### Order 2012

- 4

- 10 Served: April 6, 2012

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION



### OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 6 th of April, 2012

Essential Air Service at

CHISHOLM/HIBBING, MINNESOTA ESCANABA, MICHIGAN PELLSTON, MICHIGAN SAULT STE. MARIE, MICHIGAN

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 20 03

- 15796

DOCKET DOT

- OST

- 20 03

- 15128

DOCKET DOT

- OST

- 2011

- 0133

DOCKET DOT

- OST

- 2009

- 0303

ORDER SELECTING CARRIER

S UMMARY By this Order

, the Department is selecting Delta Air Lines, Inc., 1 to provide essential air service (EAS) at Chisholm/Hibbing, Minnesota , and Escanaba, Pellston, and Sault Ste. Marie, Michigan,

for $2,517,770, $2,833,558, $1,055,361, and $1, 676,136

, respectively. At Pellston, the service is

to consist of 12 nonstop round trips per week to Detroit in the off

- peak, and 14 per week in the peak period. At Sault Ste. Marie, the service will be 13 round trips per week year round

. At the remaining two communities, service is to consist of 12 nonstop round trips per week year round.

All service is to be operated with 50

- seat CRJ

- 200 aircraft

. 2

BACKGROUND On July 15, 2011, Mesaba Aviation, Inc., and Pinnacle Airlines, subsidiaries o f Pinnacle Airlines Corporation, d/b/a Delta Connection (Delta) filed 90

- day notices of their intent to suspend their

1 Delta Air Lines proposed to be responsible for the provision of this service itself, rather than one of its code share partners. Delta indicates that it would parcel out the EAS responsibilities at separate tim es to one of its code share partners, including Pinnacle, Atlantic Southeast, SkyWest, Mesaba, or Chautauqua, depending on availability of aircraft and other considerations in order to afford Delta maximum flexibility to meet its obligations.

2 Such subsid y is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds.- 2

-

joint service at the above captioned communities, effective October 13 , 2011

. 3 By

Order 2011

- 9

- 5 , September 13, 2011, we prohibited Delta from terminating service and requested proposals for replacement service by October 12, 2011, later extended to October 14

, 2011

. In light of the volume of traffic and because it had never received subsidy

- supported EAS,

that Order re quired the maximum level of service guaranteed by the EAS program for Pellston, i.e., 14 round trips per week with 34

- seat or larger equipment. At the three remaining communities, the Order required the level of service consistent with what we were subsid izing at

the time Delta filed notice.

Because Delta’s notices were triggered by Mesaba/Pinnacle ’s re placing its fleet of s maller 34

- seat
Saab 340 turboprops with 50

- seat regional jets , by Order 2011

- 12

- 25, December 29, 2011, w e reduced the required frequency at all four communities to 12 round trips per week.

CARRIER PROPOSALS We received timely

- filed proposals from Delta Airlines, Inc., Sovereign Air, Multi

- Aero, Inc., d/b/a Air Choice One, and Intrepid, as described below. However, some of the proposals have already been rendered moot because of the way they were packaged and the processing of other companion EAS cases. Specifically, Air Choice One’s lone option (to serve Chisholm/Hibbing) was premised

on it s also being s elected to provid e EAS at Thief River Falls, Minnesota. By Or der 2011

- 11

- 30,

November 23, 2011, we selected Great Lakes Aviation to provide EAS at Thief River Falls , thus rendering moot Air Choice One’s Chisholm/Hibbing proposal. 4 Similarly , Sovereign’s proposal to serve Escanaba was part of an inseparable EAS package with Iron Mountain, and we selected Great

Lakes to serve I ron Mountain by Order 2011

- 11

- 30. Also, Sovereign proposed three options to serve Chisholm/Hibbing, and one was linked with Thief R iver Falls, which was awarded to Great Lakes as we mention above. We will now summarize the viable proposals

.

