### Den -OST"I'1'1"l'- !>e:..1 

## 2P04-.. l'\'t\("**11~5"**

## ..**~l** 

### Swanson, Brian (OST) From: Sent: To:
Cc: Subject:
All: Swanson, Brian (OST) Friday, June 04, 2010 11:43 AM 'elyjetcenter@yahoo.com'; 'Mario Cifuentez'; 'molmos@ci.visalia.ca.us'; 'ssalomon@ci.visalia.ca.us'; 'diazg@cityofmerced.org'; 'Elliott, Ron'; 'cahillb@cityofmerced.org' 'Chuck Howell'; 'Iaura@mccallaviation.com'; Devany, Dennis (OST) Soliciting Comments on EAS bids at MCE, VIS and ELY
- Due July8, 2010

I would like to update you on the Essential Air Service (EAS) situation at Merced and Visalia, California, amj-Ely, Nevada. andgive you an opportunity to submitcomments ifyou wish.

- , In anticipation ofthe endofGreatLakes' currentcontract on September 30, 20I0, the Department issued Order 20I0-5-4 on May 4,2010, to solicit proposals from all interested aircarriers to provide EAS at Merced, Visalia, and/orEly, for a new two-year term. In response to that order, we received proposals from two carriers. GreatLakes submitted a proposal with a single option at each community. McCall Aviation Inc.'s (McCall) proposal containedthree different service options for service at Ely only. Copies ofthe proposals may also be accessed online through the Federal DocketManagement System at: http://www.regulations.gov, by doing a search on by doing a search on Dockets DOT-OST-1998-3521 (Merced), DOTOST-2004-19916 

### (\lerrrql), orDOT-OST-1995-361 (Ely). Foryourconvenience, each carrier's proposal is briefly summarized

### below.~lS..tra... Before summarizing each carrier's proposal, we would like to note that all three ofthe communities' EAS definitions call for service with two-pilot, twin-engine aircraft with at least 15- seats by virtue ofthe fact that they generated more than I I enplanements per day in at least one calendaryear from 1976-1986. Second, we are prohibitedfrom paying subsidy for EAS at any community where the per-passengerrate exceeds $200, unless the community is greaterthan 210highway miles from the nearest large ormedium hub. In this case, Merced and Visalia are fewer than 210 highway miles from a large ormedium hub and, therefore, are subjectto the $200 subsidy-per-passengerceiling. We noted in the Request for Proposalsthat passenger levels at both Merced and Visalia are very low. Both communities are well overthe $200 per passengercap, so the communities might want to address that issue. Ely, on the otherhand, is farther than 210 miles from the nearest large ormedium hub and, thus, is exempt from the $200 per passengercap.

1Great Lakes would utilize 19-passengerBeech 1900D aircraft and its code-share agreements where applicable, and the proposal for each community is on a stand-alone basis (i.e., it is not a three-city all or nothing proposal). 

### Hub(s) Served/ Daily Annual Community Service Pattern Round Subsidy Trips Requirement Nonstop to Las Vegas orone-stop to Denver; Merced no upline restrictions on one round trip; 2 $1,961,174 upline service routing would be one-stop to Ontario, (14 weekly) Los Angeles orOrange County Nonstopto Ontario, Los Angeles or Orange County; Visalia no upline restrictions on one round trip; upline 2 $1,746,507 service routing would be one-stop to Denver orLas (14 weekly) Vegas No upline restrictions; I Ely Service routing wouldbe nonstop to Las Vegas or (6 weekly) $1,752,067 one-stop to Denver As summarized below, McCall submitted a proposal with three different options, all for nonstop service between Ely and SaltLake City, utilizing 8-seat aircraft. 

### Service Weekly Annual Aircraft Type Subsidy Option 

### # Round trips Required 1 7 Piper PA31-350 $1,081,360 Navajo Chieftain 2 7 Beech-20O $1,756,822 3 12 Piper PA31-350 $1,602,627 Navajo Chieftain While McCall'sproposal does not meet the IS-seatrequirement, the carriernotes that based on the historical passenger traffic it is difficult tojustify larger aircraft. Please note that the average passengerfares shown in each proposal 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 Ely

- SaltLake City portion ofa Ely- SaltLake City

- Chicago ticket) that the subsidized carrier would realize. Also, the fare shown is net of certain charges such as Federal transportation security fees, excise or ticket taxes, andPassengerFacility Charges. Of course, carriers have the discretion to charge fares they deem appropriate, and the passengerfares presented in their proposals have been developed for subsidy rate computation purposes only. Basedon the cost elements incorporated in the carriers' computation summaries, the carriers would have to realize passengerfares comparable to the averages shown in their proposals in orderto achieve break-even orprofitable operations without subsidy.

2You should also note that the carriers' schedules may change to reflect changing conditions (e.g
.. to better meet shifting connectingbank times at the hub). The DepaJiment does expect subsidized air calTiers to maintain well-timed and wellspaced 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 July 8, 2010. Please send your comments by fax to 202-366-7638 orby email to both dennis.devany@dot.gov and brian.s'vvanson@dot.gov. Ourrules require that you send your comments to both applicants as well. Ifyou have any questions, orneed more time to reply, please feel free to contact Brian Swanson ofmy staffat 202-366-5392.
Sincerely,

Dennis

### J. DeVany Chief, Essential Air Service Division, X-53 Office ofAviation Analysis

3