Order 2013-8-22

Served: August 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 August, 2013

ORDER ON PETITION FOR RECONSIDERATION

Summary

By this Order, the Department is accepting the petition for reconsideration submitted by

Boutique Air, Inc. (Boutique) of Order 2013-5-5, issued on May 6, 2013. Upon review, the 

Department is denying the relief requested and affirming its selection of Pacific Wings, 

L.L.C. d/b/a New Mexico Airlines (New Mexico Airlines) to provide subsidized Essential 

Air Service (EAS) at Carlsbad, New Mexico.

Background

By Order 2011-4-19 (April 22, 2011), the Department re-selected New Mexico Airlines to 

provide subsidized EAS at Carlsbad, New Mexico, through May 31, 2013. Under that 

Order, New Mexico Airlines provided 12 nonstop round trips each week between Carlsbad 

and Albuquerque utilizing single-engine, 9-passenger Cessna Grand Caravan (C-208B) 

turboprop aircraft for an annual subsidy rate of $1,350,253.

In anticipation of the end of that contract, the Department issued Order 2012-12-4 

(December 12, 2012), soliciting proposals to provide EAS at Carlsbad, NM, with subsidy 

support if necessary. In response to that request, we received proposals from three carriers: 

New Mexico Airlines (the incumbent), Boutique Air, and Sovereign Air, Inc.

By Order 2013-5-5, the Department re-selected New Mexico Airlines to continue providing 

EAS at Carlsbad for an annual subsidy of $1,397,081. Under that Order, the carrier is

continuing to provide 12 weekly nonstop round trips to Albuquerque using single-engine, 

9-passenger Cessna Caravan aircraft.

Essential Air Service at

CARLSBAD, NEW MEXICO

Under 49 U.S.C. § 41731 et seq.

Docket DOT-OST-2002-12802
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Petition for Reconsideration of Boutique

On May, 28, 2013, Boutique filed a petition for reconsideration of Order 2013-5-5. In 

addition, the Department on June 3, 2013, received an answer to Boutique’s petition from 

New Mexico Airlines. Boutique alleges that the Department did not consider relevant 

information in deciding to re-select New Mexico Airlines.

Specifically, Boutique maintains that New Mexico Airlines regularly operates its 

Carlsbad-Albuquerque service in excess of 8,000 feet in altitude with un-pressurized aircraft

in violation of 49 U.S.C. § 41732(b)(6), which states that basic EAS shall include “service 

provided by pressurized aircraft when the service is provided by aircraft that regularly fly 

above 8,000 feet in altitude.” 

Boutique further contends that the seat capacity provided by New Mexico airlines (18 seats 

per day, each way) does not meet the minimum seat capacity that Carlsbad is entitled to 

under Civil Aeronautics Board (CAB) Order 84-10-10 (October 3, 1984). Under that Order, 

the CAB set Carlsbad’s EAS determination as 54 inbound and 54 outbound seats per day, 

when service is provided with 9-seat or smaller aircraft. 

Response from New Mexico Airlines

On June 3, 2013, New Mexico Airlines filed an answer to Boutique’s petition, addressing 

Boutique’s claims. New Mexico Airlines states that in any given year, over 95 percent of its

flights between Carlsbad and Albuquerque operate under Visual Flight Rules (VFR) 

conditions, and that a majority of these flights operate below 8,000 feet. Additionally, New 

Mexico Airlines asserts that since it operates mainly under VFR conditions, using company 

approved flight following procedures, the Federal Aviation Administration (FAA) would 

not maintain records of those operations.

New Mexico Airlines further contends that its service, which consists of 108 seats each way, 

per week, fully meets the requirements of CAB Order 84-10-10.

Decision

After careful consideration of this matter, the Department has decided to accept Boutique’s 

petition for reconsideration. Upon review, the Department is denying the relief requested 

and affirming the decision reached in Order 2013-5-5 to re-select New Mexico Airlines to 

provide subsidized EAS at Carlsbad. We will address Boutique’s Petition point by point

below.

