Order 2012-1-6

Served: January 10, 2012

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 10th of January, 2012

Ninety-day Notice of Mesaba Aviation, 

Inc., and Pinnacle Airlines, Inc., to 

terminate service at: 

Alpena, Michigan

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

Docket DOT-OST-2009-0300

ORDER RE-SOLICITING PROPOSALS 

Summary

By this Order, the Department is re-soliciting proposals from all interested carriers to 

provide subsidized Essential Air Service (EAS) at Alpena, Michigan. Proposals are due 

by January 31, 2012. (See Appendix A for a map).

Background

By Order 2010-5-18, the Department selected Mesaba Aviation, Inc., d/b/a Delta 

Connection (Delta), to provide 13 nonstop round trips per week between Alpena and 

Detroit with 34-seat Saab 340 equipment for $1,532,660 annually through May 31, 2012. 

On July 15, 2011, Delta filed notice to terminate service at Alpena, as well as its service 

at 23 other communities. By Order 2011-9-5, dated September 13, 2011, we prohibited 

Delta from terminating service at Alpena and those other communities and requested 

proposals by October 12, 2011.1 In response, we received proposals from Gulfstream 

International Airlines, Inc., and Intrepid International Airlines. 

Gulfstream proposed 18 nonstop round trips per week to Cleveland with 19-seat 

Beech 1900 aircraft, and requested $3,243,009 annual subsidy. Intrepid, which does not 

currently have authority to provide scheduled passenger service, proposed four nonstop 

round trips per week to Lansing, Michigan, with 19-seat Jetstream aircraft and requested 

$911,800 annual subsidy. 

 1 By Notice dated October 12, 2011, we extended that deadline to October 14, 2011. 
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The community was opposed to Intrepid’s proposal because, among other things, it 

would provide only four round trips a week, well below the two-round-trips-a-day, six 

days a week statutory requirement. The community was also opposed to Gulfstream’s 

proposal, principally because it would serve Cleveland as the community’s connecting 

hub.

By Order 2011-11-20 we re-solicited proposals for Alpena, with proposals due 

December 5, 2011. As stated on page two of that Order:

We have decided to re-bid proposals for Alpena, Michigan. Intrepid’s proposal 

does not meet the statutory two-round-trip-per-day requirement, and we have 

serious concerns about the subsidy level requested by Gulfstream. We 

encourage the community to complement our efforts during this re-solicitation 

period to secure additional options as it presumably has been doing since Delta 

first filed its termination notice. 

While both the community and Department are dissatisfied with the current 

options before us, we wish to highlight the fact that the sources of our 

dissatisfactions are different. We are concerned that the level of subsidy 

Gulfstream requests is very high -- more than twice the program average.

Proposals

In response to our second solicitation for proposals, we received proposals from only one 

carrier, Intrepid. Intrepid proposes a total of ten round trips per week between Alpena 

and either Lansing or Grand Rapids, Michigan, with 19-seat Jetstream turbo props with 

an on board lavatory, and requests $3,024,000 annual subsidy. 

Intrepid indicates the following:

First, we are (PADF) [Presque Aero Development Foundation] a nonprofit

organization, dedicated to the advocacy of air travel. And, although we are not 

operating under the authority as an FAA/DOT certified air carrier, our 

organization would be under contract to a fully authorized air carrier, who is 

subject to all safety, staffing, insurance and maintenance stipulations, subject to 

[the same as?] any other certified air carrier to provide the aforementioned 

service. And, that we would operate under the rules of a 380 operation.

Community Comment

On December 29, 2011, the Mayor of Alpena indicated that Alpena did not support 

Intrepid because it does not have authority to provide scheduled passenger service.

