August 29,2014 Via electronic mail Todd Homan Director, Office ofAviation Analysis Dennis DeVany Deputy Director, Office ofAviation Analysis Kevin Schlemmer EAS & Domestic Analysis Division Chief U.S. Department ofTransportation 1200 New Jersey Ave, SE Washington, D.C. 20590 todd.homan(Zl{dot.gov dennis.devanv@dot.gov kevin.schlemmer@,dot.gov Re: Essential Air Service ·DearMessrs. Homan, DeVany and Schlemmer, I amwritingto advise the DepartmentofSilverAirways Corp.'s ("SilverAirways") service plans at Bradford ("BFD") and Franklin/Oil City("FKL"), Pennsylvania, under the essential air service ("EAS") program. As you are aware, and with respect to both ofthese communities: (i) SilverAirways filed a notice ofintentto terminate scheduled air service onFebruary 14, 2014; (ii) the Department has terminated EAS eligibility 1upon a finding that the community does notmeet the amended statutory definition ofan "eligible place" under 49 U.S.C. 

### § 41731(a)(l)(Bf due to average service dayenplanements for fiscal year2013; and (iii)the communityconcernedhas filed a petition withthe Departmentfor a waiver from the requirements ofSection 4173l(a)(1)(B). Stricter Federal Aviation Administration ("FAA") first officer certification requirements as well as new flight and duty limitation and restrules, which took effectbetween 2013 and 2014, have impeded the ability of Silver Airways to continue providing EAS at small and rural communities.3 These new requirements have increased nearly all airlines' pilot hiring needs

1 Order 2014-6-6 (Jun. 24, 2014).
2 49 U.S.C. §41731(a)(1)(B) was amended bythe Congress underthe FAA Modernization and Reform Act of2012

(Pub.L. 112-95)to changethe definition of"eligibleplace" underthe EAS program, thereby requiring communities (otherthanthose in Alaska andHawaii orthose located more than 175 miles from the nearest medium or large hub airport) to maintain an average of10 enplanements ormore per service day, measured based on data from the most fiscal year, beginning after September 30, 2012.
3 Among other things, the new rules: (i) mandate that airline first officers hold an aircraft type rating and airline

transport pilot certification, requiring the accumulation ofat least 1,500 hours offlight time as a pilot (previously -1-

### contributing to an acute nationwide regional airline pilot shortage. Silver Airways, along with otherregional carriers, has been disproportionately impacted bythe increased hiring needs facing the industry, given that large mainline carriers fulfill their own hiring needs by recruiting pilots directly from regional carriers, who already have ahigh degree oftraining, skills andproficiency.4 

### Indeed, and as the GovernmentAccountability Office ("GAO") recently observed: As airlines have recently started hiring, nearly all of the regional airlines that GAO interviewed reported difficulties finding sufficient numbers of qualified entry-level first officers. However, mainline airlines, because they hire from the ranks of experienced pilots, have not reported similar concerns, although some mainline airlines expressed concernsthatentry-levelhiringproblems could affecttheirregional airlinepartners' ability to provide service to some locations.5


### It is against the backdrop ofthe new FAA-mandated requirements, and a pilot shortage which Silver Airways could not have reasonably foreseen when it submitted its EAS service proposals for BFD and FKL, that we have struggled to maintain reliable scheduled air service on economicallyviable terms to the communities. As a consequence ofthe pilot shortage, as well as other challenges Silver Airways has encountered which are unique to BFD and FKL, we cannot continue to serve these markets indefinitely and will be forced to stop flying there, as set forth below. I. 

