Order: 2014-7-6 Served: July 10, 2014

U N I T E D S

T A T E S O F A

M E R I C A D E P A R T M E N T O F T R A N S P O R T A T

I O N UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 10 th day of July, 2014

Essential Air Service at

SILVER CITY/HURLEY/DEMING, NEW MEXICO

Under 49 U.S. C. § 47131 et seq. DOT-OST-1996-1903



### ORDER REQUESTING PROPOSALS

Summary By this Order, the Department is requesting proposals from air carriers interested in providing Essential Air Service (EAS) at S ilver City/Hurley/Deming, New Mexi co, (“Silver City”) with or without subsidy support, for a new term be ginning December 1, 2014. Proposals are due August 12, 2014. (See Appendix A for a map.)

Background By Order 2012-11-33, issued on November 29, 2012, the Department re-selected Great Lakes Aviation, Ltd. (“Great Lakes”) to provide subs idized EAS at Silver City, using 19-seat Beechcraft B-1900D aircraft, with 12 round trips per week to Denver, Colorado, via Alamosa or Pueblo, Colorado; Santa Fe, New Mexico; or nons top service between Silv er City and Phoenix, Arizona, for the period from December 1, 2012, through November 30, 2014, at an annual subsidy rate of $2,098,460. Great Lakes’ current schedule shows only 7 round trips each week to Phoenix. According to published schedules, Gr eat Lakes has had 7 round trips per week in place since April 2014.

Order 2012-11-33, as well as the complete public f ile for EAS at Silver City, may be accessed online through the Federal Docket Management System at www.regulations.gov , by entering

“DOT-OST-1996-1903” in the “SEARCH for: Rule s, Comments, Adjudications or Supporting

Documents:” field.

Request for Proposals As the end of the current rate term approaches, we are here requesting pro posals from air carriers interested in providing EAS at Silver City, w ith or without subsidy support, for a new term beginning December 1, 2014. Air carriers should file their proposals no later than August 12, 2014. After that date, our staff will docket the proposals, thereby making them public. Additionally, we request each air ca rrier serve a copy of its proposal on the civic parties at Silver- 2 -

City and on the other app licants. Shortly afterwards, we will provide a summary of the proposals to the community and ask them to submit any fo rmal comments on this carrier-selection case. We will give full consideration to all proposals that are timely filed. 1

We are here providing interested air carriers with some basic information to serve as guidance when they prepare their propos als, but we will not prescrib e a precise form at for their proposals. Air carrier proposals should be su bmitted 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 form atted to be viewed online. We expect proposals to adequately describe the service be ing proposed and the annu al amount of subsidy being requested. The ap plicants can make their own judgments as to the level of detail they wish to present; however, we recommend they include information concerning proposed schedules and projected block hours. In add ition, applicants are en couraged to provide financial data supporting their subsidy reques ts, including information on their projected expenses and revenues. We st rongly encourage clear, well-docu mented proposals that will

facilitate their evaluation by the affected commun ities and the Department. 2

Proposals should provide sufficient capacity to accommodate historical levels. Sp ecifically, we request proposals for 12 round trips a week between Silver City and Denver, Phoenix, or another suitable hub airport, with 19-seat aircra ft or larger. Alterna tively, we will accept proposals consisting of additi onal frequencies if smaller aircraft (9-passenger) are contemplated. We encourage pro posals that meet these guidelines in an efficien t manner. Air carriers are also welcome to prop ose more than one service option, if they choose. They also

need not limit themse lves to these requirement s if they envision other, potentially more attractive service possibiliti es -- different hubs or length of contract , for exampl e -- with subsidy requirements that remain competitive.

In order to assist air carriers in developing traffic and revenue proj ections for their proposals, we have summarized historical passenger levels at Si lver City in Appendix B. In the most recent 12-month period for which data are availa ble (April 1, 2013, through March 31, 2014) Silver City generated 3,662 total origin and destination passengers, or an average of 5.8 enplanements per day. 3

1 Air carriers should not expect the Department to accept late filings. In cases where a carrier proposes to provide EAS without subsidy and we determine that service can be reliably provided without such compensation, we usually do not proceed with the carrier-s election case. Instead, we simply rely on that carrier’s subsidy- free service as proposed. 2 In selecting a carrier to provide subsidized EAS for an eligible place not in Alaska, 49 U. S.C. § 41733(c)(1) directs us to consider five factors: (a) service reliability ; (b) contractual and marketing arrangements with a larger carrier at the hub; (c) interline arra ngements with a larger carrier at the hub; (d) community views, giving substantial weight to the views of the elected official s representing the users; and (e) whether the carrier has included a plan in its proposal to market its service to the community. In addition, the Consolidated and Further Continuing Appropriations Act, 2012, Public Law No. 112-55, and continued by the Full-Year Continuing Appropriations Act, 2013, Public Law No. 113-6, and th e Continuing Appropriations Act, 2014, Public Law No. 113-46, provides that when selecting a carrier to provid e EAS, the Department may consider the relative subsidy requirements, thus codifying a factor that we have considered since the inception of the program. 3 In calculating enplanements per day, we take total annual origin and destination passenger numbers and divide by two to get passengers in one direction (enplanements at the EAS community), and then by 313 days to get average daily enplanements at the EAS community.- 3 -

Interested air carriers should prepare their prop osal with every expectation that their initial proposal will also be their final and only proposal. We retain th e discretion to negotiate proposals with air carriers when we deem it desirable; in su ch cases we will give all applicants the same opportunity. We also re tain the discretion to reject outright all unreasonable or unrealistic proposals and soli cit a new round of pro posals. However, we anticipate that negotiation or re jection will remain onl y occasional exceptions to the rule.

