Order 2011-4-19

Served: April 22, 2011

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 22nd day of April, 2011

ORDER RESELECTING CARRIERS AND SETTING FINAL SUBSIDY RATES

Summary

By this order, the Department is reselecting: (a) Pacific Wings L.L.C., d/b/a New Mexico 

Airlines to provide subsidized essential air service (EAS), with 9-seat Cessna Grand 

Caravan (C-208B) turboprop aircraft at Carlsbad, New Mexico, for the two-year period 

beginning June 1, 2011, for an annual subsidy rate of $1,350,253; and (b) Great Lakes 

Aviation, Ltd. (Great Lakes), to provide subsidized EAS with 19-passenger Beechcraft B1900D aircraft at Clovis and Silver City/Hurley/Deming, New Mexico (Silver City), for the 

period from May 1, 2011 to May 31, 2013, at a combined annual subsidy rate of 

$3,186,249.1 (See Appendix A for a map.)

Background

By Order 2009-4-18, April 27, 2009, the Department selected New Mexico Airlines to 

provide subsidized EAS at Carlsbad, through May 31, 2011. Under that order, New Mexico 

Airlines provides two nonstop round trips between Carlsbad and Albuquerque each 

weekday and each weekend, utilizing single-engine, 9-passenger Cessna Grand Caravan

(C-208B) turboprop aircraft for an annual subsidy rate of $1,046,284.

Similarly, by Order 2009-3-3, March 6, 2009, the Department selected Great Lakes to 

provide subsidized EAS at Clovis and Silver City, through April 30, 2011. Under that 

order, Great Lakes provides each community with 12 nonstop round trips per week to 

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

Essential Air Service at

CARLSBAD, NEW MEXICO

CLOVIS, NEW MEXICO

SILVER CITY/HURLEY/DEMING, NEW MEXICO

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

Docket DOT-OST-2002-12802

Docket DOT-OST-1996-1902

Docket DOT-OST-1996-1903
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Albuquerque at an annual subsidy of $1,517,277 for Clovis and $1,442,174 at Silver City. 

All service is provided with 19-seat Beech 1900 aircraft.

In anticipation of the end of the rate terms, the Department issued Orders 2010-11-9 (Clovis 

and Silver City) and 2010-12-10 (Carlsbad), soliciting proposals to provide efficient EAS, 

with subsidy support if necessary, at the three communities.

Proposals

On January 7, 2011, New Mexico Airlines provided notice to the Department that it would 

launch three daily nonstop round trips between Albuquerque and Clovis, on a subsidy-free 

basis, utilizing 9-seat Cessna 208B aircraft, starting May 1, 2011. However, instead of 

terminating the carrier-selection case at Clovis due to a subsidy-free proposal, we 

determined that the carrier’s subsidy-free proposal did not meet the twin-engine, two-pilot 

requirement contained in 49 U.S.C § 41732 (b)(5) and therefore continued to process a 

normal case at Clovis. In response to the requests for proposals, Great Lakes, New Mexico 

Airlines, Gulfstream International Airlines, Inc. (Gulfstream), and Alaska Juneau 

Aeronautics, Inc. d/b/a SeaPort Airlines (SeaPort) submitted proposals. However, 

Gulfstream withdrew its proposal on February 2, 2011, a day after having been selected to 

begin EAS at seven communities in Montana. The proposals under consideration are 

summarized below. Each carrier’s proposal and comment letters may be accessed online 

through the Federal Docket Management System at: http://www.regulations.gov, by doing a 

search on the corresponding community docket numbers listed on the first page.

New Mexico Airlines

New Mexico Airlines submitted “stand-alone” proposals at Carlsbad and Silver City for 

service to Albuquerque, utilizing 9-seat Cessna 208B aircraft. At Carlsbad, the carrier 

would provide 12 weekly nonstop round trips for an annual subsidy requirement of 

$1,350,253. At Silver City, the carrier would provide 18 weekly nonstop round trips for 

$1,332,184.

SeaPort

SeaPort proposed to provide “stand-alone” service at all three communities utilizing 9-seat 

Pilatus PC-12 aircraft. The carrier would operate from non-sterile gates at Silver City, 

Carlsbad and Albuquerque.

At Carlsbad, the carrier proposed to provide 12 nonstop round trips per week to 

Albuquerque for a first-year subsidy of $1,156,001 and a second-year rate of $1,152,468. 

