### Faulk. Scott (OST)

From: Sent:. To: Subject: Attachments:

DearAll: Faulk, Scott (OST) Tuesday, July 16, 2013 1:42 PM Alke, Debbie (dalke@mt.gov) Update on the Essential Air Service at Montana 

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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 onthe Essential Air Service (EAS) situationin Montanaand give you an opportunity to submit any comments ifyou wish. As the contract with Silver Airways, Inc. expired on May 31,2013, the Department issued Order 2013-6-13, onJune 12,2013, which, among other things, solicited proposals from air carriers interested in providing EAS at Glasgow, Glendive, Havre, Sidney, and/or WolfPoint, Montana, for a newcontract, with orwithout subsidy. Those proposals were due no laterthanJuly 15,2013.
In response to that Order, Cape Air, Inc. ("Cape Air") and Great Lakes Aviation, Ltd. ("Great Lakes") submittedproposalsto provide subsidized scheduledpassenger air service. Cape Air, which has interline ticketing and baggage agreements with all ofthe legacy air carriers and Frontier, proposed two options. Cape Air's proposal requires the selection ofno 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 ninepassenger seats. Cape Air's Option A, summarized in the table below, proposes three daily non-stop round trips from Havre, Glasgow, WolfPoint, and Glendive to Billings, and five daily non-stop round trips from Sidney to Billings, withan annual combin d b 'd · t f$14 112 169 e su s1 yreqmremen o 

### ' ' 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 WolfPoint $2,730,467 3 Cape Air's Option B, summarized in the table below, proposes two daily non-stop round trips from Havre, Glasgow, WolfPoint, and Glendive to Billings, and four daily non-stop round trips from Sidney to Billings, with an annual combined subsidyrequirement 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 WolfPoint $2,145,326 2

1Great 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 Sidneyto Denver International Airport utilizing 19-seat Beech 1900-D aircraft,[IJ for a combined annual subsidy of$4,484,573. The level ofservice, and subsidyrequired, at each community is provided in the· table below. EAS Community Subsidy DailyRoundtrips Glendive $1,904,876 2

Sidney $2,579,697 3
We have directed the air carriers to serve its proposal on you; in addition, copiesofthe 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"inthe "EnterKeyword orID" 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 ofthe total ticket price (e.g., the Glasgow- Billings- Washington, D.C. tiCket) thatthe subsidized aircarrierwould realize. Also, the fare shown is net ofcertain charges such as Federal transportation security fees, excise or tickettaxes, and Passenger Facility Charges. Of course, air carriers have the discretion to charge fares they deem appropriate, and thepassenger fares presented intheproposal have beendevelopedfor subsidy rate computation purposes only. Based onthe costelements incorporated inthe air carrier's computation summary, the aircarrier would have to realize passenger fares comparable to the average shown in their proposals in orderto achieve break-even orprofitable 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 inorderto ensure full compensation.
We request that you submit any comments you may have as soon as possible, but in any case nolater than August 9, 2013. We will carefully consider your commentsbefore we submit a recommendation to the Assistant Secretary for a decision. Ifyou have any questions, or ifyou find that you need additional time to draft yourcomments,please letmeknow.
Please send your comments to me at the following email address: EAS@dot.gov orby fax to 202-366-7838. If you have any questions, please feel free to contact Scott Faulk ofmy staffat scott.faulk@dot.gov or 202-366- 9967. Sincerely,

Dennis 

### J. DeVany Chief, Essential Air ServiceDivision, X-53 Office ofAviationAnalysis

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.

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