Order 2011

- 8

- 26 Served: August 30, 2011



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 30 th day of August, 20 11

Essential Air Service at

CODY, WYOMING

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 2011

- 0121



### ORDER PROHIBITING TERMINATION OF SERVICE AND REQUESTING PROPOSALS

Summary By this order, the Departme nt is (a) prohibiting SkyWest Airlines (SkyWest) , operating as

Delta Connection (Delta Connection ), from terminating its unsubsidized service at Cody and requiring that it continue one round trip a day u ntil conclusion of this case and (b) requesting proposals from airlines interested in p roviding EAS at Cody beginning October 4

, 2011 through approximately May 31, 2012

, and from about October 5, 2012 through approximately May 31,
2013, with or without subsidy. Pr oposals are due by September 7

, 2011 . (See Appendix A for a map.)

Background Cody is an EAS comm unity by virtue of its being listed on a certificated airline ’s certificate on

October 24, 1978, the date of enactment of the Airline Deregulation Act. Cody’s EAS determination guarantees the community a minimum of two round trips each weekday and each

we ekend with 58 seats in each direction with 15

- seat or larger aircraft.

Currently, Delta Connection operates two daily nonstop round trips (14 a week) to Salt Lake City o n 30

- seat Brasilia EMB

- 120 aircraft

. In addition, SkyWest also operates service to

Denver as United Express (United Express) providing one daily round trip o n 50

- seat Canadair- 2

-

regional jet aircraft on a year

- round basis, and one additional daily round trip on 30

- seat
Brasilia EMB

- 120 aircraf t from June through September. 1

On June 27, 2011, SkyWest filed a 90

- notice of its intent to terminate service as Delta

Connection to Salt Lake City

, effective September 25.

Decision

This is a ver y unusual case because SkyWest’s remaining service to Denver as United Express fully meets the statu tory service guarantee for four months of the year but not during the eight

month off

- peak season when it traditionally reduces its service to one round trip a day, below

the statut ory minimum of two round trip s a day, six days a week. The most logical result for the community would be for United Express to simply provide Cody with two round trips a day

to Denver on a year

- round basis. We informally contacted United Express to inquire whether, given the sign if icant amount of capacity that will be leaving the market, it would be willing to add that daily round trip

. At this point, United Express is not willing to commit to increasing

service in the off

- peak season , and, consistent with Order 2004

- 4

- 12 dealing w ith seasonal service, we cannot prevent the carrier from implemen ting its seasonal service reduction

. Thus, we are left with no other choice but to require Delta Connection to continue to provide one round trip a day t o Salt Lake City during the eight

- month, off

- peak period f rom October 4,

2011 through about May 31 , 2012 , or whenever United Express reinstates the second Denver round trip in 2012.

Request for Proposals 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. 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 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 affected community and the Department. 2

Carriers are also welcome to propose more than one option, if they choose; they need not limit themselves to those requirements if they envision other, potentia lly more attractive service possibilities

-- different hubs, frequency or equipment, for example

-- with subsidy requirements that remain competitive. The community and air carriers are encouraged to work together in advance of the due date for proposals to craft a service pattern that is desirable to

the communit y and meets the operational needs of the airline s

.

1 United Express service from October through May is negotiated annually and is provided through a minimum revenue guarantee contract subsidized by t he Wyoming Aeronautics Division of the Wyoming Department of Transportation and the local community.

2 In selecting a carri er to provide subsidized essential air service, 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 carrie r 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 facto r 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. App endix C of this order contains those general provisions.- 3

-

Carriers should file their proposals no later than September 7

, 2011 . After that date, our staff will docket proposals, thereby making them pub lic, and shortly afterwards will provide a summary of the proposals to the community and ask them for their final comments. We will give full consideration to all proposals filed in a timely manner.

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. We also retain th e discretion to reject outright all unreasonable or unrealistic proposals and solicit a new round of proposals.