At Clovis, SeaPort would provide 18 nonstop round trips a week to Albuquerque for an 

annual subsidy of $1,995,500 for the first year and $1,985,880 for the second. At Silver 

City, the carrier would provide 21 round trips a week to Albuquerque for $1,690,515 in 

annual subsidy for the first year and $1,685,707 for the second. The carrier also proposed a 

14-round-trip-a-week option at each community with prorated subsidy adjustments. Please 

note that the annual subsidy requirements above are taken directly from the exhibits the 

carrier submitted, but differ slightly from the number of weekly round trips discussed in the 

text of SeaPort’s proposal.

SeaPort’s proposals also include mention of an interline agreement with US Airways; 

however, the details and applicability of the agreement at Albuquerque are not discussed.
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Great Lakes

Great Lakes, the incumbent carrier at Clovis and Silver City, submitted a proposal with 

stand-alone options for EAS at each community, utilizing 19-seat Beech 1900 aircraft. At 

Clovis, Great Lakes proposed to provide 12 nonstop round trips per week between the 

community and Albuquerque or Denver, one-stop over Santa Fe or Pueblo, at annual 

subsidy of $1,592,157. At Silver City, the carrier proposes to provide 12 nonstop round 

trips per week between the community and Albuquerque, Phoenix or Denver, one-stop over 

Santa Fe, or a combination of Phoenix and Denver service (via Santa Fe) at an annual 

subsidy of $1,594,092.

Community Comments

By e-mails dated January 11 and 20, 2011, the Department solicited the views of the civic of 

officials at the respective communities and the New Mexico Department of Transportation

(NM DOT), as to which carriers’ proposals they would prefer. At Clovis and Silver City, 

we noted that the aircraft types proposed by New Mexico Airlines and SeaPort do not meet 

the twin-engine, two pilot requirement contained in 49 U.S.C § 41732 (b)(5). We received 

comments from the communities and the NM DOT as summarized below.

In Carlsbad, the mayor and airport manager endorse the reselection of New Mexico 

Airlines. The NM DOT notes that neither SeaPort’s nor New Mexico Airlines’ proposed

aircraft types meet the twin-engine requirement, and has concern that New Mexico Airlines’

aircraft is not pressurized.

Clovis and Silver City support the reselection of Great Lakes. The Mayor of Clovis stated 

that the City Commission unanimously voted to recommend Great Lakes. The Grant 

County2 Manager, states “the County Commission would like to keep the service to 

Albuquerque with Great Lakes.” The Mayor of Silver City also sent a comment letter 

supporting the retention of Great Lakes. The NM DOT states “the Beechcraft 1900D

proposed by Great Lakes meets all current EAS requirements” and “presents the safest and 

most comfortable option for the traveling public.”

Decision

After careful consideration of this matter, including the comments of local officials, the 

Department has decided to reselect New Mexico Airlines to provide EAS at Carlsbad and 

Great Lakes at Clovis and Silver City. New Mexico Airlines would continue to provide 12 

weekly round trips between Carlsbad and Albuquerque for an annual subsidy rate of 

$1,350,253. Great Lakes will provide 12 nonstop round trips per week between Clovis and 

Albuquerque or Denver, one-stop over Santa Fe or Pueblo at annual subsidy of $1,592,157. 

At Silver City, Great Lakes will provide 12 nonstop round trips per week between the 

community and Albuquerque, Phoenix or Denver, one-stop over Santa Fe or a combination 

of Phoenix and Denver service (via Santa Fe) at annual subsidy of $1,594,092.

 2 Silver City and Hurley are located in Grant County. Deming is located in Luna County. Grant County owns 

the airport where EAS is provided.
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At Carlsbad, the use of 9-seat aircraft may provide a better balance between the demand for 

air service with the supply of aircraft seats and ensure the effective utilization of aircraft.3 

In contrasting New Mexico Airlines’ proposal with SeaPort’s, we find that New Mexico 

Airlines’ is superior. New Mexico Airlines has established interline ticketing and baggage

agreements with numerous partner airlines worldwide and can be found on all major global 

distribution systems and internet travel portals. New Mexico Airlines also has electronic 

interline ticketing with major domestic and international airlines worldwide, providing 

customers the ability to book travel between the EAS community and hub and beyond, to 

other points in the national air transportation system. While SeaPort currently provides EAS 

at other communities, only its service between the EAS community and hub can be found on 

major global distribution systems and internet travel portals. Customers interested in travel 

beyond the hub, which is typically the vast majority of EAS passengers, are required to 

create a separate itinerary, buy a separate ticket, and re-check bags at the hub. Thus, in 

terms of seamless connectivity to the national air transportation system, New Mexico 

Airlines has a decided advantage. New Mexico Airlines has been providing EAS at 

Carlsbad for many years, and the community supports its reselection. We find that these 

selection criteria outweigh the additional subsidy costs in this case. In supporting New 

Mexico Airlines, Carlsbad has effectively waived their right to the minimum aircraft 

requirements for at least the two-year contract.