Chisholm/Hibbing, Minnesota

Delta proposes nonstop service to Minneapolis ( MSP ) with 50

- seat CRJ

- 200 aircraft. Option 1: 14 round trips per week for $3,032,756 annual subsidy. Option 2: 1 2 round trips per week for $2,517,770 annual subsidy.

Sovereign proposes nonstop service to Minneapolis (MSP) with different aircraft types

. Option 1: 24 round trips per week over an International Falls

- Chisholm/Hibbing

- Minneapolis routing

with 30

- seat Jetstream 41 turboprops for a combined annual subsidy of $ 4,174,536

. Option 2: Same as Option 1 except with 3 0

- seat jet aircraft for a combined annual subsidy of $3,703,670.

3 Delta filed notice at a total of twenty four (24) communities. This Order addresses only these four communities. We have selected Great Lakes Aviation, Ltd., to replace Delta at Fort Dodge and Mason City, Iowa; Iron Mountain, Michigan; Brainerd and Thief River Falls, Minnesota; Devils Lake and Jamestown, North Dakota, and Watertown, South Dakota; American Eagle at Sioux City and Waterloo, Iowa; and SkyWest at Aberdeen, South Dakota; Bemidji, Minnesota; and Butte, Montana. We are processing carrier

- selection proceedings at the remaining communities. We will address the other communities in subsequent Orders.

4 In addition, Air Choice One proposed service with single

- engine aircraft and the community was not willing to waive its right to twin

- engine aircraft (see 49 U.S.C. 41732(b)(5) )

.- 3

-

Escanaba, Michigan

Delta proposes nonstop service to Detroit (DTW) with 50

- seat CRJ

- 200 aircraft. Option 1: 14 round trips per week for $3,443,512 annual subsidy. Option 2: 12 round trips per week for $2,833,558 annual subsidy.

Pellston, Michigan

Del ta proposes nonstop service to Detroit (DTW) with 50

- seat CRJ

- 200 aircraft. Option 1: 14 round trips per week for $1,374,319 annual subsidy. Option 2: 14 and 12 round trips per week in the 26

- week peak and off

- peak for $1,055,322 annual subsidy. Option 3: 21 , 14, and 12 round trips per week in 13

- week peak , shoulder, and 26

- week off

- peak

for $ 467,220 annual subsidy.

Sault Ste. Marie, Michigan

Delta proposes nonstop service to Detroit (DTW) with 50

- seat CRJ

- 200 aircraft. Option 1: 14 round trips per week for $1,978,910 annual subsidy. Option 2: 12 round trips per week to Detroit (DTW) for $1,373,361 annual subsidy.

Intrepid proposes four one

- stop round trips per week over Alpena to Lansing, Michigan, with 19

- seat Jets tream 32 turboprop aircraft for $911,800 annual subsidy.

COMMUNITY COMMENTS

Chisholm /Hibbing We received comments from the Mayor s and Chambers of Commerce of Chisholm and Hibbing,

the Chis h olm /Hibbing Airport Authority, and from the Laurentian Chamber of Commerce. 5 All supported the selection of Delta, and also of Delta’s Option 1, which would provide two additional round trips per week (14 vs. 12) for an additional $514,986 annual subsidy compared

to Delta’s Option 2

. The parties favor ed Delta because it is the incumbent with a well

established frequent flier program, worldwide interline connections , an upgrade in aircraft type

from the 34

- seat turboprop to a 50

- seat jet, and provides local jobs at the Delta reservation center

in Chisholm

.

The Mayor of Chisholm favored Option 1 because “More frequency is proven better for our

customers ’ scheduling needs as we demonstrated by adding the third flight.” 6

The Mayor of Hibbing noted that over the last two years its “passengers have incre ased by approximately 30%....Specifically, providing an additional daily flight Monda y

- Friday enhanced the schedule assisting our travelers to better meet their connections, reduces layovers at Minneapolis and provides convenient arrival times into Hibbing. Reducing flights from 19 weekly round trips to 14 weekly round trips will have a negative impact on the success we have enjoyed in our air service.”

