Order: 2012

- 7

- 17

Served: July 13, 2012



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 13 th d ay of July , 20 1 2

Essential Air Service at

VICTORIA, TEXAS DOCKET DOT

- OST

- 2005

- 20454

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



### ORDER SELECTING CARRIER

Summary By th is O rder, the Department is selecting Sun Air Express, LLC d/b/a Sun Air International (Sun Air) to provide Essential Air Service (EAS) at Victoria

, Texas (Victoria)

, for an annual subsidy of $2,294,036

. 1 Service to be provided will be four weekday and four weeken d nonstop round trips (24 a week) to George Bush Intercontinental Airport (Houston) using 9

- passenger, twin

- engine Piper Chieftain aircraft

for the two

- year period beginning when the carrier commences full EAS

.

Background By Order 2011

- 5

- 7, May 5

, 2011

, the Department selected Colgan Air, Inc., operating as Continental Connection (Colgan), to provide EAS at Vi ctoria with 13 nonstop round trips per week to Houston for an annual subsidy of $1,856,692

, from July 1, 2011 , through

June 30, 2013

. Continental Airlines was subsequently merged with United Airlines and, in late 2011, Continental Connection service was rebranded as United Express (Colgan).

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

funds.- 2

-

On March 8, 2012, Colgan filed 90

- day notice s of its intent to terminate subsidized service

at seven EAS comm unities, including Victoria. The Department issued Order 2012

- 3

- 14,

March 23, 2012, requesting proposals. In response, we received only one proposal for Victoria, that from SeaPort Airlines, Inc. (SeaPort), which proposed service with single

engine aircr aft. On May 14, 2012, the community submitted comments refusing to waive their right to twi n

- engine aircraft and requested that we rebid the case. Given that 49

U.S.C. Section 41732(b)(5) entitles communities to EAS with twin

- engine aircraft, we reject ed SeaPort’s proposal and issue d Order 2012

- 5

- 16, May 17, 2012, soliciting a second round of proposals. In response to that Order, we received proposals from SeaPort and

Sun Air

.

Each airline’s complete proposal and the community’s comments may be accessed online

at http://www.regulations.gov/ by entering DOT

- OST

- 2005

- 20454 in the search block.

Proposal of SeaPort SeaPort proposes two options , both serving Houston with four week day and four week end round trips (24 a week) . Option 1 would use 9

- passenger , single

- engine Cessna Caravan aircraft for an annual subsidy of $1,844,889, while Option 2 proposes to use 9

- passenger twin

- engine Piper Chieftain for an annual subsidy of $1,870,444.

Proposal of Sun Air Sun Air proposes four weekday and four weekend round trips (24 a week) to Houston using 9

- passenger, twin

- engine Piper Chieftain aircraft for an annual subsidy of $2,294,036.

Community Comments

Mr. Jason Milewski, Managing Director for Victori a Regional Airport

, submitted

comments on June 18 , 2012, summarizing his community’s views on this air carrier

selection case:

After careful consideration and much public discussion regarding the Essential Air Service proposals for Victoria Regional Airport, we are recommending Sun Air for commercial air service. Although both proposals were well thought out, we feel that the added benefit of Sun Air having full interline agreements with the major, legacy carriers will offer a m ore fluid and better connections to the national and international air transportation system. It is primarily for this reason that we are choosing Sun Air over SeaPort. The ability for our passengers to book a single ticket and have their baggage arrive at their ultimate destination more closely matches the service we have now and we feel that it will be less disruptive for our existing air travelers.

Decision After reviewing both airlines’ proposals and taking into account the community’s comments, the Department has decided to select Sun Air. While we are concerned by the significantly higher subsidy required by Sun Air compared to SeaPort, we also recognize

that n either p roposal put forth by SeaPort or Sun Air would maintain current service levels

at Victoria and, as a result, the community will se e a large service reduction . Victoria has been receiving branded service with Colgan’s 34

- passenger, cabin

- class aircraft, under

either a Continental Airlines or United Airlines code

- share agreement. Neith er SeaPort- 3

-

nor Sun Air would provide these amenities. Furthermore, neither airline meets all four criteria for selecting an EAS carrier contained in 49 U.S.C. Section 417339(c). 2 Under

these circumstances

, we will give greater deference to the community views. The community supports Sun Air’s proposal and specifically mentions the airline’s full

interline agreements with major airlines

, which may mitigate the effects of the reduction in capacity and provide Victoria passengers seamless con nections beyond the Houston hub to

the national air transportation system. 3 In addition, we find the service and subsidy level s proposed by Sun Air to be responsive to our Request for Proposals.

