Order 2013-2-26

Served: February 27, 2013

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 27th day of February, 2013

Essential Air Service at

MACON, GEORGIA DOCKET DOT-OST-2007-28671

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

ORDER SELECTING CARRIER

AND ESTABLISHING SUBSIDY RATES

Summary

By this Order, the Department is selecting Silver Airways (“Silver”) to provide Essential 

Air Service (“EAS”) at Macon, Georgia, for an annual subsidy of $1,998,696.

1

 The service

to be provided will be one nonstop round trip per weekday and one per weekend (six a 

week) to Atlanta, Georgia, and one nonstop round trip per weekday and one per weekend 

(six a week) to Orlando, Florida, using 34-passenger Saab 340B aircraft for the two-year 

period beginning when Silver commences full EAS.

Background

The Department’s FY 2012 appropriation (P.L. 112-55) limited eligibility in the EAS 

program in the lower 48 states to certain communities, including those that received 

subsidized EAS “at any time between September 30, 2010, and September 30, 2011, 

inclusive.” Macon is eligible for subsidized service because it was receiving service on a 

subsidized basis from Pacific Wings, L.L.C., d/b/a Georgia Skies (“Pacific Wings”)

through January 24, 2011, and subsidy-free service starting January 25, 2011. However, on 

April 26, 2012, Pacific Wings filed a 90-day notice of its intent to terminate its 

unsubsidized service at Macon, which triggered this carrier-selection case.

 1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds.
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Pacific Wings’ proposed termination of service at Macon would have left the community 

with no scheduled air service. As a result, the Department issued Order 2012-5-25, on 

May 24, 2012, which prohibited Pacific Wings from terminating service for 30 days 

beyond the end of the 90-day notice period, i.e. August 25, 2012, and requested proposals 

from air carriers interested in providing EAS at Macon, with or without subsidy. In 

response to that Order, we received two proposals.

By Order 2012-9-6, issued on September 6, 2012, the Department selected Sun Air 

Express, L.L.C. d/b/a Sun Air International (“Sun Air”) to provide subsidized EAS at 

Macon for a two-year contract. However, on December 20, 2012, Sun Air sent an e-mail to 

the Department withdrawing from the case and encouraging the re-solicitation of proposals 

for EAS at Macon. Sun Air explained that it is undergoing an aggressive expansion, 

experiencing challenges in completing pilot recruiting and training, and establishing 

maintenance bases in Texas, Maryland, and Pennsylvania that has proven more difficult 

than anticipated. In response to Sun Air’s notification, we contacted the community, and it 

supported our issuance of a new request for proposals. As a result, we issued Order 

2013-1-5 on January 4, 2013, soliciting proposals from air carriers interested in providing 

EAS at Macon. In response, we received four proposals. 

Carrier Proposals

As noted above, the Department received four proposals, all of which may be accessed 

online through the Department’s Dockets Management System at: 

http://www.regulations.gov by entering “DOT-OST-2007-28671” in the “Enter Keyword 

or ID” field. We have summarized the proposals in table form below: 

Proposal of American Aviation Group, Inc. d/b/a Sky King Airlines, Inc.

American Aviation Group, Inc. (“AAG”), which is not a certificated air carrer, submitted a 

proposal claiming to be doing business as Sky King Airlines, Inc. (“Sky King”), which is a 

certificated air carrier. However, on February 7, 2013, Sky King submitted an answer in 

the docket to AAG’s proposal advising the Department that it disavows any connection 

with AAG. Among other things, the answer states that Sky King had no knowledge of 

AAG, and all claims and representations made in that proposal in reference to Sky King is 

false and made without the Sky King’s consent. This matter has been referred to the 

Department’s Office of the Assistance General Counsel for Aviation Enforcement and 

Proceedings and will not be considered further in this carrier-selection case. 

Carrier Annual Subsidy Hub Round Trips Per Week Aircraft

American Aviation Group, Inc. d/b/a Sky King 

Airlines $1,555,825 1/ ATL 42 nonstop Jetstream 31 (19 seat)

$1,184,714 2/ ATL 42 nonstop Jetstream 31 (19 seat)

SeaPort Airlines, Inc. $2,499,837 CLT/BNA 12.5 nonstop to CLT, 6 one-stop to 

BNA (via AHN) Cessna Grand Caravan (9 seats)

Silver Airw ays $1,998,696 ATL/MCO 6 nonstop to ATL, 6 nonstop to MCO Saab 340B (34 seats)

Sovereign Air, Inc. $1,514,940 ATL 28 nonstop Jetstream 31 (19 seat) or 

Beechcraft 99 (15 seat)

1/ First year rate.

