Order 2015-4-11

Served: April 17, 2015

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 17th day of April, 2015

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, Colorado, 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 provided 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 the 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 meant that Pueblo would not have scheduled air service, which the community 

is entitled to under the EAS program, the Department issued Order 2014-11-18, on 
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November 25, 2015, prohibiting SkyWest from terminating service at Pueblo for 30 days 

beyond the end of the air carrier’s 90-day notice period, i.e. February 16, 2015.

1 Due to the 

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

issued Order 2015-3-3, on 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 

February 1, 2015. 

Those Orders, as well as the complete public file for EAS at Pueblo, may be accessed 

online through the Federal Dockets Management System 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 an adjustment to its subsidy on the 91st 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 SkyWest 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 finds 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 31, 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 representatives 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 carrier selection case for the community. 
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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 finds that SkyWest Airlines, Inc. operating as United Express is fit, 

willing and able to operate as a certificated air carrier, and capable of providing reliable 

Essential Air Service at Pueblo, Colorado;

4. Docket DOT-OST-1999-6589 will remain open pending further Department action; and

5. The Department will serve a copy of this Order on the 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.

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

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, 2015, through July 31, 2015

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

Aircraft: 50-passenger CRJ-200

Rate per Eligible Flight: $2,5591

Weekly Ceiling for each community: $61,4162

Note: The air 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 air 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 air 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 air 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 circumstances warrant, the Department 

may locate and select a replacement air carrier to provide service on these routes. The air 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 amounts or at the stipulated service levels, the air 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 subsidy and/or service that are mutually agreed to in writing by the Department 

and air carrier do not constitute a total or partial reduction or cessation of payment.

Subsidy contracts 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 31st; August claims must be submitted by November 30th, and so on.

 

 1 Annual compensation of $3,129,808 divided by 1,223 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.