Essential Air Service at BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. r",,'.'
..... :t 1" ." ,,'1..-'

IRONWOOD, MICHIGAN/ASHLAND, WISCONSIN MANISTEE/LUDINGTON, MICHIGAN DocketDOT-OST-1996-1266 Docket DOT-OST-1996-1711 Under49 U.S.c. 41731 etseq.
PROPOSAL IN RESPONSE TO ORDER 2010-9-26 Pursuant to Order2010-9-26, CharterAir Transport, Inc. (CAT) and Public Charters, Inc. (PC) hereby submit theirjointproposal to provide essential air transportation service at Ironwood, Michigan!Ashland, Wisconsin ("Ironwood") and Manistee/Ludington, Michigan ("Manistee"), hereinafterjointly referred to as the "EAS communities."
About the Offerors
CAT is a U. S. DirectAir Carrier (certificate number GNOA005I) authorized by the FAA to operate under 14 CFR Part 135. CAT is also authorizedbythe USDOT to operate as a CommuterAir Carrierunder 14 CFRPart 298 (see Order 2010-3-29). CATpresently operates five (5) EmbraerEMB-120 "Brasilia" 30-passengerregional airliners in additionto other turbine-powered aircraft.
PC is a U.S. Charter Operator authorizedpursuant to 14 Part 380 to organize and sell Public Charters as an Indirect Air Carrier. PC is authorizedby lATAto use the two-letter code "PI" and has distribution rights on certain GDS platforms, through certain online travel agencies, and has an agreement to settle ticket sales through ARC. Itowns proprietary web-based software products that together address all aspects ofticket sales, distribution, e-ticketing, baggage tracking, and interline communications. PC is TSA Secure Flight compliant, providing both2 domestic and intemational TSA clearances. PC also has direct experience in all aspects ofair carrier station operations and management.
With the full support ofthe EAS communities, CAT and PCjointly make this proposal to provide Essential Air Service to Ironwood and Manistee, Michigan as public charters under 14 CFRPart 380. As set forth in our Petition for Reconsideration ofthe DOT's finding in Order 2010-9-26, filed on October 20,2010 and hereby incorporatedby reference, DOT mayprovide EAS subsidy to support this proposed service. Each ofthe EAS communities filed documents with the DOT supporting our Petition ofReconsideration. Proposed Schedule
CAT/PC proposes service for both EAS communities to General Mitchell Intemational Airport inMilwaukee, Wisconsin (MKE). Flights between Manistee, Michigan (MBL) and MKE will be non-stop. Flights between Ironwood, Michigan (IWD) and MKE will have one stop (atMBL). We have held extensive discussions with the EAS communities to determine a timetable and routing that would be the most useful for their citizens and visitors, given the current arrivals and departures ofconnecting carriers at MKE. The initial schedule to which we have all agreed is summarized in the table below. Ouragreed schedule calls for two round trips between the EAS communities and MKE on each weekday, with one round trip on Saturday and one round trip on Sunday. CAT/PC will continuallymonitor changes in the schedules ofthe connecting air carriers and other dynamics at MKE and together with the EAS communities will make refinements to the schedule that best meet the public interest.

Schedule: 2x Daily with lxon day 6 and day 7 (Sat and Sun) Depart Arrive Stops Time 

### rWb 5:00AM MBL i' >, 7:10AM " ..

# ,. I> 1.00 "**>"'L~** 

## .**7:~OAM** >.**Ml<~,i. ii:;,1~20A!'v1'**  0 . " 

### ,.0,'0".··.· ,', 

## ·K1RE.· 10:35AM 

### ,MIt;. 12:25 PM 

### ., " ,I,I.';Q ,,', :', ," 0.60**I.~:. I\1~L**  

# . 12:45PM IWI? 

### .,Y', 12:55 PM 

### 1 >;J;10 

### ·t\Yt> 2:50PM 

### AVtSL**5:00~** 

### >.1- 

# .:' >. 

### .1.00 M8l. 5:25PM**M~g** 

## ..y**S:l~>PI\(** 0 , ""0.70,"**M~e** 8:00PM 

### M$l '9':50PM Q

. 

