Order: 2011

- 6

- 30

Served: June 30, 2011



### UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 30th day of June , 20 11

Essential Air Service at

WATERTOWN, SOUTH DAKOTA

Under 49 U.S.C. 41731 et seq

. DOCKET DOT

- OST

- 2001

- 10644



### ORDER REQUESTING PROPOSALS

Summary
By this order, the Departme nt is requesting proposals from airlines interested in providing essential air service (EAS) at Watertown

, South Dakota, for the two

- year period beginning

November 1, 2011 , with or without subsidy. Pr oposals are due by August 9

, 2011 . (See Appendix A for a map.)

Background By Order 2011

- 6

- 6, June 7, 2011, the Department re

- selected Mesaba Aviation, Inc., operating as Delta Connection (Mesaba), to provide EAS at Watertown for a short

- term contract period from August 1, 2011 through October 31, 2011, for an annual subsidy of $1,769,321, pro

- rated at $450,736 for the contract period. Mesaba i s to provide two daily nonstop round trips (14 a week) to Minneapolis/St. Paul International Airport (Minneapolis) using 34

- seat Saab 340

aircraft.

While it is unusual for the Department to select a proposal for only a three

- month period, rather

than th e typical two years, we found that there were compelling reason s to do so. 1

1 See Order 2011

- 6

- 6 for a complete discussion.- 2

-

Request for Proposals As the end of the current rate term approaches, we are here requesting proposals from carriers interested in providing service at Watertown

, with or without subsidy support, for the two

- year period beginning November 1, 20 1 1 . Carriers should file their proposals no later than August 9 . After that date, our staff will docket proposals, thereby making them public, and shortly afterwards will provide a summary of the proposals to the community and ask them for

their final comments. We will give full consideration to all proposals filed in a timely manner. 2

Interested carriers should prepare their proposals with every expectation that their initial proposals will also be their final and only proposals. We retain the discretion to negotiate proposals with carriers when we deem it desirable. We also retain th e discretion to reject outright all unreasonable or unrealistic proposals and solicit 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 p rescribe a precise format. 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 m ight want to include proposed schedules as well as supporting 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

affect ed community and the Department. 3

Proposals should provide sufficient capacity to accommodate historical levels of traffic. In order to assist carriers in developing traffic and revenue projections for their proposals, we have provided a summar y of historical passengers in Appendix B. Passenger levels have been increasing and d uring the year ended December 31, 2010, an average of 24 passengers a day were enplaned at Watertown. W e expect service levels that are c ons istent with what the community currently receive s , with service to Minneapolis

, or any hub that offers access to the national air transportation system utilizing 15

- seat or larger aircraft

. Specifically, for proposals

with 30 to 34

- seat aircraft, the Depa rtment expects frequencies of two round trips a day (12

- 14 a week)

. For proposals with 19

- seat aircraft, we would expect proposals f or three round trips a day (18

- 21 a week). We would also entertain proposal s with 8/9

- seat aircraft and additional frequencies. Should the community agree to aircraft with few er than 15 passenger seats, in effect waiving their right t o 15

- seat or larger aircraft, we would consider the waiver to apply only to the two

- year carrier

- selection at hand, i.e. we would not assume that the community

2 Carriers should not expect the Department to accept late fillings. In cases where a carrier proposes to provide essential air service without subsidy and we determine that service can be reliably provided without such compensation, we typically do not pr oceed with the carrier

- sel ection case. Instead, we generally rely on that carrier’s subsidy

- free service as proposed.

3 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 with a larger carrier at the hub; and (4) community views. In addition, the

Consolidat ed Appropriations Act, 2008, Public Law 110

- 161 , 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. Inte rested carriers should also be aware that our general provisions governing EAS will be included in the selection order as part of our authorization of subsidy for the selected service. Appendix C of this order contains those general provisions.- 3

-

would waiv e their rights for all time. As always, we will formally solicit the community ’ s views on any service options we receive b efore making a long

- term airline selection decision.

