Order: 2011-12-8

Served: December 16, 2011

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 15th day of December, 2011

Docket DOT-OST-1996-1901

TENTATIVE ORDER REGARDING TERMINATION OF EAS ELIGIBILITY AND 

SETTING SHORT-TERM SUBSIDY RATES

Summary

By this Order, the Department is directing interested persons to show cause why the 

Department should not terminate the eligibility of Alamogordo/Holloman Air Force 

Base, New Mexico under the Essential Air Service (EAS) program and allow Pacific 

Wings L.L.C., d/b/a New Mexico Airlines (New Mexico Airlines), to suspend service at 

the community. Objections to the Department’s tentative decision are due within 20 days 

of the service date of this Order. An area map is attached as Appendix A.

Background

By Order 2009-11-14, November 19, 2009, the Department re-selected New Mexico 

Airlines to provide subsidized EAS at Alamogordo/Holloman Air Force Base, for the 

two-year period ending December 31, 2011, for an annual subsidy rate of $1,169,337. 

Under that Order, New Mexico Airlines provides 12 nonstop round trips each week 

between Alamogordo/Holloman Air Force Base and Albuquerque, utilizing singleengine, nine-passenger Cessna Grand Caravan (C-208B) turboprop aircraft.

In anticipation of the end of the rate term, the Department issued Order 2011-7-2 on 

July 1, 2011, soliciting proposals to provide more efficient EAS at the community, with 

subsidy support if necessary.

New Mexico Airlines was the only air carrier to submit a proposal in response to Order 

2011-7-2 and would continue to provide 12 weekly nonstop round trips each week 

Essential Air Service at

ALAMOGORDO/HOLLOMAN AIR FORCE 

BASE, NEW MEXICO

under 49 U.S.C. 41731 et seq.
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between the community and Albuquerque, utilizing nine-passenger Cessna Grand 

Caravan (C-208B) turboprop aircraft, for an annual subsidy rate of $1,187,531.

The complete public file for EAS at Alamogordo/Holloman Air Force Base may be 

accessed online through the Federal Dockets Management System (FDMS) at

http://www.regulations.gov by using a keyword or ID search on: DOT-OST-1996-1901.

Recent Developments

Public Law 112-27, signed into law on August 5, 2011, amended the definition of 

“eligible place” for the purpose of receiving EAS. See 49 U.S.C. § 41731. The 

amendment, among other things, states that to be eligible, a community must have had an 

average subsidy per passenger of less than $1,000 during the most recent fiscal year, as 

determined by the Secretary of Transportation.

Passenger Traffic and Subsidy History

New Mexico Airlines has served the community since January 2008. Historical traffic 

and annual subsidy rates are detailed in Appendix B, including the complete data for the 

most recent fiscal year, which became available to DOT earlier this month. For the most 

recent fiscal year (FY 2011), New Mexico Airlines transported 809 total passengers at an

annual subsidy rate of $1,169,337. Thus, the corresponding average per passenger 

subsidy for FY 2011 was approximately $1,445.

Decision

After careful consideration of this matter, the Department has tentatively decided to 

terminate the subsidy eligibility of Alamogordo/Holloman Air Force Base under the EAS

program and allow New Mexico Airlines to end service at the community, because the 

community is no longer eligible to receive EAS.

Even with the smaller, less expensive, nine-seat aircraft, the subsidy per passenger has 

been well over the $1,000 cap. As shown in Appendix B, the community’s average per 

passenger subsidy has been over $1,000 in each of the last four fiscal years. Overall 

ridership of EAS at Alamogordo/Holloman Air Force Base has not kept pace with the 

federal subsidy required.1

New Mexico Airlines’ current contract expires on December 31, 2011. We hereby 

require New Mexico Airlines to continue to provide EAS at the community after that 

date, until further notice (which may be included in the Department’s Final Order on this 

matter, following the receipt of objections, as explained below). We will compensate 

New Mexico Airlines at the subsidy rate contained in its two-year proposal received in 

response to Order 2011-7-2, from January 1, 2012, until further notice.

We will give interested persons 20 days after the service date of this Order to submit 

objections. Objections should be fully documented and contain complete information on 

the data used by the persons objecting. If we later finalize the tentative findings in a 

subsequent Order, the Department would make the Order effective 30 days thereafter. In 

 1 The proposed subsidy rate of $1,187,531 per passenger going forward exceeds the $1,000 cap.
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that event, if New Mexico Airlines decides to suspend service upon the effective date of 

that Order, we will expect it to contact all passengers who hold reservations for flights 

that will be suspended to inform them of the suspension, and assist them in arranging 

alternative transportation or to provide a refund of the ticket price, without penalty, if 

requested.

