Order 2012-3-19

Served: March 30, 2012

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 30th of March, 2012

Ninety-day Notice of Mesaba Aviation, 

Inc., and Pinnacle Airlines, Inc., to 

terminate service at: 

ALPENA, MICHIGAN

under 49 U.S.C. 41731 et seq. 

DOCKET DOT-OST-2009-0300

ORDER RE-SOLICITING PROPOSALS 

Summary

By this Order, the Department is re-soliciting proposals from all interested carriers to 

provide subsidized Essential Air Service (EAS) at Alpena, Michigan. Proposals are due 

by May 15, 2012. (See Appendix A for a map).

Background

By Order 2010-5-18, the Department selected Mesaba Aviation, Inc., d/b/a Delta 

Connection (Delta), to provide 13 nonstop round trips per week between Alpena and 

Detroit with 34-seat Saab 340 equipment for $1,532,660 annually through May 31, 2012. 

Initial Request for Proposals, Order 2011-9-5, September 13, 2011

On July 15, 2011, Delta filed notice to terminate service at Alpena. We prohibited Delta 

from terminating service at Alpena, as well as 23 other communities, 1 and requested 

proposals by October 12, 2011.2 

In response to Order 2011-9-5, we received proposals from Gulfstream International 

Airlines and Intrepid International Airlines. Gulfstream proposed 18 nonstop round trips 

per week to Cleveland with 19-seat Beech 1900 aircraft, and requested $3,243,009 annual 

subsidy. Intrepid proposed four nonstop round trips per week to Lansing, Michigan, with 

19-seat Jetstream aircraft and requested $911,800 annual subsidy. 

 1 Delta simultaneously filed notice to terminate service at 23 other communities. This Order only addresses 

Alpena.

2 By Notice dated October 12, 2011, we extended that deadline to October 14, 2011. 
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Second Request for Proposals, Order 2011-11-20, November 17, 2011

We received comments from the Alpena County Regional Airport, the Alpena County 

Board of Commissioners, the Bank of Alpena, and numerous individuals. 

On November 7 the Alpena County Board of Commissioners stated that neither carrier’s 

proposal would provide the needed level of service or connectivity and requested a 60-

day extension “so that the newly formed Airport Committee would have an adequate 

period of time to fully investigate an Essential Air Service carrier for Alpena County.” 

On November 3, the Bank of Alpena indicated what it saw to be numerous deficiencies 

with Gulfstream’s proposal, and those concerns were echoed by the comments of other 

members of the community. Among their concerns were the need for guaranteed code 

sharing and an integrated reservation system; that a three million dollar award to 

Gulfstream for less service was not a good use of taxpayer money;3 that cancelled flights 

in the more-distant Cleveland would leave passengers with fewer choices in getting 

home; that Gulfstream’s aircraft were smaller and without a lavatory; that Cleveland is 

not an international gateway airport like Detroit with less than half of Detroit’s nonstop 

departures.4 Others noted that Alpena’s enplanements were up two years in a row, so it 

made no sense to select smaller aircraft. 

The Order rejected the proposals submitted by Gulfstream and Intrepid in response to 

Order 2011-9-5, and solicited a second round of proposals. Intrepid’s proposals did not 

provide the statutory two round trips per day, and the Department was concerned about 

the level of subsidy requested by Gulfstream. 

In response to Order 2011-11-20, we received proposals from only one carrier, Intrepid. 

The carrier proposed to provide ten round trips per week between Alpena and either 

Lansing or Grand Rapids, Michigan, with 19-seat Jetstream turbo props, and requested 

$3,024,000 annual subsidy.

Third Request for Proposals, Order 2012-1-6, January 10, 2012

The Order rejected the lone proposal submitted by Intrepid in response to Order 2011-11-20 

and solicited a third round of proposals, with proposals due January 31, 2012. As stated on 

pages two and three of Order 2012-1-6:

First, Intrepid correctly indicates that it has neither DOT nor FAA operating 

authority. Regarding its proposal to provide EAS with 19-seat aircraft in 

partnership with an unnamed Part 380 operator, the Department found in 

 3 Many of the comments contrasted Gulfstream’s proposal with smaller equipment to Cleveland, a smaller 

hub, to the current $1.5 million contract with Mesaba to Detroit, with larger Saab 340 equipment. Delta 

filed notice because it is retiring those aircraft and the smallest aircraft available to it are much more 

expensive regional jets. Delta only has an obligation to continue to provide EAS until we secure a 

replacement capable of providing reliable basic EAS. 

