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Mason City Airport gets Great Lakes Aviation as new carrier


This news story was published on November 28, 2011.
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Effective Period: Two-year period beginning when Great Lakes begins full EAS at each of these communities through the 24th month thereafter.
Service: 24 nonstop round trips per week to Minneapolis (MSP).
Aircraft: Beech 1900D, 19 seats.
Rate per Eligible One-Way Flight: $479
Weekly Ceilings: $22,992

Order Selecting Carrier

Summary
By this order, the Department is selecting Great Lakes Aviation, Ltd., to provide essential air service (EAS) at the six communities captioned above at the following annual subsidy rates: Brainerd, Minnesota, $959,865; Fort Dodge, $1,798,693; Iron Mountain, $1,707,841; Mason City, $1,174,468; Thief River Falls, Minnesota, $1,881,815; and Watertown, $1,710,324, for the two-year period beginning when Great Lakes inaugurates full EAS at all six communities.

Background
On July 15, 2011, Mesaba Aviation, Inc., and Pinnacle Airlines, d/b/a Delta Connection (Delta) filed 90-day notices of their intent to suspend their joint service at these six communities effective October 13. By Order 2011-9-5 we prohibited Delta from terminating service and requested proposals for replacement service. When a carrier files a 90-day notice of its intent to suspend service at a community, we have a legal obligation to make every effort to secure replacement service and release the suspending carrier. In that context, the decision at these six communities is very straightforward and so we will issue a final decision now to allow the carriers to start to work out smooth transitions as we continue to process the carrier-selection decisions at the remaining communities. Except for Brainerd, these communities were all receiving subsidized service from Delta with 34-seat Saab 340s at the time it filed notice, and we have summarized the service and subsidy levels in the following chart:

Carrier Proposals
In response to our request for proposals, we received proposals from Bemidji Aviation Services, Inc., Great Lakes Aviation (Great Lakes), Multi-Aero, Inc., d/b/a Air Choice One, and Sovereign Air. While the chart below outlines the critical elements of each carrier’s proposals, there are other considerations. Great Lakes indicated that it would not be able to provide the service under any of its proposals unless we selected them at a minimum of five communities, so that it would have sufficient flights to open a new hub at Minneapolis. Air Choice One’s proposals are all stand-alone proposals; however, its aircraft do not meet the two-engine requirement. Sovereign Air’s Fort Dodge and Mason City proposals are a two-city package. By Order 2010-10-21, the Department dismissed Sovereign Air’s application for Commuter Air Carrier Authority, and by Order 2011-2-3, the Department dismissed its petition for reconsideration of that order. Therefore, the carrier does not currently have, nor has it any current prospect of receiving soon, the requisite operating authorities to provide scheduled air service from either DOT or FAA.

Community Comments
On October 21, the staff sent letters to each community requesting comments regarding the proposals. Mason City’s response is below.

Mason City
The airport manager of Mason City recommends the selection of Great Lakes. “First and foremost, as good financial stewards, we must evaluate the cost difference between the three proposals.” Great Lakes’ proposal is much less expensive, requiring $1,174,468, vs. $2,522,445 for Air Choice One and $1,577,562 for Sovereign Air. Also, Mason City prefers that its service not be tagged with Fort Dodge, as Sovereign Air proposes. It notes that while Air Choice One proposes a higher frequency in view of its smaller aircraft, those aircraft are not pressurized, unlike those of Great Lakes. Finally, the community indicates that “A very important point to consider was that Sovereign Air is currently trying to acquire its funding and scheduled-service authority.” Great Lakes currently has “more interline agreements, more code-shares and the ability to issue frequent flyer miles on Delta.”

Decision
After reviewing all the carriers’ proposals and the communities’ comments, the carrier-
selection decisions are very straightforward, and we have decided to select Great Lakes.
All of the communities support the selection of Great Lakes, and the proposals of each of the other applicants do not meet minimum program requirements. Air Choice One operates single-
engine aircraft, and the EAS program ensures communities of service with twin-engine aircraft (49 U.S.C. 41732(b)(5). As noted by several of the communities, Sovereign Air does not currently have the requisite authority to operate their proposed service from either the Federal Aviation Administration or the Department. In addition, we find that the service levels proposed by Great Lakes are responsive to our Request for Proposals and that its subsidy levels are reasonable. Finally, though not determinative, we note that Delta is working with Great Lakes in an attempt to make the connecting service at Minneapolis as seamless as possible, as noted in Delta’s letter dated October 20:

“Due to the retirement of our 34-seat Saab aircraft fleet, Delta no longer has suitable aircraft to serve the smaller EAS markets. To that end, we are cooperating with Great Lakes Aviation to enhance their EAS bids in nine small communities where they recently submitted bids. If Great Lakes is selected, Delta intends to assist Great Lakes through an interline and ticketing arrangement, participation in our SkyMiles frequent flyer program, and booking capability on Delta.com.”

The communities have expressed appreciation for Delta’s support in this endeavor, which is tantamount to a code-share arrangement in many ways and promises to provide the communities with seamless access to the national air transportation system.

Service Transition
We expect Great Lakes and Delta to work together to make a smooth transition at these communities. In that regard, before Delta suspends its service we expect it to notify any passengers holding reservations for travel after the suspension date, to assist those passengers in making alternate air transportation arrangements, or to provide a refund of the ticket price, without penalty, if requested. In this regard, the EAS staff will be working with Delta to establish new hold-in subsidy rates as the current contracts become eligible for renegotiation.

Certifications
We shall make these selections 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.

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 carriers remain fit to conduct the operations proposed here.

This order is issued under authority delegated in 49 CFR 1.56a(f).

ACCORDINGLY,

1. We select Great Lakes Aviation, Ltd. to provide essential air service to Brainerd, Minnesota; Fort Dodge and Mason City, Iowa; Iron Mountain, Michigan; Thief River Falls, Minnesota; and Watertown, South Dakota;

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