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

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1 Order Served: July 14, 2008 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C. Ninety-day Notice of Piedmont Airlines, Inc., to terminate service at: Issued by the Department of Transportation on the 9 th day of July, 2008 WILLIAMSPORT, PENNSYLVANIA Docket DOT-OST under 49 U.S.C et seq. ORDER PROHIBITING SUSPENSION OF SERVICE AND REQUESTING PROPOSALS Summary By this order, the Department is prohibiting Piedmont Airlines, Inc., d/b/a US Airways Express (Piedmont), from suspending service at Williamsport, Pennsylvania, and requesting proposals by July 29 from carriers interested in providing replacement essential air service (EAS), with or without subsidy. Background On June 25, 2008, Piedmont filed a 90-day notice of its intent to suspend its subsidy-free service at Williamsport, effective October 1, The carrier currently provides five daily weekday round trips (fewer on weekends) to Philadelphia with 37-seat Dash-8 turboprop aircraft. Decision Piedmont s proposed termination of service at Williamsport would leave it with no scheduled air service. Therefore, the Department must prohibit the carrier from terminating such service at the end of its 90-day notice period, and require it to maintain two daily nonstop round trips to Philadelphia for an initial 30-day period, through October 23, Request for Proposals Carriers interested in providing EAS at Williamsport, with or without subsidy support, should file their proposals no later than July 29. After that date, 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

2 community officials and ask them to submit their final comments. We will give full consideration to all proposals filed in a timely manner. 1 2 Interested carriers should prepare their proposals with every expectation that their initial proposals will also be their final and only proposals. 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 solicit a new round of proposals. However, we anticipate that negotiation or rejection will remain only occasional exceptions to the rule. We are here providing interested carriers with some basic information to serve as guidance when preparing 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. 2 Proposals should offer service with two-pilot, twin-engine aircraft with at least 15 passenger seats. Specifically for Williamsport, we are requesting proposals for service consisting of four daily round trips with 19-seat aircraft, three daily round trips with 30 seaters, or two daily round trips with 37-seat aircraft. We will entertain proposals to Philadelphia, New York, Washington, or any suitable hub offering connections to the national air transportation system. We encourage proposals that meet these requirements in an efficient manner. However, carriers are welcome to propose more than one option, if they choose; they need not limit themselves to these requirements if they envision other, potentially more attractive service possibilities different hubs, for example with subsidy requirements that remain competitive. We understand that Piedmont currently operates a much higher level of service than the two daily round trips we are requiring it to maintain. However, since inception, the purpose of the EAS program is not to provide all the scheduled air service that a community wants; rather, EAS is simply the level of service that the government should guarantee to ensure that an eligible community will have access to the national air transportation system. 3 Williamsport s guarantee of 67 seats a day represents the program s maximum seating guarantee, and two round trips a 1 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 subsidyfree service as proposed. 2 In selecting a carrier to provide subsidized essential air service, 49 U.S.C (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 Consolidated Appropriations Act, 2008, Public Law , 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 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. 3 See 44 FR (September 7, 1979).

3 day with 37-seat aircraft will provide the community with 74 seats a day and, thus, will more than satisfy that guarantee. 4 For the same reasons that we will not authorize subsidy for more than our maximum capacity guarantee prospectively, we will not authorize subsidy for more than two daily round trips with 37-seat aircraft during the hold-in period. 3 In order to assist carriers in making their passenger and revenue forecasts, we have included historical O&D passenger traffic in Appendix B. We note that, even though passenger levels have fallen over the last several years, Williamsport is still a strong traffic-generating community by EAS standards, averaging 79 enplanements per day for the year ended March 31, 2008, the most recent annual period. As a result, we expect either subsidy-free proposals, or proposals at very modest subsidy levels. Other Carrier Requirements The Department is responsible for implementing various Federal statutes governing lobbying activities, drug-free workplaces and nondiscrimination. 5 Consequently, all carriers receiving Federal subsidy to support 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 $100,000 over the life of the rate term must also certify that they are in compliance with the regulations governing lobbying activities. All carriers that plan to submit proposals involving subsidy should submit the required certifications along with their proposals. Interested carriers requiring more detailed information regarding these requirements, as well as copies of the certifications, should contact the Office of Aviation Analysis at (202) The Department is prohibited from paying subsidy to carriers that do not submit these documents. 6 Community Comments Community and State officials are welcome to submit comments on the proposals at any time. As noted earlier, we will provide a summary of the proposals to the civic parties and the State and ask them to submit their final comments shortly after July 29, the due date for carrier proposals. This order is issued under authority delegated in 49 CFR 1.56a(f). ACCORDINGLY; 1. The Department requests proposals from carriers interested in providing essential air service at Williamsport, Pennsylvania. Carriers should submit their proposals, with or without subsidy 4 Order required capacity sufficient to accommodate 40 inbound and outbound passengers, which represents the essential air service program s maximum capacity guarantee. Under the 60-percent load-factor standard subsequently established by the Airport and Airway Safety and Capacity Expansion Act of 1987, P.L , the number of guaranteed seats is 40/.60 = The regulations applicable to these areas are: (1) 49 CFR Part 20 New restrictions on lobbying; (2) 49 CFR Part 21 Nondiscrimination in federally-assisted programs of the Department of Transportation Effectuation of title VI of the 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). 6 The certifications are also available on the web at

