ORDER SELECTING AIR CARRIERS

Transcription

1 Order: Served: June 22, 2016 Essential Air Service at UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Issued by the Department of Transportation on the 22 nd of June, 2016 DODGE CITY, KANSAS GARDEN CITY, KANSAS HAYS, KANSAS LIBERAL, KANSAS Docket DOT- OST Docket DOT- OST Docket DOT- OST Docket DOT- OST under 49 U.S.C et seq. ORDER SELECTING AIR CARRIERS Summary By this Order, the Department is re-selecting American Airlines (American) at Garden City and SkyWest Airlines (SkyWest) at Hays, and Peninsula Airways, Inc. (PenAir) at Dodge City and Liberal, Kansas, to provide Essential Air Service (EAS), for the two-year term from August 1, 2016, through July 31, The annual subsidy rates are as follows. 2 Community Carrier Hub Weekly Nonstop/One stop trips Aircraft No. of Seats Annual Subsidy Garden City American Dallas Fort Worth 14 ERJ 140/145/CRJ /50 $968,313 Hays SkyWest Denver 12 CRJ $3,482,353 Dodge City PenAir Denver 12 Saab $1,593,702 Liberal PenAir Denver 12 Saab $1,593,702 Background By Order (March 14, 2014), the Department selected Great Lakes Airlines to provide EAS at Dodge City and Liberal to operate 18 weekly round trips to Denver (DEN) at annual subsidies of $2,339,131, and $2,236,180, respectively. By that same Order, American Airlines was selected to operate 14 weekly nonstop round trips from Garden City to Dallas/Fort Worth (DFW), at an annual subsidy of $1,445,172, and at Hays, SkyWest Airlines was selected to operate 12 weekly nonstop round trips to DEN at an annual subsidy of $2,253, Such subsidy is calculated and distributed on a fiscal year basis, subject to the availability of funds. 2 Dodge City and Liberal have a combined annual subsidy of $3,187,403 for Year 1 and $3,131,503 for Year 2.

2 - 2 - As the end of the contracts were approaching, the Department issued Order (January 27, 2016), requesting proposals from air carriers interested in providing EAS at Dodge City, Garden City, Hays and Liberal, for a new contract term. 3 In response to that Order, Aerodynamics (ADI), American Airlines, Boutique Air (Boutique), Great Lakes Aviation, Ltd. (Great Lakes), PenAir, SkyWest, and ViaAir, LLC (ViaAir), submitted proposals for some, but not all, of these communities. The complete public file for EAS at these communities may be accessed online through the Federal Dockets Management System at: by entering the respective docket number in the SEARCH for: Rules, Comments, Adjudications or Supporting Documents: field. Dodge City and Liberal Summary of Proposals ADI ADI proposed two options to serve Dodge City and Liberal using EMB-145 Regional Jet aircraft to/from DEN. Option 1 for Dodge City is for 12 weekly nonstop round trips, at an annual subsidy of $4,752,963. Option 1 for Liberal proposed 12 weekly nonstop round trips, at an annual subsidy of $4,517,747. Option 2 combines Dodge City and Liberal for 12 weekly nonstop and one-stop round trips, at a combined annual subsidy of $5,825,212. Boutique Air Boutique proposed operating 8- or 9-passenger Pilatus PC-12 aircraft. At Dodge City, the carrier proposed 18 weekly nonstop round trips to/from DEN, at an annual subsidy of $3,552,281. At Liberal, Boutique proposed two options. Option 1 consisted of 18 weekly nonstop round trips, to/from DEN, at an annual subsidy of $3,541,745. Option 2 is for 18 weekly nonstop round trips, to/from DFW, at an annual subsidy of $3,635,127. Great Lakes Great Lakes proposed two options to/from DEN, using 30-passenger Brasilia EMB-120 Brasilia, or Beech 1900D aircraft. At Dodge City, one option is for 12 weekly nonstop round trips, operating the EMB-120, at an annual subsidy of $2,728,815. The other option consisted of 18 weekly nonstop round trips, operating the 1900D, at an annual subsidy of $2,949,874. At Liberal, one option proposed 12 weekly nonstop round trips, operating the EMB-120, at an annual subsidy of $2,652,135. The other option proposed 18 weekly nonstop round trips, operating the Beech 1900D, at an annual subsidy of $2,879,687. PenAir PenAir proposed two options for Dodge City and Liberal. Both options are contingent on it being selected to serve three Nebraska communities in a separate carrier selection case. 3 See Order which addresses Great Bend s EAS eligibility.

