Order 2014

- 1

- 4 Served: January 8, 2014



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION


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

Issued by the Department of Transportation

on the 8 th of January, 2014

Essential Air Service at

ABERDEEN, SOUTH DAKOT A , and

BEMIDJI
, MINNESOTA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 20 11

- 013 7

DOCKET DOT

- OST

- 2011

- 0134

ORDER RE

- SELECTING CARRIER

By this Order , the Department is re

- selecting SkyWest Airlines (SkyWest)

, to provide Essential

Air Service (EAS) a t Aberdeen, South Dakota, for $1,043,719 and at Bemidji

, Minnesota , for
$ 1,118,050 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 at Aberdeen , South Dakota, and at Bemidji

, Minnesota

, to Minneapolis

- St. Paul International Airport ( Minneapolis )

, from the date SkyWest inaugurated

service through February 28, 2014. 2 SkyWest began service to Aberdeen and Bemidji on

March 2, 2012. All of SkyWest’s service is provided with 50

- seat regional jet aircraft, and the

annual level of subsidy is set at $1,198,222 at Aberdeen and $1,338,293 at Bemidji

.

By Order 2013

- 10

- 2 , October 1, 2013, the Department requested proposals for EAS at Aberdeen and Bemidji

, Minnesota , for a new term . The Order requested proposals consistent with the historical service pattern of 14 nonstop round trips per week to Minneapolis with aircraft to
accommodate its traffic levels

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

. The deadline for proposals was set at October 24 , 201 3 , but b y notice we extended the deadline

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

2 Order 2012

- 1

- 23 also selected SkyWest at Butte, Montana. However, we have separately dealt with Butte, reselecting SkyWest by Order 2013

- 12

- 8 , December 30 , 2013.- 2

-

to November 15, 2013. We received a proposal from only one carrier, the incumbent, SkyWest

. On November 18, 2013, we requested comments fro m each communit y regarding the carrier

selection decision.

Propos al s of SkyWest

At Aberdeen SkyWest proposes to continue to operate fourteen (14) nonstop round trips per

week to Minneapolis with the same CRJ

- 200 regional jets it currently provides, and requests $1,043,719 annual subsidy, a decrease of $154,503 in annual subsidy from the current rate of $ 1,198,222

.

At Bemidji SkyWest proposes to continue to operate fourteen (14) nonstop round trips per week

to Minneapolis with the same CRJ

- 200 regional jets it currently provides, and requests $1,118,050 annual subsidy, a decrease of $220,243 in annual subsidy from the current rate of $1,338,293

.

Community Comments , Aberdeen

On November 18, 2013 , we requested community comments. On November 21, 2013, the Aberdeen Airport Board recommended that we reselect SkyWest. “SkyWest has p ro v i ded quality, reliable air service since they began serving Aberdeen in early 2012. The use of CRJ

200 aircraft to provide two daily flights, seven days per week to Minnea polis/St.Paul International Airport is appropriate EAS for our community.”

On November 25, the Mayor of Aberdeen also recommended that we reselect SkyWest. “SkyWest Airlines has provided our community with quality air service and we are pleased that

th ey wish to continue to provide us with this high level of service. The Aberdeen market has seen increased passenger enplanements over the past three years which appears to have resulted in a lower subsidy request by SkyWest. .... [The Mayor indicates that t ] he Aberdeen City Council would like to see passenger counts high enough to support a third flight and to allow an airline to operate without a subsidy. We feel that SkyWest has proven to be a reliable air carrier that is able to continue working with the City to make this a reality.”

Absolutely Aberdee n , an Economic Development Group, and the Chamber of Commerce also

indicated they were please d with SkyWest

, and expressed hope for additional service. 3

Community Comments, Bemidji On November 18, 2013, we received a joint ly signed letter from the Mayor, City Manager, and the Bemidji Regional Airport Authority recommending that we reselect SkyWest. They indicate that the airport “Authority and the community as a whole are looking forward to continuing to work closely with SkyWest to ensure this critical service is successful and to grow this market with the goal of this market being self

- sustaining and not requiring subsidy in the future.”

3 Staff conta cted the civic officials and indicated that SkyWest and any carrier could supplement the community’s EAS, but that the service provided by SkyWest was the maximum level by statute that the Department could

subsidize.- 3

-

Decision The decision is straightforward: we have only one propo sal from one carrier for each community

and each community strongly and unanimously favor s the selection of that proposal.

We are pleased that the subsidy requested by SkyWest has decreased at each community, notwithstanding a slight decrease in the num ber of passengers generated at Bemidji. SkyWest is a known, proven operator. Furthermore, its code

- share arrangement with Delta Air L ines at Minneapolis provides Aberdeen and Bemidji with seamless access to the national air transportation system.