### Termination ofService at BFD and FKL Silver Airways presently serves BFD and FKL from Cleveland, Ohio ("CLE") under a United Express cooperative marketing arrangement. On February 1, 2014, shortly before Silver Airways filed its 90-day termination notice for BFD and FKL, United Airlines announced a curtailment of service at CLE with a 50% reduction in United's seat capacity in October 2014 versus October 2013. The reduction ofUnited's CLE service, on which Silver Airways' initial underlying BFD and FKL service proposals (and subsidy levels) were predicated, has resulted in a significant loss ofonline connecting options for passengers flying to and from BFD and FKL, translating into a considerable drop in passenger enplanements. As both communities are subject to termination ofsubsidies, further traffic declines are not in the best interests ofthe communities as they work through waiverpetitions. Further compounding Silver Airways' challenges at BFD and FKL is the planned retirement ofthe 19-seat Beechcraft 1900D (used to provide service at BFD and FKL) from our

first officers were required to accumulate 250 such hours); and (ii) establish more rigorous pilot duty and rest requirements, including an increase in minimum rest periods immediately prior to flight duty time and new weekly/monthly/annual limits on the amount oftimepilots may be assigned to any type offlight duty.
4 Even before the new FAA requirements took effect, large mainline carriers were already confronting an

unprecedented wave ofprojected retirements in connection with a substantial number oftheir pilots "aging out," i.e., hittingthe FAA's mandatory retirement age of65-whichwas increased from 60 in 2007.
5 Aviation Workforce: Current and Future Availability ofAirline Pilots, GA0-14-232 (Feb. 28, 2014). -2-

### AIR fleet, as part ofSilver Airways' planned migration to a fleet comprised entirely ofthe larger 34- seat Saab340Bplus aircraft, which is more fuel efficient and has a higher maintenance dispatch reliabilitythan the Beechcraft 1900D. This fleet migration-explained in our 90-day termination notice filed on February 14, 2014-has impacted our ability to continue flying at BFD and FKL, as it requires us to schedule Beechcraft 1900Dpilots for training in a Saab340Bplus environment, aprocess that now is well underway. Finally, ourmarketing relationship with United Airlines will soon change, as we transition from a United Express carrier to an alliance-style codeshare partner. As a consequence, Silver Airways will no longerhave access to UnitedAirlines' reservations system forpassengerticketing and airport service functions, requiring us to install our own system at those airports where we previouslyprovided service as aUnitedExpress carrier. This installationprocess will be complex and costly, and we do not have the ability to absorb such costs at airports we do not intend to continue serving, including BFD and FKL. Although our 90-day notice of termination was filed on February 14, 2014, the Department's final order terminating EAS eligibility for BFD and FKL was issued nearly four months later, with community petitions for a waiver from the requirements of 49 U.S.C. 

### § 41731(a)(1)(B) due one month after that final order, i.e., July 24,2014. By necessity, until such time as theDepartmentcompletes its waiverreviewprocess, areplacementEAS carrierproceeding for BFD and FKL cannotbe completed. As a consequence, SilverAirways finds itselfinperpetual limbo, as itcontinuesto operate at communities for which aterminationnotice was filed morethan six months ago but for which no replacement carrier proceeding has been completed. Given the acute pilot shortage faced by SilverAirways, combined with the planned retirement ofthe aircraft providingthis service, the reduction ofCLE service andthe change in our commercial relationship with United Airlines, Silver Airways is unable to continue serving BFD and FKL. Notwithstanding our pilot staffing difficulties and considerable traffic losses attributable to our operations at BFD and FKL, we have abided by the Department's orders extending our service obligations for additional 30-day periods. However, for the reasons set forth above, after September 30, 2014, we will no longer be providing scheduled air service at BFD and FKL. On or about September 5, 2014, we will cease selling tickets for BFD and FKL itineraries involving travel after September 30, 2014, to minimize disruptions to impacted passengers and ensure that we are able to adequately assist those previously ticketed for travel after September 30, 2014, eitherbyproviding afull refundwithoutpenalty orbyhelpingthem secure alternate transportation from nearby airports.6

