Order 2010

- 11

- 6 Served: November 8 , 2010



### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on the 5 th day of November, 2010

ORDER REQUESTING PROPOSALS

Summary By this order, the Department is soliciting proposals from air carriers interested in providing essential air service (EAS) at any or all of the seven communities identified above, for a new two

- year period, beginning May 1, 2011 , with or without subsidy. (See Appendix A for a service area map.) Carriers should file their proposals no later than December 9

, 2010

. Background By Order 200 7

- 12

- 22

, December 21

, 200 7

, the Department selected Great Lakes Aviation, Ltd., Inc. (Great Lakes), operating as both a United Airlines and Frontier A irlines code

- share partner

, to provide subsidized EAS at the seven Montana communities, utilizing 19

- seat Beech

- 1900D aircraft, for a two

- year period at a combined annual subsidy rate of $ 8,201,992. Great Lakes’ original proposal was for service to Billings with the prospect of later changing the communities' hub from Billings to Denver if such a change could be agreed upon with the communities. Great Lakes commenced full EAS under Order 2007

- 12

- 22 in April 2009

.
By Order 2008

- 7

- 9 , July 3 , 2008, the Department approved Great Lakes’ request to provide service to Denver, instead of Billings

, at Lewistown, Miles City and Sidney. Similarly, by Order 2010

- 6

- 8, June 7, 2010, the Department approved the carrier’s request to alter its se rvice pattern at Glendive and provide 6 round trips a week to Denver and 6 to Billings. Great Lakes obtained support from the communities before we approved these service pattern changes

.

Essential Air Service at

GLASGOW, MONTANA GLENDIVE, MONTANA HAVRE, MONTANA LEWISTOWN, MONTANA MILES CITY, MONTANA SIDNEY, MONTANA WOLF POINT, MONTANA

Under 49 U.S.C. 41731 et seq

. D ocket DOT

- OST

- 1997

- 2605- 2

-

Request for Proposals As the end of the current contract approaches, we are here requesting proposals from carriers interested in providing service at any or all of the seven Montana communities

, with or without subsidy, for the two

- year period beginning May 1, 2011. Carriers should file their proposals no lat er than December 9

, 2010

. Staff will then docket proposals, thereby making them public, and shortly afterwards will provide a summary of the proposals to the communities and ask them for their final comments. We will give full consideration to all propos als filed in a timely manner. 1

Interested carriers should prepare their proposals with every expectation that their initial proposals will represent their final and only proposals. However, we retain the discretion to negotiate proposals with carriers wh en we deem it desirable; in such cases, of course, we will give all applicants the same opportunity. We also retain the discretion to reject outright all unreasonable or unrealistic proposals and re

- solicit a new round of proposals. However, negotiation or rejection are only an occasional exception to the rule.

We are here providing interested carriers with some basic information to serve as guidance when they prepare their proposals, but we will not prescribe a precise format for their proposals. We

ex pect proposals to adequately describe the service being proposed and the annual amount of subsidy being requested. The applicants can make their own judgments as to the level of detail they wish to present; however, they might want to include proposed sch edules as well as supporting data for their subsidy requests, such as projected block hours, revenues and expenses. We strongly encourage clear, well

- documented proposals that will facilitate their evaluation by the affected communities and the Department

. 2

With specific respect to the seven Montana communities

, the Department expect s proposals

, at a minimum, with two

- pilot, twin

- engine aircraft, and offering 12 round trips a week from each of the communities (except 17 from Sidney) to Denver and/or Billings. Such service is generally consistent with what the communities have historically receive d , and fully satisfies their essential air service requirements 3 . We encourage proposals that meet those requirements in an efficient

manner. 4

1 Carriers should not expect the Department to accept late fillings. In cases where a carrier proposes to provide essential air service without subsidy and we determine that service can be reliably provided without such compensation, we do not proceed with the carrier

- selection case. Instead, we simply rely on that carrier’s su bsidy

free service as proposed. Carriers are also welcome to propose more than one service option, if they choose; they need not limit themselves to those requirements if they envision other, potentially more

2 In selecting a carrier to provide subsidized essential air service, 49 U.S.C. 41733(c)(1) directs us to consider four factors: (a) scheduled service reliability; (b) contractual and marketing arrangements with a larger carrier to ensure service beyond the hub; (c) interline arrangements that the applicant has made with a larger carrier at the h ub; and (d) community views, giving substantial weight to the views of the elected officials representing the users. In addition, the Consolidated Appropriations Act, 2008, Public Law 110

