Order 2010

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- 12 Served: August 25 , 20 10


### UNITED STA

TES OF A MERICA DEPA RTMENT OF TRA NSPORTA TION OFFICE OF THE SECRETA RY WASHINGTON, D.C. Is sued by the Department of Transportation on the 25 th Day

of August, 2010

ORDER SELECTING CA RRIER AN D ESTA BLISHING SUBSIDY RA TE S Summary By this order, the Department is select ing Great Lakes Aviation , Lt d

. ( Great Lakes ) , to continue provid ing subsidized esse ntial air service (EAS) at Huron, South Dakota , for the two

- ye ar period beginning October 1, 20 10 , at the annual subs idy rate $1,742,886

. 1 (See Appendix A for a map of the service area

. ) Background Huron is guaranteed to receive at least a minimum level of air service under the EAS program by virtue of the fact that it appeared on a certificated carrier’s Civil Aeronautics Board

- issued certificate on October 24, 1978, the date the Airline Deregulation Act of 1978 was signed into law. (See 49 U.S.C. 417 3 1

- 41744 for the EAS program’s governing statutes.) By Order 2008

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- 3 4, July 24 , 2008, the Department selected Great Lakes to provide EAS at Huron for the two

- ye ar period through September 3 0 , 2010. That order established an an nual subsidy rate of $1, 781 , 159 for service consisting of 1 2 nonstop or one - stop round trips per week from to Denver, with 19

- seat Beech 1900D aircraft

. Inanticipation of the end of the rate term, the Department issued Order 20 10

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- 26 , May 24 , 20 10 , requesting proposals from carrie rs interested in providing replacement service at the community , with subsidy support if necessary , for the two

- ye ar period beginning October 1, 2010

.
1 Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of appropriated funds. Essential Air Service at HURON, SOUTH DA KOTA Under 49 U.S.C. 41731 et seq
. DOCKET DOT - OST - 2000 - 71382

Carrier Proposal s Inresponse to our request, we received proposals from Great Lakes (the incumbent) and Sovereign Air, Inc. Great Lakes proposes to continue providing its current level of service , under code

- share agreements with United Express and Frontier Airlines , consisting of 1 2 on e stop round trips per week to Denver In ternational Airport , with 19

- se at Beech 1900D aircraft , at the annual subsidy

rate of $1,742,886. Sovereign proposes to provide two daily nonstop or one
- stop round trips to Minneapolis/St. Paul International Airport with 9

- seat Beechcraft King Air aircraft, at the annual subsidy rate o f $1,758,636 for nonstop service, and $1,657,936 for one

- stop service. Community

Comments Inresponse to our request, we received a letter from David McGirr, Mayor of Huron. Mr. McGirr say s he appreciates the EAS program and that it is not only “essentia l”, but that it is truly a service to the members of the community , as well as the surrounding area. Although appreciative of the program and the intent of essential air service, the community feels that Great Lakes is not providing even the least “basic” service under the terms of the program. Mr. McGirr believes that reliability is critical to making connections when the community only has two flights per day and Great Lakes’ consistent lateness and cancellations hinders the community ’s ability

to claim that it has “air service”. The community ’s biggest complaint is that its morning flight has been making an additional, unexpected, unscheduled stop, making passengers significantly

late for or causing them to miss connecting flights. The community

notes that it cannot with good conscience support Sovereign’s bid with all of the unknowns surrounding it and would, therefore, support Great L akes for a new two

- ye ar period. However, the community asks that Great L akes adhere to the requirements of its contra ct or otherwise provide evidence of necessity when delaying and cancelling flights

. Lastly , the community

asks that the carrier consider providing a third daily round trip (on a trial basis) in an effort to offer passengers an alternative when flights are excessively delay ed and/or cancelled, with the hope that boardings would increase enough to offset the expense of the additional flight. Decision After careful consideration of carriers’ proposals, as well as the community ’s comments, w e have decided to select Great Lakes to continue to provide EAS at Huron, as proposed, for a new two
- ye ar period , through September 30, 2012. The EAS program’s governing statutes ( see 49 U.S.C. 41732(b)) guarantee certain service minimums. In addition, when selecting a carrier to provide EAS, we must take into consideration four statutory 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) commun ity views

.3

Great Lakes meets all of the statutory carrier

- selection criteria. Great Lakes has contractual and marketing agreements with United and Frontier at Denver International Airport, providing excellent connecting opportunities to the national air transportation sy stem; Sovereign has none. Although the community has raised some reliability issues with Great L akes , Sovereign has no track record of reliability

. W e note that Sovereign does not have the requisite authority from either the Federal Aviation Administration or the Department to operate its service as proposed. Inaddition, the community favors Great Lakes over Sovereign. Therefore, based on all of the above, we will select Great Lakes to continue to provide subsidized EAS at Huron for a new two
- ye ar period, beginning October 1, 2010. We find that the proposed service and subsidy levels are reasonable. Nonetheless , we expect the carrier to address some of the deficiencies noted by the community

and to continue to work with the community to develop well

- timed and well

- spaced flight schedules that will efficiently meet the community ’s EAS needs

. We shall make this selection contingent upon the Department’s receiving properly executed certifications from Great Lakes that it is in compliance with the Department’s regulations regarding drug

