Order: 2013-5-10

 Served: May 10, 2013

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 10th of May, 2013

Essential Air Service at

GRAND ISLAND, NEBRASKA

Under 49 U.S.C. 41731 et seq.

 Docket DOT-OST-2002-13983

ORDER SELECTING CARRIER

Summary

By this Order, the Department is selecting American Airlines (“American”) to provide Essential 

Air Service (EAS) at Grand Island, Nebraska, for an annual subsidy of $1,837,021, for the twoyear period from July 1, 2013, through June 30, 2015.1

Background

By Order 2011-1-25, January 31, 2011, the Department selected American Eagle Airlines to 

provide 13 nonstop round trips per week to Dallas/Fort Worth International Airport (“DFW”) for 

a two-year period beginning when the carrier inaugurated full EAS. The service operated using a 

mix of 37, 44, and 50-passenger regional jet aircraft at an annual subsidy amount of $2,215,582. 

American Eagle inaugurated service to Grand Island on June 13, 2011, thus setting an expiration 

date of June 30, 2013.

In anticipation of the end of the rate term, the Department issued Order 2013-1-17, January 25, 

2013, soliciting proposals to provide EAS, with or without subsidy, at Grand Island, for a new 

term.

Proposals

In response to that Order, we received proposals from two carriers: American, the incumbent,

and Sovereign Air, Inc. (Sovereign).

 

1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds.
American

American proposes to continue to operate 13 nonstop round trips per week from Grand Island to 

DFW, for an annual subsidy rate of $1,837,021. American proposes to operate regional jet 

aircraft seating 44 or 50 passengers, operated by American Eagle or ExpressJet Airlines dba 

American Eagle. American requests the ability to use these aircraft to match supply with 

demand, as well as day-of-operation swaps for operational flexibility. As a condition of its 

proposal, American requested that the DOT and Grand Island waive the right to hold-in upon its 

filing of a 120-day notice to terminate service.

Sovereign

Sovereign has proposed service from Grand Island to Denver using 30-seat Jetstream 41 aircraft, 

for an annual subsidy of $1,991,947. However, Sovereign does not have the requisite operating 

authority from either the Department or the Federal Aviation Administration, and would 

therefore not be in a position to commence service in a reasonable period of time. Thus, we will 

not consider Sovereign’s proposal further.

The complete proposals of both carriers may be accessed online at: http://www.regulations.gov/

by entering DOT-OST-2002-13983 in the “Search” box.

Community and State Comments

The Department received a letter from the Executive Director of the Hall County Airport 

Authority containing a resolution recommending American’s service from Grand Island to DFW 

providing 13 round trips per week on a 44- or 50-seat regional jet.

The Department also received a letter from the Mayor of Grand Island, supporting American’s 

proposal to continue service to DFW. He states that the Central Nebraska Regional Airport has 

been working diligently to improve the air service options for central Nebraskans and he pledges 

the community’s “full support, endorsement, and cooperation to improve the service options 

available” through the EAS program.

Decision

When selecting an air carrier, 49 U.S.C. § 41733(c)(1) directs us to consider four factors: (1) 

service reliability; (2) contractual and marketing arrangements with a larger carrier at the hub; 

(3) interline arrangements with a larger carrier at the hub; and (4) community views. In addition, 

The Consolidated Appropriations Act, 20082, provides that when selecting an air 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. 

American’s proposal is the only eligible proposal. American has served Grand Island since

June 2011, and the community fully supports American’s proposal. American will continue to 

serve Grand Island through its DFW hub, which offers excellent connectivity to the national air

transportation system, with over 750 daily departures on American and American Eagle, to over 

160 destinations. In addition, we note the reduction in annual subsidy of nearly $400,000, from 

$2,215,582 to $1,837,021.

 2 Public Law 110-161.
We shall make this selection at Grand Island contingent upon the Department’s receiving 

properly executed certifications from American that the carrier and its regional affiliates, 

American Eagle, and ExpressJet, 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) and 41738 require that we find an air carrier fit, willing, and able to 

provide reliable service before we may subsidize it to provide Essential Air Service. American, 

American Eagle, and ExpressJet are subject to the Department’s continuing fitness requirements, 

and no information has come to our attention that would cause us to question the carriers’ fitness 

at this time. We have contacted the Federal Aviation Administration, and it has raised no 

concerns that would negatively affect our fitness finding. We therefore conclude that the carriers

remain fit to conduct the operations proposed here.

This Order is issued under authority delegated in 49 CFR Part 1.25a(b).

ACCORDINGLY,

1. We select American Airlines to provide Essential Air Service at Grand Island, Nebraska;

2. We set the final rate of compensation for American Airlines for the provision of Essential Air 

Service at Grand Island, Nebraska, as described in Appendix C;

3. We direct American 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;

4. We find that American Airlines continues to be fit, willing and able to operate as a 

certificated carrier and capable of providing reliable Essential Air Service at Grand Island, 

Nebraska;

5. Under our authority in 49 U.S.C. § 40109, we will allow American Airlines to cease 

operations at Grand Island on 120 days’ notice; 

6. This docket will remain open until further order of the Department; and
- 4 -

7. We will serve copies of this Order on the mayor of Grand Island, the Hall County Executive 

Airport Director, American Airlines, and Sovereign Air, Inc.

By:

SUSAN L. KURLAND

Assistant Secretary

for Aviation and International Affairs

(SEAL)

An electronic version of this document is available at http://www.regulations.gov
Appendix A

AREA MAP

This map is provided by Sabre® AirVisionTM Profit Essentials and is being used with express permission of the copyright holder, 

Sabre Airline Solutions®.
Appendix B

 

American Airlines Proposal to serve Grand Island
Appendix C

American Airlines

Essential Air Service to be Provided at Grand Island, Nebraska

Effective Period: July 1, 2013, through June 30, 2015

Scheduled Service: 13 weekly round trips to Dallas/Fort Worth International Airport1

Intermediate stops and upline service: Service must be nonstop

Aircraft: Embraer 140 (44 seats); Embraer 145 (50 seats), or CRJ-200 (50 seats)

Rate per Eligible Flight: $1,3832

Weekly Ceiling: $35,9583

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 

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 may not be available for performance under this Order beyond September 30, 2013. The Government’s 

obligation for performance under this Order beyond September 30, 2013, is subject to the availability of 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 September 30, 2013, until funds are made available to the 

Department for performance. If funds are not made available for performance beyond September 30, 2013, the 

Department will provide notice in writing to the carrier.

All claims for payment must be submitted within 60 days of the last day of service provided under this Order.

 1 Flights may be operated by American Eagle Airlines or ExpressJet Airlines dba American Eagle. 2 Annual compensation of $1,837,021, divided by 1,329 annual departures (26 flights per week x 52 weeks plus 4) x 

98 percent completion). 3 26 flights per week multiplied by $1,383 per flight.