Or der: 20 10

- 9

- 12

Served : September 9, 2010



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 9 th of September , 2010

Essential Air Service at

BRADFORD, PENNSYLVANIA DuBOIS, PENNSYLVANIA OIL CITY/FRANKLIN, PENNSYLVANIA JAMESTOWN, NEW YORK

Under 49 U.S.C. 41731 et seq

. Docket DOT

- OST

- 2003

- 14528

Docket DOT

- OST

- 2004

- 17617

Docket DOT

- OST

- 1997

- 2523

Docket DOT

- OST

- 2003

- 14950

ORDER SELECTING CARRIER

Summary By this order, the Department is re

- selecting Gulfstream International Airlines (Gulfstream) to provide essential air service (EAS) at Bradford, DuBois, and Oil City/Franklin, Pennsylvania, and Jamestown, New York, for a combined annual subsidy of $5,870,657 ($1,087,306 for Bradford, $2,228,996 for D uBois, $915,101 for Oil City/Franklin, and $1,639,254 for
Jamestown), from October 1, 2010, through September 30, 2012. 1

Background

Gulfstream is the incumbent carrier at all four communities. In anticipation of the expiration of

its current contract at all four communities, by Order 2010

- 5

- 22, May 19, 2010, the Department requested proposals from carriers interested in serving any or all of the four communities for the

two

- year period from October 1, 2010, through September 30, 2012.

Proposal s In res ponse to that order, we received proposals from two carriers: Charter Air Transport and

Gulfstream.

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

-

Charter Air Transport Charter Air Transport submitted proposals to serve only Oil City/Franklin and Jamestown.

At Oil City/Franklin, Charter Air Transport proposes to operate 12 nonstop round trips per week to Pittsburgh utilizing 19

- seat Jetstream 32 aircraft, for an annual subsidy of $1,375,684.

At Jamestown, Charter Air Transport proposes to operate 11 nonstop round trips per week to Buffalo, with two options for the type of aircraft utilized. If 19

- seat J32 aircraft are used, the annual subsidy rate is $1,441,308. If 30

- seat EMB

- 120 aircraft are used, the annual subsidy rate is $1,796,925.

Gulfstream International Airlines Gulfstream proposed to con tinue its service to all four communities, operating its service as Continental Connection to Cleveland Hopkins International Airport, utilizing 19

- passenger Beech 1900D aircraft.

For Bradford and Jamestown, it proposes to continue its 18 round trips pe r week, operating on a

Cleveland

– Bradford

– Jamestown

– Cleveland or a Cleveland

– Jamestown

– Bradford

– Cleveland routing, for annual subsidy amounts of $1,087,306 (Bradford) and $1,639,254 (Jamestown).

For DuBois and Oil City/Franklin , it proposes to continue its 24 round trips per week at DuBois, and 12 round trips per week at Oil City/Franklin , operating on a Cleveland

– DuBois

– Oil City/Franklin

– Cleveland or a Cleveland

– Oil City/Franklin

– DuBois

– Cleveland routing, for annual subsidy amoun ts of $2,228,996 (DuBois) and $915,101 (Oil City/Franklin). As a result of the routing of these flights, Oil City/Franklin would receive an additional 6 round trips per

week ; however

, the subsidy request is based on 12 weekly round trips

.

As we mentioned in the request for proposals, Order 2010

- 5

- 22, the subsidy per passenger at

Bradford and Oil City/Franklin exceeds the statutory cap of $200. The Department is prohibited from subsidizing air service at a community where the subsidy per passenger exceeds $200

unless it is f

a rther than 210 highway miles from the nearest large or medium hub 2 , which is not

the case here 3 . We asked both communities to work aggressively with all potential applicants to mitigate some of the risks that the carriers may face in an attempt to lower their subsidy levels.

