Order 2012-11-33

Served: November 29, 2012

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 29th day of November , 2012

ORDER RE-SELECTING CARRIER AND SETTING FINAL SUBSIDY RATES

Summary

By this Order, the Department is re-selecting Great Lakes Aviation, Ltd. (“Great Lakes”) to 

provide subsidized Essential Air Service (“EAS”) with 19-passenger Beechcraft B-1900D 

aircraft at Clovis and Silver City/Hurley/Deming, New Mexico (“Silver City”), for the 

period from December 1, 2012, through November 30, 2014, at a combined annual subsidy

rate of $4,052,949.

1

Background

By Order 2011-4-19, issued on April 22, 2011, the Department re-selected Great Lakes to 

provide subsidized EAS at Clovis and Silver City, through May 31, 2013. That Order

directed Great Lakes to provide each community with 12 nonstop round trips per week to 

Albuquerque, using 19-seat Beech 1900 aircraft, at an annual subsidy of $1,592,157 for 

Clovis and $1,594,092 at Silver City. 

On June 4, 2012, Great Lakes filed a 90-day notice of its intention to terminate its scheduled 

air service at both communities, effective September 3, 2012. A copy of Great Lakes’ filing 

may be accessed online through the Federal Docket Management System at 

http://www.regulations.gov, by entering “DOT-OST-1996-1902” (Clovis) or “DOT-OST1996-1903” (Silver City) in the “SEARCH for: Rules, Comments, Adjudications or 

Supporting Documents:” field.

 

1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds.

Essential Air Service at

CLOVIS, NEW MEXICO

SILVER CITY/HURLEY/DEMING, NEW MEXICO

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

Docket DOT-OST-1996-1902

Docket DOT-OST-1996-1903
- 2 -

By Order 2012-7-20, issued on July 17, 2012, the Department (a) requested proposals from 

air carrier’s interested in providing EAS at either or both communities for a new contract 

period, with or without subsidy, and (b) extended the EAS obligation of Great Lakes at 

Clovis and Silver City for an additional 30 days, through October 3, 2012.

2 

Proposals

In response to Order 2012-9-16, the Department received proposals from SeaPort Airlines, 

Inc. (“SeaPort”) and Great Lakes. Each air carrier’s proposal and the community comments

may be accessed online through the Federal Docket Management System at: 

http://www.regulations.gov, by doing a search on the corresponding community docket 

numbers listed on the first page.

SeaPort

SeaPort proposed to provide a single inseparable service package at both communities 

utilizing either a 9-passenger Cessna Caravan or 8-passenger Piper Chieftain aircraft with 18 

weekly nonstop round trips a week to Albuquerque. Seaport’s proposal included the 

stipulation that both communities must choose the same aircraft type. SeaPort requested the 

following subsidy requirements: 

Clovis-Albuquerque Year 1 Year 2

Cessna Caravan $2,160,518 $2,268,544

Piper Chieftain $2,232,336 $2,349,058

Silver City-Albuquerque Year 1 Year 2

Cessna Caravan $1,893,414 $1,988,085

Piper Chieftain $1,943,316 $2,044,643

SeaPort’s proposals also include mention of an interline agreement with US Airways and 

the air carrier’s intent to implement another agreement, which would include full e-ticketing

and through baggage with another major airline. 

Great Lakes

Great Lakes, the incumbent air carrier at Clovis and Silver City, submitted a proposal with 

stand-alone options for EAS at each community, utilizing 19-seat Beech 1900 aircraft. At 

Clovis, Great Lakes proposed to provide 12 one-stop round trips per week between Clovis

and Denver, via Alamosa, Colorado; Liberal, Kansas; Santa Fe, New Mexico; or Pueblo, 

Colorado, at an annual subsidy of $1,954,490. 

At Silver City, the air carrier proposed to provide 12 round trips per week between the 

community and Denver, Colorado, via Alamosa, Colorado; Santa Fe, New Mexico; or 

Pueblo, Colorado, or nonstop service between Silver City and Phoenix, Arizona, at an 

annual subsidy of $2,098,460.

