Order 2011-12-19

Served: December 23, 2011

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 23rd day of December, 2011

ORDER RESELECTING CARRIER AND SETTING FINAL SUBSIDY RATES

Summary

By this Order, we are reselecting Great Lakes Aviation, Ltd. (Great Lakes), operating as both 

a Frontier Airlines and United Airlines code-share partner, to provide subsidized essential air 

service (EAS) with 19-passenger Beechcraft B-1900D aircraft at Vernal and Moab, Utah, for 

the two-year period from January 1, 2012, through December 31, 2013. The annual subsidy 

rate for Vernal will be set at $1,299,194, and $1,816,486 for Moab, or a combined total of 

$3,115,680. See Appendix A for a map.

Background

By Order 2009-12-9, December 14, 2009, the Department selected Great Lakes Aviation,

Ltd. (Great Lakes), to provide subsidized EAS at Vernal and Moab utilizing 19-passenger 

Beech B-1900D aircraft, through December 31, 2011. Under that Order, Great Lakes 

provides Vernal with 12 weekly nonstop round trips to Denver for an annual subsidy rate of 

$1,421,478. At Moab, Great Lakes also provides 12 weekly nonstop round trips to Denver

for an annual subsidy rate of $1,798,370. The combined annual subsidy rate for both 

communities totals $3,219,848.

In anticipation of the end of the current rate term, the Department issued Order 2011-7-3 on 

July 1, 2011, soliciting proposals to provide efficient EAS, with subsidy support if necessary, 

at Vernal and/or Moab. Our selection process at Moab and Vernal is governed by several 

important statutory limitations imposed on the EAS Program. Both communities are 

Essential Air Service at:

MOAB, UTAH

VERNAL, UTAH

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

DOT-OST-1997-2827

DOT-OST-1997-2706
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guaranteed to receive air service with twin-engine, two-pilot aircraft.1 In addition, the

Department is prohibited from paying subsidy for EAS at any community where the perpassenger rate exceeds $200, unless the community is greater than 210 highway miles from 

the nearest large or medium hub. In this case, Vernal is clearly less than 210 highway miles 

from Salt Lake City and, therefore, is subject to the $200 subsidy-per-passenger ceiling. In 

contrast, Moab is not within 210 highway miles of a large or medium hub, and, therefore, is 

exempt from this limit.

Based on historical service levels and the statutory limitations described above, in order to 

attract as broad an array of proposals as possible, we stated in the Request for Proposals that 

we would entertain proposals for three round trips a day (18 a week) with eight- or nine-seat 

aircraft or 12 round trips a week with 15-seat or larger aircraft to Salt Lake City or any other 

suitable hub offering convenient access to the nation’s air transportation system. Carriers 

were encouraged to propose more than one service option if they chose and were not limited 

to those requirements if they envisioned other, potentially more attractive possibilities --

different hubs, for example -- with subsidy requirements that remain competitive.

Proposals

The Department received a total of eight service options from two carriers in response to its 

solicitation. Great Lakes submitted a proposal that would replicate the existing level of 

service at the communities. SeaPort Airlines, Inc.’s (SeaPort) proposal contained six

different service options, three separate service patterns at each community. These proposals 

are summarized below. Each carrier’s proposal and comment letters may be accessed online 

through the Federal Docket Management System at: http://www.regulations.gov, by doing a 

search on Dockets DOT-OST-1997-2827 (Moab) or DOT-OST-1997-2706 (Vernal).

Great Lakes

Great Lakes, operating as a United Airlines and Frontier Airlines code-share partner,

submitted “stand-alone” service options to provide EAS at both communities. Great Lakes

would provide twelve nonstop round trips a week from each Vernal and Moab to Denver, 

utilizing 19-passenger Beech 1900D aircraft. The annual subsidy requirement at Vernal is 

$1,299,194 and for Moab, $1,816,486.

SeaPort

SeaPort submitted a proposal for each community on a “stand-alone” basis. SeaPort would 

utilize pressurized Pilatus PC-12 aircraft configured for 9-passengers with three service 

options at each community with all service being nonstop, as summarized below.

