Order 2015-3-6

Served: March 13, 2015

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 13th day of March, 2015

DOT-OST-1996-1899

FINAL ORDER TERMINATING ELIGIBILITY AND 

ALLOWING SUSPENSION OF SERVICE

Summary

By this Order, the Department is terminating the eligibility of Kingman, Arizona, under the 

Essential Air Service (EAS) program and allowing Great Lakes Aviation, Ltd. (Great Lakes), to 

suspend service at Kingman, if it chooses.

Background

By Order 2013-6-1 (June 3, 2013), the Department re-selected Great Lakes to provide EAS at 

Kingman, with 12 weekly nonstop round trips to Los Angeles or Phoenix for the two-year period 

from May 1, 2013, through April 30, 2015, for an annual subsidy of $1,635,180.

The complete public file for EAS at Kingman may be accessed online through the Federal

Dockets Management System at: http://www.regulations.gov by entering “DOT-OST-1996-

1899” in the “SEARCH for: Rules, Comments, Adjudications or Supporting Documents:” field. 

Additionally, historical traffic and monthly subsidy actually paid are detailed in Appendix A.

Legislative Changes

The Federal Aviation Administration (FAA) Modernization and Reform Act of 2012

(Public Law 112-95), signed into law on February 14, 2012, amended the definition of “eligible

place” for the purpose of receiving EAS.

1 The amendment, among other things, states that to be

 1 See 49 U.S.C. § 41731.

Essential Air Service at

KINGMAN, ARIZONA

under 49 U.S.C. 41731 et seq.
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eligible, a community must have had an average subsidy per passenger of less than $1,000 

during the most recent fiscal year, beginning with fiscal year 2013, as determined by the 

Secretary of Transportation.

2

Order to Show Cause

By Order 2014-11-17 (November 25, 2014), the Department tentatively determined to terminate

the eligibility of Kingman but allowed for objections to the Department’s tentative 

decision. The Department’s tentative decision was based on the statutory requirement that

the average subsidy per passenger must be less than $1,000 during the most recent fiscal year 

per 49 U.S.C. § 41731(a)(1)(C).

For the most recent Fiscal Year (2014), Great Lakes transported 1,059 total passengers at an 

annual subsidy rate of $1,635,180. Thus, the corresponding average per passenger subsidy for 

FY 2014 was $1,544.07. Order 2014-11-17 directed all interested parties to show cause within 

20 days (December 15, 2014), as to why the Department should not make final its tentative

findings and conclusions.

Objections to the Department’s Show Cause Order

The Department received two similar letters objecting to its tentative decision to terminate

EAS at Kingman, one from Richard E. Anderson, Mayor of Kingman, and one from Mr. David 

French, Executive Director of Kingman Airport Authority, Inc.

The objectors point to the FAA mandate that all copilots must have a minimum of 1500 hours of 

total time holding an Air Transport Pilot (ATP) certificate, and, as a result, Great Lakes has lost 

many copilots due to having fewer than 1500 hours. Furthermore, Great Lakes’ captains have 

left the carrier to jobs at larger, legacy airlines, which resulted in the carrier cancelling a 

significant number of its flights due to lack of crew availability. Additionally, the objectors

stated that “[p]assenger confidence in local airline service will not be achieved when 25% of 

the flights are cancelled due to federal mandates.” They also stated that the Department had 

just a few months ago granted a waiver from the 10-enplanement per day standard 

throughout all of Fiscal Year 2015 and that to now terminate Kingman is a form of “double 

jeopardy.”3

 Finally, they state that is not possible for the community to take corrective 

action when the EAS carrier’s service is unreliable.

Decision

There are a number of statutory eligibility standards that communities must meet in order to 

remain in the EAS program. The two that are most relevant for Kingman are the 10-

enplanement minimum and the $1,000 subsidy-per-passenger cap. These are separate 

requirements that rely on different standards. Kingman must satisfy both standards 

independently, to remain an eligible community. Kingman did receive a waiver from the 10-

enplanement standard, and service continued. However, subsidy per passenger levels at 

Kingman are over the $1,000 cap and, unlike the 10-enplanement standard, there is no statutory

provision for a waiver from the $1,000 cap.

 2 Communitiesin Alaska and Hawaii are exempt.

3 See Order 2014-9-21 (September 26, 2014), that addressed the 10-enplanement per service day requirement, which 

is a separate requirement from the $1,000 per passenger subsidy limit.
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At the time that Kingman was granted a waiver from the 10-enplanement standard, the 

Department stated its intention to address Kingman’s compliance with the $1,000 subsidy cap in 

a future Order. Subsequent to that Order, data became available for Fiscal Year 2014 traffic at 

Kingman, which include revenue passenger enplanements and deplanements, and Kingman’s 

subsidy per passenger averaged $1,544 per person. Based on this information, and in accordance 

with the requirements of 49 U.S.C. 41731(a)(1)(C), the Department tentatively determined that 

Kingman was not compliant with the $1,000 subsidy cap, and proposed to terminate Kingman’s 

EAS eligibility. An Order to Show Cause was issued on November 25, 2014, giving the 

opportunity for interested persons to object, and, as noted above, the Department received two 

objections.

