Or der: 20 10

- 3

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Served : Ma r ch 12 , 20 10



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 12 th day of M arch , 2010

Essential Air S ervice at

SALINA, KANSAS

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

- OST

- 2002

- 11376

ORDER SELECTING CARRIER

Summary By this order

, the Department is s electing SeaPort Airlines (SeaPort) to provide essential air

service (EAS) at Salina, Kansas , for a fi rst

- year annual subsidy of $1,489,435 and a second

- year of $1, 493,381 for the two

- year period beginning when it inaugurates full EAS

. 1

Background By Order 2008

- 2

- 5

, the Department selected Great Lakes Aviation

, Ltd. (Great Lakes) , to provide

the communiti es of Manhattan with 18 weekly nonstop round trips to either Kansas City or St. Louis, and Salina with 12 weekly nonstop round trips to either Kansas City or Denver, at a combined annual subsidy of $ 1,997,237

, for the two

- year period from April 1, 2008, th rough

March 31, 2010

.

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

-

In August 2009

, American Eagle inaugurated twice

- daily 50

- seat r egional jet service from

Dallas/ F ort Worth to Manhattan on a subsidy

- free basis. Since that level of service fully meets Manhattan’s EAS requ irements, we issued Order 2009

- 11

- 25 requesting proposals from carriers

interested in servin g only Salina for a new, two

- year term. In response, we received proposals from Great Lakes, SeaPort, Sovereign Air and TransportAzumah.

Proposal of Great Lakes

Great Lakes , the incumben t carrier, proposed one service option to provide Salina with two nonstop round trips each weekday and each weekend (12 a week) to Kansas City or Denver with

19

- seat Beechcraft 1900D aircraft for an annual subsidy of $1,517,138.

Proposal of SeaPort

SeaPo rt proposed one service option to provide Salina with three nonstop round trips each weekday and weekend (18 a week) to Kansas City with 9

- seat Pilatus PC

- 12 aircraft for a first

year annual subsidy of $1,489,435 and a second year of $1,493,381.

Proposal of Sovereign Air Sovereign Air has proposed two service options, both of which would use 9

- seat Beechcraft 350 aircraft. Option 1 would offer five daily (35 a week) nonstop round trips to Kansas City for an annual subsidy of $899,995. Option 2 would offe r four daily (28 a week) nonstop round trips to Kansas City for an annual subsidy of $840,028.

Proposal of TransportAzumah TransportAzumah proposed to act as a Part 380 Indirect Air Carrier and to hire Charter Air Transport, a certifi ca t ed air carrier, to actually operate the service. TransportAzumah has proposed two service options, both using 30

- seat Embraer EMB 120 aircraft. Option 1 would

offer 12 weekly Salina to Kansas City round trips for an annual subsidy of $2,806,156. Option 2

would offer 18 w eekly Salina to Kansas City round trips for an annual subsidy of $3,868,860.

Each carrier’s complete proposal may be accessed online at http://www.regulations.gov/ by entering “DOT

- OST

- 2002

- 11376

. ”

Community Comments

On January 12, 2010 , we requested community comment s regarding the carrier selection at
Salina

. In a letter dated February 17

, 2010, Luci Larson , Mayor of Salina , states that “it is the opinion of local political and civic leaders that the SeaPor t Airlines proposal will best meet Salina’s scheduled air service needs.” Mayor Larson elaborates by saying that their decision to choose SeaPort was influenced by the carrier ’s greater frequency of flight s, “right

- sized” aircraft,

and a fare structure t hat will encourage local travelers to use the service

.

Decision After carefully reviewing each carrier’s proposal and taking into account community feedback,

we have decided to select SeaPort’s proposal of three Salina

- Kansas City nonstop round trips a da y (18 a week) for a first

- year annual subsidy of $1,489,435 a nd a second

- year of $1,493,381.- 3

-

We find that the service and subsidy levels are reasonable, and will meet the community’s EAS

needs.

Regarding the proposals of Sovereign and TransportAzumah, neither carrier has the requisite operating authority from either the Federal Aviation Administration or the Department of Transportation to operate its proposed service. Moreover, there was no community support for either of the carrier’s proposals, and in the case of TransportAzumah, the requested subsidy was far greater than the other bids. As between Great Lakes and SeaPort, SeaPort’s bid was less expensive than Great Lake s and received strong community support , therefore pointing to the

selection of SeaPort.

