h Y ~o ..... Cg~~~--\ ~e'tu..c5 \ \)gt _9 s-T- -:L99<(- o ~v'-' 

tJ 

U.S. Deportment of 

Transportation 

Office ot the Secretary 

of Transportation 

Mr. Mike Huggins '·-· J 

City Manager 

203 S. Farwell St. 

Eau Claire, WI 54701 

Dear Mr. Huggins: 

' ' - f' 

1200 New Jersey Avenue, SE 

Washington, DC 20590 

September 2, 2011 

As you know, SkyWest Airlines, Inc., d/b/a United Express (SkyWest), provides 

subsidized air service under the essential air service (EAS) program at Eau Claire. The 

Department's current contract with SkyWest at Eau Claire calls for an annual subsidy of 

$1,732,372 with fourteen nonstop round trips per week to Chicago O'Hare with 50-seat 

CRJ-200 aircraft, and it expires December 31, 2011. In anticipation of the end of that 

contract, by Order 2011-8-10 the Department requested "best and final" proposals to serve 

Eau Claire for a new, two-year period, and we received timely-filed proposals from 

SkyWest, Sovereign Air, Inc., and Multi-Aero, Inc., d/b/a Air Choice One. (Air Choice 

One). 

My purpose in writing is to inform you of the results of each carrier's service and subsidy 

proposal and request your comment before we submit a recommendation on the carrierselection issue to the Assistant Secretary for Aviation and International Affairs for 

decision. Copies of each carrier's full proposal may be accessed online through the 

Department's Dockets Management System at http://www.regulations.gov/ by entering 

"DOT-OST 2009-0306" in the "enter Keyword or ID" field, so we will only summarize 

them here. 

Air Choice One The carrier proposes to provide a total of thirty five (35) nonstop round 

trips per week to Chicago O'Hare for $2,773,778 annual subsidy. All service would be 

with 9-seat, single-engine, unpressurized, turboprop Cessna Caravan aircraft. 

We note that Eau Claire's EAS calls for service with 15-seat, twin-engine aircraft. Thus it 

is likely we would only select Air Choice One if the community waives those assurances. 

In that event, we would consider that waiver effective only for the two-year period of the 

Air Choice One's contract. 

Sovereign Air 

Option 1 The carrier proposes to operate nineteen ( 19) nonstop round trips per week to 

Chicago O'Hare for $1,592,252 annual subsidy. All service would be with 30-seat Domier 

328 regional-jet aircraft. The carrier notes that it is "currently in the process of acquiring 

its scheduled service authority and anticipates being able to start its Essential Air Service 

by December 15, 2011." 
- 2 -

Option 2 The carrier's proposal under Option 2 would be identical to Option 1 in terms of 

frequency of nonstop service and aircraft type. However, the carrier would provide upline 

service to St. Cloud, Minnesota, and requests a reduced level of subsidy, $1,228,252. 

SkyWest The carrier proposes to provide a total of fourteen (14) nonstop round trips per 

week to Chicago O'Hare for $1,244,783 annual subsidy. All service would be with 50-seat 

CRJ -200 regional-jet aircraft. 

Please note that the average passenger fares shown in the carriers' proposals do not 

necessarily reflect the average local fares passengers would pay, but rather reflect the 

prorated portion of the total ticket price, e.g., the Eau Claire- Chicago portion of an Eau 

Claire- Chicago- New York ticket that the carrier would realize. Also, the implicit 

average fare, as reflected in the carriers' subsidy calculations is net of certain charges such 

as federal transportation security fees, excise and ticket taxes, and passenger facility 

charges. Of course, carriers have the discretion to charge fares they deem appropriate, and 

the proposed passenger fares were developed for subsidy rate computation purposes only. 

Each carrier would have to realize passenger fares comparable to the averages shown in its 

proposal in order to achieve break-even or profitable operations even with subsidy. 

You should also note that any schedules submitted by the carriers are illustrative only, and 

the carrier selected may make schedule changes to reflect changing conditions, e.g., to 

better meet shifting connecting bank times at the hub. The Department expects subsidized 

air carriers to maintain well-timed and well-spaced flights in order to ensure full 

compensation. 

