Order 2013

- 10

- 15

Served: October 29, 2013



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 29 th d ay of October , 2013

Essential Air Service at

CODY, WYOMING

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 2011

- 0121



### ORDER PROHIBITING TERMINATION OF SERVICE AND REQUESTING PROPOSALS

Summary By this O rder, the Departme nt is (a) prohibiting SkyWest Airlines

, operating as United Express ( SkyWest/ United Express), from terminating its unsubsidized service at Yellowstone Regional Airport in Cody, Wyoming , for 30 days beyond the end o f the 90

- day notice period ( November 28

, 2013 ) and (b) requesting proposals from air carriers intere sted in providing

y ear

- round Essential Air Service (EAS) at Cody, with or without subsidy. Proposals are due

November 26

, 2013.

Background

On June 27, 2011, SkyWest Airlines, operating as Delta Connection (SkyWest/Delta Connection) filed a 90

- day notice of its intent to te rminate service as to Salt Lake City, effective September 25, 2011. At the time of the filing, SkyWest/Delta Connection provided two daily nonstop round trips (14 a week) to Salt Lake City International Airport on 30

- seat

EMB

- 120 Brasilia (Brasilia) aircr aft. In addition, SkyWest/United Express provided one round trip a day t o Denver International Airport (Denver), with a 50

- seat Canadair regional jet aircraft

year

- round and one round trip a day during the four

- month peak season using a 30

- seat
Brasilia.

In response to SkyWest/Delta Connection’s filing, we issued Order 2011

- 8

- 26, August 30, 2011, prohibiting the suspension and requesting proposals from air carriers interested in providing EAS at Cody . Because SkyWest/United Express operated two daily

rou nd trips to Denver four months of the year and one daily round trip to Denver the other eight- 2

-

months, we requested proposals for only one round trip a day for eight months of the year. In response to that Order, we received a proposal from the incumbent, SkyWest /Delta Connection

.

By Order 2011

- 11

- 24, issued on November 18, 2011, the Department selected SkyWest/ Delta

Connection to provide EAS at Cody from October 4, 2011, through May 31, 2012, and from

October 4, 2012, through May 31, 2013, for an annual subsidy of $352,058. Under the EAS

su bsidy contract, SkyWest/ Delta Connection provided Cody one daily round trip (seven a week) to Salt Lake City International Airport using 50

- passenger Canadair Regional Jet 200

aircraf t; the service to Denver was provid ed subsidy

- free.

By Order 2013

- 4

- 18, issued on April 25, 2013, the Department re

- selected SkyWest/ Delta

Connection to provide EAS at Cody to Salt Lake City using 50

- passenger Canadair Regional Jet 200 aircraft from October 1, 2013, through May 31, 2014 , a nd October 1, 2014, through May 31, 2015, for an annual subsidy of $627,696.

On August 1, 2013, SkyWest/ United Express filed a 90

- day notice of its intent to terminate its subsidy

- free service to Denver, effective November 1, 2013. This would leave Cody with only one daily round trip (seven a week) to Salt Lake City for eight months of the year . Since Cody is guaranteed a minimum of 12 round trips a week to a large

- or medium

- hub, the Department has decided to solicit a new round of proposals.

Rather than solicit proposals for the difference in service

, it would be more convenient for the community if we consolidated all of its EAS into one contract, with one start date and one end date. Therefore, we are hereby soliciting proposals from air carriers to provide all of Cody’s

subsidized service.

Hold

- In SkyWest/ United Express’ s proposed termination of its Denver service at Cody would cause service levels to drop below the EAS guarantee d levels established by the Department. Thus, the Department must prohibit the air carrier from terminating such service at the end of its 90

- day notice (November 28, 2013). We will require SkyWest/ United Express to continue to

maintain its current level of service at Cody for successive 30

- day periods until we have completed processing the air carrier

- replacement case and the selected air carrier has actually

started service. 1

Request for Proposals Air carriers should file their prop osals no later than N ovember 26

, 2013

. After that date, our staff will docket proposals, thereby making them public, and shortly afterwards will provide a summary of the proposals to the community and ask them for their final comments. We will give full consideration to all proposals filed i n a timely manner. 2

1 In accordance with 49 U.S.C. 41734(c), we will extend SkyWest/ United Express’ service obligation for

successive 30

- day periods as necessary until replacement service actually begins.

2 Carriers should not expect the Department to accept late filings. In cases where an air carrier proposes to provide EAS without subsidy and we determine that basic EAS as required by 49 U

. S

. C

. § 41732 can be reliably provided without such compensation, w e typically do not proceed with air carrier

- selection case. Instead, we simply rely on

that carrier’s sub sidy

- free service as proposed.- 3

-

Interested carriers should prepare their proposals with every expectation that their initial proposals will also be their final and only proposals. 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 solicit a new round of proposals. Air carrier proposals should be submitted to the Department with all materials merged into a single document. In addition, because the document will be published on www.regulations.gov , each page should be format ted to be viewed online.

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 format. We expect proposals to adequately describe the service bei ng 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, we recommend that they include information concerning proposed

sched ules and projected block hours. In addition, applicants are urged to provide financial data supporting their subsidy requests, including information on their projected expenses and

revenues. We strongly encourage clear, well

- documented proposals that will facilitate their

evalu ation by the affected community and the Department. 3

Air c arriers are also welcome to propose more than one option, if they choose; they need not limit themselves to those requirements if they envision other, potentially more attractive service possibilit ies

-- different hubs, frequency or equipment, for example

-- with subsidy requirements that remain competitive. The community and air carriers are encouraged to work together in advance of the due date for proposals to craft a service pattern that is desirable to

the communit y and meets the operational needs of the airline s

.