2/ Second year rate.
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Proposal of SeaPort Airlines, Inc.

SeaPort Airlines, Inc. (“SeaPort”) proposed twelve and a half nonstop round trips per week 

to Charlotte and six one-stop round trips to Nashville (via Athens) using 9-passenger 

Cessna Caravan aircraft for an annual subsidy of $2,499,837. 

Proposal of Silver Airways

Silver proposed one nonstop round trip per weekday and one per weekend (six a week) to 

Atlanta and one nonstop round trip per weekday and one per weekend (six a week) to 

Orlando using 34-passenger Saab 340B aircraft for an annual subsidy of $1,998,696. 

Proposal of Sovereign Air, Inc.

Sovereign Air, Inc. proposed four nonstop round trips per day (28 a week) to Atlanta using 

a 19-passenger Jetstream 31 aircraft for an annual subsidy of $1,514,940. However, 

Sovereign Air does not have the requisite operating authority from either the Department or 

the Federal Aviation Administration, and would therefore not be in a position to commence 

service in a reasonable period of time. Thus, we will not consider Sovereign’s proposal 

further.

Community Comments

By letter dated February 11, 2013, the Honorable Robert Reichert, Mayor of Macon, 

provided support for Silver’s application. The Mayor points out the advantages of Silver’s 

proposal, in that it will connect passengers to both Atlanta and Orlando, thereby providing 

excellent access to the national air transportation system. The Mayor states that this will 

be attractive to both the local business community and the citizens of Macon. 

Additionally, Silver’s proposal has the potential to transport more than 20,000 passengers, 

which aligns well with Macon’s plans to participate more fully in the Federal Aviation 

Administration’s Capital Improvement Program. 

Decision

When selecting an air carrier, 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, 2008,2 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. 

Between the two eligible proposals, this case is very straight forward: Silver’s requires less 

subsidy and has the full support of the community. The core objective of the EAS 

program is to connect smaller communities to the national transportation system, and 

Silver’s proposal fully meets that objective. Silver is a well-established air carrier that 

provides EAS at many communities and maintains interline baggage and ticketing 

 2 Public Law 110-161.
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agreements with most of the major air carriers. Additionally, we find that both the service 

and subsidy levels are reasonable. 

We shall make this selection of Silver at Macon 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.

3

Service Transition

We expect Pacific Wings and Silver to work together to make a smooth transition at 

Macon. In that regard, before Pacific Wings suspends its service it must notify any 

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

in making alternate air transportation arrangements, or provide a refund of the ticket price, 

without penalty, if requested.

Legislative Changes Which May Affect Future EAS Eligibility at Macon

The FAA Modernization and Reform Act of 2012 (Public Law No: 112-95) amended 

49 U.S.C. § 41731(a)(1)(B) to change the definition of “eligible place” for the purpose of 

receiving EAS. The amendment states that to be eligible, a community must maintain an 

average of 10 enplanements or more per service day, as determined by the Secretary, 

during the most recent fiscal year beginning after September 30, 2012.4 The legislation 

exempts locations in Alaska and Hawaii and communities that are more than 175 driving 

miles from the nearest large or medium hub airport. As Macon is only about 81 miles from 

the Atlanta airport, the community must meet the 10 enplanements per service day 

threshold for EAS to continue after FY2013, barring a waiver from the Secretary. 

In the most recent fiscal year for which data are available, FY2012 (October 2011-

September 2012), Pacific Wings generated a total of 1,389 passengers (inbound and 

outbound), or an average of fewer than 3 enplanements per day.5 Silver and Macon should 

be aware that the Department will continue to monitor Macon’s eligibility to receive EAS 

in light of these new requirements throughout the life of any executed contract. The 

Department may cancel a contract for any community receiving EAS if enplanements 

remain below 10 per day during FY2013, barring a waiver from the Secretary. 

Additionally, communities are not eligible for subsidized air service if its per passenger 

subsidy exceeds $1,000.

6 The estimated subsidy per passenger based on FY12 origin and 

destination passengers at Macon is $998. However, that figure is based on unsubsidized air 

service provided by Pacific Wings. In its proposal, Silver states that it will maintain low 

local air fares, which will be comparable to those offered by low-cost carriers. This has the 

 

3 The certifications are available on the Web at http://ostpxweb.dot.gov/aviation/index.html.

4 The Secretary also has authority to waive the 10 enplanements requirement, on an annual basis, if the 

community can demonstrate to the Secretary’s satisfaction that the reason the location averages fewer than 10 

enplanements per service day is due to a temporary decline in enplanements. See 49 U.S.C. § 41731(e).

