Order: 2015-4-24

Served: April 30, 2015

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 30th day of April, 2015

ORDER RE-SELECTING AIR CARRIER

Summary

By this Order the Department is re-selecting Great Lakes Aviation, Ltd. (Great Lakes) to

provide Essential Air Service (EAS) at Page and Prescott, Arizona, for a two-year term,

from May 1, 2015, through April 30, 2017, at an annual subsidy of $2,275,111 at Page and 

$2,657,002 at Prescott.

Background

By Order 2013-6-1 (June 3, 2013), the Department selected Great Lakes to provide EAS at 

Page and Prescott, for the two-year period from May 1, 2013, through April 30, 2015, for a

combined annual subsidy of $4,566,353, with 12-24 weekly round trips, depending on the 

season at Page, and 18 weekly round trips at Prescott.

As the end of the contract was approaching, we issued Order 2014-11-15 

(November 25, 2014) requesting proposals from air carriers interested in providing EAS at 

these communities for a new contract term. In response to that Order, we received 

proposals from Great Lakes for both Page and Prescott, and Boutique Air for Page only. 

Essential Air Service at

PAGE, ARIZONA

PRESCOTT, ARIZONA

Under 49 U.S.C. § 41731 et seq.

DOCKET DOT-OST-1997-2694

DOCKET DOT-OST-1996-1899
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Each air carrier’s complete proposal and community comments may be accessed online at 

www.regulations.gov by entering the community’s respective Docket number in the search 

block.

Proposal of Great Lakes

Great Lakes submitted a bid to serve Page using either 9-passenger or 19-passenger 

Beechcraft 1900D (1900D) aircraft, with nonstop service to Phoenix (PHX), and/or onestop service to Denver (DEN), or Los Angeles (LAX), with 12 weekly round trips during 

the off-peak season, and 24 weekly round trips during the peak season. The 9-passenger 

option costs $2,690,636 in annual subsidy and the 19-passenger option costs $2,275,111 in 

annual subsidy. 

At Prescott, the carrier submitted a bid using either 9, or 19-passenger 1900D aircraft, or,

30-passenger Embraer EMB-120 aircraft (EMB-120). The 1900D aircraft bid consists of 

nonstop service to LAX, and/or one-stop service to DEN, with 18 weekly round trips, at an 

annual subsidy of $3,152,565 for the 9-passenger option, or $2,721,884 for the 19-

passenger option. Also, Great Lakes submitted a bid with 24 weekly round trips to PHX 

using the 9-passenger or 19-passenger aircraft at an annual subsidy of $2,845,027, or 

$2,735,624, respectively. The 30-passenger, EMB-120 aircraft bid consists of 12 weekly 

round trips to LAX at an annual subsidy of $2,657,002. 

Proposal of Boutique Air

Boutique Air submitted a proposal with two options for Page (only), using 9-passenger 

Pilatus PC-12 aircraft. Option 1 would provide 18 weekly nonstop round trips to PHX for 

an annual subsidy of $2,584,892. Option 2 would provide 18 weekly nonstop round trips 

to Salt Lake City (SLC) for an annual subsidy $2,807,954.

Community Comments

On January 21, 2015, the Department requested comments from the communities

regarding this EAS air carrier selection case. In response, the Department received a letter 

on March 12, 2015, from Page Airport Director, Rick Olson, supporting Boutique, which 

stated, “Last evening, the Page City Council (by a vote of 4 to 3), elected to recommend 

Boutique Air as the EAS provider with direct service to Phoenix, Arizona.” In subsequent 

correspondence to the Department, after learning that their decision to recommend 

Boutique Air would require the community to waive its right to twin-engine, single-pilot 

aircraft, the community expressed some concerns about the Boutique recommendation. 

Boutique operates with Pilatus PC-12 equipment, a single-engine aircraft. The Department 

communicated that there is no statutory guarantee of twin-engine, two-pilot aircraft after a 

community has been served for 60 consecutive days with aircraft other than that, and made

them aware of the legal issues regarding the twin-engine provision. On March 13, 2015, 

the Page City Council held a special meeting pertaining to its EAS recommendation. The 

Council, after considering both legal and future operational considerations, rescinded its 

recommendation of Boutique and recommended continued service with Great Lakes for 

the next term. On March 16, 2015, in an email to the Department, Airport Director Rick 

Olson stated, “The City of Page would prefer Bid 2, providing 19-seat accommodation to 

Phoenix Sky Harbor Airport (Denver and Los Angeles as bid).” The community later 
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cited Great Lakes’ twin-engine aircraft, interline ticket agreements, and secure baggage 

checked through to the destination, as deciding factors.