5 This chamber represents the nearby communities of Virginia, Eveleth, Mt. Iron, and Gilbert, as well as others.

6 Because there was upline service to Thief River Falls, Order 2009

- 8

- 8, August 11, 2009, selected Mesaba to provide 19 nonstop round trips p er week with a 34

- seat aircraft . If the flights had not been shared between two communities, we would not have authorized subsidy for 19 round trips a day.- 4

-

Escanaba

We received comments from the Delta County Airport Board/Delta County Board of

Commissioners (Escanaba), and from the Michigan Department of Transportation. Both supported the selection of Delta’s Option 1.

Escanaba indicated that “Option 1 of two flights a day is essential to maintain a minimum frequency. Many of our travelers use Sundays, in particular, as a travel day.... The Delta County Airport Board and County Board of Commissioners see Option 1 as our best chance to generate more airport revenue and work towards eliminating EAS dependency.” The Michigan DOT indicated that “14 round trips per week [is] the level necessary to provide the greatest economic benefit to the community.” The Michigan DOT supported Option 1 as well.

Pellston We received comments from the Mayor and from the Pellston Regional Air Service Task Force.

Both recomm end the selection of Delta’s Option 1.

The Mayor indicates that “A reduction in flights to one per day, at any time of the year, is not a viable option. One of the most obvious reasons : Even if aircraft maintenance and operations

were 100 percent certain , we still have the weather to contend with in Pellston. In the last couple years, dozens of flights have been canceled here due to the weather. Fortunately, passengers have had the option of catching other flights once conditions improved. If there was only one flight a day, and it was canceled, passengers would quickly become disenchanted with flying from Pellston and they will see k other options

– and airlines....While our busiest season has traditionally been in the summer months, that trend is changin g. Our county is home to two of the Midwest’s best and most popular ski resorts, which continue to grow.” The Task Force and

the Michigan DOT also supported Option 1 and raised concerns about the difficult weather at

Pellston

. 7

Sault Ste. Marie

We rece ived comments from the Chippewa County Board of Commissioners, the Chippewa County Economic Development Corporation, and from the Michigan DOT. All favored Delta’s Option 1. The Board of Commissioners notes that Option 1 “commits to the same high level o f service the community currently receives from Delta Air Lines, the same being two round trips, 7 days per week, utilizing CRJ

- 200 aircraft. ” The Economic Development Corporation indicates that “Delta’s Option 1 continues current [service] levels

– equip ment, capacity, and frequency. The Michigan DOT supports Delta’s Option 1 for similar reasons as it gave for supporting Option 1 for Pellston.

7 The community asserts that without two round trips a day, seven days a week, weather cancellatio ns on days with only one round trip would require passengers to wait perhaps anot her 24 hours, and thereby encourage them to drive

to alternative service.- 5

-

DECISION First, we will not select t he proposals of Sovereign Air or Intrepid

. Sovereign Air has no operating authority from either the FAA or the Department and no immediate prospect of receiving

any. 8 Intrepid ’s proposal of four round trips per week to Lansing falls short of the EAS guarantee of

a minimum of two round trips a day, six days a week, to a medium o r large hub airport

.

The only viable proposals before us at these four communities are those by Delta , and the only

issue is how many flights to subsidize on weekends. For ease of reference , we summarize Delta’s proposals in the chart below. 9

As background, o nly the biggest traffic generators in the EAS program receive service with regional jets, and only the biggest of those receive more than 1 2 round trips per week

. We note that we require only 13 nonstop round trips per week at Meridia n, Mississippi , Waterloo, Iowa ; and Sioux City, Iowa, and annual traffic at those communities for the year ended September 30, 2011, was 33,563, 42,740, and 55,970, respectively

-- each one significantly exceeding the historical traffic at Chisholm/Hibbing and Escanaba. A 12

- round

- trip

- a

- week service pattern provide s 61,152 seats per year (24 fl igh ts/week x 52 weeks x 50 seats x an assumed 98% completion factor), and adequate ly accommodate s current passenger levels at Chisholm/Hibbing

and Escanaba with average load factors of 36% and 4 0 %, respectively. As a result, we will

select Delta’s 12

- round

- trip option.

