Order: 20 1 1
- 1
- 19 Served: January 21 , 2011


### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Issued b y the Department of Transportation on the 21 st day

of January , 20 1 1

DO T - OST - 2000 - 7855

DOT - OST - 2000 - 7857

ORDER REQUESTING PROPOSALS Summary By this order , the Department is requesting proposals from carriers interested in providing essential air service (EAS) at Owensboro, Kentucky , and Jackson, Tennessee, for the next two ye ar period from September 1, 2011, through August 31, 2013 , with or without subsidy
. Proposals are due March 16, 2011
. ( See Appendix A for an area map.) Background By Order 200 9
- 6
- 17 , June 22 , 2009 , the Department selected Pacific Wings, LLC ( Pacific Wings ) to provide 1 8 nonstop round trips per week from Owensboro and Jackson to Nashville using 9
- p assenger Cessna Grand Caravan , f or 24 months from when the carrier inaugurated service, for a combined annual subsidy rate of $2,294,401 ($1,068,773 for Owensboro and $1,225,628 for Jackson)

. Pacific Wings inaugurated service at both communities on August 31, 2009 , meaning the current contract will expire August 31, 2011 . Pacific Wings operates the servic e under the brand names Tennessee Skies and Kentucky Skies. Special discussion Based on the most recent 12

- month period for which data are available (November 1, 2009, through October 31, 2010 ), 1,284 passengers were enplaned and deplaned at O wensboro , while Essential Air Service at OWENSBORO, KENTUCKY JACKSON, TENNESSEE under 49 U.S.C. 41731 et seq.- 2
-

5,098 passengers were enplaned and deplaned at Jackson . The annual subsidy amount for Owensboro is $1,068,773 and Jackson is $1,225,628 . Therefore, the subsidy per passenger is $ 832 at Owensboro and $240 at Jackson . The Department is prohibited fr om subsidizing air service at a community

where the subsidy per passenger exceeds $200, unless the community is more than 210 highway

miles from the nearest large or medium hub airport
. 1 O wensboro and Jackson exceed the $200 per passenger cap and both are fewer than 210 miles from a large or medium hub. Owensboro is 140 miles from Nashville International Airport (BNA), a medium hub. Jackson is 90 highway miles away

from Memphis International Airport (MEM), also a medium hub. Prior to Pacific Wings ’ in augurating service at Owensboro and Jackson, both communities experienced an extended service hiatus
. The previous carrier, Big Sky Airlines , ceased operations at Owensboro and Jackson on January 6 , 2008. Great Lakes Aviation, Ltd. (Great Lakes) was selected to serve both communities by Order 2008

- 2
- 1, February 6, 2008, but Great Lakes never inaugurated service. Thus, Owensboro and Jackson were without scheduled air service from January

7, 2008, until August 31, 2009. Particularl y in view of the service hiatuses, rather than terminate service eligibility at either community , at this stage, the Department will solicit proposals for EAS at both, but the Department will evaluate all proposals submitt ed before committing to a two

- year contract or making a final determination on Owensboro and Jackson’ s continuing eligibility . Prior to the due date for proposals, we expect both communities to work aggressivel y with all potential applicants to mitigate s ome of the risks that the carriers may face in an attempt to lower their subsidy levels and/ or substantial ly increase usage of the air service. Request for Proposals A s the end of the current rate term approaches , w e are here requesting proposals from carriers interested in providing service at Owensboro and Jackson , with or without subsidy , to be file d no later than March 16, 2011
. A fter that date, our staff will docket the proposals, thereb y making them public. Shortly

afterwards, we will provide a summary of the proposals to the communit ies and ask them to submit their final comments. We will give full consideration to all proposals that are timel y filed. 2 Interested carriers should prepare their proposals with every expectation that their initi al proposals will represent their final and only proposals. However, we retain the discretion to negotiate proposals with carriers when we deem it desirable. We also retain the discretion to reject outright all unreasonable or unrealistic proposals and s ol icit a new round of proposals.