We know this matter is important to you and we will act as quickly as possible upon receipt of 

your letter. In order to expedite the case, please submit your comments by email to 

EAS@dot.gov and to Kevin.Adams@dot.gov, by October 3. If you have any questions or do 

not wish to submit formal comments, please contact Kevin Adams at (202) 366-1047. 

Enclosures 

Sincerely, 

~Y 

~~ Dennis J. DeVany 

Chief, Essential Air Service Division 

Office of Aviation Analysis 

cc: Airport Manager, SkyWest, Air Choice One, Sovereign Air 
Eau Claire, Wisconsin- Chicago O'Hare International Airport- Caravan 

Operation Revenues 

EAU-ORD Revenues 

Other Revenues 

Total Operating Revenues 

Direct Operating Expenses 

Flying Operations 

Fuel and Oil 

Maintenance 

Aircraft Leases 

Total Direct 

Marketing 

Indirect 

Total Operating Expenses 

Operating Loss 

Profit Element (5% total Oper. Exp.) 

Compensation Required 

Compensation per PAX 

Compensation per Departure 

$2,376,000.00 

11,880.00 

$2,387,880.00 

$ 715,400.00 

1,577,886.24 

1,173,256.00 

475,000.00 

$3,941,542.24 

191,037.60 

783,285.00 

$4,915,864.84 

$2,527,984.84 

245,793.24 

$2,773,778.08 

$115.57 

$775.45 

I 

I 

# Passengers: 

Average Fare: 

Departures: 

Block Hours: 

Revenue Passenger Miles: 

24,000 

$99.00 

3,577 

5,723 

6,456,000 

Available Seat Miles: 8,636,191 

Representative Schedule 

Departure 

EAU 5:00AM CT 

ORO 6:45AM CT 

EAU 8:30AM CT 

ORO 10:15 AM CT 

EAU 12:00 PM CT 

ORO 1.45 PM CT 

EAU 3:30PM CT 

ORO 5:15 PM CT 

EAU 7:00PM CT 

ORO 8:45PM CT 

l 

Arrival 

ORO 6:30AM CT 

EAU 8:15 AM .. CT 

ORO 10:00 AM CT 

EAU 11:45 AM CT 

ORO 1:30PM CT 

EAU 3.15 PM CT 

ORO 5:00PM CT 

EAU 6:45 PM CT 

ORO 8:30 PM CT 

EAU 10:15 PM CT 
1 30-Seat Dornier 328 Jet 

Sovereign Air, Inc. 

Annual Compensation Requirement for Essential Air Service for Eau Claire Proposal #1 

Aircraft Type 

Available Seats Per Departure 

Passengers Per Trip 

Block Hours 

Departures 

Total Passengers 

Average Fare 

Revenue Passenger Miles 

Available Seat Miles 

Passenger Revenue 

Other Rev. @ .6 of pax. Rev. % 

Total Revenue 

Aircraft and Hull Insurance 

Fuel and Oil 

Flying Operations 

Other Direct Costs 

Maintenance 

Total Direct Costs 

Total Indirect Costs 

Total Operating Expenses 

Operating Loss 

Profit@ 5% 

Completion Rate 

Load Factor 

19 Round trips Per Week 

$155 one way 

Annual Compensation 

Requirement 

30-seats 

30 

18.8 

1,916 

1,916 

35,998 

9,657,464 

15,404,640 

$5,579,690 

$334,781 

$5,914,714 

$220,000 

$2,038,624 

$1,116,939 

$572,245 

$1,272,517 

$5,220,325 

$1,929,166 

$7,149,491 

$1,234,777 

$357,475 

$1,592.252 

97% 

63% 
30-Seat Dornier 328 Jet 

Sovereign Air, Inc. 

