Essential Air Service at Seven Montana Communities

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Essential Air Service at Seven Montana Communities Order: 2016-8-24 Served: August 24, 2016 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Issued by the Department of Transportation on the 24th of August, 2016 Essential Air Service at DUBOIS, PENNSYLVANIA DOT-OST-2004-17617 JOHNSTOWN, PENNSYLVANIA DOT-OST-2002-11451 MORGANTOWN, WEST VIRGINIA DOT-OST-2005-20735 Under 49 U.S.C. § 41731 et seq. ORDER SELECTING AIR CARRIER Summary By this Order, the Department of Transportation (“the Department”) is selecting Southern Airways Express, LLC (“Southern”), to provide subsidized Essential Air Service (EAS) to the communities of DuBois and Johnstown, Pennsylvania, and Morgantown, West Virginia. Each community will receive 38 weekly round trips to large- or medium-hub airports. Background By Order 2014-7-11, issued July 18, 2014, the Department re-selected Silver Airways (“Silver”) to provide EAS at Morgantown, West Virginia, and Johnstown, Pennsylvania, from August 1, 2014, through September 30, 2016, and also re-selected Silver at DuBois, Pennsylvania, from October 1, 2014, through September 30, 2016. In anticipation of the end of these communities’ contracts on September 30, 2016, by Order 2016-3-33, issued on March 28, 2016, the Department requested proposals for EAS at DuBois, Johnstown, and Morgantown (along with other communities not addressed in this Order) with proposals due no later than May 3, 2016. On April 27, 2016, Silver requested an extension to the deadline until May 20, 2016. On April 28, 2016, the Department granted the extension request, thereby making proposals to serve the above communities due on May 20, 2016. The carriers’ complete proposals and community comments may be accessed online at www.regulations.gov. Therefore, we will only briefly summarize the proposals and comments in the chart below. -2- Airline Proposals Boutique Air Option 1 Option 2 Origin Route Annual Subsidy $ Route Annual Subsidy $ 12 weekly non-stops to 24 weekly non- BWI and 12 weekly DuBois stops to BWI 2,675,869 non-stops toPIT 2,683,400 14 weekly non-stops to 28 weekly non- BWI and 14 weekly Johnstown stops to BWI. 2,674,148 non-stops to PIT 2,763,049 14 weekly non-stops to 14 weekly non- IAD and 21 weekly non- Morgantown stops to IAD 2,906,358 stops to PIT 3,222,004 Corporate Flight Management Option 1 Option 2 Origin Route Annual Subsidy $ Route Annual Subsidy $ 24 weekly non- 18 weekly non-stops to DuBois stops to IAD/BWI 4,205,558 IAD/BWI 3,514,911 18 weekly non- 24 weekly non-stops to Johnstown stops to IAD/BWI 3,145,330 IAD/BWI 3,712,783 18 weekly non- 24 weekly non-stops to Morgantown stops to IAD/BWI 3,347,832 IAD/BWI 3,982,787 Silver Airways Option 1 Origin Route Annual Subsidy $ 12 weekly non- stops to IAD via DuBois Johnstown 1,349,803 12 weekly non- Johnstown stops to IAD 1,974,903 13 weekly non- Morgantown stops to IAD 3,210,395 Southern Airways Express Option 1 Option 2 Option 3 Origin Route Annual Subsidy $ Route Annual Subsidy $ Route Annual Subsidy $ 19 weekly non- stops to PIT and 19 14 weekly non-stops to non-stops weekly to PIT and 19 non-stops 31 weekly non- DuBois BWI 2,967,587 weekly to BWI 2,760,404 stops to PIT 2,640,298 24 weekly non- stops to PIT and 14 19 weekly non-stops to non-stops weekly to PIT and 14 non-stops 32 weekly non- Johnstown IAD/BWI 2,912,558 weekly to IAD/BWI 2,697,078 stops to PIT 2,470,700 19 weekly non- 19 weekly non- stops to PIT stops to PIT and 19 24 weekly non-stops to and 14 non- non-stops weekly to PIT and 14 non-stops stops weekly to Morgantown IAD 2,989,432 weekly to IAD 2,989,803 IAD 2,663,241 ViaAir Option 1 Origin Route Annual Subsidy $ 24 weekly non- Morgantown stops to IAD 2,397,626 -3- Community Comments On May 23, 2016, the Department requested comments from the communities regarding the carrier- selection case. All three communities support Southern’s Option 1 with 38 weekly round trips per community, and both Johnstown and Morgantown expressed strong dissatisfaction with Silver’s service over the last two years. At DuBois, we received comments from the County Commissioner of Jefferson County, the Chairman of the Clearfield Jefferson Counties Regional Airport Authority, and a State Representative. All three letters cited Southern’s favorable price structuring, advertising and marketing plan, and reputation for operational efficiency as factors for their preference. Rep. Matt Gabler of the 75th district of the Pennsylvania House of Representatives mentions that “[with] Southern’s proposed pricing for tickets, service levels and level of professionalism and enthusiasm, it is the Authority’s hope that the per-seat cap can be overcome easily and that ridership will increase capturing those driving to those destinations.” The Chairman of the Clearfield Jefferson Counties Regional Airport Authority stated the the authority voted unanimously for