Order: 2015-4-13

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, 2015

ORDER SELECTING AIR CARRIER AND ESTABLISHING HOLDIN TERMS

Summary

By this Order the Department is selecting Boutique Air (Boutique) to provide Essential Air 

Service (EAS) at Show Low, Arizona, for a two-year term from May 1, 2015, through 

April 30, 2017, at an annual subsidy of $1,243,255.

Also by this Order, the Department establishes the EAS obligation of Great Lakes Ltd. 

(Great Lakes), at Show Low, for 30 days beyond its 90-day termination notice, through 

July 16, 2015, or until Boutique commences service, whichever comes first.

Background

By Order 2013-6-1 (June 3, 2013), the Department selected Great Lakes to provide EAS at 

Show Low, for the two-year period from May 1, 2013, through April 30, 2015, for an 

annual subsidy of $1,672,000, with 12 weekly round trips during the off-peak season, and 

18 weekly round trips during the peak season.

As the end of the contract was approaching, the Department issued Order 2014-11-15 

(November 25, 2014) requesting proposals from air carriers interested in providing EAS at 

Essential Air Service at

SHOW LOW, ARIZONA

Under 49 U.S.C. § 41731 et seq.

DOCKET DOT-OST-1998-4409
- 2 -

the community for a new contract term. In response to that Order, the Department

received proposals from Great Lakes and Boutique. 

Each air carrier’s complete proposal and community comments may be accessed online at 

www.regulations.gov by entering the community’s respective Docket number in the search 

block.

Proposal of Great Lakes

Great Lakes submitted a bid to serve the community using either 9-passenger or 19-

passenger Beechcraft 1900D aircraft, with nonstop service to Phoenix (PHX) and/or onestop service to Denver (DEN), with 12 weekly round trips during the off-peak season, and 

18 weekly round trips during the peak season. The 9-passenger option consists of 

$2,275,339 in annual subsidy and the 19-passenger option is $1,894,384 in annual subsidy. 

Proposal of Boutique Air

Boutique Air submitted a proposal using 9-passenger Pilatus PC-12 aircraft for an annual 

subsidy of $1,243,255, with nonstop service to PHX. The carrier would offer 12 weekly 

round trips during the off-peak months (January-April), and 18 weekly round trips during 

the peak months (May-December).

Community Comments

On January 21, 2015, the Department requested comments from the community regarding 

this EAS air carrier selection case. In response, the Department received a letter from 

Mayor Daryl Seymore, recommending Boutique Air as the preferred carrier at Show Low. 

Mayor Seymore stated, “The Boutique Air representatives impressed the Council with 

their proactive approach to serve our community and their eagerness to provide excellent 

service”.

Great Lakes’ termination notice

On March 18, 2015, Great Lakes filed a 90-day notice to terminate service at Show Low, 

with the last day of scheduled air service to be June 16, 2015. The carrier states that since 

the City recommended Boutique, it be allowed to terminate service earlier than prescribed 

in the notice, with the Mayor of Show Low’s consent. As of the date of this Order, the 

Mayor of Show Low has not indicated his willingness to allow Great Lakes to terminate 

service before Boutique inaugurates service. 

Decision

After carefully reviewing each air carrier’s proposal, the Department has decided to select 

Boutique at Show Low. The airline has the support of the community and Show Low has 

submitted a waiver from its statutory guarantee of aircraft with at least 2 engines and using 

2 pilots.1 The Department finds the subsidy and service levels reasonable and that the 

service will meet the EAS needs of the community.

 1 See 49 USC §41732(B)(5).
- 3 -

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

certifications from the air carriers that they are in compliance with the Department’s 

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

regulations concerning lobbying activities.2

Hold-In

Show Low is guaranteed a minimum of two round trips to Phoenix or other suitable hub. 

Great Lakes’ proposed termination of service would cause Show Low to be left with no air 

service and, therefore, the Department is required by law to prohibit Great Lakes from 

terminating such service at the end of its 90-day notice, i.e., June 16, 2015. As such, the 

Department will require Great Lakes to continue to maintain its current level of service at 

the community for successive 30-day periods until Boutique Air has initiated service. 

By this Order, the Department will require Great Lakes to continue to serve Show Low for 

30 days beyond its 90-day termination notice, through July 16, 2015, or earlier if Boutique 

begins full EAS at the community before July 16. Since Great Lakes’ contract ends April 

30, 2015, the Department will begin to compensate Great Lakes beginning 

May 1, 2015, at the rate it proposed in the carrier selection proceeding.3

Service Transition

The Department expects Great Lakes and Boutique Air to work together to make a smooth 

transition at the community. In that regard, before Great Lakes suspends its service, we 

expect it to notify all passengers holding reservations for travel after the suspension date, 

to assist those passengers in making alternate air transportation arrangements, or to provide 

a refund of the ticket price, without penalty, if requested.

Carrier Fitness

49 U.S.C. §§ 41737(b) and 41738 require that we find an air carrier fit, willing, and able to 

provide reliable service before the Department may subsidize it to provide EAS. Boutique 

Air and Great Lakes Aviation, Ltd. are subject to the Department’s continuing fitness 

requirements, and no information has come to our attention that would cause us to question

the air carriers’ fitness at this time. The Department contacted the Federal Aviation 

Administration, and it has raised no concerns that would negatively affect our fitness 

findings. The Department therefore concludes that Boutique Air and Great Lakes Aviation, 

Ltd. are reliable and fit to conduct the operations proposed here.

