Or der: 20 1 2

- 6

- 10

Served : June 18 , 201 2



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 18 th of June , 201 2

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 s electing Silver Airways (“Silver”) to provide E ssential A ir

S ervice ( “ 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 24 th month

thereafter

. 1

Background By Order 20 11

- 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, 20 11 , through April 30, 201 3 , at an annual subsidy rate of $ 2

, 180 ,46 1 . Under that Order , Colgan p rovide d 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 2 2, 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

, f or 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 be ing selected to provide EAS at five communities in Alabama, Missi ssippi, 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 c omplete proposal may be

ac cessed 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.” C iting C olgan’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 extend ing its code share with Silver to support its Dulles expansion, which United has done. Additionally, Silver’s proposal was contingent upon bein g 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 24 th month thereafter, providing the community with 1 8 nonstop round trips a week to Dulles with Saab 340 aircraft

.

We shall make th i s 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 sub j ect tothe 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 f itness finding. We therefore conclude that the carrier remain s 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 carr ier may forfeit its compensation for any claim that is not supported under the terms of this O rder ;

4 . We find that Silver Airways c ontinue s 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 M ayor 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 th is document is available at http://www.regulations.govA ppendix A



## AREA MAP

This map is provided by Sabre ® AirVision TM 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 $3,394,629Appendix 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 24 th month thereafter

Scheduled Service : 1 8 weekly round trips t o Washington Dulles International Airport Intermediate stops and upline service : S ervice m ust be nonstop to/from Dulles, but upline service to Beckley, West Virginia, is permitted

Aircraft : Saab 340B+ (34 seats ) Rate per Eligible Flight: $ 1, 850 1 Weekly Ceilin g : $ 66,600 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 elemen ts 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 b een 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 jeop ardize 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

safel y 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 complete ly , 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 reg ard 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.

Su bsidy 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 forego ing paragraph.

Funds are not currently available for performance under this Order beyond September 30, 2012

. The Governmen t’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.