Order 2013-11-19

Served: November 25, 2013

 UNITED STATES OF AMERICA

 DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

Issued by the Department of Transportation

on the 25th day of November, 2013

Essential Air Service at

PUEBLO, COLORADO DOCKET DOT-OST-1999-6589

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

ORDER SELECTING CARRIER

AND ESTABLISHING SUBSIDY RATES

Summary

By this Order, the Department is selecting SkyWest Airlines (“SkyWest”), to provide 

Essential Air Service (“EAS”) at Pueblo, Colorado, for an annual subsidy of $1,737,732.

1

 

The service to be provided will be 12 nonstop round trips per week to Denver International 

Airport, using 30-seat Embraer Brasilia 120 aircraft for the two-year period from 

February 1, 2014, through January 31, 2016.

Background

By Order 2011-12-4, served on December 13, 2011, the Department selected Great Lakes 

Aviation, Ltd. (“Great Lakes”) to provide subsidized EAS consisting of 12 nonstop round 

trips per week to Denver International Airport using 19-passenger Beech 1900-D aircraft, 

for the two-year period from February 1, 2012, through January 31, 2014, at an annual 

subsidy rate of $1,592,276. 

 1

 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds.
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In anticipation of the end of the current rate term, the Department issued Order 2013-8-4, 

on August 13, 2013, soliciting proposals to provide EAS, with or without subsidy support, 

at Pueblo, for a new two-year term. In response to that Order, the Department received two 

proposals. 

Those proposals, as well as the complete public file for EAS at Pueblo, may be accessed 

online through the Federal Dockets Management System at: http://www.regulations.gov by 

entering “DOT-OST-1999-6589” in the “SEARCH for: Rules, Comments, Adjudications 

or Supporting Documents:” field. 

Proposal of Great Lakes

Great Lakes, the incumbent air carrier at Pueblo, proposed to continue to provide 12 

nonstop round trips per week to Denver International Airport using 19-seat Beech 1900-D 

aircraft for an annual subsidy of $1,549,558. 

 

Proposal of SkyWest

SkyWest proposed 12 nonstop round trips per week to Denver International Airport using 

30-seat Embraer Brasilia 120 aircraft for an annual subsidy of $1,737,732. 

Community Comments

On September 20, 2013, the Department requested community comments regarding the 

carrier selection at Pueblo. We received a letter from the Office of the City Council of 

Pueblo dated October 15, 2013. The letter says that over 90% of Pueblo passengers 

connect to United Airlines at Denver International Airport and it states “[t]the benefits of a 

seamless processing system which a dedicated express carrier and reservation system 

provide are obvious, especially during irregular operations.” It states that while both 

proposals offer code share flights, “exclusively operating on the primary hubbing carrier 

(United Airlines) reservation system is a significant advantage.” Finally, “[a]lthough 

slightly more costly, we feel the performance and product SkyWest Airlines offers best fit 

our strategy for the present and future of the City of Pueblo.” Additionally, by letter dated 

October 29, 2013, Mr. Dave Cardinal, representing the Pueblo Airport Advisory 

Committee, expressed strong support for SkyWest’s proposal. 

Decision

In selecting an air carrier to provide subsidized EAS, 49 U.S.C. § 41733(c)(1) directs us to 

consider five factors: (1) service reliability; (2) contractual and marketing arrangements 

with a larger air carrier at the hub; (3) interline arrangements with a larger air carrier at the 

hub (4) community views; and (5) whether the air carrier has included a plan in its proposal 

to market the service. In addition, 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, and Continuing Appropriations Act, 

2014, Public Law No. 113-46, 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. 
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After careful consideration, including the comments provided by the City Council of 

Pueblo and the Pueblo Airport Advisory Committee, the Department has decided to select 

SkyWest to provide subsidized EAS at Pueblo for a two-year term from February 1, 2014, 

through January 31, 2016. The community fully supports SkyWest’s proposal, and the 

airline provides reliable EAS at many other communities. In addition, SkyWest’s 

operating agreement with United Airlines at Denver International Airport allows 

passengers to seamlessly connect to the national and global air transportation network. We 

acknowledge that SkyWest’s subsidy request is higher than the current subsidy; however, 

the subsidy requested is reasonable for the service provided.

 

We shall make this selection of SkyWest at Pueblo 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.

2

Service Transition

We expect Great Lakes and SkyWest to work together to make a smooth transition at 

Pueblo. In that regard, before Great Lakes 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.