Decision

We will reject Intrepid’s most recent proposal and re-solicit proposals. First, Intrepid 

correctly indicates that it has neither DOT nor FAA operating authority. Regarding its 

proposal to provide EAS with 19-seat aircraft in partnership with an unnamed Part 380

operator, the Department found in Order 2011-1-16 that EAS, by statute, cannot be 
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provided under Part 380 of the Department’s Aviation Regulations.2 In addition to not 

holding sufficient operating authority, Intrepid’s proposal has other deficiencies. The 

carrier proposes service to Grand Rapids and Lansing, Michigan, but basic EAS requires 

that the service be to a large- or medium-hub airport unless the community is more than 

400 miles from the nearest large or medium hub. Alpena is less than 400 miles from 

Detroit, and neither Grand Rapids nor Lansing is a medium or large hub. Finally, the ten 

round trips per week proposed by Intrepid fall short of the minimum frequency required 

by EAS, namely twelve round trips per week. 

Based on all of the above, we have decided that the best option is to re-solicit proposals at 

this time.3

Request for Proposals 

Carriers interested in filing proposals for Alpena -- with or without subsidy -- should 

e-mail them to our staff at EAS@dot.gov, no later than January 31, 2012. Our staff will 

then docket the proposals, thereby making them public, and we suggest that each 

applicant serve a copy of its proposal on the civic parties and other applicants. Shortly 

thereafter, we will provide a summary of the proposals to the community officials and 

ask them to submit their final comments about two weeks later. We will give full 

consideration to all proposals filed in a timely manner.4 

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. 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 solicit a new round of proposals. 

We are 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 and 

routings as well as supporting data for their subsidy requests, such as projected block 

hours, revenues and expenses. We strongly encourage clear, well-

 2 See Order 2011-1-16, January 22, 2011, Petition for Reconsideration of Order 2010-6-4 regarding EAS at 

Manistee/Ludington, Michigan. 

349 U.S.C. §41734(f) directs the Department, when prohibiting a carrier from terminating service, “to make 

every effort to find another carrier” to provide basic EAS as quickly as possible.

4 Carriers should not expect the Department to accept late filings. In cases where a carrier proposes to 

provide EAS without subsidy and we determine that service can be provided reliably without such 

compensation, we do not proceed with the carrier-selection case. Instead, we simply rely on that carrier’s 

subsidy-free service as proposed.
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documented proposals that will facilitate their evaluation by the community and the 

Department.5 

We request proposals for two round trips a day (twelve per week) with 30-seat or larger 

aircraft, or either two or three round trips a day (12 or 18 a week) with 19-seat aircraft. 

We also encourage the community to discuss options with carriers that might not meet 

the technical definition of basic EAS but that may be more cost efficient and more 

preferable from the community’s viewpoint. For example, we would entertain proposals 

with eight- or nine-seat aircraft and as many as four or five round trips a day (24 to 30 a 

week). 6 Finally, we take note that the community has expressed concerns about 

Cleveland as its hub. As a result, we encourage proposals to other hubs, such as the 

community’s current hub of Detroit, as well as Chicago, or any other hub that provides 

access to the national air transportation system.

Carriers are also welcome to propose more than one service option, if they choose. They 

need not limit themselves to the current service pattern if they envision other, potentially 

more attractive service possibilities -- different hubs or lengths of term -- with subsidy 

requirements that are competitive. 

In order to assist carriers in making their passenger and revenue forecasts, we have 

included historical passenger data in Appendix B. We note that Alpena is a reasonably 

strong traffic generator for the EAS program, averaging 36 enplanements a day based on 

six-day per week service during the year ended October 31, 2011, and has been growing.

New Filing Procedures

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 

Regulations.gov, each page should be formatted to be viewed online.

 5 In selecting a carrier to provide subsidized EAS, 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 

general provisions governing EAS 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. 