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

 2 The certifications are available online under “Reports and Publications” at 

http://www.dot.gov/policy/aviation-policy/small-community-rural-air-service/essential-air-service 3 In accordance with 49 U.S.C. 41734(c), the Department will extend Great Lakes’ service obligation for 

successive 30-day periods as necessary until replacement service begins.
- 4 -

ACCORDINGLY,

1. The Department selects Boutique Air to provide Essential Air Service at Show Low, 

Arizona, and establish the annual subsidy rates as described in Appendix C;

2. The Department directs Boutique Air 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 

from the service date 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 carriers may forfeit their compensation for any claim that is not 

supported under the terms of this Order;

2. The Department prohibits Great Lakes Aviation, Ltd., from suspending service at Show 

Low, at the end of the 90-day notice period, and require it to maintain its current level of 

service at the community, as set forth in Appendix D, for an initial 30-day period through 

July 16, 2015, or until Boutique Air actually is able to begin EAS service, whichever is 

first, at the rate as prescribed in Appendix C, page 2;

3. The Department finds that Boutique Air is fit, willing and able to operate as a commuter

air carrier, and is capable of providing reliable Essential Air Service at Show Low, 

Arizona;

4. The Department directs Great Lakes Aviation, Ltd. 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 from the service date 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 carriers may forfeit their compensation for any claim 

that is not supported under the terms of this Order;

5. This docket will remain open pending further Department action; and
- 5 -

6. The Department will serve a copy of this Order on the mayor of Show Low, Arizona, 

the airport manager of Show Low Regional Airport; Boutique Air, and Great Lakes 

Aviation, Ltd. 

By:

BRANDON M. BELFORD

Deputy Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available at

www.regulations.gov
Appendix A

AREA MAP

Maps generated by the Great Circle Mapper - copyright © Karl L. Swartz.

 
 Appendix B

Page 1 of 2

BOUTIQUE AIR

548 Market St San 

Francisco, CA t. 

415.449.0505

f. 415.738.7671

Show Low, AZ

Seasonal: 2 Daily RT (Jan-Apr.) 3 Daily RT (May-Dec.)

Operations

Scheduled Flights 1,660

Completed Flights (98%) 1,627

Scheduled Block Hours 1,357

Scheduled Seats 14,939

Scheduled ASMs 1,912,136

Revenue

Passengers 7,200

Average Fare 85.00

Fare Revenue $612,000

Total Revenue $612,000

Expenses

Fuel $390,096

Ownership $480,000

Maintenance and Reserves $400,545

Staff $171,680

Marketing and Distribution $23,040

Other Indirect Costs $254,274

Total Costs $1,719,635

Profit Element $135,620

Margin 5.00%

Total

Subsidy $1,243,255
Appendix B

Page 2 of 2
 Appendix C

Page 1 of 2

Boutique Air

Essential Air Service at Show Low, Arizona

DOT-OST-1998-4409

 

Effective Period: 1 May 1, 2015 through April 30, 2017

Hub: Phoenix Sky Harbor International Airport (PHX)

Scheduled Service: Off-peak -12 weekly nonstop round trips;

Jan. 3, 2016-Apr. 30, 2016, Jan. 1, 2017-Apr. 29, 2017

 Peak-18 weekly nonstop round trips;

May 1, 2015-Jan. 2, 2016, May 1, 2016-Dec. 31, 2016, 

April 30, 2017

Aircraft: 9-passenger Pilatus PC-12

Rate per Eligible Flight:

2 $755 

Weekly Ceiling:

3 Off-peak = $18,120; Peak = $27,180

Note: 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 this rate, 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 service levels, the carrier may cease to provide service to that 

specific location without regards 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 contract 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 may not be available for performance under this Order beyond September 30, 2015. The Government’s obligation for 

performance under this Order beyond September 30, 2015, 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 September 30, 2015, until funds are made available to the Department for performance. If sufficient funds are 

not made available for performance beyond September 30, 2015, the Department will provide notice in writing to the carrier.

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; August claims must be submitted by November 30, and so on.

 1 The date is an estimate for a budgetary marker. Actual start date will be determined by Boutique Air. 2 Annual compensation of $1,243,255 divided by 1,646 annual departures (24 weekly departures x 16 weeks x 98 

percent completion + 36 weekly departures x 36 weeks x 98 percent completion) 3 Off-peak: 24 flights x $755 per flight; Peak: 36 flights x $755 per flight
 Appendix C

Page 2 of 2

Great Lakes Aviation, Ltd.

Essential Air Service at Show Low, Arizona, Hold-in rate

DOT-OST-1998-4409

Effective Period: May 1, 2015, through July 31, 2015, or until Boutique Air begins 

service.

Scheduled Service: 18 weekly nonstop round trips to Phoenix, with an option to serve 

Denver with one round trip a day

Aircraft: Beechcraft 1900D

Rate per Eligible Flight:1 $1,032

Weekly Ceiling:

2 $37,152

Note: 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 this rate, 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 service levels, the carrier may cease to provide service to that 

specific location without regards 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 contract 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 may not be available for performance under this Order beyond September 30, 2015. The Government’s obligation for 

performance under this Order beyond September 30, 2015, 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 September 30, 2015, until funds are made available to the Department for performance. If sufficient funds are 

not made available for performance beyond September 30, 2015, the Department will provide notice in writing to the carrier.

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; August claims must be submitted by November 30, and so on.

 1 Annual compensation of $1,894,384 divided by 1,835 annual departures (36 weekly departures x 52 weeks x 98 

percent completion). 2 36 weekly departures x $1,032 per flight.
Appendix D

Essential Air Service to be maintained at Show Low

Effective Period: July 16, 2015, or until further Department action

Scheduled Service: 18 weekly nonstop round trips to PHX or DEN 

 

Aircraft: Beechcraft 1900D