3 - 3 - Option 1 proposed 12 weekly nonstop round trips to/from DEN at each community, operating 33-pasenger Saab 340 aircraft, at a combined annual subsidy of $5,766,712 for year 1, and $5,795,311, for year 2. Option 2 applies to both Dodge City and Liberal, and PenAir proposed 12 weekly nonstop and one-stop round trips to/from DEN, in a triangle service pattern, or circle trip, also with Saab 340 aircraft, at a combined annual subsidy of $3,187,403 for year 1, and $3,131,503, for year 2. ViaAir At Dodge City, one option is for 12 weekly nonstop, round trips to/from DEN, operating a 30- passenger, EMB-120 aircraft, at an annual subsidy of $4,049,755, and for the other option, 18 weekly nonstop round trips at $5,846,787. At Liberal, ViaAir proposed 12 weekly nonstop, round trips from DEN, with EMB-120 aircraft, at an annual subsidy of $3,306,409, and for the 18 weekly option, $4,712,272. Community Comments On March 1, 2016, the Department solicited comments from the communities regarding this carrier-selection case, and they are summarized below. On May 11, 2016, City Manager for Dodge City, Cherise Tieben, wrote, Please accept this letter as the community response and recommendation for the provision of Essential Air Service for the City of Dodge City, Kansas. As you are aware, Dodge City was one of the initial participants in the EAS Program and has long recognized the importance of the program in fulfilling the air service needs of small, geographically isolated cities and the critical need of such communities for access to the nation s air transportation system. Dodge City would like to take this time to change our original endorsement from PenAir s Option 1 to PenAir s Option 2. It is our understanding that with Option 2, Dodge City and Liberal will receive a triangle service that will be operated on a one-stop basis giving both communities two round trips per weekday with one round trip on Saturday and one round trip on Sunday. On May 19, 2016, Liberal Mayor, Joe Denoyer, stated, Please accept this letter as the community response for the provision of Essential Air Service for the City of Liberal, Kansas. After further consideration and discussion with Peninsula Airways and the United States Department of Transportation, we are changing our recommendation from Option 1 to Option 2 of the current proposal of Peninsula Airways (PenAir) to provide flights from Liberal, Kansas to Denver International Airport. PenAir s bid to provide two weekday roundtrips, one round trip on Saturday and one on Sunday (for a total of twelve round trips each week) will provide our community with dependable, cost-effective and convenient connections to the nation s air transportation system. Decision After carefully reviewing each airline s proposal and taking into account each community s feedback, the Department has decided to select PenAir s Option 2 to provide EAS at Dodge City

4 - 4 - and Liberal. 4 When selecting an airline to provide EAS outside of Alaska, the Department bases its decision on the five factors 49 U.S.C (c)(1) directs it to consider: 1) service reliability; 2) contractual and marketing arrangements with a larger airline at the hub; 3) interline agreements with a larger airline at the hub; 4) community views, giving substantial weight to the views of the elected officials representing the users; 5) whether the airline has included a plan in its proposal to market its service to the community. PenAir was the only airline that met all five EAS selection criteria, and the Department finds its service and subsidy levels to be reasonable. The carrier has community support, and a longstanding marketing relationship with Alaska Airlines, including code-sharing, which provides passengers with high visibility not only on PenAir and Alaska Airlines websites, but also on third-party Online Travel Agencies (OTAs), such as Orbitz, Travelocity, etc. Garden City Summary of Proposals American Only American submitted a proposal to serve Garden City. It plans to continue its service to/from DFW, using 44 to 50 passenger, ERJ-145 regional jets, or 50-passenger, CRJ-200 regional jets, for 14 weekly nonstop round trips, at an annual subsidy of $968,313. American also requested the community waive its right to be held in upon issuance of a 120-day notice to terminate service. Community Comments City Manager, Matthew Allen, stated, Garden City recommends continued service with two daily round trips to DFW by means of the American Airlines proposal under the regional brand, American Eagle. He further stated, Garden City waives the right to hold in American Airlines in a two year contract upon the issuance of a 120-day notice to terminate service. Decision No other proposals were received by the Department for Garden City, therefore, the decision to re-select American is straightforward. The Department finds its proposed service levels and subsidy reasonable. American is requesting an exemption from the hold-in provision at 49 U.S.C (c), which would permit the carrier to terminate service upon 120 days notice. The Secretary may exempt carriers from certain EAS requirements when the exemption is in the public interest. 49 U.S.C (c). Under 49 U.S.C (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. 4 As noted, PenAir s proposal for Dodge City and Liberal was contingent on it being selected at three EAS communities in Nebraska: Kearney, North Platte, and Scottsbluff. PenAir was selected to provide EAS at those communities by Order , issued May 25, 2016.

