Order: 2011

- 1

- 23

Served: J anuary 28, 2011



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 28 th day of January , 20 11

Essential Air Service at

WATERTOWN, SOUTH DAKOTA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 2001

- 10644



### ORDER REQUESTING PROPOSALS

Summary
By this order, the Departme nt is requesting proposals from airlines interested in providing essential air service (EAS) at Watertown

, South Dakota, for the two

- year period beginning August 1, 2011 , with or without subsidy. Pr oposals are due by March 2

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

Background
By Order 2009

- 7

- 15

, July 16

, 2009, the Department selected Mesaba Aviation, Inc.

, operating as Delta Connection (Mesaba), to provide EAS at Watertown for the period from August 1, 20 09 , through July 31

, 2011 , for an annual subsidy of $1, 338,321 for 14 nonstop round trips per week to Minneapolis/St. Paul International Airport (Minn eapolis)

.

Request for Proposals As the end of the current rate term approaches, we are here requesting proposals from carriers interested in providing service at Watertown

, with or without subsidy support, for the two

- year period beginning August 1, 20 1 1 . Carriers should file their proposals no later than March 2

. 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 c omments. 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 discre tion to negotiate proposals with carriers when we deem it desirable. We also retain the discretion to reject outright all unreasonable or unrealistic proposals and solicit a new round of proposals.- 2

-

We are here providing interested carriers with some basi c information to serve as guidance when they prepare their proposals, but we will not prescribe a precise format. We expect proposals to adequately describe the service being proposed and the annual amount of subsidy being requested. The applicants can m ake their own judgments as to the level of detail they wish to present; however, they might want to include proposed schedules as well as supporting data for their subsidy requests, such as projected block hours, revenues and expenses. We strongly encoura ge clear, well

- documented proposals that will facilitate their evaluation by the affected community and the Department. 1

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. During the year ended September 30, 2010, an average of 22 passengers a day were enplaned at Watertown. W e expect service levels that are c ons istent with what the community currently receive s , with

service to Minneapolis

, or any hub that offers access to the national air transportation system utilizing 15

- seat or larger aircraft

. With specific r espect to Watertown

, for proposals with 30 to

34

- seat aircraft, the Depa rtment expects proposals for two round trips a day (12

- 14 a week)

. For proposals with 19

- seat aircraft, we would expect proposals f or three round trips a day (18

- 21 a week). We would also entertain proposal s with 8/9

- seat aircraft and additional frequencies. 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 b efore making a long

- term airline se lection decision.

Airlines 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, equipment, or length of contract, 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 operational needs of the airline s

.

New Filing Procedures Carrier proposals should be submitted to the Department with all materials merged into a si ngle document. In addition, because the document will be published on Regulations.gov, each page

should be formatted to be viewed online.

1 In selecting 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

Consolidat ed 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. Inte rested 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 selected service. Appendix C of this order contains those general provisions.- 3

-

Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbyin g activities, drug

- free workplaces and nondiscrimination. 2 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 nondis crimination, 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 governing lobbying activities. All carriers that plan to submit proposals involving subsidy s hould submit the required certifications along with their proposals. Interested carriers requiring more detailed information regarding these requirements, as well as copies 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. 3

Community and State Comments Civic officials are welcome to submit comments on the proposals at any time. As noted earlier, we will provide a summar y of the proposals to the civic parties and ask them to submit their final comments shortly after March 2 , 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 Av iation Analysis.

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

, South
Dakota, submit their proposals, with or without subsidy requests, no later than March 2 , 2011

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

Essential Air Service at Watertown, South Dakota ,” Docket DOT

- OST

- 2001

- 10644 ; 4

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

3. The Depa rtment will serve a copy of this order on the mayor and airport manager of

Watertown ; Mesaba Aviation Inc. (Mesaba)

, and the parties listed in Appendix D.

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.

2 The reg ulations 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 Department 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).

