Order: 2 014

- 8

- 16 Served: August 18 , 2014



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

Issued by the Department of Transportation on the 18th day of August , 20 1 4



### ORDER SELECTING CARRIER AND DEFERRING ACTION

Summary By th is O rder, the Department is : 1) selecting Multi

- Aero Inc. d/b/a Air Choice One

, to provide Essential Ai r Service (EAS) at Mason City, Iowa

, using 9

- passenger Cessna Grand Caravan or 8

- passenger Piper Navajo aircraft to Chicago O’Hare International Airport (Chicago O’Hare ), for 24 weekly round trips, for the two

- year period from November 1, 2014

, through October 31, 2016

, for an annual subs idy of $4,290,533 1 ; and 2 ) deferring action at Fort Dodge, Iowa

, until further Order from the Department. See Appendix A for
a map.

Background Per Order 2011

- 11

- 30 (November 23, 2011)

, the Department selected Great Lakes Aviation, Ltd. (Great Lakes), to provide EAS a t Fort Dodge and Mason City. Order 2012

- 6

- 23 (June 26, 2012)

, esta blished the effective dates

, which were May 17, 2012

, through May 31, 2014.

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

. Essential Air Service at

FORT DODGE, IOWA MASON CITY, IOWA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 200 1

- 10682 DOCKET DOT

- OST

- 2001

- 10684- 2

-

On January 27, 2014, Great Lakes announced in a press release that s ervice to these communities would be suspended a s of Fe bruary 1, 2014, without filing the requisite 90

- day notice of its intent to suspend service. T he Department issued Order 2014

- 1

- 20 (January 31, 2014)

, requesting proposals for replacement service on an expedited basis.

We received proposals from Great Lakes and Air Choice One. Both communities asked that we re

- solicit proposals due to Great Lakes ’ suspending operations and its unrelia ble service, and Air Choice One for proposing single

- engine aircraft

. Neither community was willing to waive its right to twin

- engine service at that time. By Order 2014

- 4

- 22 ( April 22, 2014 ), the Department re

- solicited proposals from air carriers interested in p roviding EAS at F ort Dodge and Mason City, with or without subsidy. Again, we received proposals from only Great Lakes and Air Choice One.

Summary of Proposals

Great Lakes Great Lakes submitted options for Mason City , each with service to Minneapolis

- S t. Paul International Airport (Minneapolis or MSP ). The first option is 24 weekly round trips using 9

- passenger Beech 1900 aircraft for $2,987,002 in annual subsidy, or 24 weekly round trips using 19

- passenger Beech 1900 aircraft for $2,475,336 in annual subsidy. The second option is 18 weekly round trips with 9

- seat aircraft f or $2,429,954, or 18 weekly round trips with 19

- seat aircraft for $1,952,477. 2

Air Choice One Air Choice One submitted proposal s that were combined packages and stand

- alone options. The combined packages included Fort Dodg e and Maso n City; however, since action on Fort Dodge is being deferred at this time, we will only address the stand

- alone option at Mason City. If the Department grants Fort Dodge a waiver, we wi ll revisit the various options

.

The Mason City stand

- alone option consist s of 24 weekly round trips to Chicago O’Hare for an annual subsidy of $4,290,533

, for a two

- year term
, or a discounted annual rate of $4,247,628 for a four

- year term.

Community Comments On June 3

, 2014 , the Department solic it ed comments from the community regarding this air carrier selection case. We received a letter from Mr. Eric Bookmeyer, Mayor of Mason City, and Ms. Joni Dunn, Chair of the Mason City Airport Commission, supporting Air Choice One’s proposal for 24 weekly round trips to Chicago O’Hare

, described above. The Mason City Airport Commission voted unanimously to recommend Air Choice One’s option for 24 weekly round trips to Chicago O’Hare. The community also affirmatively waived their right to twin

- engine aircraft. The community stated the ir willingness to

2 As an alternative, Great Lakes provided proposals that lower subsidy requirements assuming that the

a ircraft can be returned to a 19

- seat configuration requirement

.- 3

-

support Air Choice One’ s service to ensure that they conform to the $200 per passenger subsidy.

