Order: 20 11

- 12

- 8

Served: Dec em ber 16 , 20 11



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 15 th day of Dec ember , 20 11

Docket DOT

- OST

- 1996

- 1901

TENTATIVE ORDER REGARDING TERMINATI ON OF EAS ELIGIBILITY AND
SETTING SHORT

- TERM SUBSIDY RATES

Summary By this O rder, 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 E ssential A ir S ervice (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 O rder. 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 O rder, New Mexico Airlines provides 12 nonstop round trips each week between Alamogordo/Holloman Air Force Base and Albuquerque, utilizing single

engine, nine

- passenger Cessna Grand Caravan (C

- 208B) turboprop aircraft.

In anticipation of the end of the rate term, t he Department issued Order 20 11

- 7

- 2 on July 1, 2011 , soliciting proposals to provide more efficient EAS at the community , wi th subsidy support if necessary.

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

2011

- 7

- 2 and w ould 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.- 2

-

between the community and Albuquerque, utilizing nine

- passenger Cessna Grand

Caravan (C

- 208B) turboprop aircraft , for an annual subsidy r ate of $1, 1 87

, 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 s earch 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 eligi ble, 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 si nce 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

recen t fiscal year (FY 2011)

, New Mexico Airlines transported 809 total passengers at an annual subsidy rate of $1,169,337. Thus, the c orresponding average per passenger subsidy for FY 2011 was approximate ly $1,445

.

Decision

After carefu l 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 we ll 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. O verall

riders hip of EAS at Alamogordo/Holloman Air Force Base has not k ept pace with the federal subsidy required

. 1

New Mexico Airlines’ current contract expires on December 31, 2011. W e hereby require New Mexico Airlines to continue to provide EAS at the community a fter 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). W e 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 O rder to submit objections. Objections should be fully documented and contain complete inf ormation 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 T he proposed subsidy rate of $1,187,531 per passenger going forward exceeds the $1,000 cap.- 3

-

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 O rder is issued under authority delegated in 49 CFR 1.56a(f).

ACCORDINGLY,

1. The Department tentatively finds that Alamogor do/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 Alamogor do/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

indi cates 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 . W e 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

E ssential A ir S ervice at Alamogor do/Holloman Air Force Base, New Mexico ;

7 . This doc ket 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.- 4

-

8 . Docket Operations will serve copies of this O rder 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 MAPAppendix B

Passenger Traffic and Annua l Essential Air Service Subsidy at Alamogordo/Holloman Air Force Base, New Mexico

Year

Ended Enplane d 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 MarketAppendix 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 RequirementAppendix 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, 201 2 , 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 serve d 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 app lied 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 : $ 9 71 1

Weekly Compensation Ceiling: $ 23,304 2

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 d eparture 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 co mpleted, 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 writt en 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 oper ated; 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 me t and the extent of access to the national air transportation system provided to the community.

If the Department unilaterally, either partially or complete ly , 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 reg ard 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.

Su bsidy 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 forego ing paragraph.

Funds are not currently available for performance under this order beyond September 30 , 201 2

. The Department’s obligation for performance unde r this order beyond September 30 , 201 2 , 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 , 201 2 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30 , 201 2

, 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 se rvice 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 Grigg s, 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