Faulk. Scott (OST) 

From: 

Sent:. 

To: 

Subject: 

Attachments: 

Dear All: 

Faulk, Scott (OST) 

Tuesday, July 16, 2013 1:42 PM 

Alke, Debbie (dalke@mt.gov) 

Update on the Essential Air Service at Montana 

l}r· , ...... 'T ,. , • i . '·· .f.. -~-~ n~- \ 

·.· ~P!lTCb-'!(\\ 1 

Cape Air- Montana EAS proposai15JUL13.pdf; Great Lakes Montana EAS GDV-SDY Bid 

as of 07-15-13 final (2).pdf 

I would like to update you on the Essential Air Service (EAS) situation in Montana and give you an opportunity 

to submit any comments if you wish. As the contract with Silver Airways, Inc. expired on May 31,2013, the 

Department issued Order 2013-6-13, on June 12,2013, which, among other things, solicited proposals from air 

carriers interested in providing EAS at Glasgow, Glendive, Havre, Sidney, and/or Wolf Point, Montana, for a 

new contract, with or without subsidy. Those proposals were due no later than July 15,2013. 

In response to that Order, Cape Air, Inc. ("Cape Air") and Great Lakes Aviation, Ltd. ("Great Lakes") 

submitted proposals to provide subsidized scheduled passenger air service. 

Cape Air, which has interline ticketing and baggage agreements with all of the legacy air carriers and Frontier, 

proposed two options. Cape Air's proposal requires the selection of no fewer than three communities in order 

for the air carrier to assume the EAS contract. Cape Air proposes to provide nonstop service between each of 

the five communities and Billings Logan International Airport utilizing Cessna 402 aircraft configured with 

nine passenger seats. 

Cape Air's Option A, summarized in the table below, proposes three daily non-stop round trips from Havre, 

Glasgow, Wolf Point, and Glendive to Billings, and five daily non-stop round trips from Sidney to Billings, 

with an annual combin e d b su s1 'd y reqmremen · t o f$14 112 169 ' ' EAS Community Subsidy Daily Round Trips 

Glasgow $2,590,286 3 

Glendive $2,440,124 3 

Havre $2,573,713 3 

Sidney $3,777,579 5 

Wolf Point $2,730,467 3 

Cape Air's Option B, summarized in the table below, proposes two daily non-stop round trips from Havre, 

Glasgow, Wolf Point, and Glendive to Billings, and four daily non-stop round trips from Sidney to Billings, 

with an annual combined subsidy requirement of$11,552,393. 

EAS Community Subsidy Dai!y Round Trips 

Glasgow $2,046,800 2 

Glendive $1,944,467 2 

Havre $2,036,254 2 

Sidney $3,379,546 4 

Wolf Point $2,145,326 2 

1 
Great Lakes, which has code-share agreements with United Airlines and Frontier Airlines, as well as interline· 

ticketing and baggage agreements with American Airlines, Delta Air Lines, Frontier Airlines, United Airlines, 

and US Airways, submitted a proposal on a stand-alone basis. That proposal offers one-stop service from 

Glendive and Sidney to Denver International Airport utilizing 19-seat Beech 1900-D aircraft, [IJ for a combined 

annual subsidy of $4,484,573. The level of service, and subsidy required, at each community is provided in the· 

table below. 

EAS Community Subsidy Daily Round trips 

Glendive $1,904,876 2 

Sidney $2,579,697 3 

We have directed the air carriers to serve its proposal on you; in addition, copies of the proposal are attached to 

this email and may also be accessed online through the Department's Dockets Management System at: 

http://www.regulations.gov/ by entering "DOT-OST-1997-2605" in the "Enter Keyword or ID" field. 

· Please note that the average passenger fare shown in the proposals do not necessarily reflect the average local 

fare passengers would actually pay, but rather, reflect a prorated portion of the total ticket price (e.g., the 

Glasgow- Billings- Washington, D.C. tiCket) that the subsidized air carrier would realize. 

Also, the fare shown is net of certain charges such as Federal transportation security fees, excise or ticket taxes, 

and Passenger Facility Charges. Of course, air carriers have the discretion to charge fares they deem 

appropriate, and the passenger fares presented in the proposal have been developed for subsidy rate computation 

purposes only. Based on the cost elements incorporated in the air carrier's computation summary, the air carrier 

would have to realize passenger fares comparable to the average shown in their proposals in order to achieve 

break-even or profitable operations without subsidy. 

You should also note that the schedules that the air carrier has submitted are illustrative only, and that the air 

carrier may make schedule changes to reflect changing conditions, e.g., to better meet shifting connecting bank 

times at the hub airport. The Department expects subsidized air carriers to maintain well-timed and well-spaced 

flights in order to ensure full compensation. 

We request that you submit any comments you may have as soon as possible, but in any case no later than 

August 9, 2013. We will carefully consider your comments before we submit a recommendation to the 

Assistant Secretary for a decision. If you have any questions, or if you find that you need additional time to 

draft your comments, please let me know. 

Please send your comments to me at the following email address: EAS@dot.gov or by fax to 202-366-7838. If 

you have any questions, please feel free to contact Scott Faulk of my staff at scott.faulk@dot.gov or 202-366-

9967. 

Sincerely, 

Dennis J. DeVany 

Chief, Essential Air Service Division, X-53 

Office of Aviation Analysis 

2 
[ll Great Lakes reserves the right to use 30-seat Embraer 120 Brasilias at the air carrier's discretion subject to seat utilizati.on. 

3