Order 2012

- 5

- 16

Served: May 17, 2012



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 17 th day of May , 2012

Essential Air Service at

VICTORIA, TEXAS

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 2005

- 20454



### ORDER REQUESTING PROPOSALS

Summary By this O rder, the Departme nt is requesting a second round of proposals from airlines interested in providing Essential Air S ervice (EAS) at Victoria

, T X

, with or without subsidy

, for a new rate term . Pr oposals are due by June 6

, 2012 . (See Appendix A for a map.)

Background
By Order 2009

- 6

- 10, June 11

, 2009, the Department selected Colgan Air, Inc., operating as

Continental Connection (Colgan)

, to provide EAS at Victoria, TX, for the period from July 1, 2009, through June 30, 2011, for an annual subsidy of $1,593

, 922 for 13 nonstop round trips per week to Houston

- Bush Intercontinental Airport

. Continental Airlines was subsequently merg ed into United Airlines and

, in late 2011

, Continental Connection service was rebranded as United Express (Colgan).

On March 8, 2012, Colgan filed notice of its intent to terminate subsidized service at seven EAS communities, including Victoria. The Department issued Order 2012

- 3

- 14,

March 23, 2012, prohibiting Colgan from suspending service at all seven communities and requesting proposals. In response, we received only one proposal for Victoria , that from SeaPort Airlines, Inc. (SeaPort), which pro posed service with single

- engine aircraft. On May 14

, 2012, t he community submit ted comments refus ing to waive thei r right to twin

- engine

aircraft and requesting that we rebid the case. Given that 49 U.S.C. 41732( b ) (5) entitles

communities to EAS with tw in

- engine aircraft, we have no choice but to reject SeaPort’s proposal and solicit another round of proposals that meet the minimum EAS statutory requirements.- 2

-

Request for Proposals Air carriers should file their proposals no later than June 6, 2012. Af ter that date, our staff will docket proposals, thereby making them public, and shortly afterwards will provide a summary

of the proposals to the community and ask them for their final comments. We will give full consideration to all proposals filed in a timely manner.

Interested carriers should prepare their proposals with every expectation that their initial proposals will also be their final and only proposals. We retain the discretion to n egotiate proposals with carriers when we deem it desirable. We also retain the discretion to reject outright all unreasonable or unrealistic proposals and solicit a new round of proposals. Air 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 www.regulations.gov , each page should be formatted to be viewed online.

We are here providing interested carr iers with some basic information to serve as guidance when they prepare their proposals, but we will not prescribe a precise format. We expect proposals to adequately describe the service being proposed and the annual amount of subsidy being requested. T he 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 strongly encourage clear, well

- documented proposals that will facilitate their evaluation by the affected community and the Department. 1

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

-- different hubs, frequency or equipment, for example

-- with subsidy requirements that remain competitive. The communities and air carriers are encouraged to work tog ether in advance of the due date for proposals to craft a service pattern that is desirable

to the communit y and meets the operational needs of the airline s

.

Proposals should provide sufficient capacity to accommodate historical levels of traffic. In order to assist carriers in developing traffic and revenue projections for their proposals, we have provided a summar y of historical passengers in Appendix B. During the year ended December 31, 2011, Victoria averaged 16 enplanements per day. W e expec t service levels that

are c ons istent with what the community currently receive s , with service to George Bush Intercontinental Airport (Houston)

, Dallas

- Fort Worth International Airport (Dallas), or any medium

- or large

- hub airport that offers access to the national air transportation system utilizing twin

- engine aircraft

. Specifically, two round trips a day (12 a week) with 30

- seat or larger aircraft; or three round trips a day (18 a week) with 19

- seat aircraft. We will also consider proposals with 8/9

- se at aircraft with additional frequencies. Should the community

1 In selecting a carrier to provide subsidized essential air service, 49 U.S.C. 41733(c)(1) directs us to consider four 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. In addition, the Consolidated Appropriations Act, 2008, Public Law 110

- 161 , provides that when selecting a carrier to provide EAS, the Department may consider the relative subsidy requirements, th us 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

se lected service. Appendix C of this order contains those general provisions.- 3

-

agree to sing l e

- engine aircraft , in effect waiving their right t o single

- engine aircraft, we would consider the waiver to apply only to the length of the contract term at hand, i.e. we would no t

assume that the community would waive their rights for all time. As always, we will formally

solicit the community ’ s views on any service options we receive before making a long

- term
carrier selection decision.

Other Carrier Requirements

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

- free workplaces and nondiscrimination. 2 Consequently, all carriers receiving Federal subsidy to support essential air service must certify that they ar e 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. 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 copi es of the certifications, should contact the Office of Aviation Analysis at (202) 366

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

do not submit these documents. 3

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 submit their final comments shortly after June 6

, 2012 the due date for carrier proposals.

This O rder is issued under authority delegated in 49 CFR 1.56a(f) and re

- delegated to the Director, Office of Aviation Analysis.

ACCORDINGLY, 1. We request that carriers interested in providing essential air service at Victoria

, Texas,

submit their proposals, with or without subsidy requests, no later than June 6, 2012 . The proposals should be emailed to: EAS@dot.gov with the title “Proposal to Provide Essential Air

Service at Victoria, Texas ”; 4

2. This d ocket will remain open until further order of the Department; and

2 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 o r benefiting 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 workplace (grants).

3 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.

4 Questions regarding filings in response to this order should be directed to Michael Martin at 202

- 366

- 6494, or

via email at michael.f.martin@dot.gov

.3. The Department will serve a copy of this order on the Mayor and Airport M anager of

Victoria ; Colgan Air, Inc. (Colgan )

, 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 385.50, must file such petitions within ten (10) days

after the date of service of this order.

This O rder 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 on line at www.regulations.gov

### Appendix A



## Area Map

### APPENDIX B

Historical Origin

- Destination Plane Traffic 1



### Victoria, Texas

Quarter Year Deplanements Enplanements Total
Traffic Enplanements per Day

1 2009 1,274 1,333 2,607 17

2 2009 1,405 1,473 2,878 18

3 2009 1,406 1,447 2,853 18

4 2009 1,346 1,372 2,718 17

Annual

Totals 5,431 5,625 11,056 18

1 2010 1,095 1,208 2,303 15

2 2010 1,270 1,303 2,573 16

3 2010 1,246 1,260 2,506 16

4 2010 1,314 1,267 2,581 16

Annual

Totals 4,925 5,038 9,963 16

1 2011 920 1,028 1,948 13

2 2011 1,325 1,373 2,698 17

3 2011 1,391 1,447 2,838 18

4 2011 1,400 1,350 2,750 17

Annual

Totals 5,036 5,198 10,234 16

1 Source: USDOT Bureau of Transportation Statistics, TransStats Intermodal Database, Schedule T

- 1 00

.

### Appendix 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 subsidy eligibility for a flight that has not been completed, such as certain weather cancellations, only completed flights are considered eligible for su bsidy. 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 b eyond 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, th e 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 whethe r 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 t he 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 p ayments 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 ser vice 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 amendments thereto shall not operate to controvert the foregoing paragraph.

Funds are not currently available for performance under this solicitation beyond [DATE] . T he Department’s obligation for performance under this soli citation beyond [DATE] , 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 a rise 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 carrier will receive notice in writing by the Department.

All claims for payment must be submitted within 60 days of the last day of service provided

under this order.