We shall make this selection of Sun Air at Victoria contin gent upon the Department’s receiving properly executed certifications from the air carrier that it is in compliance with the Department’s regu lations regarding drug

- free workplaces and nondiscrimination, as well as the regulations concerning lobbying activ ities. 4

S ervice Transition Colgan terminate d its entire Houston operation on June 30, 2012. Since Victoria is without air service, we expect Sun Ai r to work with the community on a mutually agreed upon start date for full EAS as soon as possible . In addition, United Airlines has assured us that it has, or will have, contacted a ll passengers holding res ervations for travel after June 30 to assist those passengers in making alternate air transpor t ation arrangements, or to provide a

refun d of the t icket price, without penalty, if requested.

Carrier Fitness

49 U.S.C. Sections 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 . T he Department recently found Sun Air fit to conduct scheduled passenger operations as a

commuter air carrier and no information has come to our attention that would cause us to question the airline’s fitness to provide EAS in this market at this time. We therefore

conclude t hat the airline is reliable and fit to conduct operations proposed here.

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

ACCORDINGLY,

1. We select S un Air Express, LLC d/b/a Sun Air International to provide Essential Air

S ervice at Victoria, Texas

, contingent upon it receiving full operating authority from both the Department and Federal Aviation Administration. We establish an annual subsidy rate as described in Appendix C;

2 In selecting a n airline to provide EAS, we are required to base our decision on the four carrier

- selection

criteria contained in 49 U.S.C. § 41733(c), in addition to its proposed subsidy level: 1) the demonstrated reliability in providing scheduled air service; 2) the co ntractual and marketing arrangements with a larger airline to ensure service beyond a hub airport; 3) interline agreements with a larger airline; and 4) support by the community’s elected officials for the applicant’s proposal.

3 Sun Air met with Victoria community officials and stated they are close to finalizing arrangements to provide passengers with interline access on their service.

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

.- 4

-

2

. We direct Sun Air Express, L LC d/b/a Sun Air International 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 representat ives 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 dispos ed of must be retained. The carrier may forfeit its compensation for any claim that is not supported under the terms of this Order ;

3 . We f i nd that Sun Air Express, LLC d/b/a Sun Air International is fit, willing and able to

operate as a commuter carrie r
, and capable of providing reliable Essential Air S ervice at Victoria, Texas ;

4

. These docket s will remain open pending further Department action ; and

5 . We will serve copies of this Order on the Mayor and Airport Manager of Victoria,

Texas

, Sun Air E xpress, LLC d/b/a Sun Air International, SeaPort Airlines, Inc., and Colgan Air, Inc.

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



## AREA MAP

Maps generated by the Great Circle Mapper

- copyright © Karl L. Swartz

.Appendix BAppendix C

Sun Air Express, LLC d/b/a Sun Air International

Essential Air Service to be Provided at Victoria, Texas

Effective Period : Beginning with full EAS through the end of the 24 th month thereafter

Scheduled Service : 24 weekly nonstop round trips to George Bush Intercontinental Airport (Houston)

Aircraft : 9

- passenger, twin

- engine Piper Chieftain Rate per Eligible Flight: $ 938 1
Weekly Ceiling for each community : $ 45,024 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 significan t elements of the required service, without prior approval. The carrier understands that an aircraft take

- off and landing at its

s cheduled 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 addit ion, 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 l ocate 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. I n 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 unil aterally, 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 sti pulated 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 are not currently available for performance under this Order beyond September 30, 2012. The Government’s obligation for performa nce under this Order beyond September 30, 2012, is subject to the availability of appropriated 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 b eyond September 30, 2012, until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30, 2012, the Department will provide notice in writing to the carrier.

All claims for payment mu st be submitted within 60 days of the last day of service provided under this Order.

1 Annual compensation of $2,294,036 divided by 2,446 annual departures (48 weekly departures x 52 weeks x 98 percent completion)

. 2 48 arrivals and departures per week multiplied by $938 per flight

.