Order 2012

- 5

- 11 Served: May 10 , 2012



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 10th day of May, 2012

Essential Air Service at

MERCED, CALIFORNIA Docket DOT

- OST

- 1998

- 3521
VISALIA, CALIFORNIA Docket DOT

- OST

- 2004

- 19916

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

ORDER REQUESTING PROPOSALS

Summary By this O rder, the Department is requesting proposals from car riers interested in providing

Essential Air S ervice (EAS) at Merced and /or Visalia , California, for a new contract period, beginning October 1, 201 2

, with or without subsidy. (See Appendix A for a servi ce area map )

. Carriers should file their proposals no later than June 11

, 201 2

.

Background By Order 20 10

- 9

- 13

, September 14 , 20 10 , we re

- selected Great Lakes to provide subsidized EAS

at the two communities

, utilizing 19

- seat Beech 1900D turboprop aircraft , for the two

- year period through October 1, 20 12 , at a combined annual subsidy of $ 3,707,681

. S ubsidized service at
Merced was to consist of either 14 nonstop round trips a week to Las Vegas or 14 one

- stop round

tri ps to Denver. At Visalia

, service was to consist of 14 nonstop round trips to Ontario, Los Angeles or Orange County. On May 15, 2011, Great Lakes began providing service between Los Angeles International Airport (LAX) and both Merced and Visalia.

Based on passenger traffic data for the year ending Sept ember 31, 2011

, 5, 700 passengers were enplaned and deplaned at Merced, while 5,0 5 1 passengers were enplaned and deplaned at Visalia

. The annual subsidy amount for Merced is $1, 961,174 and Visalia ’s i s $1, 746,507 . Therefore, the subsidy per passenger at Merced is approximately $ 3 44 and $ 346 at Visalia . The Department is prohibited from subsidizing air service at a community where the subsidy per passenger exceeds $200, unless the community is more th an 210 highway miles from the nearest large or medium hub airport 1

. Merced and Visalia exceed the $200 per passenger cap and both are fewer than 210 miles

1 Congress first established the $200 ceiling under P.L. 101

- 164 for fiscal year 1990, and reestablished it in fiscal years 1994

- 1999. The ceiling was made permanent by P.L. 106

- 69, the Department of Transportation and Related Agencies Appropriations Act o f 2000.- 2

-

from a large or medium hub. Merced is 107 miles from Mineta San Jose International Airport ( SJC ) and Visalia is 1 78 miles from Bob Hop Airport (BUR ) in Burbank, Californ i a

.

Rather than terminate service eligibility at either communit y at this stage, the Department will solicit proposals for EAS at both communities , but the Department will evaluate all proposals submitted before committing to a contract or making a final determination on Merced ’s and

Visalia ’s continuing eligibility. We note that since the switch in hub served to LAX on May 15, 2011 , traffic at both communities has increased and that the carrier is currently providing additional service, beyond the 14 weekly rou nd trips subsidized under Order 2010

- 9

- 13

. During the window for proposals, we expect both communities to work aggressively with all potential applicants to mitigate some of the risks that the carriers may face in an attempt to lower their subsidy levels.

Request for Proposals As the end of the current contracts approach, w e are requesting proposals from carriers interested in providing service at Merced and/or Visalia, wi th or without subsidy, for a new contract period beginning October 1, 201 2 . Carriers should file their proposals no later than June 11

, 201 2 . Staff

will then docket the proposals, thereby making them public, and direct each carrier to serve a copy

of its proposal on the civic parties and other applicants. Shortly afterwards, we will provide a summary of the proposals to the communities and ask them to submit their final comments

. We will give full consideration to all proposals that are timely filed. 2

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 when we deem it desirable. We als o retain the discretion to reject outright all unreasonable or unrealistic proposals and re

- solicit a new round of proposals. However, negotiation and rejection are only occasional exceptions to the rule.

We are here providing interested carriers with so me basic information to serve as guidance when they prepare their proposals, but we will not prescribe a precise format for their proposals. We expect proposals to adequately describe the service being proposed and the annual amount of subsidy being reque sted. The applicants can make their own judgments as to the level of detail they wish to present; however, they might want to include proposed schedules as well as supporting data for their subsidy requests, such as projected block hours, revenues and exp enses. We strongly encourage clear, well

- documented proposals that will facilitate their evaluation by the

affected communit ies and the Department. 3

2 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 typically do not proceed with the carrier

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

- free service as proposed.

3 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 hub; and (d) community views, giving s ubstantial 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 sub sidy requirements

. Interested carriers should also be aware that our- 3

-

Specifically, for service with 19

- seat or larger aircraft, we expect proposals for two or three round trip s a day (12 or 18 a week) to Los Angeles, Las Vegas, or any other large or medium hub airport offering numerous connections to the national air transportation system. If 8/9

- seat aircraft are proposed, we would expect four or five round trips a day (24 or 30 a week). 4

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

- alone basis, or whether it is part of a larger, inseparable package with other communities.

