Order 2012 - 6 - 9 **Served: June 15**  **, 2012** 

### UNITED STA**TES OF A MERICA**  **DEPA RTMENT OF TRA**  **NSPORTA TION**  **OFFICE OF THE SECRETA RY**  **WA SHINGTON, D.C.**  Issued b y the Department of Transportation on the 15th day

of June , 2012

**ORDER REQUESTING PROPOSA**  **LS Summary**  By this O rder, the Department is requesting proposals from carriers interested in providing Essential Air Service ( EAS ) at any or all of the four communities captioned above for a new contract period , with or without subsidy . (See Appendix A for a service area map ) . Carriers should file their proposals no later than July 16 , 2012. **Background** On July 15, 2011, Mesaba Aviation, Inc. (Mesaba) , and Pinnacle Airlines (Pinnacle) , subsidiaries of Pinnacle Airlines Corporation, d/b/a Delta Connection (Delta), filed 90 - day notices of their intent to suspend their joint service at Iron Mountain/Kingsford (Iron Mountain) , Michigan, Brainerd and International Falls, M innesota, effectiv e October 13, 2011. 1 By

Order 2011 - 9 - 5, September 13, 2011, the Department prohibited Delta from terminating service at these three communities in accordance with 49 U.S.C. § 41734(b), and requested proposals for replacement service b y October 12, 2011, l ater extended to October 14, 2011. The notices at these three communities were triggered b y Mesaba/Pinnacle’s retirement of its 34 - seat Saab aircraft. The service at these three communities is now prov ide d with 50 - seat regional jets. As a result of the larger jet aircraft replacing the smaller Saab 340 aircraft, the Department b y several subsequent Orders 2 has require Delta to maintain the statutory frequency

require ment of two round trips a day , six day s a week, i.e., twelve round trips a week, at annual rates of $ 2,090,534 1 Delta filed notice at twenty four (24) communities. This order addresses only three communities and Rhinelander, Wisconsin, where Chautauqua Airlines, Inc. currently provides EAS. 2 See Orders 2011 - 11 - 8, 2011 - 11 - 33, 2011 - 12 - 25, 2012 - 1 - 32, 2012 - 2 - 19, 2012 - 3 - 15, 2012 - 5 - 5 and 2012 - 6 - 3. Essential Air Service at **IRON MOUNTA IN/KINGSFORD, MICHIGA**  **N; BRA**  **INERD, MINNESOTA ;**  **INTERNA TIONA**  **L FA LLS, MINNESOTA**  **; and RHINELA**  **NDER, WISCONSIN** Under 49 U.S.C. 41731 et seq . **DOT -**  **OST -**  **1999 -**  **5175; DOT**  **- OST**  **- 2011**  **- 0135;**  **DOT -**  **OST -** **2009 -**  **0304; and DOT**  **- OST**  **- 2011**  **- 0109** - 2 -

at Iron Mountain and $ 1,309,886 at International Falls. 3 We are currently negotiating a hold - in subsidy

rate with Delta for its Brainerd service . At Rhinelander, on September 12, 2011 , Chautauqua Airlines, Inc., a wholly owned subsidiary

of Republic Airway s Holdings and doing business as Frontier Airlines (Chautauqua) filed a 90 - day notice with the Department of its intent to terminate its then unsubsidized service, effective December 11 , 2011 . By Order 2011 - 10 - 15 ( October 20, 2011 ) , the Department prohibited Chautauqua from suspending service through December 11, 2011 , and requested proposals from carriers interested in providing replacement service. B y several subsequent Orders , 4 the Department has require Chautauqua to maintain the statutory frequency

requirement of two round trips a day , six days a week, i.e., twelve round trips a week, utilizing Embraer 135 (37 - seats) or Embraer 145 (50 - seats) at an annual rate of $1,837,638. 5 By O rder s 2011 - 11 - 30 (November 23, 2011), 2012 - 3 - 5 (March 7, 2012) and 2012 - 4 - 8 (April 5, 2012) , the Department selected Great Lakes Aviation, Ltd. (Great L akes) to provide EAS at all four of communities for a two - ye ar period beginning when it inaugurates full service at the communities through the end of the 24 th month thereafter. O n June 11, 2012, however, Great Lakes sent an e - mail to the Department encouraging the re - solicitation of proposals for EAS at Iron Mountain, Brainerd, International Falls and Rhinelander. Great Lakes explained that it has recently experienced an aggressive expansion, is in the process of re - engineering its business model ( including its approach to code - sharing and the associated reservation s ys tem infrastructure) , has concerns regarding availability

