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Before the United States Department of Transportation

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Washington, DC

September 4, 20t4

SILVER CITY/HURLEYIDEMING, NEW MEXICO

Essential Air Service at

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

This document contains Great Lakes Aviation, Ud.'s response to Order Requesting

Proposals 2014-7-6.

Great Lakes Aviation, Ltd. is pleased to submit these proposals to provide essential

air transportation for Silver City/Hurley/Deming, New Mexico.

Great Lakes maintains interline ticketing and baggage agreements with the majority

of the carriers serving the Phoenix hub, including interline e-ticketing agreements

with American Airlines, Delta Airlines, United Airlines and U.S. Airways. All of which'

will offer Silver City/Hurley/Deming supplemental access to the domestic and international

air transportation system.

The proposed service is being offered utilizing pressurized, twin-engine Beech 19000 aircraft

flown by two pilots.

New FAA pilot qualification rules have created an industry-wide pilot shortage which has had an

acute impact on Great Lakes. These new rules mandated that first officers obtain an Airline

Transport Pilot certification (UATP")prior to being qualified to perform crewmember duties in

scheduled airline passenger service under FAR Part 121 regulatory requirements. A key factor

to enable a pilot to receive an ATP certificate is the accumulation of 1,500 flight hours.

On March 18th of this year, Great Lakes received from the FAA new operations specifications

allowing us to hire pilots under it's FAR Part 121 Certificate utilizjng FAR Part 135 regulatory

hiring requirements. This allows our new hire pilots to operate the Beech 19000 aircraft in a

nine seat configuration and will enable Great Lakes to restore pilot staffing levels while

maintaining FAR Part 121 hiring, training and maintenance standards.

Great Lakes' "base case" proposals assume that we will be limited to nine available seats for

our Beechcraft 19000 aircraft.

In addition to the "base case" proposal, Great Lakes is submitting an indicative proposal for 19

seat service. Although this service is not immediately available, it is illustrative of the economic

impact the new FAA pilot qualification rules have on the EAS program.
Excessive subsidy requirements will force communities to ultimately loose EAS service

eligibility. Available seats are being dramatically reduced due to arbitrary limitations which are

forcing communities to accept single engine, single pilot, nine seat aircraft. This type of service

falls below the congressionally mandated and statutory "One Level of Safety" Part 121

standards implemented in 1997.

The adverse impact that many EAS communities ar1eexperiencing as a result of the new FAA

pilot qualification regulations, requires Congress to address the unintended consequences.

Great Lake,' "and, ready 10 participate in creative lOlulion, 10 assist 'mall communities in

their efforts to remain in the National Air Transportation System.

Questions and comments may be referred to:

Michael O. Matthews

Chief Financial Officer

Great Lakes Aviation, Ltd.

1022 Airport Parkway

Cheyenne, VVY 82001

(307) 432-7000
Table of Contents:

Subsidy Passengers Average Subsidy Cost

Bid Service Point(s) Hub Served Round Trips Equipment Requirement Forecast Fare per Passenger

Silver City/Hurley/Demin! Phoenix 2 1900D - 9 seat $2,237,812 4,000 $98.36 $559.45

Total Cost of 9 Seat Beech 1900-D

2 Silver City/HurleylDemin! Phoenix 2 19 Seat $2,092,055 8,000 $87.17 $261.51

Total Cost of 19 Seat Bid

Cost of 1,500 hour ATP to EAS program $2,237,812 4,000 $297.95
Great Lakes Aviation, Ltd.

Annual Compensation Requirements for Essential Air Service at

Silver City/Hurley/Deming, New Mexico to Phoenix (PHX)

Two Round Trips - Nine seat - B1900 - Historical schedules should be used as sample pattern of service

(at 98 percent completion)

Departures:

Block Hours:

Revenue Passenger Miles:

Available Seat Miles:

1,227

1,329

924,000

2,550,933

Operating Revenues:

Passenger: SVC-PHX 4,000 psgrs at $98.36 $393,440

Other: (at 0.62% of passenger revenue) $2,439

Total Operating Revenues: $395,879

Operating Expenses:

Direct: Aircraft and Hull Insurance

Fuel and Oil

Flying Operations

Maintenance

$365,710

$858,160

$262,132

$447,674

Total Direct Expenses: $1,933,676

Total Indirect Expenses: $574,601

Total Operating Expenses: $2,508,277

Operating Loss

Profit Element (5.0% of Total Operating Expenses)

($2,112,398)

$125,414

Annual Compensation Requirement: $2,237,812

All SVC - PHX - SVC Service is Non-Stop

. This Proposal is submitted with no upline scheduling restrctions
Great Lakes Aviation, Ltd.

Annual Compensation Requirements for Essential Air Service at

Silver City/Hurley/Deming, New Mexico to Phoenix (PHX)

Two Round Trips - B1900 - Historical schedules should be used as sample pattern of service

(at 98 percent completion)

Departures:

Block Hours:

Revenue Passenger Miles:

Available Seat Miles:

1,227

1,329

1,848,000

5,385,303

Operating Revenues:

Passenger: SVC-PHX 8,000 psgrs at $87.17 $697,360

Other: (at 0.62% of passenger revenue) $4,324

Total Operating Revenues: $701,684

Operating Expenses:

Direct: Aircraft and Hull Insurance

Fuel and Oil

Flying Operations

Maintenance

$365,710

$858,160

$262,132

$447,674

Total Direct Expenses: $1,933,676

Total Indirect Expenses: $727,027

Total Operating Expenses: $2,660,703

Operating Loss

Profit Element (5.0% of Total Operating Expenses)

1

$133,035

Annual Compensation Requirement: $2,092,055

All SVC - PHX - SVC Service is Non-Stop

This Proposal is submitted with no upline scheduling restrctions