5 Source: Bureau of Transportation Statistics; Form 41, Schedule T-100. Daily averages are based on onehalf of the O&D passengers, divided by 313 service days (314 during leap years).

6

 See 49 USC § 41731(a)(1)(C). 
- 5 -

potential to increase enplanements, thereby decreasing the subsidy per passenger rate. The 

Department strongly encourages Macon and Silver to work together to increase 

enplanements and bring its rate of subsidy per passengers into compliance in order to avoid 

termination of eligibility for subsidy under the EAS program. We will monitor both the 

subsidy per passenger rate and the 10 enplanements per service day threshold during this 

upcoming contract to ensure compliance with the statute. 

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 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 finding. We therefore conclude that the air carrier remains fit 

to conduct the operations proposed here.

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

ACCORDINGLY,

1. The Department selects Silver Airways at Macon, Georgia, and establishes the subsidy 

rate, as detailed in Appendix B;

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 air carrier may forfeit its compensation for any claim that is not 

supported under the terms of this Order;

3. We find that Silver Airways is fit, willing and able to operate as a commuter air carrier,

and capable of providing reliable Essential Air Service at Macon, Georgia;

4. Docket DOT-OST-2007-28671 will remain open pending further Department action; 

and
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5. We will serve copies of this Order on the parties listed in Appendix C.

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

Silver Airways

Annual Compensation Requirements for Essential Air Service at

Macon, Georgia to Atlanta, Georgia and Orlando, Florida

Four daily round trips per weekday and four round trips per weekend (24 a week) 

98.0% Completion Factor

ANNUAL ANNUAL ANNUAL

ATL-MCN MCN-MCO EAS Total

Stats & Assumptions 98% 98% 98%

Aircraft Type SF3 SF3 SF3

Departures 613 613 1,226

Block Hours 460 945 1,405

Passengers 4,513 7,358 11,872

Load Factor 22% 35% 28.5%

Avg Fare $ 44.90 $ 116.67 $ 89.38

Fuel Price 4.10 4.20 4.17

A/C Miles 49,669 198,064 247,733

RPMs (000) 366 2,377 2,742

ASMs (000) 1,689 6,734 8,423

Util - Blk/Day 1.3 2.6 3.8

Pax Ticket Revenue 202,641 858,480 1,061,121

Oper. Expenses 

Fuel 275,677 570,825 846,502

Crew 195,458 401,773 597,231

Maintenance 238,382 490,006 728,387

Station Turns 200,279 221,872 422,150

Distribution 54,615 89,046 143,661

A/C Ownership 33,318 132,862 166,180

Promotion 5,000 5,000 10,000

Fixed Overhead - - -

Total 1,002,728 1,911,383 2,914,111

Operating Loss 800,087 1,052,903 1,852,990

5% Profit Margin on Cost 50,136 95,569 145,706

EAS Subsidy 850,223 1,148,473 1,998,696

Subsidy / Pax 188 156 168
 Appendix B

Silver Airways

Essential Air Service to be Provided at Macon, Georgia

Effective Period: March 15, 2013, through March 14, 2015

Scheduled Service: Six weekly nonstop round trips to Atlanta Hartsfield International Airport

and six weekly nonstop round trips Orlando International Airport 

Aircraft: Saab 340 B 

Rate per Eligible Flight: $1,6291

Weekly Ceiling for each community: $39,0962

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 March 27, 2013. The Government’s obligation for 

performance under this Order beyond March 27, 2013, 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 March 27, 2013, until funds are made available to the Department for performance. If funds are not made available 

for performance beyond March 27, 2013, 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 $1,998,696 divided by 1,227 annual departures (four daily departures x 313 days x 98 

percent completion). 2 24 arrivals and departures per week multiplied by $1,629 per flight.
Appendix C

SERVICE LIST FOR EAS AT MACON GEORGIA

MAYOR ROBERT REICHERT

CITY OF MACON

700 POPLAR STREET

MACON GA 31201

MR GEORGE BROWN

AMERICAN AVIATION GROUP INC

317 EAGLE RIDGE ROAD

MACON GA 31216

WJJCME@YAHOO.COM

MR TIM SIBER

SEAPORT AIRLINES INC

7505 NE AIRPORT WAY

PORTLAND OR 97218

MR MICKEY BOWMAN

SILVER AIRWAYS

1100 LEE WAGENER BLVD

SUITE 201

FT LAUDERDALE FL 33315

MBOWMAN@GOSILVER.COM

MR. ROBERT KARNS

SOBEREIGN AIR INC

5701 KENTUCKY AVENEUE N

SUITE 153

MINNEAPOLIS MN 55428

BOB@SOVERSIGNAIRINC.COM