Order: 2013

- 11

- 15

Served November 21, 2013



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 21 st day of November , 201 3

Essential Air Service at

GLASGOW, MONTANA

GLENDIVE, MONTANA

HAVRE, MONTANA

SIDNEY, MONTANA

WOLF POINT, MONTANA

under 49 U.S.C. § 41731 et seq

. Docket DOT

- OST

- 1997

- 2605

ORDER EXTENDING SERVICE OBLIGATION

Summary

By this Order, the Department prohibits Silver Airways (“Silver”) , from terminating Essential

Air Service (“EAS”) operations at Glasgow, Glendive, Havre, Sidney, and Wolf Point, Montana

, for 30 days, through December 2 5 , 2013

.

Background

By Order 2011

- 1

- 27, serv ed on February 3, 2011, the Department selected Gulf stream

International Airlines , subsequently re

- named Silver Airways, to provide subsidized EAS with

19

- passenger Beechcraft B

- 1900D aircraft at Lewistown, Miles City, Glasgow, G lendive, Havre,

Sidney, and Wolf Point, Montana , for a two

- year period beginning when the carrier inaugurated

service through the end of the 24 th month thereafter. The carrier inaugurated full EAS at the

Montana communities on May 15, 2011, thus setting an expiration date of May 31

, 2013.

Subsequently, by Order 2013

- 6

- 3, issued on June 4, 2013, the Department extended that contract

until further Departmental action to ensure that Silver will continue to receive EAS subsidy for

its service and to prevent a service hiatus at the ab ove communities

. By Order 2013

- 6

- 13, issued

on June 12, 2013, the Department finalized the termination of eligibility of Lewistown and Miles

City, and allowed Silver to suspend service at both communities, if it chose to, effective

July 16, 2013. 1

That Order also solicited proposals for a new contract period for the remaining five Montana

communities.

1 In addition to Order 2013

- 6

- 13, see Order 2013

- 3

- 13, issued on March 28, 2013, for a complete discussion of

legislative changes that affected Lewiston and Miles City’s eligibility in the EAS program.2

The complete public file for EAS for the Montana communities may be accessed online through

the Federal Dockets Management System at: http://www.regulations.gov by entering

“DOT

- OST

- 1997

- 2605” in the “SEARCH for: Rules, Comments, Adjudications or Supporting

Documents:” field.

Notice of Silver to Terminate S ervice and S ubsequent D evelopments

On June 28, 2013

, Silver filed a 90

- day notice of its intent to terminate its subsidized service at

Lewistown, Miles City, Glasgow, Glendive, Havre, Sidney, and Wolf Point effective

September 26, 2013. On July 19, 2013, the Department issued Order 2013

- 7

- 16, prohibiting

Silver from terminating service for 30 days beyond the end of the 90

- day notice period, until

October 26, 2013

.

Proposals and Selection Order

As noted above, by Order 2013

- 6

- 13, the Department requested proposals from air carriers interested

in providing EAS at Glasgow, Glendive, Havre, Sidney, and Wolf Point. In response to that Order,

the Department received three proposals

, and b y Order 2013

- 9

- 4, issued on September 5, 2013, the

Department selected Hyannis Air Service, Inc., D/B/A Cape Air (“Cape Air”), to provide EAS

with 9

- passenger Cessna 402 aircraft at Glasgow, Glendive, Havre, Sidney, and Wolf Point,

Montana, for a two

- year period begin ning when Cape Air begins full EAS operations at all five

of the above communities through the end of the 24 th month thereafter.

Hold

- In

Cape Air intends to start providing EAS at Glasgow, Glendive, Havre, Sidney, and Wolf Point

on December 10, 2013 , an d its flights are currently available for sale

. The current hold

- in

period, established by Order 2013

- 10

- 6, runs through November 25, 2013. Therefore, in

accordance with 49 U.S.C. § 41734(c), we must extend the service obligations of Silver for an

additi onal 30 days, through December 25, 2013, or until Cape Air actually begins service at all

five of the above communities

, which ever occurs first

. 2

This Order is issued under the authority delegated in 49 CFR Part 1.25a(b)

.

ACCORDINGLY,

1. The Department prohibits Silver Airways from suspending its service at Glasgow,

Glendive, Havre, Sidney, and Wolf Point, Montana

, for 30 days and require s it to maintain its

current level of service, as specified in Appendix A of this Order , through

Decemb er 25

, 2013 , or until Hyannis Air Service, Inc., D / B / A Cape Air actually begins EAS

operations , whichever comes first;

2. We direct Silver Airways to retain all book s , records, and other source and summary

documentation to support subsidy 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 documentatio n shall be retained for seven years from the date of service

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 air

2 In accordance with 49 U.S.C. § 41734(c), the Department will extend Silver ’s service obligation for successive

30

- day periods as ne cessary until replacement service actually begins. During this process, we will continue to

compensate Silver at rates pursuant to Order 2011

- 1

- 27

.3

carri er may forfeit its compensation for any claim that is not supported under the terms of this

O rder.