4 requests, no later than July 29, Proposals should include all the data required by section of the Department s Regulations (14 CFR 204.4). Proposals should be sent to: EAS & Domestic Analysis Division, X-53, Office of Aviation Analysis, U.S. Department of Transportation, 1200 New Jersey Avenue, S.E., Washington, D.C , with the title Proposal to Provide Essential Air Service at Williamsport, Pennsylvania (Docket DOT-OST ) ; The Department prohibits Piedmont Airlines from suspending service at Williamsport, and requires it to maintain service consisting of two daily nonstop round trips to Philadelphia for an initial 30 days beyond the 90-day notice period, through October 23, 2008, or until suitable replacement service actually begins, whichever occurs first; 8 3. The Department directs Piedmont Airlines to retain all books, records, and other source and summary documents to support subsidy 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 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; 4. This docket will remain open until further order of the Department; and 5. The Department will serve a copy of this order on the mayor and airport manager of Williamsport, Piedmont Airlines, and the parties listed in Appendix D. By: (SEAL) MICHAEL W. REYNOLDS Acting Assistant Secretary for Aviation and International Affairs An electronic version of this document is available on the World Wide Web at 7 Proposals should be ed to Renée Williams at renee.williams@dot.gov. In addition, parties with questions regarding filings in response to this order may be directed to Ms. Williams at (202) Proposals should also be ed to dennis.devany@dot.gov. 8 In accordance with 49 U.S.C (c), we will extend Piedmont s service obligation for successive 30-day periods, as necessary, until suitable replacement service actually begins.

5 AREA MAP APPENDIX A

6 APPENDIX B Scheduled Passenger Traffic at Williamsport, Pennsylannia Year Quarter Origin Destination O&D ,651 8,721 17, ,840 9,765 19, ,266 9,011 18, ,056 7,601 15,657 YE 3/31/05 35,813 35,098 70, ,308 8,239 16, ,330 7,100 14, ,081 6,978 14, ,886 6,626 13,512 YE 3/31/06 29,605 28,943 58, ,812 6,750 13, ,305 6,342 12, ,525 6,229 12, ,262 5,938 12,200 YE 3/31/07 25,904 25,259 51, ,325 6,271 12, ,468 6,339 12, ,274 6,022 12, ,105 5,512 11,617 YE 3/31/08 25,172 24,144 49,316 Source: T-100 Market On-Flight Market Report

7 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 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 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. Funds are not currently available for performance under this Order beyond September 30, The Government s obligation for performance under this Order beyond September 30, 2008 is contingent upon the availability of appropriated 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, 2008, until funds are made available to the Department for performance. If funds are not made available for performance beyond September 30, 2008, the carrier will receive notice in writing from the Department. All claims for payment must be submitted within 60 days of the last day of service provided under this order.

8 APPENDIX D SERVICE LIST FOR THE STATE OF PENNSYLVANIA Air Wisconsin, Inc. Amerijet International, Inc. Carney Aerospace Chautauqua Airlines, Inc. Chester County Aviation, Inc. Colgan Air Columbia Aviation, Inc. CommutAir, Inc. Corporate Air, Inc. Delta Connection Great Lakes Aviation, Ltd. Horizon Air, Inc. Jetstream International Airlines, Inc. Mesa Airlines, Inc. Midwest Express Airlines, Inc. Northcoast Executive Airlines, Inc. Pennsylvania Commuter Airlines, Inc. SkyVantage Corporation Vision Air Westward Airways, Inc. Grecorio Salas Calvo, Jr. Doug Franklin E.B. Freeman A. Edward Jenner Lee Mason Cory Robin Garbriel Saavedra John Sinisi