Order 2015-4-12

Served: April 17, 2015

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 17th day of April, 2015

ORDER SELECTING CARRIER

Summary

By this Order, the Department is selecting Boutique Air (Boutique) to provide subsidized 

Essential Air Service (EAS) at Carlsbad, New Mexico, for the two-year period beginning 

June 1, 2015, through May 31, 2017, for an annual subsidy rate of $2,410,695.1

Background

By Order 2013-5-5 (May 6, 2013), the Department reselected Pacific Wings, L.L.C., d/b/a/ 

New Mexico Airlines (New Mexico Airlines) to provide subsidized EAS at Carlsbad from 

June 1, 2013, through May 31, 2015. Under that Order, New Mexico Airlines was selected 

to provide 12 nonstop round trips each week between Carlsbad and Albuquerque (ABQ), 

utilizing single-engine, 9-passenger Cessna Grand Caravan (C-208B) turboprop aircraft for 

an annual subsidy rate of $1,397,081.

In anticipation of the end of the current rate term, the Department issued Order 2014-12-11

(December 16, 2014), soliciting proposals to provide EAS at Carlsbad, with subsidy support 

if necessary. In response to that request, we received one proposal from Boutique. The 

proposal is summarized below. The complete proposal is available online at 

www.regulations.gov by searching for docket: DOT-OST-2002-12802.

Boutique Air

Boutique submitted a proposal with two service options. Under both options, flights would 

be operated with single-engine, 9-passenger Pilatus PC-12 aircraft. The first option would 

provide 12 weekly nonstop round trips to ABQ for an annual subsidy of $2,081,503. The 

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

Essential Air Service at

CARLSBAD, NEW MEXICO

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

Docket DOT-OST-2002-12802
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second option would provide 12 weekly nonstop round trips to the Dallas/Ft. Worth

International Airport (DFW). This option would require an annual subsidy of $2,739,886. 

Community Comments

On January 21, 2015, we solicited community comments regarding the carrier-selection 

decision at Carlsbad. On February 23, 2015, we received letters from the Carlsbad Air 

Service Committee, members of the Carlsbad City Council, and Carlsbad Mayor Dale 

Janway. All letters express support for the selection of Boutique. However, the community 

requested that instead of either of the two service options proposed by Boutique, the 

community would prefer one round trip per day to each ABQ and DFW.

Decision

The carrier-selection decision at Carlsbad is straightforward. Boutique was the only carrier 

to submit a proposal, it meets all of the requirements for EAS2 and the service level and 

subsidy request are reasonable. In addition, Boutique has received the unanimous support 

of the community. In regard to the community’s request for one round trip each to ABQ 

and DFW, the Department contacted Boutique to see if that service pattern would be 

possible and what subsidy would be required. In response, Boutique stated that it would be 

possible, and the required subsidy would be the sum of one-half of each of the proposed 

service options.

Therefore, the Department has decided to select Boutique to provide EAS at Carlsbad, 

providing 6 weekly nonstop round trips to ABQ and 6 weekly nonstop round trips to DFW, 

for a combined annual subsidy of $2,410,695 (calculated as one-half of Boutique’s proposed 

ABQ subsidy request of $2,081,503 plus one-half of Boutique’s proposed DFW subsidy of 

$2,739,886).3 The Department shall make this selection at Carlsbad contingent upon 

receiving properly executed certifications from Boutique that it is in compliance with the 

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

the regulations governing lobbying activities.

Note Regarding Eligibility

The Department wishes to remind Boutique and Carlsbad about the recently enacted law 

that established a new subsidy cap of $1,000 per passenger, regardless of distance from hub 

airports.4

 The Department expects both the community and air carrier to work 

cooperatively to ensure subsidy rates remain in compliance with the $1,000 subsidy per 

passenger cap to remain eligible for the EAS program.

