Order 20 1 3

- 1

- 8

Served: January 11, 2013



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 11th day of January , 20 13

Essential Air Service at

KINGMAN, ARIZONA

PAGE, ARIZONA

PRESCOTT, ARIZONA

SHOW LOW, ARIZONA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 1996

- 1899

DOCKET DOT

- OST

- 1997

- 2694

DOCKET DOT

- OST

- 1996

- 1899

DOCKET DOT

- OST

- 1998

- 4409



### ORDER REQUESTING PROPOSALS

Summary

By this O rder, the Departme nt is requesting proposals from airlines interested in providing

Essential Air S ervice (EAS) at Kingman, Page

, Prescott, and Show Low, Arizona, for a new

term beginning May 1, 2013

, with or without subsidy. Pr oposals are due by February 12

, 2013

. (See Appendix A for a map.)

Background

By Order 2011

- 3

- 4, March 1, 2011, the Department re

- selected Great Lakes Aviation, Ltd.

(Great Lakes), to provide EAS at the above

- mentioned communit ies for the two

- year term

ending April 30, 2013, using 19

- passenger Beechcraft 1900D aircraft for a combin ed annual

subsidy of $6,278,887

.

Gre at Lakes was selected to provide Kingman with 12 nonstop round trips a week to either Las

Vegas McCarran Internat ional Airport (Las Vegas) or Phoenix Sky Harbor International

Airport (Phoenix) for an annual subsidy of $1,168, 390

. 1

1 Recently the Department permitted Great Lakes to change Kingman’s hub to Los Angeles International Airport.

See Order 2012

- 11

- 5.- 2

-

At Page, Great Lakes provides 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 from Page is to Phoenix,

with an option that one rou nd trip a day may be substituted to either Denver International

Airport (Denver) (one

- stop) or Las Vegas (nonstop).

At Prescott, the airli ne flies 18 weekly nonstop round trips to Los Angeles International Airport

(Los Angeles) or Ontario International Airport , and/or one

- stop service to Denver for an annual

subsidy of $1,832,233

.

At Show Low, Great Lakes provides 18 weekly nonstop round trips to Phoenix, with an option

to serve Denver via Prescott with one round trip a day for an annual subsidy of $1 ,719,058.

Legislative Changes Which May Affect Future EAS Eligibility at Kingman

The F ederal A viation A dministration (FAA) Modernization and Reform Act of 2012 (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

determined by the Secretary, during the most recent fiscal year beginning after September 30,

2012

. 2 The legislation exemp t s locations in Alaska and Hawaii and communities that are more

than 175 driving miles from the neares t large or medium hub airport. As Kingman is only

about 121 miles from the Las Ve gas , the community must meet the 10

- enplanement

- a

- day

threshold for EAS to continue after FY2013 or otherwise face termination of its eligibility to

receive EAS , barring a waiver from the Secretary

.

In the most recent fiscal year for which data are available, FY2012 (October 2011

- September

2012), Kingman generated a total of 2,063 passengers (inbound and outbound) , or an average

of 3 enplanements per day. 3 Air c arriers submitting proposals should provide a discussion on

how they would attract enough passengers to meet the 10 enplanements per day statutory

requirement in order for Kingman to remain eligible to continue receiving EAS after FY2013

. Proposing air carriers should also be aware that the Departmen t will continue to monitor

Kingman ’ s eligibility to receive EAS in light of these new requirements throughout the life of

any executed contract. The Department may cancel a contract for any community receiving

EAS if enplanements remain below 10 per day d uring FY2013. Communities that believe their

enplanements are below 10 per day due to a temporary decline should provide a detailed

explanation of the temporary decline to the Department with relevant supporting documents.

In addition, the Department is p rohibited from subsidizing air service at a community where the

subsidy per passenger exceeds $200, unless the community is more than 210 highway miles

from the nearest large or medium hub airport. 4 Kingman’s subsidy per passenger is $566, well

2 The Secretary also has authority to waive the 10 passenger requirement, on an annual basis, if the community

can demonstrate that the reason the location averages fewer than 10 passengers per day is due to a temporary

decline in enplanements. See 49 U.S.C

. § 41731(e).

