Order: 2015-4-23

Served: April 29, 2015

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 29th of April, 2015

Essential Air Service at

ALLIANCE AND CHADRON, NEBRASKA

under 49 U.S.C. § 41731 et seq.

Docket DOT-OST-2000-8322

ORDER SELECTING CARRIER AND ESTABLISHING HOLD-IN TERMS

Summary

By this Order, the Department is selecting Boutique Air (Boutique) to provide Essential Air 

Service (EAS) at Alliance and Chadron, Nebraska, for a combined annual subsidy rate of

$4,192,465, for the two-year period from June 1, 2015, through May 31, 2017.1

Also by this Order, the Department extends the EAS obligation of Great Lakes Aviation, Ltd. 

(Great Lakes) at Alliance and Chadron for 30-days beyond its 90-day termination notice, through 

July 16, 2015, or until Boutique commences full EAS, whichever comes first.

Background

By Order 2013-2-13, issued February 11, 2013, the Department reselected Great Lakes to

provide 12 nonstop or one-stop round trips per week from Alliance and Chadron to Denver using 

19-passenger Beech 1900D aircraft, from June 1, 2013, through May 31, 2015, for a combined

annual subsidy rate of $2,619,729.

In anticipation of the end of the current rate term, the Department issued Order 2014-11-10 on 

November 12, 2014, soliciting proposals to provide EAS, with or without subsidy, at Alliance 

and Chadron, for a new contract period. In response to our request, we received proposals from 

four carriers: Great Lakes (the incumbent), Boutique, Via Air, LLC (Via Air), and Gem Air, 

LLC (Gem Air). The proposals are summarized below. The full proposals may be accessed at 

www.regulations.gov by searching for docket DOT-OST-2000-8322.

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

Proposal of Great Lakes 

Great Lakes, the incumbent, proposed two service options. Both options would provide Alliance 

and Chadron two daily (12 per week) nonstop or one-stop round trips between each community 

and Denver International Airport. Service would be provided on twin-engine, Beech 1900D 

aircraft. Under the first service option, the aircraft would be configured with nine passenger 

seats. This option would require a combined annual subsidy of $2,998,295. Under the second 

service option, the aircraft would be configured with 19 seats, requiring a combined annual 

subsidy of $2,690,607. Great Lakes notes that it offers connections with its code-share partner 

United Airlines beyond Denver, and the carrier maintains interline ticket and baggage 

agreements with the majority of the other carriers serving Denver. 

Proposal of Boutique

Boutique submitted a proposal to offer 12 weekly nonstop round trips between each community 

and Denver. The service would be provided on nine-seat, single-engine Pilatus PC-12 aircraft. 

Boutique would require a combined annual subsidy of $4,192,465.2

Proposal of Via Air

Via Air proposed two service options. The first would provide each community with 12 weekly 

nonstop roundtrips from each community to Denver utilizing nine-passenger aircraft.3 This 

service option would require a combined annual subsidy of $3,726,077. Via Air’s second 

service option would consist of 12 one-stop round trips routed Chadron-Alliance-Denver. The 

service would be provided on 30-seat Embraer EMB-120 aircraft. Under this option, Via Air 

would operate as an indirect air carrier under 14 CFR Part 380, contracting with Via Airlines 

operating as the direct air carrier. This option would require a combined annual subsidy of 

$4,739,592 and the community would have to apply, and be approved, under the Alternative 

Essential Air Service program.4

Proposal of Gem Air

Gem Air proposed one service option consisting on 12 weekly nonstop round trips from each 

community to Denver utilizing twin-engine, nine-passenger Piper Navajo aircraft. Gem Air 

would require a combined annual subsidy of $3,177,640.

