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July 9, 2009 UNITED STATES of AMERICA DEPARTMENT OF

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July 9, 2009 UNITED STATES of AMERICA DEPARTMENT OF Order 2009-7-9 Served: July 9, 2009 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Issued by the Department of Transportation on the 9th day of July, 2009 Essential Air Service at DECATUR, ILLINOIS Docket DOT-OST-2006-23929 MARION/HERRIN, ILLINOIS Docket DOT-OST-2000-7881 QUINCY, ILLINOIS Docket DOT-OST-2003-14492 BURLINGTON, IOWA Docket DOT-OST-2001-8731 CAPE GIRARDEAU, MISSOURI Docket DOT-OST-1996-1559 FORT LEONARD WOOD, MISSOURI Docket DOT-OST-1996-1167 Under 49 U.S.C. 41731 et seq. ORDER REQUESTING PROPOSALS Summary By this order, the Department is requesting proposals from carriers interested in providing essential air service (EAS) at any or all of the communities from November 1, 2009, through October 31, 2011, with or without subsidy, by August 12. (See Appendix A for a map.) Background Great Lakes was selected to provide EAS at these communities by a series of orders.1 Decatur was to receive 24 weekly round trips at an annual subsidy of $1,350,256 for the first year, and an annual subsidy of $1,055,844 for the second year. Marion/Herrin was to receive 26 weekly round trips at an annual subsidy of $1,126,810. Quincy was to 1 Order 2007-3-5, March 9, 2007, for Burlington Fort Leonard Wood, and Marion/Herrin, Order 2007-3- 10, March 13, 2007, for Quincy, Order 2007-4-12, April 10, 2007, for Decatur, and Order 2008-2-1, February 1, 2008, for Cape Girardeau. - 2 - receive 24 weekly round trips at an annual subsidy of $1,532,891 for the first year and $1,421,614 for the second year. Burlington and Fort Leonard Wood were to receive 18 weekly round trips for annual subsidies of $943,793 and $519,858, respectively. Cape Girardeau was to receive 19 weekly round trips at an annual subsidy of $1,497,542. Great Lakes is currently serving Burlington from Kansas City, Fort Leonard Wood from Kansas City and St. Louis, and Marion/Herrin, Decatur, Quincy and Cape Girardeau from St. Louis. Great Lakes inaugurated service to Burlington and Fort Leonard Wood on October 7, 2007, Decatur, Marion/Herrin, and Quincy on November 4, 2007, and Cape Girardeau on June 1, 2008. Currently, only Burlington and Fort Leonard Wood are receiving the full amount of weekly round trips that the Orders outline in the footnote on page 1, and Fort Leonard Wood is receiving more service than was awarded, but at no additional subsidy from the Department. On July 9, we received a joint letter from Senator Richard J. Durbin and U.S. Representative Jerry F. Costello, requesting that we “issue a new request for proposals (RFP) to acquire improved Essential Air Service (EAS) in the communities of Quincy, Decatur, and Marion, Illinois.” They state that the communities have “struggled to find reliable service with their current operator” and “Great Lakes Aviation is currently providing air service without a critical codeshare agreement with American Airlines.” They note that the “codeshare agreement was a key component of the communities’ support for Great Lakes Aviation’s application to become the EAS provider in those areas.” In addition, we are nearing the end of the two-year period after Great Lakes inaugurated service at all of the communities, except for Cape Girardeau, we are requesting proposals from carriers interested in serving any or all of the communities listed here for a two-year period from November 1, 2009, through October 31, 2011. Although it has not been two years since service was inaugurated at Cape Girardeau, we are including Cape Girardeau because Great Lakes’ St. Louis hub consists of service to all of the communities named here, except for Burlington. Traffic levels at Cape Girardeau are quite low (1.3 enplanements per day for the last 12 months), so a change in service, whether it be a new carrier, new flight schedule, or a new hub utilizing a full schedule of its awarded service may revitalize traffic there. Request for Proposals Carriers interested in filing proposals, with or without subsidy requests, should file them no later than August 12, 2009. At the end of that period, our staff will docket the proposals, thereby making them public, and direct each carrier to serve a copy of its proposal on the civic parties and other applicants. Shortly afterwards, we will provide a summary of the proposals to the communities and ask them to submit their final comments. We will give full consideration to all proposals that are timely filed.2 2 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 do not proceed with the carrier-selection case. Instead, we simply rely on that carrier’s subsidy-free service as proposed. - 3 - Interested carriers should prepare their proposals with every expectation that their initial proposals will represent their final and only proposals. However, we retain the discretion to negotiate proposals with 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 re-solicit a new round of proposals. However, negotiation or rejection are only occasional exceptions to the rule. We are here providing interested 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 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 affected communities and the Department.3 With respect to Decatur, Marion/Herrin, and Quincy, we expect proposals consisting of service with two-pilot, twin-engine aircraft with at least 15 passenger seats, and offering four round trips each weekday and weekend (24 total round trips per week) to a suitable hub airport (e.g. Chicago O’Hare, Dallas/Fort Worth, or Memphis, with numerous connecting opportunities to the national air transportation system. If aircraft larger than 30 seats are proposed, proposals should consist of three round trips each weekday and weekend (18 round trips per week). If aircraft with fewer than 15 passenger seats are contemplated, service patterns should consist of at least six round trips each weekday and weekend (36 total round trips per week). With respect to Burlington, Cape Girardeau, and Fort Leonard Wood, we expect proposals consisting of service with two-pilot, twin-engine aircraft with at least 15 passenger seats, and offering three round trips each weekday and weekend (18 total round trips per week) to a suitable hub airport (e.g. Chicago O’Hare, Dallas/Fort Worth, or Memphis, with numerous connecting opportunities to the national air transportation system. If aircraft larger than 30 seats are proposed, proposals should consist of two round trips each weekday and weekend (12 round trips per week). If aircraft with fewer than 15 passenger seats are contemplated, service patterns should consist of at least four round trips each weekday and weekend (24 total round trips per week). 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, Consolidated 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. Interested carriers should also be aware that our general provisions governing essential air service 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. - 4 - For all communities, if a proposal offering aircraft fewer than 15 seats is submitted and the community ultimately supports the service, in effect waiving their right to 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 waives their rights for all time. Communities 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 community and meets the operational needs of the airline interested in submitting a proposal. In addition, carriers should be very clear as to whether a specific community’s proposal is on a stand- alone basis, or whether it is part of a larger, inseparable package with other communities. We encourage proposals that meet these requirements in an efficient manner. Carriers are also welcome to propose more than one service option, if they choose; they need not limit themselves to those requirements if they envision other, potentially more attractive service possibilities -- different hubs, for example -- with subsidy requirements that remain competitive. Service and Traffic History During the year ended March 31, 2009, the most recent 12-month period for which traffic data are available, Burlington averaged 7.3 enplanements a day, Decatur 3.1, Marion/Herrin 7.0, Quincy 5.8, Cape Girardeau 1.3 and Fort Leonard Wood 18.9.4 In order to assist carriers in making their traffic and revenue forecasts, we have included historical traffic data for the communities in Appendix B.
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