Order 20 11

- 8

- 6

Served: August 22 , 2011



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 22 nd of August , 20 11

Essential air service at

OWENSBORO

, KENTUCKY

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

- OST

- 200 0

- 7855

ORDER PROHIBITING TERMINATION OF SERVICE AND REQUESTING PROPOSALS

Summary By this order, the Department is (a) prohibiting Pacific Wings, LLC (Pacific Wings) from terminating its subsidized service at Owensboro, Kentucky, for 30 days beyond the end of its 90

- day notice period, and (b) requesting long

- term proposals from carriers interested in providing essential air service (EAS), with or without subsidy, by September 13 , 2011. (See Appendix A for a map.)

Background By Order 2009

- 6

- 17

, June 22 , 2009, the Department selected Pacific Wings to provide 18 nonstop round trips per wee k from Owensboro to Nashville using 9

- passenger Cessna Grand Caravan, for 24 months from when the carrier inaugurated service, for a n annual subsidy rate of $1,068,773

. Pacific Wings inaugurated service at Owensboro on August 31, 2009 , meaning the

current contract will expire August 31, 2011 . Pacific Wings operates the service under the brand

nam e s K entucky Skies and Tennessee Skies.

Prior to Pacific Wings’ inaugurating service at Owensboro, the community experienced an extended service hiatus. The prev ious carrier, Big Sky Airlines, ceased operations at Owensboro on January 6, 2008. Great Lakes Aviation, Ltd. (Grea t Lakes) was selected to serve Owensbor o by Order 2008

- 2

- 1, February 6, 2008, but Great Lakes did not inaugurate service. Thus,

Owensboro w as without scheduled air service from January 7, 2008, until August 31, 2009.

In anticipation of the expiration of Pacific Wings’ contract on August 31, the Department issued

Order 2011

- 1

- 19, January 21, 2011, soliciting proposals from interested carriers to provide- 2

-

service at Owensboro . Prior to the due date of proposals (March 16 ), Pacific Wings notified the Department of its intention to provide subsidy

- free service at Owensboro, effective September 1,

2011 , the end of the current contract

.

On June 30, Pacific Wings filed with the Department a 90

- day notice of its intent to term inate

service at Owensboro, and Jackson, Tennessee

. 1 effective September 30, 2011. Pacific Wings

stated that despite many attempts, it has been “unable to procure counter or gate space at [Nashville International Airport] on reasonable terms.” The carrie r states that [these] “barriers to access continue to impede and frustrate our service delivery efforts. ”

Decision

Because Pacific Wings’ proposed termination of service would leave Owensboro without any scheduled air service, we must prohibit the carrier from terminating such service at the end of its

90

- say notice period and request proposals for replacement service. Furthermore, we will require Pacific Wings to continue to maintain service at the communit y for successive 30

- day periods until we have co mpleted processing the carrier replacement case and the new carrier has actually started service. Although Pacific Wings had provided notice of its intent to provide

Owensboro with subsidy

- free service effective September 1, 2011, its notice of its intent to terminate service super s edes that notice and we will proceed with a carrier

- selection case

.

Request for Proposals Carriers interested in filing proposals, with or without subsi dy requests, should file them no later

than September 13

, 2011. A fter that date , our staff will docket proposals, thereby making them public, and direct each carrier to serve a copy of its proposal on the civic parties and other applicants. Shortly after wards, we will ask the communities to review the proposals and submit

their final comments. We will give full consideration to all proposals that are timely filed.

Interested carriers should prepare their proposals with every expectation that their initi al proposals will represent their final and only proposals. However, we retain the discretion to negotiate proposals with carriers when we deem it desirable. We also retain the discretion to reject outright all unreasonable or unrealistic proposals and s ol icit a new round of proposals.