 

2 We have continued to hold-in Great Lakes by successive 30-day Orders.
- 3 -

Community Comments

By e-mails dated August 17, 2012, the Department solicited the views of the civic officials 

at the respective communities and the New Mexico Department of Transportation (NM 

DOT), as to which carrier’s proposals they would prefer. Clovis and Silver City support the 

re-selection of Great Lakes. The Mayor of Clovis stated that the City Commission 

unanimously voted to recommend Great Lakes. The Grant County3 Manager stated “the 

County Commission would like to have the Essential Air Service continue with Great Lakes 

Airlines with two round trip service a day to Phoenix.” The Mayor of Silver City also sent a 

letter supporting the retention of Great Lakes. 

Decision

After careful consideration of this matter, including the comments of local officials, the 

Department has decided to re-select Great Lakes to provide 12 one-stop round trips per 

week between Clovis and Denver, via Alamosa, Liberal, Santa Fe, or Pueblo, at an annual 

subsidy of $1,954,490. At Silver City, Great Lakes will provide 12 nonstop round trips per 

week between the community and Phoenix, Arizona, or one-stop service between Silver 

City and Denver via Alamosa, Santa Fe, or Pueblo at an annual subsidy of $2,098,460.

Great Lakes is well-established and has been providing EAS at the respective communities 

for many years, and the communities support the re-selection of the air carrier. 

Furthermore, Great Lakes provides excellent access to the national air transportation system

through the use of its interline e-ticketing agreements with American Airlines, Delta Air

Lines, Frontier Airlines, United Airlines, and U.S. Airways. We also find that both Great 

Lakes’ service and subsidy levels are reasonable. 

We note that Great Lakes’ proposal offers several options of hubs to be served. Under the 

Denver option, Great Lakes has full code-share agreements in place with both United 

Airlines and Frontier Airlines, providing passengers with seamless connections to the 

national air transportation system. In this context, we expect Great Lakes and the 

communities to formulate which service option would provide the best service for the 

communities. In that regard, we note that Grant County (Silver City) expressed a preference 

for Phoenix, while Clovis was silent as to which hub it preferred. 

As a final matter regarding Great Lakes’ re-selection, we note that Great Lakes filed a 

90-day notice of its intent to suspend service on June 4, 2012. In these situations, 49 U.S.C. 

§ 41734(d) provides for air carriers to receive an increased subsidy rate no later than 180 

days after the date of its filing the 90-day notice. Thus, we will establish the effective date 

for the new, two-year contact period as December 1, 2012, through November 30, 2014. 

We shall make this selection at the communities contingent upon the Department’s 

receiving properly executed certifications from Great Lakes that they are in compliance with

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

as the regulations governing lobbying activities.

 

3 Silver City and Hurley are located in Grant County. Deming is located in Luna County. Grant County owns 

the airport where EAS is provided.
- 4 -

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 we may subsidize it to provide EAS. Great Lakes is subject 

to the Department’s continuing fitness requirements, and no information has come to our 

attention that would cause us to question the air carrier's fitness at this time. We have 

contacted the Federal Aviation Administration, and it has raised no concerns that would 

negatively affect our fitness findings. We therefore conclude that the air carrier is reliable 

and remains fit to conduct the operations proposed here.

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

ACCORDINGLY,

1. We re-select Great Lakes Aviation, Ltd. to provide Essential Air Service at Clovis and 

Silver City/Hurley/Deming, New Mexico, and establish the subsidy rates, as described in 

Appendix B, for the period from December 1, 2012, through November 30, 2014;

2. We direct 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 air carrier may forfeit its compensation for any claim that is not supported 

under the terms of this Order;

3. We find that Great Lakes Aviation, Ltd. continues to be fit, willing and able to operate as 

a commuter air carrier and capable of providing reliable Essential Air Service at Clovis, 

New Mexico, and at Silver City/Hurley/Deming, New Mexico; 

4. These Dockets will remain open until further order of the Department; and

5. We will serve copies of this Order on the parties listed in Appendix C.

By:

SUSAN L. KURLAND

Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available in the Federal Docket Management 

System (FDMS) at http://www.regulations.gov
Appendix A

Page 1 of 2

Great Lakes Aviation, Ltd.

