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 22nd day of April, 2014

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

provide Essential Air Service (EAS) at McCook, Nebraska, using Beechcraft 1900D 

aircraft, for the two-year period beginning June 1, 2014, through May 31, 2016, 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 Beechcraft 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 issued Order 

2013-12-10, 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, 2014. In response to that Order, we received proposals 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 proposals 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 (12 total round trips per week) to Denver

using Beechcraft 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 trips 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, 2014, the Department requested community comments 

regarding 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 reselection of Great Lakes 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’

operations 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 

service 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 an air carrier to provide subsidized EAS not in Alaska, 49 U.S.C. 

§ 41733(c)(1) directs us to consider 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 plan in its proposal to market the service. 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 Continuing 
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Appropriations Act, 2014, Public Law No. 113-46, provides that when selecting an 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 

Beechcraft 1900D aircraft. 

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

supports 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. We also find that both Great Lakes’ service and subsidy levels are 

reasonable. 

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

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

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

Additionally, we note that McCook is exempt from the $200 per passenger statutory limit2

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 established 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. 

We 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 nondiscrimination, 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 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. We have 

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

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

and remains 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).
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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 Service 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 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 air carrier may forfeit its compensation for any claim that is not 

supported under the terms of this Order;

3. We find 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 Service at 

McCook;

4. This docket will remain open pending further Departmental 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.

By:

 SUSAN L. KURLAND

 Assistant Secretary for

 Aviation and International Affairs

(SEAL)

 An electronic version of this document is available at

 http://www.regulations.gov
Appendix 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: 839,300

Operating Revenues:

Passenger:

MCKDEN 3,850 psgrs at $99.85 $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

7310 9:00 9:03 DEN BE1 123456

7309 13:41 13:44 DEN BE1 12345.7

ARRIVALS

FLT EQP FREQ FROM DPT ARR

7309 BE1 123456 DEN 11:30 13:31

7306 BE1 12345.7 DEN 17:00 19:01

No Upline Scheduling Restrictions
 Appendix B

Great Lakes Aviation, Ltd.

Essential Air Service to be provided at McCook, Nebraska, DOT-OST-1997-3005

Effective Period: June 1, 2014, through May 31, 2016

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

week) to Denver 

Aircraft: Beechcraft 1900D

Rate per Eligible Flight: $1,8371

Weekly Ceiling: $44,0882

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, 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 available 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 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 $2,254,017 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.