Order 2010-5-16

Served: May 13, 2010

 

UNITED STATES OF AMERICA 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

WASHINGTON, D.C. 

Issued by the Department of Transportation

on the 13th day of May, 2010

ORDER SELECTING CARRIER

AND ESTABLISHING SUBSIDY RATES

Summary

By this order, the Department is selecting Mesaba Aviation, Inc. d/b/a Delta Connection

(Mesaba), to continue providing subsidized essential air service (EAS) at Laurel/Hattiesburg, 

Mississippi, for the two-year period beginning July 1, 2010, at the annual subsidy rate of 

$1,398,798.1 (See Appendix A for a map of the service area.)

Background

Laurel/Hattiesburg is guaranteed to receive at least a minimum level of air service under the 

EAS program by virtue of the fact that it appeared on a certificated carrier’s Civil Aeronautics 

Board-issued certificate on October 24, 1978, the date the Airline Deregulation Act of 1978 was

signed into law. (See 49 U.S.C. 41731-41744 for the EAS program’s governing statutes.) By 

Order 2008-4-2, April 1, 2008, the Department selected Mesaba to provide subsidized EAS at 

Laurel/Hattiesburg for the two-year period through June 30, 2010. That order established the 

annual subsidy rate of $1,191,435, for service consisting of 14 nonstop round trips per week to 

Memphis with 34-seat Saab 340 aircraft.

In anticipation of the end of the rate term, the Department issued Order 2010-2-29, February 26,

2010, requesting proposals from carriers interested in providing replacement service at the 

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

Essential Air Service at

LAUREL/HATTIESBURG, MISSISSIPPI 

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

 

 

DOCKET DOT-OST-2001-10685 
2

community, with subsidy support if necessary, for the two-year period beginning July 1, 2010. 

In response, we received proposals from Mesaba and Sovereign Air, Inc.

Carrier Proposals

Mesaba proposes to continue providing its current level of service, doing business as Delta 

Connection, consisting of 14 nonstop round trips per week to Memphis with 34-seat Saab 340 

aircraft, at the annual subsidy rate of $1,398,798. Sovereign proposes to provide four nonstop 

round trips per day to New Orleans with 19-seat Jetstream 32 aircraft, at the annual subsidy rate 

of $999,248.

Community Comments

In response to our request for comments, we received letters from several community officials. 

Willam K. Ray, Chairman of the Hattiesburg-Laurel Regional Airport, supports Mesaba’s 

proposed service, stating that to reduce the size of the aircraft and change hub locations at this 

time would be detrimental to both the Airport and the Laurel-Hattiesburg community. 

Johnny L. DuPree, Mayor of Hattiesburg, prefers Mesaba’s continued service based on past 

service and performance to the area, seat capacity, hub location and more connections for 

travelers. Melvin Mack, Mayor of Laurel, states that he feels that Mesaba is the better choice 

and will continue to help the community grow.

Decision

After careful consideration of carriers’ proposals, as well as the community’s comments, we 

have decided to select Mesaba to continue to provide EAS at Laurel/Hattiesburg, as proposed,

for a new two-year period beginning July 1, 2010.

The EAS program’s governing statutes (see 49 U.S.C. 41732(b)) guarantee certain service 

minimums. In addition, when selecting a carrier to provide EAS, we must take into 

consideration four statutory 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.

Although Mesaba’s subsidy rate is higher than Sovereign’s, Mesaba meets all of the statutory 

carrier-selection criteria. The carrier has provided reliable service at Laurel/Hattiesburg, as well

as other communities throughout the EAS program, for many years, whereas Sovereign has no 

track record of reliability. In addition, Mesaba has contractual and marketing agreements with 

Delta at Memphis International Airport, providing excellent connecting opportunities to the 

national air transportation system; Sovereign has none. Furthermore, we note that Sovereign 

does not have the requisite authority from either the Federal Aviation Administration or the 

Department to operate its service as proposed. Lastly, Mesaba has the full support of the 

community.

