Order: 2011

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- 4 Served: March 1, 2011


### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued b y the Department of Transportation on the 1 st day

of March , 20 1 1

Essential Air Service at KINGMAN, ARIZONA PAGE, ARIZONA PRESCOTT, ARIZONA SHOW LOW, ARIZONA DOCKET DOT
- OST
- 1996
- 1899 DOCKET DOT
- OST
- 1997
- 2694 DOCKET DOT
- OST
- 1996
- 1899 DOCKET DOT
- OST
- 1998
- 4409
under 49 U.S.C. 41731 et seq.



### ORDER RE - SELECTING CARRIER
Summary By this order, the Department is re - selecting Great L akes Aviation , Lt d. (Great Lakes) to provide essential air service (EAS) at Kingman , Page, Prescott, and Show Low, Arizona for the two

- ye ar period from May 1, 2011 , to April 30, 2013 , for a combined annual subsidy of $ 5,596,114

. 1 Background The four communities are served b y Great Lakes under two different contracts. By Order 2008

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- 11 , June 10, 2008, the Department sele cted Great Lakes to provide Kingman 12 nonstop round trips a week to Las Vegas for an annual subsidy of $1,275,771, and Prescott 18 nonstop round trips per week to Phoenix or Las Vegas (later ame nded b y Order 2008

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- 12, August 13, 2008, to include service to Ontario, California) for an annual subsidy of $1,622,719. By

Order 2009

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- 5 , August 10, 2009, the Department selected

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

-

Great Lakes to provide Page 19 nonstop or one
- stop roun d trips per week to Phoenix, Denver or Las Vegas for an annual subsidy of $1,99 5,273, and Show L ow, 19 nonstop round trips each week to Phoenix for an annual subsidy of $ 1,407,255. All the contracts expire April 30, 2011 As the end of the contract s was approaching, we issued Order 2010

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- 17 , November 17, 2010 , request ing proposals to serve the four communities for a new term. In response, we received proposals from Great Lakes, Gulfstream International Airlines (Gulfstream), SeaPort Airlines (SeaPort), and SkyWest Airlines (Sky West)

. Each carrier’s complete proposal and community comments may

be accessed online at http://www.regulations.gov/ by entering the community ’s Docket number in the search block as per the front page of this order

. On February 2, Gulfstream notified the Department that they

were withdrawing their proposal to provide EAS at Kingman, Page, Prescott, and Show Low due to the carrier ’s having been selected on February 1 to provide EAS at seven Montana cities . Therefore, we will only consider the proposals of the remaining three carriers , and will summarize them briefl y here. Proposal of Great Lakes Great Lakes proposed six options to serve all four communities (two each for Page and Show L ow, one each for Kingman and Prescott) , each to be considered on a stand

- alone basis , using 19

- seat Beechcraft 1900D aircraft

. Its Denver options would operate with both the United Airlines and Frontier Airlines code. At Kingman, Great Lakes proposed 12 nonstop round trips a week to either L as Vegas or Phoenix for an annual subsidy of $1,168,390. At Page, the carrier offered two options. Option 1 would provide the equivalent of three round trips a day , with four weekday round trips (reduced weekend service) during the peak season and two round trips a day during the non - peak season for an annual subsidy of $1,559,206. Service would be to Phoenix, with an option that one round trip a day may be substituted to either Denver (one

- stop) or Las Vegas (nonstop)

. Option 2 is the same as Option 1 except Great Lakes would provide 19 weekly nonstop round trips ye ar - round for an annual subsidy of $1,494,404. For Prescott, Great Lakes proposed service of 18 weekl y nonstop round trips to either L os Angeles or Ontario, and/or one

- stop service to Denver for an annual subsidy of $1,832,233. At Show L ow , the carrier offered two options. Option 1 woul d serve Phoenix nonstop with 14 weekl y round trips for an annual subsidy of $1,396,315. Option 2 would provide 18 weekl y nonstop round trips to Phoenix, with an option to serve Denver with one round trip a day , for an annual subsidy of $1,719,058.- 3