5 - 5 - The community supports American s proposal, including the exemption from 49 U.S.C (c), which allows passengers extensive connecting opportunities at Dallas/Fort Worth, the carrier has provided reliable service to Garden City for years, and was the only qualified proposal. Considering these factors, the Department will grant American an exemption from the requirement at 49 U.S.C (c) under the authority provided at 49 U.S.C As long as Garden City remains eligible to receive EAS, the Department would, in response to any notice from American announcing its intent to terminate, suspend, or reduce service, issue a request for proposals to find a replacement carrier, as soon as it is practicable. Hays Summary of Proposals Great Lakes Great Lakes proposed two options. One is for 12 weekly nonstop round trips to/from DEN, operating a 30-passenger EMB-120 aircraft, at an annual subsidy $2,470,022. The other option proposed 18 weekly nonstop round trips, at an annual subsidy of $2,998,942, operating the same equipment. SkyWest SkyWest proposed to continue its service to/from DEN, using 50-passenger CRJ-200 aircraft, for 12 weekly nonstop round trips, at an annual subsidy of $3,482,353. ViaAir ViaAir proposed 12 weekly nonstop round trips to/from DEN, operating a 50-passenger ERJ-145 aircraft, at an annual subsidy of $2,816,810. Community Comments The City of Hays, the Hays Area Chamber of Commerce, and the Ellis County Coalition for Economic Development, all support SkyWest. Hays s mayor, Eber Phelps, stated, The City of Hays respectfully requests that the Department of Transportation select SkyWest Airlines to continue providing service at the Hays Regional Airport. Decision After carefully reviewing each airline s proposal and taking into account the community s feedback, the Department has decided to re-select SkyWest to provide EAS at Hays, Kansas, for two-year contract term. When selecting an airline to provide EAS outside of Alaska, the Department bases its decision on the five factors 49 U.S.C (c)(1) directs it to consider: 1) service reliability; 2) contractual and marketing arrangements with a larger airline at the hub; 3) interline agreements with a larger airline at the hub; 4) community views, giving substantial weight to the views of the elected officials representing the users; 5) whether the airline has included a plan in its proposal to market its service to the community. 5 SkyWest was the only airline that met all five EAS selection criteria, and the Department finds its service and subsidy levels to be reasonable. 5 In addition, the Consolidated Appropriations Act, 2016, Public Law No , 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.

6 - 6 - Other Carrier Requirements The Department makes the selections at the above communities contingent upon its receipt of properly executed certifications from the air carriers that they are in compliance with the Department s regulations regarding drug-free workplaces and nondiscrimination, as well as the regulations concerning lobbying activities. Special Discussion on Eligibility The Federal Aviation Administration (FAA) Modernization and Reform Act of 2012 (Public Law ), signed into law on February 14, 2012, amended the definition of eligible place for the purpose of receiving EAS. 6 The amendment, among other things, states that to be eligible, a community must have had an average subsidy per passenger of less than $1,000 during the most recent fiscal year, as determined by the Secretary of Transportation. Dodge City, Garden City, Hays, and Liberal are subject to the $1,000 per passenger cap. Carrier Fitness 49 U.S.C (b) and require that the Department finds air carriers fit, willing, and able to provide reliable service before we may subsidize it to provide EAS. American, PenAir, and SkyWest are 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. The Department therefore concludes that the carriers remain fit to conduct the operations proposed here. This Order is issued under authority delegated in 49 CFR Part 1.25a(b). ACCORDINGLY, 1. The Department re-selects American Airlines to provide Essential Air Service at Garden City, Kansas, and establishes the annual subsidy rates as described in Appendix C; 2. The Department re-selects SkyWest Airlines to serve Hays, Kansas, to provide Essential Air Service and establish the annual subsidy rates as described in Appendix C; 3. The Department selects Peninsula Airways, Inc., to serve Dodge City and Liberal Kansas, to provide Essential Air Service, and establish the annual subsidy rates as described in Appendix C; 4. The Department directs American Airlines, SkyWest Airlines, and Peninsula Airways to retain all books, records, and other source and summary documentation to support claims for payment, and to preserve and maintain such documentation in a manner that readily permits its audit and examination by representatives of the Department. Such documentation shall be retained for seven years from the service date of this order or until the Department indicates that the records may be destroyed, whichever comes first. Copies of flight logs for aircraft sold or disposed of must be retained. The carrier may forfeit its compensation for any claim that is not supported under the terms of this Order; 6 See 49 U.S.C