Pellston generates about double the passenger levels of Chisholm/Hibbing and Escanaba but is very seasonal

. During 2011, Pellston generated more than 8,000 passengers in each of the months of June and July, compared to a little more than 2,000 per month from November

- April. Even 14 round trips per week during the summer is not sufficient to accommodate all t he passengers, which is why carriers historically have added service in the summer months. However, 12 round trips a week are more than adequate to accommodate off

- peak demand. For example, a 12 round

- trip pattern would provide 4,800 seats per month (24 flights per week x 4 weeks x 50 seats), which will still result in load factors below 50%. Therefore, we will select Delta’s option for 14 round trips a week for the peak six months and 12 per week in the remaining off

- peak six months.

The community of S ault Ste. Marie argues that we should select Delta’s Option 1, which would provide the maximum service level the EAS program would allow. Sault Ste. Marie is a strong

8 Order 2010

- 10

- 21, issued on October 27, 2010, dismissed Sovereign’s application for authority to operate scheduled passenger service, and Order 2011

- 2

- 3, issued on February 3, 2011, affirmed that decision after Sovereign petitioned for reconsideration.

9 We omit Delta’s Option 3 at Pellston

, where Delta proposed only 7 round trips per week in the off

- peak period

. B ecause that option does not provide a minimum of 12 round trips per week, we cannot select that option. Chisolm/Hibbing Escanaba Sault Ste. Marie Pellston

Pax, YE 9-30-11 22,213 24,526 34,805 46,623

12/Week Subsidy Option $2,517,770 $2,833,558 $1,373,361 $1,055,322

14/Week Subsidy Option $3,032,756 $3,443,512 $1,978,910 $1,374,319- 6

-

traffic generator, with 34,805 passengers during the year ended September 30, 2011. Thi s level of traffic puts it into a higher category of traffic generators than Chisholm/Hibbing and Escanaba, though not the very highest. The community ’s traffic is much less seasonal than

Pellston ’s , generating significantly more passengers than Pellston in the off

- peak period. As a result, we will authorize subsidy for 13 round trips a week. While Delta submitted options for only 12 and 14 round trips a week , we will use the simple average of those two rates to establish

a 13

- round

- trip rate. The carrier has agreed to this modification

. 10

CARRIER FITNESS

49 U.S.C. 41737(b) and 41738 requires that the Department find an air carrier fit, willing, and able to provide reliable service before the Department may subsidize it to provide EAS

. Delta

Air Li nes, Inc., is subject to the Department’s continuing fitness requirements We contacted the Federal Aviation Administration, and it has raised no concerns that would negatively affect our fitness findings. The Department therefore concludes that the carri er remains fit to conduct the operations proposed here.

This Order is issued under authority delegated in 49 CFR 1.56a(f).

ACCORDINGLY,

1. We select Delta Air L ines, Inc., to provide essential air service at Ch i sholm/Hibbing, Minnesota, and at Escanaba, Pellston, and Sault Ste. Marie, Michigan ;

2 . We set the final rate s of compensation for Delta Air Lines, Inc., for the provision of essential

air service at Chisholm/Hibbing, Minnesota, and at Escanaba, Pellston, and Sault Ste. Marie, Michigan

, as described in Appendix C ;

3 . We direct Delta Airlines, Inc., 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 d ocumentation 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 ca rrier may forfeit its compensation for any claim that is not supported under the terms of this Order ;