We shall make this selection of SeaPort contingent upon the Department’s receiving properly

executed certifications from SeaPort 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 Transition
We expect Great Lakes and SeaPort to coordinate a smooth transition in service at Salina, including setting a date to switch services from Great Lakes to SeaPort. We expect Great Lakes to contact all passengers holding reservations for travel after that date, to notify them of the suspension of service, and to secure alternate air transportation for such passengers or to provide a full refund of the ticket price, without penalty, i f requested. In this regard, Great Lakes’ current contract expires on March 31. In the event at SeaPort has not inaugurated service by then, we will compensate Great Lakes at the subsidy rates contained in its proposal for Salina from April 1, 2010, unti l SeaPort begins full EAS at Salina.

Carrier Fitness

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

. SeaPort is sub j ect to the Departm ent’s continuing fitness requirements, and no information has come to our attention that would cause us to question the carrier's fitness at this time. We have contacted the Federal Aviation Administration, and it has raised no concerns that would negativ ely affect our fitness finding. We therefore conclude that the carrier 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 SeaPort Airlines , to provide essen tial air service at Salina, Kansas ;

2 . We set the final rate of compensation for SeaPort Airlines

, for the provision of essential air

service at Salina, Kansas

, as described in Appendix C ;- 4

-

3 . We direct SeaPort 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 fo r seven years 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
supporte d under the terms of this order;

4 . We find that SeaPort Airlines

, continue s to be fit, willing and able to operate as a commuter
carrier and capable of providing reliable essential air service at Salina, Kansas ;

5 . Th is docket will remain open until f urt her order of the Department; and

6 . We will serve copies of this order on the Mayor s and Airport Manager s of Salina, Kansas and

SeaPort Airlines

.

By:

SUSAN L. KURLAND Assistant Secretary

for Aviation and International Affairs

(SEAL)

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



## AREA MAPAppendix B Page 1 of 2Appendix B Page 2 of 2Appe ndix C Page 1 of 2

SeaPort Airlines

Essential Air Service to be Provided at Salina, Kansas

Effective Period : One year from date the carrier inaugurates full EAS

. Scheduled Service : 1 8 weekly nonstop round trips from Salina to Kansas City

Aircraft : Pilatus PC

- 12 aircraft 9

- seat aircraft
Rate per Eligible Flight: $ 816 1
Weekly Ceil in g : $ 2 9 ,376 2

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 si gnificant 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 fligh t 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 per iod, 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 these rates, it must first notify the Office of Aviation Analysis in wri ting 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 t hat 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 complete, 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 specific locati on 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 carrier do not constitute a total or partial reduction or cessation o f payment.

Funds are not currently available for performance under this order beyond September 30, 2010

. The Department’s obligation for performance under this order beyond September 30, 2010 , is subject to the availability of appropriated

funds from whi ch 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, 2010 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30, 2010 , the Department will provide notice in writing to the carrier.

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.

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

1 Annual compensation of $1,489,435 divided by 1825 annual departures (36 weekly departures x 52 week s x 97.5 percent completion)

. 2 36 arrivals and departures per week (per community) multiplied by $ 816 per flight

.Appendix C Page 2 of 2

SeaP ort Airlines

Essential Air Service to be Provided at Salina, Kansas

Effective Period : April 1, 2011 , through March 31, 2012

. Scheduled Service : 1 8 weekly nonstop round trips from Salina to Kansas City

Aircraft : Pilatus PC

- 12 aircraft 9

- seat aircraft

Rate per Eligible Flight: $ 818 1
Weekly Ceiling : $ 29,448 2

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

supp orting 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 conformanc e 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 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 carrier to provide service on these routes. T he 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 complete, terminates or reduces payments for se rvice 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

p rovide 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

carrier do not constitute a tot al or partial reduction or cessation of payment.

Funds are not currently available for performance under this order beyond September 30, 2010

. The Department’s obligation for performance under this order beyond September 30, 2010 , is subject to the avail ability 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, 2010 , until funds are made available to the Departm ent for performance. If funds are not made available for performance beyond September 30, 2010 , the Department will provide notice in writing to the carrier.

Subsidy contracts are subject to, and incorporate by reference, relevant statutes and Departmen t 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.

All claims for payment must be submitted within 60 days of the last day of se rvice provided under this order.

1 Annual compensation of $1,493,381 divided by 1825 annual departures (36 weekly departures x 52 weeks x 97.5 percent completion)

. 2 36 arri vals and departures per week (per community) multiplied by $818 per flight

.