Order 2011 - 6 - 7 Served: June 8, 2011 

### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION 

### OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued b y the Department of Transportation

on the 8 th of June, 2011 Essential Air Service at FORT DODGE, IOWA, AND MASON CITY , IOWA Under 49 U.S.C. 41731 et seq . DOCKET OST - 200 1 - 10682 DOCKET OST - 2001 - 10684

ORDER SELECTING CARRIER S UMMARY By this order, the Department is re - s electing Mesaba Aviation, Inc., d/b/a Delta Connection (Mesaba) , to provide essential air service (EAS) at Fort Dodge and Mason City , Iowa , at annual subsidy rate s of $ 1,910,995 and $1,017,545 at Mason City , respectively , 1 for the five - month period June 1, 2011, through October 31 , 201 1 . B ACKGROUND By Order 2009 - 4 - 20, April 27, 2009, the Department selected Mesaba to provide subsidized EAS to Fort Dodge and Mason City , Iowa, through May 31, 2011. Under that order, the Department authorized subsidy

for Mesaba consisting of eighteen round trips per week over a Fort Dodge to Mason City

to Minneapolis routing. All of the service was to be provi ded with 34 - seat Saab 340 aircraft for a total annual subsidy of $2,225,213. By

Order 2010 - 2 - 30 the Department approved an alternate service pattern decoupling Fort Dodge from Mason City , such that both communities would receive nonstop service. Under that service pattern, Mason City continue d to receive 18 nonstop round trips per week; Fort Dodge, in lieu of receiving 18 one - stop round trips per week, agreed to reduce its frequency to 14 nonstop round trips per week, wi th all service to Minneapolis. 2 1 Such subsidy is ca lculated and distributed on a fiscal year basis, subject to the availability of appropriated funds. 2 Mason City will continue to receive 18 round trips at the subsidy rate specified in Order 2009 - 4 - 20 through May 31, the end of the current contract. Effective June 1, we are authorizing subsidy for 14 round trips per week. Program guidelines preclude us from subsidizing more than 67 seats per day to any community. Mason City received 18 round trips only because it was linked with Fort Dodge. Mason City will receive 68 seats effective June 1 because of a separate requirement that co mmunities receive at least two round trips a day.- 2 -

By Order 2011 - 1 - 12 we requested proposals at Fort Dodge and Mason City , as the end of the contract was approaching, with proposals due b y March 11. On February 11 we issued a notice granting Mesaba’s request extending the deadline for proposals to April 5. We received timel y filed proposal from Multi - Aero, SeaP ort, Mesaba, and Chautauqua at Fort Dodge. At Mason City , we received timely

proposals f

ro m Multi - Aero, SeaP ort, and Mesaba. We requested community

comments and received them from Mason City and Fort Dodge on May 6 , and the issue s are ripe for decision. FORT DODGE Multi - Aero All of Multi - Aero’s proposals are for either a two - ye ar or four - ye ar period, with a four - ye ar contract requiring slightly less annual subsidy . All of the proposals contemplate 30 - seat aircraft, though they

do not specify

the exact aircraft t ype – presumabl y Embraer Brasilia or Saab 340 equipment. Multi - Aero does not currently have the r equisite authority from either the Federal Aviation Administration or the Department to operate 30 - seat aircraft in scheduled service. 3 Option 1 : 14 nonstop round trips per week to Chicago O’Hare. The carrier requests $2,692,138 annual subsidy for a two - ye ar contract, and $2,638,295 annual subsidy for a four - ye ar contract. Option 2 : 14 nonstop round trips per week to Minneapolis. The carrier requests $2,508,592 annual subsidy for a two - ye ar contract, and $2,458,420 annual subsidy for a four - ye ar contract . Option 3 : This option is part of an inseparable package with Mason City in which Fort Dodge would receive 14 nonstop round trips per week to Chicago and Mason City would receive 19 nonstop round trips to Chicago per week for a combined annual subsidy of $5,456,099 for two years or $5,346,977 for four years. However, the level of service proposed for Mason City exceeds program guidelines and we would not select it, thus leaving this option moot for Fort Dodge as well as Mason City . SeaPort Airlines SeaP ort proposes 28 nonstop round trips per week to Minneapolis with 9 - seat Pilatus PC - 12 aircraft, a single - engine , pressurized, turboprop aircraft. The carrier requests $1,600,064 subsidy the first year and $1,652,942 subsidy the second year. Because Fort Dodge is guaranteed service with twin - engine, 15 - seat aircraft, SeaPort’s proposal w ould not be selected unless the community

