Order 2010

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- 16

Served: May 13 , 20 10



### UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 13 th day of May, 2010

ORDER SELECTING CARRIER
AND ESTABLISHING SUBSIDY RATE S

Summary By this order, the Department is select ing Mesaba Aviation , Inc. d/b/a Delta Connection ( Mesaba )

, to continue p rovid ing subsidized essential air service (EAS) at Laurel/Hattiesburg, Mississippi

, for the two

- year period beginning Ju ly 1, 20 10 , at the annual subs idy rate of $ 1,398,798

. 1 (See Appendix A for a map of the service area

. )

Background Laurel/Hattiesburg i s 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 o f 1978 was signed into law. (See 49 U.S.C. 417 3 1

- 41744 for the EAS program’s governing statutes.) By

Order 200 8

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- 2

, April 1 , 200 8 , the Department selected Mesaba to provide subsidized EAS at Laurel/Hattiesburg for the two

- year period through June 3 0 , 20 10 . That order established the annual subsidy rate of $1,191,435

, for service consisting of 1 4 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 20 10

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- 29

, Feb ruary 2 6

, 20 10 , 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

- 200 1

- 106852

communit y , with subsidy support if necessary, for the two

- year period beginning July 1, 2010

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

.

Carrier Proposal s 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 sever al 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 Laur el, states that he feels that Mesaba is the better choice and will continue to help the community grow.

Decision

After careful consideration of carriers ’ proposal s
, as well as the communit y’s comments, w e have decided to select Mesaba to continue to provi de EAS at Laurel/Hattiesburg , as proposed

, for a new two

- year period beginning July 1, 20 10

.

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 t ake 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 s ubsidy 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 Soverei gn 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. F urthermore, 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

communit y

.

Therefore, based on all o f 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 comm unity ’ 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 bec oming 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

Avi ation 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 1.5 6a(f).

ACCORDINGLY,

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

, to continue to provide EAS at Laurel/Hattiesburg, Mississippi , a nd establishes the subsidy rate s , as detailed in Appendix B , for the two

- year period beginning Ju l y 1, 20 10 ;

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 c eiling 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

certificat ed 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 m anner 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 l ogs 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 desi gnated. 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 m ayor s 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

Assi stant Secretary for Aviation

and International Affairs

(SEAL)

An electronic version of this document is available on line 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, 20 10 , through June 3 0 , 201 2

Service: 1 4 non stop round trips per week to Memphis

Aircraft type: Saab 340 aircraft (34 seats)

Timing of flights: No upline or intermediate service is permit ted without prior Department approval. Flights must be well

- timed and well

spaced in order to ensure full compensation.

Annual compensation: $ 1,398,798

Subsidy Rate Per Arrival/Departure: $ 991 1

Weekly Compensation Ceiling: 2 $ 2 7

, 748 3

___________________________ 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 9 7 % completion = 1,412

2 This rate assumes an annual completion factor of 9 7 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 sup porting 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 conforman ce 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 t o 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 amendm ents 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 mad e 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 da y of service provided

under this order.