UNITED STATES OF AMERICA DEPARTMENT OF …

Order: 2021-3-1

Served: March 1, 2021

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

On the 1st day of March, 2021

Essential Air Service at

SIOUX CITY, IOWA (FAIN 69A3452160498) 1

DOT-OST-2011-0131

Under 49 U.S.C. ¡ì 41731 et seq.

ORDER SELECTING AIR CARRIER AND SETTING RATES FOR HOLD-IN PERIOD

Summary

For the hold-in period beginning December 1, 2020, the U.S. Department of Transportation (the

Department) will compensate American Airlines, Inc. (American) with a subsidy of $2,045 per

flight to continue to provide Essential Air Service (EAS) at Sioux City, Iowa. 2

In addition, the Department is selecting SkyWest Airlines, Inc., branded as United Express

(SkyWest), to provide EAS at Sioux City using 50-seat Bombardier CRJ-200 aircraft, for the

three-year term from April 1, 2021 through March 31, 2024. SkyWest will provide 12 weekly

round trips total to Chicago O¡¯Hare International Airport (ORD) and Denver International

Airport (DEN) at a first-year annual subsidy amount of $1,479,891, a second-year annual

subsidy of $880,418, and a third-year annual subsidy of $533,437.

Background

American had provided subsidy-free EAS at Sioux City since May 1, 2016, with flights to ORD.

American¡¯s most recent service for Sioux City had provided daily round trips to ORD and

Dallas/Fort Worth International Airport (DFW), on regional jet aircraft, operating as American

Eagle.

By letter dated August 28, 2020, American gave 90 days¡¯ notice to the Department of its

intention to discontinue service at Sioux City on December 1, 2020, or such earlier date as

permitted by the Department.

Federal Award Identification Number.

Previously, the Department issued Orders extending American¡¯s obligation at Sioux City for 30-day periods, the

most recent of which required American to continue to provide EAS through March 1, 2021.

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2

-2By Order 2020-9-23 (September 24, 2020), the Department requested proposals from air carriers

interested in providing EAS at Sioux City for a new contract term. In response to Order 2020-923, American and SkyWest submitted proposals for subsidized EAS at Sioux City. In addition,

Boutique Air, Inc. (Boutique) proposed to provide unsubsidized EAS at Sioux City.

In that same Order, the Department prohibited American from terminating EAS at Sioux City for

30 days beyond December 1, 2020, (December 31, 2020) or until the date on which another

carrier begins EAS at Sioux City, whichever occurs earlier. Subsequently, the Department

issued orders extending American¡¯s obligation for 30-day periods, the most recent of which

required American to continue to provide EAS through March 1, 2021.

Summary of Air Carrier Proposals

American

Service

Option

Boutique

Service

Option

SkyWest

Service

Option

Annual

Subsidy

(Year 1)

Annual

Subsidy

(Year 2)

$2,527,531 $2,527,531

Annual

Subsidy

(Year 3)

Annual

Subsidy

(Year 4)

Community

Support?

Hub(s)

N/A

N/A

No

ORD

Annual

Subsidy

(Year 1)

Annual

Subsidy

(Year 2)

Annual

Subsidy

(Year 3)

Annual

Subsidy

(Year 4)

Community

Support?

$0

$0

N/A

N/A

No

Annual

Subsidy

(Year 1)

Annual

Subsidy

(Year 2)

Annual

Subsidy

(Year 3)

Annual

Subsidy

(Year 4)

Community

Support?

$1,479,891

$880,418

$533,437

N/A

Yes

Round

Trips

per

Week

12

Round

Trips

Hub(s)

per

Week

MSP/ORD 15/15

Round

Trips

Hub(s)

per

Week

DEN/ORD

6/6

Aircraft

Seats

Interline/

Codeshare

ERJ-145

50

Yes

Aircraft

Seats

Interline/

Codeshare

King Air 350

8-9

Yes

Aircraft

Seats

Interline/

Codeshare

CRJ-200

50

Yes

The proposals, as well as the community¡¯s entire dockets, may be accessed online at

by entering the docket number in the search field.

