Order 2012-5-25 Served: May 24, 2012 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON,

D.C. Issued by the Department of Transportation on the 24th day of May, 2012 Essential Air Service at MACON, GEORGIA Under 49 U.S. C. 41731 et seq. DOCKET DOT-OST-2007-28671

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Summary By this Order, the Department prohibits Pacific Wings, L.L.C., d/b/a Georgia Skies (Pacific Wings), from terminating service at Macon, Georgia, for 30 days beyond the end of the 90-day notice period, i.e., August 25, 2012. We are also requesting proposals from air carriers interested in providing Essential Air Service (EAS) at Macon, with or without subsidy. (See Appendix A for a map). Proposals are due June 20, 2012. Background By Order 2008-5-43, May 29, 2008, the Department selected Pacific Wings to provide EAS at the community for the two-year period through September 30, 2010, for an annual subsidy rate of $1,386,306. 1 In anticipation of the end of that rate term, the Department issued Order 2010-5-33, May 28, 2010, requesting proposals from air carriers interested in providing replacement service at Macon, with subsidy support if necessary, for the two-year period beginning October 1, 2010. The Department received proposals from four air carriers, but, by Order 2010-10-5, we rejected the proposals of all four air carriers. We rejected two of the proposals because those air carriers did not have the requisite operating authority at that time. We rejected the remaining two proposals because the per passenger subsidy from both proposals would have exceeded the subsidy-per-passenger ceiling. Then, on December 14, 2010, Pacific Wings filed the following:

1 By Order 2010-10-5, October 7, 2010, we extended that rate until further Department action. That service consisted of 26 nonstop round trips a week, operated with 9-seat Cessna 208-B aircraft.

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ORDER PROHIBITING SUSPENSION OF SERVICE AND REQUESTING PROPOSALS

-2At this point, [Pacific Wings] has invested far too much in Macon to simply walk away. Please accept this correspondence as notice that [Pacific Wings] is withdrawing its bid for subsidized service at Macon, but will continue to serve the community without subsidy. In light of the above, the Department terminated that carrier-selection proceeding and relied on Pacific Wings subsidy-free service to continue to meet Macons EAS needs. Pacific Wings continued to provide subsidy-free service until April 26, 2012, at which point the carrier filed the current 90-day notice of intent to terminate its unsubsidized service at Macon, effective July 26, 2012. Hold-In The Departments FY 2012 appropriation (P.L. 112-55) limited eligibility in the EAS program in the lower 48 states to certain communities, including those that received subsidized EAS at any time between September 30, 2010, and September 30, 2011, inclusive. Macon is eligible for subsidized service because it was receiving service on a subsidized basis from Pacific Wings through January 24, 2011. Pacific Wings proposed termination of service at Macon would leave the community with no scheduled air service whatsoever. In this circumstance, 49 U.S.C. 41731(a)(1)(c) requires the Department to prohibit the air carrier from terminating such service for 30 days beyond the end of its 90-day notice, i.e., August 25, 2012. We will require Pacific Wings to continue to maintain the current level of service at Macon for successive 30-day periods until we have completed processing the air carrier-replacement case and the selected air carrier has actually started service. 2 Request for Proposals We are here requesting proposals from air carriers interested in providing service at Macon, with or without subsidy support, for a new two-year period. Air carriers should file their proposals no later than June 20, 2012. After that date, our staff will docket proposals, thereby making them public, and direct each air carrier to serve a copy of its proposal on the civic parties and other applicants. Shortly thereafter, we will provide a summary of the proposals to community officials and ask them to submit their final comments. We will give full consideration to all proposals filed in a timely manner. 3 We are here providing interested air 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
2 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. 3 Carriers should not expect the Department to accept late filings. 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 proceed with the carrier-selection case. Instead, we simply rely on that carriers subsidy-free service as proposed.

-3schedules 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 affected communities and the Department. 4 Interested air carriers should prepare their proposal with every expectation that their initial proposal will also be their final and only proposal. We retain the discretion to negotiate proposals with air carriers when we deem it desirable; in such cases, of course, we will give all applicants the same opportunity. We also retain the discretion to reject outright all unreasonable or unrealistic proposals and solicit a new round of proposals. However, we anticipate that negotiation or rejection will remain only occasional exceptions to the rule. In order to assist air carriers in developing traffic and revenue projections for their proposals, we have summarized historical passengers in Appendix B. In 2011, Macon generated 1,988 O&D passengers, an average of three enplanements a day. 5 Other Air Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug-free workplaces and nondiscrimination. 6 Consequently, all air carriers receiving Federal subsidy to support EAS must certify that they are in compliance with Department regulations regarding drug-free workplaces and nondiscrimination, and those air 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. All air carriers that plan to submit proposals involving subsidy should submit the required certifications along with their proposals. Interested air 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. The Department is prohibited from paying subsidy to air carriers that do not submit these documents. 7 Community Comments Civic officials and the State are welcome to submit comments at any time. We encourage prospective applicants to contact the community before they submit their proposals so that they can tailor them to the communitys needs, as they will not be able to amend them after
4 In selecting an air carrier to provide subsidized EAS, 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 Consolidated Appropriations Act, 2008, Public Law 110-161, provides that when selecting an air 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. Interested 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. 5 See Appendix B for historical traffic data. Enplanements represent one-half of total origin-and-destination traffic, and average enplanements per day are based on 313 service days a year. 6 The regulations 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 (nonprocurement) and government-wide requirements for drug-free workplace (grants). 7 The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html.

