Order: 2014-6-9

Served June 17, 2014

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 17th day of June, 2014

Essential Air Service at

ALAMOSA, COLORADO

CORTEZ, COLORADO

DOCKET DOT-OST-1997-2960

DOCKET DOT-OST-1998-3508

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

ORDER RE-SELECTING CARRIER AND

ESTABLISHING SUBSIDY RATES 

Summary

By this Order, the Department is re-selecting Great Lakes Aviation, Ltd. (Great Lakes), to 

provide Essential Air Service (EAS) at Alamosa and Cortez, Colorado, using 19-seat 

Beechcraft 1900D aircraft, for the two-year period from August 1, 2014, through 

July 31, 2016, at an annual subsidy rate of $2,192,179 for Alamosa, and $2,270,297 for 

Cortez.

1

Background

By Order 2012-8-7, issued on August 3, 2012, the Department re-selected Great Lakes to 

provide EAS using 19-seat Beechcraft 1900D aircraft, for the period from August 1, 2012, 

through July 31, 2014, with service from Alamosa providing 18 weekly nonstop round 

trips to Denver International Airport (Denver), and from Cortez providing 18 weekly 

nonstop round trips to Denver at an annual subsidy rate of $2,078,676, at Alamosa, and 

$2,240,766, at Cortez.

 1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds.
- 2 -

In anticipation of the end of the current rate term, the Department issued Order 2014-2-3,

on February 4, 2014, soliciting proposals from air carriers interested in providing EAS at

Alamosa and Cortez, with subsidy support if necessary, for a new term beginning 

August 1, 2014. In response to that Order, we received one proposal, from the incumbent 

air carrier, Great Lakes.

That proposal as well as the complete public file for EAS at Alamosa and Cortez may be 

accessed online through the Federal Docket Management System at 

http://www.regulations.gov/ by entering Docket number “DOT-OST-1997-2960” 

(Alamosa) or “DOT-OST-1998-3508” (Cortez) in the “SEARCH for: Rules, Comments, 

Adjudications or Supporting Documents:” field. 

Proposal of Great Lakes

Great Lakes proposed to continue to provide three nonstop round trips for a two-year term 

from Alamosa and Cortez each weekday and weekend (18 total round trips per week per 

community) to Denver using 19-seat Beechcraft 1900D aircraft for an annual subsidy rate 

of $2,192,179 at Alamosa and $2,270,297 at Cortez.

Community Comments

By letter dated March 18, 2014, the Department solicited community comments regarding 

Great Lakes’ proposal to continue providing EAS at Alamosa and Cortez. The 

communities elected not to submit formal comments regarding this air carrier-selection 

case. 

Decision

In selecting an air carrier to provide subsidized EAS not in Alaska, 49 U.S.C. 

§ 41733(c)(1) directs us to consider five factors: (1) service reliability; (2) contractual and 

marketing arrangements with a larger air carrier at the hub; (3) interline arrangements with 

a larger air carrier at the hub (4) community views; and (5) whether the air carrier has 

included a plan in its proposal to market the service. In addition, the Consolidated and 

Further Continuing Appropriations Act, 2012, Public Law No. 112-55, and continued by 

the Full-Year Continuing Appropriations Act, 2013, Public Law No. 113-6, and Continuing 

Appropriations Act, 2014, Public Law No. 113-46, provides that when selecting an air

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. 

Given the facts of this carrier-selection case, we have decided to re-select Great Lakes for a 

new, two-year term, from August 1, 2014, through July 31, 2016. Great Lakes has been 

providing EAS at Alamosa and Cortez for many years, and the community raised no 

objections to the re-selection of the incumbent air carrier. Furthermore, Great Lakes 

provides access to the national and global air transportation system through the use of its 

interline e-ticketing agreements with American Airlines, Delta Air Lines, Frontier Airlines, 

United Airlines, and US Airways. We also find that both Great Lakes’ service and subsidy 

levels are reasonable. 
- 3 -

We shall make this selection of Great Lakes at Alamosa and Cortez contingent upon the

Department’s receiving properly executed certifications from the air 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

