Order 2012-7-35

Served: July 30, 2012

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 30th of July, 2012

Essential Air Service at

MERIDIAN, MISSISSIPPI

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

 DOCKET DOT-OST-2008-0112

ORDER SELECTING CARRIER AND SETTING HOLD-IN RATE

SUMMARY

By this Order, the Department is selecting Silver Airways, Inc. (Silver), to provide Essential Air 

Service (EAS) at Meridian, Mississippi, for $2,417,808 annual subsidy. The service will consist 

of 13 nonstop round trips per week to Atlanta (ATL) year round with 34-seat Saab 340 aircraft.1 

The Order also sets a final rate for the incumbent, ExpressJet Airlines, d/b/a Delta Connection 

(Delta), for the period July 1, 2012, until it is replaced by Silver.

BACKGROUND

By Order 2010-5-28, the Department selected Delta2 to provide EAS at Meridian, Mississippi, 

through June 30, 2012. Annual service and subsidy levels were set at 13 nonstop round trips per 

week to Atlanta and $686,489 annual subsidy for service with 50-seat CRJ-200 regional jets. As 

the end of the contract approached, Order 2012-4-19, April 13, 2012, requested proposals by 

May 3, 2012. We received a timely-filed proposal from only one applicant, Silver.3 Silver 

proposes to provide 13 nonstop round trips per week to Atlanta with 34-seat Saab 340 turboprops 

for $2,417,808 annual subsidy. We requested comment from the community regarding Silver’s 

proposal by June 21, 2012, and received them on June 28, 2012. 

COMMUNITY COMMENTS

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

2 ExpressJet is a wholly-owned subsidiary of SkyWest Airlines, Inc.

3 By Notice issued May 1, 2012, we extended the deadline for proposals to May 17, 2012, in response to a request 

by Silver. 
- 2 -

The community objected to the tentative schedule in Silver’s proposal. “[Silver’s] first proposed

flight arrives in Atlanta at 11:40 am, some four hours after the connections allowed by our 

current early morning flight which puts the passenger to their destination by noon in almost all 

cases. The business passenger loses a half day of work compared to an early morning (6:00 am) 

departure [as in Delta’s current schedule.] ” The community was also concerned that because 

the first flight of the day was scheduled to arrive in Atlanta at 11:40 am, and the last flight of the 

day to Meridian was scheduled to leave Atlanta at 4:40 pm, “the business traveler can’t complete 

even a half day of work [in Atlanta] before having to depart for home.” 

RESPONSE OF SILVER

On July 2, 2012, Silver responded with a revised schedule, as follows:

Silver indicated that “Studying the travel patterns of the community and best use of Silver 

Airways’ resources, this alternative service pattern would seem the best compromise. It should 

be understood that this is a draft schedule and may not be representative of the final published 

schedule.” 

DECISION

The selection of Silver is straightforward: their proposal is the only one that can be selected, and 

the proposed service and subsidy levels appear reasonable.

The community expressed only one concern, that being the schedule initially offered by Silver. The 

revised schedule fully meets the concerns expressed by the community. The first flight of the day 

from Meridian will leave at 6 am, as the community requested, allowing Meridian originating 

passengers to arrive the same day at virtually any community in the U.S. Likewise the last flight of 

the day leaves Atlanta at 9 pm, and this later departure, combined with the earlier scheduled 

departure at Meridian, affords the business passengers a full day of work at Atlanta. 

The carrier indicates that its revised schedule may not be representative of the final published 

schedule. It would be counter-productive for the Department to dictate an exact schedule for any 

carrier, as the best connecting times change from month-to-month as other carriers at the hub 

modify their schedule. However, the revised schedule makes clear that Silver proposes to base an 

aircraft in Meridian, which by itself will go far to meet the community’s concerns. 

CARRIER TRANSITION

Local Time of: Intermediate

From To Departure Arrival Aircraft Frequency Stops

Meridian Atlanta 600 825 SF3 X7 0

Meridian Atlanta 900 1125 SF3 7 Only 0

Meridian Atlanta 1330 1555 SF3 X6 0

Atlanta Meridian 1230 1305 SF3 X6 0

Atlanta Meridian 1715 1750 SF3 6 Only 0

Atlanta Meridian 2100 2135 SF3 X6 0
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We expect Silver and Delta to work together to make a smooth transition at Meridian. In that 

regard, before Delta suspends its service it must notify any passengers holding reservations for 

travel after the suspension date, to assist those passengers in making alternate air transportation 

arrangements, or to provide a refund of the ticket price, without penalty, if requested. 

Furthermore, Delta must be compensated for its forced service from July 1, 2012, until Silver 

replaces it. The carrier requests $1,681,857 annual subsidy for 13 nonstop round trips per week to 

Atlanta with a 50-seat CRJ-200, the same service it was selected to provide. We have reviewed 

this claim, and it appears reasonable.4 Therefore we will set a final rate for that service, as 

described in Appendix C-2.

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. Silver

Airways, Inc., is subject to the Department’s continuing fitness requirements. We contacted the 

Federal Aviation Administration, and it has raised no concerns that would negatively affect our 

fitness findings. The Department therefore concludes that the carrier remains fit to conduct the 

operations proposed here.