1 Congress first established the $200 ceiling under P.L. 101

- 164 for fiscal year 1990, and reestablished it in fiscal years 1994
- 1999. The ceiling was made permanent by P.L. 106

- 69, the Department of Transportation and Related Agencies Appropriations Act o f 2000. 2 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to provide essential air service without subsidy and we determine that service can be reliably provided without such compensation, we do not proc eed with the carrier

- selection case. Instead, we sim ply rely on that carrier’s subsidy

free service as proposed.- 3
-

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. We expect proposals to adequatel y 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 strongl y encourage clear, well

- documented proposals that will facilitate their evaluation by the affected communities and the Department. 3 With respect to Owensboro and Jackson , w e ask that carriers submit proposals for two nonstop round trips per day (12 round trips per week) with 15
- seat or larger aircraf t to Atlanta, Memphis, St. Louis, or another suitable hub where numerous connections to the national air transportation sy stem can be made. While b oth communities are entitled to service with 15

- seat or larger aircraft, we would also entertain proposals for eight

- or nine

- seat aircraft with an additional frequency (18 to 21 round trips per week) for ei ther or both communities. If the Department receives proposals for eight

or nine

- seat, and the community ultimatel y supports the service, in effect waiving their right to 15
- seat or larger aircraft, we would consider the waiver to appl y onl y to the carri er - selection at hand, i.e. we would not assume that the community would waive their rights for all time. As alway s, we will formally

solicit the communities’ views on any service options we receive before making a long

- term carrier selection decision. If service with eight

- or nine

- seat aircraft is proposed, service from each community to the hub should be nonstop. The c ommunities 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 community and meets the operational needs of the airline
. In addition, carriers should be very clear as to whether a specific community ’s proposal is on a stand

- alone basis , or whether it is part of a larger, inseparable package with the other community . We encourage proposals that meet these requirements in an efficient manner. Carriers are also welcome to propose more than one service option, if they choose; they

need not limit themselves to those requirements if they envision other, potentially more attractive service possibilities

-- different hubs or length of service terms , for example

-- with subsidy requirements that remain competitive. As stated above, we will e valuate all proposals submitted before committing to a two

- year contract or making a final determination on Owensboro and Jackson’s continuing eligibility
.
3 In selecting a carrier 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 carrier 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 factor that we have considered since the inception of the program. Interested carriers should also be aware that our gener al 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
-

New Filing Procedures Carrier proposals s hould be s ubmitted to the Department with all materials merged into a single document. The document will be published on Regulations.gov and each page should be formatted to be viewed online. Service and Traffic History For the 12
- month period end ed October 31 , 2010 , th e most recent period for which traffic data are available, Owensboro averaged 2.1 enplanements per day and Jackson averaged 8.1
. 4 Inorder to assist carriers in making their traffic and revenue forecasts, we have included historical traffic data in Appendix B. Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobb yi ng activities, drug

- free workplaces, and nondiscrimination. 5 Consequently , all carriers receiving Federal subsidy for essential air service must certify that they are in compliance with Department regulations regarding drug

- free workplaces and nondiscrimination, and those carriers whose subsidies exceed $100,000 over the life of the rate term must also certify that they are in complian ce with the regulations governing lobb yi ng 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 selected carrier will be required to complete the required certifications. Interested carriers requiring more detailed information regarding these requirements should contact the Office of Aviation Analy sis at (202) 366
- 5903. 6 Community and State Comments The communit ies and state s are welcome to submit comments on the proposals at any time. As noted earlier, however, we will provide a summary of the proposals to the civic parties and ask them to submit their final comments shortly after March 16, 2011 , the due d ate for proposals. This order is issued under authority delegated in 49 CFR 1.56a(f) and re

- delegated to the Director, Office of Aviation Analy sis. ACCORDINGLY, 1. We request that carriers interested in providing essential air service at Owensboro, Kentucky , and Jackson, Tennessee, beginning September 1, 2011 , submit their proposals, with or without

4 See Appendix B for historical traffic data. Enplanements represent one

- half of total origin

- and

- destination traffic, and average enplanements per day are based on 77 we ekdays and weekends each quarter , except as noted. 5 The regulations applicable to the se 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; 49 CFR Part 27

– Nondisc rimination 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). 6 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.- 5
-

requests for subsidy, no later than March 16, 2011
. The proposals should be e - mailed to EAS@dot.gov , with the title: “Proposal to Provide Essential Air Service at Owensboro, Kentucky (Docket DOT

- OST
- 2000
- 7855) and/or Jackson, Tennessee (Docket DOT

- OST
- 2000
- 7857 ) ”; 7 2. Th ese docket s will remain open until further order of the Department; and 3 . We wi ll serve co pies of this order on the Mayor s of Owensboro and Jackson , the managers of Owensboro

- Daviess County Regional Airport, McKellar

- Sipes Regional Airport (Jackson), an d the parties listed in Appendix D
. Persons entitled to petition the Department for review of this order under the Department’s Aviation Economic Regulations, 14 CFR 385.50, must file such petitions within ten (10) day s 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 Anal ysis (SEAL) An electronic version of this document is available at http://www.regulations.gov