### ··:'O.fi6 

### MBL 10:10PM tWO iO:20PM 1 1,ltl3

Annual Compensation
We have detennined the annual compensation requirement for ourproposed service to be $3,584,328.65. A summary ofourprojected revenues and expenses appears in Exhibit A hereto.
Aircraft and Operations
CAT/PC proposes operations using CAT's EMB-120 "Brasilia" aircraft. The EMB-120 is apressurized twin-engine turboprop airlinerbuilt and regulated to 14 CFR Part 25 standards. Its crew compliment includes a Captain, First Officer, and Flight Attendant. The EMB-120 has a readily-accessible main cabin that seats 30 passengers and has the features that the public expects ofan airline operation, including overhead luggage bins, a galley capable ofdispensing hot and cold drinks, and a full-size private lavatory. The EMB-120 also features a flight deckthat is physically separated from the main passengercabin and a pressurized cargo hold with 1,200 pounds ofcapacity.
As noted above, CATpresently has five (5) EMB-120 aircraft in its fleet, providing ample reserve capacity to address planned and unplanned aircraft maintenance requirements.
We have negotiated initial fuel pricing at each ofthe airports on the proposed route. We are satisfiedthat in the nonnal course ofoperations, all fuel related requirements will be met in a commerciallyreasonable manner.
All operations will be conducted to and from the main tenninals at each airport on the route. All passengers and the aircraft will undergo full TSA screening inthe main tenninal at theirtrip'spoint oforigin.4
Connecting at MKE
We have been in discussions for several months with FrontierAirlines, one ofthe lowcost carriers serving MKE. FrontierAirlines has given us a verbal indicationthat they would enter into negotiations with us to establish an interline agreement for connecting service at MKE upon notification ofan award ofthe Ironwood and Manistee, Michigan EAS routes. Upon such award, we will move forward with all possible speed to negotiate the agreement with Frontier Airlines, conduct system testing, and commence interline operations. The successful implementation ofthe FrontierAirlines interline will become ourmodel for establishing similar arrangements with the other carriers serving MKE.
Certain airlines serving at MKE do notmake interline arrangements with other carriers. These are low-cost carriers whose fares and fees maybe very attractive to the EAS communities. We will use innovative approaches such as combining internet boarding pass printing technology with color codedbaggage identification tags to facilitate the transfer ofpassengers andbaggage to and from such low-cost carriers through sterile terminal operations. OurMKE station personnel will work one-on-one with the stationpersonnel ofthe low-cost carriers using these and other creative methods to provide seamless boarding and baggage handling for our connecting passengers.

