Order 2014

- 8

- 10 Served: August 14 , 2014



### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation
on the 14 th day of August , 201 4

ORDER REQUESTING PROPOSALS

Summary By this O rder, the Depa rtment is requesting proposals from carriers interested in providing Essential Air Service ( EAS ) at any or all of the four communities captioned above for a new contract period beginning February 1, 2015, with or without subsidy. (See Appendix A for a service area map )

. Carriers should file their proposals no later than September 17

, 201 4

.

Background
On September 11 , 201 2

, the Department issued Order 2012

- 9

- 11, selecting SkyWest Airlines (SkyWest), operating with a Delta Air Lines, Inc. (Delta) code

- share, to provide subsidized EAS between each of the four communities captioned above and the Minneapolis

- St. Paul
Internation al Airport (MSP). The annual subsidy rates for each community under that Order are: $2,512,971 at Iron Mountain/Kingsford (Iron Mountain) , $1,519,619 at Rhinelander, $1,356,764 at Brainerd, and $1,107,900 at International Falls. The four communities hav e a combined annual subsidy rate of $6,497,254.

Request for Proposals
As the expiration of the current rate

- term approaches, we are here requesting proposals from
carriers interested in providing EAS at any or all of these communities , with or without sub sidy,
for a new rate

- term beginning February 1, 2015

. Carriers should file their proposals no later than September 17

, 2014

. Staff will then docket proposals, thereby making them public, and shortly afterwards will provide a summary of the proposals to the communities and ask them for their

Essential Air Service at

IRON MOUNTAIN/KINGSFORD, MICHIGAN BRAINERD, MINNESOTA INTERNATIONAL FALLS, MINNESOTA RHINELANDER, WISCONSIN

Under 49 U.S.C. 41731 et seq

. DOT

- OST

- 1999

- 5175 DOT

- OST

- 2011

- 0135 DOT

- OST

- 2009

- 0304 DOT

- OST

- 2011

- 0109final comments. We will give full consideration to all proposals that are filed in a timely

manner

. 1

Interested carriers should prepare their proposals with every expectation that their initial proposals will repres ent their final and only proposals. However, we retain the discretion to negotiate proposals with carriers when we deem it desirable. We also retain the discretion to reject outright all unreasonable or unrealistic proposals and re

- solicit a new round of proposals. However, negotiation and rejection are only occasional exceptions to the rule.

We are here providing interested carriers with some basic information to serve as guidance when they prepare their proposals, but we will not prescribe a precise f ormat for their proposals. We expect proposals to adequately describe the service being proposed and the annual amount of subsidy being requested. The applicants can make their own judgments as to the level of detail they wish to present; however, they m ight want to include proposed schedules as well as supporting data for their subsidy requests, such as projected block hours, revenues and expenses. We strongly encourage clear, well

- documented proposals that will facilitate their evaluation by
the affect ed communit ies and the Department. 2

Specifically, we expect proposals to Minneapolis

- St. Paul

, Detroit, Chicago O’Hare , or any other large or medium hub airport offering numerous connections to the natio nal air transportation system at service levels cons istent with what the communities currently receive, as outlined in
the table below:

1 Carriers should not expect the Department to accept late fillings. In cases where a carrier proposes to provide essential air service without subsidy and we determine that service can be reliably provided without such compensation, we typically do not pr oceed with the carrier

- selection case. Instead, we usually rely on that carrier’s subsidy

- free service as proposed.

2 In selecting a carrier to provide subsidized EAS , 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 to ensure service beyond the hub; (c) interline arrangements that the applicant has made with a larger carrier at the hub; (d) community views, giving substantial weight to the views of the el ected officials representing the users ; and (e) the carrier’s plan to market its service to the community

. In addition, the Continuing Appropriations Act, 2014, Public Law No. 113

- 46, provides that when selecting a 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. Interested carriers should also be aware that our ge neral provisions governing EAS will be included in the selection O rder as part of our authorization of subsidy for t he selected service. Appendix B of this O rder contains those general provisions.Community Round Trips per Week 1 Aircraft Enplanements per Day 2

Iron Mountain, MI 13 (7 nonstop, 6 one

- s top) 50

- seat CRJ

- 200 30.1

Rhinelander, WI 14 nonstop 50

- seat CRJ

- 200 64.4

International Falls, MN 12 (7 nonstop, 5 one

- stop) 50

- seat CRJ

- 200 42.3

Brainerd, MN 12 nonstop 50

- seat CRJ

- 200 47.7

Notes: 1. This is the current level of service. We expect similar levels of service to be proposed
for the new term.
2. Source

– US DOT Bureau of Transportation Statistics, Form T

- 100 Market Report for YE 6/30/2014. Based on origin and destination passengers divided by 2 (for two directions), divided by 313 service days, where each weekend i s equal to one service day.