Carrier Selection for Mason City T he community support s Air Choice One to provide EAS at Mason City

, and the Department finds the service and subsidy levels to be reasonable . In addition, Air Choice One’s service to Chicago O’Hare will provide Mason City with excellent access to the national air transportation system, and the carrier has a good track record of providing reliable service in the EAS program. Therefore

, we will select Air Choice One to provide EAS at Mason City for a two

- year term.

We make this selection of Air Choice One a t Mason City contingent upon the Department’s receiving properly executed certifications from the air carr ier that it is in compliance with the Department’s regu lations regarding drug

- free workplaces and nondiscrimination, as well as the regulations concerning lobbying activities. 3

Legislative Changes That May Affect Future EAS Eligibility Public Law No

. 112

- 95 amended 49 U.S.C. §41731(a)(1)(B) to change the definition of “eligible place” for the purpose of receiving EAS. The amendment states that to be eligible, a community must maintain an average of 10 enplanements or more per service day, as determin ed by the Secretary, during the most recent fiscal year beginning after September 30, 2012. 4 The legislation exempts locations in Alaska and Hawaii and communities that are more than 175 driving miles from the nearest large or medium hub airport. Additio nally, the Department of Transportation and Related Agencies Appropriations Act, 2000, prohibits the Department from subsidizing EAS to communities located within the 48 contiguous States receiving per passenger subsidy amounts exceeding $200, unless the c ommunities are located more than 210 miles from the nearest large or medium hub airport. As Mason City is within 175 miles of a large or medium hub airport, Minneapolis/St. Paul International Airport (MSP) and

, thus

, is also within 210 miles of a large or medium hub, the communities must meet the 10

- enplanement

- a

- day threshold and not exceed the $200 subsidy per passenger cap for EAS to continue, barring a waiver from the Secretary. 5

Public Law 112

- 27, signed into law on August 5, 2011, further amended th e definition of “eligible place” for the purpose of receiving EAS. 6 The amendment, among other things,

3 The certifications are available online under “Reports and Publications” at http://www.dot.gov/policy/aviation

- policy/small

- community

- rural

- air

- service/essential

- air

- service

4 The Secretary also has authority to waive the 10 passenger requirement, on an annual basis, if the community can demonstrate that the r eason the location averages fewer than 10 passengers per day is due to a
tem porary decline in enplanements and to waive the $200 subsidy

- per

- passenger limit for a limited period of time, on a case

- by

- case basis. See 49 U.S.C. § 41731(e) ; Public Law 112

- 95

. 5 On May 1, 2014, a Notice of Proposed Enforcement Policy on the $200 per passenger subsidy cap was published in the Federal Register (Volume 79, Issue 84). It outlined the Department’s proposed policy on this issue, which would use traffic data from Nov ember 1, 2014 , through September 30, 2015, to measure compliance. The Department has solicited public comments on the policy and the comment period closed June 30, 2014. Refer to www.regulations.gov and search “DOT

- OST

- 2014

- 0061” for more information.

6 See 49 U.S.C. § 41731.- 4

-

states that to be eligible, a community must have had an average subsidy per passenger of less than $1,000 during the most recent fiscal year, as determ ined by the Secretary of Transportation.

Air Choice One and the community should be aware that the Department wil l continue to monitor eligibility to receive EAS in light of these requirements throughout the life of the EAS contract. The Department may cancel a contract for any community rece iving EAS if it does not average 10 or more enplanements per service day dur ing FY2014 and all subsequent fiscal year s

. Average enplanements and per p assenger subsidies will be cal culated based on end of fiscal year data.

T he Department highly encourages Air Choice One and Mason City to work together to

r emain in compliance with the statute.

Special discussion abou t Fort Dodge Order 2014

- 4

- 26, issued on April 24, 2014

, found that Fort Dodge was within 175 m iles of Omaha Airport

- Eppley Airfield (OMA), a medium hub, averaged fewer than 10 enplanements per day in fiscal year 2013 and, thus, tenta tively terminated its EAS eligibility. That tentative decision was made final by Order 2014

- 6

- 6, issued June 24

, 2014, w hich also described the waiver process and announced our intention n ot to terminate EAS subsidy during the processing of any waiver petitions, which were due to th e Depa rtment by July 24. Fort Dodge submitted a timely waiver application, so its long

term status in the EAS program will not be known until the waiver process has concluded

. Therefore, we will not address any Fort Dodge proposals or any proposals that include Fort Dodge as part of an inseparable package.

