Order : 2015

- 4

- 14 Served: April 17, 2015



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

On the 17th day of April , 20 15

Essential Air Service at

CLARK’S POINT , ALASKA FALSE PASS, ALASKA SOUTH NAKNEK, ALASKA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 2015

- 0058

DOCKET DOT

- OST

- 2015

- 0059

DOCKET DOT

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- 2015

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### ORDER PROHIBITING TERMINATION OF SERVICE AND REQUESTING PROPOSALS

Summary By this O rder, the Departme nt is (a) prohibiting Grant Aviation, Inc. (Grant Aviation) from terminating its unsubsidized service at Clark’s Point, False Pass, and South Naknek , Alaska,

and requiring that it continue its current service u ntil conclusion of this Essential Air Service (EAS) case and (b) requesting proposals from airlines interested in p roviding EAS at Clark’s Point, False Pass, and South Naknek

, with or without subsidy. Pr opo sals are due by May 18

, 2015.

Background and Eligibility
On March 16, 2015 , Grant Aviation filed 90

- day notice s of its intent to ter minate service at all three communities, effective June 14 , 2015.

Clark’s Point, False Pass, and South Naknek are EAS comm unities by virtue of them being

listed on a certificated airline ’s certificate on October 24, 1978, the date of enactment of the Airline Deregulation Act. In the FAA Modernization and Reform Act of 2012, Pub. L. 112

- 95 (Feb. 14, 2012), Congress amended 49 U.S.C. § 41731(a)(1)(B) to change the definition of “eligible place” for the purpose of receiving EAS. Under the amendment, eligible communities are those that (among other things), at any time during the period between September 30, 2010, and September 3 0, 2011, inclusive

— (i) received Essential Air S ervice for which compensation was provided to an air carrier under this subchapter; or (ii) received a 90

- day notice of intent to

terminate Essential Air S ervice and the Secretary required the air carrier to continue to provide such service to the community.- 2

-

49 U.S.C. § 41731(c) states that subparagraphs (B), (C), and (D), of subsection (a)(1) shall not apply with respect to locations in the State of Alaska or the State of Hawaii. Thus, Clark’s Point, False Pass, and South Naknek are eligible to receive EAS.

Clark’s Point, False Pass, and South Naknek ’s EAS determination (Order 80

- 1

- 167) guarantee

the communit ies a minimum of two round trips per week.

Hold

- In By DOT Order 80

- 1

- 167, Clark’s Point, False Pass, and South Naknek are guaranteed a minimum of two round trips Dilli ngham, Cold Bay, King Salmon

, or other suitable hub s . Grant Aviation’s proposed termination of service would cause these three communities to be left with

no air s ervice and, therefore, the Department is required by law to prohibit Grant Aviation from terminating such service at the end of its 90

- day notice, i.e., June 14

, 2015. As such, the Department will require Grant Aviation to continue to maintain its current l evel of service at

these communities for successive 30

- day periods until the Department has completed

process ing the air carrier

- replacement case and the selected air carrier (s) have initiated service. 1

Request for Proposals Carriers should file their p roposals no later than May 18 , 2015. After that date, our staff will docket proposals, thereby making them public, and shortly afterwards will provide a summary

of the proposals to the communities and the State of Alaska and ask th em for their final

comments. The Department will give full consideration to all proposals filed in a timely

manner.

The Department is providing interested carriers with some basic information to serve as guidance when they prepare their proposals, but we will not prescribe a precise format. The Department expect s 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, th ey may want to include proposed schedules as well as supporting data for their subsidy requests, such as projected block h ours, revenues and expenses. The Department strongly encourage s clear, well

- documented proposals that will

facilitate their evaluatio n by the affected community and the Department. 2

1 In accordance with 49 U.S.C. 41734(c), the Department will extend Grant Aviation’s service obligation for

successive 30

- day periods as necessary until replacement service begins. Should the Department require Grant Aviation to serve beyond June 14, 2015, Grant Aviation will be compensated in accordance with 49 U.S.C. 41734(e). If Grant Aviation continued service and compensation is needed, the Department will address this in a separate Order.

2 In selecting a carrier to provide subsidized EAS in Alaska, 49 U.S.C. § 417 33(c) (1) directs us to consider six 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; (4) community views; (5) the expe rience of the applicant in providing, in Alaska, scheduled air service or significant patterns of non

- scheduled air service; and (6) whether the carrier has included a plan in its proposal to market the service. In addition

, the Consolidated Appropriation s Act, 2012, Public Law 112

- 55, and continued by the Consolidated and Further Continuing Appropriations Act, 2015,

Public Law No. 113

- 235, 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 Essential Air Service 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.- 3

-

Carriers are also welcome to propose more than one option, if they choose; they need not limit themselves to those requirements if they envision other, potentially more attractive service possibilities

-- d ifferent hubs, frequency or equipment, for example

-- with subsidy requirements that remain competitive. The community and air carriers are encouraged to work together in advance of the due date for proposals to craft a service pattern that is desirable t o the communit y and meets the operational needs of the airline s

.

Carrier proposals should be submitted to the Department with all materials merged into a single document. In addition, because the document will be published on Regulations.gov, each page

s hould be formatted to be viewed online.