Community and State Comments

On October 27, 2020, the Department requested community comments regarding the air carrier

selection case at Sioux City. The community supported SkyWest¡¯s proposal. By letter dated

November 9, 2020, Sioux City Mayor, Robert E. Scott, stated:

We respectfully ask that you award SkyWest Airlines (United Express) the

Essential Air Service contract proposed for Sioux City service. We thank the US

DOT for its support for [Sioux Gateway Airport] through the Essential Air

Service program and we look forward to growing our air service for long-term

success.

By letter dated November 4, 2020, Dave Bernstein, President of the Sioux Gateway Airport

Board stated:

After much deliberation, it is the recommendation of the Sioux Gateway Airport

Board to support SkyWest Airlines¡¯ bid at Sioux Gateway Airport. SkyWest

-3meets all EAS criteria, and United Express service to Chicago O¡¯Hare will be

critical as our community recovers from the COVID-19 pandemic, keeping our

critical ties to the National Transportation System. We have valued our

relationship with American Airlines over the past eight years, and ultimately, we

hope that American is able to return to Sioux City in the future once the airline

industry is on the road to recovery.

Subsequent development

In an email and letter dated February 1, 2021, Shawn Simpson of Boutique Air notified the

Department that Boutique is withdrawing the unsubsidized proposal for air service at Sioux City.

Decision

Title 49 U.S.C. ¡ì 41733(c)(1) directs the Department to consider five factors when making an air

carrier selection for a community not in Alaska where basic EAS will not be provided without

compensation: (A) service reliability of the applicant air carrier; (B) the existence of contractual

and marketing arrangements with a larger air carrier at the hub; (C) the existence of interline

arrangements with a larger air carrier at the hub; (D) the preferences of the actual and potential

users of the EAS, giving substantial weight to the views of the elected officials representing

those users; and (E) whether the air carrier has included a plan in its proposal to market the EAS.

In addition, Section 41732(b)(1)(A) requires basic EAS to include at least two daily round trips

six days a week for an eligible place not in Alaska. Finally, the Consolidated Appropriations

Act, 2021, Pub. L. No. 116-260 (December 27, 2020), authorizes the Department to consider the

relative subsidy requirements of the applicant air carriers.

SkyWest¡¯s proposal meets the air carrier selection criteria the Department is required to

consider, and the Department finds its service and subsidy levels reasonable. Therefore, the

Department is selecting SkyWest for the three-year term proposed by the carrier.

SkyWest serves over 45 EAS communities and has earned a solid reputation for providing

reliable EAS. In addition, SkyWest¡¯s codeshare with United Airlines at its DEN and ORD hubs

will provide Sioux City passengers connectivity and access to the national air transportation

system. Also, SkyWest¡¯s proposal is supported by the community¡¯s officials. Furthermore,

SkyWest dedicates $20,000 per year to market its air service.

Reminder About EAS Eligibility

To remain eligible for EAS, communities must comply with all applicable EAS eligibility

requirements. We note that many of the traditional eligibility requirements, including those

below, were waived for Fiscal Years 2020 and 2021 by the Consolidated Appropriations Act,

2021, Pub. L. No. 116-260 (December 27, 2020). Unless waived by Congress for future fiscal

years, compliance with these eligibility requirements will resume at the beginning of Fiscal Year

2022.

Title 49 U.S.C. ¡ì 41731(a)(1)(B) provides that a community must maintain an average of 10

enplanements per service day, as determined by the Secretary of Transportation, during the most

recent fiscal year, to remain eligible for EAS. Locations in Alaska and Hawaii, and

communities that are more than 175 driving miles from the nearest large or medium hub airport,

-4are exempt from this requirement. Sioux City is subject to this requirement, because it is not

more than 175 miles from the nearest large or medium hub airport.

Further, the Department of Transportation and Related Agencies Appropriations Act, 2000, Pub.