We are here providing interested carriers with some basic information to serve as guidance when they prepare their proposals, but we will not prescribe a precise format for their proposals. We expect proposals to adequately describe the service being proposed and the annual amount of subsidy being requested. The applicants can make their own judgments as to the level of detail they wish to present; however, they might want to include proposed schedules as well as

s upporting data for their subsidy requests, such as projected block hours, revenues and expenses. We strongly encourage clear, well

- documented proposals that will facilitate their evaluation by the affected communities and the Department. 2

1 Air service at Jackson, Tennessee, will be addressed in a separate Order.

2 In selecting a carrier to provide subsidized essential air service, 49 U.S.C. 41733(c) (1) directs us to consider four

factors: (1) service reliability; (2) contractual and marketing arrangements with a larger carrier at the hub; (3) interline arrangements wi th a larger carrier at the hub; and (4) community views. In addition

, the Consolidated Appropriations Act, 2008, Public Law 110

- 161, provides that when selecting a carrier to provide EAS, the Department may consider the relative subsidy requirements, thu s codifying a factor that we have considered- 3

-

Specifically

, we are seeking proposals similar to the service that the communit y is currently receiving (three round trips each weekday and weekend for a total of 18 round trips per week with aircraft seating fewer than 15 passengers ) or proposals with 15

- seat or larger aircraft (two round trips each weekday and weekend for a total of 12 round trips per week) to Atlanta, Chicago O’Hare, Detroit, Memphis, St. Louis, or another suitable hub where numerous connections to the national air transportation system can be made. As always, we will formally

solicit the communit y ’ s views on any service options we receive before making a long

- te rm carrier selection decision.

The communit y and air carriers are encouraged to work together in advance of the due date for proposals to craft a service pattern that is desirable to the community and meets the operational

needs of the airline

.

We encourage proposals that meet these requirements in an efficient manner. Carriers are also welcome to propose more than one service option, if t hey choose; they need not limit themselves to those requirements if they envision other, potentially more attractive service possibilities

-- different hubs or length of service terms , for example

-- with subsidy requirements that remain competitive.

New Filing Procedures Carrier proposals s hould be s ubmitted to the Department with all materials merged into a single

document. The document will be published on Regulations.gov and each page should be

formatted to be viewed online.

Service and Traffic Hist ory In order to assist interested carriers in developing traffic and revenue projections for their service proposals, we have summarized some historical origin

- destination traffic in Appendix B.

Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug

- free workplaces, and nondiscrimination. 3 Consequently, all carriers receiving Federal subsidy for essential air service must certify that they are in compliance with Department

reg ulations regarding drug

- free workplaces and nondiscrimination, and those carriers whose subsidies exceed $100,000 over the life of the rate term must also certify that they are in compliance with the regulations governing lobbying activities. Because the Department is prohibited from paying subsidy to carriers that do not submit these documents, all carriers that

since the inception of the program. Interested carriers should also be aware that our general provisions governing essential air service will be included in the selection order as part of our authorization of s ubsidy for the selected service. Appendix C of this order contains those general provisions.

3 The regulations applicable to these areas are: (1) 49 CFR Part 20

-- New restrictions on lobbying; (2) 49 CFR Part 21

-- Nondiscrimination in federally

- assis ted programs of the Department of Transportation

-- Effectuation of title VI of the Civil Rights Act of 1964; 49 CFR Part 27

-- Nondiscrimination on the basis of disability in programs and activities receiving or benefiting from Federal financial assistance ; and 14 CFR Part 382

-

- Nondiscrimination on the basis of disability in air travel; and (3) 49 CFR Part 29

-- Government

- wide debarment and suspension (non

- procurement) and government

- wide requirements for drug

- free workplace (grants).- 4

-

plan to submit proposals involving subsidy should be aware that the selected carrier will be expected to complete the required certifications. I nterested carriers requiring more detailed information regarding these requirements as well as copies of the certifications should contact the Office of Aviation Analysis at (202) 366

- 5903

. 4

Community and State Comments

The communit y and state are welcome to submit comments on the proposals at any time. As noted earlier, however, we will provide a summary of the proposals to the civic parties and ask them to submit their final comments shortly after September 13

, 2011

.

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

ACCORDINGLY, 1. We prohibit Pacific Wings, LLC

, from suspending service at Owensboro, Kentucky, at the

end of its 90

- day notice period, and require it to maintain service as set forth in Appendix D, f or an initial 30

- day period through Octo ber 30, 2011, or until a carrier capable of providing reliable essential air service actually begins service, whichever is first ; 5

2

. We direct Pacific Wings, LLC. to retain all books and other source and summary

d ocumentation 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 or until the Department indicates that the records may be destroyed, whichever is earlier. Copies of 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 request that carriers interested in providing essential air service at Owensboro, Kentucky

, submit their proposals, with or without subsidy requests, no later than September 13 , 2011

. The proposals should be e

- mailed to EAS@dot.gov, with the title: “Proposal to Provide EAS at Owensboro, K entucky ( Docket DOT

- OST

- 200 0

- 7855 ) ; 6

4

. Th is docket will remain open until further order of the Department; and

4 The certification s are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.

5 In accordance with 49 U.S.C. 41734(c), we will extend Pacific Wings’ service obligation for successive 30

- day periods as necessary until replacement service actually begins.