Annual Compensation Requirement for Essential Air Service Proposal #2 EAU CLAIRE 

(EAU) to CHICAGO (ORD) starting at ST CLOUD (STC) 

Aircraft Type 

Available Seats Per Departure 

Passengers Per Trip 

Block Hours 

Departures 

Total Passengers 

Average Fare 

Revenue Passenger Miles 

Available Seat Miles 

Passenger Revenue 

Other Rev. @ .6 of pax. Rev. % 

Total Revenue 

Aircraft and Hull Insurance 

Fuel and Oil 

Flying Operations 

Other Direct Costs 

Maintenance 

Total Direct Costs 

Total Indirect Costs 

Total Operating Expenses 

Operating Loss 

Profit@ 5% 

Completion Rate 

Load Factor 

19 Round trips Per Week 

$155 one way Avg. 

Annual Compensation 

Requirement 

30-seats 

30 

26 

$7,904,690 

$474,281 

$8,378,714 

$220,000 

$2,338,624 

$1,216,939 

$1,972,245 

$1,272,517 

$7,020,325 

$9,149,491 

$770,777 

$457,475 

$1,228,252 

97% 

86% 
Eau Claire Schedule #1 

Fit# Freq From TO Dpt-Arr 

802 1234567 EAU ORO 6:20am-7:10am 

812 1234567 ORO EAU 8:20am-9:10am 

902 23456 EAU ORO 10:20am11:10am 

912 23456 ORO EAU 12:20pm-1:10pm 

702 1234567 EAU ORO 6:20pm-7:10pm 

712 1234567 ORO EAU 8:20pm-9:10pm 

St Cloud , Eau Claire, Chicago Schedule #2 

Fit# Freq Depart Arrive Depart 

502 1234567 STC 6:30am EAU 6:50am-7:00am 

503 1234567 ORO 9:00am EAU9:50am-10:00am 

504 23456 STC 11:30am EAU11:50am-12:pm 

505 23456 OR0 2:00pm EAU2:50pm-3:00pm 

506 1234567 STC6:30pm EAU6:50pm-7 :OOpm 

507 1234567 ORD9:00pm EAU9:50PM-10:00PM 

Arrive 

ORO 8:00am 

STC 10:20am 

ORD1:00pm 

STC3:20pm 

ORD8:00pm 

STC10:20pm 

A~ f <--vi~>< ~ 

\> ~~ 19f') 

50 ve v-c.: ~~ .Avv--

Sovereign Air complies with the Global Warming Pollution Reduction requirements for 2012 and year 

2020. 

Sovereign Air, Inc. 
SkyWest Airlines 

Eau Claire, WI Essential Air Service Bid 

8/31/2011 

Number of round-trips per week 

Aircraft type 

Passenger Revenue 

Passengers 

Average fare 

Revenue 

Block Time 

Trip block time (minutes) 

Total scheduled block time 

Total completed block time 

RPMS 

Passengers 

Stage length 

ASMs 

Scheduled departures 

Competed departures 

Stage length 

Available Seats 

Revenue 

Direct operating expenses 

Flight attendant 

RPM related 

Departure related 

ASM related 

Total expenses 

Operating income (loss) 

5% profit margin 

Subtotal 

Marketing assistance 

Subsidy requirement 

SkyWest effective rates per unit 

Cost per trip 

Cost per passenger 

SkyWest cost per block hour 

Effective Subsidy rate per unit 

Subsidy per trip 

Subsidy per passenger 

load factor 

98% 

98% 

CRJ 

Blk Hr $ 2,066.24 

Blk Hr $ 37.30 

RPMs $ 0.003 

Departures $ 412.56 

ASMs $ 0.011 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

2012-2013 

Eau Claire, WI 

Chicago, ll 

14 

CRJ200 

35,000 

92.00 

3,220,000 

68 

1,650 

1,617 

35,000 

268 

9,380,000 

1,456 

1,427 

268 

50 

19,510,400 

3,220,000 

3,341,380 

60,319 

28,140 

588,674 

214,614 

4,233,127 

(1,013,127) 

211,656 

1,224,783 

20,000 

1,244,783 

2,967 

121 

2,618 

858 

35 

48% 

A ffe\.4 P:-~ '-

?~~e \<> ~ t 

5 ryWe5 t-