waived its right to those standards. Mesaba Aviation, Inc. Mesaba proposes a five - month term , from June 1 through October 31, for 14 nonstop round trips per week to Minneapolis with 34 - seat Saab 340 aircraft. The carrier requests $1,910,995 annual 3 Multi - Aero currently holds economic authority from the Department to conduct operations pursuant to 14 CFR Part 135. As determined in Order 2011 - 1 - 16, such authority permits a carrier to provide schedule d service with 9 - seat or smaller, non - turbo - jet aircraft, and public charter service with up to 30 - seat aircraft, under 14 CFR Part 380. However, as discussed in Order 2011 - 1 - 16, such authority is insufficient to enable the carrier to operate 30 - seat airc raft for essential air service.- 3 -

subsidy for this level of service, which it revised downward from its initial proposal after discussions with the staff. 4 Mesaba would operate as Delta Connection. Mesaba, a wholl y owned subsidiary

of Pinnacle Airlines Holding, would be compensated on a one - for - one basis for regional jets operated by Pinnacle in lieu of Mesaba’s Saab 340 equipment. Chautauqua Chautauqua proposes 13 nonstop round trips per week to Milwaukee with regional jets, either 37 - seat ERJ - 135 o r 50 - seat ERJ - 145 aircraft, and operated under a code - share agreement with Frontier. The carrier requests $4,148,224 annual subsidy for this level of service. The contr act would presumabl y be for a typical two - ye ar period. MASON CITY Multi - Aero All of Multi - Aero’s proposals are for either a two - ye ar or four - ye ar period, with a four - ye ar contract requiring slightly less annual subsidy . All of the proposals contemplate 30 - seat aircraft, though they

do not specify

the exact aircraft t ype – presumabl y Embraer Brasilia or Saab 340. Multi - Aero does not currently have the requisite authority from either the Federal Aviation Administration or the Department to operate 30 - seat aircraft in scheduled service. Option 1 : 19 nonstop round trips per week to Chicago O’Hare. The carrier requests $2,789,224 annual subsidy for a two - ye ar contract, and $2,733,439 annual subsidy for a four - ye ar contract. Option 2 : 14 nonstop round trips per week to Chicago. The carrier requests $2,642,194 annual subsidy

for a two - ye ar contract, and $2,589,350 annual subsidy for a four - ye ar contract. Option 3 : 19 nonstop round trips per week to Minneapolis. The carrier requests $2,686,177 annual subsidy for a two - ye ar contract, and $2,632,453 annual subsidy for a four - ye ar contract. Option 4 : This option is part of an inseparable package with Mason City in which Fort Dodge would receive 14 nonstop round trips per week to Chicago and Mason City would recei ve 19 nonstop round trips to Chicago per week for a combined annual subsidy of $5,456,099 for two years or $5,346,977 for four years. However, the level of service proposed for Mason City exceeds program guidelines and we would not select it, thus leaving this option moot for Mason City as well as Fort Dodge. SeaPort Airlines SeaP ort proposes 28 nonstop round trips per week to Minneapolis with 9 - seat Pilatus PC - 12 aircraft, a single - engine , pressurized, turboprop aircraft. The carrier requests $957,764 subsidy the first year and $1,003,306 subsidy the second year. Because Mason City is guaranteed service with twin - engine, 15 - seat aircraft, SeaPort’s subsidized proposal w ould not be selected unless the community

waived its right to those standards.