 1 Previously most EAS communities were entitled to service with 15-seat or larger aircraft. However, in the 

Department’s FY 2012 appropriation (Consolidated and Further Continuing Appropriations Act, P.L. 112-55, 

November 18, 2011), Congress repealed the 15-seat guarantee.
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Service 

Option 

#

Proposed Service

Annual Subsidy 

Required

Vernal Moab

1 18 round trips a week to Salt Lake City (SLC) $1,566,015 $2,074,620

2 11 round trips a week to Denver (DEN); and

7 round trips a week to SLC $1,855,925 $2,278,580

3 7 round trips a week to DEN; and

11 round trips a week to SLC $1,701,407 $2,197,787

SeaPort’s options do not meet the twin-engine requirement for either community, and the 

Department would not select SeaPort at either unless we received written community 

support. Based on the historical passenger traffic included in Order 2011-7-3, SeaPort’s perpassenger subsidy requirements for service options #s 1 and 3 are below the statutory cap at 

Vernal, but service option #2 is not.

Community Comments

On August 30, 2011, the Department sent letters to the airport managers and civic officials of 

both communities, summarizing the statutory restrictions imposed on the EAS Program (as 

described above), all of the proposals submitted, and requesting their comments on the 

carrier-selection decision.

In response, the Department received community comments from the Vernal Regional 

Airport Manager and Grand County Council. Both parties endorsed Great Lakes’ proposal. 

Each community made note of their preferences for 19-passenger, pressurized aircraft. 

Vernal expressed some concern about Great Lakes’ reliability and dependability. However, 

they have met with the airline and expect service to improve.

Decision on Carrier Selection

After careful consideration, including the comments of local officials, the Department has

decided to reselect Great Lakes to provide EAS at both communities, in accordance with its 

proposal. The carrier will continue to provide 12 weekly nonstop round trips between Vernal 

and Denver (with no upline restrictions on one round trip) and between Moab and Denver 

(with no upline restrictions on one round trip) with twin-engine, two-pilot, 19-passenger, 

Beech 1900D aircraft. The annual subsidy rate for Vernal will be set at $1,299,194; and 

$1,816,486 for Moab.

At Vernal, Great Lakes’ proposal meets all of the statutory carrier-selection criteria. Great 

Lakes requires less subsidy than all of the SeaPort options and the community is supportive 

of Great Lakes’ proposal. The carrier has a long history of providing reliable EAS. Its codeshare agreement with both Frontier Airlines and United Airlines at Denver provides the 

community online connections to more than 150 domestic and international destinations. In 

addition, we find both the service and subsidy levels to be reasonable.

In contrast, SeaPort’s service options at Vernal do not meet the twin-engine requirement, nor 

did the carrier receive support from the community. SeaPort did not identify any code-share 

partners at Denver or Salt Lake City, and only mentions a basic interline baggage agreement 
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with US Airways, a major carrier but with relatively few connecting opportunities at Denver 

or Salt Lake City. Thus, the selection of Great Lakes at Vernal is clear.

At Moab, we requested proposals for either two round trips a day with 15-seat or larger 

aircraft or three round trips a day with 8-or 9-seat aircraft. Great Lakes meets all the 

minimum service requirements and carrier-selection criteria,2 including community support. 

SeaPort has proposed a higher annual subsidy than Great Lakes and Seaport’s aircraft do not 

meet the twin-engine requirement. SeaPort’s 18 round trips a week to Salt Lake City option 

is approximately $250,000 more than Great Lakes’ proposal,. Great Lakes has interline 

baggage agreements with all major carriers and fully implemented code-share agreements 

with both Frontier Airlines and United Airlines at Denver that allow for one reservation, 

ticket and baggage check-in that provides seamless service beyond the hub. Similar to the 

situation at Vernal, Great Lakes’ proposal at Moab meets all of the statutorily mandated 

selection criteria. Finally, while not decisional, half of Great Lake’s service at Moab is flown 

over a Page-Moab-Denver routing. Selecting SeaPort could also result in our having to pay 

more subsidy at Page.

