Order 2013

- 12

- 18 Served: December 30, 2013



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION


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

Issued by the Department of Transportation

on the 30 th of December, 2013

Es sential Air Service at

BUTTE
, MONTANA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 20 11

- 0136

ORDER SELECTING CARRIER

By this Order , the Department is re

- selecting SkyWest Airlines d/b/a Delta Connection (SkyWest)

, to provide Essential Air Service (EAS) at Butte, Montana, for $735,956 annual subsidy

. 1

Background By Order 2012

- 1

- 23, January 26, 2012, the Department selected SkyWest Airlines (SkyWest), to provide 14 nonstop round trips per week between Butte, Montana, and Salt Lake City, Utah,

throu gh December 31, 2013. SkyWest was to provide the service with 50

- seat regional jet

aircraft for an annual subsidy of $672,230.

By Order 2013

- 10

- 1, October 1, 2013, the Department requested proposals for EAS at Butte,

Montana , for a new term . The Order requested proposals consistent with the historical service pattern of 14 nonstop round trips per week to Salt Lake City with aircraft to accommodate its

traffic levels

, as well as proposals with different aircraft types to different hubs , with proposals

d ue October 24 , 201 3 . We received a proposal from only one carrier, the incumbent, SkyWest

.

Propos al of SkyWest SkyWest proposes to continue to operate fourteen (14) nonstop round trips per week to Salt Lake City with CRJ

- 200 regional jets for $ 735,956 annual subsidy , a slight increase over the current rate of $672,230

.

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

-

Community Comments On October 25, 2013, we requested community comments. On October 28, 2013, we received comments from the Chancellor of the University of Montana. The Chancellor in dicates general satisfaction with SkyWest’s service but indicates that increased frequency of service would be appreciate d . However, he recognizes that there are financial constraints on the level of service provided to small town airports such as Butte.

On November 27, 2013, we received comments from the Executive Director of the Butte Chamber of Commerce, Mr. Mar i o Lucich.

“Butte is very fortunate to have an airline such as SkyWest servicing our community. I have personally had the opportunity to fly out of Butte on SkyWest Airlines on numerous occasions. My experiences have been exceptionally good and very professional. The fourteen flights per week into our community are essential and necessary for the residents of Butte and surrounding areas. The presence of SkyWest in the Butte community is paramount to the economic development and growth of Butte. As we recruit new businesses and professionals, one of the priorities and selling points of our community is that we have air service that comes right into Butte and that they

are five to ten minutes from any destination in the community. Service and convenience are key factors in selecting an airline and SkyWest provides both of these to Butte.”

On November 29, 2013, we received comments from th e Chief Executive of the county of Butte

Silver Bow, Mr. Matt Vincent. He indicates he is “very pleased with the service and the cooperation the community has received from SkyWest, and strongly support s the carrier’s proposal. ” He does indicate that the community would like additional frequencies and larger

aircraft. 2

Decision The decision is straightforward: we have only one proposal from one carrier and the community favors the selection of that proposal. The subsidy requested by SkyWest has increase d by $63,726 or 9.4 percent from the current rate , while in the most recent year traffic has increased significantly, attaining the same number of passengers Butte generated before it was subsidized

.

SkyWest is a known, proven operator. Furthermore, it s code

- share arrangement with Delta Air

L ines at Sa lt Lake City provides Butte with seamless access to the national air transportation
system.

Carrier Fitness

49 U.S.C. §§ 41737(b) and 41738 require that the Department find an air carrier fit, willing, and able to provide reliable service before the Department may subsidize it to provide EAS. SkyWest is subject to the Department’s continuing fitness requirements, and no information has

2 Staff contacted the Chief Executive, and indicated that SkyWest and any carrier could supplement the community’s EAS, but that the service by SkyWest was the maximum level that the Department could subsidize.- 3

-

come to our attention that would cause us to question the carriers ’ fitness at this time. EAS staff has contacted the Federal Aviation Administration, and it has raised no concerns that would negatively affect our fitness findings. We therefore conclude that SkyWest remain s fit to conduct the operations proposed here.