Community Comments

On January 15, 2015, we requested community comments regarding the carrier selection at 

Alliance and Chadron. On March 4, 2015, we received a letter from the Airport Manager for the 

City of Alliance, as well as City Resolutions from both Alliance and Chadron, all endorsing the 

selection of Boutique. The communities state that they were pleased with all of the proposals 

received from Gem Air, Via Air, and Boutique, but that Boutique was the communities’ 

preferred choice, with the caveat that before it commences service, Boutique must achieve 

approval from the Transportation Security Administration (TSA) for sterile operations. 

 2 Boutique proposed an annual subsidy of $2,359,650 for Alliance and $2,407,815 for Chadron, and offered a 

$575,000 reduction if it was selected at both communities.

3 Via Air did not provide any further the description of the aircraft that would be used other than having nine seats.

4 See 49 U.S.C. § 41745(a).
- 3 -

On March 27, 2015, the Airport Manager of Alliance submitted an e-mail to the Department 

stating that both communities understand that the recommendation and acceptance of Boutique 

using single engine aircraft means that in the future, Alliance and Chadron cannot reject, out of 

hand, future single engine air service bids.

Decision

Both Gem Air and Via Air submitted competitive proposals, despite their relative lack of 

experience in supplying EAS. We note that Gem Air recently received its economic operating 

authority from the Department for commuter operations. Via Air is providing service through 

the Alternate EAS program at Beckley, West Virginia, but as a public charter operation using 30-

seat EMB-120 aircraft. We welcome both entities to submit proposals for service at other 

communities in the future.

Due to operational issues at Great Lakes (the incumbent), the carrier has been providing less than 

full-EAS (only one round trip during any given day and not seven days per week) at Alliance and 

Chadron since early 2014. As stated above, Great Lakes provided the Department with a 90-day 

notice of intent to terminate EAS at Alliance and Chadron indicating its wish to leave these 

communities. Considering that Great Lakes has not fulfilled their contractual requirements for 

much of the existing rate-term, their lack of community support, and their early termination 

request, the Department will not select Great Lakes.

Regarding the longer-term carrier selection, after carefully considering each of the remaining 

proposals and taking into account the communities’ views, the Department has decided to select 

Boutique to provide EAS at Alliance and Chadron for a new two-year term. When selecting a 

carrier, 49 U.S.C. § 41733(c)(1) directs us to consider five factors: (1) service reliability; (2) 

contractual and marketing arrangements with a larger carrier at the hub; (3) interline 

arrangements with a larger carrier at the hub; (4) community views, giving substantial weight to 

the views of the elected officials representing the users; and (5) whether the carrier has included 

a plan to market its services to the community. In addition, The Consolidated and Further 

Continuing Appropriations Act, 20155, provides that when selecting a 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. 

Boutique has recently begun providing EAS at Clovis and Silver City/Hurley/Deming, New 

Mexico, and has to date provided reliable service at those communities. Elected officials of both 

Alliance and Chadron also preferred the Boutique proposal over the two remaining carrier 

proposals. The Department also finds the proposed service levels and subsidy requests to be 

reasonable. Given these factors, combined with the communities’ recent struggles with EAS 

service from Great Lakes, the Department has decided to select Boutique.

Boutique’s subsidy request is higher than some of the other proposals submitted in this case. 

Given the communities’ recent experiences with poor and unreliable service, in selecting 

Boutique the Department is giving the communities’ preference more deference than we 

 

5 Public Law No: 113-235.
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otherwise might. However, the Department wishes to remind Boutique and the communities of 

Alliance and Chadron about the recently enacted law that established a new subsidy cap of 

$1,000 per passenger, regardless of distance from hub airports. The Department expects both 

the communities and air carrier to prudently manage the costs of the service to ensure subsidy 

rates remain in compliance with the $1,000 subsidy per passenger cap to remain eligible for the 

EAS program.

The Department therefore selects Boutique to provide EAS at alliance and Chadron, for the twoyear period from June 1, 2015, through May 31, 2017, at a combined annual subsidy rate of 

$4,192,465. This selection at Alliance and Chadron is contingent upon the Department’s 

receiving properly executed certifications from Boutique that it is in compliance with the 

Department’s regulations regarding drug-free workplaces and nondiscrimination, as well as the 

regulations concerning lobbying activities.