3

. Th is Docket will remain open until further o rder of the Department; and

4. We will serve copies of this Order on the mayors of Glasgow, Glendive, Havre, Sidney, and

Wolf Point, Montana, and the airport managers of Wokal Field/Glasgow International Airport,

Dawson Community Airport (Glendive)

, Havre City

- County Airport, Sidney

- Ric hland

Municipal Airport, L.M. Clayton Airport ( Wolf Point ) , and the service list for this docket.

Persons entitled to petition the Department for review of this Order under the Department’s

Aviation Economic Regulations, 14 CFR Part 385.31(a), must file s uch petitions within seven (7)

days after the date of service of this Order.

This Order will be effective immediately, and the filing of a petition for review shall not

preclude its effectiveness.

By:

TODD M. HOMAN

Director

Office of Aviation Analysis

(SEAL)

An electronic version of this document is available at

http://www.regulations.govAppendix A

Page 1 of 2

Silver Airways Essential Air Service

to be Provided at Havre, Glendive, and Glasgow , Montana

Effective Period: November 26, 2013, through December 25, 2013

Schedule Service: Havre: twelve one

- stop round trips each week to Billings

Gl endive: twelve one

- stop round trips each week to Billings

Glasgow: five nonstop and seven one

- stop round trips each week

to Billings

Intermediate Stop and

Upline Service: Havre: No service to any intermediate or upline points are

permitted ; accordingly, no such service may be provided on

subsidized flights without prior Department approval.

Glendive : No service to any intermediate or upline points are

permitted ; accordingly, no such service may be provided on

subsidized flights without prior Department approval.

Glasgow : an intermediate stop at Wolf Point, Montana may be

served on seven weekly subsidized round trips.

Aircraft Typ e: Beechcraft B

- 1900D (19 passenger seats)

Timing of Flights: Flights must be well

- timed and well

- spaced in order to ensure full

compensation.

Annual Compensation: Havre : $ 1,162,329

Gl endive : $ 1,193,391

Glasgow : $ 1,166,049

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.

Subsidy Rate per Flight: Havre : $ 9 60 3

Gl endive : $ 98 6 4

Glasgow : $ 96 3 5

Weekly Compensation

Ceiling: Havre : $ 23, 040 6

Gl endive : $ 23, 664 7

Glasgow : $ 23,1 12 8

3 $ 1,162,329 divided by 1, 211 annual departures: 24 flights x 52 weeks x .97 (completion factor) = 1, 211

. 4 $ 1,193,391 divided by 1, 211 annual departures : 24 flights x 52 weeks x .97 (completion factor) = 1,211

. 5 $ 1,166,049 divided by 1, 211 annual departures : 24 flights x 52 weeks x .97 (completion factor) = 1,211

. 6 2 4 flights per week multiplied by $ 960 per flight.

7 24 flights per week multiplied by $ 986 per flight.

8 2 4 flights per week multiplied by $ 963 per flight.Appendix A

Page 2 of 2

Silver Airways Essential Air Service

to be Provided at Sidney and Wolf Point , Montana

Effective Period: November 26, 2013, through December 25, 2013

Schedule Service: Sidney: Seventeen nonstop round trips each week to Billings

Wolf Point : Seven nonstop and five one

- stop round trips per

week to Billings

Intermediate Stop and

Upline Service: Sidney: No service to any intermediate or upli ne points are

permitted ; accordingly, no such service may be provided on

subsidized flights without prior Department approval.

Wolf Poin t : an intermediate stop at Glasgow, Montana may be

served on five weekly subsidized round trips.

Aircraft Type: Beechcraft B

- 1900D (19 passenger seats).

Timing of Flights: Flights must be well

- timed and well

- spaced in order to ensure full

compensation.

Annual Compensation: Sidney : $ 2,932,152

Wolf Point : $ 1,502,378

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.

Subsidy Rate per Flight: Sidney : $1, 7 10 9

Wolf Point : $1 ,24 1 10

Weekly Compensation

Ceiling: Sidney : $ 58,1 31 11

Wolf Point : $ 29,77 5 12

9 $ 2,932,152 divided by 1,715 annual departures : 34 f lights x 52 week x .97 ( completion factor) = 1, 715

. 10 $ 1,502,378 divided by 1, 211 annual departures : 24 flights x 52 week x .97 ( completion factor ) = 1,211

. 11 34 flights per week multiplied by $1, 710 per flight.