The community has raised two issues currently affecting Kingman’s eligibility to receive 

subsidized EAS. First, the community noted that it received a waiver from the 10-enplanement 

requirement for Fiscal Year 2015. The Department fully acknowledges that it granted Kingman 

a waiver from the 10 enplanement standard; however, that in no way immunizes the community 

from the requirement to comply with $1,000 subsidy per passenger limit.

4

 Second, the objectors 

indicated that enplanements declined due to flight cancellations.

To address the objectors’ statement that 25 percent of flights were cancelled, the Department 

examined data showing scheduled vs. completed flights for the period in question, and Great 

Lakes’ completion factor at Kingman was 74.2 percent. See Appendix B for full data on Great 

Lakes’ completion factor for Fiscal Year 2014. Given the low completion factor, the 

Department examined the subsidy actually paid to see if the subsidy per passenger was lower 

than described in the Order tentatively terminating Kingman’s eligibility to receive subsidized 

EAS. The actual subsidy paid for flights to and from Kingman for the 12-month period at issue 

was $1,310,260. With 1,059 total passengers carried, the actual subsidy per passenger was 

$1,237.26, still well above the statutory limit of $1,000 per passenger. See Appendix A. 

The objecting parties did not dispute the Department’s tentative determination that the

community’s average per passenger subsidy for FY 2014 was above the $1,000 limit. As

stated above, Public Law 112-95 amended the definition of “eligible place” to include the

requirement that during the most recent fiscal year, a community must have had an average

subsidy per passenger of less than $1,000. 

Thus, the Department hereby finalizes its tentative findings in Order 2014-11-17, that 

Kingman’s subsidy per passenger exceeded $1,000 during Fiscal Year 2014, and allows Great 

Lakes to terminate service. In order to allow for an orderly shutdown, the Department will

continue to authorize subsidy through April 30, 2015, the end of Great Lakes’ current 

contract, and permit Great Lakes to suspend service at that time. If Great Lakes decides to

suspend service at the community, the Department expects it to contact all passengers who

hold reservations for flights that will be suspended to inform them of the suspension, and to 

assist them in arranging alternative transportation or provide them with a refund of their ticket

price, without penalty, if requested.

 4 See Order 2014-9-21 (September 26, 2014) notifying Kingman that “[t]he waiver granted by this Order does not 

insulate Kingman...from the $1,000 requirement...”
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This Order is issued under authority delegated in 49 CFR Part 1.25a(b).

ACCORDINGLY,

1. The Department terminates the eligibility of Kingman, Arizona, under the Essential Air 

Service program, effective April 30, 2015;

2. The Department will continue to authorize subsidy for Great Lakes Aviation, Ltd. for the

provision of EAS at Kingman, Arizona, as described in Appendix C of Order 2013-6-1, through 

April 30, 2015;

3. The Department will allow Great Lakes Aviation, Ltd., to suspend service at Kingman, 

Arizona, after April 30, 2015, if it chooses; 

4. The Department will not entertain petitions for reconsideration of this Order, as the 

opportunity was provided for the filing of objections to the Order to Show Cause proposing 

termination of Kingman’s EAS eligibility (Order 2014-11-17);

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

5. The Department will serve copies of this Order on the mayor of Kingman, Arizona, the 

Executive Director of Kingman Airport Authority, Inc., and Great Lakes Aviation, Ltd.

By:

BRANDON M. BELFORD

Deputy Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available at: http://www.regulations.gov/
Appendix A

Claims Payment Data for Kingman, AZ5

Month Subsidy Per Flt. No. of Flts. Submitted 

for Payment Subsidy Paid

Oct-13 $1,337 90 $120,330

Nov-13 $1,337 52 $69,524

Dec-13 $1,337 50 $66,850

Jan-14 $1,337 64 $85,568

Feb-14 $1,337 82 $109,634

Mar-14 $1,337 66 $88,242

Apr-14 $1,337 74 $98,938

May-14 $1,337 102 $136,374

Jun-14 $1,337 104 $139,048

Jul-14 $1,337 103 $137,711

Aug-14 $1,337 103 $137,711

Sep-14 $1,337 90 $120,330

980 $1,310,260

Total Passengers and Actual Subsidy Paid Per Passenger at Kingman, AZ 6

Month No. of 

passengers

Oct-13 184

Nov-13 101

Dec-13 147

Jan-14 121

Feb-14 71

Mar-14 66

Apr-14 62

May-14 76

Jun-14 76

Jul-14 56

Aug-14 56

Sep-14 43

Total 1,059

Actual Subsidy Paid $1,310,260

Actual Subsidy Per Passenger $1,237.26

 5 From Aviation Decisions Data System (ADDS), the Department’s claims payment system.

6 Source: Bureau of Transportation Statistics: T-100
Appendix B

Completion Factor at Kingman, AZ

year month uniquecarrier Flights Sched Flights Performed % Difference

2013 10 Great Lakes 170 144 84.7%

2013 11 Great Lakes 102 50 49.0%

2013 12 Great Lakes 106 50 47.2%

2014 1 Great Lakes 106 64 60.4%

2014 2 Great Lakes 112 82 73.2%

2014 3 Great Lakes 120 66 55.0%

2014 4 Great Lakes 120 74 61.7%

2014 5 Great Lakes 124 114 91.9%

2014 6 Great Lakes 120 118 98.3%

2014 7 Great Lakes 124 104 83.9%

2014 8 Great Lakes 124 112 90.3%

2014 9 Great Lakes 120 96 80.0%

1448 1074 74.2%