Hold-In Rate

The subsidy rate for Great Lakes’ current service ends on January 31, 2014. If SkyWest 

does not inaugurate service by February 1, 2014, we will establish a bridge rate to 

compensate Great Lakes until SkyWest commences full EAS at Pueblo. Consistent with 

established program policy, we typically use a carrier’s prospective proposal that was 

submitted during the competitive bid process to establish a bridge rate until the new carrier 

inaugurates service. After reviewing Great Lakes’ proposed rate, we have concluded that it 

appears reasonable for the service at issue. We will therefore establish it as the final rate for 

the carrier’s hold-in service at Pueblo, for the period from February 1, 2014, until SkyWest 

inaugurates full EAS, but no later than February 28, 2014.

Air 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. SkyWest 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 1.25a(b).

 

2 The certifications are available on the Web at http://www.dot.gov/policy/aviation-policy.
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ACCORDINGLY,

1. The Department selects SkyWest Airlines at Pueblo, Colorado, and establishes the 

subsidy rate, as detailed in Appendix B, page 1;

2. We direct SkyWest 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 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 SkyWest Airlines, Inc. is fit, willing and able to operate as a certificated air

carrier, and capable of providing reliable Essential Air Service at Pueblo, Colorado;

4. We set the hold-in rate of compensation for Great Lakes Aviation, Ltd. for EAS

service at Pueblo, Colorado, as described in Appendix C, page 2;

5. We direct Great Lakes Aviation, Ltd. 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;

6. Docket DOT-OST-1999-6589 will remain open pending further Department action; and
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7. We will serve copies of this Order on the City Manager of Pueblo, the City Council of 

Pueblo, the Director of Aviation at Pueblo Memorial Airport, Great Lakes Aviation, Ltd., 

and 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.gov
 Appendix A

Page 1 of 2

SkyWest Airlines 

Annual Compensation Requirements for 

Essential Air Service at Pueblo, Colorado

Twelve Round trips per week

98.0% Completion Factor

Passenger Revenue

Passengers 9,500

Average fare $ 69.00

Revenue $ 655,500

Block Time

Trip block time (minutes) 48

Total scheduled block time 998

Total completed block time 98% 978

RPMS

Passengers 9,500

Stage length 109

1,035,500

ASMs

Scheduled departures 1,248

Competed departures 98% 1,223

Stage length 109

Available Seats 30

4,080,960

Revenue $ 655,500

Direct operating expenses $ 1,638,874

Indirect operating expenses $ 151,179

Departure related $ 489,216

Total expenses $ 2,279,268

Operating income (loss) $ (1,623,768)

5% profit margin $ 113,963

Subsidy requirement $ 1,737,732

SkyWest effective rates per unit

Cost per trip $ 1,864

Cost per passenger $ 240

SkyWest cost per block hour $ 2,330

Effective Subsidy rate per unit

Subsidy per trip $ 1,421

Subsidy per passenger $ 183

Passengers / Departure 8

Load factor 25%
Appendix A

Page 2 of 2
 Appendix B

Page 1 of 2

SkyWest Airlines 

Essential Air Service to be Provided at Pueblo, Colorado

Effective Period: February 1, 2014, through January 31, 2016

Scheduled Service: 12 weekly nonstop round trips to Denver International Airport

Aircraft: 30-Seat Embraer 120

Rate per Eligible Flight: $1,4211

Weekly Ceiling for each community: $34,1042

Note: The air 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 air 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 air 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 air 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 air carrier to provide service on these routes. The air 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 air 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 air carrier do not constitute 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 may not be available for performance under this Order beyond 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 for service provided in July must be filed by 

October 31st; August claims must be submitted by November 30th, and so on.

 1 Annual compensation of $1,737,732 divided by 1,223 annual departures (24 departures per week x 313 days x 98 

percent completion).

2 24 arrivals and departures per week multiplied by $1,421 per flight.
Appendix B

Page 2 of 2

 Great Lakes Aviation, Ltd.

Essential Air Service to be Provided at

Pueblo, Colorado

Effective Period: February 1, 2014, until SkyWest inaugurates full EAS, but no later than 

February 28, 2014

Scheduled Service: 12 nonstop round trips each week to Denver International Airport

Aircraft: Beechcraft 1900-D, 19 seats

Rate per Eligible Flight: $1,2981

Weekly Ceiling: $31,1522

Note: The air 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 air 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 air 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 air 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 air carrier to provide service on these routes. The air 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 air 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 air carrier do not constitute 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 may not be available for performance under this Order beyond 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 for service provided in July must be filed by 

October 31st; August claims must be submitted by November 30th, and so on.

1 Annual compensation of $1,592,276, divided by 1,227 annual departures (313 service days x 4 flights per

service day x 98 percent completion).

2 24 arrivals and departures per week (per community) multiplied by $1,298 per flight.