6 Questions regarding filings in response to this order may be directed to Kevin Schlemmer at kevin.schlemmer@dot.gov.- 5

-

5

. We will serve copies of this o rder on the Mayor of Owensboro, the manager of Owensboro

Daviess County Regional Airport, Pacific Wings, LLC, and the parties listed in Appendix E

.

By:

SUSAN L. KURLAND Assistant Secretary for Aviation and

International Affairs

(SEAL)

An electronic version of this document is available a t : http://www.regulations.govAppendix A



# AREA MAP

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

Sabre Airline Solutions®.Appendix B

Owensboro, KY (OWB) 1

Traffic History

Stn Year Month Uniquecarriername Inbound Outbound Total

OWB 2009 9 Pacific Wings Airlines 103 164 267

OWB 2009 10 Pacific Wings Airlines 69 106 175

OWB 2009 11 Pacific Wings Airlines 65 97 162

OWB 2009 12 Pacific Wings Airlines 78 81 159

OWB 2010 1 Pacific Wings Airlines 67 74 141

OWB 2010 2 Pacific Wings Airlines 62 49 111

OWB 2010 3 Pacific Wings Airlines 66 71 137

OWB 2010 4 Pacific Wings Airlines 63 76 139

OWB 2010 5 Pacific Wings Airlines 55 59 114

OWB 2010 6 Pacific Wings Airlines 24 49 73

OWB 2010 7 Pacific Wings Airlines 25 42 67

OWB 2010 8 Pacific Wings Airlines 15 17 32

OWB 2010 9 Pacific Wings Airlines 28 32 60

OWB 2010 10 Pacific Wings Airlines 45 44 89

OWB 2010 11 Pacific Wings Airlines 39 63 102

OWB 2010 12 Pacific Wings Airlines 46 53 99

OWB 2011 1 Pacific Wings Airlines 34 60 94

OWB 2011 2 Pacific Wings Airlines 37 48 85

OWB 2011 3 Pacific Wings Airlines 29 41 70

OWB 2011 4 Pacific Wings Airlines 12 15 27

OWB 2011 5 Pacific Wings Airlines 6 10 16

1 Source

– T

- 100 Market Report, Passengers in Scheduled Service. Pacific Wings traffic only.Appendix C

Example of General Terms and Conditions for Essential Air Service

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

o utlined 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 suppo rting 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 these rates, it must first notify t he 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. Th e 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 c onsider 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 s ervice 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 to tal 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 amendmen ts thereto shall not operate to controvert the foregoing paragraph.

Funds are not currently available for performance under this solicitation beyond [DATE] . The

Government’s obligation for perform ance under this solicitation beyond [DATE] , is contingent upon 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 [DATE] , until funds are made available to the Department for performance. If funds are not made available for performance beyond [DATE] , the carrier will receive notice in writing by the Department.

All claims for payment must be submitted within 60 days of th e last day of service provided

under this order

.Appendix D

PACIFIC WINGS, LLC

dba KENTUCKY SKIES

dba TENNESSEE SKIES

ESSENTIAL AIR SERVICE TO BE MAINTAINED OWENSBORO, KENTUCKY

EFFECTIVE PERIOD 30 days beyond September 30 , 201 1 , until further Department ac tion

SERVICE 18 weekly nonstop round trips to Nashville International Airport (3 nonstop round trips each weekday and 3 nonstop round trips each weekend)

AIRCRAFT TYPE Cessna Grand Caravan (9 seats)

TIMING OF

FLIGHTS Flights must be well timed and well spaced to ensure full compensation

SUBSIDY RATE As outlined in Order 2009

- 6

- 17, June 22, 2009, effective September 1, 2011, until further Department actionAppendix E

