Order 2007- 1-2 Served: January 10,2007

UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation on the 5th day of January, 2007

Essential Air Service at

I RON MO UNTAl N/KI N GS FORD, MIC HI G AN Docket OST-1999-5175 IRONWOOD, MICHIGANIASHLAND, Docket OST-1999-5712 MANISTEE/LUNDINGTON, Docket OST-1996-1711 ESCANABA, MICHIGAN Docket OST-2003-15128

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

ORDER REQUESTING PROPOSALS

Summary By this order, the Department is requesting proposals from air carriers interested in providing at: Iron MountaidKingsford, Michigan; Ironwood, MichigadAshland, Wisconsin; hhnistee/Ludington, Michigan; and Escanaba, Michigan, for a new two-year period, beginning June 1, 2007, with or without subsidy. (See Appendix A for a service area map.)

Background By Order 2005-5-14, May 23,2005, the Department selected , Inc., d/b/a (Skyway Airlines), to provide subsidized EAS at Iron MountaidKingsford, Ironwood/Ashland, and Manistee/Ludington, through May 3 1, 2007, utilizing Beech- 1900D aircraft, at annual subsidy rates of $602,761, $409,242 and $776,05 1, respectively ($1,788,054 in total). Under that order, Skyway Airlines provides Iron MountaidKingsford with three round trips each weekday and four round trips each weekend to , with an allowable stop in either Escanaba or Marquette, Michigan, on no more than two of the six one-way flights that operate each weekday and five of the eight one-way flights that operate each weekend. At Ironwood/Ashland, Skyway Airlines provides two round trips each weekday and three round trips each weekend to Milwaukee, with an allowable intermediate stop at Rhinelander, Wisconsin. Service at Manistee/Ludington consists of two round trips each weekday and each weekend to Milwaukee with an allowable intermediate stop in Muskegon, Michigan, on no more than three of the four one-way flights which operate each weekday and each weekend.

Similarly, on June 21, 2006, the Department issued Order 2006-6-23, reselecting Skyway Airlines to provide subsidized EAS at Escanaba for the period of April 1,2006 through May 3 1. 2007, at an annual subsidy rate of $908,903. Under that order, Skyway provides Escanaba with -2-

three round trips each weekday and four each weekend (1 9 round trips per week) to Milwaukee with Beech-1900D aircraft. The order also allowed Skyway Airlines to substitute 32-seat Fairchild 328 Jet aircraft for twelve nonstop round trips per week in lieu of the nineteen round trips per week utilizing Beech-1 900D aircraft.

In awarding Escanaba’s current EAS contract to Skyway Airlines, the Department and carrier agreed to reduce the typical two-year contract period to allow for the synchronization of the expiration date of Escanaba’s EAS contract with those of Iron Mountaifiingsford, Ironwood/Ashland. and Manistee/Ludington.

Request for Proposals As the end of the current rate term approaches, we are here requesting proposals from carriers interested in providing service at Iron Mountaiflingsford, Ironwood/Ashland, Manistee/L,udington and/or Escanaba, with or without subsidy, for the two-year period beginning June 1, 2007. Carriers should file their proposals within 30 days of the date of service of this order. At the end of that period, our staff will docket 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.’

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 resolicit a new round of proposals. However, negotiation arid 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.

Carriers should not expect the Department to accept late fillings. 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-

We strongly encourage clear, well-documented proposals that will facilitate their evaluation by the affected communities and the Department.2

With speci lic respect to Iron MountainKingsford, Ironwood/Ashland, Manistee/Ludington and Escanaba. the Department expects proposals consisting of service with 19-passenger aircraft and offering a mix of two or three round trips a day between each community and Milwaukee. Larger aircraft, offering fewer daily trips may be substituted in lieu of the 19-passenger aircraft, higher frequency service so long as the number of available seats between the EAS community and the hub are approximately equivalent. Such service is generally consistent with what the communities currently receive, and fully satisfies their essential air service requirements. We encourage proposals that meet those 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 Historical traf'fic for Iron MountairdKingsford, Ironwood/Ashland, Manistee/Ludington and Escanaba is detailed in Appendix B. During the year ended December 3 1, 2005, Iron Mountain/Kingsford averaged 22.2 enplanements a day, Ironwood/Ashland 4.9, and ManistedLudington 3.7. For year ended November 30,2005, Escanaba generated an average of 30.7 enplanements per day. While enplanements are trending upward in these communities, they have not yet returned to pre-September 1 1,2001, levels.