Southern’s Option 1, with 19 weekly round trips to both Pittsburgh and to Baltimore. RaNell Fenchak, the airport manager at the Johnstown Cambria County Airport, states that the community supports Southern’s proposal for 24 weekly nonstops to Pittsburgh and 14 weekly nonstop to Washington Dulles, citing Southern’s operational efficiency, scheduling, fleet quality and potential for code sharing and/or interline agreements. Further, “[a]lthough they do not have code share [or] interline agreements, they are currently in the process of establishing an interline agreement. They also have methods in place to provide timely and convenient check in at the connecting airports.” Calvin G. Kelly III, Acting Airport Director at Morgantown Municipal Airport recommends Southern’s Option 1, and cites the carrier’s reputation for reliability and operational efficiency. Decision In selecting an air carrier to provide subsidized EAS not in Alaska, 49 U.S.C. § 41733(c)(1) directs the Department to consider five factors: (A) service reliability; (B) contractual and marketing arrangements with a larger air carrier at the hub; (C) interline arrangements with a larger air carrier at the hub (D) community views, giving substantial weight to the views of the elected officials representing the users of the serve; and (E) whether the air carrier has included a plan in its proposal to market the service. In addition, the Consolidated Appropriations Act, 2016, Pub. L. 114-113, provides that when selecting a carrier to provide EAS, the Department may consider the relative subsidy requirements, thus codifying a factor that has been considered since the inception of the program. Southern (previously Sun Air) has a record of providing reliable EAS at markets around the U.S., and, with the exception of Silver, none of the proposals received contemplated contractual, marketing, or interline arrangements with a larger air carrier at a hub airport. In this case, the communities’ support of Southern is clear. As described above in the Department’s statutory selection criteria, the Department is directed to consider community views and also to give substantial weight to the views of elected officials. All of the letters received from the three communities were in support of Southern, including comments from Morgantown and Johnstown expressing the communities’ strong dissatisfaction with the service that Silver, the incumbent, has provided over the last two years. The Morgantown Municipal Airport specifically cited Silver’s lack of reliability as a major factor leading to “the significant dwindling of [the community’s] enplanements…” Additionally, Southern states in its proposal, “Southern has full-time, dedicated EAS marketing professionals who maintain a physical -4- presence in each service community. Including weekly marketing calls and bi-weekly visits with airport officials, Southern executives are engaged with the airports in every aspect of the operation.” Considering Southern’s a comprehensive marketing plan, robust scheduling options, and the communities’ strong and unanimous support of Southern’s proposals, the Department will select Southern’s Option1 to provide EAS at DuBois, Johnstown, and Morgantown. Southern proposes use of single-engine aircraft. Under 49 U.S.C. § 41732(b)(5), EAS requires service by an aircraft with at least two engines. However, 49 U.S.C. § 40109(c) states that the Secretary may grant an exemption from certain EAS requirements when the exemption is consistent with the public interest. Under 49 U.S.C. § 40101(a)(11), the Secretary of Transportation shall consider as being in the public interest: “maintaining a complete and convenient system of continuous scheduled interstate air transportation for small communities and isolated areas with direct financial assistance from the United States Government when appropriate.” All three communities specifically supported an exemption from 49 U.S.C. § 41732(b)(5), and fully understand all consequences of this request. Rick Wise, Chairman of the Clearfield-Jefferson Counties Regional Airport Authority, states, “We believe there is sufficient value in use of [single engine] aircraft in our community that we are prepared to waive our right to twin engine service. We understand that use of single engine aircraft for Essential Air Service could eliminate the twin engine minimum standard in future EAS bids.” RaNell Fenchak, Manager at the Johnstown-Cambria County Airport Authority, also submitted a letter waiving the community’s right for the current contract term and potentially for future EAS bids, stating, “We hereby waive the multi-engine requirement for our EAS, based on the high reliability rate of the Pratt and Whitney PT6 engine used in the Caravan aircraft.” The Department grants an exemption from 49 U.S.C. 41732(b)(5) to these communities and finds that this exemption is consistent with the public interest.
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