Summary
By this Order, the United States Department of Transportation (the Department) is selecting Advanced Air, LLC (Advanced Air) to provide Essential Air Service (EAS) at Silver City/Hurley/Deming, New Mexico (Silver City) for the two-year period from January 1, 2019, through December 31, 2020. Advanced Air will provide 17 nonstop round trips each week to Albuquerque International Sunport (ABQ) and 7 nonstop round trips each week to Phoenix Sky Harbor International Airport (PHX), using twin-engine 9-seat King Air 350 aircraft, at an annual subsidy rate of $3,513,367 for the first year and $3,601,202 for the second year.
Background
By Order 2016-10-13, issued on October 25, 2016, the Department re-selected Boutique Air, Inc. (Boutique Air) to provide EAS at Silver City, for the two-year period from January 1, 2017, through December 31, 2018. Under the terms of that contract, Boutique Air continued to provide 17 nonstop round trips each week to ABQ and seven nonstop round trips each week to PHX, using single-engine 8- or 9-seat Pilatus PC-12 aircraft, at an annual subsidy rate of $3,285,885 for the first year and $3,368,032 for the second year.
In anticipation of the end of that rate term, the Department issued Order 2018-5-3 on May 1, 2018, soliciting proposals for a new term, with service consistent with what the community currently receives – 24 weekly nonstop round trips using small aircraft to a suitable large- or medium-hub airport – and that provides numerous connecting opportunities to the national air transportation system.
In response to the Department’s solicitation, Boutique Air and Advanced Air submitted proposals for consideration.
Those proposals, as well as the complete public file for EAS at Silver City, may be accessed online through the Federal Docket Management System at: http://www.regulations.gov by entering “DOT-OST-1996-1903” in the search field.
Proposal of Boutique Air
Boutique Air submitted one proposal consisting of two options, using either single-engine Pilatus PC-12 or twin-engine Beechcraft King Air 350 aircraft, for either a two- or four-year term.
Boutique Air has an interline ticket and baggage agreement in place with United Airlines, Inc.
(United) and its proposal indicates it will commit $20,000 annually to market the air service.
Proposal of Advanced Air
Advanced Air submitted one proposal consisting of three options, using 9-seat King Air 350 aircraft, for either a two- or four-year term. Advanced Air’s proposal indicates it will commit $50,000 annually to market the air service.
Community Comments
On June 6, 2018, the Department requested community comments regarding this air carrier selection case. By letter dated June 20, 2018, Mr. Billy Billings, Chairman of the Grant County Commission, expressed support for Advanced Air’s proposal. In that letter, the Chairman expressed concern with Boutique Air’s reliability, stating: “[u]nfortunately, cancellations, delayed flights, miscommunication, mechanical issues and pilot shortages and fatigue simply happen way too often in and out of the Silver City/Grant County Airport. Many citizens, including myself and members of my family have experienced these issues repeatedly. Boutique has not responded positively to requests for more reliable service."
Chairman Billings also questioned Boutique Air’s proposed average airfare of $60, stating: “[i]n reality, costs have been much higher, and prices escalate each time two seats are sold.” The Chairman further stated that “I believe Advanced Air’s twin-engine fleet, transparent pricing, and 98% on-time reliability history will better serve the community and airport in the coming years.”
By letter dated June 28, 2018, State Representative Rodolpho S. Martinez of the New Mexico House of Representatives also supported Advanced Air’s proposal. In that letter, Representative Martinez stated that “Boutique Air’s EAS service to Silver City has deteriorated greatly. The airline has failed to provide reliable service to Silver City flyers, with numerous cancellations, equipment failures, and delayed flights.” Representative Martinez further expressed that “I no longer have confidence in Boutique Air’s EAS service. Instead of flying with the airline, I now often choose to simply drive to Albuquerque, because of the unreliability concerns.”
By letter dated July 10, 2018, the Grant County Commission submitted a letter of support for Advanced Air’s proposal. That letter explained the Commission’s disappointment with Boutique Air’s service due to cancellations, reliability, flight delays, mechanical issues, and pilot shortage. That letter stated “[i]t is our opinion from meeting with both Boutique Air and Advanced Air ad after reviewing the proposals, that Advanced Air would clearly best serve Silver City/Grant County passengers.”
