O rder: 2014

- 3

- 6

Served: March 11, 2014



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY By this O rder, the Department is requesting proposals from air ca rriers interested in providing E ssential A ir S ervice (EAS) at Victoria, Texas

, for a new contract period beginning October 1, 201 4 , wi th or without subsidy

. (See Appendix A for a map). Air c arriers should file their proposals no later than April 16

, 2014

. 

### WASHINGTON, D.C.

Issued by the Department of Transportation

on the 11 th of March , 20 1 4

ORDER REQUESTING PROPOSALS

Summary By this O rder, the Department is requesting proposals from air ca rriers interested in providing

E ssential A ir S ervice (EAS) at Victoria, Texas

, for a new contract period beginning

October 1, 201 4 , wi th or without subsidy

. (See Appendix A for a map). Air c arriers should file their proposals no later than April 16

, 2014

.

Background
By Order 2012

- 7

- 17 (July 13, 2012 ), the Department selected Sun Air Express, LLC d/b/a Sun Air International (Sun Air) to provide EAS at Victoria to George Bush Intercontinental Airport (Houston or IAH ) using 9

- passenger, twin engine Piper Chieftain aircraft for a two

year period beginning when the air carrier commenced full EAS. 1 Under that Order, Sun Air provides Victor ia with 24 weekly nonstop round trips for an annual subsidy of $2,294,036.

The complet e public file for EAS at Victoria may be accessed online through the Federal Dockets Management System at: www.regulations.gov by entering “DOT

- OST

- 2005

- 20454 ” in the “Search for Rules, Comments, Adjudications, or Supporting Documents” field.

Special d iscussion concerning Victoria’s subsidy per passenger The Department is prohibited from subsidizing air service at a community wh ere the subsidy per passenger exceeds $200, unless the community is more than 210 highway miles from the

1 Sun Air started full EAS on October 1, 2012 , thus making the contract expiration date September 30, 2014

.

Essential Air Service at

VICTORIA, TEXAS

Under 49 U.S.C. § 41731 et seq

. Docket D OT

- OST

- 2005

- 20454- 2

-

nearest large or medium hub airport. Vic toria is 124 miles from IAH (a large hub airport) and

b ased on FY2013 data (October 1, 2012, through September 30, 2013), 6,518 passengers were enplaned and de planed at Victoria . The annual subsidy amount for Victoria is $2,294,036

. Therefore, the subsidy per passenger at Victoria is $352, above the subsidy per passenger ceiling . Rather than termin ate the commu nity’s eligibility at this stage, the Department will solicit proposals for EAS and evaluate all proposals submitted before either committing to a

two

- year contract or making a final determination on Victoria ’s continuing eligibility to receive EAS in ligh t of its current subsidy per passenger being above the $200 ceiling. Before the due date for proposals, we expect the community to work aggressively with all potential applicants to mitigate some of the risks that the air carriers may face in an attempt t o lower their subsidy levels. We also expect air carriers to detail in their proposals how they will work with the community in getting the subsidy per passenger under the $200 cap.

Request for Proposals

As the end of the current contract approaches, the Department is requesting proposals from air carriers interested in providing EAS at Victoria with subsidy support if necessary , for a new contract period beginning October 1

, 201 4

. Carriers should file their proposals no later than April 16

, 20 14

. Staff will the n docket the proposals, thereby making them public

. Shortly afterwards, we will provide a summary of the proposals to the communit y and ask them to submit their final comments. We will give full consideration to all proposals that are timely

fil ed. 2

Interested air carriers should prepare their proposals with every expectation that their initial proposals will represent their final and only proposals. However, we retain the discretion to negotiate proposals with carriers when we deem it desirabl e; 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 re

- solicit a new round of proposals. However, negotiation and rejection are only occasional exceptions to the rule.

We are here providing interested carriers with some basic information to serve as guidance when they prepare their proposals, but we will not prescribe a precise format for their proposals. Air 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 www.regulations.gov

, each page should be formatted to be viewed online. 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, we recommend they include informatio n concerning proposed

schedules and projected block hours . In addition, applicants are urged to provide financial data supporting their subsidy requests, including information on their projected expenses and

2 Carriers should not expect th e Department to accept late fil ings. In cases where a carrier proposes to p rovide

EAS without subsidy and we determine that basic EAS, as required by 49 U.S.C. § 41732, can be reliably provided without such compensation, we typically will not proceed with the carrier

- selection case. Instead, we simply rely on that carrier’s subs idy

- free service as proposed.- 3

-

revenues. We strongly encourage clear, well

- do cumented proposals that will facilitate their evaluation by the affected communit ies and the Department. 3

Proposals should provide sufficient capacity to accommodate historical levels of traffic. In order to assist air carriers in developing traffic and revenue projections for their proposals, we have provided a summary of historical passengers in Appendi x B. During the year ended September 30

, 2013, Victoria enplaned and deplaned a total of 6,518 passengers

. The Department expects proposals that are co nsistent with what the community currently receives, with service to a large

- or medium

- hub airport that provides numerous connecting opportunities to the national air transportation system. Specifically, air carriers should

propose two daily round trips (12 a week) with 30

- passenger or larger aircraft. For air carriers proposing service with 15

- seat to 29

- seat aircraft, we expect three daily roun d trips (18 a week). We would also consider proposals with 8/9

- seat aircraft and additional frequencies.

Air c arriers are also welcome to propose more than one service option, if they choose. T hey

also need not limit themselves to the se requirements if they envision other, potentially more

attractive service possibilities

-- different hubs or length of contract

, for example

-- with subsidy requirements that remain competitive.

