Order 2011

- 6

- 22 Served: June 23, 2011



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

Issued by the Department of Transportation

on the 23 rd day of June , 20 11

Essential Air Service at

MUSCLE SHOALS, ALABAMA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 2000

- 7856



### ORDER REQUESTING PROPOSALS

Summary By this order, the Department is requesting proposals by July 8 from carriers interested in providing essential air service (EAS) at Muscle Shoals, with or without subsidy

, for a new rate

term beginning when the carrier begins full EAS

. (See Appendix A for map.)

Background By Order 2011

- 3

- 26, March 18, 2011, the Department selected Gulfstream International Airlines (Gulfstream) to replace Me saba Aviation , Inc., operating as Delta Connection (Mesaba)

, as the subsidized EAS carrier at Muscle Shoals . Gulfstream was to provide three

nons top round trips a day to Memphis (18 a week) with 19

- seat Beech craft 1900D aircraft for an annual subsidy of $2,553,283. On June 1, Gulfstream notified the Department in writing that it was withdrawing its offer to serve Muscle Shoals as a result of failed negotiations to

obtain a code

- share agreement with Delta Air Lines, Inc. (Delta).

Request for Proposals Since Gulfstream has notified the Department that it will not provide EAS at Muscle Shoals, we are here requesting proposals from carriers interested in providing service , with or without subsidy support, for a new rate term commenci ng when the carrier inaugurates full EAS

. Carriers should file their proposals no later than July 8 . After that date , our staff will docket proposals, thereby making them public, and direct each carrier to serve a copy of its proposal on the civic partie s and other applicants. Shortly afterwards, we will provide a summary of the- 2

-

proposals to communit y officials and ask them to submit their final comments. We will give full consideration to all proposals filed in a timely manner. 1

Interested carriers sh ould prepare their proposals with every expectation that their initial proposals will also be their final and only proposals. We retain the discretion to negotiate proposals with 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.

We are here providing interested carriers with some basic information to serve as guidance when they prepare their proposals, but we will not prescribe a precise for mat for their proposals. 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 mig ht want to include proposed schedules as well as supporting data for their subsidy requests, such as projected block hours, revenues and expenses. We strongly encourage clear, well

- documented proposals that will facilitate their evaluation by the affected community and the Department. 2

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, there is

a summar y of historical passengers in Appendix B. We note that traffic has been increasing and averaged 27 enplanements a day during calendar year 2010. Specifically for Muscle

Shoals

, we expect proposals that are consistent with what the community currently receive s

-- 14 nonstop round trips per week with 30

- or 34

- seat aircraft , with service to Atlanta, Memphis, or any hub that offers access to the natio nal air transportation system. For proposals with 19

- seat aircraft, we would expect proposals for three round tr ips a day (18 a week). We would also entertain proposals with 8/9

- seat aircraft and additional frequencies. Should the community agree to aircraft with fewer than 15 passenger seats, in effect waiving their right to

15

- seat or larger aircraft, we would c onsider the waiver to apply only to the two

- year carrier selection at hand, i.e. we would not assume that the community would waive their rights for all time. As always, we will formally solicit the community’s views on any service options we

receive befo re making a long

- term carrier selection decision. Carriers are also welcome to propose more than one option, if they choose; they need not limit themselves to 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 community 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 submitting proposal s

.

1 Carriers should not expect the Department to a ccept late filings. In cases where a carrier proposes to provide essential air service without subsidy and we determine that service can be reliably provided without such compensation, we do not proceed with the carrier

- selection case. Instead, we simply rely on that carrier’s subsidy

free service as proposed.

2 In selecting a carrier to provide subsidized essential air service, 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

Consolidat ed 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. Inte rested 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 of this order contains those general provisions.- 3

-

New Filing Procedures 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 Regulations.gov, each page

should be formatted to be viewed online.

Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug

- free workplaces and nondiscrimination. 3 Consequently, all carriers receiving Federal subsidy to support essential air service must certify that they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimination, and those

carriers whose s ubsidies exceed $100,000 over the life of the rate term must also certify that they are in compliance with the regulations governing lobbying activities. All carriers that plan to submit proposals involving subsidy should submit the required certification s along with their proposals. Interested carriers requiring more detailed information regarding these requirements, as well as copies of the certifications, should contact the Office of Aviation Analysis at (202) 366

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

do not submit these documents. 4

Community and State Comments Civic officials 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 July 8 , the due date for carrier proposals.

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

ACCORDINGLY, 1. We request that carriers interested in providing essential air serv ice at Muscle Shoals, Alabama, submit their proposals, with or without subsidy requests, no later than July 8, 2011

. The proposals should be emailed to: EAS@dot.gov with the title “Proposal to Provide

Essential Air Servic e at Muscle Shoals, Alabama, Docket DOT

- OST

- 2000

- 7856” ; 5

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

3 The reg ulations 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 basis 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).

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

5 Questions regarding filing s in response to this order should be directed to Michael Martin at 202

- 366

- 6494, or

via email at michael.f.martin@dot.gov

.- 4

-

3. The Department will serve a copy of this order on the mayor and airport manager of Muscle Shoals, Mesaba Aviat ion, Inc.

, operating as Delta Connection, and the service list for this

Docket

.

By:

SUSAN L. KURLAND Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available on line at www.regulations.gov

### Appendix A



## Area Map

### Appendix B

Historical Origin

- Destination Plane Traffic 1



### Muscle Shoals, Alabama

Quarter Year Deplanements Enplanements Total
Traffic Enplanements per Day

1 2008 1,009 1,050 2,059 13

2 2008 1,215 1,211 2,426 16

3 2008 1,190 1,209 2,399 15

4 2008 1,552 1,573 3,125 20

Annual

Totals 4,966 5,043 10,009 16

1 2009 925 942 1,867 12

2 2009 1,094 1,161 2,255 14

3 2009 2,240 2,336 4,576 29

4 2009 2,397 2,455 4,852 31

Annual

Totals 6,656 6,894 13,550 22

1 2010 1,501 1,562 3,063 20

2 2010 2,071 2,194 4,265 27

3 2010 2,175 2,257 4,432 28

4 2010 2,561 2,661 5,222 33

Annual

Totals 8,308 8,674 16,982 27

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 flight that has not been completed, suc h 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; flight s 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 goals of the program are met and the ex tent 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 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 require ment 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 cessation of payment.

Subsidy contracts ar e 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 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 appropriated funds from which payment for se rvices 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 are not made available for performan ce 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.