Great Lakes’ Early Termination Request

On March 18, 2015, Great Lakes filed 90-day notices to terminate service at Alliance and 

Chadron, with the last day of scheduled air service to be June 16, 2015. The carrier requests that 

since the communities recommended that the Department select Boutique, it be allowed to 

terminate service earlier than prescribed in the notice. 

Lynn Placek, airport manager at Alliance Municipal Airport, submitted comments on Great 

Lakes’ early termination request on behalf of both Alliance on Chadron in an April 2 e-mail to 

the Department. Ms. Placek states that in May (2015), they are seeing that Great Lakes has 

reduced its service schedule once again to one flight per day, lower than the contracted amount 

and she requests that the Department not grant Great Lakes permission to leave until a new 

carrier is selected, as has been the normal practice for EAS communities.

Alliance and Chadron are guaranteed a minimum of two round trips to a suitable hub. Great 

Lakes’ proposed termination of service would cause the two communities to be left with no air 

service. Therefore, the Department will require Great Lakes to continue to maintain its current 

level of service at the community for successive 30-day periods until Boutique Air has initiated 

service. 

As required by 49 USC § 41733(d), the Department will require Great Lakes to continue to 

serve Alliance and Chadron for 30 days beyond its 90-day termination notice, through 

July 16, 2015, or earlier if Boutique begins full EAS at the communities before July 16. Since 

Great Lakes’ contract ends May 31, 2015, consistent with longstanding program practice, the 

Department will compensate the carrier from June 1, 2015, through July 16, 2015, at the rate it 

proposed in the competitive carrier selection proceeding.6

Service Transition

The Department expects Great Lakes to maintain its current service levels, which meet 

minimum EAS requirements of two round trips per day, six days per week. Since Great Lakes’ 

current rate expires May 31, 2015, the Department will set a new rate of compensation for Great 

 

6 In accordance with 49 U.S.C. § 41734(c), the Department will extend Great Lakes’ service obligation for 

successive 30-day periods as necessary until replacement service begins.
- 5 -

Lakes starting June 1, 2015, which will cover its hold-in period. The Department expects Great 

Lakes to provide both communities with 12 round trips per week until Boutique begins full EAS 

at both communities, which, at this time, is expected to occur in June, 2015, pending Boutique’s 

certification for sterile operations by the appropriate federal agencies.

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

communities. In that regard, before Great Lakes suspends its service, it must notify all 

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. 

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. Boutique and Great Lakes 

are 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. 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 carriers remain fit to conduct the operations 

proposed here.

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

ACCORDINGLY,

1. We select Boutique Air to provide Essential Air Service at Alliance and Chadron, Nebraska;

2. We set the final rate of compensation for Boutique Air, for the provision of Essential Air 

Service at Alliance and Chadron, Nebraska, as described in Appendix C, pages 1 and 2;

3. We direct Boutique Air 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;

4. We find that Boutique Air continues to be fit, willing and able to operate as a commuter

carrier and capable of providing reliable Essential Air Service at Alliance and Chadron, 

Nebraska; 

5. We prohibit Great Lakes Aviation, Ltd. from suspending Essential Air Service at Alliance and 

Chadron, Nebraska, until July 16, 2015, or until Boutique Air begins full EAS at both 

communities, whichever comes first;

6. We set the interim rate of compensation for Great Lakes Aviation, Ltd., for the provision of 

Essential Air Service at Alliance and Chadron, Nebraska, as described in Appendix C, page 3;
- 6 -

7. 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;

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

9. We will serve copies of this Order on the Mayor and City Manager of Chadron, Nebraska, the 

Mayor of Alliance, Nebraska, and the Airport Manager of Alliance Municipal Airport, Great 

Lakes Aviation, Ltd., Boutique Air, Via Air, LLC, and Gem Air, LLC.