12 24 flights per week multiplied by $1, 241 per flight.Appendix B

NOTE:

The air c a rr i e r un d er st a nds t h a t it m a y f o rfe it its c omp e ns a tion f or a n y f li g hts th a t it do e s not

op era te in c o n f o r m a n c e with the t er ms a nd stipul a tions of the ra te Order

, i n c luding the s er vi c e

pl a ns outlin e d in the Order a nd a n y oth e r s i g ni f i c a nt e l e m e nts of the re qui re d s er vi ce , without

p r ior a p p r ov a l. The air c arr i e r und e r st a nds th a t a n a i r cr a f t t a k e

- o f f a nd l a nding a t its s c h e du l e d

d e stin a tion c onstitut e s a c ompl e t e d f li g ht; a bs e nt a n e x pl a n a tion suppo r ting subsi d y e li g i b ili t y f o r

a f l i g ht th a t h a s n ot b ee n c ompl e t e d, su c h a s cer t a in w ea th e r ca n ce ll a tions, o n l y c ompl e t e d f li g hts

a r e c onsid ere d e l i g ible f or su b si d y

. I n a ddition, if the air carr i e r d o e s not s c h e dule or o p era t e its

f li g hts in f ull c on f o r m a n c e with the Order f o r a s i g ni f i ca nt p e r iod, it m a y j e op ar di z e its e nti r e

subsi d y c l a im f or t he p er iod in qu e stion. I f the air c a rr i e r c ont e mpl a t e s a n y su c h c h a ng e s b e y ond

the s c ope o f the Order du r ing the a ppli ca ble p e r iod of th e se ra t e s, it must f i r st noti f y the O ff i c e of

Avi a tion An a l y sis in w r iti n g a nd r ece ive w r itt e n a pp r o v a l f r om the D e p a r tm e nt to be e nsu re d o f

f ull c omp e ns a tion. S hould c i rc umst a n ce s w arr a n t , the D e p ar tm e nt m a y l o c a te a nd s e l e c t a

re pl a ce m e nt air c arr i e r to p r ovide s er vi c e on th e se r out e s. The air c a rr i e r must c ompl e te a ll

f li g hts th a t ca n b e s a f e l y op era t e d; f l i g hts th a t ov e rf l y points f o r l ac k of t r a f f ic will not be

c omp e ns a t e d. I n d e t er m i ning wh e t h e r subsi d y p a y m e nt f o r a d e v i a ting f l i ght should be a djust e d

or dis a llow e d, t he D e p a r tm e nt will c onsid e r the e x t e nt to whi c h the g o a ls of the p r og ra m a r e m e t

a nd the e x t e nt of acce ss to the n a tion a l a ir t ra nspo r t a tion s y s t e m p r ovid e d to the c ommuni t y

.

I f the D e p ar tm e nt unil a t e ra l l y

, e ith e r p a r ti a l l y or c ompl e t e l y , t er min a t e s or re du ce s p a y m e nts f or

s e r vi c e or c h a ng e s s er vi c e r e qui re m e nts a t a sp ec i f ic lo c a tion p r ovid e d f or und e r this Order, th e n,

a t the e nd of the p e r iod f or whi c h the D e p ar tm e nt d o e s m a ke p a y m e nts in the stipul a t e d a mounts

or a t the stipul a t e d s er vi c e l e v e ls, the air c a rr i e r m a y cea se to p r ovide s er v i c e t o th a t sp ec i f ic

lo c a tion without re g a r d to a n y r e qui re m e nt f or noti c e of su c h c e ss a tion. Those a djustm e nts in the

l e v e ls of subsi d y a nd/or s er vi c e th a t ar e mutu a l l y a g r ee d to in w r iting b y the D e p ar tm e nt a nd air

ca r r i e r do not c on s titute a tot a l or p ar ti a l re d u c tion or ce ss a tion of p a y m e nt.

Funds may not be available for performance under this Order beyond January 15, 2014. The

Government’s obligation for performance under this Order beyond January 15, 2014, is subject

to the availability of 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

January 15, 2014, until funds are made available to the Department for performance. If

sufficient funds are not made available for perform ance beyond January 15, 2014, the

Department will provide notice in writing to the carrier.

S ubsi d y c ont r a c ts ar e su b j ec t to, a nd in c o rpo r a te b y r ef e re n c e

, r e l e v a nt st a t ut e s a nd D e p ar tm e nt

r e g ul a tions, a s th e y m a y be a m e nd e d fr om time to tim e . How e v er

, a n y su c h st a tut e s, r e g ul a tions,

or a m e ndm e nts th ere to sh a ll not op era te to c ont r o v er t the f o r e g oi n g p ar a g r a ph.

All claims for payment, including any amended claims, must be submitted within 90 days of the

last day of the month for which compensation is being claimed. For example, claims for service

provided in July must be filed by October 31 st ; August claims must be submitted by November

30 th , and so on.