The carrier-selection decision at Clovis and Silver City is very straightforward. The 

communities are guaranteed service with at least 15-seat aircraft, Great Lakes is wellestablished and has been providing EAS at the respective communities for many years, and 

the communities support the reselection of the carrier. Further, neither New Mexico 

Airlines’ nor SeaPort’s proposed aircraft types meet the twin-engine, two-pilot requirement 

contained in 49 U.S.C § 41732 (b)(5). We also find that both Great Lakes’ service and 

subsidy levels are reasonable. Subject to community approval, service from Clovis may operate 

to Denver and service from Silver City may operate to Phoenix or Denver.

We shall make these selections at the communities contingent upon the Department’s 

receiving properly executed certifications from New Mexico Airlines and Great Lakes that

they are in compliance with the Department’s regulations regarding drug-free workplaces 

and nondiscrimination, as well as the regulations governing lobbying activities.

Finally, the Department will synchronize the three communities’ expiration dates by 

establishing Great Lakes’ contract at Clovis and Silver City for 25 months, to expire 

May 31, 2013, the same day as New Mexico Airlines’ contract is set to expire at Carlsbad.

Carrier Fitness

49 U.S.C. 41737(b) requires that we find an air carrier fit, willing, and able to provide 

reliable service before we may subsidize it to provide essential air service. New Mexico

Airlines and Great Lakes 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 to provide EAS in these markets at this time. We have contacted the Federal 

 3 The incumbent EAS carrier, New Mexico Airlines, has been utilizing 9-seat Cessna 208B aircraft for several 

years. As a result, the community has received only single-pilot, single-engine service for 60 or more 

consecutive days, and, therefore, the community is not guaranteed EAS with two-engine, two-pilot aircraft.
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Aviation Administration, and it has raised no concerns that would negatively affect our 

fitness finding in these markets. We therefore conclude that the carriers are reliable and 

remain fit to conduct the operations proposed here.

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

ACCORDINGLY,

1. We reselect Pacific Wings L.L.C., d/b/a New Mexico Airlines, to provide essential air 

service at Carlsbad, New Mexico, and establishes the subsidy rates, as described in 

Appendix C, for the period from June 1, 2011, through May 31, 2013;

2. We reselect Great Lakes Aviation, Ltd. to provide essential air service at Clovis and 

Silver City/Hurley/Deming, New Mexico, and establishes the subsidy rates, as described in

Appendix C, for the period from May 1, 2011, through May 31, 2013;

3. The Department directs Pacific Wings L.L.C., d/b/a New Mexico Airlines, and Great 

Lakes Aviation, Ltd., 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 carriers may forfeit its 

compensation for any claim that is not supported under the terms of this order;

4. We find that Pacific Wings L.L.C., d/b/a New Mexico Airlines, continues to be fit, 

willing and able to operate as a commuter air carrier and capable of providing reliable 

essential air service at Carlsbad, New Mexico;

5. We find that Pacific Great Lakes Aviation, Ltd. continues to be fit, willing and able to 

operate as a commuter air carrier and capable of providing reliable essential air service at 

Silver City/Hurley/Deming, New Mexico, New Mexico; and

6. These Dockets will remain open until further order of the Department.

By:

SUSAN L. KURLAND 

Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available in the Federal Docket Management 

System (FDMS) at http://www.regulations.gov
Appendix A

AREA MAP

ABQ: Albuquerque International Sunport

Airport Codes

CNM: Clovis Municipal Airport

CVN: Cavern City Airport (Carlsbad)

DEN: Denver International Airport

PHX: Phoenix Sky Harbor International Airport

PUB: Pueblo Memorial Airport

SAF: Santa Fe Municipal Airport

SVC: Grant County Airport (Silver City)

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

Page 1 of 3

Pacific Wings L.L.C., d/b/a New Mexico Airlines

Provision of Essential Air Service at Carlsbad, New Mexico

Calculation of Compensation Requirement
Appendix B

Page 2 of 3

Great Lakes Aviation Ltd.