Note Regarding Eligibility

The Department of Transportation and Related Agencies Appropriations Act, 2000, 

prohibits the Department from subsidizing EAS to communities located within the 48 

contiguous States receiving per passenger subsidy amounts exceeding $200, unless the 

communities are located more than 210 miles from the nearest large or medium hub.3 We 

note that Cortez is exempt from the $200 per passenger statutory limit because it is more 

than 210 miles from the nearest large or medium hub airport; however, Alamosa is within 

210 miles of Albuquerque International Sunport, a medium hub, and therefore subject to 

the $200 cap. The Department fully expects both Alamosa and Great Lakes to work 

cooperatively to ensure subsidy rates remain below the $200 per passenger level to remain 

eligible for the EAS program.4

 

We also wish to remind both communities about the recently enacted law that established a 

new subsidy cap at $1,000 per passenger regardless of distance from hub airports.5 The 

Department fully expects all parties involved to work cooperatively to ensure subsidy rates 

remain below the $1,000 per passenger level to remain eligible for the EAS program. 

 

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. Great Lakes is subject 

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

attention that would cause us to question the air 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 air carrier is reliable 

and remains fit to conduct the operations proposed here.

This Order is issued under authority delegated in 49 CFR Part 1.25a(b).

 2 The certifications are internet accessible at: http://www.dot.gov/policy/aviation-policy/small-communityrural-air-service/essential-air-service. 3 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 of 2000. 

4 On May 1, 2014, a Notice of Proposed Enforcement Policy on the $200 per passenger subsidy cap was 

published in the Federal Register (Volume 79, Issue 84). It outlined the Department’s proposed policy on 

this issue, which would use traffic data from October 1, 2014, through September 30, 2015, to measure 

compliance. The Department has solicited public comments on the policy and they are due June 30, 2014. 

Refer to www.regulations.gov and search “DOT-OST-2014-0061” for more information.

5 See 49 USC § 41731(a)(1)(C).
- 4 -

ACCORDINGLY,

1. We re-select Great Lakes Aviation, Ltd. to provide Essential Air Service at Alamosa 

and Cortez, Colorado, at the service levels and subsidy rates as described in Appendix B, 

for the period from August 1, 2014, through July 31, 2016; 

2. We direct Great Lakes Aviation, Ltd., 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 air carrier may forfeit its compensation for any claim that is not 

supported under the terms of this Order;

3. We find that Great Lakes Aviation, Ltd. continues to be fit, willing and able to operate 

as a commuter air carrier, and capable of providing reliable Essential Air Service at 

Alamosa and Cortez, Colorado;

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

5. The Department will serve copies of this Order on the civic officials of Alamosa and 

Cortez, Colorado, the Manager of San Luis Valley Regional Airport, the Manager of 

Cortez Municipal Airport, Great Lakes Aviation, Ltd., and the service list for this 

docket.

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

 Page 1 of 2

Great Lakes Aviation, Ltd.

Annual Compensation Requirements for EAS at

Alamosa, Colorado to Denver (DEN)

Three Round Trips – B1900

98.0% Completion Factor

Departures: 1,840

Block Hours: 1,810

Revenue Passenger Miles: 2,640,250

Available Seat Miles: 6,257,840

Operating Revenues:

Passenger: 14,750 psgrs at $107.72 $1,588,870 

Other (at 0.62% of passenger revenue) $9,851 

Total Operating Revenues: $1,598,721 

Operating Expenses:

Direct: Aircraft and Hull Insurance $365,710 

Fuel and Oil $990,359 

Flying Operations $357,004 

Maintenance $639,719 

Total Direct Expenses: $2,352,792 

Total Indirect Expenses: $1,257,589 

Total Operating Expenses $3,610,381 

Operating Loss ($2,011,660)

Profit Element (5.0% of Total Operating Expenses) $180,519 

Annual Compensation Requirement: $2,192,179 

Representative Schedule

*** [ALS] Alamosa, Colorado ***

DEPARTURES

FLT TO DPT ARR EQP FREQ

7263 DEN 6:00 7:13 BE1 12345

7263 DEN 8:00 9:00 BE1 6

7264 DEN 10:45 11:45 BE1 12345 7

7269 DEN 16:28 17:28 BE1 12345 7

ARRIVALS

FLT FROM DPT ARR EQP FREQ

7305 DEN 12:15 13:13 BE1 12345

7268 DEN 15:20 16:18 BE1 12345 7

7258 DEN 20:58 21:56 BE1 6

7258 DEN 20:58 21:56 BE1 12345 7

No Upline Scheduling Restrictions
Appendix A

Page 2 of 2

Great Lakes Aviation, Ltd.