4 For the month of August, 2011, Detroit had 19,412 departures in scheduled passenger service while 

Cleveland had 7,509.
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Order 2011-1-16 that EAS, by statute, cannot be provided under Part 380 of the 

Department’s Aviation Regulations.5 In addition to not holding sufficient 

operating authority, Intrepid’s proposal has other deficiencies. The carrier 

proposes service to Grand Rapids and Lansing, Michigan, but basic EAS 

requires that the service be to a large- or medium-hub airport unless the 

community is more than 400 miles from the nearest large or medium hub. 

Alpena is less than 400 miles from Detroit, and neither Grand Rapids nor 

Lansing is a medium or large hub. Finally, the ten round trips per week 

proposed by Intrepid fall short of the minimum frequency required by EAS, 

namely twelve round trips per week. 

At the request of the community, we extended the deadline for proposals to February 14, 

2012. In response to our third request for proposals, we received a proposal from only 

one carrier, Multi-Aero, Inc., d/b/a Air Choice One. 

As is our usual practice, by letter dated February 17, 2012, we summarized that carrier’s 

proposal in a letter sent to the Mayor of Alpena, as shown in the following chart, 

requesting that he respond by March 15, 2012, so that we would know the community’s 

position.

Our letter of February 17 further indicated the following:

Air Choice One is currently providing subsidized service to Burlington, Iowa, 

and Decatur, Illinois, and clearly has the required operating authority to provide 

the proposed service. Of the five options submitted by the carrier, the first three 

proposed service with single-engine Cessna 208 Caravan aircraft. Basic EAS 

requires service with twin-engine aircraft, and those three options thus are not 

selectable without community support. However, Options 4 and 5 assume 

service with twin-engine Piper Navajo aircraft. Their proposed service would 

go to a large hub, Chicago O’Hare, and that airport fully meets the basic EAS 

requirement that service be to a medium or large hub airport. Option 4 proposed 

 5 See Order 2011-1-16, January 22, 2011, Petition for Reconsideration of Order 2010-6-4 regarding EAS at 

Manistee/Ludington, Michigan. 

Option 1 Option 2 Option 3 Option 4 Option 5

Aircraft Caravan Caravan Caravan Navajo Navajo

Hub ORD ORD ORD ORD ORD

Weekly Nonstop Round Trips 18 21 24 18 24

O&D Passengers 7,800 9,500 10,500 7,800 8,500

Projected Passenger Fares $99 $99 $99 $99 $99

Projected Revenue $779,922 $949,905 $1,049,895 $779,922 $849,915

Projected Economic Cost $3,068,014 $3,550,187 $3,841,873 $2,887,254 $3,558,393

Annual Subsidy, Two-Year Term $2,288,092 $2,600,282 $2,791,978 $2,107,332 $2,708,478

Discounted Four-Year Term Subsidy $2,265,211 $2,574,279 $2,764,058 $2,086,259 $2,681,393

All options project approximately 103 minutes per one-way flight.

All options would base the aircraft in Alpena.
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18 nonstop round trips per week to O’Hare with 9-seat Piper Navajo aircraft for 

$2,107,332 annual subsidy; Option 5 was the same except for increased 

service/subsidy of 24 nonstop round trips per week for $2,708,478 annual 

subsidy. ...We reiterate that the Department has an obligation to relieve Delta 

of its obligation to provide EAS at Alpena.

Community Comments, March 15, 2012

In response to our letter, the City of Alpena indicates the following:

Alpena is a growing city, the largest in Northeast Lower Michigan. Our 

economy is diverse and numerous elements of that economy depend on effective 

air transportation in order to conduct on-going business operations. Alpena is 

also a very isolated city; 71 miles to the nearest Interstate Highway and 100 

miles (all on two-lane roads) to the nearest alternative airport (Pellston). ...Our 

air service is currently prospering, with 2011 total traffic on our flights to and 

from Detroit of nearly 23,000 passengers.

The community rejected Air Choice One’s first three options using single-engine 

aircraft.6 It also rejected Option 4 because Order 2011-9-5 had suggested that 18 to 24 

round trips per week with a 19-seat aircraft was an appropriate level of service. 

The community questioned the capacity of the Piper Navajo, an aircraft that can be 

configured for up to 9 seats, to carry more than four passengers with the fuel required to 

travel the 306 miles from Alpena to Chicago on days with less than perfect operating 

conditions. Also, the community noted that Air Choice appeared to be on “probation” 

with DOT, because Order 2011-12-7 awarded it a contract at Burlington and Decatur for 

only one year with the proviso that it should fully implement an electronic ticketing and 

baggage agreement with a major airline.” The community was also concerned that the 

one hour and forty minute scheduled flight time projected by Air Choice One was 

understated, given that the carrier requires the same amount of time to fly the 187 miles 

from Burlington to Chicago. 

Finally, the community asks the Department for additional time.