4 . We find that Delta Air Lines, Inc., continue s to be fit, willing and able to operate as a certificated carrier and capable of providing reliable essential air service at the these

communities ;

5 . Th ese docket s will remain open until further Order of the Department; and

10 We will not show cause this technical modification of Delta’s proposal, which came after the deadline for proposals. No other carrier is aggrieved by our action. Also, the only other carrier to submit a timely

- filed proposal

at Sault Ste. Marie was Intr epid, and, as discussed, its proposal is not selectable.- 7

-

6 . We will serve copies of this Order on the Mayors and Airport Managers of Chisholm/Hibbing, Minnesota, and at Escanaba, Pellston, and Sault Ste. Marie, Michigan

, Mesaba/Pinnacle Airlines, Delta Airlines, Inc., SkyWest Airlines, Inc., and Sovereign Air, Multi

Aero, Inc., d/b/a Air Choice One, and Intrepid

.

By:

Susan Kurland Assistant Secretary for

Aviation and International Affairs (SEAL)

An electronic version of this document is available on the World Wide Web at http://www.regulations.govAppendix A

- 1

Nonstop Great Circle Miles to Detroit (DTW) Other Great Circle Miles FNT, Flint, 56 Escanaba (ESC) to Marquette (MQT), 46 LAN, Lansing, 74 Pellston (PLN) to Sault Ste. Marie (CIU) 49 MBS, Saginaw, 98 Pellston (PLN) to Traverse City (TVC) 69 AZO, Kalamszoo , 113 GRR, Grand Rapids, 120 APN, Alpena, 198 TVC, Traverse City, 207 PLN, Pellston, 243 MQT, Marquette, 349 CIU, Sault S te. Marie, 284 ESC, Escanaba, 306Appendix A

- 2

Nonstop Great Circle Miles to Minneapolis (MSP) RST, Rochester, 76 BRD, Brainerd, 114 DLH, Duluth, 144 HIB, Hibbing, 174 BJI, Bemidji, 199 FAR, Fargo, 223 INL, International Falls, 255 TVF, Thief River Falls, 261 GFK, Grand Forks, 284Appendix B

Essential Air Service to be Provided to Chisholm/Hibbing, Escanaba, Pellston

and Sault Ste. Marie, Dockets 2003-15796, 2003-15128, 2011-0133, & 2009-0303

Chisholm/

Hibbing Escanaba Pellston 2/ Sault Ste. Marie

Hub MSP DTW DTW DTW
Weekly Trips 12 12 14/12 13
Completion 98% 98% 98% 98%

Passengers 20,149 21,352 39,602

Departures 1,227 1/ 1,227 1/ 1,329 2/ 1,329 3/

Block Hours 1,289 1,473 1,582

Passenger Revenue $1,798,097 $1,931,929 $4,284,936

Other Revenue $216,657 $232,783 $516,302

Total Revenue $2,014,754 $2,164,712 $4,801,238

Pilots $480,427 $549,060 $589,431

Fuel $1,355,806 $1,549,492 $1,663,425

Maintenance $611,613 $698,986 $750,382

Aircraft $508,530 $581,177 $623,910

Total Directs $2,956,376 $3,378,715 $3,627,147

Total indirects $1,360,313 $1,381,542 $1,950,529

Total Operating $4,316,689 $4,760,257 $5,577,676

Profit @ 5% $215,834 $238,013 $278,884

Total Economic Cost $4,532,524 $4,998,270 $5,856,560

Annual Subsidy $2,517,770 $2,833,558 $1,055,322 $1,676,136 4/

1/ Chisolm/Hibbing, and Escanaba : 12 round trips per week x 2 directions x 52 weeks x .98 x 313/312 = 1,227.

