Order: 2012-4-30

Served: April 26, 2012

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 26th day of April, 2012

Essential Air Service at

ALTOONA, PENNSYLVANIA

JOHNSTOWN, PENNSYLVANIA

DOCKET DOT-OST-2002-11446

DOCKET DOT-OST-2002-11451

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

ORDER SELECTING CARRIER

Summary

By this Order, the Department is selecting Silver Airways, formerly Gulfstream 

International Airways, to provide Essential Air Service (EAS) at Altoona and Johnstown, 

Pennsylvania, to Washington Dulles International Airport (Washington Dulles), for a 

combined annual subsidy of $3,997,187.1

 Service to be provided will be 18 weekly 

nonstop and one-stop round trips over an Altoona-Johnstown-Washington Dulles or 

Johnstown-Altoona-Washington Dulles routing using 34-seat Saab 340 aircraft for the twoyear period beginning when the carrier begins full EAS at both communities.

Background

By Order 2010-5-10, May 10, 2010, the Department selected Colgan Air, Inc., operating as 

United Express (Colgan), to provide EAS at Altoona and Johnstown with three round trips 

each weekday and weekend (18 a week), with a mix of nonstop and one-stop service over 

an Altoona-Johnstown-Washington Dulles or Johnstown-Altoona-Washington Dulles 

 1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated 

funds.
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routing using 34-seat Saab 340 aircraft for a combined annual subsidy of $3,348,294 from 

July 1, 2010, through June 30, 2012. 

As the end of the contract was approaching, we issued Order 2012-2-9, February 14, 2012, 

requesting proposals from carriers interested in providing EAS at the communities for a 

new term beginning July 1, 2012. In response to that Order, we received a proposal from

only Silver Airways. Subsequent to our issuing the Request for Proposals, Colgan filed a 

90-day notice to suspend its service at Altoona and Johnstown, as well as five other EAS 

communities.

Silver Airways’ complete proposal and the communities’ comments may be accessed 

online at http://www.regulations.gov/ by entering each community’s Docket number in the 

search block: Altoona, Docket DOT-OST-2002-11446, and Johnstown, Docket DOTOST-2002-11451. 

Proposal of Silver Airways

Silver Airways proposed one option for a two-year term that would provide three weekday 

and three weekend nonstop round trips (18 a week) to Washington Dulles using 34-seat 

Saab 340 aircraft for a combined annual subsidy of $3,997,187. This proposal is 

contingent upon United Airlines’ (United) extending an existing codeshare agreement with 

Silver Airways to include the Altoona and Johnstown flights. 

Community Comments

Both communities submitted comments on Silver Airways’ proposal to serve Washington 

Dulles using Saab 340 aircraft. Mr. Chuck Pillar, Airport Manager for Altoona-Blair 

County Airport, states “Since service commenced to IAD in February 2008, the airport has 

seen positive improvements in enplanement numbers. The response from both the Blair 

County local business community and the leisure passengers has also been very positive 

and encouraging.”

The Johnstown-Cambria County Airport Authority submitted a letter expressing the 

critical role the airport plays in Johnstown’s economic development. The letter also 

included a list of questions prepared by an airline committee formed to manage the 

upcoming air service transition. This airline committee is made up of airport board 

members, community leaders, and individuals with backgrounds in the travel industry. 

On April 4, Department staff conducted a conference call with the airline committee to 

answer and address their questions and concerns. At the end of the call, the airline 

committee agreed to conduct a similar conference call in the near future with Silver 

Airways. Subsequently, we received additional comments from each community 

supporting the selection of Silver Airways’ for its EAS air carrier.

Decision

The decision is straightforward. The communities support Silver Airways’ proposal and 

Silver Airways is a well-established airline in the EAS program. Furthermore, the 

proposed service to Washington Dulles would provide the communities with excellent, 

seamless access to the National air transportation system. While we understand that this 
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proposal is contingent upon Silver Airways’ obtaining a United codeshare agreement to 

include the Altoona and Johnstown flights, we are optimistic this can be achieved given 

that Silver Airways has an existing United code-share at Cleveland-Hopkins International 

Airport. 

We are, however, concerned that the proposed subsidy could put Altoona’s per passenger 

subsidy slightly over the $200 cap. Since the Department is prohibited from 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, 

we fully expect the community and airline to work together to maximize use of the service

to ensure the subsidy per passenger is $200 or less. 