-4the due date. As noted earlier, we will provide a copy of the proposals to the civic parties and ask them to submit their final comments shortly after June 20, 2012, the due date for air carrier proposals. This Order is issued under authority delegated in 49 CFR 1.56a(f) and re-delegated to the Director, Office of Aviation Analysis. ACCORDINGLY, 1. We request that air carriers interested in providing Essential Air Service at Macon, Georgia, submit their proposals, with or without subsidy requests, no later than June 20, 2012. The proposals should be emailed to: EAS@dot.gov with the title Proposal to Provide Essential Air Service at Macon, Georgia (Docket DOT-OST-2007-28671) 8 2. The Department prohibits Pacific Wings, L.L.C., d/b/a Georgia Skies, from suspending their service at Macon, Georgia, at the end of its 90-day notice period and require it to maintain its current level of service, as specified in Order 2011-1-14, issued on January 18, 2011, through August 25, 2012, or until an air carrier capable of providing reliable Essential Air Service actually begins service, whichever comes first; 9 3. The Department will serve copies of this Order on the civic officials of Macon, Georgia, Pacific Wings, L.L.C., d/b/a Georgia Skies, and the parties listed in Appendix D; By:

SUSAN L. KURLAND Assistant Secretary for Aviation and International Affairs (SEAL) An electronic version of this document is available on the World Wide Web at http://www.regulations.gov

8 Questions regarding filings in response to this Order should be directed to Mr. Scott Faulk at scott.faulk@dot.gov or (202) 366-9967. 9 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.

Appendix A

AREA MAP

Appendix B

Macon Georgia1

Year Quarter 2009 1 2009 2 2009 3 2009 4

Inbound Pax 373 369 332 323

Outbound Pax

Total

348 385
317 274

721 754
649 597 2,721 447 595 839 668 2,549 495 407 471 615 1,988

Total

2010 2010 2010 2010

1
2 3 4

223 318 463 303

224 227 376

365

Total

2011 2011 2011 2011

1 2 3 4

259 222 252 339

236 185 219 276

Total

Source: Bureau of Transportation Statistics; Schedule T-100.

Appendix C Example of General Terms and Conditions for Essential Air Service The air 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 air 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 air 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 air 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 air carrier to provide service on these routes. The air 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 air 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 air 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 September 30, 2012. The Government's obligation for performance under this Solicitation beyond September 30, 2012, is subject to 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 solicitation beyond September 30, 2012, until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30, 2012, the Department will provide notice in writing to the air carrier. All claims for payment must be submitted within 60 days of the last day of service provided under this Order.

Appendix D
Aero Twin, AACA, Tony Cestnik Alaska Air Carriers Association, Joy Journeay Alaska Airlines, Joe Sprague Alaska Airlines, Sandy Sinick Alaska Central Express, John Seamon Alaska Central Express, Mike Bergt Alaska Central Express, Steve Endlich Alaska DOT, Christine Klein Alaska DOT, Rebecca Cronkhite Alaska DOT-Medicaid Passenger Fares Alaska Seaplanes, Craig Loken Alsek Air, Les and Debra Hartley Arctic Circle, Donald Singsaas Arctic Circle, Kelly Harris Arctic Transportation Services (ATS), Wilfred Ryan Arctic Transportation Services, (ATS), Jim Hjelm Baker Aviation, Marjorie Baker Bering Air, Allen Haddadi Bering Air, Jim Rowe Congressional, Murkowski, Arne Fuglvog Congressional, Begich, Amanda Clausen Congressional, Young, Jeremy Price Consultant, Hank Myers Consultant, Ken Acton Consultant, Norm Israelson Ellis Air Taxi, Lynn Ellis Era Aviation, Mike Lenorman ERA, David M. Richards Frontier Flying, Bob Hajducovich Grant Aviation, Bruce McGlasson Hageland, Mike Hageland Hageland, Patrick Thurston Hageland, Steve Wahrnke Harris Air, Fly Hackett Harris Air, Scott Harris Air, Scott Harris Homer Air, Andy Smircich Iliamna Air, Tim LaPorte Inland Aviation, Stephen Hill Island Air Service, Bob Stanford Katmai Air, Sonny Peterson DHS, Randy Webb Northern Air Cargo, John Eckles Northern Air Cargo, Keven Schlosstein Pacific Airways, Steve Montanus PenAir Consultant, Patrick Rizzi PenAir, Betty Gonzalez PenAir, Danny Seybert PenAir, Orin Seybert PenAir, Robert Cohn PenAir, Scott Bloomquist PM Air, d/b/a Promech, Marc Sessoms RITA, Benard Stankus Servant Air, W es Osowski Skagway, Ben Lingle Smokey Bay Air, Claire McCann Spernak Airways, Mike Spernak Tanana Air Service, Brian Martin Taquan Air Service, Brien Salazaar Taquan, Beckie Allen Tatonduk, Controller, Tina Paylor Tatonduk, Marketing, Robert Ragar Tatonduk, Owner, Robert Everts USPS, Greg Garcia USPS, Joel Rosen USPS, Mary Tobias USPS, Meredith Chavez, Consultant USPS, Steve Deaton USPS, Taylor, Mary T USPS, Tina Campbell USPS, William Jones Warbelows Air Ventures, Arthur W arbelow Ward Air, Ed Kiesel Wings of Alaska, Bob Jacobsen Wings of Alaska, Michelle Donohue Wright Air Service, Bob Bursiel Yute, Tim Vottis