Proposals should provide sufficient capacity to accommodate historical levels of traffic. In

order to assist car riers in developing traffic and revenue projections for their proposals, we have provided a summar y of historical passengers in Appendix B. D uring the year ended

June 30

, 2013

, Cody averaged 94 enplanements per day. The community has expressed to the Dep artment that their preference is to maintain the current service to both the Denver and Salt Lake City hubs. Therefore, in lieu of the typical two or three round trips a day to a single hub, we are requesting the same total frequency levels

, but split between Denver and Salt Lake City

. However, we would also accept proposals with service to either Denver or Salt Lake City . A ir carriers should propose year

- round service, with two round trips a day (14 a week) using 30

s eat or l arger aircraft; or four r ound trips a day (28 a week) using 15

- 29 seat aircraft. We

would also entertain proposals with 8/9 seat aircraft and additional frequencies. As always, we will formally solicit the community ’ s views on any service options we receive before making a long

- term carrier selection decision.

3 In selecting a carrier to provide subsidized EAS for an eligible place not in Alaska , 49 U.S.C. § 41733(c) (1)

direct s us to consider five factors: (1) service reliability; (2) contractual and marketing arrangements with a larger carrier at the hub; (3) interline arrangements with a larger carrier at the hub ; (4) community views; and (5) whether

the 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 Ap propriations 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. Interes ted carriers should also be aware that our general provisions governing Essential Air Service will be included in the selection Order as part of our authorization of subsidy for the selected service. Appendix C of this Order contains those general provisio ns.- 4

-

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

- free workplaces and nondi scrimination. 4 Consequently, all carriers receiv ing Federal subsidy to support EAS must certify that they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimination, and those carriers whose subsidies exceed $100,00 0 over the life of the rate term must also certify that they are in compliance with the regulations governing lobbying activities. All air carriers that plan to submit proposals involving subsidy should submit the required certifications along with their proposals. Interested carriers requiring more detailed information regarding these requirements, as well as copies of the certifications, should contact the Office of Aviation Analysis at (202) 366

- 5903. The Department is prohibited from paying subsidy t o carriers that

do not submit these documents. 5

Community and State Comments Civic officials are welcome to submit comments on the proposals at any time. As noted earlier, we will provide a summary of the proposals to the civic parties and ask them to su bmit their final comments shortly after November 26

, 2013

, the due date for carrier proposals.

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

ACCORDINGLY,

1. We prohibit SkyWest / United Express from suspending one round trip a day to Denver, at

the end of the 90

- day notice period, and require it to maintain service at the communit y , as set forth in Appendix D, for an initial 30

- day period through November 28, 2013, or until an air carrier capable of providing reliable EAS actual ly beings service, whichever is first;

2. We request that air carriers interested in providing EAS at Cody, Wyoming

, submit their proposal , with or without subsidy requests, no later than November 26

, 2013 . The proposal

should be emailed to: EAS@dot.gov with the title “Proposal to Provide EAS at Cody

, Wyoming ”; 6

4 The regulations applicable to these areas are: (1) 49 CFR 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 Right s Act of 1964; 49 CFR Part 27

– Nondiscrimination on the basis 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).

5 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

. 6 Questions regarding filings in response to this order should be directed to Michael Martin at 202

- 366

- 6494, or

via email at michael.f.martin@dot.gov

.- 5

-

3

. This docket will remain open until further order of the Department; and

4

. The Department will serve a copy of this O rder on the Mayor of Cody

, the airport manager at Yellowstone Regional Airport, and the service list for this Docket

.

By:

SUSAN L. KURLAND Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available on line at www.regulations.gov

### Appendix A



## Area Map

Maps generated by the Great Circle Mapper

- copyright © Karl L. Swartz

.

### A ppendix B

Historical Origin

- Destination Plane Traffic 1



### Cody, Wyoming

Quarter Year Deplanements Enplanements Total
Traffic Enplanements per Day

3 2010 10,102 11,015 21,117 134

4 2010 6,303 6,599 12,902 84

1 2011 5,007 5,069 10,076 65

2 2011 7,824 7,418 15,242 96

Annual

Totals 29,236 30,101 59,337 95

3 2011 9,311 9,929 19,240 122

4 2011 5,247 5,602 10,849 70

1 2012 4,684 4,838 9,522 61

2 2012 7,449 6,943 14,392 91

Annual

Totals 26,691 27,312 54,003 86

3 2012 9,840 10,464 20,304 129

4 2012 5,854 6,287 12,141 79

1 2013 4,970 5,321 10,291 66

2 2013 8,318 7,685 16,003 101

Annual

Totals 28,982 29,757 58,739 94

1 Source: USDOT Bureau of Transportation Statistics, T ransStats Intermodal Database, Schedule T

- 1 00

.

### Appendix C

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

destinatio n 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 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 f light 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 amounts

o r 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 t o time. However, any such statutes, regulations, or amendments thereto shall not operate to controvert the foregoing paragraph.

Funds may not be available for per formance under this order beyond [DATE] . The

Government ’s obligation for performance under this order beyond [DATE] , 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 [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 w ithin 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.

### Appendix D

Essential Air Service to be Maintained at Cody, Wyoming

Effective Period : November 29, 2013, until further Department action

Scheduled Service : One round trip a day to Denver

Aircraft : 50

- seat Canadair Regional Jet 200 (CRJ 200)