3 Source: Bureau of Transportation Statistics; Form 41, Schedule T

- 100. Daily averages are based on one

- half of

the O&D passengers, divided by 313 service days (314 during leap years).

4 Congress first established the $200 ceiling under P.L. 1 01

- 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 of 2000.- 3

-

above the $200 ceiling. 5 Rather than terminate the community’s eligibility, at this state, the

Department will solicit proposals for EAS and evaluate all proposals before either committing

to a two

- year contract to making a final determination on Kingman’s continui ng eligibility to

receive EAS in light of its current subsidy per passenger being above the $200 ceiling. We

therefore expect air carriers to detail in their proposals how they will work with the community

in getting the subsidy per passenger under the $2 00 cap.

Special d iscussion concerning Show Low

As discussed above, the Department is prohibited from subsidizing air service at a community

where the subsidy per passenger exceeds $200, unless the community is more than 210

highway miles from the nearest large or medium hub airport. Show Low is 154 miles from

Phoenix and b ased on FY2012 data (October 1, 2011, through September 30, 2012), 8,360

passengers were enplaned and de planed at Show Low . The annual subsidy amount for Show

Low is $1,719,058 . Theref ore, the subsidy per passenger at Show Low is $ 206, just over t he

subsidy per passenger ceiling . Rather than terminate the community’s eligibility, at this stage,

the Department will solicit proposals for EAS and evaluate all proposals submitted before

either committing to a two

- year contract or making a final determination on Show Low ’s

continuing eligibility to receive EAS in light of its current subsidy per passenger being above

the $200 ceiling. During the 30

- day window for proposals, we expect bot h communities to

work aggressively with all potential applicants to mitigate some of the risks that the air carriers

may face in an attempt to lower their subsidy levels. We also expect air carriers to detail in

their proposals how they will work with the community in getting the subsidy per passenger

under the $200 cap.

Request for Proposals

Air carriers should file their proposals no later than February 12

, 2013. After that date, our

staff will docket proposals, thereby making them public, and shortly afterwards will provide a

summary of the proposals to the community and ask them for their final comments. We will

give full consideration to all proposals filed in a timely manner.

Interested air carriers should prepare their proposals with every expec tation that their initial

proposals will also be their final and only proposals. We retain the discretion to negotiate

proposals with air carriers when we deem it desirable. We also retain the discretion to reject

outright all unreasonable or unrealistic proposals and solicit a new round of 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

www.regulations.gov , each page should be formatted to be viewed online.

We are here providing interested air carriers with some basic information to serve as guidance

when they prepare their proposals, but we will not prescribe a precise format. We expect

proposals to adequately describe the service being proposed and the annual amount of subsidy

being requested . The applicants can make their own judgments as to the level of detail they

wish to present; however, they might want to include proposed schedules as well as supporting

data for their subsidy requests, such as projected block hours, revenues and expense s. We

5 Subsidy per passenger is calculated by dividing the annual subsidy by the total passengers enplaned and

deplaned at the airport. Kingman’s annual subsidy is $1,168,390 and the total passengers en planed and deplaned

for FY12 were 2,063. Therefore Kingman’s subsidy per passenger is $566.- 4

-

strongly encourage clear, well

- documented proposals that will facilitate their evaluation by the

affected community and the Department. 6

Air c arriers are also welcome to propose more than one option, if they choose; they need not

limit themselves t o those requirements if they envision other, potentially more attractive service

possibilities

-- different hubs, frequency or equipment, for example

-- with subsidy

requirements that remain competitive. The communities and air carriers are encouraged to

work together in advance of the due date for proposals to craft a service pattern that is desirable

to the communit y and meets the operational needs of the airline s

.

Proposals should provide sufficient capacity to accommodate historical levels of traffic. In

order to assist carriers in developing traffic and revenue projections for their proposals, we

have provided a summar y of historical passengers in Appendix B. Below is a summary of the

average enplanements for each c ommunity for the year ended Septem ber 30, 2012:

Community Enplanements per day

Kingman 3

Page 20

Prescott 17

Show Low 13

W e expect service levels that a re consistent with what the communities currently receive, with

service to any large

- or medium

- hub airport that offers access to the national air transportation

system utilizing two

- pilot, t win

- engine aircraft. Given the low passenger levels at Kingman,

the Department would expect two round trips each weekday and weekend (12 a week). At

Page, Pre scott, and Show Low, we would expect proposals for three round trips each day (18 a

week) with 19

- 30

- seat or larger aircraft, or additional frequencies utilizing 8/9

- seat a ircraft

.