Annual Compensation Requirements for Essential Air Service at

Clovis, New Mexico to Denver (DEN)

Two Round Trips – B1900 – one stop via ALS, LBL, SAF, or PUB

98.0% Completion Factor

Departures: 1,227

Block Hours: 1,636

Operating Revenues:

Passenger: 7,500 psgrs at $144.97 $1,087,275

Other (at 0.62% of passenger revenue) $6,741

Total Operating Revenues: $1,094,016

Operating Expenses:

Direct: Aircraft and Hull Insurance $365,710

Fuel and Oil $917,795

Flying Operations $289,801

Maintenance $415,070

Total Direct Expenses: $1,988,376

Total Indirect Expenses: $914,963

Total Operating Expenses $2,903,339

Operating Loss ($1,809,323)

Profit Element (5.0% of Total Operating Expenses) $145,167

Annual Compensation Requirement: $1,954,490
Appendix A

Page 2 of 2

Great Lakes Aviation, Ltd.

Annual Compensation Requirements for Essential Air Service at

Silver City/Hurley/Deming, New Mexico to Denver (DEN) or Phoenix (PHX)

Two Round Trips – B1900 – one stop via ALS, SAF, PUB, or nonstop to PHX

98.0% Completion Factor

Departures: 1,227

Block Hours: 1,538

Operating Revenues:

Passenger: 6,000 psgrs at $137.85 $827,100

Other (at 0.62% of passenger revenue) $5,128

Total Operating Revenues: $832,228

Operating Expenses:

Direct: Aircraft and Hull Insurance $365,710

Fuel and Oil $837,810

Flying Operations $272,441

Maintenance $401,137

Total Direct Expenses: $1,877,098

Total Indirect Expenses: $914,033

Total Operating Expenses $2,791,131

Operating Loss ($1,958,903)

Profit Element (5.0% of Total Operating Expenses) $139,557

Annual Compensation Requirement: $2,098,460
Appendix B

Page 1 of 2

Great Lakes Aviation, Ltd.

Provision of Essential Air Service at Clovis, New Mexico

Summary of Service To Be Provided

Effective Period: December 1, 2012, through November 30, 2014.

Scheduled Service: 12 round trips a week to Denver

Aircraft type: Beechcraft B-1900D (19 passenger seats).

Intermediate stops and 

upline service:

One-stop via ALS, LBL, SAF, or PUB.

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

compensation.

Annual compensation: $1,954,490

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:

$1,5921

Weekly Compensation 

Ceiling:

$38,2082

 

1 Annual subsidy of $1,954,490 divided by 1,227 annual departures (313 service days x 4 flights per service day x 

98 percent completion)..

2 24 flights per week multiplied by $1,592 per flight.
Appendix B

Page 2 of 2

Great Lakes Aviation, Ltd.

Provision of Essential Air Service at Silver City/Hurley/Deming, New Mexico

Summary of Service To Be Provided

Effective Period: December 1, 2012, through November 30, 2014.

Scheduled Service: 12 round trips a week to Denver or Phoenix.

Aircraft type: Beechcraft B-1900D (19 passenger seats).

Intermediate stops and 

upline service:

One stop via ALS, SAF, PUB, or nonstop to PHX

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

compensation.

Annual compensation: $2,098,460

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:

$1,7101

Weekly Compensation 

Ceiling:

$41,0402

 

1 Annual subsidy of $2,098,460 divided by 1,227 annual departures (313 service days x 4 flights per service day x 

98 percent completion).

2 24 flights per week multiplied by $1,710 per flight.
Appendix C

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 March 31, 2013. The 

Department’s obligation for performance under this order beyond March 31, 2013, 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 March 31, 2013, until funds are made available to the Department for 

performance. If funds are not made available for performance beyond March 31, 2013, 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.