2/ Pellston:
Peak: 14 round trips per week x 2 directions x 26 weeks x .98 x 313/3 716
Off-Peak: 12 round trips per week x 2 directions x 26 weeks x .98 x 3 613
3/ Sault. Ste. Marie:
13 round trips per week x 2 directions x 52 weeks x .98 x 313/312 = 1,329.
4/ The average of Option 1 and Option 2 proposed by Delta.
($1,978,910 + $1,373,361) ÷ 2 = $1,676,136.Appendix C

- 1

Delta Air Lines, Inc., Essential Air Service to be Provided to Chisholm/Hibbing, Minnesota, Docket 2003

- 15796

Effective Period : Start of Great Lakes’ Service at Thief River Falls, allowing Delta to terminate its service obligation at Thief River Falls, through the 24 th month thereafter.

Scheduled Service : 1 2 nonstop round trips per week to Minneapolis (MSP)

Aircraft Type : CRJ

- 200, 50 seats

Rate per Flight: $ 2,052 1

Weekly Ceiling : $ 49,248 2

Note: The carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance wi th 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 flig ht; 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 compensatio n. 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 co mpensated. In determining whether subsidy payment for a deviating flight should be adjusted or disa llowed, 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, termina tes 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 leve ls, 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 subsidy and/or service th at are mutually agreed to in writing by the Department and c arrier 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 statut es, regulations, or amendments thereto shall not operate to controvert the foregoing paragraph.

Funds are not currently available for performance under this Order beyond September 30, 2012 . The Government’s obligation for performance under this Order bey ond September 30, 2012 , is subject to the availability of appropriated 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, 2012 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30, 2012 , the Department will provide notice in writing to the carrier.

All claims for payment must be submitted within 6 0 days of the last day of service provided under this Order

.

1 Annual compensation of $ 2,517,770 , divided by 1, 227 annual flights, calculated as follows: 12 round trips per week x 2 directions x 52 weeks x .98 completion x 313/312 = 1,227

. 2 2 4 flights per week x $ 2,052

.Appendix C

- 2

Delta Air Lines, Inc., Essential Air Service to be Provided to Escanaba, Michigan, Docket 2003

- 15128

Effective Period : Start of Great Lakes’ Service at Iron Mountain, allowing Delta to terminate its service obligation at Iron Mountain, through the 24 th month thereafter.

Scheduled Service : 1 2 nonstop round trips per week to Detroit (DTW)

Aircraft Type : CRJ

- 200, 50 seats

Rate per Flight: $ 2,309 1

Weekly Ceiling : $ 55,416 2

Note: The carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance wi th 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 eligibilit y 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 si gnificant 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 Anal ysis 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 al l 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 whic h the goals of the program are met and the extent of access to the national air transportation system provided to the communi ty.

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 carrier may cease to provide service to that sp ecific location without regard to any requirement for notice of such cessation. Those adjustments in the levels of subsidy and/or service th at are mutually agreed to in writing by the Department and carrier do not constitute a total or partial reduction o r 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 operat e to controvert the foregoing paragraph.

Funds are not currently available for performance under this Order beyond September 30, 2012 . The Government’s obligation for performance under this Order beyond September 30, 2012 , is subject to the availability of appropriated 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, 2012 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30, 2012 , the Department will provide notice in writing to the carrier.

All claims for payment must be submitted within 60 days of the last day of service provided under this Order

.

1 Annual compensation of $ 2,833,558 , divided by 1, 227 annual flights, calculated as follows: 12 round trips per week x 2 directions x 52 weeks x .98 completion x 313/312 = 1,227

. 2 2 4 flights per week x $ 2,309

.Appendix C

- 3

Delta Air Lines, Inc., Essential Air Service to be Provided to Pellston, Michigan, Docket 2011

- 0133

E ffective Period s : October 13 , 2011, through October 31, 2013

Scheduled Service : 1 4 nonstop round trips per week year

- round to Detroit (DTW) initially, decreasing to 12 nonstop round trips per week in the off

- peak, and 14 nonstops per week in the peak on January 1, 2012 Aircraft Type : CRJ