of gates and facilities to expand further at Minneapolis/St. Paul, and does not want to hinder communities from considering other alternatives. In response to Great Lakes’ notific ation, we contacted all four communiti es and they support our issuing a new request for proposals. As a result, we will now solicit proposals from carriers interested in providing service to any or all of these communities. **Request for Proposals** Carriers should file their proposals no later than July 16 , 2012 . Staff will then docket proposals, thereb y making them public, and shortly afterwards will provide a summary of the proposals to the communities and ask them for their final comments. We will give full consideration to all proposals that are timel y filed. 6 Interested carriers should prepare their proposals with every expectation that their initial proposals will represent their final and only proposals. However, we retain the discre tion to negotiate proposals with carriers when we deem it desirable. We also retain the 3 See Order 2011 - 9 - 5 4 See Orders 2012 - 4 - 1, 2012 - 5 - 3 and 2012 - 5 - 26 5 See Order 2012 - 3 - 5 6 Carriers should not expect the Department to accept late fillings. In cases where a carrier proposes to provide essential air service without subsidy and we determine that service can be reliably provided without such compensation, we typically do not pr oceed with the carrier - selection case. Instead, we sim ply rely on that carrier’s subsidy - free service as proposed.- 3 -

discretion to reject outright all unreasonable or unrealistic proposals and re - solicit a new round of proposals. However, negotiation and rejection are onl y occasional exceptions to the rule. We are here providing interested carriers with some basic information to serve as guidance when they

prepare their proposals, but we will not prescribe a precise format for their proposals. We expect proposals to adequately describe the service being proposed and the annual amount of subsidy being requested. The applicants can make their own judgments as to the level of detail they wish to present; however, they might want to include proposed schedules as well as supporting data for their subsidy requests, such as projected block hours, revenues and expenses. We strongl y encourage clear, well documented proposals that will facilitate their evaluation by the affected communities and the Department. 7 Specificall y, we expect propo sals to Minneapolis/St. Paul , Detroit, Chicago O’Hare , or any other large or medium hub airport offering numerous connections to the natio nal air transportation sy stem at service levels described in the table below. 8 **Community Round Trips per Day**  **/Week 1**  **Enplanements**

**per Day 2**  **34 seaters 30 seaters**  **19 seaters** Iron Mountain, MI 2/12 2/14 3/18 32.8 Brainerd, MN 2/12 - 14 3/18 3 - 4/18 - 24 51.8 International Falls, MN 2/12 - 14 2 - 3/12 - 18 3 - 4/18 - 24 45.8 Rhinelander, WI 2/12 - 14 2 - 3/12 - 18 3 - 4/18 - 24 99.8 **Notes:** 1. The requested frequency of service assumes that the service would be provided on a nonstop

turnaround basis. If two communities are service under a linear route, thus sharing seats, we wo uld consider proposals with additional frequencies from those outlined above. 2. Source - US DOT Bureau of Transportation Statistics, Forms T - 100 Market Report for YE 9/30/2011. Based on Origin and Destination Passengers divided by 2 (for two directions), divided by 313 service days, where each weekend is equal to one service day. The communities and air carriers are encouraged to work together in advance of the due date for proposals to craft a service patter n that is desirable to the communities and meets the operational need of the airline interested in submitting a proposal. In addition, 7 In selecting a carrier to provide subsidized essential air service, 49 U.S.C. 41733(c) (1) directs us to consider four factors: (a) scheduled service reliability; (b) contractual and marketing arrangements with a larger carrier to ensure service beyond the hub; (c) interline arrangements that the applicant has made with a larger carrier at the hub; and (d) community views, giving substantial weight to the views of the elected officials representing the users. In addition, the Consolidated Appropriations Act, 2008, Public La w 110 - 161, provides that when selecting a carrier to provide EAS, the Department may consider the relative subsidy requirements , thus codifying a factor that we have considered since the inception of the program. Interested carriers should also be aware that our general provisions governing EAS will be included in the selection order as part of our authorization of subsidy for the selected service. Appendix C of this order contains those general provisions. 8 Pr eviously, most EAS communities were entitled to service with 15 - seat or larger aircraft. However, for FY 2012, Congress repealed the minimum requirement that basic EAS include service with at least 15 - seat or larger aircraft. See Consolidated and Further Continuing Appropriations Act, P.L. 112 - 55, November 18, 2011. Communities are still entitled to service with twin - engine aircraft.- 4 -