W e are here requesting proposals from carriers interested in providing service, with or without

s ubsidy support, beginning October 4

, 201 1

. Be cause SkyWest’s service from June through September to Denver fully meets Cody’s EAS requirements, and its service from October through May meets half of its minimum EAS requirements, we expe ct proposals that will provide only one round trip a day with 15

- seat or larger aircraft from October 4, 2011, through approximately May 31, 2012, and from about October 5, 2012 through approximately May 31, 2013

. In order to assist carriers in developing traffic and revenue projections for their proposals, we have pro vided a summar y of historical passengers in Appendix B. We note that traffic has been increasing and averaged 93 enplanements a day for the year ended March 31,

2011. W e expect proposals for ser vice to Salt Lake City, Denver, or any hub that offers access to the national air transportation system utilizi ng 15

- seat or larger aircraft. We would also entertain proposals for two round trips a day with 8/9

- seat aircraft. Should the community agree to aircraft with fewer than 15 p assenger seats, in effect waiving their right to 15

- seat or larger aircraft, we would consider the waiver to apply only to the two

- year carrier

- selection at hand, i.e. we would not assume that the community would waive their rights for all time when

EAS is subsidized . As always, we will formally solicit the community’s views on any service options we receive before making a long

- term carrier selection decision.

New Filing Procedures Carrier proposals should be submitted to the Department with all materi als 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 statut es governing lobbying activities, drug

- free workplaces and nondiscrimination. 3 Consequently, all carriers receiving Federal subsidy to support essential air service must certify that they are in compliance with Department regulations regarding drug

- free w orkplaces 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

3 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 Transp ortation

– 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 government

- wide requirements for drug

- free workplace (grants).- 4

-

proposals. Interested carriers requiring more detailed information regarding these requirements, as well as copies of the certifications, should contact the Office of Aviation

A nalysis at (202) 366

- 5903. The Department is prohibited from paying subsidy to carriers that

do not submit these documents. 4

Community and State Comments Civic officials 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 ask them to submit their final comments shortly after September 7 , the due date for carrier proposals.

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

ACCORDINGLY,

1. We prohibit SkyWest Airlines operating as Delta Connection from suspending one round trip a day to Salt Lake City, at the end of the 90

- day notice period, and require it to maintain service at the communities, as set forth in Appendix D, for an initial 30

- day period through

November 27, 2011, or until a carrier capable of providing reliable EAS actually begins service, whichever is first 5 ;

2. We request that carriers interested in providing essential air service at Cody, Wyoming

, submit their proposals, with or without subsidy requests, no later than September 7 , 2011 . The proposals should be emailed to: EAS@dot.gov with the title “Proposal to Provide Essential Air

Service at Cody, Wyoming ”; 6

3

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

4 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.

5 In accordance with 49 U.S.C. 41734(c), we will extend Delta Connection’s service obligation for successive 30

- day periods as necessary until replacement s ervice actually begins.

6 Questions regarding filings in response to this order should be directed to Michael Martin at 202

- 366

- 6494, or

via email at michael.f.martin@dot.gov

.- 5

-

4

. The Department will serve a copy of this order on the mayor and airport manager of Cody

, SkyWest Airlines, and t he service list for this Docket

.

By:

SUSAN L. KURLAND Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available on line at www.regulations.gov

### Appendix A



## Area Map

### APPENDIX B

Historical Origin

- Destination Plane Traffic 1



### Cody, Wyoming

Quarter Year Deplanements Enplanements Total
Traffic Enplanements per Day

2 2008 6,171 5,614 11,785 76

3 2008 8,930 9,618 18,548 117

4 2008 5,845 6,126 11,971 76

1 2009 4,539 4,608 9,147 59

Annual

Totals 25,485 25,966 51,451 82

2 2009 7,378 7,033 14,411 92

3 2009 8,781 9,540 18,321 116

4 2009 5,192 5,424 10,616 67

1 2010 3,794 3,909 7,703 50

Annual

Totals 25,145 25,906 51,051 82

2 2010 7,329 6,913 14,242 91

3 2010 10,104 11,016 21,120 134

4 2010 6,303 6,599 12,902 82

1 2011 5,007 5,069 10,076 65

Annual

Totals 28,743 29,597 58,340 93

1 Source: USDOT Bureau of Trans portation Statistics, TransStats Intermodal Database, Schedule T

- 1 00

.

### 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 aircra ft 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 an y 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 circumsta nces 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

de termining 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 Depart ment 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 su bsidy 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 Departm ent 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 b eyond [DATE] . The Department’s obligation for performance under this soli citation 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 a ny 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 Departm ent.

All claims for payment must be submitted within 60 days of the last day of service provided

under this order.

### Appendix D

Essential Air Service to be Maintained at Cody, Wyoming

Effective Period : October 29 , 2011, until further Department action

Scheduled Service : One round trip a day to Salt Lake City

Aircraft : 30

- seat Brasilia EMB

- 120