7 The Department finds that American Airlines continues to be fit, willing and able to operate as a certificated carrier and capable of providing reliable Essential Air Service at Garden City, Kansas; 6. The Department finds that SkyWest Airlines continues to be fit, willing and able to operate as a certificated carrier and capable of providing reliable Essential Air Service at Hays, Kansas; 7. The Department finds that Peninsula Airways, Inc. continues to be fit, willing and able to operate as a certificated carrier and capable of providing reliable Essential Air Service at Dodge City and Liberal, Kansas; 8. Under the Department s authority in 49 U.S.C , the Department exempts American Airlines from 49 U.S.C (c) and will allow American Airlines to cease, suspend, or reduce Essential Air Service at Garden City upon 120 days notice; 9. These dockets will remain open until further order of the Department; and 10. The Department will serve copies of this Order on the mayors of Dodge City, Garden City, Hays, and Liberal, Kansas, the airport officials at Dodge City Regional Airport, Garden City Regional Airport, Hays Regional Airport, Liberal Mid-America Regional Airport, Aerodynamics, Inc., American Airlines, Boutique Air, Great Lakes Aviation, Ltd., SkyWest Airlines, and ViaAir. By: JENNY T. ROSENBERG Acting Assistant Secretary for Aviation and International Affairs An electronic version of this document is available at

8 Appendix A AREA MAP Maps generated by the Great Circle Mapper - copyright Karl L. Swartz

9 Appendix B Page 1 of 3

10 Appendix B Page 2 of 3

11 Appendix B Page 3 of 3 Peninsula Airways proposal for Dodge City and Liberal 7 7 See Page 6 in Peninsula Airways proposal at: by entering DOT-OST in the SEARCH for: Rules, Comments, Adjudications or Supporting Documents and find, ID: DOT-OST

12 Appendix C Page 1 of 4 American Airlines Essential Air Service to be Provided at Garden City, Kansas Docket DOT- OST Effective Period: August 1, 2016, through July 31, 2018 Scheduled Service: 14 weekly nonstop round trips to Dallas/Fort Worth Aircraft: 44 to 50-passenger Embraer (ERJ-145) or Canadair regional jet (CRJ-200 LR) Rate per Eligible Flight: $672 1 Weekly Ceiling: $18,616 2 Note: 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 this rate, 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 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 service levels, the carrier may cease to provide service to that specific location without regards 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 contract 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 may not be available for performance under this order beyond September 30, The Government s obligation for performance under this order beyond September 30, 2016, is subject to the availability of 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 order beyond September 30, 2016, until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond September 30, 2016, the Department will provide notice in writing to the carrier. All claims for payment, including any amended claims, must be submitted within 90 days of the last day of the month for which compensation is being claimed. For example, claims for service provided in July must be filed by October 31; August claims must be submitted by November 30, and so on. 1 Annual compensation of $968,313 divided by 1,441 annual departures (28 weekly departures x 52 weeks x 99 percent completion) flights per week multiplied by $672 per flight.