We encourage proposals that meet those requirem ents in an efficient manner. 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 attractive service possibilities

-- different hub s, or length of contract, for example

-- with subsidy requirements that remain competitive.

New Filing Procedures Carrier proposals should be submitted to the Department with all materials compiled into a single document. In addition, because the document will be published on http://www.regulations.gov/

, each page should be formatted to be viewed online and fo r easy printing.

Service and Traffic History In order to assist carriers in making their passenger and revenue forecasts, we have included historical passenger data in Appendix B. For year ending December 31, 201 0

, Merced generated approximately 6.5 enpl anements a day; and Visalia, 5.8

. As noted above, passenger traffic h as increased with a change in service pattern to LAX.

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

- free workplaces, and nondiscrimination. 5 Consequently, all carriers receiving Federal subsidy for Essential Air Service must certify that they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimination, and tho se 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

general provisions governing EAS will be included in the selection order as part of our authorization of subsidy for the selected service. Appendix C of this order contains those genera l provisions.

4 Previously, most EAS communities were entitled to service with 15

- seat or larger aircraft. However, for FY 2012, Congress revoked the minimum requirement that basic EAS include service with at least 15

- seat or larger aircraft. See

Consoli dated and Further Continuing Appropriations Act, P.L. 112

- 55, November 18, 2011. Communities are still

entitled to service with twin

- engine aircraft.

5 The regulations applicable to these areas are: (1) 49 CFR Part 20

-- New 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 disability in programs and activities r eceiving 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 requiremen ts for drug

- free workplace (grants).- 4

-

prohibited from paying subsidy to carriers that do not s ubmit 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. 6

Community and 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 not 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 their final comments shortly after June 11 , the deadline 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 e ssential air service at Merced and /or Visalia

, California

, submit their proposals, with or without subsidy requests, no later than June 11

, 20 12

. The proposals should be e

- mailed to: EAS@dot.gov with the title “Proposal to Provide Essential

Air Service at Merced and Visalia , California

, ” with the docket number s corresponding to the

communit ies as s hown on the first page of this O rder; 7

2. These dockets will remain open until further O rder of the Department; and

3. We will serve copies of this O rder on the communities of Merced a nd Visalia, California ; and the parties listed in Appendix D.

Persons entitled to petition the Department for review of this O rder under the Department’s Regulations, 14 CFR 385.50, must file such petitions within ten (10) days aft er the date of service

of this O rder.

6 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.

7 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 immediately, 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



# • Ely



# • Merced



# • VisaliaAppendix B



### Historical Passenger Traffic 1

Merced, California

Year Enplanements Deplanements Total Average Annual Enplanements per Day 2

2003 7,510 7,509 15,019 24.0

2004 8,004 7,936 15,940 25.5

2005 8,596 8,447 17,043 27.5

2006 7,864 7,770 15,634 2 5.1

2007 9,033 9,400 18,433 28.9

2008 3 1,332 1,429 2,761

-

2009 999 1035 2,034 3.2

2010 2,046 1,997 4,023 6.5

Jan.

– October 2011 2,521 2,531 5,052

-

Visalia, California

Year Enplanements Deplanements Total Average Annual Enplanements per Day 2

2003 1,355 1,329 2,684 4.3

2004 1,085 1,046 2,131 3. 5

2005 2,377 2,234 4,611 7.6

2006 4,289 4,383 8,672 13.7

2007 6,617 6,398 13,015 21.1

2008 1,674 1,789 3,463

-

2009 2,433 2,305 4,738 7.8

2010 1,828 1,842 3,670 5.8

Jan.

– October 2011 2,375 2,240 4,615

-

1 U.S. DOT, Bureau or Transportation Statistics, T

- 100 Market data and Orders 2008

- 5

- 42 and 2010

- 5

- 4.

2 Annual Enplanements divided by 313 days, 314 for leap years.

3 Data for June, July and August was not reportedAppendix 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 co mpleted, 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 writt en 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 oper ated; 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 me t 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 locati on 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 pa ragraph.