- free workplaces and nondiscrimination, as well as the regulations governing lobbying activities. Finally , while we appreciate Sovereign Air’s interest in participating in the EAS program, we will not selec t its proposal here for the reasons we have stated above. However, we encourage Sovereign to continue its efforts toward becoming an operating commuter carrier and look forward to receiving proposals from the carrier in the future. Carrier Fitness 49 U.S .C. 41737(b) requires that we find an air carrier fit, willing, and able to provide reliable service before we may

subsidize it to provide essential air service. Great Lakes is subject to the Department’s continuing fitness requirements, and no informatio n has come to our attention that would cause us to question the carrier's 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 carrier remains fit to conduct the operations proposed here. This order is issued under authority delegated in 49 CFR 1.56a(f). AC CORDINGLY, 1. The Department selects Great Lakes Aviation , Lt d ., to continue to provide EAS at Huron, South Dakota , and establishes an annual subsidy rate of $1,742,886 , as detailed in Appendix B , for the two

- ye ar period beginning October 1, 20 10 ; 2

. We set the final rate of compensation for Great Lakes , for the provision of essential air service at Huron , pay able as follows: for each month during which EAS is provided, the amount of compensation shall be subject to the weekly ceiling set forth in Appendix C and shall4

be determined by

multiplying the subsidy

- eligible arrivals and departures completed during the month by $ 1,420 ; 2 3 . The Department finds that Great L akes continues to be fit, willing and able to operate as a commuter air carrier and capable of providing reliable EAS at Huron ; 4 . We direct Great Lakes to retain all books, records, and other source and summary documentation to support claims for pay ment, 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 destroy ed, 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; 5 . Docket DOT

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- 2000

- 7138 will remain open until further order of the Department; and 6 . The Department will serve a copy of this order on the m ay or and airport manager of Huron , Great Lakes Aviation , Lt d. , and Sovereign Air, Inc. By :

SUSA N L. KURLA ND Assistant Secretary for Aviation and International Affairs (SEAL ) An electronic version of this document is available on line at www.regulations.gov

2 See Appendix C for the calculation of this ra te, w hich assumes the use of the aircraft designated. If the carrier reports a significant number of aircraft substitutions, a revision of this rate may be required.

### Appendix A
Area Map

### Appendix B Page 1 of 2 GREAT LAKES AVI ATI ON , LTD
. ANNUAL COMPENSATI ON REQUI REMENT FOR ESSENTIAL AIR SERVICE AT HURON , SOUTH DAKOTA

### Appendix C Page 1 of 2 GREAT L AKES AVI ATI ON, LTD
. ANNUAL COMPENSATI ON REQUI REMENT FOR ESSENTIAL AIR SERVICE AT HURON, SOUTH DAKOTA Effective period: October 1, 20 10 , through September 3 0 , 201 2 Service: 1 2 non stop or one - stop round trips per week to Denver Aircraft ty

pe: Beechcraft 1900D aircraft ( 19 seats) Timing of flights: No upline or intermediate serv ice is permitted without prior Department approval. Flights must be well

- timed and well

spaced in order to ensure full compensation. Annual compensation: $ 1, 742,886 Subsidy Rate Per Arrival/Departure: $ 1, 420 1 Weekly Compensation Ceiling: 2 $ 3 4 , 0 80 3

___________________________ 1 Annual compensation of $ 1, 742 , 886 divided by 1, 227 annual arrivals and departures calculated as follows: 4 flights x 3 13 service days x 9 8 % completion = 1, 227

. 2 This rate assumes an annual completion fac tor of 9 8 percent. A compensation ceiling is to be applied per calendar week such that service above that ceiling in one week cannot make up for service shortfalls in another week. 3 Subsidy rate per arrival/departure of $ 1, 420 multiplied by 24 eligible arrivals and departures.

### Appendix C Page 2 of 2 General Terms and Conditions for Essential A ir 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 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 sch edule 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. I f the carrier contemplates any such changes bey ond the scope of the order during the applicab le period of these rates, it must first notify the Office of Aviation Analy sis 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 pay ment 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 sy stem provided to the community

. If the Department unilaterally , either partially or completely , terminates or reduces pay ments 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 pay ments in the stipulated amounts or at the stip ulated 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 pay ment. Subsidy contracts are subject to, and incorporate by reference, relevant statutes and Department regulations, as they

may be amended from time to time. Howe ver, any such statutes, regulations, or amendments thereto shall not operate to controvert the foregoing paragraph. Funds are not currently

available for performance under this order beyond September 30, 2010. The Government's obligation for performance under this order beyond September 30, 2010, is contingent upon the availability of appropriated funds from which pay ment for services can be made. No legal liability

on the part of the Government for any pay ment may arise for performance under this order bey ond September 30, 2010, until funds are made available to the Department for performance. I f funds are not made available for performance beyond September 30, 2010, the carrier will receive notice in writing by the Department. All claims for pay

ment must be submitted within 60 day s of the last day of service provided under this order.