13 Appendix C Page 2 of 4 SkyWest Airlines Essential Air Service to be Provided at Hays, Kansas Docket DOT-OST Effective Period: August 1, 2016, through July 31, 2018 Scheduled Service: 12 weekly nonstop round trips to Denver International Airport Aircraft: 50-passenger Canadair regional jet (CRJ-200 LR) Rate per Eligible Flight: $2,847 3 Weekly Ceiling: $59,688 4 Note: 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 this rate, 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 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 service levels, the carrier may cease to provide service to that specific location without regards 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 contract 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 may not be available for performance under this order beyond September 30, The Government s obligation for performance under this order beyond September 30, 2016, is subject to the availability of 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 order beyond September 30, 2016, until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond September 30, 2016, the Department will provide notice in writing to the carrier. All claims for payment, including any amended claims, must be submitted within 90 days of the last day of the month for which compensation is being claimed. For example, claims for service provided in July must be filed by October 31; August claims must be submitted by November 30, and so on. 3 Annual compensation of $3,482,353 divided by 1,223 annual departures (24 weekly departures x 52 weeks x 98 percent completion) flights per week multiplied by $2,847 per flight.

14 Appendix C Page 3 of 4 Peninsula Airways, Inc. Essential Air Service to be Provided at Dodge City, Kansas Docket DOT-OST Effective Period: August 1, 2016, through July 31, 2018 Scheduled Service: 12 weekly nonstop/one-stop round trips to Denver International Airport Aircraft: 33-passenger Saab 340 Rate per Eligible Flight: Year 1 = $1,316 1 ; Year 2 = $1,293 Weekly Ceiling: Year 1 = $31,584 2 ; Year 2 = $31,032 Note: 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 this rate, 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 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 service levels, the carrier may cease to provide service to that specific location without regards 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 contract 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 may not be available for performance under this order beyond September 30, The Government s obligation for performance under this order beyond September 30, 2016, is subject to the availability of 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 order beyond September 30, 2016, until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond September 30, 2016, the Department will provide notice in writing to the carrier. All claims for payment, including any amended claims, must be submitted within 90 days of the last day of the month for which compensation is being claimed. For example, claims for service provided in July must be filed by October 31; August claims must be submitted by November 30, and so on. 1 Dodge City and Liberal have a combined annual subsidy of $3,187,403 for Year 1 and $3,131,503 for Year 2. Year 1 annual compensation of $1,593,702 divided by 1,211 annual departures (24 weekly departures x 52 weeks x 97 percent completion). Year 2 annual compensation of $1,565,752 divided by 1,211 annual departures (24 weekly departures x 52 weeks x 97 percent completion). 2 Year 1 = 24 flights per week multiplied by $1,316 per flight. Year 2 = 24 flights per week multiplied by $1,293 per flight.

15 Appendix C Page 4 of 4 Peninsula Airways, Inc. Essential Air Service to be Provided at Liberal, Kansas Docket DOT-OST Effective Period: August 1, 2016, through July 31, 2018 Scheduled Service: 12 weekly nonstop/one-stop round trips to Denver International Airport Aircraft: 33-passenger Saab 340 Rate per Eligible Flight: Year 1 = $1,316 1 ; Year 2 = $1,293 Weekly Ceiling: Year 1 = $31,584 2 ; Year 2 = $31,032 Note: 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 this rate, 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 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 service levels, the carrier may cease to provide service to that specific location without regards 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 contract 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 may not be available for performance under this order beyond September 30, The Government s obligation for performance under this order beyond September 30, 2016, is subject to the availability of 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 order beyond September 30, 2016, until funds are made available to the Department for performance. If sufficient funds are not made available for performance beyond September 30, 2016, the Department will provide notice in writing to the carrier. All claims for payment, including any amended claims, must be submitted within 90 days of the last day of the month for which compensation is being claimed. For example, claims for service provided in July must be filed by October 31; August claims must be submitted by November 30, and so on. 1 Dodge City and Liberal have a combined annual subsidy of $3,187,403 for Year 1 and $3,131,503 for Year 2. Year 1 annual compensation of $1,593,702 divided by 1,211 annual departures (24 weekly departures x 52 weeks x 97 percent completion). Year 2 annual compensation of $1,565,752 divided by 1,211 annual departures (24 weekly departures x 52 weeks x 97 percent completion). 2 Year 1 = 24 flights per week multiplied by $1,316 per flight. Year 2 = 24 flights per week multiplied by $1,293 per flight.