Order 2012-4-8

Served: April 5, 2012

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 5th of April, 2012

Essential Air Service at

INTERNATIONAL FALLS, 

MINNESOTA

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

 DOCKET DOT-OST-2009-0304

ORDER SELECTING CARRIER

SUMMARY

By this Order, the Department is selecting Great Lakes Aviation, Ltd. (Great Lakes), to provide 

Essential Air Service (EAS) at International Falls, Minnesota, for $993,247 annual subsidy. The 

service is to consist of 18 nonstop round trips per week to Minneapolis (MSP) year round with 

19-seat Beech 1900 aircraft.1

BACKGROUND

On July 15, 2011, Mesaba Aviation, Inc., and Pinnacle Airlines, subsidiaries of Pinnacle Airlines 

Corporation, d/b/a Delta Connection (Delta), filed 90-day notices of their intent to suspend their 

joint service at International Falls, Minnesota, effective October 13, 2011.2 By Order 2011-9-5, 

September 13, 2011, we prohibited Delta from terminating service and requested proposals for 

replacement service by October 12, 2011, later extended to October 14, 2011. The Order

required that the level of service be consistent with what we were subsidizing at the time Delta 

filed notice. Because Delta’s notice was triggered by Mesaba/Pinnacle’s replacing its fleet of 

smaller 34-seat Saab 340 turboprops with 50-seat regional jets, by Order 2011-12-25, 

December 29, 2011, we reduced the required frequency to 12 round trips per week, and 

 

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

2 Delta filed notice at a total of 24 communities. This Order addresses only International Falls. We have selected 

(a) Great Lakes Aviation, Ltd., to replace Delta at Fort Dodge and Mason City, Iowa; Iron Mountain, Michigan; 

Brainerd and Thief River Falls, Minnesota; Devils Lake and Jamestown, North Dakota; and Watertown, South 

Dakota; (b) American Eagle at Sioux City and Waterloo, Iowa; and (c) SkyWest at Aberdeen, South Dakota; 

Bemidji, Minnesota; and Butte, Montana. We are processing carrier-selection proceedings at the remaining 

communities. We will address the other communities in subsequent Orders. 
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requested proposals. We received timely-filed proposals from two carriers -- Great Lakes 

Aviation and Sovereign Air. On October 21 we requested comments from the community by 

November 21 on these proposals. We have received those comments, and the carrier-selection 

issue is now ready for decision. 

CARRIER PROPOSALS

We received timely-filed proposals from Great Lakes and from Sovereign Air. However, one of 

Sovereign Air’s options is moot because it was presented as an inseparable package deal. 

Specifically, Sovereign’s Option 1 was premised on the carrier’s also being selected to provide EAS 

at Thief River Falls, Minnesota. However, by Order 2011-11-30, November 23, 2011, we selected 

Great Lakes to provide EAS at Thief River Falls. Moreover, Sovereign does not have the required 

operating authority from either the FAA or the Department, and has no community support. Thus 

only Great Lakes’ proposal is viable.

Great Lakes proposed to provide 18 nonstop round trips per week to Minneapolis (MSP), with 19-

seat Beech 1900 aircraft. The carrier requests $993,247 annual subsidy for this service. In addition, 

the carrier indicates that it will provide additional lift during the summer peak season if no other 

carrier provides service.

COMMUNITY COMMENTS

On November 16, 2011, we received comments from the Kooching Economic Development 

Authority; on November 17, 2011, from the Management Analysis and Development Division of 

the State of Minnesota; on November 18, 2011, from the Chamber of Commerce; on 

November 21, 2011, and again on January 30, 2012, from the Mayor of International Falls; on 

November 22, 2011, from the Airport Commission; and on November 28, 2011, from the Boise 

Paper Company. In addition, on March 6, 2012, the EAS staff and Great Lakes met with a 

number of civic officials from International Falls, including Mayor Shawn Mason.

In its filing on November 21, 2011, the City of International Falls endorsed the selection of Great 

Lakes as its EAS carrier but was concerned with three critical elements for its air service: 

sufficient summer capacity, reliable service, and appropriate scheduling. 

“We believe it is critical that whatever carrier is chosen for service at INL have the

capacity to increase summer options as needed to accommodate the requirements of our 

local tourist economy, at least up the maximum seat allowance provided for under the 

EAS program....We are not asking for more seats than we need. We ask only that the 

United States Department of Transportation requires – or at least allows for – our 

selected carrier to provide the maximum 67 seats permitted, for the period from June 

through August....Nearly half of our annual enplanements accrue during our short three 

months of summer. We cannot afford to lose 10 to 15 percent of that total for lack of 

just a few seats per day.” 

On January 30, 2012, the City of International Falls indicated that 

“Without commercial air service, our community and our region would suffer 

significant economic decline. Our summer tourism industry is the main support of our 
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many small resorts and other businesses that work with them. They depend on the 

airport to bring in their customers. Our cold Weather Test Industry relies on 

commercial air service to move goods and people in and out of the airport-based test 

center. We benefit from the trade of our Canadian neighbors who cross the border to do 

business and who provide nearly half of our annual enplanements. Because of the 

extreme distances to other commercial airports, it is not practical or realistic to assume 

our local business climate could continue as is, let alone improve, if our own 

commercial service is discontinued.”