- 161 , provides that

, when selecting a carrier to provide EAS , the Department may consider the relative subsidy requirements, thus codifying a factor that we have considered since the inception of the program

. 3 The communities’ essential air service determinations, as last established by Order 94

- 10

- 4, October 6, 1 994, required at least two round trips to Billings each weekday and weekend with no more than one intermediate stop (nonstop

- only for Lewistown), providing a minimum of 10 inbound and outbound seats for Glasgow, 5 for Glendive, 8 for Havre, 6 for Lewistown

, 5 for Miles City, 13 for Sidney, and 10 for Wolf Point.
4 For example, in most cases here, two communities are served together on a single route.- 3

-

attractive service possibilities

-- different hubs, for example

-- with subsidy requirement s that remain competitive.

Communities and air carriers are encouraged to work together in advance of the du e date for proposals to craft service pattern s that are desirable to the communities and meet the operational requirements of the airline interested in submitting a proposal. In addition, carriers should be very clear as to whether a specific community’s proposal is a stand

- alone option, or whether it is part of a larger, inseparable package conn ected to other communities.

Service and Traffic History Big Sky had operated subsidized service at the seven communities since 1980, when it replaced Frontier Airlines, Inc. , until it ceased all service on March 8, 2008

. During the year ended 2009

, the most recent calendar year period for which data are available, Glasgow averaged 3

. 7 enplanements a day, Glendive 0

. 8 , Havre 2

. 3

, Lewistown 3

. 3 , Miles City 2

. 8 , Sidney 8

. 8 and Wolf Point 2

. 9

. Traffic is rebounding slowly after the 2008 hiatus in air service at all seven communities. 5

New Filing Procedures Carrier proposals should be submitted to the Department with all materials merged into a single document. In addition, because the document will be published on Regulations.gov, each page should be formatted to be viewed online.

Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug

- free workplaces, and nondiscrimination. 6 Consequently, all carriers receiving Federal s ubsidy for essential air service must certify that they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimination, and those carriers whose subsidies exceed $100,000 over the life of the rate

- term must also certify that they are in compliance with the regulations governing lobbying activities. Because the Department is prohibited from paying subsidy to carriers that do not submit these documents, all carriers that plan to submit proposals involving subsidy should be aware that the selected carrier will be required to complete the required certifications. Interested carriers requiring more detailed information regarding these requirements should contact the Office of Aviation Analysis at (202) 366

- 5903. 7

5 See Appendix B for historical traffic data. Enplanements represent one

- half of total origin

- and

- destination traffic, and average enplanements per day are based on 3 13 weekdays and weekends a year.
6 The regulations applicable to these areas are: (1) 49 CFR Part 20

-- Ne w restrictions on lobbying; (2) 49 CFR Part 21

-- Nondiscrimination in federally

- assisted programs of the Department of Transportation

-- Effectuation of title VI of the Civil Rights Act of 1964; 49 CFR Part 27

-- Nondiscrimination on the basis of disabil ity in programs and activities receiving or benefiting from Federal financial assistance; and 14 CFR Part 382

-

- Nondiscrimination on the basis of disability in air travel; and (3) 49 CFR Part 29

-- Government

- wide debarment and suspension (non

- procurement ) and government

- wide requirements for drug

- free workplace (grants).
7 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.- 4

-

Community an d State Comments The communities and State are welcome to submit comments at any time. We encourage prospective applicants to contact the communities before they submit their proposals so that they can tailor them to the communities’ needs, as they will n ot be able to amend them after the due date. As noted earlier, we will provide a summary of the proposals to the civic parties and ask them to submit the ir final comments shortly after December 9 , the end of the 30

- day period for carrier proposals.

This order is issued under authority delegated in 49 CFR 1.56a(f).

ACCORDINGLY, 1. We request that carriers interested in providing essential air service at Glasgow, Glendive, Havre, Lewistown, Miles City, Sidney, and /or Wolf Point, Montana , submit their proposals, with or without subsidy requests, no later than December 9

, 2010. The proposals should be e

- mailed

to: EAS@dot.gov with the title “Proposal to Provide Essential Air Service at Glasgow, Glendive, Havre, Lewistown, Miles City, Sidney, and /or Wolf Point, Montana

, Docket DOT

OST

- 1997

- 2605 ”; 8

2. Th is docket will remain open until further order of the Department; and

3. We wil l serve copies of this order on the parties listed in Appendix D.

Persons entitled to petition the Department for review of this order under the Department’s Aviation Economic Regulations, 14 CFR 385.50, must file such petitions within ten (10) days after the date of service of this order.

