Order: 2014

- 4

- 20

Served April 22, 2014



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 22 nd day of April , 20 1 4

Essential Air Service at

McCOOK, NEBRASKA DOCKET DOT

- OST

- 1997

- 3005

under 49 U.S.C. 41731 et seq.



### ORDER RE

- SELECTING CARRIER AND

ESTABLISHING SUBSIDY RATES

Summary

By th is O rder, the Department is re

- selecting Great Lakes Aviation, Ltd. ( Great Lakes)

, to

provide Essential Air S ervice (EAS) at McCook, Nebraska

, using Beech craft 1900D

aircraft

, for the two

- year period beginning June 1, 201 4 , through May 31 , 201 6

, at an annual subsidy rate of $ 2,254,017

. 1

Background

By Order 2012

- 6

- 19

, issued on June 22, 2012 , the Department re

- selected Great Lakes to

provide EAS at McCook with 12 weekly nonstop round trips to Denver International

Airport ( Denver)

, using 19

- seat Beech craft 1900D aircraft, for the period from

June 1, 2010 , through May 31, 2012 , at an annual subsidy rate of $ 1, 976,338

.

In anticipation of the end of the current rate term

, the Department issu ed Order

2 013

- 12

- 10, on December 20, 2013

, soliciting proposals from air carriers interested in

providing EAS at McCook , with subsidy support if necessary, for a new term beginning

June 1

, 201 4 . In response to that Order , we received proposal s from the incumbent air

carrier

, Great Lakes , and SeaPort Airlines , Inc. (SeaPort).

1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated

funds.- 2

-

Both of the proposal s and the complete public file for EAS at McCook may be accessed

online at http://www.regulations.gov/ by entering Docket number DOT

- OST

- 1997

- 3005 in

the search block

.

Proposal of Great Lakes

Great Lakes proposed one option for a two

- year term that would continue to provide two

nonstop round trips each weekday and weekend (1 2 total round trips per week) to Denver

using Beech craft 1900D aircraft for an annual subsidy rate of $ 2,254,017

.

Proposal of SeaPort

SeaPort proposed three options , each for a two

- year term using 9

- seat Cessna Grand

Caravan aircraft : 1) two nonstop round trips each weekday and weekend (12 total round

trips per week ) to Wichita

, Kansas

, for an annual subsidy rate of $1,938,697 ; 2) two

nonstop round trips each weekday and weekend (12 total round trips per week) to Omaha

, Nebraska

, for an annual subsidy rate of $2,022,382 ; or 3) two nonstop round trips each

weekday and weekend (12 total round t rips per week) to Wichita and one nonstop round

trips each weekend to Kansas City

, Missouri, for an annual subsidy rate of $2,706,256.

Community Comments

By letter dated February 3 , 201 4

, the Department r equested community comments

regard ing this EAS case. In response, we received a letter from Mr. Kyle Potthoff, Public

Works Director and Assistant Airport Manager for the City of McCook

. That letter

explained that by unanimous consent, the McCook City Council recommended the re

selection of Great La kes to provide EAS at the community. However, that letter expressed

concern with the amount of cancelled flights by Great Lakes and the need for the air carrier

to market its service to the community in an effort to build confidence in Great Lakes’

operat ions at McCook . Additionally, that letter urged Great Lakes to increase the number

of pilots available to service the route in order to provide the community with consistent

and reliable air service

.

Subsequent Developments

On March 12, 2014, Great Lakes filed notice to suspend its service at McCook beginning

April 1, 2014, through April 27, 2014, due to a pilot shortage. By letter dated

April 14, 2014, the City of McCook reaffirmed its support of Great Lakes’ continued

serv ice at the community and urged the Department to select the air carrier to provide 12

nonstop round trips per week to Denver.

Decision

In selecting a n air carrier to provide subsidized EAS not in Alaska, 49 U.S.C.

§ 41733(c)(1) directs us to conside r five factors: (1) service reliability; (2) contractual and

marketing arrangements with a larger air carrier at the hub; (3) interline arrangements with

a larger air carrier at the hub (4) community views; and (5) whether the air carrier has

included a pl an in its proposal to market the service. In addition

, t he 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 Continuing- 3

-

Approp riations Act, 2014, Public Law No. 113

- 46 , provides that when selecting a n air

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.

After careful consideration of this matter, including the comments of local officials, the

Department has decided to re

- select Great Lakes to provide 12 nonstop round trips per

week between McCook and Denver, at an annual subsidy rate of $ 2,254,017 , using

Beech craft 1900D aircraft

.

Great Lakes has been providing E AS at McCook for many years, and the community

support s the re

- selection of the air carrier. Furthermore, Great Lakes provides access to the

national and global air transportation system through the use of its interline e

- ticketing

agreements with American Airlines, Delta Air Lines, Frontier Airlines, United Airlines,

and US Airways. W e also find that both Great Lakes’ service and subsidy levels are

reasonable.

We are very concerned b y the community’s displeasure with the current service provided

by Great Lakes and strongly encourage both parties t o work together to address the

concerns mentioned in the letter dated February 3, 2014, submitted by M r. Potthoff

. Additionally, we note that McCook is exempt from the $200 per passenger statutory limit 2

because it is more than 210 miles from the nearest large or medium hub airport ; however,

the Department wishes to remind Great Lakes and McCook about the recently enacted law

that e stablished a new subsidy cap at $1,000 per passenger regardless of distance from hub

airports

. 3 The Department fully expects McCook and Great Lakes to work cooperatively to

ensure subsidy rates remain well below the $1,000 per passenger level

.

