Order 2010-8-12

Served: August 25, 2010

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

on the 25th Day of August, 2010

ORDER SELECTING CARRIER

AND ESTABLISHING SUBSIDY RATES

Summary

By this order, the Department is selecting Great Lakes Aviation, Ltd. (Great Lakes), to continue 

providing subsidized essential air service (EAS) at Huron, South Dakota, for the two-year 

period beginning October 1, 2010, at the annual subsidy 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. 41731-41744 for the EAS program’s governing statutes.) By

Order 2008-7-34, July 24, 2008, the Department selected Great Lakes to provide EAS at Huron 

for the two-year period through September 30, 2010. That order established an annual subsidy

rate of $1,781,159 for service consisting of 12 nonstop or one-stop round trips per week from to 

Denver, with 19-seat Beech 1900D aircraft.

In anticipation of the end of the rate term, the Department issued Order 2010-5-26, May 24,

2010, requesting proposals from carriers interested in providing replacement service at the 

community, with subsidy support if necessary, for the two-year 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 DAKOTA

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

DOCKET DOT-OST-2000-7138
2

Carrier Proposals

In response 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 12 onestop round trips per week to Denver International Airport, with 19-seat 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 of 

$1,758,636 for nonstop service, and $1,657,936 for one-stop service.

Community Comments

In response to our request, we received a letter from David McGirr, Mayor of Huron. 

Mr. McGirr says he appreciates the EAS program and that it is not only “essential”, 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 Lakes for a new two-year 

period. However, the community asks that Great Lakes adhere to the requirements of its 

contract 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 delayed 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, we 

have decided to select Great Lakes to continue to provide EAS at Huron, as proposed, for a new 

two-year 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) community 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 system; Sovereign has 

none. Although the community has raised some reliability issues with Great Lakes, Sovereign 

has no track record of reliability. We note that Sovereign does not have the requisite authority

from either the Federal Aviation Administration or the Department to operate its service as 

proposed. In addition, 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-year 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 select 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 information 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).

ACCORDINGLY,

1. The Department selects Great Lakes Aviation, Ltd., 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-year period beginning October 1, 2010;

2. We set the final rate of compensation for Great Lakes, for the provision of essential air 

service at Huron, payable 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 shall 
4

be determined by multiplying the subsidy-eligible arrivals and departures completed during the 

month by $1,420;

2

3. The Department finds that Great Lakes 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 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 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-OST-2000-7138 will remain open until further order of the Department; and

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

Great Lakes Aviation, Ltd., and Sovereign Air, Inc.

By:

SUSAN L. KURLAND

Assistant Secretary for Aviation

 and International Affairs

(SEAL)

An electronic version of this document is available online at

www.regulations.gov

 

2 See Appendix C for the calculation of this rate, which 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 AVIATION, LTD.

ANNUAL COMPENSATION REQUIREMENT FOR ESSENTIAL AIR SERVICE AT

HURON, SOUTH DAKOTA
Appendix C

Page 1 of 2

GREAT LAKES AVIATION, LTD.

ANNUAL COMPENSATION REQUIREMENT FOR ESSENTIAL AIR SERVICE AT

HURON, SOUTH DAKOTA

Effective period: October 1, 2010, through September 30, 2012

Service: 12 nonstop or one-stop round trips per week to Denver

Aircraft type: Beechcraft 1900D aircraft (19 seats)

Timing of flights: No upline or intermediate service is permitted without prior 

Department approval. Flights must be well-timed and wellspaced in order to ensure full compensation.

Annual compensation: $1,742,886

Subsidy Rate Per

Arrival/Departure: $1,4201

Weekly Compensation 

Ceiling: 2$34,0803

___________________________

1

 Annual compensation of $1,742,886 divided by 1,227 annual arrivals and departures calculated as 

follows: 4 flights x 313 service days x 98% completion = 1,227.

2

 This rate assumes an annual completion factor of 98 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 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 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 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 

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 

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 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 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, 2010, until funds are made available to the 

Department for performance. If funds are not made available for performance beyond 

September 30, 2010, the carrier will receive notice in writing by the Department.

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

under this order.