Airlines are also welcome to propose more than one option, if they choose; th ey need not limit themselves to those requirements if they envision other, potentially more attractive service possibilities

-- different hubs, frequency, equipment, or length of contract, for example

-- with subsidy requirements that remain competitive. The community 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 communit y and meets the operational needs of the airline s

.

New Filing Procedures Carrier proposals should be submitted to the Department with all materials merged into a single document. In addition, because the document will be published on Regulations.gov, each page

should be formatted to be viewed online.

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

- free workplaces and nondiscrimination. 4 Consequently, all carriers receiving Federal subsidy to support essential air service must certify that they are in complia nce with Department regulations 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 ac tivities. All carriers that plan to submit proposals involving subsidy should submit the required certifications along with their proposals. Interested carriers requiring more detailed information regarding these requirements, as well as copies of the ce rtifications, should contact the Office of Aviation Analysis at (202) 366

- 5903. The Department is prohibited from paying subsidy to carriers that

do not submit these documents. 5

Community and State Comments

Civic officials are welcome to submit comments on the proposals at any time. As noted earlier, we will provide a summary of the proposals to the civic parties and ask them to submit their final comments shortly after August 9 , the due date for carrier proposals.

This order is issued under authority d elegated in 49 CFR 1.56a(f) and re

- delegated to the Director, Office of Aviation Analysis.

4 The reg ulations applicable to these areas are: (1) 49 CFR Part 20

– New restrictions on lobbying; (2) 49 CFR

Part 21

– Nondiscrimination in federally

- assisted 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).

5 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.- 4

-

ACCORDINGLY, 1. We request that carriers interested in providing essential air service at Watertown

, South Dakota, submit their proposals, with or without subsidy requests, no later than August 9, 2011

. The proposals should be emailed to: EAS@dot.gov with the title “Proposal to Provide

Essential Air Service at Watertown, South Dakota

, ” Docket DOT

- OST

- 2001

- 10644 ; 6

2. This docket will remain open until further order of the Department; and

3. The Department will serve a copy of this order on the mayor and airport manager of

Watertown ; Mesaba Aviation Inc. (Mesaba)

, and the service list for this Docket

.

Persons entitled to petition the Department for review of this order under the Department’s

Aviation Economic Regulations, 14 CFR 385.50, must file such petitions within ten (10) days

after the date of service of this order.

This order will be effective immediately, and the filing of a petition for review shall not preclude its effectiveness.

By:

TODD M. HOMAN

Director Office of Aviation Analysis

(SEAL)

An electronic version of this document is available on line at www.regulations.gov

6 Questions regarding filing s in response to this order should be directed to Michael Martin at 202

- 366

- 6494, or

via email at michael.f.martin@dot.gov

.

### Appendix A



## Area Map

### APPENDIX B

Historical Origin

- Destination Plane Traffic 1



### Watertown, South Dakota

Quarter Year Deplanements Enplanements Total
Traffic Enplanements per Day

1 2008 1,155 1,257 2,412 16

2 2008 1,301 1,217 2,518 16

3 2008 1,520 1,278 2,798 18

4 2008 1,138 1,214 2,352 15

Annual

Totals 5,114 4,966 10,080 16

1 2009 1,170 1,266 2,436 16

2 2009 1,252 1,304 2,556 16

3 2009 1,555 1,849 3,404 22

4 2009 1,403 1,401 2,804 18

Annual

Totals 5,380 5,820 11,200 18

1 2010 1,634 1,688 3,322 22

2 2010 1,678 1,712 3,390 22

3 2010 1,998 2,096 4,094 26

4 2010 2,216 2,307 4,523 29

Annual

Totals 7,526 7,803 15,329 24

1 Source: USDOT Bureau of Transportation Statistics, TransStats Intermodal Database, Schedule T

- 1 00

.

### 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 outlined in the order and any other significant elements of the required service, without prior approval. The carrier understand s 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 flight s 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 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 com pensated. 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 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 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 are not currently available for performance under this solicitation beyond [DATE] . The Department’s obligation for performance under this soli citation 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

wr iting by the Department.

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

under this order.