Other Air Carrier Requirements

The Department is responsible for implementing various Federal statutes governing lobbying

activities, drug

- free workplaces and nondiscrimination. 7 Consequently, all air carriers

receiving Federal subsidy to support EAS must certify that they are in compliance with

Department regulations regarding drug

- free workplaces and nondiscrimination, and those

carriers whose subsidies exceed $100,000 over the life of the rate term must also certify that

6 In selecting a carrier to provide subsidized EAS, 49 U.S.C. § 41733(c)(1) directs us to consider four factors:

(1) service reliability; (2) contractual and marketing arrangements with a larger carrier at the hub; (3) interline

arrangements with a larger carrier at the hub; and (4) community views. In addition, the Consolidated

Appropriations Act, 2008, Public Law 110

- 161, provides that when selecting a carrier to provide EAS, the

Department may consider the relative subsidy requirements, thus codifying a factor that we have considered

since the inception of the program. Interested carriers should also be aware that our general provisions

governing EAS will be included in the selection order as part of our authorization of subsidy for the selected

service. Appendix C o f this order contains those general provisions.

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

– New restrictions on lobbying; (2) 49 CFR

Part 21

– Nondiscrimination in federally

- assisted programs of the Department of Transportation

– Effectuation of

title VI of the Civil Rights Act of 1964; 49 CFR Part 27

– Nondiscrimination on the basis of disability in programs

and activities receiving or benefiting from Federal financial assistance; and 14 CFR Part 382

– Nondiscrimination

on the b asis of disability in air travel; and (3) 49 CFR Part 29

– Government

- wide debarment and suspension (non

procurement) and government

- wide requirements for drug

- free workplace (grants).- 5

-

they are in compliance with the regulations governing lobbying activities. All air carriers that

plan to submit proposals involving subsidy should submit the required certifications along with

their proposals. Interested air carriers requiring more detailed information regarding these

requirements, as well as copies of the certifications, should con tact the Office of Aviation

Analysis at (202) 366

- 5903. The Department is prohibited from paying subsidy to carriers that

do not submit these documents. 8

Community and State Comments

Civic officials and the State are welcome to submit comments on the proposals at any time. As

noted earlier, we will provide a summary of the proposals to the civic parties and ask them to

submit their final comments shortly after February 12

, 2013, the due date for carrier proposals.

This order is issued under authority delegated in 49 CFR 1.56a(f) and re

- delegated to the

Director, Office of Aviation Analysis.

ACCORDINGLY,

1. We request that air ca rriers interested in providing Essential Air S ervice at Kingman, Page

, Prescott, and Show Low, Arizona, submit their proposals, with or without subsidy requests, no

later than February 12, 2013 . The proposals should be emailed to: EAS@dot.gov with the title

“Proposal to Provide Essential Air Service at Kingman, Page, Prescott

, and /or Show Low,

Arizona”; 9

2. These docket s will remain open until further order of the Department; and

8 The certifications are also available on the web at http://ostpxweb. dot.gov/aviation/index.html.

9 Questions regardi ng this O rder should be directed to Michael Martin at 202

- 366

- 6494, or via email at

michael.f.martin@dot.gov

.- 6

-

3. The Department will serve a copy of this O rder on the mayor s and airport manager s of

Kingman, Page, Prescott, Show Lo w

, Great Lakes Aviation, Ltd. (Great Lakes)

, and the parties

listed in Appendix D.

Persons entitled to petition the Department for review of this order under the Department’s

Aviation Economic Regulations, 14 CFR Part 385.50, must file such petitions with in ten (10)

days after the date of service of this order.

This O rder will be effective immediately, and the filing of a petition for review shall not

preclude its effectiveness.

By:

TODD M. HOMAN

Director

Office of Aviation Analysis

(SEAL)

An electronic version of this document is available on line at

www.regulations.gov

### Appendix A



## Area Map

Maps generated by the Great Circle Mapper

- copyright © Karl L. Swartz

.

