O rder: 2013

- 11

- 24

Served: November 26, 2013



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 26th of November , 20 13

ORDER REQUESTING PROPOSALS

Summary By this O rder, the Department is requesting proposals from air ca rriers interested in providing

E ssential A ir S ervice (EAS) at Chisholm/Hibbing

, Minnesota

, for a new contract period

be ginning June 1, 201 4 , with or without subsidy

. (See Appendix A for a map). Air c arriers should file their proposals no later than January 7, 2014

.

Background
By Order 2012

- 4

- 10 (April 6, 2012 ), the Department selected Delta Air Lines, Inc. (Delta) to

pr ovide 12 nonstop round trips per week from Range Regional Airport (Hibbing) to Minneapolis/St. Paul International Airport (Minneapolis) using 50

- passenger Canadair Regional Jet aircraft , for a two

- year period beginning when Great Lakes inaugurated service at
Thie f River Falls, Minnesota, which at the time was served by Delta in conjunction with Hibbing, through the end of the 24 th month thereafter. Great Lakes inaugurated service at Thief River Falls on May 18, 2012, and Delta began its new obligation at Hibbing, thus making the expiration date of Delta’s contract to serve Hibbing May 31, 2014. 1

The complete public file for EAS at Hibbing may be accessed online through the Federal Dockets Management System at: www .regulations.gov by entering “DOT

- OST

- 2003

- 15796” in the “Search for Rules, Comments, Adjudications, or Supporting Documents” field.

1 Delta Air Lines propo sed to be responsible for the provision of this service itself rather than one of its code

share partners. Delta indicated that one of its Delta Connection carriers would perform the service and SkyWest is the airline currently operating the service.

Essential Air Service at

CHISHOLM/HIBBING, MINNESOTA

Under 49 U.S.C. § 41731 et seq

. Docket DOT

- OST

- 2003

- 15796- 2

-

Request for Proposals

As the end of the current contract approaches, the Department is requesting proposals from air

car riers interested in providing EAS at Hibbing

, with subsidy support if necessary , for a new contract period beginning June 1, 201 4

. Carriers should file their proposals no later than January 7

, 20 14

. Staff will the n docket the proposals, thereby making th em public

. Shortly afterwards, we will provide a summary of the proposals to the communit y and ask them to submit their final comments. We will give full consideration to all proposals that are timely

filed. 2

Interested air carriers should prepare their proposals with every expectation that their initial proposals will represent their final and only proposals. However, we retain the discretion to negotiate proposals with carriers when we deem it desirable; in such cases, of course, we will give all appl icants the same opportunity. We also retain the discretion to reject outright all unreasonable or unrealistic proposals and re

- solicit a new round of proposals. However, negotiation and rejection are only occasional exceptions to the rule.

We are here p roviding interested carriers with some basic information to serve as guidance when they prepare their proposals, but we will not prescribe a precise format for their proposals. Air carrier proposals should be submitted to the Department with all materials merged into a single document. In addition, because the document will be published on Regulations.gov, each page should be formatted to be viewed online. We expect proposals to adequately describe the service being proposed and the annual amount of subs idy being requested. The applicants can make their own judgments as to the level of detail they wish to present; however, we recommend they include information concerning proposed schedules

and projected block hours . In addition, applicants are encourage d to provide financial data supporting their subsidy requests, including information on their projected expenses and

revenues. We strongly encourage clear, well

- documented proposals that will facilitate their evaluation by the affected communit ies and the Department. 3

2 Ca rriers should not expect the Department to accept late fillings. In cases where a carrier proposes to provide

EAS without subsidy and we determine that basic EAS, as required by 49 U.S.C. § 41732, can be reliably provided without such compensation, we typ ically will not proceed with the carrier

- selection case. Instead, we simply rely on that carrier’s subsidy

- free service as proposed.

3 In selecting a carrier to provide subsidized EAS for an eligible place not in Alaska , 49 U.S.C. § 41733(c) (1)

directs us to consider five factors: (a) service reliability; (b) contractual and marketing arrangements with a larger carrier at the hub; (c) interline arrangements with a larger carrier at the hub; (d) community views, giving substantial weight to the views of th e elected officials representing the users; and (e) whether the carrier has included a plan in its proposal to market its service to the community. In addition, the Consolidated and Further Continuing Appropriations Act, 2012, Public Law No. 112

- 55, and c ontinued by the Full

- Year Continuing Appropriations Act, 2013, Public Law No. 113

- 6

, and the Continuing Appropriations A ct, 2014, Public Law No.

113

- 46, provides that wh en selecting a carrier to provide EAS, the Department may consider the relative subsidy requirements

, thus codifying a factor that we have considered sinc e the inception of the program

. Interested carriers should also be aware that our general provisions governing Essential Air Service will be included in the selection Order as part of our authorization of subsidy for the selected service. Appendix C of this Order contains those general provisions.- 3

-

Proposals should provide sufficient capacity to accommodate historical levels of traffic. In order to assist air carriers in developing traffic and revenue projections for their proposals, we have provided a summary of historical passengers in Appendix B. During the year ended

June 30

, 2013, Hibbing averaged 37 enplanements per day. The Department expects proposals that are co nsistent with what the community currently receives, with service to a large

- or medium

- hub airport that provides n umerous connecting opportunities to the national air transportation system. Specifically, air carriers should propose two round trips each weekday and weekend (12 a week) with 30

- passenger or larger aircraft. For air carriers proposing service with 15

- se at to 29

- seat aircraft, we expect three round trips each weekday and weekend (18 a week). We would also consider proposals with 8/9

- seat aircraft and additional frequencies. Air c arriers are also welcome to propose more than one service option, if they c hoose. T hey also need not limit themselves to the se requirements if they envision other, potentially more attractive service possibilities

-- different hubs or length of

contract, for example

-- with subsidy requirements that remain competitive.