W e shall make this selection of Great Lakes at McCook contingent upon the Department’s

receiving properly executed certifications from the air carrier that it is in compliance with

the Department’s regulations regarding drug

- free workplaces and nondisc rimination, as

well as the regulations concerning lobbying activities.

Carrier Fitness

49 U.S.C. §§ 41737(b) and 41738 require that we find an air carrier fit, willing, and able to

provide reliable service before we may subsidize it to provide EAS

. Great Lakes is subj ect

to the Department’s continuing fitness requirements, and no information has come to our

attention tha t would cause us to questio n the air carrier's fitness at this time. We have

contacted the Federal Aviation Administration, and it has r aised no concerns that would

negatively affect our fitness finding s . We therefore conclude that the air carrier is reliable

and remain s fit to conduct the operations proposed here.

2 Congress first established the $200 ceiling under P.L. 101

- 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 See 49 USC § 41731(a)(1)(C)

.- 4

-

This Order is issued under authority delegated in 49 CFR Part 1.25a(b)

.

ACCORDINGLY,

1. We re

- select Great Lakes Aviation, Ltd. to provide Essential Air S ervice at McCook,

Nebraska

, at the service levels and subsidy rate as described in Appendix B , for the period

from June 1, 2014, through May 31, 2016 ;

2. We direct Great Lakes Aviation, Ltd.

, to retain all books, records, and other source and

summary documentation to support claims for payment, and to preserve and maintain such

documentation in a manner that readily permits its audit and examination by

representatives of t he Department. Such documentation shall be retained for seven years

from the service date of this Order or until the Department indicates that the records may

be destroyed, whichever comes first. Copies of flight logs for aircraft sold or disposed of

mus t be retained. The air carrier may forfeit its compensation for any claim that is not

supported under the terms of this Order ;

3 . We f i nd that Great Lakes Aviation, Ltd. continues to be fit, willing and able to operate

as a commuter air carrier

, and capable of providing reliable Essential Air S ervice at

McCook ;

4. This docket will remain open pending further Department al action ; and

5 . We will serve copies of this Order on the Mayor of McCook , the Public Works

Director/Assistant Airport Manager of the City of McCook

, SeaPort Airlines, Inc., and

Great Lakes Aviation, Ltd

.

B y:

SUSAN L. KURLAND

Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is ava ilable at

http://www.regulations.govAppendix A 

## Great Lakes Aviation, Ltd.

Annual Compensation Requirements for Essential Air Service at

McCook, Nebraska to Denver (DEN)

Two Round Trips

– B1900

98.0% Completion Factor

Departures: 1,227

Block Hours: 1,227

Revenue Passenger Miles: 8 39

, 3 00

Operating Revenues:

Passenger: MCK

DEN 3,850 psgrs at $9 9.85 $ 384,423

Other (at 0.62% of passenger revenue) $2, 383

Total Operating Revenues: $ 386,806

Operating Expenses:

Direct: Aircraft and Hull Insurance $ 364,710

Fuel and Oil $ 801,059

Flying Operations $ 242,013

Maintenance $ 430,051

Total Direct Expenses: $1, 837,834

Total Indirect Expenses: $ 677,236

Total Operating Expenses $2, 515,069

Operating Loss ($2,128,264 )

Profit Element (5.0% of Total Operating Expenses) $ 125,753

Annual Compensation Requirement: $2,254,017

Representative Schedule

*** [MCK] McCook, Nebraska ***

DEPARTURES

FLT DPT ARR TO EQP FREQ

7 310 9:00 9:03 DEN BE1 12345 6

7309 13:41 13:44 DEN BE1 12345.7

ARRIVALS

FLT EQP FREQ FROM DPT ARR

7309 BE1 12345 6 DEN 11:30 13:31

7306 BE1 12345.7 DEN 17:00 19:01

No Upline Scheduling RestrictionsAppendix B

Great Lakes Aviation, Ltd.

Essential Air Service to be provided at McCook, Nebraska , DOT

- OST

- 1997

- 3005

Effective Period : June 1

, 201 4 , through May 31 , 201 6

Scheduled Service : T wo nonstop round trips each weekday and weekend (12 total round trips per

week) to Denver

Aircraft : Beech craft 1900D

Rate per Eligible Flight: $ 1,837 1

Weekly Ceiling : $ 44,088 2

Note: 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, such as certain weather cancellations, only completed flights are considered eligible for subsidy.

In addition, if the carrier does not sched ule 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 this rate, 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 car rier 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. I n determining whether subsidy payment for a deviating flight should be a djusted or disallowed, the Department will consider

the extent to which the goals 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 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 service levels, the ca rrier may cease to provide service to that

specific location without regards 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 cessation of payment.

Subsidy contract 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, regul ations, or amendments thereto shall not operate to controvert

the foregoing paragraph.

Funds may not be available for performance under this order beyond September 30, 2014. The Government’s obligation for

performance under this order beyond September 30 , 2014, 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 arise for performance under this

order beyond September 30, 2014, until funds are made availa ble to the Department for performance. If sufficient funds are

not made available for performance beyond September 30, 2014, the Department will provide notice in writing to the carrier.

All claims for payment, including any amended claims, must be submi tted 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; August claims must be submitted by November 30, and so on.

1 Annual compensation of $ 2,254,017 divided by 1,227 annual departures (313 service days x 4 flights per service

day x 98 percent completion).

2 24 flights per week multiplied by $ 1,837 per flight.