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

ACCORDINGLY,

1. The Department tentatively finds that Alamogordo/Holloman Air Force Base, 

New Mexico, is no longer an eligible EAS community;

2. The Department directs all interested persons to show cause within 20 days of the date 

of service of this Order why we should not make final the tentative findings and 

conclusions set forth above. Objections should be filled with Docket Operations, M-30, 

West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE, 

Washington, DC 20590.2

3. We will afford full consideration to the matters and issues raised in any timely and 

properly filed objections before we take further action.3

4. We set a short-term subsidy rate for Pacific Wings L.L.C., d/b/a New Mexico 

Airlines, for provision of EAS at that Alamogordo/Holloman Air Force Base, 

New Mexico, beginning January 1, 2012, as described in Appendix C, until further 

notice;

5. The Department directs Pacific Wings L.L.C., d/b/a New Mexico Airlines, to retain all 

books, records, and other source and summary documentation to support claims for 

payment for EAS provided on or after January 1, 2012 under this Order, 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 when the EAS begins on January 1, 2012 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;

6. We find that Pacific Wings L.L.C., d/b/a New Mexico Airlines, continues to be fit, 

willing and able to operate as a commuter air carrier and capable of providing reliable 

Essential Air Service at Alamogordo/Holloman Air Force Base, New Mexico;

7. This docket will remain open until further order of the Department; and

 2 In addition, copies of comments may be e-mailed to dennis.devany@dot.gov, brian.swanson@dot.gov, or 

faxed to the Chief, EAS & Domestic Analysis Division, at (202) 366-7638. Regardless of whether copies 

are faxed to the EAS & Domestic Analysis Division, all objections should be filed with Docket Operations, 

M-30, at the above address.

3 Since the Department is providing for the filing of objections to this Order, we will not entertain petitions 

for reconsideration.
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8. Docket Operations will serve copies of this Order on the parties listed in Appendix E.

By:

SUSAN KURLAND

Assistant Secretary for Aviation

and International Affairs

(SEAL)

An electronic version of this document is available on the World Wide Web at:

http://www.regulations.gov/
Appendix A

REGIONAL MAP
Appendix B

Passenger Traffic and Annual Essential Air Service Subsidy

at Alamogordo/Holloman Air Force Base, New Mexico

Year 

Ended

Enplaned

Passengers

Deplaned

Passengers

Enplaned +

Deplaned

Passengers

Annual

Federal 

Subsidy

Subsidy 

Per 

Passenger

9/30/2008 256 293 549 $948,437 $1,727.57

9/30/2009 358 360 718 $994,623 $1,385.27

9/30/2010 406 419 825 $1,125,659 $1,364.44

9/30/2011 358 451 809 $1,169,337 $1,445.41

Source: BTS T-100 Market
Appendix C

Pacific Wings L.L.C., d/b/a New Mexico Airlines

Provision of Essential Air Service at Alamogordo/Holloman Air Force Base, New Mexico

Calculation of Compensation Requirement
Appendix D

Page 1 of 2

Pacific Wings L.L.C., d/b/a New Mexico Airlines

Provision of Essential Air Service at Alamogordo/Holloman Air Force Base, New Mexico

Revised Summary of Service To Be Provided

Effective Period: Beginning January 1, 2012, until further Department action

Scheduled Service: Two nonstop round trips each weekday and over each weekend to 

Albuquerque.

Aircraft type: Cessna 208B (9-seats).

Intermediate stops and 

upline service:

No service to any other intermediate point is contemplated under the 

terms of the carrier’s proposal; accordingly, no such service may be 

provided on subsidized flights without prior Department approval.

Points upline from Alamogordo may be served on subsidized flights.

Timing of flights: Flights must be well-timed and well-spaced in order to ensure full 

compensation.

Annual compensation: $1,187,531

This rate assumes an annual completion factor of 98 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: 

$9711

Weekly Compensation 

Ceiling:

$23,3042

 1 Annual subsidy of $1,187,531 divided by 1,223 annual departures: 2 arrivals and 2 departures each week day and 

each weekend (24 flights/week) x 52 weeks x .98 (completion factor) = 1,223.

2 Rate per departure of $971 multiplied by 24 scheduled weekly departures.
Appendix D

Page 2 of 2

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 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, 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 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 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 order beyond September 30, 2012. 

The Department’s obligation for performance under this order beyond September 30, 2012, 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 September 30, 2012, until funds are made available to the Department 

for performance. If funds are not made available for performance beyond September 30, 2012, 

the Department will provide notice in writing to the carrier.

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

under this order.
Appendix E

SERVICE LIST

Parker Bradley, Alamogordo - White Sand Regional Airport

Colonel Robert Cole, Mission Support Group Commander, Holloman AFB

The Honorable Ron Griggs, City of Alamogordo

Colonel Kevin Huyck, Vice Wing Commander, Holloman AFB

Greg Kahlstorf, Pacific Wings LLC

Jane Lucero, New Mexico Department of Transportation

Mark B. Roath, Esq., City of Alamogordo