Sales will be conducted by using PC's "P1" lATA code through its proprietary computerizedreservation system (CRS). PC's CRS has "Type A" connectivity and has been certified for E-Ticketing onboth the Sabre and Amadeus Global Distribution Systems (GDS). One ofthe features that GDS participation provides is access to information about all available connections at the EAS hub airport. GDS participation also makes fares available world-wide, maximizing exposure for the EAS Communities.5
In addition to GDS distribution, our flights will be available for purchase through a number ofinternet travel agents, including but not limited to Travelocity and Expedia, as well as through our own web site. Through GDS and internet distribution, we enable passengers or their travel agents to construct itineraries using multiple carriers by purchasing tickets on each carrier separately. Travel agents can use a special "segment select" function that enables then to build each segment offlight with different carriers onthe same itinerary regardless ifthere is an existing interline agreement. We receive complete electronic information on all ofourbookings, including multiple carrier itineraries. Our system is designed to identify such bookings and to provide the pertinent data to ourupline and downline stationpersonnel. Our local station personnel will work closely with the connecting carriers to ensure the most expeditious transfers ofboth passengers andbaggage to the final destination points.
We will fully complywith the 14 C.F.R. Part 380 provisions governing tour operatorparticipant contracts. Screen displays will disclose the informationrequiredbyPart 380 and DOT guidance on advertising and internet sales. Also, as part ofthe purchase process, passengers or their travel agents will receive electronic copies ofthe OperatorParticipant Contract and the CAT Contract ofCarriage.
Funds from all GDS and online sales will be cleared through the Airline Reporting Corporation and remitted directly into the depository escrow account requiredby Part 380
..In addition, passengers will protectedbyPart 380 bonding and escrow requirements applicable to both CAT and Pc.
CAT's Contract ofCarriage for EAS flights will incorporate all DOTregulations providing consumerprotection that are applicable to commuter air carriers, meeting consumer expectations for scheduled service operations with aircraft having fewer than 60 passenger seats.C4T/PC has t:vatuated the 1\\'1) and :'I.-1BL markets and detennined that there is room fvr growth in their i:llplum::!Ilcms, In order to rebmld these markets. we will devote considerable resources 10 (lUnH.:ling new pU:-l:;engerfl. Om marketi11g plan mc.ludcs, but is not limited to:
An**agg.n~ssiv~** pricing :-;trudurc (we c'>timate an nvemge one wny tru-e of$7(f.OO) Use ofmcdi<t, iflduding**10l;alldevi~jol1** a.nd radio. to promote the airp<lrts a.nd b\S Direct selling to**blJ~in~ssc,~** wiLhiTl Hom:-hnur dltve oreach EAS airpolt " pmumm prm,iriing**selection~** ofunsuhsidized flights from each community to destinations ofinterest to promote awareness ofthc loc(ll airporl and the EAS pmgrarn In all ofourmarketing and sales dforis. C'ATiPe ",·ill take all**'IICp~** ncccs'Iliry til comply with DOT's consumer protection**r,~glll!ttinn~** ami I"**~n1\lITt:** that (lIJr trade practices are fair. Community**Endorscmcnt~** The CAT!PC' pmpnsal is strongly supp0l1ed by the EAS communities. Hoth Ironwoodand \1,mislcc hay!': i.s,.,ued \
..,.ritten communications to the OUT in support ofCATlPC's initial scn'icc pmposal and our Petitiontor Reconsideration. I'hese documents were filed withtbe DOT r.::ontcmpmaneoUl.ly ,,,,"ith the tilingofour Petition tor I{cconsideration and are incorporated herein hy reference.

CHARTER AIR David A. Luca..
.. Vice PresldentlCFU 2301 North Marginal Road Cleveland, Ohio 44114 216-348-141S, x210 (voice) 216-348-1432**(ta:~)** ctlucas(t/shartersinranspon.com (e-mail) Jim Gallllgher. President/CEO 2(11 lIangar Koad Avoca. I'''' 18702 570.457.1950 (voice) 570-457-4111 (fax) J(n2}@.l!!lJ...(;pm (e-mail)Exhibit A CAT/PC Annual Compensation Requirements for Essential Air Serivce at Ironwood and Manistee, Michigan 10/25/2010

Departures Hours Revenue Passenger Miles Available Seat Miles Projected Operating Revenue:
IWD MBL

Projected Operating Expenses: Total Passengers Average Fare 4,992 $ 79.00 $ 12,312 $ 79.00 $ Total Projected Operating Revenue Revenue 394,368 972,648

Aircraft, Insurance, Crew $ 1,369,863.09 Maintenance $ 993,986.91 Fuel $ 970,754.40**.2e=r.2!i~~** __________

## !**.2.:~21'~2.0_** Total Projected Direct Expenses Total Projected Indirect Expenses Total Projected Operating Expenses Projected Net Gain (Loss) From Operations: Annual Compensation Requirement $

$ $ $ $ 2,496 2,122 3,348,170 13,744,224

1,367,016.00

4,587,212.40

364,132.25 4,951,344.65 (3,584,328.65) 

### $ 3,584,328.65CERTIFICATE OF SERVICE
I hereby certify that I have this date served a copy ofthe foregoing motion on the following personby electronic mail: Mr. Dennis DeVany, Division Chief, USDOT EAS Program.

25 October 2010 David A. Lucas, VP/CFO CharterAirTransport, Inc.