Order: 2011
- 3
- 26 Served: March 18, 2011


### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Issued b y the Department of Transportation on the 18 th day

of March , 20 1 1 Essential Air Service at MUSCLE SHOALS, ALABAMA DOCKET DOT - OST - 2000 - 7856 under 49 U.S.C. 41731 et seq.



### ORDER SELECTING CARRIER Summary By this order, the Department is selecting Gulfstream International Airlines (Gulfstream) to provide essential air service (EAS) at Muscle Shoals, Alabama, for a two - year period beginning when it inaugurates full EAS , through the end of the 24 th month ther eafter for an annual subsidy

of $ 2,553,283
. 1 Background By Order 2008
- 10
- 17, October 16, 2008, the Department selected Mesaba Airlines, Inc., operating as Northwest Airlink (Mesaba) to co ntinue providing EAS at Muscle S hoals for the two
- ye ar period from February 1, 2009 through January 31, 2011. That order established an annual subsidy rate of $1,782,928, for service consisting of five nonstop and 14 one
- stop round trips per week to Memphis, with 34
- seat Saab 340 aircraft. By Order 2009
- 4
- 24, Apri l 28, 2009, the Department approved Mesaba’s request to alter Muscle Shoals’ service pattern from 19 nonstop and one
- stop round trips per week to Memphis to 14 nonstop round trips to Atlanta.
1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds.- 2
-

As the end of the contract was approaching, we issued Order 2010
- 10
- 13 , October 19, 2010 , request ing proposals to serve Muscle Shoals for a new term. In response, we received proposals from Charter Air Transport (Charter Air), Gulfstream, Multi
- Aero Inc., operating as Air Choice One (Air Choice One ) , and SeaPort A irlines (SeaPort)
. Each carrier’s complete proposal and community comments may

be accessed online at http://www.regulations.gov/ by entering Docket number DOT
- OST
- 2000
- 7856 in the search block
. Proposal of Air Choice One Air Choice One proposed two options, both providing four round trips a day (28 round trips a week) using 9
- seat Cessna Caravan aircraft
. Option 1 would serve Atlanta for an annual subsidy

of $2 ,996,542, and Option 2 would serve Memphis for an annual subsidy of $2,421,983. Proposal of Charter Air Charter Air proposed three service opti ons, all using 30
- seat EMB
- 120 Brasilia aircraft. Option 1 would provide Muscle Shoals tw o round trips each weekday and weekend (12 round trips a week) to Atlanta for an annual subsidy of $2,190,143. Option 2 would provide Muscle Shoals two round trips each weekday and weekend (12 round trips a week) to Memphis for an annual subsidy of $2,195,765. Option 3 would provide Muscle Shoals with two round trips each weekday and weekend (12 round trips a week) to Nashville for an annual subsidy of $2,166,494. Proposal of Gulfstream Gulfstream p roposed three nonstop round trips each weekday and weekend (18 round trips a week) to Memphis using 19
- seat Beechcraft 1900D aircraft for an annual subsidy of $2,954,313. Proposal of SeaPort SeaPort proposed two options, both using 9
- seat Pilatus PC
- 12 ai rcraft. Option 1 would provide two round trips each weekday and weekend (12 a week) to Memphis and three round trips each weekday and weekend (18 a week) to Atlanta for a total of 30 round trips a week for a first year annual subsidy of $2,842,911 , and a second year annual subsidy of $2,875,243. Option 2 would provide two round trips each week day and weekend (12 a week) to Nashville and three round trips each week day and weekend (18 a week) to Atlanta , for a total of 30 round trips each week for a first year subsidy of $3,331,237, and a second year subsidy of $3,375,256. Community Comments On December 22, 2010 , we requested community comments regarding this carrier
selection case, and in response we received four letter s , all supporting Gulfstream’s proposal. David H. Bradford, Mayor of Muscle Shoals, stated that while he was disappointed that Delta Air L ines (Delta) would no longer be servi ng the community he- 3
-

believed Gulfstream’s se rvice to Memphis offered the best vi able service, and he hopes that Gulfstream will be able to develop ticket and baggage agreements with Delta in the near future. Matthew Hea of the Northwest Alabama Regional Airport Authority and Stephen Holt of the Shoals Chamber of Commerce echoed Mayor Bradford’s support for Gulfstream and the hope that an agreement with Delta to provide seamless travel to Muscle Shoals passengers will be forthcoming. Decision The EAS program’s governing statute (see 49 U.S. C. 41732(b)) guarantees certain service minimums. When selecting a carrier to provide EAS, we must also take into consideration certain statutory

