Or der: 20 1 3

- 5

- 10

Served : May 10 , 201 3



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 10 th of May , 201 3

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 O rder

, the Department is s electing American Airlines (“American”) to provide E ssential

A ir S ervice (EAS) at Grand Island, Nebraska , for an annual subsidy of $1,837,021

, for the two

year period from July 1, 2013, through June 30, 2015

. 1

Background By Order 20 11

- 1

- 25, January 31 , 20 11, the Department selected American Eagle Airlines to provide 1 3 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 $2,2 15

, 582

. American Eagle inaugurated service to Grand Island on June 13, 2011, thus setting an expiration date of June 30, 2013

.

I n anticipation of the end of the r ate term, the Department issued Order 201 3

- 1

- 17

, January 25

, 201 3

, solicit ing proposals to provide EAS , with or without subsidy

, at Grand Island, for a new

t erm

.

Proposal s 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 op erate 1 3 nonstop round trips per week from Grand Island to

D FW , 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 t he ability t o use these aircraft to match supply with demand, as well as day

- of

- operation swaps for operational flexibility. As a condit ion 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.

S overeign Sovereign has proposed service from Grand Island to Denver using 30

- seat Jetstream 41 ai rc raft

, for an annual subsidy of $ 1 ,99 1

, 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 p eriod of time. Thus, we will not consider Sovereign’s proposal further

.

The complete proposal s of both carriers may be accessed online at : http://www.regulations.gov/ by entering DOT

- OST

- 200 2

- 13983 in th e “ 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) d irects 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 Ap propriations Act, 2008 2 , 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 th i s selection at Grand Island contingent upon the Department’s receiving properly executed certifications from American t hat the carrier and its regional affiliates, American Eagle, and ExpressJet, are in compliance with the Department’s regulations regarding drug

- free workplac es 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 provi de E ssential A ir S ervice

. American

, American Eagle, and ExpressJet are sub j ect 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 carrier s remain fit to conduct the operations proposed here.

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

ACCORDINGLY,

1. We select American Airlines to provide E ssential A ir Se rvice at Grand Island, Nebraska ;

2 . We set the final rate of compensation for American Airlines for the provision of E ssential A ir

S ervice 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, whicheve r 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 continue s to be fit, w illing and able to operate as a certificated carrier and capable of providing reliable E ssential A ir S ervice at Grand Island,

Nebraska ;

5. Under our authority in 49 U

. S

. C

. § 40109, w e will allow American Airlines to cease operations at Grand Island on 120 days ’ notice;

6

. Th is docke t will remain open until further order of the Department; and- 4

-

7

. We will serve copies of this O rder 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 th is document is available at http://www.regulations.govAppendix A



## AREA MAP

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

Sabre Airline Solutions®.A ppendix B

Am erican Airlines Proposal to serve Grand IslandAppendix C

American Airlines

Essential Air Service to be Provided at Grand Island, Nebraska

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

Scheduled Service : 1 3 weekly round trips t o Dallas/Fort Worth International Airport 1 Intermediate stops and upline service : S ervice m ust be nonstop

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

- 200 (50 seats) Rate per Eligible Flight: $ 1, 38 3 2 Weekly Ceilin g : $ 3 5,958 3

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 signif icant 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 th at 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 devi ating 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 complete ly , 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 am ounts 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 agree d 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 beyon d September 30, 2013 , until fund s 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 b e 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 1,32 9 annual departures (26 flights per week x 52 weeks plus 4) x 98 percent completion)

. 3 26 flights per week m ultiplied by $ 1, 38 3 per flight.