carriers should be very

clear as to whether a specific community ’s proposal is on a stand alone basis, or whether it is part of a larger, inseparable package with other communities . **Service and Traffic History** In order to assist carriers in developing traffic and revenue projections for their proposals, we have summarized passenger traffic in table above . For the year ended Septe mber 30, 20 11 , Iron Mountain averaged approximately 33 enplanements a day , Brainerd , 52, International Falls, 46, and Rhinelander, 100 . **New Filing Procedures** Carrier proposals should be submitted to the Department with all materials compiled into a single document. In addition, because the document will be published on http://www.regulations.gov/ , each page should be formatted to be viewed online and for eas y printing. **Other Carrier Requirements** The Department is responsible for implementing various Federal statutes governing lobbying activitie s, drug - free workplaces, and nondiscrimination. 9 Consequently , all carriers receiving Federal subsidy for Essential Air S ervice must certify that they are in compliance with Department regulations regarding drug - free workplaces and nondiscrimination, and those carriers whose subsidies exceed $100,000 over the life of the rate - term must also certify that they are in compliance with the regulations governing lobbying activities. Because the Department is prohibited from paying subsidy to carriers that do no t submit these documents, all carriers that plan to submit proposals involving subsidy should be aware that the selected carrier will be required to complete the required certifications. Interested carriers requiring more detailed information regarding th ese requirements should contact the Office of Aviation Analy sis at (202) 366 - 5903. 10 **Community and State Comments** The communities and States are welcome to submit comments at any time. We encourage prospective applicants to contact the communities before they submit their proposals so that they

can tailor them to the communities’ needs, as they will not be able to amend them after the due date. As noted earlier, we will provide a summary of the proposals to the civic parties and ask them to submit their f inal comments shortly

after July 1 6 , the deadline for carrier proposals. This O rder is issued under authority delegated in 49 CFR 1.56a(f).

9 The regulations applicable to these areas are: (1) 49 CFR Part 20 -- New restrictions on lobbying; (2) 49 CFR Part 21 - - Nondiscrimination in federally - assisted programs of the Department of Transportation -- Effectuation of title VI of the Civil Rights Act of 1964; 49 CFR Part 27 -- Nondiscrimination on the basis of disability in programs and activities receiving or benef iting from Federal financial assistance; and 14 CFR Part 382 -- Nondiscrimination on the basis of disability in air travel; and (3) 49 CFR Part 29 -- Government - wide debarment and suspension (non -procurement) and government wide requirements for drug - free wo rkplace (grants). 10 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.- 5 -

**AC CORDINGLY,**  1 . We request that carriers interested in providing Essential Air S ervice at Iron Mountain/Kingsford, Michigan, Brainerd and International Falls, Minnesota , and/or Rhinelander, Wisconsin, submit their proposals, with or without subsidy requests, no later than July 16 , 2012. The proposals should be e - mailed to: EAS@dot. gov with the title “Proposal to Provide Essential Air Service at Iron Mountain/Kingsford, Michigan, Brainerd and International Falls, Minnesota, and/or Rhinelander, Wisconsin, ” with the docket number corresponding to the communities as s hown on the first page of this O rder; 11 2 . These Dockets will remain open until further order of the Department; and 3 . We will serve copies of this O rder on the parties listed in Appendix C . Persons entitled to petition the Department for review of this order under the Department’s Aviation Economic Regulations, 14 CFR 385.50, must file such petitions within ten (10) day s 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. HOMA N**  Director Office of Aviation Anal ysis (SEAL) An electronic version of this document is available online at www.regulations.gov

11 Questions regarding filings in response to this order may be directed to Brian Swanson at (202) 366 - 5392 or brian.swanson@dot.gov .

### Ap **pendix A ARE**  **A MA**  **P**

Maps generated b y the Great Circle Mapper - copy right © Karl L. Swartz

### Ap **pendix B**

**Example of**  **General Terms**  **and Conditions for Essential A ir 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 o rder 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 el ig ibility 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. I f 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 Avi ation Analy sis 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 c omplete all flights that can be safel y operated; flights that overfl y points for lack of traffic will not be compensated. In determining whether subsidy pay ment 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 sy stem provided to the community . If the Department unilaterally , either partially or complete ly , terminates or reduces pay ments for service or change s service requirements at a specific location provided for under this order, then, at the end of the period for which the Department does make pay ments 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 pay ment. 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 [DATE] . The Department’s obligation for performance unde r this order beyond [DATE] , 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 [DATE] , until funds are made available to the Department for performance. If funds are not made available for performance beyond [DATE] , the Department will provide notice in writing to the carrier. All claims for pay

ment must be submitted within 60 day s of the last day of service provided under this order.

