Order 2011

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- 6 Served: December 14, 2011



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION



### OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 14 th of December, 2011

Essential Air Service at

DEVILS LAKE, NORTH DAKOTA

Under 49 U.S.C. 41731 et seq

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O RDER MAKING SHORT

- TERM CARRIER SELECTION Summary By this O rder, the Department is selecting Great Lakes Aviation, Ltd. (Great Lakes) to provide

E ssential Air S ervice (EAS) at Devils Lake, North Dakota, for an annual subsidy of $2,797,467

, effective with the start of service by Great Lakes . W e anticipate that G reat Lakes will start
service on or about December 17, 2011. This Order will remain in effect until further
Department al action. 1

Background By Order 2009

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, we selected Mesaba Aviation, Inc., and Pinnacle Airlines, d/b/a Delta Connection (Delta), to provide EAS at Devils Lake through September 30, 2011. The annual subsidy level was $1,459,493 for two round trips per da y to Minneapolis operated with a mixture

of one

- stop and nonstop service, with 34

- seat Saab 340 aircraft.

On July 1 5 , 20 11

, Delta filed 90

- day notices of intent to suspend service at Devils Lake , as well

as at 23 other EAS communities, effective October 1 3 , 2011

. 2 By Order 20 11

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, we prohibited Delta from terminating service at Devils Lake and requested proposals for replacement service by October 21 , 2011

. We received timely filed proposals from two carriers, Great Lakes and Sovereign Air

.

1 Such subsidy is calculated and distributed on a fiscal year basis, subj ect to the availability of appropriated funds.

2 This order addresses only Devils Lake.- 2

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Subseq uent Developments

Effective November 30

, 2011, Delta retire d the last of its Saab 340 aircraft and planned to

backfill its Saab service with 50

- seat Canadair Regional Jets (CRJ). However, because the

runway is not long enough for CRJs to land safely except in ideal weather conditions, Delta has

been unable to provide reliable service. In fact, f or the week of December 12

- 16, 2011, Delta has cancelled all flights into and out of D evils Lake and is reaccommod ating passengers by busing them to nearby Grand Forks

, to board a nother Delta flight there.

Decision

Devils Lake has received almost no air service since December 1 , 2011, so immediate action is

warranted

. The only proposals that we received were from Great Lakes and Sovereign. However, Sovereign does not have the requisite operating authority from either the Federal Aviation

A dministration or the Department, and, because time is of the essence here, we did not pursue replacement service with Sovereign.

Great Lakes’ initial proposal does not meet the criteria set out in the Department’s Request for Proposals in that it proposed two round trips a day instead of the three round trips that we requested.

Giv en the time urgency caused by the lack of service at Devils L ake, however, we decided to forego soliciting another round of proposals or negotiations with Great Lakes, which could become protracted, and instead requested that Great Lakes submit a short

- ter m, stopgap proposal that could be implemented quickly , on an interim basis. In response

, Great L akes pro poses to operate two daily (14 per week) nonstop round trips to Minneapolis with 19

- seat B 1900D aircraft

, for an annual subsidy rate of $2,797,467

, and is making every effort to inaugurate the service on December 17

, 2011

. We recognize that the community wants more than two round trips per day . While we will work with Great Lakes to secure an additional round trip in the near future, our principal concern is securing reliable service as soon as possible. We have contacted the community, and t he Mayor of

Devils Lake has indicated that this solution is acceptable on a temporary basis.

Certifications We shall make these selections contingent upon the Department’s recei pt of properly executed

certifications from Great Lakes that it is in compliance with the Department’s regulations regarding drug

- free workplaces and nondiscrimination, as well as the regulations governing lobbying activities.

Carrier Fitness

49 U.S.C. 41737(b) requires that we find an air carrier fit, willing, and able to provide reliable

service before we may subsidize it to provide E ssential A ir S ervice. 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 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 finding. We theref ore conclude that the carrier remain s fit to conduct the operations proposed

here.

This O rder is issued under authority delegated in 49 CFR 1.56a(f).- 3

-

ACCORDINGLY,

1. We select Great Lakes Aviation, Ltd.

, to provide E ssential A ir S ervice at Devils Lake, North

Dakota ;

2. We set the final rate s of compensation for Great Lakes Aviation, Ltd., for the provision of

E ssential Air S ervice at Devils Lake, North Dakota, as described in Appendix C ;

3. We direct Great Lakes Aviation, Ltd., to retain all bo oks, 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 sha ll be retained for seven years from the date it begins providing Essential Air Service 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. Th e carrier may forfeit its compensation for any claim that is not sup ported under the

terms of this O rder;

4. We find that Great Lakes Aviation, Ltd., continues to be fit, willing and able to operate as a

c ommuter carrier and capab le of providing reliable E ssential A ir S ervice at the these

communities ;

5. Th i s docket will remain open until further order of the Department; and

6. We will serve copies of this O rder on the Mayors and Airport Managers of Devils Lake,

North Dakota

.

By:

Susan Kurland Assistant Secretary for

Aviation and International Affairs (SEAL)

An electronic version of this document is available on the World Wide Web at http://www.regulations.govAppendix A

Nonstop Great Circle Miles Devils Lake (DVL) to Minneapolis (MSP) 351 Jamestown (JMS) to Minneapolis (MSP) 299 Grand Forks (GFK) to Minneapolis (MSP) 284 Fargo (FAR) to Minneapolis (MSP) 223 Devils Lake to Grand Forks (GFK) 81 Jamestown to Fargo (FAR) 88

Devils Lake to Jamestown 83Appendix B Great Lakes Aviation, Ltd. Annual Compensation Requirements for Essential Air Service at Devils Lake, North Dakota to Minneapolis/St. Paul ( MSP )
Two Round Trips - B1900

98.0% completion factor Temporary - Interim Pattern of Service

Departures: 1,431 1/

Block Hours: 2,265 Revenue Passenger Miles: 2,457,000

Available Seat Miles: 9,543,339

Operating Revenues:

Pax. DVL-MSP 7,000 psgrs at $137.82 $964,740

Other: (at 0.62% of passenger revenue) $5,981

Total Operating Revenues: $970,721

Operating Expenses:

Direct: Aircraft and Hull Insurance $365,710

Fuel and Oil $1,301,253 Flying Operations $396,692

Maintenance $516,639

Total Direct Expenses: $2,580,294

Total Indirect Expenses: $1,008,456

Total Operating Expenses: $3,588,751

Operating Loss ($2,618,029) Profit Element (5.0% of Total Operating Expenses) $179,438

Annual Compensation Requirement: $2,797,467

1/ 14 flights per week x 2 directions x 52 weeks x .98 x 313/312 = 1,431.Appendix C

Great Lakes Aviation, Ltd. Essential Air Service

to be Provided to Devils Lake, North Dakota

Effective Period : From start of service until further Department action.

Service : 1 4 nonstop round trips per week to Minneapolis (MSP).

Aircraft : Beech 1900D, 19 seats. Rate per Eligible On e

- Way Flight : $ 1,955 1
Weekly Ceilings : $ 54,740 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 signi ficant 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

t hat 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 c an 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 t he 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 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 p ayment.

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 performance 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 beyond 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 must be submitted within 60 days of the last day of service provided under this order.

1 Annual compensation of $ 2,797,467 divided by 1,431 estimated annual completed departures and a rrivals:

4 flights/ day x 365 days x 98 percent completion

. 2 $ 1,955 x 28 flights per week = $ 54,740

.