Although Gulfstream explained its detailed plans for reducing Oil City/Franklin’s subsidy per passenger, it provided proposed subsidy rates for the other three communities in the event that the Department decided to terminate Oil City/Franklin’s eligibility to receive subsidized air service through the EAS program. Those rates are as follows: $1,116,213 (Bradford), $1,662,715 (Jamestown), and $2,247,023 (DuBois).

2 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.

3 Bradford is 84 miles from Buffalo Niagara International Airport (BUF) and Oil City/Franklin is 100 miles from Pittsburgh International Airport (PIT) , both medium

- hub airports

.- 3

-

The complete proposals of the two carriers may b e accessed online at: http://www.regulations.gov/ by entering “ DOT

- OST

- 2003

- 14528 ” (Bradford), “ DOT

- OST

2004

- 17617” (DuBois), “ DOT

- OST

- 1997

- 2523 ” (Oil City/Franklin), or “ DOT

- OST

- 2003

- 14950 ” (Jamestown) in the “Enter Keyword or ID” field.

Community and St ate Comments

On July 8, 2010 , we requested co mmunity co mments regarding the carrier selection at all four

communities. A summary of the comments received follows.

B radford We received a letter from the Airport Director at Bradford Regional Airport supporting Gulfstream’s proposal that assumes Oil City/Franklin’s continued eligibility in the EAS program.

DuBois The Department received letters from the Mayor of DuBois, the Clearfield County Commissioners, and the Chairman of the Clearfield

- Jefferson Counties Regional Airport Authority. All unanimously support continued service from Gulfstream under its proposal that includes its service shared with Oil City/Franklin. The Mayor of DuBois states, “We are extremely happy with the excellent service we h ave received from Gulfstream and the DuBois Regional Airport and look forward to continuing this relationship.”

O il City/Franklin

We received dozens of letters and e

- mail comments concerning the carrier selection at Oil City/Franklin. Civic officials fro m Franklin and Oil City, businesses, individuals, business organizations, and other stakeholders unanimously support Gulfstream’s service to Cleveland and voiced the desire to continue to have air service to Venango Regional Airport, which serves

the Frank lin and Oil City area.

Jamestown Letters from the Manager of Chautauqua County Airport

– Jamestown and the Chautauqua County Executive fully support Gulfstream’s proposal to continue service to Cleveland. The letters also detail the struggles the communi ty has experienced with several carrier and hub transitions over the past few years. They also state that Gulfstream has delivered on everything they have promised and that if Charter Air Transport was selected, the community would again face significant marketing hurdles to battle the negative effects of having three airlines serve the community in a 2 1⁄2 year period.

Other letters The Director of Airports for Cleveland Airport Systems expressed his support and that of the City of Cleveland for the contin uation of Gulfstream’s service from all four communities discussed here to Cleveland Hopkins International Airport.

Decision For Bradford and DuBois, the decision is straightforward. Gulfstream, the incumbent, was the only applicant and the carrier has the full support of both communities. For Bradford,- 4

-

Gulfstream addressed the Department’s request for proposal concerning Bradford’s per passenger subsidy rate and lowered the annual subsidy request. If traffic levels remain at current

levels at Bradfor d, the subsidy going forward will be less than $200 per passenger. We therefore find that the subsidy requested is reasonable for the service provided.

For Oil City/Franklin and Jamestown, Charter Air Transport does not meet any of the four statutorily m andated carrier

- selection criteria: (1) it has no demonstrated reliability in providing scheduled air service; (2) it does not have contractual and marketing arrangements with a larger carrier at the hub; (3) it does not have interline arrangements with a larger carrier to allow passengers and cargo at the hub to be transported through one reservation, ticket, and baggage check in; and (4) it d id not receive any support from Jamestown or the Franklin/Oil City communities. In addition, its proposals would requir e a higher annual subsidy than Gulfstream’s. We have therefore eliminated Charter Air Transport from further consideration.

At Jamestown, Gulfstream was the only applicant other than Charter Air Transport, and we find its subsidy request reasonable for the service provided.