- 200, 50 seats

Year Round Off

- Peak Peak Off

- Peak Peak

10

- 13

- 11 to 1/1/12 to 5

- 6

- 12 to 11

- 4

- 12 to 5

- 5

- 13 to Seasonality 12

- 31

- 11 5/5/12 11

- 3

- 12 5

- 4

- 13 10

- 31

- 13

Rate per Flight : $ 960 1 $ 794 2 $794 $794 $794

Weekly Ceiling : $ 26,880 3 $ 19,056 4 $22,232 5 $ 19,056 $22,232

Note: The carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance wi th 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 flig ht; 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 compensatio n. 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 co mpensated. In determining whether subsidy payment for a deviating flight should be adjusted or disa llowed, 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, termina tes 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 leve ls, 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 subsidy and/or service th at are mutually agreed to in writing by the Department and c arrier 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 are not currently available for performance under this Order beyond September 30, 2012 . The Government’s obligation for performance under this Ord er beyond September 30, 2012 , is subject to the availability of appropriated 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 , 2012 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30, 2012 , the Department will provide notice in writing to the carrier.

All claims for payment must be submitted wi thin 60 days of the last day of service provided under this Order

.

1 Annual compensa tion of $ 1,374,319 , divided by 1,431 annual flights, calculated as follows: 14 round trips per week x 2 directions x 52 weeks x .98 completion x 313/312 = 1,431

. 2 Annual compensation of $ 1,055,322 , divided by 1,329 annual flights, calculated as follows:

O ff

- Peak: 12 round trips per week x 2 directions x 26 weeks x .98 completion x 313/312 = 613 Peak: 14 round trips per week x 2 directions x 26 weeks x .98 completion x 313/312 = 716

3 28 flights per week x $ 960

. 4 24 flights per week x $ 794

. 5 28 flights per week x $ 794

.Appendix C

- 4

Delta Air Lines, Inc., Essential Air Service to be Provided to

Sault Ste. Marie , Michigan, Docket 2009

- 0303

Effective Period : January 11, 2012, 1 through January 31 , 2014.

Scheduled Service : 1 3 nonstop round trips per week to Detroit (DTW) Aircraft Type : CRJ

- 200, 50 seats

January 11, 2012, to Start of 13 Round

the S tart of 1 3 Round T rips per W eek Service Trips per Week Service to January 31, 2014

Rate per Flight: $1, 119 2 $1,261 3

Weekly Ceiling : $ 26,856 4 $32,786 5

Note: The carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance wi th the terms and stipulations of the rate Order , including the service plans outlined in the Order and any other significant elemen ts 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 b een 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 jeop ardize 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 w ritten 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 ar e 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 lo cation 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 carrier may cease to provide service to that spec ific location without regar d 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 pa yment.

Subs idy 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 th e foregoing paragraph.

Funds are not currently available for performance under this Order beyond September 30, 2012 . The Government’s obligation for performance under this Order beyond September 30, 2012 , is subject to the availability of appropriated 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, 2012 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30, 2012 , the Department will provide notice in writing to the carrier.

All claims for payment must be submitted within 60 days of the last day of service provided under this Order

.

1 January 11 is 180 days after Del t a filed its notice on July 15. Through January 10

, Delta is compensated at the prior rate set by Order 2010

- 5

- 18, which was due to expire on May 31, 2012.

2 Annual compensation of $1,373,361 divided by 1,227 annual flights, calculated as follows:

1 2 round trips per week x 2 directions x 52 weeks x .98 completion x 313/312 =1, 227

. 3 Annual compensation of $ 1,676,136 [($1,978,910+$1,373,361÷2)] ÷ 1,329 annual f lights, calculated as follows: 13 round trips per week x 2 directions x 52 weeks x .98 completion x 313/312 = 1,329

. 4 24 flights per week times $1, 119

. 5 26 flights per week times $1, 261

.