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Proposal of SeaPort SeaPort proposed to serve Show L ow only , with a total of two nonstop round trips each week day and weekend (12 a week) to Albuquerque, and two nonstop round trips (12 a week) to Phoenix , all using 9

- seat Pilatus PC

- 12 aircraft for a first

- ye ar subsidy of $1,771,566, and a second

- ye ar subsidy of $1,773,648. Proposal of SkyWest Sky West proposed to serve Page onl y, with two daily nonstop round trips , one to Salt L ake City operating as Delta Connection and one to Las Vegas operating as United Express (14 total round trips) , using 30

- seat Embraer Brasilia EMB

- 120 aircraft for an annual subsidy of $2 ,443,182. Community Comments On January

21, 2011 , we requested community comments regarding this carrier

- selection case. We heard from all four communities, and each endorsed the proposal submitted by Great Lakes. David C. French, Executive Director at Kingman Airport Authority , fully supports the selection of Great Lakes. Lyle Dimbatt, Mayor of Page, supported Great Lakes Option #1 and stated that the carrier’s service to Phoenix and Denver, and the airline’s interline ticket and baggage agreements with a number of major airlines , were important deciding fac tor s . Mayo r Dimbatt , however, did express concern over Great Lakes’ reliability , stating , “... there has been a decline in dependable service (late or cancelled flights), causing passenger leakage... ,” also adding, “Passenger support has declined and complaints have increased.” Pr escott Mayor Marlin Kuyendall requested in his letter that Great Lakes work with the community

“to develop a reasonable flight schedule to ensure that service is provided at the highest level possible. ” Rick Fernau, Mayor of Show L ow, states that Great Lakes’ Option # 2 and its presence as Show Low’s current carrier skewed the City Council in its favor. Mayor Fernau also added , “We prefer the larg er, more comfortable aircraft that Great Lakes flies and the interline agreements Great Lakes already has in place.” Decision After carefully

reviewing each carrier’s proposal and taking into account community feedback, we have decided to re - select Gre at Lakes at all four communities to fulfill the EAS contract for another two

- ye ar term. With the withdraw a l of Gulfstream’s proposal, Great Lakes was left as the only carrier to bid on service at Kingman and Prescott. Both communities supported Great Lak es’ proposal and we find the subsidy and service levels reasonable and will meet both communities’ needs

. At Page we were faced with a choice b etween Great Lakes and Sky West and , a gain, the decision is straightforward. T he community supports Great Lakes’ Option #1, and Great Lakes ’ annual subsidy

request of $1,559,206 is significantly lower than Sky

West’s annual subsidy request of $2,443,182. We are concerned, howev er, b y the community ’s comments about the reliability of service provided by Great Lakes. A key component of EAS carrier selection criteria is demonstrated reliability in providing scheduled service,- 4

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and we expect Great Lakes to work to address the community ’s concerns regarding its service reliability

. With respect to Show L ow , the decision to choose Great Lakes is straightf orward. The community

supports Great Lakes Option #2, which is a continuation of status

- quo service, and the carrier’s annual subsidy of $1,719,058 is slightly

less than SeaPort’s annual subsidy of $1,771,5 56. Although we are selecting Great Lakes to serve Kingman and Show Low for a two

- ye ar period, both communities are currentl y over the $200 subsidy cap (Kingman at $629, Show Low at $250), and , in particular, Kingman’s per passenger subsidy is extremely high

. While w e are aw are that Kingman suffered a ten

- month service hiatus from May 31, 2008, through April 17, 2009, the Department is nonetheless prohibited from subsidizing air service at a community

where the subsidy per passenger exceeds $200, unl ess the community

is more than 210 highway miles from the nearest large or medium hub airport. 2 Kingman is 121 miles from L as Vegas McCarren International, a large hub a irport. We expect both communities and Great Lakes to work together to maximize use of the service to lower the subsidy

per passenger to $200 or less. We will continue to monitor enplanements during the course of Great Lakes’ term and will take appropriate action if neces sary , including termination of eligibility for subsidy

under the EAS program. We shall make these selection s of Great Lakes contingent upon the Department’s receiving properl y executed certifications from the carrier that it is in compliance with the Department’s regulations regarding drug