Carr ier 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 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 fit ness findings. We therefore conclude that SkyWest remain s fit to conduct the operations proposed here.

This 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 Aberdeen and Bem idji

, Minnesota

, 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 per mits 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. Copie s 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 oper ate as a certificated

air carrier and capable of providing reliable EAS at Aberdeen and Bemidji

, Minnesota ;

4 . Th ese docket s will remain open until further Order of the Department; and- 4

-

5 . We will serve copies of this Order on the civic officials of Aber deen and Bemidji

, Minnesota

, 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 Minneapolis (MSP) BRD, Brainerd 114 HIB, Hibbing, 174 FSD, Sioux Falls, 196 BJI, Bemidji 199 FAR, Fargo 223 ABR, Aberdeen 257 PIR, Pierre 350

Nonstop Miles to Bemidji (BJI) FAR, Fargo 97 BRD, Brainerd 85 HIB, Hibbing 99

Nonstop Miles to Aberdeen (ABR) FAR, Fargo 128 PIR, Pierre 117 FSD, Sioux Falls 153Appendix B

SkyWest Airlines, Essential Air Service at Aberdeen, South Dakota,
and Bemidji, Minnesota, Dockets 2011-0137 and 2011-0134

Aberdeen Bemidji
Weekly Trips 14 14

Hub MSP MSP
Stage Length 257 199
Aircraft Type CRJ-200 CRJ-200

Seats 50 50
Scheduled Departures 1/ 1,456 1,456
Completion Factor 98.00% 98.00%

Block Minutes 73 62
Passengers 47,000 43,000
Passenger Fare $96.00 $87.00

Deps. Performed 1,427 1,427

Block Hours 1,736 1,475

RPMs 12,079,000 8,557,000

ASMs 18,709,600 14,487,200
Passenger Fare $96.00 $87.00

Revenue $4,512,000 $3,741,000

Direct Operating Expense $4,062,327 $3,450,196

$/Block Hour $2,339.80 $2,339.80

RPM Related $41,189 $29,179
Departure Related $1,013,270 $1,013,270

ASM Related $174,373 $135,021

Indirects $1,228,834 $1,177,471

Total Operating $5,291,161 $4,627,667

Profit $264,558 $231,383

Economic Cost $5,555,719 $4,859,050

Subsidy @ 98% $1,043,719 $1,118,050

1/ 14 flights per week x 2 direction x 52 weeks = 1,456Appendix C

- 1

SkyWest Airlines

, Essential Air Service to be Provided to Aberdeen

, South Dakota

, Docket 2011

- 013 7

Effecti ve Period : March 1 , 201 4 , through February 28 , 201 6 ; Service: Fourteen (1 4 ) nonstop round trips per week to Minneapolis (MSP) Aircraft Type : CRJ

- 200, Regional Jet, 50 seats Annual Subsidy : $ 1,043,719 Annual Flights : 1,427 1
Subsidy per Flight : $ 731 2
Weekly Subsidy Ceiling : $ 20,468 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 oth er 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 signific ant period, it may jeopardize its entire subsidy claim for the period in question. If the carrier contemplates any such changes beyond the scop e 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 routes. The carrier must complete all fl ights that can be safely operated; flights that overfly points for lack of traffic will not be compensated. In determining whether subsidy payment for a deviat ing flight should be adjusted or disallowed, the Department will consider the extent to which th e 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

requ irements at a specific location provided for under this order, then, at the end of the period for which the Department does m ake payments in the stipulated amounts or at the stipulated service levels, the carrier may cease to provide service to that spec if ic location without regard to any requirement for notice of such cessation. Those adjustments in the levels of subsidy and/or service th at are mutually agreed to in writing by the Department and carrier do not constitute a total or partial reduction or ce ssation 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 t o 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 w hich 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 fun ds 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 $ 1,043,719 ÷ 1, 427 flights.

3 $ 731 per flight x 2 8 flights per week.Appendix C

- 2

SkyWest Airlines, Essential Air Service to be Provided to Bemidji , Minnesota,

Docket 2011

- 0134

Effective Period : March 1, 2014, through February 28, 2016;

Service: Fourteen (14) nonstop round trips per week to Minneapolis (MSP) Aircraft Type : CRJ

- 200, Regional Jet, 50 seats Annual Subsidy : $ 1,118,050 Annual Flights : 1, 427 1
Subsidy per Flight : $ 783 2
Weekly Subsidy Ceiling : $ 21,924 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 p lans 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 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 scop e 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 deviat ing 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 do es 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 th at 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 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 subje ct 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 Departm ent 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 o f 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 14 flights per w eek x two directions x 52 weeks x .98 completion = 1,427 flights.

2 $ 1,118,050 ÷ 1,427 flights.

3 $ 783 per flight x 28 fli ghts per week.