Annual Compensation Requirements for EAS at

Cortez, Colorado to Denver (DEN)

Three Round Trips – B1900

98.0% Completion Factor

Departures: 1,840

Block Hours: 2,347

Revenue Passenger Miles: 4,656,500

Available Seat Miles: 9,718,880

Operating Revenues:

Passenger: 16,750 psgrs at $128.75 $2,156,563 

Other (at 0.62% of passenger revenue) $13,371 

Total Operating Revenues: $2,169,933 

Operating Expenses:

Direct: Aircraft and Hull Insurance $365,710 

Fuel and Oil $1,263,357

Flying Operations $462,922 

Maintenance $732,496 

Total Direct 

Expenses: $2,824,486 

Total Indirect Expenses: $1,404,305 

Total Operating Expenses $4,228,791 

Operating Loss ($2,058,857)

Profit Element (5.0% of Total Operating Expenses) $211,440 

Annual Compensation Requirement: $2,270,297 

Representative Schedule

*** [CEZ] Cortez, Colorado ***

DEPARTURES

FLT TO DPT ARR EQP FREQ

7261 DEN 6:00 7:13 BE1 12345

7261 DEN 6:45 7:58 BE1 6

7263 DEN 8:05 9:18 BE1 1234567

7267 DEN 16:17 17:30 BE1 12345 7

ARRIVALS

FLT FROM DPT ARR EQP FREQ

7262 DEN 8:35 21:55 BE1 1234567

7266 DEN 14:43 16:03 BE1 12345 7

7267 DEN 16:45 18:05 BE1 6

7270 DEN 20:56 22:16 BE1 12345 7

No Upline Scheduling Restrictions
Appendix B

Page 1 of 2

Great Lakes Aviation, Ltd.

Essential Air Service to be provided at Alamosa, Colorado

DOT-OST-1997-2960

Effective Period: August 1, 2014, through July 31, 2016

Scheduled Service: Three nonstop round trips each weekday and weekend (18 total round trips 

per week) to Denver 

Aircraft: 19-Seat Beechcraft 1900D

Rate per Eligible Flight: $1,1911

Weekly Ceiling: $42,8762

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 may not be available for performance under this order beyond September 30, 2014. The Government’s 

obligation for performance under this order beyond September 30, 2014, is subject to the availability of 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, 2014, until funds are made available to the Department 

for performance. If sufficient funds are not made available for performance beyond September 30, 2014, the 

Department will provide notice in writing to the carrier.

All claims for payment, including any amended claims, must be submitted within 90 days of the last day of the 

month for which compensation is being claimed. For example, claims for service provided in July must be filed by 

October 31; August claims must be submitted by November 30, and so on.

 1 Annual compensation of $2,192,179 divided by 1,840 annual departures (313 service days x 6 flights per service 

day x 98 percent completion).

2 36 flights per week multiplied by $1,191 per flight.
 Appendix B

 Page 2 of 2

Great Lakes Aviation, Ltd.

Essential Air Service to be provided at Cortez, Colorado

DOT-OST-1998-3508

Effective Period: August 1, 2014, through July 31, 2016

Scheduled Service: Three nonstop round trips each weekday and weekend (18 total round trips 

per week) to Denver 

Aircraft: 19-Seat Beechcraft 1900D

Rate per Eligible Flight: $1,2341

Weekly Ceiling: $44,4242

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 may not be available for performance under this order beyond September 30, 2014. The Government’s 

obligation for performance under this order beyond September 30, 2014, is subject to the availability of 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, 2014, until funds are made available to the Department 

for performance. If sufficient funds are not made available for performance beyond September 30, 2014, the 

Department will provide notice in writing to the carrier.

All claims for payment, including any amended claims, must be submitted within 90 days of the last day of the 

month for which compensation is being claimed. For example, claims for service provided in July must be filed by 

October 31; August claims must be submitted by November 30, and so on.

 1 Annual compensation of $2,270,297 divided by 1,840 annual departures (313 service days x 6 flights per service 

day x 98 percent completion).

2 36 flights per week multiplied by $1,234 per flight.