Therefore, based on all of the above, we will select Mesaba to continue providing EAS at 

Laurel/Hattiesburg for a new two-year period, beginning July 1, 2010. We find that the service 

and subsidy levels are reasonable, and will meet the community’s EAS needs.
3

We shall make this selection contingent upon the Department’s receiving properly executed 

certifications from Mesaba Airlines that it is in compliance with the Department’s regulations 

regarding drug-free workplaces and nondiscrimination, as well as the regulations governing

lobbying activities.

Finally, while we appreciate Sovereign Air’s interest in participating in the EAS program, we 

will not select its proposal here for the reasons we have stated above. However, we encourage 

Sovereign to continue its efforts toward becoming an operating commuter carrier and look 

forward to receiving proposals from the carrier in the future.

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. Mesaba 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. 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 remains fit to conduct the operations proposed 

here.

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

ACCORDINGLY,

1. The Department selects Mesaba Aviation, Inc. d/b/a Delta Connection, to continue to

provide EAS at Laurel/Hattiesburg, Mississippi, and establishes the subsidy rates, as detailed in 

Appendix B, for the two-year period beginning July 1, 2010;

2. We set the final rate of compensation for Mesaba, for the provision of essential air service at 

Laurel/Hattiesburg, payable as follows: for each month during which EAS is provided, the 

amount of compensation shall be subject to the weekly ceiling set forth in Appendix C-1 and 

shall be determined by multiplying the subsidy-eligible arrivals and departures completed 

during the month by $991;2

3. The Department finds that Mesaba continues to be fit, willing and able to operate as a 

certificated air carrier and capable of providing reliable EAS at Laurel/Hattiesburg;

4. We direct Mesaba 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 carrier may forfeit its compensation for any claim that is not 

supported under the terms of this order;

5. Docket DOT-OST-2001-10685 will remain open until further order of the Department; and

 2 See Appendix C for the calculation of this rate, which assumes the use of the aircraft designated. If the carrier 

reports a significant number of aircraft substitutions, a revision of this rate may be required.
4

6. The Department will serve a copy of this order on the mayors of Laurel and Hattiesburg, the 

airport manager of the Hattiesburg-Laurel Regional Airport, Mesaba Aviation, Inc. d/b/a Delta 

Connection, and Sovereign Air, Inc.

By:

SUSAN L. KURLAND

Assistant Secretary for Aviation

 and International Affairs

(SEAL)

An electronic version of this document is available online at

www.regulations.gov
Appendix A

LAUREL/HATTIESBURG, MS

and Surrounding Areas
Appendix B

MESABA AVIATION, INC. d/b/a DELTA CONNECTION

ANNUAL COMPENSATION REQUIREMENT FOR ESSENTIAL AIR SERVICE AT

LAUREL/HATTIESBURG, MISSISSIPPI
Appendix C

Page 1 of 2

MESABA AVIATION, INC. d/b/a DELTA CONNECTION

ANNUAL COMPENSATION REQUIREMENT FOR ESSENTIAL AIR SERVICE AT

LAUREL/HATTIESBURG, MISSISSIPPI

Effective period: July 1, 2010, through June 30, 2012

Service: 14 nonstop round trips per week to Memphis

Aircraft type: Saab 340 aircraft (34 seats)

Timing of flights: No upline or intermediate service is permitted without prior 

Department approval. Flights must be well-timed and wellspaced in order to ensure full compensation.

Annual compensation: $1,398,798

Subsidy Rate Per

Arrival/Departure: $9911

Weekly Compensation 

Ceiling: 2 $27,7483

___________________________

1

 Annual compensation of $1,398,798 divided by 1,412 annual arrivals and departures calculated as 

follows: 28 flts/week x 52 weeks x 97% completion = 1,412 2

 This rate assumes an annual completion factor of 97 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.

3

 Subsidy rate per arrival/departure of $991 multiplied by 28 eligible arrivals and departures.
Appendix C

Page 2 of 2

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 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 September 30, 2010. 

The Government's obligation for performance under this order beyond September 30, 2010, is

contingent upon 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, 2010, until funds are made available to the 

Department for performance. If funds are not made available for performance beyond 

September 30, 2010, the carrier will receive notice in writing by the Department.

All claims for payment must be submitted within 60 days of the last day of service provided 

under this order.