Other Carrier Req u i re ments The Department is responsible for implementing various Federal statutes governing lobbying activities, drug-free workplaces, and nondiscrimination.3 Consequently, all carriers receiving Federal subsidy for essential air service must certify that they are in compliance with Department regulations regarding drug-free workplaces and nondiscrimination, and those carriers whose subsidies exceed $1 00,000 over the life of the rate term must also certify that they are in compliance with the regulations governing lobbying activities. Because the Department is prohibited from paying subsidy to carriers that do not submit these documents, all carriers that

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, the Transportation, Treasury, Housing and Urban Development, the Judiciary, the District of Columbia, and Independent Agencies Appropriations Act, 2006, Public Law 109-1 15, provides that when selecting a carrier to provide EAS, the Department may consider the relative subsidy requirements, 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. The regulations applicable to these areas are: (1) 49 CFR Part 20 -- New restrictions on lobbying; (2) 49 CFR Part 2 1 -- Nondiscrimination in federally-assisted programs of the Department of Transportation -- Effectuation of title VI ofthe 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 (non-procurement) and government-wide requirements for drug-free workplace (grants). -4- plan to submit proposals involving subsidy should be aware that the selected carrier will be required to complete the required certifications. Interested carriers requiring more detailed information regarding these requirements should contact the Office of Aviation Analysis at (202) 366-5903.4

Community and State Comments The communities and State are welcome to submit comments at any time. We encourage prospective applicants to contact the communities before they submit their proposals so that they can tailor them to the communities’ needs, as they will not be able to amend them after the 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 the end of the 30-day period for carrier proposals.

This order is issued under authority delegated by the Assistant Secretary for Aviation and International Affairs in 49 CFR 1.56a(f).

ACCORDINGLY, I. We request that carriers interested in providing essential air service at Iron MountaidKingsford, Michigan; Ironwood, MichigadAshland, Wisconsin; Manistee/Ludington, Michigan; and Escanaba, Michigan, submit their proposals, with or without subsidy requests, no later than 30 days after the date of service of this order. The proposals should be sent to the EAS & Domestic Analysis Division, X-53, Office of Aviation Analysis, Room 6401, Department of Transportation, 400 7th Street S.W., Washington, DC 20590, with the title “Proposal to Provide Essential Air Service at: Iron MountainKingsford, Michigan (Docket OST-1999-5 175); Ironwood, MichigadAshland, Wisconsin (Docket OST- 1999-5 172); Manistee/Ludington, Michigan (Docket OST-1996-1711); and Escanaba, Michigan (Docket OST-2003-15 128).”j

2. These dockets will remain open until further order of the Department; and

3. We will serve copies of this order on the parties listed in Appendix D.

Persons entitled to petition the Department for review of this order under the Department’s Regulations, 14 CFR 385.50, must file such petitions within ten (10) days after the date of service of this order.

-I The certifications are also available on the web at http://ostpxweb.dot.gov/aviation/index.html. j Questions regarding filings in response to this order may be directed to Brian Swanson at (202) 366-5392 or brian.swanson@,dot.gov. Proposals may also be emailed to [email protected] and dennis.devany@,dot.gov -5-

This order will be effective immediately, and the filing of a petition for review shall not preclude its effectiveness.

TODD M. HOMAN Director Office of Aviation Analysis

(SEAL)

An electronic version of this document is avuiluble on the World Wide Web at http://dms.dot.pov Appendix A

AREA MAP

'-10 Ironwood L .... ,-f ----i:'"^--'- Iron MountaidKingsford

\

e MILWAUKEE

DETROIT e/

I \ /

CHICAGO O'HARE __/-- Appendix B Page 1 of 2

Histori ca I En plan e ments Ironwood, MichigadAshland, Wisconsin

Origin & Averaqe Annual Year Destination En planemen ts Ended En plane ments2 Passengers

