Order 2011

- 11

- 1

Served: November 1, 2011



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 1 st day of Nove mber , 20 11

Essential Air Service at

SALINA, KANSAS

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 2 002

- 11376



### ORDER REQUESTING PROPOSALS

Summary
By this order, the Departme nt is requesting proposals from airlines interested in providing essential air service (EAS) at Salina, Kansas , for a new term beginning April 1

, 2012, with or without subsidy. Pr oposals are due by November 29

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

Background
By Order 2010

- 3

- 17

, March 12

, 2010 , the Department selected S eaPort Airlines (SeaPort )

, to provide EAS at Salina with 18 weekly nonstop round trips to Kansas City International Airport (Kansas City) using 9

- seat Pilatus PC

- 12 aircraft from April 1 9

, 2010 , through March 31

, 2012

, for a first

- year annual subsidy of $ 1,489,435 and a second

- year annual subsidy of $1,493,381

.

Special Discussion on Subsidy per Passenger

Based on the most recent 12

- month period for which data are available (July 1, 2010, through June 30, 2011), 5,037 passengers were enplaned and deplaned at Salina. The annual subsidy for Salina is $ 1,493,381. Therefore, the subsidy per passenger at Salina is $296. 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. 1

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 Act of 2000. Salina exceeds the $200 per passenger cap and is 186 miles from Kansas City, a medium hub airport. Rather than terminate the community’s eligibility, at this stage, the Department will solicit proposals for EAS, and evaluat e all- 2

-

proposals submitted before committing to a new contract or making a final determination on Salina’s continuing eligibility. During the 30

- day window for proposals, we expect the community to work with all potential applicants to mitigate some of the risks that the carriers may face in an attempt to lower their subsidy levels.

Request for Proposals Carriers should file their proposals no later than November 29, 2011 . After that date, our staff will docket proposals, thereby making them public, 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.

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.

We are here providing interested carriers with some basic information to serve as guidance when they prepare their proposals, but we wi ll not prescribe an exact forma t. 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 pro posed 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 Dep artment. 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, potentially 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 operation al needs of the airline s

.

Proposals should provide sufficient capacity to accommodate historical levels of traffic. In order to assist carriers in developing traffic and revenue projections for their proposals, we have provided a summar y of historical passengers in Appendix B. W e expect service levels

that are c o mparable with what the community currently receive s , with service to Kansas City or

2 In se lecting 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 general provisions governing EAS will be included in the selection order as part of our authorization of subsidy for the

sele cted service. Appendix C of this order contains those general provisions.- 3

-

any large or medium hub that offers access to the national air transportation system utilizing

15

- seat or larger aircraft

. Specifically

, for proposals with 15

- seat or larger aircraft, the Department expects proposals for t wo round trips each weekday and weekend (12 a week)

. For proposals with 8/9

- seat aircraft, we would expect proposals for three ro und trips a day (18 a week). Should the community agree to aircraft with few er than 15 passenger seats, in effect waiving their right t o 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. As always, we will formally solicit the community ’ s views on any service options we receive before making a long

- term carrier selection decision.

Other Carrier Requirements

Th e Department is responsible for implementing various Federal statutes 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 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 governi ng 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 co pies 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. 4

Community and State Comments

Civic officials are welcome to su bmit 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 November 29 , the due date for carrier proposals.

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

- delegated to the Director, Office of Aviation Analysis.

ACCORDINGLY, 1. We request that carriers interested in providing essential air service at Salina, Kansas

, submit their proposals, with or without subsidy requests, no later than November 29

, 2011

. The proposals should be emailed to: EAS@dot.gov with the title “Proposal to Provide

Essential Air Service at Salina, Kansas ”; 5

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

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 De partment 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 government

- wide requirements for drug

- free workplace (grants).

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

5 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

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-

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

Kansas

, SeaPort Airlines

, and t he service list for this Docket

.

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) days

after the date of service of this order.

Thi s 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 Analysis

(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



### Salina, Kansas

Quarter Year Deplanements Enplanements Total
Traffic Enplanements per Day

3 2008 1,758 1,764 3,522 22

4 2008 1,115 1,382 2,497 16

1 2009 923 889 1,812 12

2 2009 594 611 1,205 8

Annual

Totals 4,390 4,646 9,036 14

3 2009 779 611 1,390 9

4 2009 545 507 1,052 7

1 2010 378 474 852 6

2 2010 482 1,111 1,593 10

Annual

Totals 2,184 2,703 4,887 8

3 2010 521 599 1,120 7

4 2010 609 744 1,353 9

1 2011 609 630 1,239 8

2 2011 640 685 1,325 8

Annual

Totals 2,379 2,658 5,037 8

1 Source: USDOT Bureau of Transportation 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 aircraft take

- off and landing at its scheduled destination constitutes a comp leted 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 o r 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 peri od 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 carrie r 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 adju sted 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 complet ely, 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 Depa rtment 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 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 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.