### APPENDIX B

Page 1 of 4

Historical Origin

- Destination Plane Traffic 1



### Kingman, Arizona

Quarter Year Deplanements Enplanements Total

Traffic Enplanements

per Day

4 2009 381 293 674 4

1 2010 235 268 503 3

2 2010 248 190 438 3

3 2010 224 230 454 3

Annual

Totals 1,088 981 2,069 3

4 2010 256 209 465 3

1 2011 247 226 473 3

2 2011 239 228 467 3

3 2011 229 244 473 3

Annual

Totals 971 907 1,878 3

4 2011 281 265 546 3

1 2012 268 289 557 4

2 2012 278 250 528 3

3 2012 210 222 432 3

Annual

Totals 1,037 1,026 2,063 3

1 Source: USDOT Bureau of Transportation Statis tics, TransStats Intermodal Database, Schedule T

- 1 00

.

### APPENDIX B

Page 2 of 4

Historical Origin

- Destination Plane Traffic 1



### Page, Arizona

Quarter Year Deplanements Enplanements Total

Traffic Enplanements

per Day

4 2009 1,072 1,086 2,158 14

1 2010 885 806 1,691 11

2 2010 1,915 1,631 3,546 23

3 2010 2,450 2,222 4,672 30

Annual

Totals 6,322 5,745 12,067 19

4 2010 1,081 1,136 2,217 14

1 2011 768 737 1,505 10

2 2011 1,786 1,553 3,339 21

3 2011 2,661 2,540 5,201 33

Annual

Totals 6,296 5,966 12,262 20

4 2011 773 829 1,602 10

1 2012 679 629 1,308 8

2 2012 2,236 1,802 4,038 26

3 2012 2,757 2,669 5,426 34

Annual

Totals 6,445 5,929 12,374 20

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

- 1 00

.

### APPENDIX B

Page 3 of 4

Historical Origin

- Destination Plane Traffic 1



### Prescott, Arizona

Quarter Year Deplanements Enplanements Total

Traffic Enplanements

per Day

4 2009 3,324 3,388 6,712 42

1 2010 2,026 1,910 3,936 26

2 2010 2,486 2,484 4,970 32

3 2010 2,158 2,133 4,291 27

Annual

Totals 9,994 9,915 19,909 32

4 2010 1,334 1,301 2,635 17

1 2011 1,027 976 2,003 13

2 2011 1,364 1,345 2,709 17

3 2011 1,402 1,436 2,838 18

Annual

Totals 5,127 5,058 10,185 16

4 2011 1,454 1,400 2,854 18

1 2012 1,142 1,107 2,249 15

2 2012 1,361 1,348 2,709 17

3 2012 1,386 1,297 2,683 17

Annual

Totals 5,343 5,152 10,495 17

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

- 1 00

.

### APPENDIX B

Page 4 of 4

Historical Origin

- Destination Plane Traffic 1



### Show Low, Arizona

Quarter Year Deplanements Enplanements Total

Traffic Enplanements

per Day

3 2009 1,140 1,201 2,341 15

4 2009 797 796 1,593 10

1 2010 508 584 1,092 7

2 2010 742 797 1,539 10

Annual

Totals 3,187 3,378 6,565 10

3 2010 966 1,049 2,015 13

4 2010 656 645 1,301 8

1 2011 447 516 963 6

2 2011 991 1,049 2,040 13

Annual

Totals 3,060 3,259 6,319 10

3 2011 1,408 1,498 2,906 18

4 2011 994 933 1,927 12

1 2012 721 782 1,503 10

2 2012 1,011 1,013 2,024 13

Annual

Totals 4,134 4,226 8,360 13

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

- 1 00

.

### Appendix 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 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

for a fli ght 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 p eriod, 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 w riting 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 disallowed, the

Department will consider the extent to which the goa ls 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, terminates or reduces payments for

service or changes service requireme nts 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

lo cation 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 cessati on of payment.

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 con trovert the foregoing paragraph.

Funds are not currently available for performance under this solicitation beyond [DATE] . The

Department’s obligation for performance under this solicitation beyond [DATE] , is contingent

upon the availability of appropriat ed 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 to the Department for performance. If

funds ar e not made available for performance beyond [DATE] , the carrier will receive notice in

writing by the Department.

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

under this order.