T his Order is issued under authority delega ted in 49 CFR Part 1. 25 a (b)

.

ACCORDINGLY,

1 . We select SkyWest Airlines to provide EAS at Butte, Montana, as described in Appendi x C ;

2 . We direct SkyW est 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 from the service date of the 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 carrier may forfeit its compensation for any claim that is not supported under the terms of this Order ;

3 . We find that SkyWest Airlines continue s to be fit, willing and able to operate as a certificated

air carrier and capable of providing reliable EAS at Butte, Montana ;

4 . Th is docket will remain open until further Order of the Department; and

5 . We will serve copies of this Order on the civic officials of Butte, Montana, and on SkyWest

Airlines

.

By:

SUSAN L. KURLAND Assistant Secretary for

Aviation and International Affairs (SEAL)

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

Nonstop Great Circle Miles to Butte (BTM)
BZN, Bozeman 66 MSO, Missoula 101 BIL, Billings 191 BOI, Boise 247 GEG, Spokane 265 SLC, Salt Lake 358 SEA, Seattle 477
DEN, Denver 578 SFO, San Fr ancisco 768 MSP, Minneapolis 938Appendix B

SkyWest, Essential Air Service to be Provided to Butte, Montanaq, Docket 2011-0136

Passengers 49,000 Skd. Departures 1,456 1/ Completion 98.00% Stage Length 358 Departures Performed 1,427

Block Time 77

Annual Block Hours 1,831

Seats 50

Available Seat Miles 26,062,400 2/

RPMs 17,542,000
Passengers Passenger Fare $105.00

Revenue $5,145,000

Direct Expenses $4,284,921

RPM Related $59,817
Departure Related $1,013,270

ASM Related $242,902
Indirect Expenses $1,315,989

Operating Expense $5,600,910

Profit at 5% $280,046

Economic Costs $5,880,956

Annual Subsidy $735,956

1/ 14 nonstop flights per week to SLC x 2 directions x 52 weeks = 1,456

2/ 1,456 deps. x 50 seats x 358 miles = 26,062,400Appendix C

SkyWest Airlines

, Essential Air Service to be Provided to Butte, Montana,

Docket 2011

- 0136

Effective Period : January 1 , 201 4 , through December 31, 201 5 ; Service: Fourteen (1 4 ) nonstop round trips per week to Salt Lake City ( SLC ) Aircraft Type : CRJ

- 200, Regional Jet, 50 seats Annual Subsidy : $ 735

, 956 Annual Flights : 1,427 1
Subsidy per Flight : $ 516 2
Weekly Subsidy Ceiling : $ 14,448 3

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 r equired service, without prior approval. The carrier understands that a n 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 cert ain weather cancellations, only completed flights are co nsidered eligible for subsidy.

In addition, if the carrier does not schedule or operate its flights in full conformance with the order for a significant per iod, it may jeopardize its entire subsidy claim for the period in question. If the carrier conte mplates 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 receiv e 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 op erated; flights that overfly points for lack of traffic will not be compensat ed. 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 e xtent of access to the national air transportation system provid ed 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 amounts or at the stipulated service levels, the carrier may cease to provide service to that spec ific location without regard to any requirement for notice of such cessation. Those adjustments in the le vels 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 pa yment.

Subsidy contracts are subject to, and incorporate by reference, relevant statutes a nd 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 forego ing paragraph.

Funds may not be available for performance under this Order beyon d January 15, 2014 . The Government’s obligation for performance under this Order beyond January 15, 2014 , 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 January 15, 2014 , until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond January 15, 2014, the Department will provide notice in writing to the carrier.

All claims for payment, including any amended claims, must be submitted within 90 days of the last day of the month for which compensation is being claimed. For example, claims filed for service provided in July must be filed by October 31; August claims must be submitted by November 30, and so on.

1 1 4 flights per w eek x two directions x 52 weeks x .98 completion = 1, 427 flights.

2 $ 735,956 ÷ 1, 427 flights

. 3 $ 516 per flight x 2 8 flights per week.