In summary, we are doing everything we can to find a suitable EAS carrier for 

Alpena. We have visited SkyWest Airlines and we have been in contact with 

American Eagle Airlines. We are in active discussions with Public Charters and 

are watching how the Department will respond to Manistee’s proposal for 

alternative EAS using that carrier. At some point, legal definitions must give 

way to common sense. Perhaps in Alaska there are EAS routes where Piper 

Navajos or similar aircraft fly two hour flights. Alpena is not in Alaska. How 

the spirit and intent of the EAS program can be so turned as to define a two hour 

 6 Previously most EAS communities were entitled to service with 15-seat or larger aircraft. However, in 

the Department’s FY 2012 appropriation (Consolidated and Further Continuing Appropriations Act, 

P.L. 112-55, November 18, 2011), Congress repealed the 15-seat guarantee, although communities are still 

entitled to service with twin-engine aircraft.
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plus flight on a Piper Navajo on an airline lacking basic interline agreements as 

a legal bid escapes me.

Reply by Air Choice One to the Community’s Comments, March 21, 2012

Air Choice One responded to the community’s comments by letter dated March 21, 2012. 

It assures the Department that its Piper Navajos, even with requirements for fuel reserves 

and significant allowances for the weight of passenger baggage would be able to carry 

seven passengers a flight between Chicago and Alpena, even under “less than perfect 

operating conditions.” The carrier also responded to the community’s concern about the 

scheduled times reflected in Air Choice One’s proposal. “Published schedules for other 

cities with different stage lengths and traffic patterns cannot be used to evaluate a 

"Representative Schedule," since published schedules reflect day-to-day experience in the 

actual operating conditions.’ Finally, the carrier also indicates that Alpena misconstrued 

Order 2011-12-7: Air Choice One is not on probation with the Department. Rather, the 

Department offered Air Choice One the “lure of a 3-year renewal if we can implement an 

electronic interline ticketing agreement with a major carrier.” 

Decision

We have decided to issue one additional request for proposals at Alpena. The community 

pleads for more time to secure additional air service options. We take the community at 

its word that it is close to finding a carrier to submit a bid that would meet the 

community’s needs. Moreover, this situation is highly unusual, if not unique, in that 

none of Air Choice One’s five service options could provide as many seats as there are 

passengers currently using the service. Specifically, Air Choice One’s Option 5, 

providing the most seat capacity of any option meeting basic EAS requirements, would 

provide only 17,4727 seats per year, while in calendar year 2011 Alpena generated 

23,965 passengers. Furthermore, we recognize that the transition to service with 9-seat 

Piper Navajo aircraft from 50-seat regional jets would be difficult, notwithstanding that 

the communities of Burlington, Iowa, and Decatur, Illinois, where we currently subsidize 

Air Choice One, are very satisfied with that carrier’s service. 

We take this action notwithstanding that Air Choice One’s Options 4 and 5 fully meet the 

requirement for basic EAS, i.e., service with twin-engine aircraft, to a medium or large 

hub, and with 12 or more round trips per week; that we have already held Delta in for 

approaching nine months from when it first filed notice; and that this action will cause 

additional delay.8 

Based on all of the above, we have decided to issue one final request for proposals. 

However, if this fourth request for proposals does not elicit any responses, we fully 

intend to select Air Choice One, either Option 4 or 5. If we do receive proposals, we will 

process the carrier-selection case based the statutory selection criteria. (See footnote 7.) 

 7 24 round trips per week x 2 directions x 52 weeks x 7 seats x 100% completion = 17,472 seats. Air 

Choice One indicates in their reply to the community that their Navajos would typically be able to 

accommodate seven passengers on their flights between Chicago and Alpena.

8 49 U.S.C. §41734(f) directs the Department, when prohibiting a carrier from terminating service, “to 

make every effort to find another carrier” to provide basic EAS as quickly as possible.
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Request for Proposals 

Carriers interested in filing proposals for Alpena -- with or without subsidy -- should 

e-mail them to our staff at EAS@dot.gov, no later than May 15, 2012. Our staff will then 

docket the proposals, thereby making them public, and we suggest that each applicant 

serve a copy of its proposal on the civic parties and other applicants. Shortly thereafter,

we will provide a summary of the proposals to the community officials and ask them to 

submit their final comments about two weeks later. We will give full consideration to all 

proposals filed in a timely manner.9 

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 negotiate 

proposals with carriers when we deem it desirable. In such cases, of course, we will give 

all applicants the same opportunity. We also retain the discretion to reject outright all 

unreasonable or unrealistic proposals and solicit a new round of proposals. 

We are providing interested carriers 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. 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 and 

routings 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 community and the Department.10 

We request proposals for two round trips a day (12 per week) with 30-seat or larger 

aircraft, or either two or three round trips a day (12 or 18 a week) with 19-seat aircraft. 