L. No. 106-69 (Oct. 9, 1999), prohibits the Department from subsidizing EAS to communities

located within the 48 contiguous States that require a subsidy per passenger amount exceeding

$200 (¡°Subsidy Cap¡±), unless the community is located more than 210 miles from the nearest

large or medium hub airport. Sioux City is subject to this requirement, because it is not more

than 210 miles from the nearest large or medium hub airport. EAS communities, except for

those in Alaska and Hawaii, are also subject to an additional $1000 subsidy per passenger cap,

regardless of the distance to a hub airport. 3

The Department expects SkyWest and Sioux City to work together to ensure that the community

will comply with the applicable requirements. Communities that fail to comply with the

applicable above requirements may risk having their eligibility in the EAS program terminated.

In the event the Department terminates a community¡¯s eligibility for EAS due to lack of

compliance, that action will supersede this Order.

Air Carrier Fitness

Title 49 U.S.C. ¡ì¡ì 41737(b) and 41738 require that the Department find an air carrier reliable,

fit, willing, and able to provide reliable service before the Department may subsidize it to

provide EAS. American and SkyWest are subject to the Department¡¯s continuing fitness

requirements, and no information has come to the Department¡¯s attention that would cause the

Department to question the air carriers¡¯ fitness at this time. The Department has contacted the

Federal Aviation Administration, and it has raised no concerns that would negatively affect the

Department¡¯s fitness findings. The Department therefore concludes that American and SkyWest

are reliable and fit to conduct the operations proposed at Sioux City.

This Order is issued under authority delegated by the Secretary of Transportation in 49 CFR ¡ì

1.25a(b)(6)(ii)(D).

ACCORDINGLY,

1. In accordance with 49 U.S.C. ¡ì 41734(e), the Department will pay compensation to American

Airlines, Inc. for service provided during the hold-in period beginning December 1, 2020, at a

rate of $2,045 per flight;

2. The Department selects SkyWest Airlines, Inc. to provide Essential Air Service at Sioux City,

Iowa, for the three-year term from April 1, 2021, through March 31, 2024, and establishes the

annual subsidy rates as described in Appendix B;

3. The Department makes these selections contingent upon receiving properly-executed

certifications from SkyWest Airlines, Inc. and American Airlines, Inc. that each air carrier is in

3

See 49 U.S.C. ¡ì 41731(a)(1)(C).

-5compliance with the Department¡¯s regulations regarding drug-free workplaces and

nondiscrimination, as well as the regulations concerning lobbying activities; 4

4. The Department directs SkyWest Airlines, Inc. and American Airlines, Inc. to retain all

books, records, and other source and summary documentation to support claims for payment,

including copies of flight logs for aircraft used to provide EAS under this Order and sold or

disposed of, and to preserve and maintain such documentation in a manner that readily permits

its audit and examination by representatives of the Department. This documentation shall be

retained for three years from the last day of service under this Order, or such longer period as the

Department may notify the air carrier. If any litigation, claim, or audit is started before the

expiration of the three-year period, the records must be retained until all litigation, claims, or

audit findings involving the records have been resolved and final action taken. The air carrier

may forfeit its compensation for any claim that is not supported under the terms of this Order;

5. The Department finds SkyWest Airlines, Inc. and American Airlines, Inc. are, fit, willing, and

able to operate as a certificated air carriers, and capable of providing reliable Essential Air

Service at Sioux City, Iowa;

6. This docket will remain open pending further Department action; and

7. The Department will serve this Order on the mayor of Sioux City, Iowa, the airport

director of Sioux Gateway Airport, the Executive Vice President of the Siouxland Chamber of

Commerce/The Siouxland Initiative, American Airlines, Inc., Boutique Air, Inc., and

SkyWest Airlines, Inc.

By:

Joel Szabat

Deputy Assistant Secretary

for Aviation and International Affairs

(SEAL)

An electronic version of this document is available at



The certifications are available online under ¡°Reports and Publications¡± at .

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