Funds are not currently available for performance under this order beyond [DATE] . The Department’s obligation for performance unde r this order beyond [DATE] , is subject to the availability of appropriated funds from which payment for services ca n be made. No legal liability on the part of the Government 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] , 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 se rvice provided

under this order.Appendix D

SERVICE LIST

Air Choice One Airlines, Shane Storz Delta Air Lines, Stephen A. Hedden Pacific Aviation Group, Craig Garrick

Air Greco/Wings Air Dorado Jets Pacific Aviation Group, Ron Rye

Air Sunshine, Inc. Dorado Jets, Mark McKenna Pacific Wings, Frank Ford

Air Sunshine, Mirmohammad Adili E ra Aviation, Lori Goodman Pacific Wings, Greg Kahlstorf

Air West, Inc., John Raatz Executive Airlines, Kate Soled Penn Air, Danny Seybert

Air Wisconsin, Annette Daly ExpressJet, Jon Lindlief Penn Air, Scott Bloomquist

Air Wisconsin, Jim Rankin ExpressJet, Roger Weston Pinnacle Airlines, Jennifer Gammill

Airline Associates, Bill Mishk Frontier Airlines, Daniel Shurz Pinnacle Airlines, Megan Rosia

Alaska Airlines, Jeff Cole Frontier Flying, Bob Hajducovich Pinnacle Airlines, Phil Reed

Alaska Ai rlines, Sandy Sinick Frontline Aviation Planemasters, Inc., John Kessler

American Airlines, Carl Nelson Gem Air, Dan Schroeder Planemasters, Inc., Paul Berliner

American Eagle, Gary Foss Gem Air, JoAnn Wolters Planemasters, Inc., Todd DeSimone

American Eagle, Robert Emrich Great Lakes Airlines, Chuck Howell RAA, Faye Balck

American Eagle, Patrick Swift Great Lakes Airlines, Doug Voss Raytheon, Mike Schiedt

Aviation Express, Brad Shriner Homeland Security, Bill Ragan Rectrix, Aviation, Scott L aForge
Aviation Technologies/Charter Air Transport, Jim Gallagher Homeland Security, David Bernier Saab Group, Polly Prelinger

Bemidji Aviation, Arlen Rinkenberger Horizon Air, Jennifer Thompson Scenic, Mary Schneider

Bemidji Aviation, Cori Rude Horizon Air, Mike McQeen Scenic, Mitzi Daines

Cape Air, Andrew Bonney Horizon Air, Jeff Cole Seaborne Airlines, Shawn Lewis

Cape Air, Dan Wolf ICEPR, Luis Irizarry SeaP ort Airlines

, EAS Mailbox

Cape Air, J. Flaherty Intrepid Internatl Air, Rick Eyk SeaPort Airlines. Rob McKinney

Capital Aviation, Mike Colgan Island Air Charters, Linda House Shuttle America, Jerry Balsano

Chautauqua, Josh Pascoe Jet Air, Daniel Wolford Silver Airways, Darrell Richardson

Classic Aviation, Tony Henderson Kenmore Air, Tim Brooks Silver Airways, Mickey Bowman

Colgan Air, Kevin Scott McCall Aviation, Dan Scott SkyWest, Brad Rawson

Colgan Air, Mike Colgan McCall Aviation, Michelle SkyWest, Eric Christensen

CommutAir, Andy Price Mesaba, John Spanjers SkyWest, Michael Thompson

CommutAir, Joel Raymond Mesaba, Max Shemesh Sovereign Air, Bob Karns

Consultant, Jeff Hartz Michigan DOT, Matt Brinker Tailwind International, Michele

Wilkinson
Consultant, Mike Mooney Midstar Airlines, Jeffrey Fonner Tatonduk, Robert Everts

Consultant, Robert Silverberg Republic Air Line , Greg Aretakis Tatonduk, Robert Ragar

Consultant, Ron McNeil MN Aviation, Jose Maldonado Tradewind, Eric Zipkin

Continental, Bruce Keiner Multi Aero, Darnea Transport Azumah, Joel Anabilah

Azumah

Continent al, Dan Weiss Multi Aero, Shane Storz Trans States, Fred Oxley

Continental, Lorry Halloway Northern Air Cargo, David Karp Trans States, Gerry Wigmore

Delta Air Lines Anthony Canitano Northern Air Cargo, Eric Van Andel Trans States, Warren Crotty

Delta Air Lines, Dan Shuman NYDC, Henok Araya United, Alicia Gabriel

Delta Air Lines, Dana Debel OST, Brian Swanson United, James Starnes

Delta Air Lines, Jeff Davidman OST, Brooke Chapman US Airways, Benjamin Slocum

Delta Air Lines, Jeff Morgan OST, Dennis DeVany US Airways, Howard Kass

Delta Air Lines, Joe Esposito OST, Kevin Adams US Airways, Jason Reisinger

Delta Air Lines, Kristal Murphy OST, Kevin Schlemmer Warbelows Air Ventures, Art

Warbelow
Delta Air Lines, Sally Veith OST, Michael Martin MCE, Ron Elliott

Delta Air Lines, Sascha Vanderbellen OST, Scott Faulk MCE, John Bramble

VIS, Steve Salomon VIS, Mario Cifuentez, II