The Department received a resolution from the Mayor and City Council of Prescott, 

recommending Great Lakes. The resolution states, “... the City of Prescott requests that 

Great Lakes Aviation commit to provide Essential Air Service between Prescott and Los 

Angeles using Embraer EMB-120 aircraft, with not less than two daily nonstop flights.” 

The community fully embraces the aircraft upgrade to the larger, 30-passenger aircraft.

Decision

After carefully reviewing each air carrier’s proposal, the Department has decided to select 

Great Lakes at both communities. The airline has the support of the communities, a key 

air carrier selection criterion. Additionally, Page did not waive its statutory guarantee of 2-

engine, 2-pilot aircraft, therefore, Boutique’s proposal was not considered further. The 

Department finds the subsidy and service levels reasonable and that the service will meet 

the EAS needs of both Page and Prescott.

The selection shall be made upon the Department’s receiving properly executed 

certifications from the air carrier that they are in compliance with the Department’s 

regulations regarding drug-free workplaces and nondiscrimination, as well as the 

regulations concerning lobbying activities.1

Discussion regarding continued eligibility requirements

The Federal Aviation Administration (FAA) Modernization and Reform Act of 2012 

(Public Law No: 112-95) amended 49 U.S.C. § 41731(a)(1)(B) to change the definition of 

“eligible place” for the purpose of receiving EAS. The amendment states that to be 

eligible, a community must maintain an average of 10 enplanements or more per service 

day, as determined by the Secretary, during the most recent fiscal year beginning after 

September 30, 2012. The legislation exempts locations in Alaska and Hawaii and 

communities that are more than 175 driving miles from the nearest large- or medium-hub 

airport. Prescott is within 175 miles of Phoenix Sky Harbor International Airport (PHX), a 

large-hub, and therefore, it must meet the 10-enplanement-a-day threshold for EAS or 

otherwise face termination of its eligibility to receive EAS, barring a waiver from the 

Secretary. Page is located beyond 175 miles of the nearest large or medium hub airport, 

and, therefore, is exempt from this requirement

Additionally, the Department is prohibited from subsidizing air service at a community 

where the subsidy per passenger exceeds $200, unless the community is more than 210 

highway miles from the nearest large- or medium-hub airport. This applies to Prescott 

because it is located fewer than 210 miles from PHX. Page is exempt from the $200 per 

 1 The certifications are available online under “Reports and Publications” at 

http://www.dot.gov/policy/aviation-policy/small-community-rural-air-service/essential-air-service
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passenger cap.

2

 As stated in the Notice of Enforcement Policy on the $200 per passenger 

subsidy cap, the Department is measuring compliance with this requirement on passenger 

traffic from October 1, 2014, through September 30, 2015.3

Although Page is exempt from the $200 per passenger statutory limit, as described above, 

both Page and Prescott are subject to the $1,000 per passenger per passenger subsidy cap,

regardless of distance from hub airports.4 The Department fully expects Great Lakes to 

work cooperatively with both communities to ensure subsidy rates remain below the 

$1,000 per passenger level to remain eligible for the EAS program.

Carrier Fitness

49 U.S.C. §§ 41737(b) and 41738 require that the Department finds an air carrier fit, 

willing, and able to provide reliable service before we may subsidize it to provide EAS. 

Great Lakes is subject to the Department’s continuing fitness requirements, and no 

information has come to our attention that would cause us to question the air carrier’s 

fitness at this time. The Department contacted the Federal Aviation Administration, and it 

has raised no concerns that would negatively affect our fitness findings. We therefore 

conclude that Great Lakes Aviation, Ltd. is reliable and fit to conduct the operations 

proposed here.