Service Transition

The Department expects New Mexico Airlines and Boutique to work together to make a 

smooth transition at Carlsbad. In that regard, before New Mexico Airlines suspends its 

 2 Boutique’s proposal uses single-engine aircraft, and since Pacific Wings d/b/a New Mexico Airlines has 

served Carlsbad for at least 60 consecutive operating days at any time since October 31, 1978, the community 

is not guaranteed aircraft with at least 2 engines and 2 pilots. Thus, Boutique’s proposal meets basic EAS 

requirements. See 49 USC § 41732(b)(5). 3 Proposed ABQ subsidy = $2,081,503; Proposed DFW subsidy = $2,739,886. 

($2,081,503 / 2) + ($2,739,886 / 2) = $2,410,695.

4

See 49 U.S.C. § 41731(a)(1)(C).
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service it must notify any passengers holding reservations for travel after the suspension 

date, and assist those passengers in making alternate air transportation arrangements, or 

provide a refund of the ticket price, without penalty, if requested.

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. Boutique is subject to 

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

attention that would cause us to question the carrier’s fitness to provide EAS in this market 

at this time. We have contacted the Federal Aviation Administration, and it has raised no 

concerns that would negatively affect our fitness finding in this market. We therefore 

conclude that the carrier is reliable and remains fit to conduct the operations proposed here.

This Order is issued under authority delegated in 49 CFR Part 1.25a(b).

ACCORDINGLY,

1. The Department selects Boutique Air to provide Essential Air Service at Carlsbad, New 

Mexico, and establishes the service levels and subsidy rates, as described in Appendix C, for 

the period from June 1, 2015, through May 31, 2017;

2. The Department directs Boutique Air 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 carriers may forfeit its compensation for any claim that is not supported under 

the terms of this Order;

3. The Department finds Boutique Air continues to be fit, willing and able to operate as a 

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

New Mexico;

4. This Docket will remain open until further Order of the Department;
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5. The Department will serve copies of this Order on the Mayor and Airport Manager of 

Carlsbad, New Mexico, New Mexico Airlines and Boutique Air.

By:

BRANDON M. BELFORD

Deputy 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

AREA MAP

This map is provided by Sabre® AirVisionTM Profit Essentials and is being used with express permission of the copyright holder, 

Sabre Airline Solutions®.
Appendix B

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Appendix B

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Subsidy Calculation

2 RT One-half

ABQ $2,081,503 $1,040,752

DFW $2,739,886 $1,369,943

Total Annual 

Subsidy: $2,410,695
Appendix C

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Boutique Air

Provision of Essential Air Service at Carlsbad, New Mexico

Summary of Service To Be Provided

Effective Period: June 1, 2015 through May 31, 2017.

Scheduled Service: 6 nonstop round trips per week to Albuquerque, and;

6 nonstop round trips per week to Dallas/Ft. Worth.

Aircraft type: Pilatus PC-12 (9-seats).

Intermediate stops and 

upline service:

No service to any intermediate or upline points are contemplated under the 

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

on subsidized flights without prior Department approval.

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

compensation.

Annual compensation: $2,410,6951

Subsidy Rate per 

Flight:

$1,9712

Weekly Compensation 

Ceiling:

$47,3043

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 

 1 See Appendix B.

2 Annual compensation of $2,410,695 divided by 1,223 annual departures (24 weekly departures x 52 weeks x 98% 

completion factor). 

3 24 flights per week multiplied by $1,971 per flight.
Appendix C

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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 may not be available for performance under this Order beyond September 30, 2015. The 

Government’s obligation for performance under this Order beyond September 30, 2015, is 

subject to the availability of 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, 2015, until funds are made available to the Department for 

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

2015, the Department will provide notice in writing to the carrier. 

All claims for payment, including any amended claims, must be submitted within 90 days of the 

last day of the month for which compensation is being claimed. For example, claims for service 

provided in July must be filed by October 31st; August claims must be submitted by November 

30th, and so on.