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

ACCORDINGLY,

1. We select Silver Airways, Inc., to provide EAS at Meridian, Mississippi;

2. We set the final rate of compensation for Silver Airways, Inc., for the provision of EAS at 

Meridian, Mississippi, as described in Appendix C-1;

3. We set the final rate of compensation for ExpressJet Airlines, d/b/a Delta Connection, for the 

provision of EAS at Meridian, Mississippi, as described in Appendix C-2;

4. We direct Silver Airways, Inc., and ExpressJet Airlines, d/b/a Delta Connection, 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 carrier may forfeit its compensation for any claim that is not supported 

under the terms of this Order;

5. We find that Silver Airways, Inc., continues to be fit, willing and able to operate as a 

commuter carrier and capable of providing reliable EAS at the these communities;

 4 The increase in subsidy for Delta between that set by Order 2010-5-28 and what we are setting here is due to a 

decrease in projected revenue, as reflected in more recent traffic forecasts, and in higher fuel prices. For that matter, 

the higher subsidy required by Silver is due to significantly lower projected revenue, offset partly by lower indirect 

operating expenses compared to Delta. 
- 4 -

6. We will continue to require ExpressJet Airlines, d/b/a Delta Connection, to provide EAS at 

Meridian until it is replaced by Silver Airways, Inc.;

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

8. We will serve copies of this Order on the Mayor and Airport Manager of Meridian, 

Mississippi, Delta Airlines, Inc., ExpressJet Airlines, and Silver Airways, Inc.

By:

Susan Kurland

Assistant Secretary for

Aviation and International Affairs

(SEAL)

An electronic version of this document is available on the World Wide Web at

http://www.regulations.gov
Appendix A

Nonstop Great Circle Miles to Meridian (MEI)

Hattiesburg, PIB, 69

Columbus, GTR, 77

Jackson, JAN, 77

Mobile, MOB, 117

Birmingham, BHM, 144

Memphis, MEM, 200

Atlanta, ATL, 267
Appendix B

Subsidy Need at Meridian, Mississippi, Docket 2008-0112

Order Hold-In

2010-5-28 Rate

Carrier ExpressJet ExpressJet Silver

Aircraft Type CRJ-200 CRJ-200 Saab 340

Weekly Nonstop Trips 13 13 13

Block Hours 1,657 1,531 1,990

Passengers 35,506 30,638 24,749

Fare $122.00 $124.84 $91.58

Passenger Revenue $4,331,751 $3,824,848

Other Revenue $438,963 $484,315

Total Revenue $4,770,714 $4,309,163 $2,266,480

Pilots $539,101 $570,577 $694,461

Fuel $1,140,193 $1,594,252 $1,173,748

Maintenance $756,361 $791,818 $1,353,062

Aircraft $728,761 $755,154 $226,278

Total Directs $3,164,416 $3,711,801 $3,447,549

Indirects $1,998,916 $1,993,933 $1,013,678

Operating Expense $5,153,333 $5,705,734 $4,461,227

Inflation $38,650 $0 $0

Profit $257,667 $285,286 $223,061

Economic Cost $5,449,650 $5,991,020 $4,684,288

Annual Subsidy $678,936 $1,681,857 $2,417,808
Appendix C-1

Silver Airways, Inc., Essential Air Service to be Provided to 

Meridian, Mississippi, Docket 2008-0112

Effective Period: Start of Silver’s service at Meridian, through the 24th month thereafter.

Scheduled Service: 13 nonstop round trips per week to Atlanta (ATL)

Aircraft Type: Saab 340, 34 seats

Annual Subsidy $2,417,808

Annual Flights 1,3251

Subsidy per Flight: $1,8252

Weekly Ceiling: $47,4503

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 amounts or at the stipulated service levels, the carrier may cease 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 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 are not currently available for performance under this Order beyond September 30, 2012. The Government’s obligation 

for performance under this Order beyond September 30, 2012, is subject to 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 September 30, 2012, until funds are made available to the Department for performance. If funds are not 

made available for performance beyond September 30, 2012, 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 13 flights x 2 directions x 52 weeks x .98 = 1,325.

2 Annual subsidy divided by annual flights.

3 26 flights per week x $1,825.
Appendix C-2

ExpressJet Airlines, Essential Air Service to be Provided to 

Meridian, Mississippi, Docket 2008-0112

Effective Period: July 1, 2012, until start of Silver’ service

Scheduled Service: 13 nonstop round trips per week to Atlanta (ATL)

Aircraft Type: CRJ-200, 50 seats

Annual Subsidy $1,681,857

Annual Flights 1,3291

Subsidy per Flight: $1,2662

Weekly Ceiling: $32,9163

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 amounts or at the stipulated service levels, the carrier may cease 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 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 are not currently available for performance under this Order beyond September 30, 2012. The Government’s obligation 

for performance under this Order beyond September 30, 2012, is subject to 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 September 30, 2012, until funds are made available to the Department for performance. If funds are not 

made available for performance beyond September 30, 2012, 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 13 flights x 2 directions x 52 weeks x .98 x 313/312 = 1,329.

2 Annual subsidy divided by annual flights.

3 26 flights per week x $1,266.