8 Questions regarding filings in response to this order may be directed to Brian Swanson at (202) 366

- 5392 or brian.swanson@dot.gov

.- 5

-

This order will be effective im mediately, and the filing of a petition for review shall not preclude its effectiveness.

By:

TODD M. HOMAN Director Office of Aviation Analysis

(SEAL)

An electronic version of this document is available

at http://www.regulations.govAppendix A



# AREA MAPAppendix B Page 1 of 3

Historical Enplanements

Glasgow , Montana

Year Ended Origin & Destination Passengers 2 Enplanements 1 Average Enplanements Per Service Day 3 31-Dec-05 3,548 1,774 5.7 31-Dec-06 2,800 1,400 4.5 31-Dec-07 3,056 1,528 4.9 31-Dec-08

- - - 31-Dec-09 2,296 1,148 3.7 Jan.-Sept. 2010 2,288 1,144

Glendive , M ontana

Year Ended Origin & Destination Passengers 1 Enplanements 2 Average Enplanements Per Service Day 3 31-Dec-05 1,868 934 3.0 31-Dec-06 1,726 863 2.8 31-Dec-07 1,466 733 2.3 31-Dec-08

- - - 31-Dec-09 486 243 0.8 Jan.-Sept. 2010 408 204

Havre, Montana

Year Ended Origin & Destination Passengers 1 Enplanements 2 Average Enplanements Per Service Day 3 31-Dec-05 3,052 1,526 4.9 31-Dec-06 2,610 1,305 4.2 31-Dec-07 2,266 1,133 3.6 31-Dec-08

- - - 31-Dec-09 1,458 729 2.3 Jan.- Sept. 2010 1,190 595

Notes: 1. Enplanements multipled by two. 2. Source: Montana Aeronautics Division 3. Average annual enplanements divided by 313 effective annual service days.Appendix B Page 2 of 3

Historical Enplanements

Lewistown, Montana

Year Ended Origin & Destination Passengers 1 Enplanements 2 Average Enplanements Per Service Day 3 31-Dec-05 1,496 748 2.4 31-Dec-06 1,248 624 2.0 31-Dec-07 1,066 533 1.7 31-Dec-08 892 446

- 31-Dec-09 2,072 1,036 3.3 Jan.- Sept. 2010 1,046 523

Miles City, Montana

Year Ended Origin & Destination Passengers 1 Enplanements 2 Average Enplanements Per Service Day 3 31-Dec-05 2,350 1,175 3.8 31-Dec-06 2,098 1,049 3.4 31-Dec-07 1,822 911 2.9 31-Dec-08

- - - 31-Dec-09 1,774 887 2.8 Jan.- Sept. 2010 1,406 703

Sidney, Montana

Year Ended Origin & Destination Passengers 1 Enplanements 2 Average Enplanements Per Service Day 3 31-Dec-05 6,802 3,401 10.9 31-Dec-06 5,784 2,892 9.2 31-Dec-07 5,598 2,799 8.9 31-Dec-08 1,196 598

- 31-Dec-09 5,524 2,762 8.8 Jan.- Sept. 2010 4,900 2,450

Notes: 1. Enplanements multipled by two. 2. Source: Montana Aeronautics Division 3. Average annual enplanements divided by 313 effective annual service days.Appendix B Page 3 of 3

Historical Enplanements

Wolf Point, Montana

Year Ended Origin & Destination Passengers 1 Enplanements 2 Average Enplanements Per Service Day 3 31-Dec-05 3,878 1,939 6.2 31-Dec-06 3,342 1,671 5.3 31-Dec-07 2,824 1,412 4.5 31-Dec-08

- - - 31-Dec-09 1,800 900 2.9 Jan.- Sept. 2010 808 404

Notes: 1. Enplanements multipled by two. 2. Source: Montana Aeronautics Division 3. Average annual enplanements divided by 313 effective annual service days.Appendix C

Example of General Terms and Conditions for Essential Air Service

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 weat her 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 Departme nt 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 po ints 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 or der, 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 o f such cessation. Those adjustments in the levels of subsidy and/or service that are mutually agreed to in writing by the Department and carrier do not constitute a total or partial reduction or cessation of payment.