The community leaders echoed their written statements at their meeting with the EAS staff, 

emphasizing in particular the need for increased capacity during the summer. Following that 

meeting, Great Lakes confirmed that it would “commit to at least one round trip during summer 

peak travel being provided with our 30-seat Brasilias. Great Lakes recognizes the need for 

additional capacity seasonally and will do so without requesting additional subsidy beyond that 

of the rates established for our 19-seat Beech 1900-Ds.”

DECISION

The selection of Great Lakes is straightforward: their proposal is the only one that can be 

selected, the proposed service and subsidy levels appear reasonable, and the community has fully 

endorsed their selection. 

The community’s main concern is that there be sufficient capacity to accommodate historical traffic 

during the peak summer season. Great Lakes’ proposal does not specify extra service during the 

peak season, and thus we cannot require it to provide that service. However, the carrier has since

indicated that it will provide extra lift during the summer by using a larger, 30-seat Brasilia aircraft

in lieu of the 19-seat Beech 1900s it proposed on at least one of its subsidized flights for no 

additional subsidy.3

Carrier Transition

We expect Great Lakes and Delta to work together to make a smooth transition at International 

Falls. In that regard, before Delta suspends its service we expect it to notify any passengers 

holding reservations for travel after the suspension date, to assist those passengers in making 

alternate air transportation arrangements, or to provide a refund of the ticket price, without 

penalty, if requested. In this regard, the EAS staff will be working with Delta to establish a holdin subsidy rate for its past-period service to the community.

CARRIER FITNESS

49 U.S.C. 41737(b) and 41738 requires that the Department find an air carrier fit, willing, and 

able to provide reliable service before the Department may subsidize it to provide EAS. Great 

Lakes Aviation, Ltd, is subject to the Department’s continuing fitness requirements. We 

contacted the Federal Aviation Administration, and it has raised no concerns that would 

negatively affect our fitness findings. The Department therefore concludes that the carrier 

remains fit to conduct the operations proposed here.

 

3 Under our rules, a carrier can substitute a larger aircraft for the one it proposed and be subsidized at the same rate 

as that of the smaller aircraft.
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This Order is issued under authority delegated in 49 CFR 1.56a(f).

ACCORDINGLY,

1. We select Great Lakes Aviation, Ltd., to provide Essential Air Service at International Falls, 

Minnesota;

2. We set the final rates of compensation for Great Lakes Aviation, Ltd., for the provision of 

Essential Air Service at International Falls, Minnesota, as described in Appendix C;

3. We direct Great Lakes Airlines, 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 from the service date of 

this Order 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 Great Lakes Aviation, Ltd., continues to be fit, willing and able to operate as a 

commuter carrier and capable of providing reliable Essential Air Service at the these 

communities;

5. We will continue to require Mesaba/Pinnacle Airlines to provide EAS at International Falls 

until it is replaced by Great Lakes Aviation, Ltd.;

6. This docket will remain open until further Order of the Department; and

7. We will serve copies of this Order on the Mayor and Airport Manager of International Falls, 

Minnesota, Delta Airlines, Inc., Sovereign Air, and on Great Lakes Aviation, Ltd.

By:

Susan Kurland

Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available on the World Wide Web at

http://www.regulations.gov
Appendix A

Nonstop Great Circle Miles to Minneapolis (MSP)

RST, Rochester, 76

BRD, Brainerd, 114

DLH, Duluth, 144

HIB, Hibbing, 174

BJI, Bemidji, 199

FAR, Fargo, 223

INL, International Falls, 255

TVF, Thief River Falls, 261

GFK, Grand Forks, 284
Appendix B

Great Lakes Aviation, Ltd., Proposal for Essential Air Service at

International Falls, Minnesota, Docket 2009-0304

Aircraft Beech 1900 D

Departures 1/ 1,840

Block Hours 2,454

Passengers 28,750

Passenger Revenue $3,235,813

Other Revenue $20,062

 Total Revenue $3,255,875

Flying Operations $429,794

Fuel $1,222,302

Maintenance $601,152

Aircraft & Hull $365,710

 Total Directs $2,618,958

Total Indirects $1,427,825

Total Operating $4,046,783

Profit $202,339

Economic Cost $4,249,122

Subsidy $993,247

1/ 18 round trips per week x 2 directions x 52 weeks x .98 completion x 313/312 = 1,840

Tentative Weekday Schedule

INL to MSP MSP to INL

 6:30 to 7:45 10:32 to 11:57

12:12 to 1:27 2:15 to 3:40

3:55 to 5:10 7:45 to 9:10
Appendix C

Delta Air Lines, Inc., Essential Air Service to be Provided to 

International Falls, Minnesota, Docket 2009-0304

Effective Period: Start of Great Lakes’ Service at International Falls, through the 24th month thereafter.

Scheduled Service: 18 nonstop round trips per week to Minneapolis (MSP)

Aircraft Type: Beech 1900, 19 seats

Rate per Flight: $5401

Weekly Ceiling: $19,4402

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 this rate, 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 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 30, 2012. The Government’s obligation 

for performance under this Order beyond September 30, 2012, 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 30, 2012, until funds are made available to the Department for performance. If funds are not 

made available for performance beyond September 30, 2012, 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 Annual compensation of $993,247, divided by 1,840 annual flights, calculated as follows:

18 round trips per week x 2 directions x 52 weeks x .98 completion x 313/312 =1,840. 

2 36 flights per week x $540.