### Ap **pendix C**  **SERVICE LIST** Air Choice One Airlines, Shane Storz Delta Air Lines, Stephen A. Hedden Pacific Aviation Group, Craig Garrick Air Greco/Wings Air Dorado Jets Pacific Aviation Group, Ron Rye Air Sunshine, In c. Dorado Jets, Mark McKenna Pacific Wings, Frank Ford Air Sunshine, Mirmohammad Adili Era Aviation, Lori Goodman Pacific Wings, Greg Kahlstorf Air West, I

nc., John Raatz Executive Airlines, Kate Soled Penn Air, Danny Seybert Air Wisconsin, Annette Da ly ExpressJet, Jon Lindlief Penn Air, Scott Bloomquist Air Wisconsin, Jim Rankin ExpressJet, Roger Weston Pinnacle Airlines, Jennifer Gammill Airline Associates, Bill Mishk Frontier Airlines, Daniel Shurz Pinnacle Airlines, Megan Rosia Alaska Airlines, Jeff Cole Frontier Flying, Bob Hajducovich Pinnacle Airlines, Phil Reed Alaska Airlines, Sandy Sinick Frontline Aviation Planemasters, I nc., John Kessler Am erican Airlines, Carl Nelson Gem Air, Dan Schroeder Planemasters, I nc., Paul Berliner Am erican Eagle, Gary Foss Gem Air, JoAnn Wolters Planemasters, I nc., Todd DeSimone Am erican Eagle, Robert Emrich Gr eat Lakes Airlines, Chuck Howell RAA, Faye Balck Am erican Eagle, Patrick Swift Gr eat Lakes Airlines, Doug Voss Raytheon, Mike Schiedt Aviation Express, Brad Shriner Homeland Security, Bill Ragan Rectrix, Aviation, Scott LaForge Aviation Technologies/Charter Air Transport, Jim Gallagher Homeland Security, David Bernier Saab Group, Polly Prelinger Bemidji Aviation, Arlen Rinkenberger Horizon Air, Jennifer Thompson Scenic, Mary Schneider Bemidji Aviation, Cori Rude Horizon Air, Mike McQeen Scenic, Mitzi Daines Cape Air, Andrew Bonney Horizon Air, Jeff Cole Seaborne Airlines, Shawn Lewis Cape Air, Dan Wolf ICEPR, Luis I rizarry SeaP ort Airlines , EAS Mailbox Cape Air, J. Flaherty Intrepid I nternatl Air, Rick Eyk SeaPort Airlines. Rob McKinney Capital Aviation, Mike Colgan Is land Air Charters, Linda House Shuttle America, Jerry Balsano Chautauqua, Josh Pascoe Jet Air, Daniel Wolford Silver Airways, Darrell Richardson Classic Aviation, Tony Henderson Kenmore Air, Tim Brooks Silver Airways, Mickey Bowman Colgan Air, Kevin Scott McCall Aviation, Dan Scott SkyWest, Brad Rawson Colgan Air, Mike Colgan McCall Aviation, Michelle SkyWest, Eric Christensen CommutAir, Andy Price Mesaba, John Spanjers SkyWest, Michael Thompson CommutAir, Joel Raymond Mesaba, Max Shemesh Sovereign Air, Bob Karns Consultant, Jeff Hartz Michigan DOT, Matt Brinker Tailwind I nternational, Michele Wilkinson Consultant, Mike Mooney Midstar Airlines, Jeffrey Fonner Tatonduk, Robert Everts Consultant, Robert Silverberg Republic Air Line , Greg Aretakis Tatonduk, Robert Ragar Consultant, Ron McNeil MN Aviation, Jose Maldonado Tradewind, Eric Zipkin Continental, Bruce Keiner Multi Aero, Darnea Transport Azumah, Joel Anabilah Azumah Continental, Dan Weiss Multi Aero, Shane Storz Trans States, Fred Oxley Continental, Lorry Halloway Northern Air Cargo, David Karp Trans States, Gerry Wigmore Delta Air Lines Anthony Canitano Northern Air Cargo, Eric Van Andel Trans States, Warren Crotty Delta Air Lines, Dan Shuman NYDC, Henok Araya United, Alicia Gabriel Delta Air Lines, Dana Debel OST, Brian Swanson United, James Starnes Delta Air Lines, Jeff Davidman OST, Brooke Chapman US Airways, Benjamin Slocum Delta Air Lines, Jeff Morgan OST, Dennis DeVany US Airways, Howard Kass Delta Air Lines, Joe Esposito OST, Kevin Adams US Airways, Jason Reisinger Delta Air Lines, Kristal Murphy OST, Kevin Schlemmer Warbelows Air Ventures, Art Warbelow Delta Air Lines, Sally Veith OST, Michael Martin IM T, Airport Manager Delta Air Lines, Sascha Vanderbellen OST, Scott Faulk Iron Mountain, Mayor BRD, Airport Manager Brainerd, Mayor INL, Airport Manager International Falls, Mayor RHI , Airport Manager RHI , Commission Chair Michigan DOT, Matt Brinker