4 Chautauqua indicated it could not significantly reduce its bid . Because the proposals of SeaPort and Multi - Aero were not selectable, staff did not discuss revisions with those carriers .- 4 -

Mesaba Aviation, Inc. Mesaba proposes only

a five - month term , from June 1 through October 31, and would operate 14 nonstop round trips per week to Minneapolis with 34 - seat Saab 340 aircraft. The carrier requ ests $1,017,545 annual subsidy for this level of service, which it revised downward from its initial proposal after discussions with the staff. 5 Mesaba would operate as Delta Connection. Mesaba, a wholly - owned subsidiary of Pinnacle Airlines Holding, wou ld be compensated on a one - for one basis for regional jets operated b y Pinnacle in lieu of Mesaba’s Saab 340 equipment. C OMMUNITY COMMENTS On April 14 we requested community comment s regarding the carrier selection at Fort Dodge and Mason City and received comments from the Ford Dodge Director of Aviation , and from the Mayor and Airport Commission at Mason City . Fort Dodge supports the proposal of either Mesaba or Chautauqua. The community notes the following: “The proposal b y M esaba Aviation provides our community with qualit y ai r service and worldwide seamless connectivity . As you know, Mesaba made improvements to our air service in June 2010 by

providing us with direct flights and a better - timed schedule. Even though we lost one daily flight in exchange for the direct flights, the support for this change was reflected in utilization by our businesses and community . Enplanements were up by 50% at the end of 2010 and are up 85% for the first quarter of 2011. These increases were attained with only two daily

flights compared to three which is reflective of the importance of direct service, time of departures/arrivals, and competitive fares. The downside of the Mesaba proposal is that it is only for five months and the fact that the SAAB 340 a ircraft is being removed from their fleet without a similar size aircraft as a replacement. Mason City also supports the proposal of Mesaba. The Airport Commission indicated that “After reviewing these proposals, the Commission unanimously chose to supp ort the Mesaba proposal.” The Mayor indicated that “Mesaba’s proposal will ensure there is a superior quality of air service available from the Mason City airport which is very

important to the residents and businesses of Mason City

as well as the surroun ding communities.” D ECISION S We have reviewed each carrier’s proposal and the communit ies ’ comments, and have decided to re - select Mesaba , based largel y on community support. Fort Dodge favor ed either Mesaba or Chautauqua. However, Mesaba requested an annual subsidy of $1,910,995, less than half of the $4,148,224 Chautauqua requested . That difference between the two is clearly decisional. Regarding the other two applicants, e ach of Multi - Aero’s several proposals requested significantly more subsidy than Mesaba, and did not receive community

support. SeaPort requests $1,652,942 -- about $310,000 less subsidy than Mesaba

– and its subsidy

advantage strongl y supports SeaPort’s selection . However, Fort Dodge is 5 Because the proposals of SeaPort and Multi - Aero were not selectable, staff did not discuss revisions with those carriers .- 5 -

guaranteed service with twin - engine, 15 - seat aircraft, so without the community waiving their guarantee we would not select SeaP ort . Finally , Multi - Aero requested significantly more subsidy than Mesaba, the community did not favor their selection, and they do not currentl y have authority to operate the service they proposed, so we will not select them. Mason City

strongly favored Mesaba. SeaP ort requested less subsidy than Mesaba , requesting $957,764 subsidy

vs. Mesaba’s $1,017,545 . However, as w ith Fort Dodge, Mason City is guaranteed service with twin - engine, 15 - seat aircraft , so a bsent the community

waiving their guarantee we would not select SeaP ort . Finally , Multi - Aero requested significantly more subsidy than Mesaba, the community did not f avor their selection, and they do not currentl y have authority to operate the service they proposed, so we will not select them. Mesaba’s proposal meets all of the statutorily mandated carrier - selection criteria. Mesaba is a well - established carrier an d its code - share arrangement with Delta allows for reservations, ticket and baggage check - in for passengers traveling beyond the hub. The amount of subsidy

requested by Mesaba has increased significantl y, from $2,225,213 previously

to $2,928,540 annually for the two communities combined , but appears reasonable . Part of the cause for the increase is that Mesaba no longer operates the two communities in a linear pattern to Minneapolis. However, as Fort Dodge mentioned, their traffic has responded favorabl y to the new nonstop service, even with a frequency reduction from 18 round trips a week to 14. We anticipate that traffic will continue to grow at Fort Dodge in response to the nonstop service, which may defray future subsidy