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

ACCORDINGLY,

1. The Department selects Great Lakes Aviation, Ltd. to provide Essential Air Service at 

Page and Prescott, Arizona, and establishes the annual subsidy rates as described in 

Appendix C;

2. The Department directs 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 the 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 must be retained. The carriers may forfeit their compensation for any claim 

that is not supported under the terms of this Order;

3. The Department finds that Great Lakes Aviation, Ltd. is fit, willing and able to operate 

as a certificated commuter air carrier, and capable of providing reliable Essential Air 

Service at Page and Prescott, Arizona;

 2 Congress first established the $200 ceiling under P.L. 101-164 for fiscal year 1990, and re-established 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 www.regulations.gov, docket OST-2014-0061 for a complete discussion.

4 See 49 U.S.C. § 41731(a)(1)(C).
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4. These dockets will remain open pending further Department action; and

5. The Department will serve a copy of this Order on the mayors of Page and Prescott, 

Arizona, the airport managers of Page Municipal Airport, Prescott Municipal Airport; 

Boutique Air, and Great Lakes Aviation, Ltd. 

By:

BRANDON M. BELFORD

Deputy Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available at

www.regulations.gov
Appendix A

AREA MAP

Maps generated by the Great Circle Mapper - copyright © Karl L. Swartz.

 
 Appendix B

Page 1 of 2
 Appendix B

Page 2 of 2
 Appendix C

Page 1 of 2

Great Lakes Aviation, Ltd.

Essential Air Service at Page, Arizona

DOT-OST-1997-2694

Effective Period: May 1, 2015, through April 30, 2017

Hubs: PHX nonstop and/or DEN one-stop or LAX one-stop

Aircraft: 19-passenger Beechcraft 1900D

Rate per Eligible Flight:1 $1,173

Scheduled Service: 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 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 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 carrier 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. 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 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 carrier 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, regulations, or amendments thereto shall not operate to controvert the foregoing paragraph.

Funds may not be available for performance under this Order beyond September 30, 2015. The Government’s obligation for performance 

under this Order beyond September 30, 2015, 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, 2015, until funds 

are made available to the Department for performance. If sufficient funds are not made available for performance beyond September 30, 

2015, 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; August claims 

must be submitted by November 30, and so on.

 1 Annual compensation of $2,275,111 divided by 1,936 annual departures, per Great Lakes’ proposal (38 weekly 

departures x 52 weeks x 98 percent completion). 2 Page’s service varies by season, with 12 weekly round trips in the off-peak, 18 weekly round trips in shoulder 

seasons, and 24 weekly round trips in peak season. Weekly departures x $1,173 per flight.

Service Dates Departures per Week Weekly Ceiling

May 1, 2015-May 14, 2015 36 $42,228

May 15, 2015-October 2, 2015 48 $56,304

October 3, 2015-December 6, 2015 36 $42,228

December 7, 2015-February 29, 2016 32 $37,536

March 1, 2016-April 30, 2016 38 $44,574

May 1, 2016-May 14, 2016 36 $42,228

May 15, 2016-October 6, 2016 48 $56,304

October 7, 2016-December 4, 2016 36 $42,228

December 5, 2016-February 28, 2017 24 $28,152

March 1, 2017-April 30, 2017 36 $42,228
Appendix C

Page 2 of 2

Great Lakes Aviation, Ltd.

Essential Air Service at Prescott, Arizona

DOT-OST-1996-1899

Effective Period: May 1, 2015, through April 30, 2017

Scheduled Service: 12 weekly nonstop round trips to LAX

Aircraft: 30-passenger Embraer EMB-120

Rate per Eligible Flight:3 $2,173

Weekly Ceiling:

4 $52,152

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 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 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 carrier 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. 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 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 carrier 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, regulations, or amendments thereto shall not operate to controvert 

the foregoing paragraph.

Funds may not be available for performance under this Order beyond September 30, 2015. The Government’s obligation for 

performance under this Order beyond September 30, 2015, 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, 2015, until funds are made available to the Department for performance. If sufficient funds are 

not made available for performance beyond September 30, 2015, 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; August claims must be submitted by November 30, and so on.

 3 Annual compensation of $2,657,002 divided by 1,223 annual departures (24 weekly departures x 52 weeks x 98 

percent completion). 4 24 weekly departures x $2,173 per flight.