By:

BRANDON M. BELFORD

Deputy Assistant Secretary

for Aviation and International Affairs

(SEAL)

An electronic version of this document is available at

http://www.regulations.gov
Appendix A

AREA MAP

This map is provided by Sabre® AirVisionTM Profit Essentials and is being used with express permission of the copyright holder, 

Sabre Airline Solutions®.
Appendix B

Page 1 of 3
Appendix B

Page 2 of 3
Appendix B

Page 3 of 3
Appendix C

Page 1 of 3

Boutique Air

Essential Air Service to be Provided at Alliance, Nebraska

Effective Period: June 1, 2015, through May 31, 2017

Scheduled Service: 12 weekly nonstop roundtrips to Denver International Airport

Aircraft: Pilatus PC-12, 9 seats

Annual Subsidy: $2,072,1501

Rate per Eligible Flight: $1,6942

Weekly Ceiling: $40,6563

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 service levels, the carrier may cease to provide service to that 

specific location without regards 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 may not be available for performance under this Order beyond September 30, 2015. The Government’s 

obligation for performance under this Order beyond September 30, 2015, 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 September 30, 2015, until funds are made available to the Department 

for performance. If sufficient funds are not made available for performance beyond September 30, 2015, 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 31; August claims must be submitted by November 30, and so on.

 1 Reflects reduction of $575,000 annually ($287,500 per community) as outlined in Boutique’s proposal.

2 Annual compensation of $2,072,150 divided by 1,223 annual operations (24 weekly operations x 52 weeks x 98 

percent completion).

3 24 operations per week multiplied by $1,694 per flight.
Appendix C

Page 2 of 3

Boutique Air

Essential Air Service to be Provided at Chadron, Nebraska

Effective Period: June 1, 2015, through May 31, 2017

Scheduled Service: 12 weekly nonstop roundtrips to Denver International Airport

Aircraft: Pilatus PC-12, 9 seats

Annual Subsidy: $2,120,3154

Rate per Eligible Flight: $1,7345

Weekly Ceiling: $41,6166

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 service levels, the carrier may cease to provide service to that 

specific location without regards 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 may not be available for performance under this Order beyond September 30, 2015. The Government’s 

obligation for performance under this Order beyond September 30, 2015, 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 September 30, 2015, until funds are made available to the Department 

for performance. If sufficient funds are not made available for performance beyond September 30, 2015, 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 31; August claims must be submitted by November 30, and so on.

 4 Reflects reduction of $575,000 annually ($287,500 per community) as outlined in Boutique’s proposal.

5 Annual compensation of $2,120,315 divided by 1,223 annual operations (24 weekly operations x 52 weeks x 98 

percent completion).

6 24 operations per week multiplied by $1,734 per flight.
Appendix C

Page 3 of 3

Great Lakes Aviation, Ltd.

Essential Air Service to be Provided at Alliance and Chadron, Nebraska

Effective Period: June 1, 2015, through July 16, 2015 

Scheduled Service: 12 weekly nonstop roundtrips from each community to DEN

Aircraft: Beechcraft 1900D, 9 seats

Annual Subsidy: $2,998,2951

Rate per Eligible Flight: $1,2262

Weekly Ceiling: $58,858 ($29,424 per community)3

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 service levels, the carrier may cease to provide service to that 

specific location without regards 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 may not be available for performance under this Order beyond September 30, 2015. The Government’s 

obligation for performance under this Order beyond September 30, 2015, 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 September 30, 2015, until funds are made available to the Department 

for performance. If sufficient funds are not made available for performance beyond September 30, 2015, 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 31; August claims must be submitted by November 30, and so on.

 1 See Appendix B, page 3.

2 Annual compensation of $2,998,295 divided by 2 communities, divided by 1,223 annual operations (24 weekly 

operations x 52 weeks x 98 percent completion).

3 24 operations per week multiplied by $1,226 per flight.