expenditures. We note that M esaba’s proposal is very unusual, in that it is only for a five - month period, rather than the ty

pical two years. Mesaba explains this deviation as follows: “As the Department is aware, the Saab 340 aircraft are scheduled to be retired from Mesaba's flee t by

the end of 2011. No decision has yet been made on replacement aircraft or replacement flying . Accordingl y, Mesaba's bid is for a short term EAS contract period ending on November 1, 2011. Mesaba will advise the Department as soon as a decision is made regarding long term plans for service at these communities.” While our request for proposals asked for two - year bids, the Department has discretion to award contracts that are longer than or shorter than that when we find th at the individual facts provide compelling reason to do so. This is one of those cases. In brief, SeaPort’s proposals do not meet either community ’s 15 - seat and twin - engine guarantee, Multi - Aero does not have authority to operate the 30 - seat equipment th ey proposed, and Chautauqua’s proposal to serve Fort Dodge requests double Mesaba’s subsidy , a rate we cannot justify paying. Because of Mesaba’s short term contract, w e will soon be issuing another RFP for service beginning November 1 . The Department shall make this selection contingent upon our receiving properly executed certifications from the carrier that it is in compliance with the regulations regarding drug - free workplaces and nondiscrimination, as well as the regulations governing lobbying acti vities.- 6 -

Carrier Fitness 49 U.S.C. 41737(b) requires that DOT find an air carrier fit, willing, and able to provide reliable service before DOT may

subsidize it to provide essential air service. Mesaba Aviation, Inc. , is subject to the Department’s continuing fitness requirements, and no information has come to our attention that would cause us to question the carrier ’ s fitness at this time. DOT has contacted the Federal Aviation Administration, and it has raised no concerns that would negativel y af fect our fitness finding s . DOT therefore concludes that the carrier remain s fit to conduct the operations proposed here. This order is issued under authority delegated in 49 CFR 1.56a(f). ACCORDINGLY, 1. We select Mesaba Aviation, Inc. , d/b/a Delta Connection , to provide essential air service at Fort Dodge and Mason City , Iowa ; 2. We set the final rate of compensation for Mesaba Aviation , Inc., for the provision of essential air service at Fort Dodge and Mason City , Iowa , as described in Appendix C ; 3 . We direct Mesaba Aviation, Inc. , to retain all books, records, and other source and summary documentation to support claims for pay ment, and to preserve and maintain such documentation in a manner that readil y permits its audit and examination by representatives of the Department. Such documentation shall be retained for seven ye ars 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. Th e carrier may forfeit its compensation for any claim that is not supported under the terms of this order; 4 . We find that Mesaba Aviation, Inc. , continue s to be fit, willing and able to operate as a certificated carrier and capable of providing reliable essential air service at Fort Dodge and Mason City , Iowa ; 5 . Th ese docket s will remain open until further order of the Department; and 6 . We will serve copies of this order on the Mayor s and Airport Manager s of Fort Dodge and Mason City , Iowa , Multi - Aero, SeaPort, Chautauqua , and Mesaba Aviation , Inc . By , Susan L. Kurland Assistant Secretary

for Aviation and International Affairs (SEAL) An electronic version of this document is available on the World W ide Web at http://www.regulations.govAppendix A

Nonstop, Great Circle Miles from Mason City (MCW) and Fort Dodge (FOD) Fort Dodge (FOD) Mason City

( MCW ) 60 Des Moines ( DSM ) 75 Omaha ( OMA ) 123 Minneapolis ( MSP ) 168 Milwaukee ( MKE ) 321 Chicago ( ORD ) 325 Mason City