factors, such as service reliability, interline and baggage arrangements with a larger carrier to allow for s eamless connections beyond the hub, as well as community

views (49 U.S.C. 41733 (c)). In narrowing the field of options, Air Choice One, Charter Air , and SeaPort received no community

support. Moreover, Muscle Shoals is entitled to receive service with 15
- seat or larger aircraft, and the community did not waive its right to receive service with 15
- seat or larger aircraft , as is proposed by both Air Choice One and SeaPort. Charter Air does not have the requisite authority to provide its service as propo sed. 2 Gulfstream, on the other hand received unanimous support from the community , and it is providing reliable EAS elsewhere in the country
. We were concerned that Gulfstream’s proposed subsidy of $2,954,313 was high
. After subsequent discussion s with the EAS staff , the carrier agreed to reduce its requested subsidy to $2,553,283. W e expect Gulfstream and Muscle Shoals to work closel y together to increase ridership and, ultimately, to reduce the subsidy in the coming ye ars . We shall make this selection of Gulfstream at Muscle Shoals contingent upon the Department’s receiving properl y executed certifications from the carrier s that they are in compliance with the Department’s regulations regarding drug
- free workplaces and nondiscrimination, as w ell as the regulations concerning lobb yi ng 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
. Gulfstream is s ubj ect to the Department’s continuing fitness requirements, and no information has come to our attention that would cause us to questio n the carrier's fitness at this time. We have contacted the Federal Aviation Administration, and it has raised no concerns that would negativel y affect our fitness finding s . We therefore conclude that the carrier s remain fit to conduct the operations proposed here. This order is issued under authority delegated in 49 CFR 1.56a(f).

2 See Order 2011
- 1
- 16 for a complete discussion of Charter Air’s ability to provide EAS.- 4
-

AC CORDINGLY, 1. We select Gulf

stream International Airlines to provide essential air service at Muscle Shoals , Alabama an d establish annual subsidy rate of $2,553,283 , as described in Appendix C; 2. We direct Gulfstream International Airlines to retain all books, records, and other source and summary

documentation to support claims for pay ment, 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 ye ars 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 an y claim that is not supported under the terms of this order; 3 . We f i nd that Gulfstream International Airlines continue s to be fit, willing and able to operate as a commuter carrier , and capable of providing reliable essential air service at Muscle Shoals ; 4
. D ocket DOT
- OST
- 2000
- 7856 w ill remain open pending further Department action ; and 5 . We will serve copies of this order on the Mayor of Muscle Shoals and the Airport Director of Northwest Alabama Regional Airport, Multi
- Aero, Inc., Charter Air, Inc. , Gulfstream International Airli nes , and SeaPort Airlines
. B y:

SUSAN L. KURLAND Assistant Secretary for Aviation and International Affairs (SEAL) An electronic version of this document is ava ilable on the World W ide Web at http://www.regulations.govAppendix A 

## AREA MAPAppendix B



### `Appendix C Gulfstream International Airlines Essential Air Service to be Provided at Mus c l e Shoals, Alabama Effective Period : Two ye ars beginning when Gulfstream inaugurates full EAS through the end of the 24 th month thereafter Scheduled Service : 18 weekl y nonstop round trips between Muscle Shoals and Memphis Aircraft : 1 9
- seat Beechcraft 1900D Rate per Eligible Flight: $ 1,388 ; 1 Weekly Ceiling : $49,968 2 Note: The carrier understands that it may forfeit its compensation for any flights that it does not operate in conformance with the terms an d 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 destinat ion 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 carri er 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 duri ng 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 selec t 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 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 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 w riting by the Department and the carrier do not constitute a total or partial reduction or cessation of payment. Funds are not currently available for performance under this order beyond March 17 , 2011
. The Department’s obligation for performance under this order beyond Marc h 17 , 2011 , 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 March 17 , 2011 , until funds ar e made available to the Department for performance. If funds are not made available for perf ormance beyond March 17 , 2011 , the Department will provide notice in w riting to the carrier. Subsidy contracts are subject to, and incorporate by reference, rele vant 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. All claims for payment must be submitted within 60 day s of the last day of service provided under this order.

1 Annual compensation of $2,553,283 divided by 1,840 annual departures (6 flights a day x 313 days x 98 percent completion). 2 36 arrivals and departures per week multiplied by $1,388 per flight.