offer Alliance and Chadron. To illustrate the economic impact of the effect of the pilot shortage on small community air service, the Beech 1900D service with 19 seats offers a substantial reduction in subsidy requirement due to the availability of more seats which can generate more passenger traffic and revenue. Changes to FAA pilot qualification rules have created an industry-wide pilot shortage which has had an acute impact on Great Lakes. These rules mandated that first officers obtain an Airline Transport Pilot certification (“ATP”) prior to being qualified to perform crewmember duties in scheduled airline passenger service under FAR Part 121 regulatory requirements. A key factor to enable a pilot to receive an ATP certificate is the accumulation of 1,500 flight hours. Our proposals contemplate conveniently timed connecting services to our Denver hub, whereby passengers may utilize our code-share agreement with United Airlines. In addition to our code share agreement with United Airlines, Great Lakes maintains electronic interline ticketing and baggage agreements with American, Delta and United. Passengers will also be eligible for Delta Sky Miles Frequent Flyer program when travel is booked through Delta's sales channels. All of which will offer passengers traveling to and from these communities supplemental access to the domestic and international air transportation system.The proposed service is being offered utilizing pressurized, twin-engine Beechcraft 1900D aircraft flown by two pilots. Questions and comments may be referred to:
Michael O. Matthews Chief Financial Officer Great Lakes Aviation, Ltd. 1022 Airport Parkway Cheyenne, WY 82001 (307) 432-7000 It is Great Lakes' belief that the unintended consequences of the changes in pilot qualification rules have debilitated small community air service whereby excessive subsidy requirements will force communities to loose EAS service eligibility. To avert these unintended consequences and revitailize small community air service, will necessitate regulatory relief. Great Lakes stands ready to participate in creative solutions to assist small communities in their efforts to remain in the National Air Transportation System. Great Lakes received FAA operations specifications allowing us to hire pilots under its FAR Part 121 certificate utilizing FAR Part 135 regulatory hiring requirements. This allows our new hire pilots to operate the Beech 1900D aircraft in a nine seat configuration and will enable Great Lakes to restore pilot staffing levels while maintaining FAR Part 121 pilot training and aircraft maintenance standards.Table of Contents:RoundSubsidy PassengersAverage Subsidy CostBid Service Points Hub ServedTripsEquipment Requirement Forecast Fare per Passenger1 Alliance & Chadron Denver 2 Nine Seat Beech 1900D$2,998,2954,350$104.75 $689.262 Alliance & Chadron Denver 2 19 Seat Beech 1900D$2,690,6078,500$97.19 $316.54Cost of 1,500 hour ATP to EAS program $307,687(4,150)$372.72

# Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at 

## Alliance and Chadron, Nebraska to Denver (DEN) Two Round Trips - Nine seat - B1900 - Historical schedules should be used as sample pattern of service (at 98 percent completion)

Departures: 2,198 Block Hours: 1,588 Revenue Passenger Miles: 1,735,000

Operating Revenues: Passenger: AIA 1,850 psgrs at $104.75 $193,788 CDR 2,500 psgrs at $117.94 $294,850
Other: (at 0.62% of passenger revenue) $3,030 Total Operating Revenues: $491,667
Operating Expenses: Direct: Aircraft and Hull Insurance $365,710 Fuel and Oil $1,047,286 Flying Operations $315,567 Maintenance $711,545 Total Direct Expenses: $2,440,108 Total Indirect Expenses: $883,665 Total Operating Expenses: $3,323,773 Operating Loss ($2,832,106) Profit Element (5.0% of Total Operating Expenses) $166,189 Annual Compensation Requirement: $2,998,295

This Proposal is submitted with no upline scheduling restrctions

# Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at 

## Alliance and Chadron, Nebraska to Denver (DEN) Two Round Trips - B1900-19 seats - Historical schedules should be used as sample pattern of service (at 98 percent completion)

Departures: 2,198 Block Hours: 1,588 Revenue Passenger Miles: 1,735,000

Operating Revenues: Passenger: AIA 3,500 psgrs at $97.19 $340,165 CDR 5,000 psgrs at $104.92 $524,600
Other: (at 0.62% of passenger revenue) $5,362 Total Operating Revenues: $870,127
Operating Expenses: Direct: Aircraft and Hull Insurance $365,710 Fuel and Oil $1,047,286 Flying Operations $315,567 Maintenance $711,545 Total Direct Expenses: $2,440,108 Total Indirect Expenses: $951,067 Total Operating Expenses: $3,391,175 Operating Loss ($2,521,048) Profit Element (5.0% of Total Operating Expenses) $169,559 Annual Compensation Requirement: $2,690,607

This Proposal is submitted with no upline scheduling restrctions