Interested carriers should prepare their proposals with every expectation that their initial proposals will also be their final and only proposals. The Department retain s the discretion to negotiate proposals with carrier s when we deem it desirable. The Department also retain s the discretion to reject outright all unreasonable or unrealistic proposals and solicit a new round of proposals. As always, the Department will f ormally solicit the communit ie s ’ views on any service options it receive s before making a long

- term carrier selection decision.

With specific respect to Clark’s Point, False Pass, and South Naknek , air carriers should provide sufficient capacity to accomm odate historical levels of traffic , consisting of two or three round trips per week . Further, flights meeting EAS guidelines at Alaskan communities should provide sufficient capacity to accommodate passenger, freight, and mail demand on the

critical ou tbo und segment. In that regard , as is typically the case in Alaska, significantly more freight and mail flow from the hub to the EAS community than from t he EAS community to

the hub. In order to help air carriers make traffic a nd revenue projections, histor ical traffic

levels are included in Appendix B.

Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug

- free workplaces and nondiscrimination. 3 Consequently, all carriers receiving Federal subsidy to support Essential Air Service must certify that they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimination, and those carriers whose subsidies exceed $10 0,000 over the life of the rate term must also certify that they are in compliance with the regulations governing lobbying activities. All carriers that plan to submit proposals involving subsidy should submit the required certifications along with their proposals. Interested carriers requiring more detailed information regarding these requirements, as well as copies of the certifications, should contact the Office of Aviation Analysis at (202) 366

- 5903. The Department is prohibited from paying subsidy t o carriers that

do not submit these documents. 4

3 The regulations applicable to these areas are: (1) 49 CFR Part 20

– New restrictions on lobbying; (2) 49 CFR

Part 21

– Nondiscrimination in federally

- assis ted 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 benefiting from Federal financial assistance; and 14 CFR Part 382

– Nondiscrimination

on the basis of disab ility in air travel; and (3) 2 CFR Part 1200

– Government

- wide debarment and suspension (non

- procurement) and government

- wide requirements for drug

- free workplace (grants).

4 The certifications are also available on the web at http://www.dot.gov/policy/aviation

- policy/small

- community

rural

- air

- service/essential

- air

- service

.- 4

-

Community and State Comments Civic officials are welcome to submit comments on the proposals at any time. As noted earlier, we will provide a summary of the proposals to the civic parties and ask them to su bmit their final comments shortly after May 18

, 2015 , the due date for carrier proposals.

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

ACCORDINGLY,

1. The Department prohibit s Grant Aviation, Inc. from suspending service at Clark’s Point, False Pass, and South Naknek , Alaska , at the end of the 90

- day notice period, and require it to

mai ntain service at the community , as set forth in Appendix D, for an initial 30

- day period through July 14

, 2015 , or until a carrier capable of providi ng reliable EAS actually begins service, whichever is first;

2. The Department request s that ca rriers interested in providing Essential Air S ervice at Clark’s Point, False Pass, and South Naknek , Alaska

, submit their proposals, with or without subsidy r equests, no later than May 18 , 2015

. The proposals should be emailed to eas@dot.gov with the title “Proposal to Provide Essential Air Service at Clark’s Point, False Pass, and South

Naknek , Alaska ”; 5

3

. These docket s will remain open until further order of the Department; and

4

. The Department will serve a copy of this O rder on the Alaska Department of Transportation

& Public Facilities ; the civic officials of Clark’s Point, False Pass, and South Naknek , Alaska;

Gran t Aviation, Inc.; and t he service list for this d ocket

.

By:

BRANDON M. BELFORD Deputy Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available on line at www.regulations.gov

5 Quest ions regarding filings in response to this Order should be directed to Michael Gorma s at 202

- 366

- 1853 , or via email at michael.gormas@dot.gov

.

### Appendix A



## Area Map

Source: Great Circle Mapper, 2015

, Karl L. Swartz.Appendix B Page 1 of 3

Historical Traffic

– Clark’s Point, AK 1

1 T100 Market Enplanement DataAppendix B Page 2 of 3

Historical Traffic

– False Pass , AKAppendix B Page 3 of 3

Historical Traffic

– South Naknek , AKAppendix C

Example of 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 subsi dy 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 O rder 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

o f 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 m ust 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 complete, terminates or reduces payments for

service or cha nges 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 servi ce 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 partia l reduction or cessation of payment.

Funds may not be available for performance under this Order beyond [DATE]. The Government’s obligation for performance under this Order beyond [DATE], is subject to the availability of funds from which payment for ser vices 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 sufficient funds

are not made available for performance beyond [DATE], the Department will provide notice in writing to the carrier.

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.

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.Appendix D

Essential Air Service to be maintained at Clark’s Point, False Pass, and South Naknek

, Alaska

Effective Period : June 14 , 2015 , until further Department action

Scheduled Service : Clark’s Point; Three weekly round trips to Dillingham False Pass; Three weekly round trips to Cold Bay South Naknek; Th r ee weekly round trips to King Salmon

Aircraft : 6

- passenger Cessna 407, 7

- passenger GA

- 8, and 9

- passenger Piper Navajo Chieftain