- free workplaces and nondiscrimination, as well as the regulations concerning lobb yi ng activities. C arrier Fitness 49 U.S.C. 41737(b) requires that we find an air carrier fit, willing, and able to provide reliable serv ice before we may subsidize it to provide essential air service

. Great Lakes is subj ect to the Department’s continuing fitness requirements, and no information has come to our attention that w ould 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 negativel y affect our fitness finding s . We therefore conclude that the carrier remain s fit to conduct the operations proposed here. This order is issued under authority delegated in 49 CFR 1.56a(f).
AC CORDINGLY, 1. We select Great Lakes Aviation, Ltd., to provide essential air service at Kingman, Page, Prescott, and Show Low, Arizona , and establish the subsidy rates, as described in Appendix C, for the period May 1, 2011, through April 30, 2013;

2 Congress first established the $200 ceiling under P.L. 101

- 164 for fiscal year 1990, and reestablished it in fiscal years 1994

- 1999. The ceiling was made permanent by P.L. 106

- 69, the Department of Transportation and Related Agencies Appropriations Act o f 2000.- 5

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2

. We direct Great Lakes Aviation, Ltd

. , 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 for seven ye ars or until the Department indicates that the records may be destroyed, whichever comes first. Copies of flight logs for ai rcraft sold or disposed of must be retained. The carrier may forfeit its compensation for an y claim that is not supported under the terms of this order; 3 . We f i nd that Great Lakes Aviation, Ltd

. , continue s to be fit, willing and able to operate as a commuter carrier, and capable of providing reliable essential air service at Kingman, Page, Prescott, and Show L ow, Arizona ; 4

. These docket s will remain open pending further Department action ; and 5 . We will serve copies of this order on the Mayors an d Airport Manager s of Kingman , Page, Prescott, Show Low, Great Lakes Aviation, Ltd., SeaPort Airlines, and Sky West Airlines

.
B y:

SUSAN L. KURLAND Assistant Secretary for Aviation and International Affairs (SEAL) An electronic version of this document is ava ilable on line at www.regulations.govAppendix A


## AREA MAPAppendix B Page 1 of 4Appendix B Page 2 of 4Appendix B Page 3 of 4Appendix B Page 4 of 4Appendix C Page 1 of 4 Great Lakes Aviation, Ltd. Essential Air Service to be Provided at Kingman, Arizona Effective Period : May

1, 2011, through April 30, 2013 Scheduled Service : 12 nonstop round trips a week to either Las Vegas or Phoenix Aircraft : 19

- seat Beechcraft 1900D Rate per Eligible Flight: $955 1 Weekly Ceiling : $ 22,920 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, w ithout 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 been completed, such as certai n 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 cla im 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 De partment 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 over fly points for lack of traffic will not be compensated. In determining whether subsidy payment for a deviating flight should be adjusted or disallow ed, the Department will consider the extent to which the goals of the program are met and the extent of acc ess to the national air transportation system provided to the community. If the Department unilaterally, either partially or complete ly , 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 location without regard to any requirement for no tice of such cessation. Those adjustments in the levels of subsidy and/or service that are mutually agreed to in w riting by the Department and the carrier do not constitute a total or partial reduction or cessation of payment. Funds are not currently ava ilable for performance under this order beyond March 3, 2011

. The Department’s obligation for performance under this order beyond March 3, 2011 , 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 March 3, 2011 , until funds are made avai lable to the Department for performance. If funds are not made available for performance beyond March 3, 2011 , the Department will provide notice in w riting to the carrier. Subsidy contracts are subject to, and incorporate by reference, relevant statute s 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 $1,168,390 divided by 1,223 annual departures (24 w eekly departures x 52 weeks x 98 percent completion factor).
2 24 arrivals and departures per w eek multiplied by $955.Appendix C Page 2 of 4
Great Lakes Aviation, Ltd. Essential Air Service to be Provided at Page, Arizona Effective Period : May