Based on all of the above, the Department has decided to authorize the annual subsidies

requested by Great Lakes at both communities. In that regard, the Department fully expects 

that passenger traffic will continue to grow at both communities, and expects the 

communities and Great Lakes to continue to work together to ensure the sustainability of the

service.

The Department shall make this selection at both communities contingent upon the 

Department’s receiving properly executed certifications from Great Lakes Aviation, Ltd, 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 essential air service. 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 therefore conclude that the carrier remains fit to 

conduct the operations proposed here.

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

ACCORDINGLY,

 2 The carrier-selection criteria are not prerequisites; rather, they are used as guidelines when performing a 

comparative analysis in our decision making. In selecting a carrier to provide subsidized essential air service, 

49 U.S.C. 41733(c) (1) directs us to consider four 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; and 

(4) community views. In addition, the Consolidated Appropriations Act, 2008, Public Law 110-161, 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.
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1. We reselect Great Lakes Aviation, Ltd., to provide essential air service at Vernal and 

Moab, Utah, and establish the subsidy rates, as described in Appendix C, for the period from 

January 1, 2012, through December 31, 2013;

2. The Department directs 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 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 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 Vernal and 

Moab, Utah;

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

5. Docket Operations will serve copies of this Order on the parties listed in Appendix D.

By:

SUSAN L. 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.gov/
Appendix A
Appendix B

Page 1 of 2

Great Lakes Aviation, Ltd.

Provision of Essential Air Service at Moab, Utah

Calculation of Compensation Requirement
Appendix B

Page 2 of 2

Great Lakes Aviation, Ltd.

Provision of Essential Air Service at Vernal, Utah

Calculation of Compensation Requirement
Appendix C

Page 1 of 2

Great Lakes Aviation, Ltd.

Provision of Essential Air Service at Vernal and Moab, Utah

Summary of Service To Be Provided

Effective Period: January 1, 2012 through December 31, 2013.

Scheduled Service: Vernal: Twelve nonstop round trips each week to Denver

Moab: Twelve nonstop round trips each week to Denver

Intermediate stops and upline 

service: 

No service to any intermediate point is contemplated under the 

terms of the carrier’s proposal; accordingly, no such service may

be provided on subsidized flights without prior Department 

approval.

Points upline from Moab and/or Vernal may be served on one 

daily subsidized flight each weekday and each weekend.

Aircraft type: Beechcraft B-1900D (19 passenger seats).

Timing of flights: Flights must be well-timed and well-spaced in order to ensure full 

compensation.

Annual compensation: Vernal: $1,299,194

Moab: $1,816,486

This rate assumes an annual completion factor of 98 percent. A 

compensation ceiling is to be applied per calendar week such that 

service above that ceiling in one week cannot make up for service 

shortfalls in another week.

Subsidy Rate per Flight: Vernal: $1,0621

Moab: $1,4852

Weekly Compensation 

Ceiling:

Vernal: $25,4883

Moab: $35,6404

 1 $1,299,194 divided by 1,223 annual departures: 4 flights x 6 days x 52 weeks x .98 (completion factor) = 1,223.

2 $1,816,486 divided by 1,223 annual departures: 4 flights x 6 days x 52 weeks x .96 (completion factor) = 1,223.

3 24 flights per week multiplied by $1,062 per flight.

4 24 flights per week multiplied by $1,485 per flight
Appendix C

Page 2 of 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 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 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 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 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 are not currently available for performance under this Order beyond September 30, 2012. 

The Department’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.
Appendix D

SERVICE LIST

Grand County, Ruth Dillon

Grand County Airport, Kelly Braun

Great Lakes Aviation, Chuck Howell

Great Lakes Aviation, Michael Matthews

SeaPort Airlines, Timothy Sieber

Vernal Regional Airport, Kelly Harvey