Community Comments The community and State is welcome to submit comments at any time. We encourage prospective applicants to contact the community before they submit their proposals so t hat they can tailor them to the community’s needs, as they will not be able to amend them after the due date. As noted earlier, we will provide a summary of the proposals to the civic parties shortly after the deadline for carrier proposals, and ask them to submit their final comments.

Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug

- free workplaces, and nondiscrimination. 4 Consequently, all carriers receiving

Federal s ubsidy for EAS must certify that they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimination, and those carriers whose subsidies

3 In selecting a carrier to provide subsidized EAS for an eligible place not in Alaska, 49 U.S.C. § 41733(c)(1) directs us to consider five factors: (a) service reliability; (b) contractual and marketing arrangements with a

l arger carrier at the hub; (c) interline arrangements with a larger carrier at the hub; (d) community views, giving substantial weight to the views of the elected officials representing the users; and (e) whether the carrier has included a plan in its propo sal to market its service to the community. In addition, the Consolidated Appropriations Act, 2014, Public Law No. 113

- 76, 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 Essential Air Service 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.

4 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; (3) 49 CFR Part 27

-- Nondiscrimination on the Basis of Disability in Programs and Activities Receiving or Benefiting from Federal Financial Assistance; (4)

14 CFR Part 382

-- Nondiscrimination on the Basis of Disability in Air Travel; and (5) 49 CFR Part 29

-- Government

- Wide Debarment and Suspension (Non

- Procurement) and Government

- Wide Requirements for Drug

- Free Workplace (Grants).- 4

-

exceed $100,000 over the life of the contract must also certify that they are in co mpliance with the regulations governing lobbying activities. Because the Department is prohibited from paying subsidy to carriers that do not submit these documents, all carriers that plan to submit proposals involving subsidy should be aware that the sel ected carrier will be required to complete the required certifications. Interested carriers requiring more detailed information regarding these requirements should contact the Offic e of Aviation Analysis at (202) 366

- 5903. 5

This Order is issued under aut hority delegated in 49 CFR Part 1.25a(b) and re

- delegated to the Director, Office of Aviation Analysis.

ACCORDINGLY, 1. We request that carriers interested in providing Essential Air Service at Victoria

, Texas

, submit their proposals, with subsidy suppor t if necessary , no later than April 16

, 20 14 . The proposals should be e

- mailed to: michael.f.martin@dot.gov with the title “Proposal to

Provide E AS at Victoria, Texas ”; 6

2. Th is docket will remai n open un til further O rder of the Department; and

3 . We will serve copies of this O rder on the mayor of Victoria, Texas

, the airport manager of Victoria Regional Airport , and the service list for this docket.

Persons entitled to petition the Department for revie w of this Order under the Department’s Regulations, 14 CFR Part 385.31(a), must file such petitions within seven (7) days after the

date of service of this Order.

This Order will be effective immediately, and the filing of a petition for review shall not preclude its effectiveness.

By:

TODD M. HOMAN

Director Office of Aviation Analysis (SEAL) An electronic version of this document is available

o nline at www.regulations.gov

.

5 The certifications are al so available on the web at http://www.dot.gov/policy/aviation

- policy/small

- community

rural

- air

- service/essential

- air

- service

. 6 Questions re garding filings in response to this O rder may be directed to Michael Martin at (202) 366

- 6494 or michael.f.martin@dot.gov

.Appendix A

AREA MAP

Maps generated b y the Great Circle Mapper

- copyright © Karl L. Swartz

.Appendix B



### Victoria, Texas 1

Quarter Year Deplanements Enplanements Total Traffic

4 2009 1,346 1,372 2,718

1 2010 1,095 1,208 2 ,303

2 2010 1,270 1,303 2,573

3 2010 1,246 1,260 2,506

Annual

Totals 4,957 5,143 10,100

4 2010 1,314 1,267 2,581

1 2011 920 1,028 1,948

2 2011 1,325 1,373 2,698

3 2011 1,391 1,447 2,838

Annual

Totals 4,950 5,115 10,065

4 2011 1,400 1 ,350 2,750

1 2012 1,289 1,404 2,693

2 2012 1,395 1,509 2,904

3* 2012 0 0 0

Annual

Totals 4,084 4,263 8,347

4** 2012 842 842 1,684

1 2013 750 818 1,568

2 2013 805 898 1,703

3 2013 759 804 1,563

Annual

Totals 3,156 3,362 6,518

* Victoria had no air service during 3Q2012.

** For 4Q2012, data showed that 1,684 passengers enplaned at Victoria but 0 passengers deplaned. We assume this to be a reporting error on the part of Sun Air, and that

, in fact

, 1,684 is the total passengers enplaned an d deplaned at Victoria. We simply divided 1,684 by 2 to determine a reasonable estimate of passengers deplaned and enplaned.

1 Source: Bureau of Transportation Statistics; Schedule T

- 100Appendix C

Example of General Terms and Conditions for Essential Air Service

The carrier understands that it may forfeit its compensation fo r 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 unde rstands 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 c arrier 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 compensat ion. 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 s ystem provided to the community.

If the Department unilaterally, either partially or complete, 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.

Funds may not be available for performance under this Order beyond [DATE] . The Government’s obligation for performance under this Order beyond [DATE], 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 [DATE], until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond [DATE] , the Department will provide notice in writing to the carrier.

Subsidy contracts ar e 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.

Al l claims for payment, including any amended cl aims, must be submitted within 9 0 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 31 st ; August claims must b e submitted by November 30 th , and so on.