31-Dec-99 3,830 31-Dec-00 4,014 3 1-Dec-0 1 4,025 2,OI 3 31-Dec-02 3,239 1,620 31-Dec-03 4,498 2,249 7.2 3 I-Dec-04 3,042 1,521 4.8 31-Dec-05 3,095 1,548 4.9

Histori ca I Enplane mentsl Iron MountainlKingsford, Michi!gan

I 1 I Ave raqe Enplan emen ts Per Service Dav 3

29.9 28.6 26.7 22.4 17.8 20.7 22.2

Notes: 1. Source: Order 2005-2-3, Dockets OST-1999-5175, OST- 1999-5712, and OST-1996-1711 and Order 2005-1 2-1 7, Docket OST-2003-12800 and USDOT Bureau of Transportation Statistics, Form T-I00 2. Origin-destination passengers divided by two. 3. Average annual enplanements divided by 31 3 effective annual service days, except for annual period.; ended 12/31/2000 and 12/31/2004 (314 effective annual service days). Appendix B Page 2 of 2

Historical Enplanements' Manistee/Ludington, Michigaln

'I Origin & Averaqe Year Annual Destination En planements Ended Enplane men ts2 Passengers

I 2.506 I 1.253 ____ .A/4.0 2,502 I 1.251 2,498 1,249 I 31 -Dec-02 3 1-Dec-03 3,397 1,699 5.4 I 31-Dec-04 2,308 1,154 31-Dec-05 2,335 1,168

Historical Enplanements4 Escanaba, Michigan

Origin & Year Destination Enp la nemen ts Ended En planements Passengers Per Service Da

27,800 16.240 16,440 *+I 17,906 8,953 19.224 9,612 30.7

Notes: 1. Source: Order 2005-2-3, Dockets OST-199!3-5175, OST- 1999-5712, and OST-1996-1711 and Order 2005-12-1 7, Docket OST-2003-12800 and USDOT Bureau of Transportation Statistics, Form T-I 00 2. Origin-destination passengers divided by two. 3. Average annual enplanements divided by 31 3 effective annual service days, except for annual periods ended 12/31/2000 and 12/31/2004 (314 effective annual service days). Appendix C

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 1.0 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.

All claims for payment must be submitted within 60 days of the last day of service provided under this order. Appendix D Page 1 of 2

Service List for the State of Michtigan

Air Wisconsin, Inc. Allied Airlines, Inc. , Inc. , Inc. Chrysler , Inc. , Inc. CommutAir, Inc. Great Lakes Aviation, Ltd. Jet Services, Inc. J et stream I nt er nat io na I Air I in es , I nc . Logansport Flying Service, Inlc. , Inc. Mesaba Aviation, Inc. Michigan Airways, Inc. Midwest Express Airlines, Inc. Northcoast , Inc. Pennsylvania , Inc. Planemaster Services Inc. RegionsAir Sterling Aviation, Inc. Shawano Flying Service, Inc. S kyVa nt ag e Corporation Trans North Aviation Ltd. Westward Airways, Inc.

David Cole, Chairman Doug Franklin E.B. Freeman A. Edward Jenner Dan Katzka Lee Mason Cory Robin Garbriel Saavedra Tracy Schoenrock Edward Wenz Appendix D Page 2 of 2

Service List for the State of Wisconsin

Air Wisconsin, Inc. Amerijet International, Inc. Bemidji Airlines Air Taxi, Inc. , Inc. Delta Connection Dwyer Aircraft Sales, Inc. Gorda Aero Service, Inc. Great Lakes Aviation, Ltd. Imperial International, Inc. Jet Services, Inc. Mesa Airlines, Inc. Mesaba Aviation, Inc. Michigan Airways, Inc. Midwest Aviation Midwest Express Airlines, Inc. Planemaster Services Inc. RegionsAir Sterling Aviation, Inc. Shawano Flying Service, nc. Skyvantage Corporation Thunderbird Aviation, Inc Trans North Aviation Ltd. Westward Airways, Inc. Wise Aviation Company

Tom Alton Rick Bauer Doug Franklin E.B. Freeman A. Edward Jenner Dan Katzka Lee Mason Cory Robin Garbriel Saavedra Tracy Sc hoenroc k Edward Wenz