Other Air Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug-free workplaces and nondiscrim ination. Consequently, all air carriers receiving Federal subsidy to su pport EAS must certify that they are in compliance with Department regulations regarding drug-free work places and nondiscrimination, and those air carriers whose subsidies exceed $100, 000 over the life of the rate term must also certify that they are in compliance with the regulations governing lobbying ac tivities. All air carriers that plan to submit proposals involvi ng subsidy should submit the re quired certifications along with their proposals. Interested air carrier s requiring more detailed information regarding these requirements, as well as copies of th e certifications, should contact the Office of Aviation Analysis at (202) 366- 5903. The Department is proh ibited from paying subsidy to

air carriers that do not submit these documents. 4

Community Comments

Civic officials and the State are welcome to su bmit comments at any time. We encourage prospective applicants to contact the community before they submit their proposals so that they can tailor them to the community’s needs, as they will not be able to amend them after the due date. As noted earlier, we will provide a copy of the proposals to the civic parties and ask them to submit their final comments shortly after August 12, 2014, the due date for air carrier proposals.

This Order is issued under authority delegated in 49 CFR Part 1.25a(b) and re-delegated to the Director, Office of Aviation Analysis.

ACCORDINGLY, 1. We request that air carriers interested in providin g Essential Air Service at Silver City/Hurley/Deming, New Mexico, submit their proposals, with or without subsidy requests, no later than August 12, 2014. The proposals should be emailed to: EAS@dot.gov with the title “Proposal to Provide Essential Air Service at Silver City, NM;” 5

4 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 financia l assistance; and 14 CFR Pa rt 382 – Nondiscrimination on the basis of disability in air travel; and (3) 49 CFR Part 29 – Government-wide debarment and suspension (nonprocurement) and government-wide requir ements for drug-free work place (grants). The certifications are available

on the web at http://www.dot.gov/policy/aviation-policy/small-co mmunity-rural-air-service/essential-air-service

. 5 Questions regarding filings in response to this Order should be directed to Mr. Scott Faulk at scott.faulk@dot.gov or (202) 366-9967.- 4 -

2. Docket DOT-OST-1996- 1903 will remain open until furt her Order of the Department; and

3. The Department will se rve copies of this Orde r on the civic officials of Silver City, Hurley, and Deming, New Mexico, the Director of Grant Co unty Airport, and the service list for this

docket.

Persons entitled to petition the Department for review of this Order under the Department’s Regulations, 14 CFR Part 385.31(a), must file such pe titions within seven (7) days after the date

of service of this Order.

This Order 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

An electronic version of this document is available

online at www.regulations.gov.Appendix A



### AREA MAP

Maps generated by the Great Circle M apper - copyright © Karl L. Swartz.Appendix B



### Silver City/Hurley/Deming, New Mexico 1

Historical Traffic

Year Quarter Enplanements Deplanements Total

2011 2 461 453 914

2011 3 450 406 856

2011 4 384 364 748

2012 1 349 353 702

1644 1576 3220

Year Quarter Enplanements Deplanements Total

2012 2 372 371 743

2012 3 363 354 717

2012 4 279 314 593

2013 1 202 195 397

1216 1234 2450

Year Quarter Enplanements Deplanements Total

2013 2 436 426 862

2013 3 484 467 951

2013 4 548 531 1079

2014 1 394 376 770

1862 1800 3662

1 Source: Bureau of Transportation Statistics; Schedule T-100.Appendix C

Example of General Terms and Cond itions for Essential Air Service

The air carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance with the terms and stipula tions of the rate Order, including the service plans outlined in the Order and an y other significant elements of the required service, without prior approval. The air 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, such as certain weather cancellations, only completed flights are considered eligible for subsidy. In addition, if the air carrier does no t schedule or operate its flights in full conformance w ith the Order for a significant period, it may jeopardize its entire subsidy claim for the period in question. If the air carrier contemplates any such changes beyond the scope of the Order during the appl icable period of these rates, it must first notify the Office of Aviation Analysis in writing and receive written a pproval from the Department to be ensured of full compensation. Should circum stances warrant, the Departme nt may locate and select a replacement air carrier to provide service on thes e routes. The air carr ier 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 paym ent for a deviating flight should be adjusted or disallowed, the Department will consider the ex tent to which the goals of the program are met

and the extent of access to the national air tr ansportation system provided to the community.

If the Department unilaterally, either partially or completely, terminates or reduces payments for service or changes service require ments at a specific location provi ded for under this Order, then, at the end of the period for whic h the Department does make paym ents in the stipulated amounts or at the stipulated service levels, the air carr ier may cease to provide se rvice to that specific location without regard to any requirement for no tice of such cessation. T hose adjustments in the levels of subsidy and/or service that are mutually agreed to in writing by the Department and air carrier do not constitute a total or part ial reduction or cessation 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 controvert the foregoing paragraph.

Funds may not be available for perfor mance under this Order beyond [DATE]. The Government’s obligation for performance under this Order beyond [DATE], 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 ar ise for performance under this Order beyond [DATE], until funds are made available to the De partment for performance. If sufficient funds are not made available for performance beyond [D ATE], the Department will provide notice in writing to the carrier.

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 st ; August claims must be submitted by November

30 th , and so on.