However, the Department also received more than 200 comments from members of the Silver City community, the majority of which support Boutique Air’s continued EAS.3 In an email dated July 17, 2018, though, Ms. Alicia Edwards, District Three Grant County Commissioner, questioned this support from community members, stating that “the response from local folks about Boutique was driven in large part by greatly misleading Facebook posts and advertising Boutique ran.” Commissioner Edwards explained that “[t]here was significant public input asking for earlier outbound flights and later inbound flights to and from Albuquerque to accommodate a longer business day and significant public input asking for better SVC to PHX schedule including making it easier to get in and out of Phoenix on weekends. Advanced Air proposed a much better schedule to accommodate those requests.”
Commissioner Edwards also noted that “Advanced Air and Boutique had the opportunity to make a public presentation at the Grant County Convention Center on May 31, 2018 at 1:30.”
Mr. Billy Billings, in an email dated July 24, 2018, further explained that Ms. Pricilla Lucero, Executive Director of the Southwest New Mexico Council of Governments (Council) arranged one meeting for Advanced Air and one meeting for Boutique Air. Mr. Billings stated that Advanced Air “took extra initiative and sent a representative to meet with each of the commissioners and other community leaders,” which was separate from the two meetings scheduled by the Council.
By letter dated July 25, 2018, Mr. Shawn Simpson, CEO of Boutique Air, expressed that he felt that the community did not follow a public process that would have allowed him to provide a presentation to the community in support of Boutique Air’s proposal. Mr. Simpson explained that “Boutique Air, with the help from Grant County Staff, setup a public meeting to make a presentation to the County Commissioners. Only one of the five decided to attend, however.” Mr. Simpson further stated that “I do not believe that a process was followed in Grant County that allowed for a fair examination of the carriers by the decision makers.”
By letter dated August 6, 2018, Mr. R. Stan Little, Jr., Chairman and CEO of Southern Airways Express, LLC (Southern Airways), submitted comments on this air carrier selection case in support of Boutique Air. While Southern Airways did not submit a proposal to serve Silver City, Mr. Little stated that “[i]t is my experience that some cities now view the Department as a ‘rubber stamp’ for their desires, yet they do not have in place the processes traditionally utilized by the Department to ensure that ultimate decisions are actually in the best interests of the traveling public and the American taxpayers.” Mr. Little further stated, “I would urge the Department to consider the ‘essential’ nature of the service mandated under the program and to recognize that ‘substantial weight’ given to the desires of the local community is neither definitive nor conclusive.”
Those comments can be found online at:
https://www.regulations.gov/searchResults?rpp=25&so=DESC&sb=postedDate&po=0&s=DOT-OST-1996- 1903&dct=FR%2BPR%2BN%2BO%2BPS
On August 11, 2018, Chairman Billings affirmed Grant County’s support of Advanced Air and stated that “the Grant County Commission still believes that Advanced Air will offer the best service. Boutique Air continues to contact customers and persuade them otherwise; however, as these customers reach out to us and we respond, we end up getting neutral or positive feedback – almost without exception, on the process and our resulting decision for Advanced Air.”
Decision
The Department has decided to select Advanced Air to provide EAS at Silver City. When making an air carrier selection decision outside of Alaska, 49 U.S.C. § 41733(c)(1) directs the Department to consider: (A) service reliability; (B) contractual and marketing arrangements with a larger air carrier at the hub; (C) interline arrangements with a larger air carrier at the hub; (D) community views, giving substantial weight to the views of the elected officials representing the actual and potential users of the service; and (E) whether the air carrier has included a plan in its proposal to market the service. In addition, the Consolidated Appropriations Act, 2018, Pub. L. No. 115-141, continued by the Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019, Pub. L. 115- 245, provides that, when selecting an air carrier to provide EAS, the Department may consider the relative subsidy requirements, thus codifying a factor that the Department has considered since the inception of the EAS program.
The Department recognizes that Boutique Air has interline ticket and baggage agreements in place with a larger air carrier (United) and included a line item in its proposal for marketing the service. Boutique has provided reliable service at other EAS communities it serves; however, the Grant County Commission expressed significant concerns about the reliability of Boutique’s service at Silver City. While the Department agrees with the comments from Southern Airways that it is not a “rubber stamp” for community preferences, in this carrier selection proceeding, the Department’s decision to select Advanced Air is based in large part on the County Commission’s specific concerns about Boutique and its strong support for Advanced Air.4 Additionally, the Department may consider relative subsidy requirements in the carrier selection proceeding. Advanced Air’s proposal for twin engine service for 24 round trips to two hubs is more than $450,000 per year less than the same service offered by Boutique. Lastly, the Department finds Advanced Air’s service levels and subsidy request to be reasonable.
