Order: 2011-3-26

Served: March 18, 2011

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 18th day of March, 2011

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 24th month thereafter 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 continue providing EAS at Muscle Shoals for 

the two-year 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, April 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.
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As the end of the contract was approaching, we issued Order 2010-10-13,

October 19, 2010, requesting 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 Airlines 

(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 options, all using 30-seat EMB-120 Brasilia aircraft. 

Option 1 would provide Muscle Shoals two 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 proposed 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 aircraft. 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 weekday and weekend (12 a 

week) to Nashville and three round trips each weekday 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 carrierselection case, and in response we received four letters, all supporting Gulfstream’s 

proposal. David H. Bradford, Mayor of Muscle Shoals, stated that while he was 

disappointed that Delta Air Lines (Delta) would no longer be serving the community he 
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believed Gulfstream’s service to Memphis offered the best viable 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 seamless 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 proposed.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 discussions with the EAS staff, the carrier agreed 

to reduce its requested subsidy to $2,553,283. We expect Gulfstream and Muscle Shoals to 

work closely together to increase ridership and, ultimately, to reduce the subsidy in the 

coming years. 

We shall make this selection of Gulfstream at Muscle Shoals contingent upon the 

Department’s receiving properly executed certifications from the carriers that they are 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) 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

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 findings. We therefore conclude that the carriers 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.
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ACCORDINGLY,

1. We select Gulfstream International Airlines to provide essential air service at Muscle 

Shoals, Alabama and 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 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 Gulfstream International Airlines continues to be fit, willing and able to 

operate as a commuter carrier, and capable of providing reliable essential air service at 

Muscle Shoals;

4. Docket DOT-OST-2000-7856 will 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 Airlines, and SeaPort Airlines.

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

AREA MAP

 
Appendix B

`
 Appendix C

Gulfstream International Airlines

Essential Air Service to be Provided at Muscle Shoals, Alabama

Effective Period: Two years beginning when Gulfstream inaugurates full EAS through the end of 

the 24th month thereafter

Scheduled Service: 18 weekly nonstop round trips between Muscle Shoals and Memphis

Aircraft: 19-seat Beechcraft 1900D

Rate per Eligible Flight: $1,388;

1

Weekly Ceiling: $49,9682

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 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 March 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 are made available to the 

Department for performance. If funds are not made available for performance beyond March 17, 2011, the 

Department will provide notice in writing to the carrier.

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.

All claims for payment must be submitted within 60 days 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.