(MCW) Fort Dodge ( FOD ) 60 D es Moines (DSM) 113 Omaha ( OMA ) 184 Minneapolis ( MSP ) 120 M ilwaukee (M KE ) 275 Chicago ( ORD ) 288 This map is provided by Sabre ® AirVision TM Profit Essentials and is being used with express permission of the copyright holder, Sabre Airline Solutions®.Ap pen di x B An nua l Su bsi dy R ates at For

t Do dg e an d Mason Ci ty , Iowa Do ckets 2001- 10682 an d 10684 For t Do dg e Mason Ci ty Ef fe cti vePeri od Ju

ne1, 2011, t

hr u Ju

ne1, 2011, t

hr u Oct ober 31, 2011 Oc to ber 31, 2011 Code Sh are De lta De lta Ro undt ri ps per Week 28 28 Stops No ne No ne Hu b Mi nne apol is Mi

nne apol is Ai rcraf t Typ e Saab 340 Saab 340 Passen gers 18,194 27,228 Departu res 1,416 1,416 Bl ock Hou rs 1,625 1,290 Passen ger R ev en ue $1,115,041 $1,574,350 To tal R ev en ue $1,292,611 $1,825,065 To tal D irects $1,934,534 $1,535,854 To tal In di re cts $1,116,519 $1,171,394 To tal O per at in g $3,051,053 $2,707,248 Prof it $152,553 $135,362 Ec on om icCost $3,203,606 $2,842,610 An nua l Su bsi dy R ate $1,910,995 $1,017,545Appendix C - 1 Mesaba /Pinnacle Essential Air Service to be Provided to Fort Dodge , Iowa , Docket OST - 200 1 - 10682 Effective Period : June 1, 201 1 , thru October 31 , 201 1 . Scheduled Service : 1 4 nonstop round trips per week to Minn eapolis . Aircraft : Saab 340, 34 seats , or CRJ - 200 equipment. Rate per Eligible Flight: $ 1, 3 50 1 Weekly Ceiling : $ 3 7,800 2 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 servic e 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 explanat ion 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 co nformance 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 this rate, it must first n otify the Office of Aviation Analysis in writing and receive w ritten 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 rout es. 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 disallow ed, 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 w riting by the Department and carrier do not c onstitute a total or partial reduction or cessation of payment. Subsidy contract 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 currently available for performance under this order beyond September30 , 201 1 . The Government’s obligation for performance under this order beyond September 31, 2011 , is subject to the availability of appropriated 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 31, 2011 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 31, 2011 , the Department will provide notice in w riting to the carrier. All claims for payment must be submitted within 60 days of the last day of service provided under this order.

1 Annual compensation of $1,910,995 divided by 1,416 estimated annual completed departures and arrivals: 4 one - way flights per day x 365 days x 97 percent completion = 1,416 departures per year . 2 28 flights/week x $ 1,350 .Appendix C - 2 Mesaba /Pinnacle Essential Air Service to be Provided to Mason City , Iowa, Docket OST - 200 1 - 10684 Effective Period : June 1, 2011, thru October 31 , 201 1 . Scheduled Service : 1 4 nonstop round trips per week to Minneapolis . Aircraft : Saab 340, 34 seats, or CRJ - 200 equipment. Rate per Eligible Flight: $ 719 1 Weekly Ceiling : $ 20,132 2 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 ai rcraft 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 consid ered 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 contemplate s any such changes beyond the scope of the order during the applicable period of this rate, it must first notify the Office of Aviation Analysis in writing and receive w ritten approval from the Department to be ensured of full compensation. Should circums tances 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 w ill not be compensated. In determining whether subsidy payment for a deviating flight should be adjusted or disallow ed, 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 th e 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 w riting by the Department and carrier do not constitute a total or partial reduction or cessation of payment. Subsidy contract 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 currently available for performance under this order beyond September 31, 2011 . The Government’s obligation for performance under this order beyond September 31, 2011 , is subject to the availability of appropriated 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 31, 2011 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 31, 2011 , the Department will provide notice in w riting to the carrier. All claims for payment must be submitted within 60 days of the last day of service provided under this order.

1 Annual compensation of $1,017,545 divided by 1,416 estimated annual completed departures and arrivals: 4 one - way flights per day x 365 days x 97 percent completion = 1,416 departures per year . 2 28 flights/week x $ 719 .