At Franklin/Oil City, t his leaves Gulfstream with a selectable proposal. As in its proposal for Bradford, Gulfstream responded to the Department’s request for proposals and presented several items that may help in red ucing the subsidy per passenger at Oil City/Franklin. Gulfstream’s proposal for Oil City/Franklin offers a multi

- faceted approach that it has planned with the community to increase enplanements and lower the per passenger subsidy. Gulfstream is prepared to waive any administrative fees associated with flying the route and has waived the 5% profit element in support of keeping air service to the Oil City/Franklin area. The community has pledged to allow Gulfstream to operate at the Venango Regional Airpor t free of airport charges, and the Oil Region Alliance, the Venango County Chamber of Commerce, the Franklin Area Chamber of Commerce, the Venango County Regional Planning Commission, and other stakeholders in the community have pledged to partner with Gul fstream in a large marketing outreach program called “SOS” or “Save Our Service.” Based on the large number of community letters we received, there appears to be serious interest and motivation in increasing the usage of the community’s subsidized air ser vice. Although we are selecting Gulfstream to continue to serve Oil City/Franklin, we will continue to monitor enplanements and take appropriate action if necessary.

We shall make this selection at the four communities discussed here contingent upon the Department’s receiving properly executed certifications from Gulfstream that it is in compliance with the Department’s regulations regarding drug

- free workplaces and nondiscrimination, as well as the regulations concerning lobbying activities.

Carrier Fit ness 49 U.S.C. 41737(b) requires that we find an air carrier fit, willing, and able to provide reliable service before we may subsidize it to provide essential air service

. Gulfstream is subj ect to the Department’s continuing fitness requirements, and no information has come to our attention that would cause us to question either 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- 5

-

finding. We therefo re conclude that the carrier remains fit to conduct the operations proposed

here.

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

ACCORDINGLY,

1. We select Gulfstream International Airlines to provide essential air service at Bradford

, DuBois, and Oil City/Franklin, Pennsylvania, and Jamestown, New York ;

2. We set the final rate s of compensation for Gulfstream International Airlines for the provision

of essential air service at Bradford, DuBois, and Oil City/Franklin, Pennsylvania, a nd Jamestown, New York, as described in Appendix C;

3. We direct Gulfstream International Airlines 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 or until the Department indicates that the records may be destroyed, whichever comes first. Copies of fligh t 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;

4. We find that Gulfstream International Airlines continues to be fit, willing and able to operate
as a commuter carrier and capable of providing reliable essential air service at Bradford, DuBois, and Oil City/Franklin, Pennsylvania, and Jamestown, New York,

5 . Th ese docke ts will remain open until further order of the Department; and

6

. We will serve copies of this order on the Mayors of Bradford, DuBois, Oil City, Franklin, and Jamestown, the managers of Bradford Regional Airport, DuBois Regional Airport, Venango Regional Airport (Oil City/Franklin), Chautauqua County/Jamestown Airport, Gulfstream International Airlines and Charter Air Transport.

By:

SUSAN L. KURLAND Assistant Secretary

for Aviation and International Affairs

(SEAL)

An electronic version of this document is available on the Internet at http://www.regulations.govAppendix 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

Gulfstream International Airlines (Proposal for Bradford and Jamestown )Appendix B Page 2 of 2

Gulfstream International Airlines (Proposal for DuBois and Oil City/Franklin )Appendix C Page 1 of 4

Gulfstream International Airlines

Essential Air Service to be Provided at Bradford, Pennsylvania

Effective Period : October 1, 2010, through September 30, 2012

Scheduled Service : 1 8 weekly round trips to Cleveland Intermediate stops and upline service : Service may be nonstop or routed via Jamestown, NY

Aircraft : Beech 1900D

, 19 seats Rate per Eligible Flight: $ 597 1
Weekly Ceiling : $ 21,492 2

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 comple ted, 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 a pproval 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 an d the extent of access to the national air transportation system provided to the community.