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

4 Questions regarding filing s in response to this order should be directed to Michael Martin at 202

- 366

- 6494, or

via email at michael.f.martin@dot.gov

.- 4

-

This 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



### Watertown, South Dakota

Quarter Year Deplanements Enplanements Total

Traffic Enplanements per Day

4 2007 1,141 1,108 2,249 14

1 2008 1,155 1,257 2,412 16

2 2008 1,301 1,217 2,518 16

3 2008 1,520 1,278 2,798 18

Annual

Totals 5,117 4,860 9,977 16

4 2008 1,138 1,214 2,352 15

1 2009 1,170 1,266 2,436 16

2 2009 1,252 1,304 2,556 16

3 2009 1,555 1,849 3,404 22

Annual

Totals 5,115 5,633 10,748 17

4 2009 1,403 1,401 2,804 18

1 2010 1,634 1,688 3,322 22

2 2010 1,678 1,712 3,390 22

3 2010 1,998 2,096 4,094 26

Annual

Totals 6,713 6,897 13,610 22

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 completed flight; absent an explanati on 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 con formance 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 compensation. Should circumstances warrant, the Department may locate and select a replacement carrier to provide service on these rou tes. 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 Departmen t 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 paymen ts 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 c ease 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 constit ute 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 con tingent 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 t he 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.

### Appendix D

Scheduled Air Carriers, Contiguous US and Puerto Rico

Air Greco/Wings Air
Air Sunshine, Inc.
Air Sunshine, Mirmohammad Adili Air Wisconsin, Annette Daly
Air Wisconsin, Jim Rankin
Airline Associates, Bill Mishk
Alaska Airlines, Jeff Cole Alaska Airlines, Sandy Sinick Allegiant Air, Brian Davis
American Airlines, Carl Nelson American Eagle, Jeffrey Hartz Bemidji Aviation, Cori Rude Bemidji Aviation, Arlen Rinkenberger Cape Air, Andrew Bonney Cape Air, Dan Wolf Cape Air, J.Flaherty Colgan Air, Kevin Scott Colgan Air, Mike Colgan CommutAir, Andy Price CommutAir, Joel Raymond Consultant, Robert Silverberg
Continental, Bruce Keiner
Continental, Dan Weiss Continental, Lorry Halloway Delta, Anthony Canitano
Delta, Dan Shuman Delta, Jeff Morgan Delta, Joe Esposito Delta, Karen Zachary Delta, Kristal Murphy
Delta, Sascha Vanderbellen DHS, Bill Ragan
DHS, David Bernier
Era Aviation, Mike Lenorman
Executive Airlines, Kate Soled Frontier Flying, Bob Hajducovich
GemAir/Salmon Air, Dan Schroeder
GemAir/Salmon Air, JoAnn Wolters
Great Lakes, Chuck Howell Great Lakes, Doug Voss Great Lakes, Greg Stephens
Gulfstream, Dave Hackett
Gulfstream, Mickey Bowman Gulfstream, T. Cooper
Horizon Air, Dan Russo Horizon Air, Jennifer Thompson Horizon Air, Mike McQueen
Horizon, Jeff Cole ICEPR, Luis Irizarry Intrepid Interntl Air, Rick Eyk
Island Air Charters, Linda House
Jet Air, Daniel Wolford
Kenmore Air, Tim Brooks
Mesa Air, Michael Lotz Mesaba, John Spanjers
Mesaba, Max Shemesh Midwest Airlines, Greg Aretakis
MN Aviation, Jose Maldonado
Multi Aero, Darnea
Multi Aero, Shane Storz Northwest Airlines, Aaron Murray
Northwest, Tim McDonald NYDC, Henok Araya
OST, Brian Swanson OST, Dennis DeVany
OST, Kevin Adams
OST, Kevin Schlemmer
OST, Michael Martin
OST, Renee Williams Pacific Wings, Greg Kahlstorf PenAir, Danny Seybert PenAir, Scott Bloomquist
Pinnacle Airlines, Joe Williams
Pinnacle Airlines, Phil Reed
Planemasters, Inc., John Kessler
Planemasters, Inc., Paul Berliner
Planemasters, Inc., Todd DeSimone Public Charters, Jim Gallagher Scenic, Mary Schneider
Scenic, Mitzi Daines

SeaPort /Wings of Alaska, Jim Day SeaPort/Wings of Alaska, Nate Vallier Seaport/Wings of Alaska, Rob McKinney Shuttle America, Jerry Balsano SkyWest, Eric Christensen SkyWest, Michael Thompson SkyWest, Steve Hart Sovereign Air, Bob Karns Sovereign Air, Lois R. Barton Tradewind, Eric Zipkin Trans States, Fred Oxley Trans States, Gerry Wigmore
United, Alicia Gabriel
United, James Starnes US Airways, Benjamin Slocum US Airways, Howard Kass US Airways, Jason Reisinger

Warbelows Air Ventures, Art Warbelow