Order: 2012-6-10

 Served: June 18, 2012

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 18th of June, 2012

Essential Air Service at

STAUNTON, VIRGINIA

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

 Docket DOT-OST-2002-11378

ORDER SELECTING CARRIER

Summary

By this Order, the Department is selecting Silver Airways (“Silver”) to provide Essential Air 

Service (“EAS”) at Staunton, Virginia, for an annual subsidy of $3,394,629, for a two-year 

period beginning when the carrier inaugurates service through the end of the 24th month 

thereafter.1

Background

By Order 2011-3-2, March 1, 2011, the Department selected Colgan Air, Inc. (“Colgan”) to 

provide EAS with subsidy support at Staunton for two years, from May 1, 2011, through 

April 30, 2013, at an annual subsidy rate of $2,180,461. Under that Order, Colgan provided the 

community with 18 nonstop round trips each week to Washington Dulles International Airport 

(Dulles) using 34-passenger Saab 340 aircraft. While all Staunton-Dulles service is nonstop, 

some flights also serve an upline community, Beckley, West Virginia.

On March 8, 2012, Colgan, through its parent company Pinnacle Airlines Corp. (“Pinnacle”) 

filed notice of its intent to terminate its currently subsidized service at seven communities, 

including Staunton, effective June 8, 2012. By Order 2012-3-14, March 23, 2012, the 

Department prohibited Colgan from terminating its service at Staunton and requested proposals 

from carriers interested in providing replacement service, with or without subsidy. Proposals 

were due April 25, 2012. On April 22, 2012, Silver requested an extension to submit proposals 

to serve Staunton to May 9, 2012. The Department contacted the community and the community

 1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds.
expressed no objection to Silver’s request; thus, we granted Silver’s request for extension until 

May 9, 2012.

Proposal of Silver

Silver was the only carrier to submit a proposal. Under its proposal, Silver proposes to continue 

the three-round-trip-a-day service pattern from Staunton to Dulles that Colgan has been 

providing, for an annual subsidy of $3,394,629. Service would be operated with 34-seat Saab 

340 aircraft. The service is contingent upon United Airlines’ extending its existing codeshare 

with Silver to Staunton and several other communities where it has been selected to provide EAS 

to Dulles. This proposal is also contingent upon Silver’s being selected to provide EAS at five

communities in Alabama, Mississippi, and West Virginia, so that Silver would be able to access 

its primary maintenance base. Although 18 weekly nonstop round trips are proposed, some of 

those operations also serve Beckley using the same aircraft. Silver’s complete proposal may be 

accessed online at http://www.regulations.gov/ by entering “DOT-OST-2002-11378” in the 

“Search” field.

Community Comments

In a May 10 letter, the Chairman of the Shenandoah Valley Regional Airport Commission and 

the Mayor of Staunton strongly endorse Silver’s proposal. The community noted the increase in 

enplanements it has experienced since Colgan introduced the United Express product and the 34-

passenger Saab 340 aircraft in early 2008, stating that passenger traffic has grown 157% and 

“continues to post increases.” Citing Colgan’s code-share arrangement with United and access 

to its Dulles hub, the community stated it was “imperative that commensurate, uninterrupted 

service continue to be provided,” and Silver would provide that continuity.

Decision

The decision is straightforward. Silver was the only carrier to propose service at Staunton. 

Although Silver’s proposal requires an increase in subsidy over Colgan’s current rate, we find 

that both the service and subsidy levels are reasonable, and Staunton officials affirmatively 

support Silver’s proposal. Silver’s proposal was contingent upon United extending its code share 

with Silver to support its Dulles expansion, which United has done. Additionally, Silver’s 

proposal was contingent upon being selected at Muscle Shoals, Alabama, Greenville, 

Laurel/Hattiesburg, and Tupelo, Mississippi, and Greenbrier/White Sulphur Springs 

(Lewisburg), West Virginia, which it was, through Order 2012-5-17, May 22, 2012. Therefore, 

we will select Silver for a two-year period beginning when the carrier inaugurates service 

through the end of the 24th month thereafter, providing the community with 18 nonstop round 

trips a week to Dulles with Saab 340 aircraft. 

We shall make this selection at Staunton contingent upon the Department’s receiving properly 

executed certifications from Silver that the carrier is in compliance with the Department’s 

regulations regarding drug-free workplaces and nondiscrimination, as well as the regulations 

concerning lobbying activities.

Carrier Fitness

49 U.S.C. 41737(b) and 41738 require that we find an air carrier fit, willing, and able to provide 

reliable service before we may subsidize it to provide Essential Air Service. Silver 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,

1. We select Silver Airways to provide Essential Air Service at Staunton, Virginia;

2. We set the final rate of compensation for Silver Airways for the provision of Essential Air 

Service at Staunton, Virginia, as described in Appendix C;

3. We direct Silver Airways, 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 from when the carrier begins EAS 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;

4. We find that Silver Airways continues to be fit, willing and able to operate as a certificated 

carrier and capable of providing reliable Essential Air Service at Staunton, Virginia; and

5. We will serve copies of this Order on the Mayor of Staunton, the Chairman of the 

Shenandoah Valley Regional Airport Commission, the Executive Director of Shenandoah Valley 

Regional Airport, Silver Airways, Colgan Air, Inc., and Pinnacle Airlines Corp.

By:

SUSAN L. KURLAND

Assistant Secretary

for Aviation and International Affairs

(SEAL)

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

 

AREA MAP

This map is provided by Sabre® AirVisionTM Profit Essentials and is being used with express permission of the copyright holder, 

Sabre Airline Solutions®.
Appendix B

Silver Airways

Proposal to serve Staunton

Service Option 1 Compensation Summary

Stats & Assumptions IAD-SHD

Assumed Comp % 98%

Aircraft Type SF3

Departures 1,840

Block Hours 1,637 

Enplaned Passengers 24,250 

Load Factor 39%

Avg Fare $58.48 

A/C Miles 167,480

RPMs (000) 2,207

ASMs (000) 5,694 

Pax Revenue $1,418,140

Oper. Expenses 

Fuel $976,147

Crew $570,144

Maintenance $1,107,771

Station Turns $754,985

Distribution $287,575

A/C Ownership $495,614

Promotion $12,000

Fixed Overhead $362,111

Total $4,583,589

Operating Loss $3,165,449

5% Profit Margin on Cost $229,179

EAS Subsidy Required $3,394,629
Appendix C

 

Silver Airways

Essential Air Service to be Provided at Staunton, Virginia

Effective Period: Two years beginning when the carrier inaugurates service through the end of 

the 24th month thereafter

Scheduled Service: 18 weekly round trips to Washington Dulles International Airport

Intermediate stops and upline service: Service must be nonstop to/from Dulles, but upline service 

to Beckley, West Virginia, is permitted

Aircraft: Saab 340B+ (34 seats)

Rate per Eligible Flight: $1,8501

Weekly Ceiling: $66,6002

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 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 $3,394,629, divided by 1,835 annual departures (36 flights per week x 52 weeks x 98 

percent completion. 2 36 flights per week multiplied by $1,850 per flight.