4 The Department fully considered all of the comments received in this carrier selection proceeding. While the majority of the individual commenters supported Boutique’s proposal, the Department is directed “to give substantial weight” to the views of elected officials representing the actual and potential users of the service. 49 U.S.C. § 41733(c)(1)(D).
Note Regarding Eligibility
Silver City is exempt from the $200 per passenger statutory limit5 and the 10-enplanement per day requirement because it is more than 210 miles from the nearest large- or medium-hub airport, in this case, ABQ; however, the Department reminds Advanced Air and Silver City about the $1,000 subsidy per passenger cap that applies regardless of distance from hub airports.6 The Department fully expects both parties to work cooperatively to ensure subsidy rates remain below the $1,000 per passenger level to remain eligible for the EAS program.
The Department shall make this selection of Advanced Air at Silver City contingent upon the Department’s receiving properly-executed certifications from the air carrier that it is in compliance with the Department’s regulations regarding drug-free workplaces and nondiscrimination, as well as the regulations concerning lobbying activities.
Service Transition
The Department expects Boutique Air and Advanced Air to work together to make a smooth transition at Silver City, with Boutique Air ending service on one day and Advanced Air inaugurating service the next day. In that regard, before Boutique Air suspends its service, it must notify any passengers holding reservations for travel after the suspension date, assist those passengers in making alternate air transportation arrangements, or provide a refund of the ticket price, without penalty, if requested.
The Department anticipates Advanced Air to begin service at Silver City by January 1, 2018. However, if Advanced Air begins service later than that date, Boutique Air must continue to provide service until Advanced Air begins full EAS at Silver City.
Air Carrier Fitness
Title 49 U.S.C. §§ 41737(b) and 4138 require the Department to find an air carrier fit, willing, and able to provide reliable service before it can provide subsidized EAS. Advanced Air is subject to the Department’s continuing fitness requirements, and no information has come to the Department’s attention that would bring into question the air carrier's fitness at this time. The Federal Aviation Administration has been contacted, and it has raised no concerns that would negatively affect the Department’s fitness findings. The Department therefore concludes that Advanced Air is reliable and fit to conduct the operations proposed here.
This Order is issued under authority delegated in 49 CFR 1.25a(b)(6)(ii)(D).
ACCORDINGLY,
1. The Department selects Advanced Air, LLC to provide Essential Air Service at Silver City/Hurley/Deming, New Mexico, at the service levels and subsidy rates described in Appendix B, for the two-year period from January 1, 2019, through December 31, 2020; Congress made permanent the $200 subsidy cap by Public Law 106-69, the Department of Transportation and Related Agencies Appropriations Act of 2000. See 49 U.S.C. § 41731(a)(1)(C).
2. Boutique Air, Inc. may suspend service at Silver City/Hurley/Deming, New Mexico provided that (a) Advanced Air, LLC is prepared to inaugurate full Essential Air Service the day after the final day of service provided by Boutique Air, Inc.; and (b) Boutique Air, Inc. has satisfied the conditions described in the paragraph titled “Service Transition” in this Order.
3. The Department directs Advanced Air, LLC 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 air carrier may forfeit its compensation for any claim that is not supported under the terms of this Order;
4. This selection is contingent upon receiving properly-executed certifications from Advanced Air, LLC that it is in compliance with the Department’s regulations regarding drug-free workplaces and nondiscrimination, as well as the regulations concerning lobbying activities;7
5. The Department finds Advanced Air, LLC fit, willing, and able to operate as a commuter air carrier, and capable of providing reliable Essential Air Service at Silver City/Hurley/Deming, New Mexico;
6. This docket will remain open pending further Department action; and
7. The Department will serve copies of this Order on the civic officials of Grant County, New Mexico, Silver City, Hurley, and Deming, New Mexico, the airport manager of Grant County Airport, Advanced Air, LLC, Boutique Air, Inc., and Southern Airways Express LLC.
By:
Joel Szabat
Deputy Assistant Secretary
for Aviation and International Affairs