First, in any EAS carrier-selection case, after the bid-period has closed, we provide all bids 

received to the community and civic officials and request their comments. During the 

comment period, we received replies from the Carlsbad Air Service Committee (CASC)1

and Carlsbad Mayor Dale Janway. In its letter, the CASC stated that its recommendation 

was that the Department select Boutique’s service option 1, which offered service to both 

Dallas-Ft. Worth and Albuquerque, while its service option 3, for Dallas-Ft. Worth-only 

 1 The CASC is a civic group, appointed by the mayor, and charged with evaluating the EAS proposals and 

providing a recommendation to the mayor.
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service, would be unacceptable since the community requires service to Albuquerque.2 

Additionally, the CASC stated that Boutique’s pressurized aircraft “will significantly 

improve the comfort level of our community’s frequent travelers.”3 In Mayor Janway’s 

subsequent letter affirming the CASC’s recommendation, no mention was made of aircraft 

pressurization.

After receiving these community comments, we responded noting that we could not 

consider either option for dual-hub service from Boutique as both would provide capacity 

greatly in excess of what was requested in the RFP and would require subsidy levels that the 

Department cannot justify given current budget constraints.4 In response, we received a 

second letter from the CASC stating that it would compromise and accept Boutique’s 

option 2 (service to both Dallas-Ft. Worth and Albuquerque but with less frequency than 

option 1) and that “This option meets our need for a pressurized plane...” and that 

“Pressurized flight service in a mountainous state is critical.”5 We also received a second 

letter from Mayor Janway stating that Boutique’s option 2 “meets the need for a pressurized 

plane and includes 12 weekly flights to DFW and Albuquerque. This is the minimum 

service that we determine will fit the essential economic needs of the community and area.”6

None of the community comments received during the carrier-selection proceeding asserted

that New Mexico Airlines’ flights “regularly” exceed 8,000 feet or provided any evidence 

towards such a finding. Rather, the comments only cited the community’s desire for 

pressurized aircraft in order to enhance passenger comfort. However, as Boutique has raised 

the issue in its petition, we have sought to gather any available evidence to determine the 

actual operating altitude of New Mexico Airlines’ Carlsbad-Albuquerque flights. We have 

contacted both the FAA’s Air Traffic Organization as well as the Flight Standards District 

Office that is responsible for monitoring New Mexico Airlines’ compliance with safety and 

operational standards. Neither office was able to provide the Department with sufficient 

evidence that clearly demonstrates that New Mexico Airlines’ flights regularly operate 

above 8,000 feet. The FAA confirmed New Mexico Airlines’ assertion that when it

operates under VFR conditions, the FAA does not maintain records of such operations. 

Secondly, Boutique maintains that we must select their service option 1 since it is the only 

proposal at hand that provides the daily seat capacity as determined under CAB Order 

84-10-10, specifically 54 seats per day, each way. Here, New Mexico Airlines is factually 

incorrect in its answer. The capacity levels specified in CAB Order 84-10-10 are daily 

capacities, not weekly as New Mexico Airlines asserts. This point aside, the Department

must take a practical approach in our management the EAS program. 

As stated in CAB Order 84-10-10, Carlsbad enplaned 4,546 passengers in 1983. Even then

the CAB recognized that the level of traffic Carlsbad was generating was likely too low to 

warrant 54 daily seats:

 2 Boutique’s EAS proposal consisted of three different service options. They are summarized in Order 

2013-5-5, and their full proposal can be found in docket DOT-OST-2002-12802.

3 Letter of Carlsbad Air Service Committee, February 7, 2013. DOT-OST-2002-12802-0083.

4 DOT Request for Additional Comments, February 8, 2013. DOT-OST-2002-12802-0081.

5 Letter from City of Carlsbad Air Service Committee, February 14, 2013. DOT-OST-2002-12802-0087.

6 Letter from Mayor Janway, February 20, 2013. DOT-OST-2002-12802-0086.
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“...[T]he Board also noted that Carlsbad’s enplanements for the second 

quarter of 1984 (17 per day) had risen only moderately over the 1983 levels. 