Provision of Essential Air Service at Clovis, New Mexico

Calculation of Compensation Requirement
Appendix B

Page 3 of 3

Great Lakes Aviation Ltd.

Provision of Essential Air Service at Silver City/Hurley/Deming, New Mexico

Calculation of Compensation Requirement
Appendix C

Page 1 of 4

Pacific Wings L.L.C., d/b/a New Mexico Airlines

Provision of Essential Air Service at Carlsbad, New Mexico

Summary of Service To Be Provided

Effective Period: June 1, 2011 through May 31, 2013.

Scheduled Service: 12 round trips a week to Albuquerque.

Aircraft type: Cessna 208B (9-seats).

Intermediate stops and 

upline service:

No service to any intermediate or upline points are contemplated under the 

terms of the carrier’s proposal; accordingly, no such service may be provided 

on subsidized flights without prior Department approval.

Timing of flights: Flights must be well-timed and well-spaced in order to ensure full 

compensation.

Annual compensation: $1,350,253

This rate assumes an annual completion factor of 95 percent. A 

compensation ceiling is to be applied per calendar week such that 

service above that ceiling in one week cannot make up for service 

shortfalls in another week.

Subsidy Rate per 

Flight:

$1,1381

Weekly Compensation 

Ceiling:

$27,3122

 1 Annual subsidy of $1,350,253 divided by 1,186 annual departures: 2 arrivals and 2 departures each week day 

and each weekend (24 flights/week) x 52 weeks x .95 (completion factor) = 1,186.

2 24 flights per week multiplied by $1,138 per flight.
Appendix C

Page 2 of 4

Great Lakes Aviation, Ltd.

Provision of Essential Air Service at Clovis, New Mexico

Summary of Service To Be Provided

Effective Period: May 1, 2011 through May 31, 2013.

Scheduled Service: 12 round trips a week to Albuquerque.

Aircraft type: Beechcraft B-1900D (19 passenger seats).

Intermediate stops and 

upline service:

No service to any intermediate or upline points are contemplated under the 

terms of the carrier’s proposal; accordingly, no such service may be provided 

on subsidized flights without prior Department approval.

Timing of flights: Flights must be well-timed and well-spaced in order to ensure full 

compensation.

Annual compensation: $1,592,157

This rate assumes an annual completion factor of 98 percent. A 

compensation ceiling is to be applied per calendar week such that 

service above that ceiling in one week cannot make up for service 

shortfalls in another week.

Subsidy Rate per 

Flight:

$1,2981

Weekly Compensation 

Ceiling:

$31,1522

 1 Annual subsidy of $1,592,157 divided by 1,227 annual departures: 2 arrivals and 2 departures each week day and 

each weekend (24 flights/week) x 52 weeks x .98 (completion factor) = 1,227 + 4 additional flights.

2 24 flights per week multiplied by $1,298 per flight.
Appendix C

Page 3 of 4

Great Lakes Aviation, Ltd.

Provision of Essential Air Service at Silver City/Hurley/Deming, New Mexico

Summary of Service To Be Provided

Effective Period: May 1, 2011 through May 31, 2013.

Scheduled Service: 12 round trips a week to Albuquerque.

Aircraft type: Beechcraft B-1900D (19 passenger seats).

Intermediate stops and 

upline service:

No service to any intermediate or upline points are contemplated under the 

terms of the carrier’s proposal; accordingly, no such service may be provided 

on subsidized flights without prior Department approval.

Timing of flights: Flights must be well-timed and well-spaced in order to ensure full 

compensation.

Annual compensation: $1,594,092

This rate assumes an annual completion factor of 98 percent. A 

compensation ceiling is to be applied per calendar week such that 

service above that ceiling in one week cannot make up for service 

shortfalls in another week.

Subsidy Rate per 

Flight:

$1,2991

Weekly Compensation 

Ceiling:

$31,1762

 1 Annual subsidy of $1,594,092 divided by 1,227 annual departures: 2 arrivals and 2 departures each week day and 

each weekend (24 flights/week) x 52 weeks x .98 (completion factor) = 1,227 + 4 additional flights.

2 24 flights per week multiplied by $1,299 per flight.
Appendix C

Page 4 of 4

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 are not currently available for performance under this order beyond April 15, 2011. The 

Department’s obligation for performance under this order beyond April 15, 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 March 3, 2011, until funds are made available to the Department for performance.

If funds are not made available for performance beyond April 15, 2011, 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.