If the Department unilaterally, either partially or complete ly , terminates or reduces payments for service or changes service requirements at a specific location p rovided 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 cont racts 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 paragr aph.

Funds are not currently available for performance under this order beyond September 30 , 20 10. The Governmen t’s obligation for performance under this order beyond September 30 , 20 10 , is subject to 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 September 30 , 20 10 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30 , 20 10 , 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 $1,087,306, divided by 1,822 annual departures (313 se rvice days x 6 flights per service day x 97 percent completion)

. 2 36 flights per week multiplied by $ 597 per flight.Appendix C Page 2 of 4

Gulfstream International Airlines

Essential Air Service to be Provided at DuBois, Pennsylvania

Effective Period : October 1, 2010, through September 30, 2012

Scheduled Service : 24 weekly nonstop or one

- stop round trips to Cleveland Intermediate stops and upline service: Service may be nonstop or routed over Oil City/Franklin

Aircraft : Beech 1900D

, 19 seats Rate per Eligible Flight: $ 913 1
Weekly Ceiling : $ 43,824 2

Note: The carrie r 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 requir ed 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, s uch 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 entir e 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 approva l 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; flig hts 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 complete ly , 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 an y 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 con tracts 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 parag raph.

Funds are not currently available for performance under this order beyond September 30 , 20 10. The Governmen t’s obligation for performance under this order beyond September 30 , 20 10 , is subject to the availability of appropriated funds from which pa yment 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 , 20 10 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30 , 20 10 , 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 $2,228,996, divided by 2,441 annual departures (313 service days x 8 flights per service day x 97.5 percent compl etion).

2 48 flights per week per community multiplied by $ 913 per flight.Appendix C Page 3 of 4

Gulfstream International Airlines

Essential Air Service to be Provided at Oil City/Franklin, Pennsylvania

Effective Period : October 1, 2010, through September 30, 2012

Scheduled Service : 12 weekly nonstop or one

- stop round trips t o Cleveland Intermediate stops and upline service: Service m ay routed over DuBois

Aircraft : Beech 1900D, 19 seats Rate per Eligible Flight: $ 754 1
Weekly Ceilin g : $ 18,096 2

Note: The carrier understands that it may forfeit its compensation for any flights t hat 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 con sidered 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 contempl ates 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 ci rcumstances 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 complete ly , 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 level s 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 order beyond September 30 , 20 10. The Governmen t’s obligation for performance under this order beyond September 30 , 20 10 , is subject to the availability of appropriated funds from which payment f or 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 , 20 10 , until funds are made available to the Department for performance. If funds are not made availa ble for performance beyond September 30 , 20 10 , 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 $915,101, divided by 1,214 annual departures (313 service days x 4 flights per service day x 97 percent completion)

. 2 24 flights per week multiplied by $ 75 4 per flight.Appendix C Page 4 of 4

Gulfstream International Airlines

Essential Air Service to be Provided at Jamestown, New York

Effective Period : October 1, 2010, through September 30, 2012

Scheduled Service : 18 weekly nonstop or one

- stop round trips t o Cl eveland Intermediate stops and upline service: Service m ay be nonstop or routed over Bradford, PA

Aircraft : Beech 1900D, 19 seats Rate per Eligible Flight: $ 900 1
Weekly Ceilin g : $ 32,400 2

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 un derstands 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 complete d 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 compens ation. 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 no t 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 complete ly , 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

per iod 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 adjustm ents 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, relev ant 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 , 20 10. The Governmen t’s obligation for performance under this order beyond September 30 , 20 10 , 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 , 20 10 , until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30 , 20 10 , 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 $1,639,254, divided by 1,822 annual departures (313 service days x 6 flights per service day x 97 percent completion)

. 2 36 flights per week multiplied by $ 900 per flight.