The communities and air carriers are encouraged to work together in advance of the due date for proposals to craft a service patter n that is desirable to the communities and meets the operational need of the airline interested in submitting a proposal. In addition, carriers should be very clear as to whether a specific community’s proposal is on a stand

- alone basis, or whether it is p art of a larger, inseparable package with other communities

.

Service and Traffic History In order to assist carriers in developing traffic and revenue projections for their proposals, we have summarized passenger traffic in the table above . For the year ended June 30, 20 1 4

, Iron
Mountain averaged approximately 30 .1 enplanements a day

, Brainerd

, 4 7.7 , International Falls,
4 2 .3 , and Rhinelander, 64

. 4.

Filing Procedures Carrier proposals should be submitted to the Department with all materia ls compiled into a single document. In addition, because the document will be published on http://www.regulations.gov/

, each page should be formatted to be viewed online and for easy printing.

Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug

- free workplaces, and nondiscrimination. 3 Consequently, all carriers receiving Federal subsidy for Essential Air S ervice must certify t hat they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimination, and those carriers whose subsidies exceed $100,000 over the life of the rate

- term must also certify that they are in compliance with the regulation s governing lobbying activities. Because the Department is prohibited from paying subsidy to carriers that do not submit these documents, all carriers that plan to submit proposals involving subsidy should be aware that the selected carrier will be

3 The regulations applicable to these areas are: (1) 49 CF R 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 b asis of disability in programs and activities receiving or benefiting from Federal financial assistance; and 14 CFR Part 382

-

- Nondiscrimination on the basis of disability in air travel; and (3) 49 CFR Part 29

-- Government

- wide debarment and suspension ( non

- procurement) and government

- wide requirements for drug

- free workplace (grants).requir ed to complete the required certifications. Interested carriers requiring more detailed information regarding these requirements should contact the Office of Aviation Analysis at (202) 366

- 5903. 4

Community and State Comments
The communities and States ar e welcome to submit comments at any time. We encourage prospective applicants to contact the communities before they submit their proposals so that they can tailor them to the communities’ needs, as they will not be able to amend them after the due
date. As noted earlier, we will provide a summary of the proposals to the civic parties and ask them to submit their final comments shortly after September 17 , the deadline for carrier proposals.

This O rder is issued under authority delegated in 49 CFR 1. 25 a( b ) and re

- delegated to the Director, Office of Aviation Analysis

.

ACCORDINGLY,
1

. We request that ca rriers interested in providing Essential Air S ervice at Iron Mountain/Kingsford, Michigan, Brainerd and International Falls, Minnesota

, and/or Rhinelander, Wisconsin, submit their proposals, with or without subsidy requests, no later than September 17

, 201 4 . The proposals should be e

- mailed to: EAS@dot.gov with the title “Proposal to Provide Essential Air Ser vice at Iron Mountain, Brainerd

, International Falls,

and/or Rhinelander

, ”; 5

2

. These Dockets will remain open until further order of the Department; and

3

. We will serve copies of this O rder on the mayors of Iron Mountain and Kingsford, M ichigan

, Brainerd, M innesota , International Falls, M innesota , Rhinelander, W isconsin

, the airport managers at Ford Airport (Iron Mountain/Kingsford), Brainerd Lakes Regional Airport, Falls International Airport, and Rhinelander/Oneida County Airport, and the servic e list for this
docket

.

4 The certifications are also available on the web at http://www.dot.gov/policy/aviation

- policy/small

- community

rural

- air

- service/essential

- air

- service

. 5 Questions regardi ng filings in response to this Order may be directed to A.J. Muldoon at (202) 366

- 1058 or albert.muldoon@dot.gov

.Persons entitled to petition the Department for review of this order under the Department’s Aviation Economic Regulations, 14 CFR 385.50, must file such petitions 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

(SEAL)

An electronic version of this document is available online at www.regulations.govAppendix A



### AREA MAP

Maps generated by the Great Circle Mapper

- copyright © Karl L. SwartzAppendix B

Example of General Terms and Conditions for Essential Air Service

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 ope rate 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 these rates, 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 complete, te rminates 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 amounts or at the stipulated service levels, the carrier may cease to provide service to that specific location without regard 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 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 performance under this Order beyond [DATE] . The Government’s obligation for performance under this Order beyond [DATE] , i s 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 [DATE] , until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond [DATE] , 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 d ay 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.