6 Silver Airways respectfully notes that, unlike Great Lakes Airlines, which recently summarily discontinued air

service at certain EAS points with little or no advance notice, we will have provided more than seven months' advance notice in connection with our discontinuation of scheduled air services at BFD and FKL, and we have abided by at least four (4) hold-in orders with respect to our services at these communities. See Orders 2014-3-12 (Mar. 19, 2014), Order 2014-6-1 (Jun. 5, 2014), 2014-7-5 (Jul. 9, 2014) and 2014-8-7 (Aug. 12, 2014) -3-II. SilverAirways' Continued Participation in the EAS Program Underscoring our strong commitmentto the Department'sEAS program, wewere recently awarded EAS contracts to provide Saab340Bplus service at communities that can support the service and where we have the ability, staffing and infrastructure to provide such service, and. where we can do so in an economically viable manner. 

### In fact, the termination ofour services at BFD and FKL, the retirement ofthe Beechcraft 1900D aircraft from ourfleet and the re-allocation ofthose pilots to our Saab340Bplus flying will allow us to maintain service at our other EAS communities. 

### In addition, wherepossible, we have adjusted ourintendedtermination date atother EAS communities where a replacement carrier has been selected. For example:

• The Departmentrecently re-selected SilverAirways, the incumbentEAS carrier at each of (1) Clarksburg/Fairmont, West Virginia ("CKB"), (2) DuBois, Pennsylvania ("DUJ"), (3) Johnstown, Pennsylvania ("JST"), (4) Greenbrier/White Sulphur Springs, West Virginia ("LWB"), (5) Morgantown, West Virginia ("MOW"), (6) Parkersburg, West Virginia/Marietta, Ohio ("PKB") and (7) Staunton/Shenandoah Valley, Virginia ("SHD"), to continueprovidingEAS under newtwo year contracts atthose communities. Wherethe new contracts involve a transition to a revised service pattern, Silver Airways is on track to complete thattransition bythe beginning ofthe renewal contractperiod.

• For each ofLaurel/Hattiesburg, Mississippi ("PIB") and Meridian, Mississippi ("MEl"), where SilverAirways isthe incumbentcarrier,the Departmentrecently selectedExpress jet Airlines d/b/aAmericanEagle to provide replacement EAS under a new two year contract term beginning on November 1, 2014. We are preparedto continue our EAS operations at each of these communities until ExpressJet Airlines commences operations, which we understand are slated to begin on November 6, 2014. Although we regret that we are unable to sustain service at all airports where we currently provide EAS, SilverAirways has endeavored, under extraordinarily challenging circumstances, to continue service for as long as possible at BFD and FKL-communitiesfor which EAS eligibility has been terminated but for which a replacement EAS carrier selection proceeding has been delayed. Furthermore, we believe that we have provided considerably more advance notice-to both the communities and the Department--ofour plans than other EAS operators have in the recentpast with respectto their service terminations.7 Finally, webelieve that BFD and FKL will see further reductions in traffic, driven by the fact that they no longer have as many connecting opportunities over CLE and future service by Silver is uncertain. Additional reductions intraffic will move both communities further out ofcompliance with minimum usage regulations and will be detrimental to the establishment ofreplacement service with smaller capacity aircraft.

7 For example, we understand that Great Lakes Airlines earlier this year discontinued service at a number ofEAS

communities with little or no advance notice, including, but not limited to, Devils Lake and Jamestown, North Dakota (Docket OST-1997-2785), FortDodge, Iowa (Docket OST-2001-10682), Mason City, Iowa (Docket OST2001-10684), and Ironwood, Michigan (Docket OST-1996-1266). -4-SilverAirways takes its EAS obligations seriously, and we wishto be fully transparent and forthright regarding ourplans at BFD andFKL. Please do not hesitate to contactme at (954) 302-5929 orvia email, at jamie.kogutekrmsilverairways.com, should the Departmentwishto discuss this matter withus. Verytruly yours,

Jamie Kogutek Vice President, Network & Schedule Planning

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