Thus, if traffic does not continue to respond to the service and we have to 

readdress the service needs of the community in the event the selected carrier 

were to file a notice, we would consider reducing the service requirement at 

that time.”7 

Today Carlsbad is enplaning only 2,775 passengers per year, significantly lower than in 

1983.8 

Congress has made clear its intent that we operate the EAS program in an efficient, costeffective manner. Demonstrative of that intent, Congress has implemented many reforms 

over the years aimed at reducing waste and inefficiencies in the program such as: the $200 

per passenger subsidy cap when a community is less than 210 miles from a large or medium 

hub airport9; eliminating the 15-seat requirement10; and more recently instituting the $1,000 

per passenger subsidy cap11 and the 10-enplanement per day requirement.12

Recognizing this intent, we have sought to reduce excess capacity and save program funds

wherever possible by matching capacity to demand. In the most recent year-ended period 

for which data are available (February 1, 2012-January 31, 2013), Carlsbad enplaned 2,775

passengers, or on average 8.9 passengers per day, or about 4.5 passengers per flight.13 New 

Mexico Airlines currently provides 18 outbound seats per day in the market, resulting in an 

average load factor of approximately 50 percent.14 Given that the current service is 

operating at half capacity, and considering Congress’s intent that we reduce program costs, 

we simply cannot justify tripling capacity in the market at a cost of almost three times the 

current subsidy.15

 7 Civil Aeronautics Board Order 84-10-10, October 3, 1984, at 8.

8 Based on Bureau of Transportation Statistics (BTS) T-100 Market data for the 12-month period ended 

January 31, 2013.

9 Congress first established the $200 ceiling under Public Law No. 101-164 for fiscal year 1990, and 

reestablished it in fiscal years 1994-1999. The ceiling was made permanent by Public Law No. 106-69, the 

Department of Transportation and Related Agencies Appropriations Act of 2000.

10 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). 11 The FAA Modernization and Reform Act of 2012 (Public Law No. 112-95), signed into law on February 14, 

2012, amended the definition of “eligible place” for the purpose of receiving EAS. The amendment, among 

other things, states that to be eligible, a community must have had an average subsidy per passenger of less 

than $1,000 during the most recent fiscal year, as determined by the Secretary of Transportation.

12 The FAA Modernization and Reform Act of 2012 (Public Law No. 112-95) also states that to be eligible for 

subsidized EAS, 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. 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.

13 Source: BTS T-100 Market Report. Passengers per day = 2,775 passengers per year divided by 313 service 

days per year. Passengers per flight = 8.9 passengers per day divided by 2 flights per day. 

14 8.9 passengers per day divided by 18 seats per day.

15 Congress has also directed us to consider the carriers’ relative subsidy requirements when selecting an EAS 

provider. See: The Consolidated and Further Continuing Appropriations Act, 2012 (Public Law No. 112-55)

and later continued by the Full-Year Continuing Appropriations Act, 2013 (Public Law No. 113-6).
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Based on all of the above, we affirm our decision in Order 2013-5-5 to re-select New 

Mexico Airlines to provide EAS at Carlsbad, New Mexico. 

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

ACCORDINGLY,

1. We accept the petition for reconsideration of Order 2013-5-5 submitted by Boutique Air, 

Inc. and, upon review, affirm our decision in Order 2013-5-5 re-selecting Pacific Wings, 

L.L.C. d/b/a New Mexico Airlines to provide EAS at Carlsbad, New Mexico;

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

3. We will serve copies of this Order on the Mayor and Airport Manager of Carlsbad, New 

Mexico, Pacific Wings L.L.C., d/b/a New Mexico Airlines, and Boutique Air.

By:

SUSAN L. KURLAND

Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available in the Federal Docket Management 

System (FDMS) at http://www.regulations.gov