7 Questions regarding filings in response to this order may be directed via electronic mail to Kevin Schlemmer at kevin.schlemmer@dot.gov or via phone at (202) 366

- 3176.Appendix A


## AREA MAP

This map is provided by Sabre ® AirVision TM Profit Essentials and is being used with express permission of the copyright holder, Sabre Airline Solutions®.Appendix B Page 1 of 2 Traffic History 8 Owensboro, KY (OWB)

Ye ar Quarte r Mo nth De st T110 R pa x T110 Rp ax Total s Un iq ue carri er na me 2009 3 9 OW B 103 164 267 Pac ificWi ngs Air lin es 2009 4 10 OW B 69 106 175 Pac ificWi ngs Air lin es 2009 4 11 OW B 65 97 162 Pac ificWi ngs Air lin es 2009 4 12 OW B 78 81 159 Pac ificWi ngs Air lin es 2010 1 1 OW B 67 74 141 Pac ificWi ngs Air lin es 2010 1 2 OW B 62 49 111 Pac ificWi ngs Air lin es 2010 1 3 OW B 66 71 137 Pac ificWi ngs Air lin es 2010 2 4 OW B 63 76 139 Pac ificWi ngs Air lin es 2010 2 5 OW B 55 59 114 Pac ificWi ngs Air lin es 2010 2 6 OW B 24 49 73 Pac ificWi ngs Air lin es 2010 3 7 OW B 25 42 67 Pac ificWi ngs Air lin es 2010 3 8 OW B 15 17 32 Pac ificWi ngs Air lin es 2010 3 9 OW B 28 32 60 Pac ificWi ngs Air lin es 2010 4 10 OW B 45 44 89 Pac ificWi ngs Air lin es 1, 284 (1 2- month total ) Average dail y enplanements at Owensboro (12

- months ending 10/31/2010)

– 2.1 9

8 Source

– T
- 100 Market Report, Passengers in Scheduled Passenger Service. 9 Average daily enplanements= total traffic for the most recent 12
- month period (1,284 passengers) divided by 313 service days divided by 2.Appendix B Page 2 of 2

Jackson, TN (MKL) 10

Ye ar Quarte r Mo nth Ap t Inbound Outbound Total s Un iq ue carri er na me 2009 3 9 MK L 189 269 458 Pac ificWi ngs Air lin es 2009 4 10 MK L 205 262 467 Pac ificWi ngs Air lin es 2009 4 11 MK L 245 319 564 Pac ificWi ngs Air lin es 2009 4 12 MK L 263 337 600 Pac ificWi ngs Air lin es 2010 1 1 MK L 212 183 395 Pac ificWi ngs Air lin es 2010 1 2 MK L 173 237 410 Pac ificWi ngs Air lin es 2010 1 3 MK L 202 224 426 Pac ificWi ngs Air lin es 2010 2 4 MK L 206 263 469 Pac ificWi ngs Air lin es 2010 2 5 MK L 192 248 440 Pac ificWi ngs Air lin es 2010 2 6 MK L 152 219 371 Pac ificWi ngs Air lin es 2010 3 7 MK L 194 232 426 Pac ificWi ngs Air lin es 2010 3 8 MK L 150 180 330 Pac ificWi ngs Air lin es 2010 3 9 MK L 147 207 354 Pac ificWi ngs Air lin es 2010 4 10 MK L 142 171 313 Pac ificWi ngs Air lin es 5, 098 (1 2- month total ) Average dail y enplanements at Jackson (12

- months ending 10 /31/2010)

– 8.1 11

10 Source

– T
- 100 Market Report, Passengers in Scheduled Passenger Service. Pacific Wings Airlines service only. 11 Average daily enplane ments= total traffic for the most recent 12
- month period (5,098 passengers) divided by 313 service days divided by 2.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 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 beyon d the scope of the order during the applicable period of these rates, it must first notify the Office of Aviation Analy sis 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 safel y operated; flights that overfly points for lack of traffic will not be compensated. In determining whether su bsidy pay ment 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 D epartment unilaterally , either partially or completely , terminates or reduces pay ments 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 pay ments 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 mutuall y agreed to in writing b y the Department and carrier do not constitute a total or partial reduction or cessation of pay ment. 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 solicitation beyond [DATE]
. The G overnment’s obligation for perform ance under this solicitation beyond [DATE] , is contingent upon the availability of appropriated funds from which pay ment 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 funds are not made available for performance beyond [DATE] , the carrier will receive notice in writing by the Department. All claims for pay