1, 2011, through April 30, 2013 Scheduled Service : 19 weekl y nonstop round trips to Phoenix, with an option that one round trip a day may be substituted to either Denver (one

- stop) or Las Vegas (nonstop) Aircraft : 19

- seat Beechcraft 1900D Rate per Eligible Flight: $ 805 1 We ekly Ceiling : $ 30,590 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 supporting subsidy eligibility fo r 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 signif icant 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 Analys is 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 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 disallow ed, 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 ly , terminates or reduces payments for service or changes service re quirements 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 spec ific 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 w riting by the Department and the carrier do not constitute a total or partial reduction or cessation of payment. Funds are not currently available for performance under this order beyond March 3, 2011

. The Department’s obligation for performance under this order beyond March 3, 2011 , is subject to the availability of appropriated funds fro m 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 March 3, 2011 , until funds are made available to the Department for performance. If funds are not made available for performance beyond March 3, 2011 , the Department will provide notice in w riting 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 $1,559,206 divided by 1,93 6 annual departures (38 w eekly departures x 52 weeks x 98 percent completion). 2 38 arrivals and departures per w eek multiplied by $805 per flight

.Appendix C Page 3 of 4 Great Lakes Aviation, Ltd. Essential Air Service to be Provided at Prescott, Arizona Effective Period : May

1, 2011, through April 30, 2013 Scheduled Service : 18 weekl y nonstop round trips to either Los Angeles or Ontario, and /or one

stop service to Denver Aircraft : 19

- seat Beechcraft 1900D Rate per Eligible Flight: $ 999 1 Weekly Ceiling : $ 35,964 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 aircra ft 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 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 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. The carrier must complete all flights that can be safely operated; flights that overfly points for lack of traffic will not be compensated. In de termining whether subsidy payment for a deviating flight should be adjusted or disallow ed, 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 ly , 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 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 w riting by the Department and the carrier do not constitute a total or partial reduction or cessation of payment. Funds are not currently available for performance under this order beyond March 3, 2011

. The Department’s obligation for performance under this order beyond March 3, 2011 , 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 aris e for performance under this order beyond March 3, 2011 , until funds are made available to the Department for performance. If funds are not made available for performance beyond March 3, 2011 , the Department will provide notice in w riting 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 fo regoing 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 $1,832,233 divided by 1,835 annual departures (36 w eekly departures x 52 weeks x 9 8 percent completion). 2 36 arrivals and departures per w eek multiplied by $999.Appendix C Page 4 of 4 Great Lakes Aviation, Ltd. Essential Air Service to be Provided at Show Low, Arizona Effective Period : May

1, 2011, through April 30, 2013 Scheduled Service : 18 weekl y nonstop round trips to Phoenix, with an option to serve Denver with one round trip a day Aircraft : 19

- seat Beechcraft 1900D Rate per Eligible Flight: $ 937 1 We ekly Ceiling : $33,732 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 supporting subsidy eligibility fo r 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 signif icant 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 Analys is 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 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 disallow ed, 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 ly , terminates or reduces payments for service or changes service re quirements 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 spec ific 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 w riting by the Department and the carrier do not constitute a total or partial reduction or cessation of payment. Funds are not currently available for performance under this order beyond March 3, 2011

. The Department’s obligation for performance under this order beyond March 3, 2011 , 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 March 3, 2011 , until funds are made avai lable to the Department for performance. If funds are not made available for performance beyond March 3, 2011 , the Department will provide notice in w riting 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 $1,719,058 divided by 1,835 annual departures (36 w eekly departures x 52 weeks x 98 percent completion). 2 36 arrivals and departures per w eek multiplied by $937.