6 Previously most EAS communities were entitled to service with 15-seat or larger aircraft. However, in 

the Department’s FY 2012 appropriation (Consolidated and Further Continuing Appropriations Act, 

P.L. 112-55, November 18, 2011), Congress repealed the 15-seat guarantee, although communities are still 

entitled to service with twin-engine aircraft.
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Other Carrier Requirements

The Department is responsible for implementing various Federal statutes governing 

lobbying activities, drug-free workplaces and nondiscrimination.7 Consequently, all 

carriers receiving Federal subsidy to support EAS 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 compliance with the regulations governing 

lobbying activities. All carriers that plan to submit proposals involving subsidy should 

submit the required certifications along with their proposals. Interested carriers requiring 

more detailed information regarding these requirements, as well as copies of the 

certifications, should contact the Office of Aviation Analysis at (202) 366-5903. The 

Department is prohibited from paying subsidy to carriers that do not submit these 

documents.8 

Community Comments

The community and the State 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 the State and ask them to submit their final comments approximately two weeks after 

the carrier proposals are received.

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

ACCORDINGLY;

1. The Department requests proposals from carriers interested in providing Essential Air 

Service, with subsidy if necessary, by January 31, 2012. Proposals should be emailed to 

EAS@dot.gov and be entitled “Proposals to Provide Essential Air Service at Alpena, 

Docket 2009-0300.” Service should be consistent with that discussed in the body of the 

Order. Questions regarding filings may be directed to Kevin Adams at 202-366-1047 or 

kevin.adams@dot.gov;

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

 7 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; 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 governmentwide requirements for drug-free workplace (grants).

8 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.
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3. The Department will serve a copy of this Order on the Mayor and Airport Manager of 

Alpena, Michigan, Pinnacle Airlines Corporation, Gulfstream International Airlines, Inc., 

Intrepid International, and the carriers in our service list. 

By:

TODD M. HOMAN

Director

Office of Aviation Analysis

(SEAL)

An electronic version of this document is available 

at http://www.regulations.gov
Appendix A

Map for Alpena and Vicinity

Nonstop Great Circle Miles From Alpena (APN)

CIU, Sault Ste. Marie 92

CLE, Cleveland 267

DTW, Detroit 198

GRR, Grand Rapids 181

MKE, Milwaukee 261

MKG, Muskegon 187

ORD, Chicago O’Hare 305

PLN, Pellston 69

TVC, Traverse City 102
Appendix B

Historical Traffic at Alpena, Michigan (APN)

T-100 Market Report

Origin Dest O&D

Year Month Pax. Pax. Pax.

2008 11 571 507 1,078

2008 12 522 561 1,083

2009 1 515 452 967

2009 2 493 470 963

2009 3 620 549 1,169

2009 4 443 494 937

2009 5 588 564 1,152

2009 6 671 707 1,378

2009 7 830 849 1,679

2009 8 918 863 1,781

2009 9 649 597 1,246

2009 10 681 658 1,339

YE 10-30-2009 7,501 7,271 14,772

2009 11 588 579 1,167

2009 12 532 627 1,159

2010 1 591 454 1,045

2010 2 457 462 919

2010 3 704 660 1,364

2010 4 596 674 1,270

2010 5 571 586 1,157

2010 6 713 759 1,472

2010 7 925 988 1,913

2010 8 1,108 962 2,070

2010 9 736 696 1,432

2010 10 789 729 1,518

YE 10-30-2010 8,310 8,176 16,486

2010 11 720 676 1,396

2010 12 720 804 1,524

2011 1 694 591 1,285

2011 2 687 643 1,330

2011 3 1,080 953 2,033

2011 4 824 934 1,758

2011 5 991 993 1,984

2011 6 1,089 1,170 2,259

2011 7 1,315 1,281 2,596

2011 8 1,437 1,277 2,714

2011 9 1,087 968 2,055

2011 10 952 898 1,850

YE 10-30-2011 11,596 11,188 22,784
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 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 communities.

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 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 are not currently available for performance under this solicitation beyond 

[DATE]. The Department’s obligation for performance under this solicitation 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 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 payment must be submitted within 60 days of the last day of service 

provided under this Order.