ment must be submitted within 60 day s of the last day of service provided under this order
.Appendix D Scheduled Air Carriers, Contiguous US and Puerto Rico Air Greco/Wings Air McCall Aviation, Dan Scott Air Sunshine, Inc. McCall Aviation, Michelle Air Sunshine, Mirmohammad Adili Mesaba, John Spanjers Air West, Inc., John Raatz Mesaba, Max Shemesh Air Wisconsin, Annette Daly MidStar Airlines, Jeffrey Fonner Air Wisconsin, Jim Rankin Midwest Airlines, Greg Aretakis Airline Associates, Bill Mishk MN Aviation, Jose Maldonado Alaska Airlines, Jeff Cole Multi Aero, Darnea Alaska Airlines, Sandy Sinick Multi Aero, Shane Storz Allegiant Air, Brian Davis Northern Air Cargo, David Karp American Airlines, Carl Nelson Northern Air Cargo, Eric Van Andel American Eagle, Jeffrey Hartz Northwest, Tim McDonald Atlantic Southeast, Jon Lindlief Northwest, Aaron Murray Atlantis Southeast, Roger Weston NYDC, Henok Araya Aviation Technologies/Charter Air Transport OST, Brian Swanson Bemidji Aviation, Cori Rude OST, Dennis DeVany Bemidji Aviation, Arlen Rinkenberger OST, Kevin Adams Cape Air, Andrew Bonney OST, Kevin Schlemmer Cape Air, Dan Wolf OST, Michael Martin Cape Air, J. Flaherty Pacific Aviation Group, Craig Garrick Classic Aviation, Tony Henderson Pacific Aviation Group, Ron Pye Colgan Air, Mike Colgan Pacific Wings, Frank Ford Colgan Air, Kevin Scott Pacific Wings, Greg Kahlstorf CommutAir, Andy Price PenAir, Danny Seybert CommutAir, Joel Raymond PenAir, Scott Bloomquist Consultant, Robert Silverberg Pinnacle Airlines, Jennifer Gammill Continental, Bruce Keiner Pinnacle Airlines, Megan Rosia Continental, Dan Weiss Pinnacle Airlines, Phil Reed Continental, Lorry Halloway Pla nemasters, Inc. John Kessler Delta, Anthony Canitano Pla nemasters, Inc. Paul Berliner Delta, Dan Shuman Pla nemasters, Inc. Todd DeSimone Delta, Jeff Morgan Raytheon, Mike Scheidt Delta, Joe Esposito Saab Group, Polly Prelinger Delta, Karen Zachary Scenic, Mary Schneider Delta, Kristal Murphy Scenic, Mitzi Daines Delta, Sascha Vanderbellen Seaborne Airlines, Shawn Lewis DHS, Bill Ragan SeaPort Airlines, Daniel Helland DHS, David Bernier SeaPort/Wings of Alaska , Jim Day Dorado Jets SeaPort/Wings of Alaska, Nate Vallier Dorado Jets, Mark McKenna SeaPort/Wings of Alaska , Rob McKinney Era Aviation, Lori Goodman Shuttle America, Jerry Balsano Executive Airlines, Kate Soled SkyWest, Brad Rawson Frontier Flying, Bob Hajducovich SkyWest, Eric Christensen Frontier, Daniel Shurz SkyWest, Michael Thompson Frontline Aviation Sovereign Air, Bob Karns Gem Air, Dan Schroeder Sovereign Air, Lois R. Barton Gem Air, JoAnn Wolters Tatonduk, Robert Everts Pacific Wings , Chuck Howell Tatonduk, Robert Ragar Pacific Wings , Doug Voss Tradewind, Eric Zipkin Gulfstream, Dave Hackett TransStates, Fred Oxley Gulfstream, Mickey Bowman TransStates, Gerry Wigmore Gulfstream, T. Cooper Transport Azumah, Joel Anabilah

- Azumah Horizon Air, Dan Russo United, Alicia Gabriel Horizon Air, Jennifer Thompson United, James Starnes Horizon Air, Mike McQueen US Airways, Benjamin Slocum Horizon Air, Jeff Cole US Airways, Howard Kass ICEPR, Luis Irizarry US Airways, Jason Reisinger Intrepid Internatl Air, Rick Eyk Warbelows Ai r Ventures, Art Warbelow Island Air Charters, Linda House Jet Air, Daniel Wolford Kenmore Air, Tim Brooks