We also encourage the community to discuss options with carriers that might not meet 

the technical definition of basic EAS but that may be more cost efficient and more 

preferable from the community’s viewpoint.11 Finally, we take note that the community 

has expressed concerns about Cleveland as its hub. As a result, we encourage proposals 

 9 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to 

provide EAS without subsidy and we determine that service can be provided reliably without such 

compensation, we do not proceed with the carrier-selection case. Instead, we simply rely on that carrier’s 

subsidy-free service as proposed.

10 In selecting a carrier to provide subsidized EAS, 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, 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. 

11 Previously most EAS communities were entitled to service with 15-seat or larger aircraft. However, in 

the Department’s FY 2012 appropriation (Consolidated and Further Continuing Appropriations Act, 

P.L. 112-55, November 18, 2011), Congress repealed the 15-seat guarantee, although communities are still 

entitled to service with twin-engine aircraft.
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to other hubs, such as the community’s current hub of Detroit, as well as Chicago, or any 

other hub that provides access to the national air transportation system.

Carriers are also welcome to propose more than one service option, if they choose. They 

need not limit themselves to the current service pattern if they envision other, potentially 

more attractive service possibilities -- different hubs or lengths of term -- with subsidy 

requirements that are competitive. 

In order to assist carriers in making their passenger and revenue forecasts, we have 

included historical passenger data in Appendix B. We note that Alpena is a reasonably 

strong traffic generator for the EAS program, averaging 36 enplanements a day based on 

six-day per week service during the year ended October 31, 2011, and has been growing.

New Filing Procedures

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 should be formatted to be viewed online.

Other Carrier Requirements

The Department is responsible for implementing various Federal statutes governing 

lobbying activities, drug-free workplaces and nondiscrimination.12 Consequently, all 

carriers receiving Federal subsidy to support EAS 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. 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 to carriers that do not submit these 

documents.13 

Community Comments

The community and the State 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 the State and ask them to submit their final comments approximately two weeks after 

the carrier proposals are received.

 12 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 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 governmentwide requirements for drug-free workplace (grants).

13 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.
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This Order is issued under authority delegated in 49 CFR 1.56a(f).

ACCORDINGLY;

1. The Department requests proposals from carriers interested in providing Essential Air 

Service, with subsidy if necessary, by May 15, 2012. Proposals should be emailed to 

EAS@dot.gov and be entitled “Proposals to Provide Essential Air Service at Alpena, 

Docket 2009-0300.” Service should be consistent with that discussed in the body of the 

Order. Questions regarding filings may be directed to Kevin Adams at 202-366-1047 or 

kevin.adams@dot.gov;

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

3. The Department will serve a copy of this Order on the Mayor and Airport Manager of 

Alpena, Michigan, Pinnacle Airlines Corporation, Gulfstream International Airlines, Inc., 

Intrepid International, Delta Airlines, Inc., and the carriers in our service list. 

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

Map for Alpena and Vicinity

Nonstop Great Circle Miles From Alpena (APN)

CIU, Sault Ste. Marie 92

CLE, Cleveland 267

DTW, Detroit 198

GRR, Grand Rapids 181

MKE, Milwaukee 261

MKG, Muskegon 187

ORD, Chicago O’Hare 305

PLN, Pellston 69

TVC, Traverse City 102
Appendix B

Historical Traffic at Alpena, Michigan (APN)

T-100 Market Report

Year Month Origin Dest O&D

2009 1 515 452 967

2009 2 493 470 963

2009 3 620 549 1,169

2009 4 443 494 937

2009 5 588 564 1,152

2009 6 671 707 1,378

2009 7 830 849 1,679

2009 8 918 863 1,781

2009 9 649 597 1,246

2009 10 681 658 1,339

2009 11 588 579 1,167

2009 12 532 627 1,159

CY 2009 7,528 7,409 14,937

2010 1 591 454 1,045

2010 2 457 462 919

2010 3 704 660 1,364

2010 4 596 674 1,270

2010 5 571 586 1,157

2010 6 713 759 1,472

2010 7 925 988 1,913

2010 8 1,108 962 2,070

2010 9 736 696 1,432

2010 10 789 729 1,518

2010 11 720 676 1,396

2010 12 720 804 1,524

CY 2010 8,630 8,450 17,080

2011 1 694 591 1,285

2011 2 687 643 1,330

2011 3 1,080 953 2,033

2011 4 824 934 1,758

2011 5 991 993 1,984

2011 6 1,089 1,170 2,259

2011 7 1,315 1,281 2,596

2011 8 1,437 1,277 2,714

2011 9 1,087 968 2,055

2011 10 952 898 1,850

2011 11 1,042 1,006 2,048

2011 12 991 1,062 2,053

CY 2011 12,189 11,776 23,965
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 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 communities.

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 solicitation beyond 

[DATE]. The Department’s obligation for performance under this solicitation 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 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 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.