Carrier Fitness 49 U.S.C. §§ 41737(b) and 41738 require that we find an air carrier fit, willing, and able to provide reliable service before we may subsidize it to provide EAS

. Air Choice One is subject to the Department’s continuing fitness requirements, and no information has c ome to our attention that would cause us to question the air carrier’s fitness at this time. We have contacted the Federal Aviation Administration, and it has raised no concerns that would negatively affect our fitness findin gs . We therefore conclude tha t Air Choice One is reliable and fit to conduct the operations proposed here.

This Order is issued under authority delegated in 49 CFR Part 1

. 25a(b)

.
ACCORDINGLY, 1. We select Multi

- Aero Inc. d/b/a Air Choice One to provide EAS at Mason City, Iowa

, and establish the annual subsidy rate as described in Appendix C;

2. We will defer action on a long

- term carrier selection decision at Fort Dodge, Iowa

, until further Department action ;

3

. We direct Multi

- Aero Inc. d/b/a Air Choice One to retain all books, records, and other source and summary documentation to support claims for payment, and to preserve and- 5

-

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 Multi

- Aero Inc. d/b/a Air Choice One is fit, willing and able to operate as a
commuter air carrier, and capable of providing reliable Essential Air Service at Mason City ;

5

. These docket s will remain open pending further Department action ; and

6

. The Department will serve a copy of this O rder on the Mayor s of Fort Dodge and Mason City, Iowa, the airport manager s of Fort Dodge Regional Airport and Mason City Municipal Airport, Multi

- Aero, Inc. d/b/a Air Choice One, and Great Lakes Aviation, Ltd

.

B y:

SUSAN L. KURLAND Assistant Secretary for Aviation and International Affairs

(SEAL)

An electronic version of this document is ava ilable at http://www.regulations.govAppendix A



### AREA MAP

Maps generated by the Great Circle Mapper

- copyright © Karl L. Swartz

.Appendix B



### Air Choice One Proposal for EAS at Mason CityAppendix C

Multi

- Aero Inc. d/b/a Air Choice One Essential Air Service to be provided at Mason City, Iowa

Docket DOT

- OST

- 2001

- 10684

Effective Period : November 1, 2014 , through October 31, 2016 Scheduled Service : 24 weekly nonstop round trips to Chicago (ORD) Aircraft : 9

- passenger Cessna Grand Caravan or 8

- passenger Piper Navajo Rate per Eligible Flight: $ 1,748 1 Weekly Ceiling : $ 83,904 2

Note: The carrier understands that it may forfeit its compensation for any flig hts 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 significan t elements of the required service, without prior approval. The carrier understands th at an aircraft take

- off and landing at its scheduled destination constitutes a completed flight; absent an explanation supporting subsidy eligibility for a flight that has not been completed, such as certain weather cancellations, only completed flights ar e 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 con templates 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 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 compensat ed. 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 provid ed to the community.

If the Department unilaterally, either partially or completely, terminates or reduces payments for service or changes service requirements at a specific location provided for under this Order, then, at the end of the period for which the department does make payments in the stipulated service levels, the carrier may cease to provide service to that specific location without regards to any requirement for notice of such cessation. Those adjustments in the levels of subsidy and/or servi ce that are mutually agreed to in writing by the Department and carrier 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 may not be available for performance under this order beyond September 30, 2014. The Go vernment’s obligation for performance under this order beyond September 30, 2014, 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 performan ce under this order beyond September 30, 2014, until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond September 30, 2014, the Department will provide notice in writing to the car rier.

All claims for payment, including any amended claims, must be submitted within 90 days of the last day of the month for which compensation is being claimed. For example, claims for service provided in July must be filed by October 31; August claims must be submitted by November 30, and so on.

1 A nnual compensation of $4,290,533 divided by the 2,454 annual departu res (8 flights per day x 313 days x 98 percent completion).
2 48 arrivals and departures per week multiplied by $ 1,748 per flight.