Order 2011

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- 17 Served: January 18, 2011 

### UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION 

### OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on the 18 th of January, 2011 Essential Air Service at MACON , GEORGIA Un der 49 U.S.C. 41731 et seq . DOCKET OST - 2007 - 28671

ESSENTIAL AIR SERVICE FOR MACON, GEORGIA Summary By this order the Department is terminating the carrier

- selection case at Macon, Georgia, and relying on Pacific Wings , LLC, d/b/a Georgia Skies (Pacif ic Wings) to provide subsidy

- free essential air service (EAS) at the community as it proposed . We are also terminating Pacific Wings’ current subsidy at the community effective seven days after the issuance of this order. Background By Order 2008

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- 43 , we selected Pacific Wings to provide EAS to Macon, Georgi a, through September 30, 2010, for $1,386,306 annual subsidy , and by Order 2010

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- 5 we extended that rate until further Department action. In anticipation of the end of th at contract , Order 2010

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- 3 3 requested proposals for EAS at Macon
. We received proposals but by Order 2010

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- 5 we rejected the proposals of all four carriers. We rejected the proposals of Charter Air Transport and Sovereign Air because those carriers did not have the requisite operating authority
. One of the remaining carriers, Gulfstream International Airlines, Inc. (Gulfstream) request ed $2,733,975 annually for a total of twelve round trips per week

-- six nonstops to Orlando and six nonstops to Tampa. We rejected that propos al because “it requires $1.35 million more subsidy than Pacific Wings, and noted that Gulfstream’s subsidy request would result in a subsidy per passenger in excess of $900. Pacific Wings resubmitted its prior proposal, request ing the same level of subsid y it had previously requested for the same level of service

– 26 nonstop round trips per week to Atlanta with Cessna 208 aircraft. W e did not accept Pacific Wings’ proposal because it contemplated service with 9

- seat Cessna 208 aircraft, and Macon did not waive its right to service with 15

- seat or larger aircraft. W e therefore decided to reject all of the proposals and- 2

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rebid the case . Finally, Order 2010

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- 5 noted that Macon’s most recent subsidy per passenger was $464 , based on historical passengers and that t he D e par tm ent is prohibited from subsidizing air service at a communit y if the subsidy per passenge r at that community exceeds $200, unless it is more than 210 miles from a medium or large hub . In fact, Macon is 82 miles from Atlanta, a large hub a irport , and is therefore subject to the subsidy

- per - passenger ceiling
. However, we chose not to terminate Macon’s eligibility for subsidy at that time
. “Rather than terminate Macon’s service eligibility, at this stage, the Depar tm e n t will solicit proposa ls for EAS, but the Department will evaluate all proposals submitted before committing to a two

- year contract or making a final determination on Macon’s continuing eligibility.” In response to the latest request for proposals , on November 16, we received proposals from Charter Air Transport, Gulfstream, and Pacific Wings. Gulfstream and Pacific Wings request ed the same level of subsidy as they proposed originally , although Gulfstream offered to cap its subsidy at the l ower of its annual subsidy request an d the number of passengers carried times $200 . On December 10, the Mayor of Macon indicated the community continued to prefer Gulfstream. On December 14, Pacific Wings filed the following: “At this point, [Pacific Wings] has invested far too much in Mac on to simply walk away. Please accept this correspondence as notice that [Pacific Wings] is withdrawing its bid for subsidized service at Macon, but will continue to serve the community without subsidy . Obviously, pricing and other adjustments will be ne cessary to make non - subsidized service viable; however, Pacific Wings has successfully done so in a number of formerly subsidized EAS locations across the country.” Dec i sion In light of these developments, we will terminate this carrier

- selection procee ding and rely on Pacific Wings’ subsidy

- free service to meet Macon’s EAS needs. The Department is authorized to pay EAS subsidy only when a community would not otherwise receive any scheduled a i r service at all. Specifically, the program’s governing stat ute, 49 U.S.C 41733(d), states “The Secretary shall end payment of compensation to an air carrier for providing basic essential air service to an eligible place when the Secretary decides that compensation is no longer necessary to maintain basic essential air service to the place.” Based on th at statute, we alert all parties that if we receive a subsidy

- free proposal, we will rely on that service and terminate the carrier

selection proceeding. See footnote five of Order 2010

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- 5 that resolicited proposa ls for Macon. Under another provision of the law, most communities are guaranteed service with 15

- seat or larger aircraft. However, there are several exceptions. 49 U.S.C 41732(b)(3) states that communities that are otherwise guaranteed service with 1 5

- seat aircraft are not so guaranteed if 15

- seat proposals require subsidy while a proposal with smaller aircraft does not. Further, 49 U.S.C. 41732(b)(5) states that communities are guaranteed service with twin

- engine, two

pilot operations “...unless sched uled air transportation has not been provided to the place in aircraft with at least two engines and using two pilots for at least 60 consecutive days at any time since October 31, 1978. ” In this case, Pacific Wings has served Macon for the last two years with single

- engine aircraft
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Nonetheless, Macon remains an eligible EAS community. In that regard, should Pacific Wings decide at some point in the future to suspend service at Macon , it would first have to file a 90

- day notice of its intent to suspen d that service and be subject to being held in until we could secure replacement service. Finally , we will terminate the rate set by Order 2010

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- 5 to compensate Pacific Wings’ for its subsidized service while we processed the carrier

- selection proceedin g . This order is issued under authority delegated in 49 CFR 1.56a(f)
. ACCORDINGLY, 1. The Department terminates the carrier

- selection proceeding at Macon, Georgia , and relies on the subsidy

- free service of Pacific Wings to meet Macon’s essential air se rvice ; 2. The Department terminates the subsidy rate set by order 2010

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- 5 effective 7 days after the service date of this order ; 3
. Docket DOT

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- 28671 will remain open until further Department action; and 4 . We will serve copies of this or der on the Mayor and Airport Manager of Macon, Georgia, Charter Air Transport, Sovereign Air, Gulfstream International Airlines, and Pacific Wings. By:

Susan L. Kurland Assistant Secretary for Aviation and International Affairs (SEAL) An electronic ver sion of this document is available on the World Wide Web at http://www.regulations.gov