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.

Funds are not curre ntly available for performance under this solicitation beyond [DATE] . The Department’s obligation for perform ance under this solicitation beyond [DATE] is contingent upon the availability of appropriated funds from which payment for services can be made. No legal liability on the part of the Department for any payment may arise for performance under this order beyond [DATE] , until funds are made available to the Department for performance. If funds are not made available for performance beyond [DATE] , th e carrier will receive notice in writing by the Department.

All claims for payment must be submitted within 60 days of the last day of se rvice provided under this order.Appendix D

SERVICE LIST

Air Sunshine, Inc. Jet Air, Daniel Wolford
Air Sunshine, Mirmohammad Adili Kenmore Air, Tim Brooks
Air West, Inc., John Raatz McCall Aviation and Salmon Air, Dan Scott
Air Wisconsin, Barbara Jones McCall Aviation, Michelle
Airline Associates, Bill Mishk Mesa Air Group, Jonathan Ornstein

Alaska Airlines, Jeff Cole Mesa Air Group, Michael Lotz Alaska Airlines, Sandy Sinick Mesa Air Group, Mike Holcomb Allegiant Air, Robert Ashscroft Mesaba, Max Shemesh
American Airlines, Carl Nelson Mesaba, John Spanjers American Eagle, Jeff Hartz Midstar Airlines, Jeffrey Fonner
Atlantic Southeast, Jon Lindlief Midwest Airlines, Greg Aretakis Atlantic Southeast, Roger Weston MN Aviation, Jose Maldonado Bemidji Aviation, Arlen Rinkenberger Multi Aero, Darnea Bemidji Aviation, Cori Rude Multi Aero, Shane Storz Cape Air, Andrew Bonney Northwest, Tim McDonald Cape Air, Dan Wolf NYDC, Henok Araya Cape Air, J. Flaherty OST, Brian Swanson Classic Aviation, Tony Henderson OST, Dennis DeVany Colgan Air, Mike Colgan OST, Kevin Adams CommutAir, Andy Price OST, Kevin Schlemmer CommutAir, Joel Raymond OST, Michael Martin Consultant, Robert Silverberg OST, Renee Williams
Continental, Bruce Keiner Pacific Wings, Frank Ford
Continental, Dan Weiss Pacific Wings, Greg Kahlstorf Continental, Lorry Halloway Penn Air, Danny Seybert Delta Air Lines Amy Martin Penn Air, Scott Bloomquist Delta Air Lines, Jeff Morgan Pinnacle Airlines, Joe Williams
Delta Air Lines, Dan Shuman Pinnacle Airlines, Phil Reed Delta Air Lines, Joe Esposito Public Charters, Jim Gallagher
Delta Air Lines, Sascha Vanderbellen Scenic, Mary Schneider Delta Air Lines, Karen Zachary Scenic, Mitzi Daines

Dorado Jets Seaborne Airlines, Wayne D’Amico
Dorado Jets, Mark McKenna SeaPort Airlines. Jim Day
Era Aviation, Mike Lenorman SeaP ort Airlines. Rob McKinney
Executive Airlines, Kate Soled Shuttle America, Jerry Balsano Frontier Flying, Bob Hajducovich SkyWest, Eric Christensen
Gem Air, Dan Schroeder SkyWest, Michael Thompson
Gem Air, JoAnn Wolters Sovereign Air, Bob Karns

Great Lakes Airlines, Chuck Howell Sovereign Air, Lois R. Barton Great Lakes Airlines, Doug Voss Tradewind, Eric Zipkin
Gulfstream, Dave Hackett Trans States, Fred Oxley Gulfstream, Mickey Bowman Trans States, Gerry Wigmore Gulfstream, T. Cooper United, Alicia Gabriel Homeland Security, Bill Ragan United, James Starnes Homeland Security, David Bernier US Airways, Benjamin Slocum Homeland Security, Randy Webb US Airways, Howard Kass
Horizon Air, Dan Russo US Airways, Jason Reisinger
Horizon Air, Jenni fer Thompson Warbelows Air Ventures, Art Warbelow
Horizon Air, Jeff Cole Wings Air (Air Greco), Aaron Goerlich ICEPR, Luis Irizarry State of Montana

, Debbie Alke Intrepid Internatl Air, Rick Eyk State of Montana, Patty Kautz
Island Air Charters, Linda House EAS Taskforce, John Rabenberg