Communit y Comments The community is welcome to submit comments at any time. We encourage prospective applicants to contact the community before they submit their proposals so that they can tailor them to the community’s needs, as they will not be able to amend th em after the due date. As noted earlier, we will provide a summary of the proposals to the civic parties shortly after the deadline for carrier proposals, and ask them to submit their final comments.

Other Carrier Requirements The Department is responsib le for implementing various Federal statutes governing lobbying activities, drug

- free workplaces, and nondiscrimination. 4 Consequently, all carriers receiving Federal subsidy for EAS must certify that they are in compliance with Department regulations

reg arding drug

- free workplaces and nondiscrimination, and those carriers whose subsidies exceed $100,000 over the life of the contract must also certify that they are in compliance with the regulations governing lobbying activities. Because the Department is prohibited from paying subsidy to carriers that do not submit these documents, all carriers that plan to submit proposals involving subsidy should be aware that the selected carrier will be required to complete the required certifications. Interested car riers requiring more detailed information regarding these requirements should contact the Offic e of Aviation Analysis at (202) 366

- 5903. 5

4 The regulations applicable to these areas are: (1) 49 CFR Part 20

-- New Restrictions on Lobbying; (2) 49 CFR Part 21

-- Nondiscrimination i n Federally

- Assisted Programs of the Department of Transportation

-- Effectuation of Title VI of the Civil Rights Act of 1964; (3) 49 CFR Part 27

-- Nondiscrimination on the Basis of Disability in Programs and Activities Receiving or Benefiting from Federa l Financial Assistance; (4)

14 CFR Part 382

-- Nondiscrimination on the Basis of Disability in Air Travel; and (5) 49 CFR Part 29

-- Government

- Wide Debarment and Suspension (Non

- Procurement) and Government

- Wide Requirements for Drug

- Free Workplace (Grants ).

5 The certifications are also available on the web at http://www.dot.gov/policy/aviation

- policy/small

- community

rural

- air

- service/essential

- air

- service

.- 4

-

This Order is issued under authority delegated in 49 CFR Part 1.25a(b) and re

- delegated to the Director, Office of Av iation Analysis.

ACCORDINGLY, 1. We request that carriers interested in providing Essential Air Service at Chisholm/Hibbing,

Minnesota

, submit their proposals, with subsidy support if necessary , no later than January 7

, 20 14 . The proposals should be e

- m ailed to: michael.f.martin@dot.gov with the

title “Proposal to Provide E AS at Chisholm/Hibbing, Minnesota ”; 6

2. Th is docket will remai n open until further O rder of the Department; and

3 . We will serve co pies of this O rder on the mayor s of Chisholm and Hibbing, Minnesota

, the airport manager of Range Regional Airport , and the service list for this docket.

Persons entitled to petition the Department for review of this Order under the Department’s Regulatio ns, 14 CFR Part 385.31(a), must file such petitions within seven (7) days after the

date of service of this Order.

This Order will be effective immediately, and the filing of a petition for review shall not preclude its effectiveness.

By:

TODD M. HOM AN

Director Office of Aviation Analysis (SEAL) An electronic version of this document is available

o nline at www.regulations.gov

.

6 Questions regarding filings in response to this O rder may be directed to Michael Martin at (202) 366

- 6494 or michael.f.martin@dot.gov

.Appendix A

AREA MAP

Maps generated by the Great Circle Mapper

- copyright © Karl L. Swartz

.Appendix B

Chisholm/Hibbing, Minnesota 1

Quarter Year Deplanements Enplanements Total Traffic Enplanements per Day

3 2009 2,507 2,544 5,051 32

4 2009 2,143 2,133 4,276 27

1 2010 2,587 2,752 5,339 35

2 2010 2,748 2,521 5,269 34

Annual

Totals 9,985 9,950 19,935 32

3 2010 3,053 3,194 6,247 40

4 2010 2,608 2,622 5,230 33

1 2011 2,823 2,959 5,782 38

2 2011 3,010 2,771 5,781 37

Annual

Totals 11,494 11,546 23,040 37

3 2011 3,273 3,480 6,753 43

4 2011 2,998 2,922 5,920 37

1 2012 2,776 2,908 5,684 37

2 2012 3,133 2,902 6,035 39

Annual

Totals 12,180 12,212 24,392 39

3 2012 3,293 3,488 6,781 43

4 2012 2,969 2,470 5,439 34

1 2013 2,622 2,716 5,338 35

2 2013 2,773 2,655 5,428 35
11,657 11,329 22,986 37

1 Source: USDOT Bureau of Transportation Statistics, T ransStats Intermodal Database, Schedule T

- 100Appendix C

Example of General Terms and Conditions for Essential Air Service

The carrier understands that it may forfeit its compensation for any flights that it does not operate in

conformance with the t erms 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 d estination 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 th e 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 Ord er 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 an d 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 de viating 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 am ounts or at the stipulated service levels, 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 that are mutually agree d to in writing by the Department and carrier do not constitute a total or partial reduction or cessation of payment.

Funds may not be available for performance under this Order beyond [DATE]. The Government’s obligation for performance under this Order beyond [DATE], 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 [DATE], until funds are made

available t o the Department for performance. If sufficient funds are not made available for performance beyond [DATE] , the Department will provide notice in writing to the carrier.

Subsidy contracts are subject to, and incorporate by reference, relevant statutes an d 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, including any amended cl aims, must be subm itted within 9 0 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.