Scheduled Air Carriers, Contiguous US and Puerto Rico

Air Greco/Wings Air McCall Aviation, Dan Scott
Air Sunshine, Inc. McCall Aviation, Michelle
Air Sunshine, Mirmohammad Adili Mesaba, John Spanjers
Air West, Inc., John Raatz Mesaba, Max Shemesh Air Wisconsin, Annette Daly MidStar Airlines, Jeffrey Fonner
Air Wisconsin, Jim Rankin Midwest Airlines, Greg Aretakis
Airline Associates, Bill Mishk MN Aviation, Jose Maldonado
Alaska Airlines, Jeff Cole Multi Aero, Darnea

Alaska Airlines, Sandy Sinick Multi Aero, Shane Storz Allegiant Air, Brian Davis Northern Air Cargo, David Karp
American Airlines, Carl Nelson Northern Air Cargo, Eric Van Andel American Eagle, Jeffrey Hartz Northwest, Tim McDonald
Atlantic Southeast, Jon Lindlief Northwest, Aaron Murray Atlantis Southeast, Roger Weston NYDC, Henok Araya Aviation Technologies/Charter Air Transport OST, Brian Swanson Bemidji Aviation, Cori Rude OST, Dennis DeVany Bemidji Aviation, Arlen Rinkenberger OST, Kevin Adams Cape Air, Andrew Bonney OST, Kevin Schlemmer Cape Air, Dan Wolf OST, Michael Martin Cape Air, J. Flaherty Pacific Aviation Group, Craig Garrick Classic Aviation, Tony Henderson Pacific Aviation Group, Ron Pye Colgan Ai r, Mike Colgan Pacific Wings, Frank Ford Colgan Air, Kevin Scott Pacific Wings, Greg Kahlstorf CommutAir, Andy Price PenAir, Danny Seybert CommutAir, Joel Raymond PenAir, Scott Bloomquist Consultant, Robert Silverberg Pinnacle Airlines, Jennifer Gammill
Continental, Bruce Keiner Pinnacle Airlines, Megan Rosia
Continental, Dan Weiss Pinnacle Airlines, Phil Reed Continental, Lorry Halloway Planemasters, Inc. John Kessler Delta, Anthony Canitano Planemasters, Inc. Paul Berliner
Delta, Dan Shuman Planemasters, Inc. Todd DeSimone Delta, Jeff Morgan Raytheon, Mike Scheidt Delta, Joe Esposito Saab Group, Polly Prelinger Delta, Karen Zachary Scenic, Mary Schneider Delta, Kristal Murphy Scenic, Mitzi Daines
Delta, Sascha Vanderbellen Seab orne Airlines, Shawn Lewis DHS, Bill Ragan SeaPort Airlines, Daniel Helland
DHS, David Bernier SeaPort/Wings of Alaska, Jim Day

Dorado Jets SeaPort/Wings of Alaska, Nate Vallier
Dorado Jets, Mark McKenna SeaPort/Wings of Alaska, Rob McKinney

Era Aviation, Lori Goodman Shuttle America, Jerry Balsano
Executive Airlines, Kate Soled SkyWest, Brad Rawson Frontier Flying, Bob Hajducovich SkyWest, Eric Christensen
Frontier, Daniel Shurz SkyWest, Michael Thompson

Frontline Aviation Sovereign Air, Bob Karns
Gem Air, Dan Schroeder Sovereign Air, Lois R. Barton
Gem Air, JoAnn Wolters Tatonduk, Robert Everts Pacific Wings, Chuck Howell Tatonduk, Robert Ragar Pacific Wings, Doug Voss Tradewind, Eric Zipkin
Gulfstream, Dave Hackett TransStates, Fred Oxley Gulfstream, Mickey Bowman TransStates, Gerry Wigmore Gulfstream, T. Cooper Transport Azumah, Joel Anabilah

- Azumah
Horizon Air, Dan Russo United, Alicia Gabriel Horizon Air, Jennifer Thompson United, James Starnes

Horizon Air, Mike McQueen US Airways, Benjamin Slocum
Horizon Air, Jeff Cole US Airways, Howard Kass ICEPR, Luis Irizarry US Airways, Jason Reisinger Intrepid Internatl Air, Rick Eyk Warbelows Air Ventures, Art Warbelow
Island Air Charters, Linda House

Jet Air, Daniel Wolford
Kenmore Air, Tim Brooks