We shall make this selection of Silver Airways at Altoona and Johnstown contingent upon 

the Department’s receiving properly executed certifications from the carrier that it is in 

compliance with the Department’s regulations regarding drug-free workplaces and 

nondiscrimination, as well as the regulations concerning lobbying activities.2

Service Transition

We expect Silver Airways and Colgan to work together to make a smooth transition at 

these communities. In that regard, before Colgan suspends its service we expect it to notify 

any passengers holding reservations for travel after the suspension date, to assist those 

passengers in making alternate air transportation arrangements, or to provide a refund of 

the ticket price, without penalty, if requested. 

Colgan’s current EAS contract expires on June 30, 2012. Should Silver Airways not start 

full EAS on July 1, 2012, the Department will extend Colgan’s current contract until Silver 

Airways begins full EAS. 

Carrier Fitness

49 U.S.C. 41737(b) and 41738 require that we find an air carrier fit, willing, and able to 

provide reliable service before we may subsidize it to provide EAS. Silver Airways is

subject to the Department’s continuing fitness requirements, and no information has come 

to our attention that would cause us to question the carrier’s fitness at this time. We have 

contacted the Federal Aviation Administration, and it has raised no concerns that would 

negatively affect our fitness findings. We therefore conclude that the carriers are reliable 

and remain fit to conduct the operations proposed here.

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

ACCORDINGLY,

1. We select Silver Airways to provide Essential Air Service at Altoona and Johnstown, 

Pennsylvania, and establish an annual subsidy rate as described in Appendix C;

 2 The certifications are available on the Web at http://ostpxweb.dot.gov/aviation/index.html.
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2. We direct Silver Airways to retain all books, records, and other source and summary 

documentation to support claims for payment, and to preserve and maintain such 

documentation in a manner that readily permits its audit and examination by 

representatives of the Department. Such documentation shall be retained for seven years 

from the service date of this Order or until the Department indicates that the records may 

be destroyed, whichever comes first. Copies of flight logs for aircraft sold or disposed of 

must be retained. The carrier may forfeit its compensation for any claim that is not 

supported under the terms of this Order;

3. We find that Silver Airways continue to be fit, willing and able to operate as a 

commuter carrier, and capable of providing reliable Essential Air Service at Altoona and 

Johnstown, Pennsylvania;

4. These dockets will remain open pending further Department action; and

5. We will serve copies of this Order on the Mayors and Airport Managers of Altoona and 

Johnstown, Pennsylvania, Silver Airways, and Colgan Air, Inc.

By:

SUSAN L. KURLAND

Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available at

http://www.regulations.gov
Appendix A

AREA MAP

 
 Appendix B

Silver Airways Proposal:

(98% Completion Factor 

Assumed ) Annual

Stats & Assumptions

Aircraft Type SF3

Departures

 

3,058 

Block Hours

 

2,456 

O&D Passengers

 

25,000 

Load Factor 40%

Avg Fare

 

82 

A/C Miles

 

243,385 

RPMs (000)

 

3,310 

ASMs (000)

 

8,275 

Pax Ticket Revenue 2,054,840 

Operating Expense

Fuel 1,478,562 

Crew

 

662,450 

Maintenance 1,616,073 

Station 1,091,403 

Distribution

 

288,207 

A/C Ownership

 

341,642 

Promotion

 

24,000 

Fixed Overhead

 

261,500 

Total 5,763,835 

Operating Loss 3,708,995 

5% Profit Margin on Cost

 

288,192 

EAS Subsidy Required

 

3,997,187 

Subsidy / Pax

 

160 
 Appendix C

Silver Airways

Essential Air Service to be Provided at Altoona and Johnstown, Pennsylvania

Effective Period: Beginning with full EAS through the end of the 24th month thereafter

Scheduled Service: 18 weekly nonstop and one-stop round trips over an Altoona-JohnstownWashington Dulles or Johnstown-Altoona-Washington Dulles routing

Aircraft: 34-passenger Saab 340

Rate per Eligible Flight: $1,0891

Weekly Ceiling for each community: $39,2042

Note: 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 this rate, 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 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 

department does make payments in the stipulated service levels, the carrier may cease to provide service to that 

specific location without regards 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 contract 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 Order beyond September 30, 2012. The Government’s 

obligation for performance under this Order beyond September 30, 2012, is subject to 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 September 30, 2012, until funds are made available to the Department for 

performance. If funds are not made available for performance beyond September 30, 2012, the Department will provide 

notice in writing to the carrier.

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

 1 Annual compensation of $3,997,187 divided by3,669 annual departures (36 weekly departures x 2 communities 

x 52 weeks x 98 percent completion). 2 36 arrivals and departures per week multiplied by $1,089 per flight.